International Chamber of Shipping (ICS) chairman Esben Poulsson fears the USD 50 bln operational impact and safety issues new Sulphur emission regulations will pose next year.
“Nevertheless, the industry still has operational and safety concerns relating to the worldwide availability of compliant and safe fuels as well as the realistic and pragmatic global enforcement of the regulation,” said Poulsson.
“The big unknown is what the precise cost of compliant low sulphur fuels will on 1 January, and in the immediate months beforehand as shipowners start ordering these fuels.”
He said that prices of low sulphur fuel “will certainly be much more expensive, than the residual fuel which the majority of ships currently burn, but with variations from region to region and port to port”.
“The impact will be significant, and whilst estimates vary, some analysts predict a collective cost to the global industry of something in the order of USD 50 billion per annum.”
But the Chamber fully supports the new regulations for a healthier environment and worked closely with regulators to prepare for implementation.
Poulsson is on the island to attend the Cyprus Shipping Chamber (CSC) 30th Annual General Meeting in Limassol on Thursday.
He praised the CSC as a “model member”, while calling for the lifting of restrictions imposed by Turkey on Cypriot-flagged ships to create a “win-win situation”.
The Chairman of the London-based ICS highlighted that the CSC is very effective in taking agreed ICS positions to the Cyprus Government.
“CSC is very much a model ICS member. This is one of the reasons that as Chairman of the ICS I have accepted to attend and address the CSC’s AGM at a special occasion in celebrating its 30th anniversary.”
He said Turkey’s embargo was bad for trade and international shipping.
“We believe strongly in a ‘level playing field’ for international shipping, and open access for international trade as being the means to ensure that world trade can be moved most cost effectively…we lobby strongly against any practices which represent a constraint on free trade in goods and services.”
Poulsson said prospects for rapid future trade growth look a little worrying, as global GDP growth is likely to be slower this year and decelerate some more next year.
Apart from the danger of the trade war between the US and China escalating, there are already signs that the rate of growth in China is slowing – with 2018 being the slowest year of growth since 1990, even if growth of 6.5% continues to look impressive.
“But if China catches a cold then so does shipping, and a lot will depend on the measures that the Chinese authorities take in response to any downturn so that the risk of a full-blown recession can hopefully be avoided.”
“There is risk that a full-blown trade war would impact on overall demand for shipping, increasing the danger of overcapacity and the return of unsustainable freight rates, especially as the sector is about to have to absorb the significant extra cost of compliance with the 2020 global sulphur cap.”
“Our real concern is how a trade war could affect sentiment in the wider economy…If it reduces investment and economic activity then we could have a serious problem…” (source CNA)
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