Moving cars and equipment on the ocean is arguably the least environmentally damaging way of doing it. The good news is that it is about to become even less polluting with the introduction of emission control areas (ECAs) around the coasts of the Baltic and North Sea in Europe and the coasts of the US and Canada. According to Arild Iverson, CEO of ocean forwarder Wallenius Wilhelmsen Logistics, a ship carrying cargo on a US-Europe route will spend 75% of the journey time in an emission control area.
The flipside to that benefit is that bunker costs, already near historic highs at around $700 per tonne, could rise substantially with pending regulatory demands. For example, the maximum limit of sulphur in fuels will be 0.1% in control areas around the Baltic and North seas and the English Channel from 2015—a cost that could add a premium of around $350-$400 per tonne, according to DFDS Seaways’ Peder Gellert, something for which he and Iversen suggest the industry and its customers are not properly prepared to pay.
“When we started in 2001 at seriously looking at how to bring our sulphur consumption down to a level that was set at 1.5% globally, it took us three years to find practical solutions” said Iversen. “It is less than three years before these new ECA regulations come into force and I am asking: how are we, as an industry, going to face this challenge in such a short time when it took us three years to get down to 1.5%?”
Trying to avoid the regulations is unrealistic according to Iversen, something born out recently when the European Parliament confirmed that the EU will not apply a five-year extension on the introduction of the regulations (which were themselves agreed by the IMO in 2008 and subsequently by several EU member states). That decision came as a disappointment to shipping operators, including ro-ro lines, who have argued that the subsequent rise in bunker costs will lead to a substantial modal shift from short-sea shipping to land transport.
This shift goes against the environmental priorities that WWL has maintained for some time and which Iversen said its customers are keen to follow. “We should see the environment as a tool for improvement,” he told attendees at the RoroEx conference in Sweden.
Iversen outlined a number of options now facing the sector. Marine gas oil or diesel is currently lower in cost but is likely to skyrocket in the near future. WWL will use a mix if it has no other option, said Iversen. There is also the costly investment required in scrubber technology, something that WWL is researching but ultimately an option Iversen does not believe to be the long-term answer. “I hope we will never see scrubbers on 40,000 vessels, because the sulphur has to be gotten rid of somewhere,” he said.
Gellert, speaking at the ECG Assembly in Copenhagen, estimated the cost of fitting scrubbers to its entire fleet—over 30 ships—at around €155m ($194m). “The scrubbers weigh around 50 tonnes, which not only means they increase the ship’s weight, but they would be unsuitable for smaller ro-ro vessels,” he said.
Another option, according to Iversen, would be to use desulphurised heavy fuel oil, something that doesn’t currently exist, but which WWL believes could be the answer. He said the best route would be to remove the sulphur directly at the refineries producing the fuel. It is an option that WWL is calling on its industry peers and customers to help lobby for.
“Fuel comes with high sulphur and we should work with the providers [and] the refineries to take out the sulphur at the source,” said Iversen. “We have to challenge our customers and competitors to work with us to lobby for a change here.”
Iversen said it was the shipping companies, including bulk, tanker and container companies, that first needed to get organised and make sure they were pursuing the most cost-effective method before approaching their customers—in WWL’s case, the vehicle and equipment makers. Once organised, Iversen said that the voice of the OEM would be a powerful one and be crucial in helping to reach the necessary critical mass.
“We, as shipping and logistics companies, first need to organise ourselves and then the next step will be to involve our customers,” said Iversen. “They don’t want us to end up being forced to have solutions that are not efficient, they don’t want us to have solutions that are not good for environment. I think then, there could be an enormous push from the car manufacturers.”
