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New rules 1.1.2015: Surcharges on Ferry Services

These new rules will imply that shipping-rates for all crossings will be heavily increased , the exact surcharges are not known for the moment but will be known in forth-coming months.

Itís clear that the new EU-legislation on maritime sulphur emissions will have a knock-on effect far beyond shipping companies. The full impact and costs implications for the transport sector and itís customer cannot be quantified until the confirms its revised price structure and network capabilities. We will, of ocurse, not only keep you informed but also work closely with you to continue the optimum solutions for your requirements.

IRF will keep you updated and will announce further developments on our website., for further information about the upcoming EU sulphur rules you can contact your local IRF representative of send an e-mail to info@irf.eu

NEW RULES ON 1 JANUARY 2015

On 1 January 2015, the EU Sulphur Directive 2012/33/ EU will bring about a major reduction in sulphur dioxide emission from ships, and that will heavily impact shipping in northern Europe. The Directive will require ships

sailing in the English Channel, the North Sea and the Baltic Sea (the North European emission control area) to use bunker oil with a maximum 0.1% sulphur or apply alternative methods in order to achieve the same effect.

WHAT WILL BE THE CONSEQUENCES?

The fuel with 0.1% sulphur content is the marine gas oil (MGO), which is significantly more expensive than heavy fuel oil (HFO) with 1% sulphur, which is currently allowed and commonly used inside the North European ECA. As a result, fuel prices will increase and so will the costs of shipping. It has been estimated that ships trading within this area consume around 13,000,000 tons of HFO per year. Switching this to 0.1% MGO would mean an extra cost of about EUR 3 billion per year. It is entirely up to the shipping industry to cover this extra cost.

Some studies predict that it will become more interesting for a lorry to drive extra kilometres instead of selecting the sea. This could lead to a modal back shift where a portion of sea freight moves to the already busy roads in Europe. As a consequence, society may see further congestion on roads, environmental side-effects, potential closure of shipping routes and a loss of jobs.

For these reasons, shipping companies have been working hard to find solutions to this challenge.

WHAT POTENTIAL SOLUTIONS ARE OUT THERE?

The new rules will come into effect in 2015 and there will be no exemptions. There are basically three ways to comply with the new legislation:

  1. Switch to the MGO fuel
  2. Change to liquefied natural gas (LNG).
  3. Invest in scrubbers that remove sulphur from the exhaust gases from ships.

All three options will lead to significant cost increases for shipping companies. Legislation for their use is still not fully in place and there is a significant lead time for such major conversions to existing vessels.

The scrubber technology is an approved solution in order to comply with the EU Sulphur Directive. However, not all ships can accommodate such an installation. It has to be adapted to every single ship as it is not a one-size-fits-all solution. Furthermore, a scrubber will increase operating costs as it is a heavy investment of EUR 4-7 million per vessel and operating it consumes chemicals. Furthermore, there will be a slight loss of energy, increasing bunkers consumption by 1-2%. So, unfortunately there are still many things to be decided and our challenge is to adapt to this changing environment.

Society and shipping companies have a common interest in improving the environment, while simultaneously ensuring that sea transport doesnít become unnecessarily expensive, which could lead to an increase in cargo being transported on already congested roads.

We have to work together in order to ensure the development of long-term solutions, including clear and appropriate rules for the use of scrubbers and rules that provide companies with a secure basis for deciding on investments.

Source : DFDS Seaways

In case of further questions feel free to contact our Customer Service department in Rozenburg.

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