Hapag-Lloyd Expects USD 1 Bn in Extra Fuel Costs from 2020 Sulphur Cap

German liner company Hapag-Lloyd is facing around USD 1 billion of extra fuel costs stemming from the new sulphur regulations entering into force in 2020.

Speaking at today’s TradeWinds Shipowners Forum, being held as part of SMM trade fair program, Rolf Habben Jansen, CEO of Hapag-Lloyd, said that the fuel costs will rise significantly due to the enforcement of the 2020 sulphur cap.

“We have a real problem in our hands, and we need to figure out what are we going to do about it,” Jansen said.

Hapag-Lloyd revealed in its half-year results for 2018, that it was preparing two pilot projects as a way of getting ready for the sulphur cap.

Namely, the company is testing scrubbers on two large containerships and exploring the benefits of LNG as fuel.

The testing of scrubbers is set to take stage in the beginning of 2019, and based on the results, the company may decide to invest into the technology a bit more.

But in the end, Jansen estimates that there will a small percentage of ships in the global fleet with installed scrubbers on board by 2020.

As for the LNG, Jansen said today that the company was exploring the potential of retrofitting some of the boxships acquired through the merger with United Arab Shipping Company. UASC has a series of seventeen 15,000 TEU vessels that are LNG-ready.

“If the first project proves to be successful, we may convert the other 16 vessels to LNG as well,” Jansen explained.

However, taking into account that the endeavor requires a significant investment, and the fact that the availability of LNG as fuel is limited, at least until 2020, companies around the world will end up switching to a different type of fuel, Hapag-Lloyd’s CEO estimates.

“We have to take this as the base case as we move forward. This also means that we have to find the mechanism to cover these fuel-related costs, because the current formulas that we have are simply not adequate,” he added.

World Maritime News Staff; Image by WMN