EMEA News
DFDS May Shut 7 Routes As ECA Rules Drive Up Bunker Costs
Danish shipper DFDS is looking at as many as seven routes that may be running at a loss, with an eye to shutting some of them down, industry news site ShippingWatch reports.
With new limits on sulfur emissions in the North Sea, the Baltic Sea, and the English Channel starting next year, the company argues that it will become more difficult for it to turn a profit on some operations.
"Fuel costs will increase by 40-50 percent," said CEO Niels Smedegaard.
"This is going to shut down routes, and will potentially put companies out of business, so it's pretty serious.
"And the industry, customers, and politicians are only slowly starting to realize how significant this new legislation is."
In 2013, DFDS closed one route in the Baltic region, saying it was already financially marginal and would have been impossible to operate at a profit with the higher costs involved in the new emission rules.
"In our service network, four to seven routes are in danger, but it also depends on what our competitors do," Smedegaard said.
"If they shut down, we might still be able to maintain a profitable business, even though we stand to lose some cargo volumes to road transports."
He added that decisions will also depend on road pricing and tariffs.
Smedegaard also said the company is negotiating with port terminals, customers, and employers in an effort to share the extra costs of the new rules.
DFDS plans to install scrubbers on 20 ships at a cost of $137.8 million.
Smedegaard said in August that rules should be put in place to help ships transition to the new regulations, possibly through temporary exemptions.
