MSC expects $2bn in annual fuel costs from new marine rules
The shipping line will introduce a bunker charge from next year to recoup losses incurred by switching to low-sulphur fuels
London — Swiss-headquartered MSC expects to pay over $2bn a year in fuel costs due to tougher global marine fuel rules and will introduce a bunker charge next year to recoup expenses, the world’s second-biggest container line said.
The UN agency International Maritime Organisation (IMO) will prohibit ships from using fuels with sulphur content above 0.5% from January 1 2020, compared with 3.5% today, unless they are equipped with exhaust-gas cleaning systems, known as scrubbers, to clean up sulphur emissions.
For shipping companies struggling from years of weaker earnings, the new regulations are expected to mean more cost pressure.
“MSC has estimated that the cost of the various changes we are making to our fleet and its fuel supply is in excess of $2bn per year. We have already had to start incurring these costs to be ready for 2020,” the group said in a December 1 note.
MSC said it would levy a bunker recovery charge from January 1, 2019 “as a result of the regulatory changes we all support”.
The privately-owned group has a fleet of 510 vessels with a total capacity of 3.3-million twenty-foot equivalent units (TEUs), which includes both owned and chartered vessels, an MSC spokesperson said on Monday.
“Clearly, MSC will need to use a large amount of low-sulphur fuels to propel the fleet, in order to meet the 2020 low-sulphur cap,” the spokesperson said.
“At the same time, a significant portion of MSC’s owned ships will be equipped with exhaust-gas cleaning systems. For a shipping line of our size, with a global network, it makes sense to have a combination of these solutions.”
In September, Denmark’s Maersk Line — the world’s biggest container shipping carrier — said it would introduce a new bunker adjustment factor surcharge from January 1 2019. Maersk has said it expected extra fuel costs of at least $2bn annually.
Apart from scrubbers and low-sulphur fuel, shipping companies can also use liquefied natural gas (LNG) as an alternative marine fuel, although its usage is still at an early stage.