Harwich: Ferry firm Stena Line warns sulphur directive will push up freight costs

The Stena Britannica and Stena Hollandica

The Stena Britannica and Stena Hollandica

A ferry company operating out of Harwich has slammed a new directive on sulphur emissions, describing it as one of the largest negative political decisions taken since duty-free shopping was discontinued.

The Stena Hollandica at Harwich International Port

The Stena Hollandica at Harwich International Port

Stena Line warned that the new sulphur directive for shipping traffic within the North European Sulphur Emission Control Area (SECA) area, which comes into force on January 1, 2015, will have “a significant economic impact” on its business, pushing up its fuel costs by around £41million a year and forcing it to increase prices for its freight customers.

The company implemented a two-year performance programme in 2013, in large part to deal with the negative impact of the new sulphur directive, which has been in the planning stage for a number of years.

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 after the directive comes into force.

Stena said that as a result of the rolling programme, it had cut its vessels from two to one on the Trelleborg-Sassnitz route.

Chief executive Carl-Johan Hagman said: “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.”

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The company said the changes mean a direct increase in fuel costs of more than £100,000 per day, or around £41m a year, as a result of having to use 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 Mr Hagman.

The company said that since 2005, it had worked “diligently” to reduce its environmental impact with a comprehensive Energy Saving Programme which has successfully reduced vessel energy consumption by around 2.5% every year since. In parallel with the change to low-sulphur oils, Stena Line has also been 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,” said Mr Hagman.

The new Sulphur Directive requires ships to use bunker fuels with sulphur content below 0.1%, or use abatement methods to comply with the sulphur cap. The European SECA includes the English Channel, North Sea and the Baltic Sea.

Stena Line is a Swedish family-owned business which operates about 40 vessels on 23 routes within Northern Europe.