A report released Thursday 19 May, states that new sulfur emissions regulations have forced vessels to use higher cost fuel and has thus increased container shipping firms' annual costs by a total $500 million.
Rising fuel costs will further hurt an industry already stung by overcapacity, low demand and falling rates.
From January 2015, ships entering Emissions Control Areas from the Baltics to the North American coast had to switch to ship fuels with less than 0.1 percent sulfur content, from 1 percent, as part of a campaign to combat marine pollution.
An even lower cap of 0.50 percent is planned for 2020 and it could add annual total costs of around $5 billion to $30 billion for the container shipping industry, the Organisation for Economic Co-operation and Development (OECD) report said.
"We will assume that container shipping lines have limited possibility to absorb cost increases, so they will likely transfer these to their customers," it said.
According to OECD calculations a global sulfur cap of 0.5 percent in 2020 mean costs for transporting agricultural goods could rise by as much as 7.5 percent.
Source: reuters.com
