Wednesday, August 29, 2012

Trans-Pac shipping lines plan to offset cost of new North American coastal emissions reg

The principal group of container-shipping lines engaged in the eastbound trans-Pacific trade from Asia to U.S. announced they plan to implement an add-on per-box fee to its next bunker charge adjustment on October 1 in response to the new, reduced sulfur oxide requirement for commercial vessels transiting within 200 miles of North America's coastlines.

The Transpacific Stabilization Agreement said in a statement that the new fee would be $17 per-forty-foot container to the U.S. West Coast, and $21 per-FEU to the U.S. East and Gulf coasts.

On August 1, the North America Emissions Control Area came into effect as a result of the International Maritime Organization's MARPOL Annex VI protocol that requires what the TSA referred to as "more costly low-sulfur fuel" for vessels sailing in and out of the 200-mile coastal zones of the U.S. and Canada.

The TSA referenced pricing data by Platt's, an energy industry news and pricing data resource, that
price differentials between standard bunker and premium low-sulfur fuel at the four ports – Los Angeles/Oakland, Seattle, Charleston and New York – ranged from $87 to $260 per metric ton as of mid-August.

The TSA lines said they spent close to 2.7 sailing days per voyage within the North American ECA to the U.S. West Coast, and just over 4.4 days to the East and Gulf Coasts.

"As our member carriers have adjusted to comply with MARPOL Annex VI, the relative added cost per- FEU aboard ship as reflected in the charge is not huge, but the overall cost impact per sailing across the entire trade is significant," said the TSA's executive administrator Brian M. Conrad.

"Lines with scheduled services are also concerned about the spike in demand for low-sulfur fuel created by the ECA, and effects in the near and midterm on supply and price," Conrad said.

The TSA claims that for every $20 per-metric ton change in low-sulfur fuel prices, "component levels rise or fall $2-3 to the West Coast, and $5-6 to the East and Gulf Coasts."

Conrad said the TSA will start posting weekly low-sulfur prices on its website that will include a mechanism for with instructions for customers to calculate the likely component levels for the low-sulfur price adjustment, such as what the shipping line group says is currently used for calculating the bunker charge.

In addition to the new North American low emissions zone, there are ECAs in the Baltic and North seas.

A U.S. Caribbean ECA that covers Puerto Rico and the U.S. Virgin Islands is slated to take effect in 2014.

The TSA said the total estimated cost of the ECA by 2020 is $3.2 billion, which is aimed at achieving an 85 percent reduction in vessel SOx and particulate matter emissions.

More stringent ECA nitrogen oxide emissions requirements are scheduled to take effect in 2016.

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