UASC: ECA Will Raise Bunker Costs 50%, But Ocean Three Will Save Us at Least $100M a Year

UASC has also announced a tie up with Hamburg Sud

United Arab Shipping Co. (UASC) President and CEO Jorn Hinge says stricter Emissions Control Area (ECA) rules coming into effect on January 1, 2015 will increase bunker costs by 50 percent, but that will be offset by his company's membership of the Ocean Three alliance which will reduce their costs by at least $100 million a year, The Wall Street Journal reports.

The Ocean Three alliance was announced last month between UASC, CMA CGM, and China Shipping Container Lines and follows the July announcement of the 2M alliance between Maersk Line and Mediterranean Shipping Co..

Ocean Three will see the companies share ports and vessels on the Europe-Asia box ship route, and Hinge cited flexibility of capacity as key to the savings attributable to the alliance.

"If you are in a group and cancel one of your five or six departures during low seasons, you will still be OK as the other departures will still have a full cargo and cater to the needs of your customers," he explained.

"But if you only have two departures and stop one of them, you are dead."

Hinge said that modern, large ships are vital to reducing bunker costs, shipping lines' single biggest operating cost, and that from next year, new the new ECA rules are set to increase those costs even further.

"When [the new ECA] goes into force, it will basically increase fuel costs by 50%.

"You either buy new engines that burn cleaner fuels, or mix fuels to cut the sulfur content."

From January 1, 2015 vessels operating within an ECA must use a fuel with a sulfur content not exceeding 0.10 percent by weight, down from the current limit of 1.00 percent.

Recently CMA CGM's Vice Chairman Rodolphe Saade said the Ocean Three alliance would save a combined $1 billion or more annually.