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Maersk's Fuel Costs to Jump by USD2bn amid 2020 Sulphur Cap
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Source:green shipping

The annual fuel bill of Danish shipping giant A.P.Moller Maersk is set to increase by USD2 billion a year, at least, amid rising costs from the implementation of the 0.5 percent sulfur cap in 2020.

Simon Bergulf, director for regulatory affairs at A.P. Moller-Maersk A/S, told Bloomberg that the issues stemming from the new regulations have almost created a perfect storm, taking into account the expected tight availability of compliant fuels and required investments in infrastructure and research.

As informed, the company spent USD3.37 billion on fuel last year, meaning the new regulations are likely to almost double these expanses.

Maersk plans to comply with the new rules by using low sulphur fuel. The company said earlier that it was not investing in scrubbers taking into account various operational concerns.

As part of its efforts to ensure availability of compliant fuel, earlier this month Maersk tamed up with Royal Vopak, an independent tank storage operator, on a project aimed at launching 0.5 percent sulphur fuel bunkering facility in Rotterdam.

Under the project, Maersk will be able to supply its ships with compliant fuel at Vopak's modified facilities at Vopak Terminal Europoort.

The 2020 sulphur regulation, which will ban ships from using any marine fuel with a sulphur content above 0.5 pct as of Jan. 1, 2020, is expected to impose a heavy burden on owners as the annual fuel costs for the shipping industry are likely to jump by up to USD60 billion, including by USD10 billion for the containership sector alone.

Fears have been raised that some owners might opt to dodge the regulations and not invest in compliant fuels as paying a fine for non-compliance would be much cheaper. Maersk CEO Soren Skou said earlier this year that the only way for creating a level playing field with the new regulation would be strong enforcement, including banning of non-compliant ships.

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