DFDS: Desite Bunker Price Drop, ECA Shippers Still At a Disadvantage to Land Transport

Land transporters are able to drop prices, but ferries are not, says DFDS

DFDS CEO Niels Smedegaard last week said Emissions Control Area (ECA)-based ferry operators were still at a competitive disadvantage to land transport, despite an almost 50 percent drop in the price of compliant bunkers such as marine gasoil (MGO), Lloyd's List reports.

Speaking at last week's European Shipping Week conference, Smedegaard described new regulations, which saw allowable sulfur limits within ECAs drop to 0.10 percent from January 1, as a "pretty dramatic turn of events."

"Fortunately, by coincidence we have seen a fall in the fuel price since last September, which to a certain extent has alleviated the impact of the transition to the new product, but it has by no means fixed the challenge we have seen," he said, adding that ECA ferry operators have been left at a disadvantage compared to land-based transporters.

DFDS has already lost customers to land transport rivals as a result of higher costs associated with low-sulphur regulations, said Smedegaard.

Most shippers have decided to switch fuels in order to comply with the new regulations rather than use alternatives such as installing scrubbers.

While the cost of ECA-compliant bunkers such as marine gasoil has almost halved over recent months, the switch from residual fuels to distillates means fuel prices have not fallen for most ECA shippers.

"Some people are asking what we are crying about because low-sulphur is now the same price as high-sulphur fuel was back in September, but we are competing with road haulage where the price of diesel has fallen to the price of high-sulphur marine fuel," said Smedegaard.

"So for a customer using sea freight, there has been no price reduction since September, but for those using land transport there will be a reduction."

This week, ferry industry body Interferry urged in an emailed statement that European Union (EU) officials should seek first hand experience when considering future regulations for the shipping industry, while praising a cooperative atmosphere at last week's inaugural European Shipping Week (ESW).