Drewry: ECA Compliance Costs Shippers Nothing

first_imgzoom The implementation of the new marine pollution regulation in North Europe and the US since January has so far resulted in zero extra costs for shipping lines and shippers, according to Drewry Maritime Research.Resistance from shippers and the opportune collapse of oil prices have neutralised the cost impact of the low-sulphur fuel surcharge in the container shipping sector, at least for now, Drewry says.But the real cost will be seen once fuel prices start rising again, as Drewry sees inevitably happenning.Before the introduction of the low-sulphur marine fuel regulations in January, shipping lines warned that they would have to increase bunker surcharges, increase freight rates or introduce a new low-sulphur fuel surcharge to offset the extra cost of cleaner fuel.However, very little of this has actually happened since January, according to data gathered by Drewry and by the World Container Index.In principle, if fuel prices had stayed the same, the extra fuel cost on carriers of having to use the more expensive, low-sulphur marine gas oil in the protected Emission Control Areas was estimated at about USD 29/TEU from North Europe to US East Coast, USD 49/TEU from North Europe to US Gulf and USD 21/TEU from North Europe to Asia.From the Mediterranean to the Southern Hemisphere and from Asia to both the Southern Hemisphere and the Mediterranean, there are no Emission Control Areas and therefore no low-sulphur fuel cost impact on carriers.Having tracked this technical issue, Drewry has seen three developments since the beginning of January:From North Europe to the US, about half of shipping lines have actually charged a low-sulphur bunker surcharge (averaging about USD 55/TEU), and the other half included this extra cost in the base rate;From North Europe to Asia, about half of shipping lines have actually charged a low-sulphur bunker surcharge (averaging about USD 20/TEU), and the other half include this extra cost in the base rate;Some shippers have refused to pay any more to cover the low-sulphur fuel costs, on the ground that the cost of standard Intermediate Fuel Oil has decreased during the same period.Given the scale of the decrease in the Bunker Adjustment Factors cost component on the Asia-Europe route, a nominal increase of USD 20/TEU linked to the low-sulphur fuel was immaterial, Drewry says.Furthermore, the underlying bunker price paid by shipping lines to run their ship engines in all areas other than the protected Emission Control Areas has dropped by 44% between July 2014 and December 2014 – an even bigger fall than that of BAF charges.Because there is a lag time between bunker price changes and BAF charge changes, Drewry expects that BAFs will continue to decline in the short term.Source: Drewrylast_img read more