Shipping giants decry Trump's appeal to delay UN's draconian fuel rule
THE Trump administration's appeal to delay the January 1, 2020 implementation of virtual sulphur ban in ships' fuel has been opposed by the World Shipping Council (WSC) that represents the major container lines
THE Trump administration's appeal to delay the January 1, 2020 implementation of virtual sulphur ban in ships' fuel has been opposed by the World Shipping Council (WSC) that represents the major container lines.
'Any uncertainty or delay at this point would confuse markets and penalise shipowners and fuel suppliers that are already investing to ensure compliance,' said WSC president John Butler.
'Adding uncertainty to an already expensive regulation would increase, not decrease, the potential for economic harm,' he said.
Contrary to popular opinion big companies embrace stringent regulatory regimes as they have less trouble in meeting skyrocketing compliance costs than smaller rivals. Critics say they can more easily be put out of business and increase the majors' market share.
The Wall Street Journal reported that Trump administration officials were alarmed by the projected economic impact of the costs as the global maritime fleet switches to the low-sulphur fuel.
The new eco fuels demanded by the UN's International Maritime Organisation (IMO) are at least 55 per cent more expensive than standard bunker fuel.
French shipping giant CMA CGM says that it will cost shippers US$160 per TEU more when the fuel rule kicks in, and they had better accept the new reality.
Standard bunker can be used after the deadline if it is subjected to treatment by scrubbers, which are expensive to retrofit, expensive to run with the added expense of disposing of scrubbing waste in an environmentally approved ways.
Earlier this month, Organisation of Petroleum Exporting Countries (OPEC) warned that the IMO decision to lower the maximum allowed sulphur content for bunker from 3.5 per cent to 0.5 per cent by weight 'will be disruptive to both the shipping and refining sectors.
'Due to a sudden switch in the fuel mix, potential shortages of compliant fuel are possible, especially middle distillates, which could spread to other sectors too. It is hoped that there will be sufficient flexibility in the refining system in order to avoid any extreme events in the years to come,' OPEC said.