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Sulphur Regulations to Force Changes at Stena Line

29th September 2014
Sulphur Regulations to Force Changes at Stena Line

#EUsulphurDirective - The EU's new sulphur directive for shipping traffic within the North European Sulphur Emission Control Areas (SECA), which comes into force on 1 January 2015, is due to have a significant economic impact on Stena Line's business.The Swedish owned ferry company is to face more than £100,000 per day in extra fuel costs.

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 annually 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 approximately 2.5% 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.

Published in Ferry
Jehan Ashmore

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Jehan Ashmore

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Jehan Ashmore is a marine correspondent, researcher and photographer, specialising in Irish ports, shipping and the ferry sector serving the UK and directly to mainland Europe. Jehan also occasionally writes a column, 'Maritime' Dalkey for the (Dalkey Community Council Newsletter) in addition to contributing to UK marine periodicals. 

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Ferry & Car Ferry News The ferry industry on the Irish Sea, is just like any other sector of the shipping industry, in that it is made up of a myriad of ship operators, owners, managers, charterers all contributing to providing a network of routes carried out by a variety of ships designed for different albeit similar purposes.

All this ferry activity involves conventional ferry tonnage, 'ro-pax', where the vessel's primary design is to carry more freight capacity rather than passengers. This is in some cases though, is in complete variance to the fast ferry craft where they carry many more passengers and charging a premium.

In reporting the ferry scene, we examine the constantly changing trends of this sector, as rival ferry operators are competing in an intensive environment, battling out for market share following the fallout of the economic crisis. All this has consequences some immediately felt, while at times, the effects can be drawn out over time, leading to the expense of others, through reduced competition or takeover or even face complete removal from the marketplace, as witnessed in recent years.

Arising from these challenging times, there are of course winners and losers, as exemplified in the trend to run high-speed ferry craft only during the peak-season summer months and on shorter distance routes. In addition, where fastcraft had once dominated the ferry scene, during the heady days from the mid-90's onwards, they have been replaced by recent newcomers in the form of the 'fast ferry' and with increased levels of luxury, yet seeming to form as a cost-effective alternative.

Irish Sea Ferry Routes

Irrespective of the type of vessel deployed on Irish Sea routes (between 2-9 hours), it is the ferry companies that keep the wheels of industry moving as freight vehicles literally (roll-on and roll-off) ships coupled with motoring tourists and the humble 'foot' passenger transported 363 days a year.

As such the exclusive freight-only operators provide important trading routes between Ireland and the UK, where the freight haulage customer is 'king' to generating year-round revenue to the ferry operator. However, custom built tonnage entering service in recent years has exceeded the level of capacity of the Irish Sea in certain quarters of the freight market.

A prime example of the necessity for trade in which we consumers often expect daily, though arguably question how it reached our shores, is the delivery of just in time perishable products to fill our supermarket shelves.

A visual manifestation of this is the arrival every morning and evening into our main ports, where a combination of ferries, ro-pax vessels and fast-craft all descend at the same time. In essence this a marine version to our road-based rush hour traffic going in and out along the commuter belts.

Across the Celtic Sea, the ferry scene coverage is also about those overnight direct ferry routes from Ireland connecting the north-western French ports in Brittany and Normandy.

Due to the seasonality of these routes to Europe, the ferry scene may be in the majority running between February to November, however by no means does this lessen operator competition.

Noting there have been plans over the years to run a direct Irish –Iberian ferry service, which would open up existing and develop new freight markets. Should a direct service open, it would bring new opportunities also for holidaymakers, where Spain is the most visited country in the EU visited by Irish holidaymakers ... heading for the sun!

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