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05 October 2018

Law firm highlights shipping costs as shipowner calls for regulatory action

Moore Stephens sets out environmental regulation options, while shipowner at Malta Martime Summit says slow shipping 'realistic' option.

Vichaya Kiatying-Angsulee

The Moore Stephens OpCost 2018 report reveals that total annual operating costs in the shipping industry fell by 1.3% in 2017, compared with the 1.1% average fall for 2016.

Two options

For the third successive year, all categories of expenditure in 2017 were down, most notably insurance costs and stores. Richard Greiner, Partner, Shipping and Transport, says ‘overall, confidence in the shipping industry held up well in 2017, and has continued to do so this year. There remains an appetite for investment, and recourse to the necessary finance.’ Mr Greiner explained, ‘meanwhile, owners and operators are still pondering the optimum way to meet the challenge of complying with the IMO’s 0.50% global limit on the sulphur content of fuel oil used on board ships from 1 January 2020. Compliance with this regulation can be achieved either by switching to low-sulphur fuel or by installing the likes of scrubbers. The first option is expensive. The second is both expensive and disruptive and moreover will be accompanied by an increase in operating costs. Decisions will be influenced by individual risk profile and commercial strategy, but will undoubtedly be costly.’

Slow shipping

Speaking at the 2nd Malta Maritime Summit ,shipowner George Prokopiou said regulators should introduce mandatory slow steaming as a giant step towards long-term emissions reduction targets. In the past, slow steaming has been supported by some shipowners and environmental bodies, but Mr Prokopiou said ‘a more realistic solution’ was on offer by adopting a limit of 10 knots, ‘the result is tangible right from the first day’ and ‘without creating any further pollution nor increasing the incremental carbon footprint for the manufacturing of useless equipment.’ He was critical of scrubber regulation, arguing ‘shifting pollution from the air to the sea does not make sense’ and ‘there is nothing more polluting than recycling existing equipment because you don’t use it anymore.’

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