New sulphur regulations force changes at Stena Line
26 September 2014
The new sulphur directive for shipping traffic within the North European SECA area, which comes into force on 1 January 2015, is due to have a significant economic impact on Stena Line's business. The new sulphur directive has been in the planning stage for a number of years and its negative economic impact, a significant increase in fuel costs, was one of the key drivers behind Stena Line’s decision to implement a company-wide two year Change Programme in 2013.
One of the key objectives of the Change Programme was to improve Stena Line’s performance by £100m to help put the company on a more secure financial footing post- directive implementation. The rolling programme has resulted in a number of steps being taken including the reduction from two vessels to one on the Trelleborg-Sassnitz route and the fact that Stena Line is now being forced to increase its prices to freight customers as a direct result of the change in legislation.
"From an economic perspective, this is one of the largest negative political decisions taken since tax-free shopping was discontinued. As a company we are very supportive of environmental improvement regulations as long as the changes are the same for everyone and are implemented at a rate which we and our customers can handle but unfortunately this is not the case with the new sulphur rules. Ultimately, the resultant increase in fuel costs negatively impacts on North European export and import trade because a significant proportion of these trades are facilitated by sea transport", said Stena Line's CEO Carl-Johan Hagman.
For Stena Line, the changes mean a direct increase in fuel costs of more than £100, 000 per day, or around £41M per year as a result of having to use the more expensive low sulphur fuel.
"If you look at the freight side of our business for example, we are going to have to increase prices by around 15%. As a business, we are committed to delivering the same quality and service and we will continue our efforts to offer environmentally effective transports. This means that unfortunately we are left with no alternative but to pass on the imposed increase in costs to our freight customers", said Carl-Johan Hagman.
Since 2005 Stena Line has worked diligently to reduce its environmental impact with a comprehensive Energy Saving Programme which has successfully reduced vessel energy consumption by approx 2.5 per cent every year since 2005. In parallel with the change to low-sulphur oils, Stena Line is also running a number of projects to look at alternative fuels and different techniques for emission purification.
"In early 2015 we will be starting a trial with methanol as a potential fuel on one of our ferries. At the same time we will be taking a closer look at deploying scrubber technologies and also looking at LNG as a possible fuel. Naturally, converting and rebuilding our ferries will both take time and require a significant investment on our part”, concluded Carl-Johan Hagman.
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