As the introduction of new, stricter rules on shipping sulfur emissions moves ever nearer, Swedish ferry operator Stena Lines has become the latest company to warn of an economic shift, including charging higher freight costs, as a result of the changes.
In a statement Thursday, Stena said the new sulfur emissions directive, which comes into force on January 1, 2015, would have “a significant economic impact on Stena Line’s business.”
The company said it would look to use alternatives to traditional bunker fuel from 2015, including using methanol and LNG, or converting its ferries with the introduction of scrubbing units.
Next year, ships traveling within 200 miles of shore in North America and the Baltic and North Seas must limit sulfur emissions from fuel to 0.1%, down from 1%, according to International Maritime Organization rules.
These regions of compliance are called Emission Control Areas.
Stena said it had already reduced its fleet by two vessels, and it is now being “forced” to increase freight prices as a direct result of increased fuel costs.
“From an economic perspective, this is one of the largest negative political decisions since tax-free was discontinued,” Stena CEO Carl-Johan Hagman said.
“We have a positive attitude to environmental improvement rules as long as they are the same for everyone and are implemented at a rate that we and our customers can handle — but this isn’t the case with the new sulfur rules. Ultimately, the increasing fuel costs affect the North European export and import industry negatively because a significant share of transports are done by sea,” Hagman said.
INCREASED FUEL COSTS
For Stena, the changes mean increased fuel costs of SEK1 million ($139,661) a day, or around SEK450 million a year as a result of the more expensive low sulfur fuel.
“On the freight side, we thereby have to increase prices by around 15%.
We want to be able to deliver the same quality and service and continue our efforts to offer environmentally effective transports. This means that we must charge our freight customers more to compensate for the increased costs,” Hagman said.
Stena said it has since 2005 worked to reduce its environmental impact, which has reduced vessel energy consumption by 2.5%/year.
In parallel with the change to low-sulfur oils, Stena is running a number of projects to look at alternative fuels and different techniques for emission purification., it said.
“In early 2015 we will be starting a trial with methanol as a fuel on one of our ferries. At the same time we are investigating scrubber technologies and also looking at LNG as a fuel. Naturally, converting and rebuilding our ferries will both take time and cost a lot of money,” Hagman said.
Other shipping companies have also said their businesses would be affected by the changes.
Switzerland-based Mediterranean Shipping Co. said this month it would levy per-container surcharges of up to $165 to offset expected higher bunker fuel prices when the stricter emissions regulations come into effect in January.