P&O Ferries: ECA Rules Will Increase Fuel Bill by £30 Million per Year

by Ship & Bunker News Team
Wednesday October 8, 2014

British company P&O Ferries has estimated that the upcoming emission control area (ECA) regulations will cost the company an extra £30 million ($48.2 million) in fuel costs, reports Lloyds Loading List.

The company said that it expects to recover costs by passing them onto customers, creating a low sulfur surcharge that many other shipping companies such as Maersk Line are also adopting in response to the new rules.

"We have adopted a 'fair share' principle on this and are talking to our freight customers about it as part of annual negotiations (on rates)," said a spokesman for P&O.

"As to how much the surcharge is likely to add to the rate per freight unit, this is currently being finalised before being put to customers," he said. "So, we can't say any more at this juncture."

Beginning January 1, 2015, the sulfur content of marine fuel used in ECA zones must not exceed 0.10 percent by weight, meaning in the absence of an equivalent method of compliance, operators will have to use more expensive compliant fuel.

Netherlands-based container company Samskip is also expecting to see its fuel costs jump by 50 percent as it switches to marine gas oil. 

Samskip CEO Diederick Blom predicted that in the short term, the new regulations would likely drive companies to shift back to road transportation on certain European shortsea routes. 

In the long term, however, he expects transport by sea and rail to increase far more than road. 

Surcharges in response to ECA regulations have been varying from company to company, with Switzerland-based MSC announcing a surcharge of up to $165 per TEU on its North European and North American routes, while Maersk Line has said it expects surcharges of $50-$150 per FEU on certain routes. 

The Transpacific Stabilization Agreement (TSA) announced last week that its 15 member lines would all be implementing low sulphur surcharges to offset rising fuel costs.