Additional cost for ULSFO compliance

Slide1We cannot put price on nature and saving environment is never too expensive.  Saving the environment, the planet, the eco system is not only government’s job; private partnership is always required where private fitments are there contributing to damage of nature. It is either through self initiative or through forced national or international regulations.

With New regulations for ULSFO compliance into force from 1st January 2015, ULSFO cost is 50-55% more expensive than normal IFO 380; as of September 2017@Rotterdam , ULSFO price is $490/m ton, where as IFO 380 is costing $320/mtons.

ULSFO cost of compliance 2015-2016;

  • A big container vessel is consuming approximately 150 m tons of fuel /day,
  • 2-3 days transit to ECA area on one way, so total transit days – 5-6 days in one call to EU area.
  • Vessel calling from China to Europe or USA will occur extra cost every time in the tune of USD170X5daysX150 tons = USD127000.
  • Assuming 6 calls to EU each year, additional cost of fuel will be approximately USD 700,000-1,000,000 per vessel.

Besides this there are one time cost of installation of separate ULSFO system, chiller plant etc  for older vessels, costing approximately USD100,000.

If we consider only sea going vessels arriving port of Rotterdam in year 2015 & 2016  , 56000vessels alone called port of Rotterdam in 2015 and 2016.  Considering all other ports in EU and USA (ECA), total number of seagoing vessels arriving these ports will not be less than 200,000 in 2 years. Estimating average additional ULSFO fuel cost of USD500,000 / vessel, in last 2 years 500,000X200,000 = USD10,000,000,000 = USD 10Bn has been spent for ECA compliance.

Above calculation is estimated, however close approximation, and total additional cost of fuel consumed to comply with ECA regulation is enormous and will have definitely a great impact on freight and profitability of ship owners.

However, it will be  good for environment and our coming generation in long run.