Stena Line Warns on "Significant Economic Impact" from 2015 ECA Rules

by Ship & Bunker News Team
Tuesday September 30, 2014

Stricter Emission Control Area (ECA) regulations coming into effect from 2015 will have significant economic impact on Sweden-based Stena Line, who says it will have to raise freight rates by 15 percent to accommodate the new rules. 

"From an economic perspective, this is one of the largest negative political decisions since tax-free was discontinued," said CEO Carl-Johan Hagman.

"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 sulphur 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."

Beginning January 1, 2015, marine fuel used in ECAs will not be permitted to have sulfur content of more than 0.10 percent by weight. 

Stena said that low sulfur fuel is expected to cost the company approximately SEK 1 million ($0.1 million) more per day, to a total of SEK 450 million ($62.1 million) per year.

The ECA rules are also a large driver of Stena's two-year, company-wide program launched in 2013, which seeks to improve earnings by SEK 1 billion ($138 million).

"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," said Hagman.

The company is also currently working on a number projects looking at alternative fuels and different techniques on emission purification.

Stena said that it has reduced its vessel energy consumption by 2.5 percent every year since 2005.

"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 (liquefied natural gas) as a fuel. Naturally, converting and rebuilding our ferries will both take time and cost a lot of money," said Hagman.

Last year, Stena Line sent one of its high speed sea service vessels to the recycling yard after increasing fuel costs made the ship impractical.