Watchkeeper: Why Shipping Is Likely to Cost More?

It seems to have taken a very long time coming, but the public is at last being alerted to why their shipping is likely to cost more in the future, according to Watchkeeper.

Six months from the coming into force of the EU Sulphur Directive, letters and articles have appeared in national newspapers pointing out that in the absence of any derogation from this directive, which is due to bite in the new year, the costs of operating ships in the European Emission Control Area will rise substantially.

Ship owners have undoubtedly grasped the reality that the public sympathy is very much on the side of tighter environmental controls and they have wisely elected not to oppose them, merely to point out their likely consequences.

Arguably, it is a pity that these consequences, which have been known about ever since the EU decided to accelerate International Maritime Organization requirements, were not widely broadcast at the time.

In fact, the warnings were given by all sides of the industry, but somehow they failed to register with the mainstream media and tended to be ignored by the political classes. The industry did its best and only the proximity of the coming into force seems to have now attracted the editors.

It is a moot point as to whether, at any time, the regulators in Brussels really considered the true costs of these regulations, along with the practicability of forcing the industry to embrace technology that is still in an early stage of development.

The regulators, of course, will suggest that the end-product of maritime emissions cleansed of most sulphur has a societal benefit that cannot be denied and the timetable is the only practical method of forcing the pace.

The three “choices” facing the industry of very much more expensive gasoil, LNG, or the use of scrubbers, presents operators with few obvious solutions and the timescale and costs do not appear to pass the test of what is “reasonable”.

All the industry can now hope for is a “level playing field” as the new regulations come into force and some sympathetic understanding about the timescale and the possibility that some ships fitted with scrubbers are in fact operating prototype machinery.

Sometimes, in the lengthy discussions that have taken place over these issues in Europe, there seemed to be the impression that the regulators suspected that the industry, in its objections, was “crying wolf” and merely hoping to put off the implementation dates.

The remarks of prominent short sea ferry operators in the national press would underline their real concern that there would be a modal shift from their ships, when their cost structures took into account the new regime.

The first “hard” evidence will be seen in the North Sea, when, for the first time in more than 150 years, there will be no ferry link between England and Scandinavia, with DFDS ceasing to operate its service between Harwich and Esbjerg, blaming the effect of fuel costs. The consequences, of course, will be an immediate increase in the amount of truck-miles, as hauliers switch to the road. It is likely that this will be a continuing and worrying trend, with the environment suffering – something of an irony, but no surprise.

BIMCO, June 27, 2014

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