Global Sulfur Cap Will Cost Box Shippers $5 Billion to $30 Billion per Year: OECD

by Ship & Bunker News Team
Friday May 20, 2016

A 0.50 percent global sulfur cap for bunkers, planned to come into force in 2020 or 2025, will add $5 to $30 billion per year in costs for the container shipping industry, the Organisation for Economic Co-operation and Development (OECD) said in a new report Thursday.

That amount will be on top of the current $500 million per year that existing Emissions Control Area (ECA) regulations (that put a 0.10 percent sulfur cap on bunkers off the coast of North America, as well as within defined zones in Europe) are already costing the sector.

As to who will ultimately foot this bill, the organisation suggests that it will be the end customer: "We will assume that container shipping lines have limited possibility to absorb cost increases, so they will likely transfer these to their customers," stated the report.

Given the significant costs involved, OECD said effective enforcement of the regulations "is of utmost importance" in order to guarantee a level playing field - a matter that has already been stressed by a number of players, perhaps most notably by the world's biggest box shipper, Maersk Line.

In February, the International Bunker Industry Association (IBIA) said that the stricter 0.50 percent global sulfur cap would lead to extreme price differentials and low levels of compliance, with those companies that were compliant, operating at a 25 percent cost disadvantage to those less scrupulous operators and charterers.

IBIA Chairman Robin Meech last month also told Ship & Bunker that 2020 was more likely than 2025 as the date for the new cap.

Ship & Bunker News Team
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