EMEA News
2015 ECA Rules Will Raise Box Line BAFs $100 to $120 per TEU
The new 0.10 percent limit on sulfur content for ship fuel used in the North Sea and Baltic Sea Emission Control Areas (ECAs) could force carriers to increase bunker adjustment factor (BAF) charges by around 20 percent, Philip Damas, director of Drewry Supply Chain Advisors, told the Global Liner Shipping conference in Hamburg, according to Lloyd's Loading List.
The cost differential between current fuel and the low-sulfur fuel is about $300 per tonne, he said, which could push BAF charges up by $100 to $120 per twenty-foot equivalent unit (TEU) when the new rules take effect next year.
"The problem is that today very few carriers are equipped with liquefied natural gas engines, instead they have to use low sulphur marine diesel oil or they have to use scrubbers," Damas said.
"The impact of this is that the cost per tonne is 50% higher than the current fuel."
Analysts disagreed about the exact impact likely from the new rules, with Mercator International partner Jesper Kjaedegaard saying that BAF levels could rise even more if higher demand for low-sulfur fuel drives up its prices.
Kjaedegaard also said costs could rise even more for voyages that go through multiple ECAs, such as transatlantic trades that spend 60 percent of the trip in a European or North American ECA.
Mike Garratt, managing director of MDS Transmodal, on the other hand, said he does not expect an increase in the price of low-sulfur fuel.
Garratt said he expects BAF levels to rise less than Damas predicts, although they could go higher if the Mediterranean is designated as an ECA.
Carriers including Maersk Line and Hapag-Lloyd have been warning customers that the new rules will necessitate fuel surcharges.
