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Freightening Rise In Ship-Fuel Costs

Published on Jul 7 2014 12:50 PM in General Industry

Freightening Rise In Ship-Fuel Costs

The Irish Continental Group will relay extra costs which it will have to pay in order to comply with an EU law which states that ships may only use with maximum sulphur-content of 1 per cent.

The new regulation, passed in 2012, will have a "substantial" effect on the ICG, as the firm will pass on "all of the extra cost in the form of surcharges and increased fares".

Their container operations to continental Europe and ferry services to northern France will both be affected. The exact cost-increase has not yet been calculated, but "as a guide, some large European ferry operators are indicating freight rate rises of 15-20 per cent", their spokesman said.

The vast majority of Irish exports are transported by ship, and the busiest route is to Rotterdam. Most ships cannot switch fuels, so will have to operate with the more expensive fuel, even in Irish waters not covered by the law.

This may hurt the pharmaceutical industry hardest; Howard Knott of the Irish Exporters' Association stated: "Anything that pushes up the delivered-to-customer cost is bad for a [pharmaceutical] plant in Ireland because the companies are multinationals with plants elsewhere. For the foreign direct investment side of things, it has to be a worry.

"It’s like the millennium bug: you’re never sure what’s going to happen. Obviously [shipping] lines are competing and they’re not going to gratuitously set themselves up as more expensive than their competitors. It might be 20 per cent or it might be a lot less."

The UK Chamber of Shipping believes the "sharp increase in demand for low sulphur fuel will see a massive spike in costs both for shipowners and potentially for ordinary diesel-car users."

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