New directive criticised by the shipping industry

By: Thomas Ström 10/3/14

Shipping companies on the Baltic Sea will ignore the new directive regarding sulphur regulation but will still raise their prices


But how will this be regulated and by who?

The new directive regarding sulphur regulation put forth by the EU and the UN will be in force from January 1st of 2015. This means that the sulphur content of the flue gas from all the ships in Northern Europe must reduce their emissions from the current permissible level of 1.0 percent to 0.1 percent.

But since there will be no follow-ups, I am certain many shipping companies will ignore the directive and still charge higher fees even though they have not made the investments in environment as required by the directive.     

The proposal has been criticised by the shipping industry, which believes the regulations will work in favour of southern Europe while be a disadvantage for the northern countries. And although it is a fair assumption, I believe there will be different consequences.

Some shipping companies have ordered LNG carriers to meet the demands. LNG terminals are also being installed in several of Sweden’s larger harbours, for example in Gothenburg. But the main question is whether we can trust that the shipping industry will follow these directives for the Baltic Sea, the English Channel and parts of the North Sea, along the west coast of Sweden for example.

As with regulations within the Swedish transport industry there are no follow-ups. No ideas have been presented as to how, and by whom, this would be regulated. All of this points to the shipping industry ignoring the new directive regarding sulphur regulation.      

This also means that this new directive will not lead to more of the cargo being transported by train or road, which the shipping industry has feared. It will probably also not lead to any greater effects on the environment but rather a bigger competition, where rouge businesses continue to run ships on HFO and old engines. 

On the other hand, one obvious side effect will be that the price for freight by sea to and from Sweden will rise, maybe with as much as 30 percent. And if the companies ignore the requirements that are needed to lower the sulphur emissions, they will make a large profit since the customers still will be charged for the “increased costs”.

This will result in a large number of unscrupulous shipping companies making a profit by ignoring the directive.

So, how can I be certain of this?
The answer is simple.

No authority has been appointed responsible for ensuring that the new rules are followed. There will of course be shipping companies that decide to follow the new directive; however the question is whether the ships’ skippers will do it. They are in fact required to be as profitable as possible and therefore they might save money by using the cheaper and, for the environment, inferior oil.  

The truth in this becomes very obvious when you consider ships that start somewhere else and then enter these affected areas. The idea is that these ships will change fuel when they enter the area, but what are the chances that they will actually do it if they can save a great deal of money by not doing it?

Because the big question is: How will this new directive regarding sulphur regulation be regulated and by who?
As of today, there is no one!
And in approximately three months the shipping companies will substantially raise their prices!