EURO ECA Inspections Jun 2014

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Shortsea-Euro June 2014 SeaIntel Maritime Analysis

ECA-Zones: Comply or pay?

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Alan MurphyCOO and PartnerSeaIntel Maritime Analysis

June 10th, 2014Shortsea-Euro


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Agenda

Low-sulphur regulations and ECA-zones

Fuel inspections

Fine sizes vs potential savings

Will the ECA-zones lead to more transshipment?

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Low-sulphur regulations and theECA-zones

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Low-sulphur regulations and the ECA-zones

IMO agreement reached in 2006 -> The Baltic Sea became

the first fully SOx Emission Control Area (SECA)

In 2007 the North Sea and the English Channel became thesecond SECA-zones

July 2010 the agreement came into effect, which lowered themaximum allowed sulphur content from 1.5% to 1.0%

On January 1st 2015 this threshold will be lowered to 0.1%


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Low-sulphur regulations and the ECA-zones

Increase the bunker price $180-280 per ton

The new regulations are expected to give significantpollutant emission reductions from the shipping sector.

Emission reductions of more than 90% for SO2 and up to80% for PM (particulate matter) are predicted for the Balticand North Sea.

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Fuel inspections

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Fuel inspections

Two sorts of fuel inspections fuel log inspections or actual

sampling of the bunker fuel

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# fuel samples taken 2013

Country Samples

Denmark 74

Sweden 210

Germany a few*

Netherlands 90

UK 1177

Finland 20

Poland 330

Estonia 30

Norway 60

Lithuania 60

Subtotal 2051

Estimates

France 500

Belgium 60

Latvia 30

Total 2641

*Germany is based on 2012 figures, as number

of 2013 inspections has not been released yet.

We estimate that it means thatroughly 1% of all commercialvessels are inspected bysampling every year

This seems like a fairly highnumber, and it is also mainlykept at this level as the Britishauthorities say they do almost1200 inspections a year.

Sweden, Finland and Norway allplan to increase the number ofinspections in 2015


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Fuel inspections

Only Sweden and Lithuania said they performed inspections

at high seas

Sweden and Denmark are looking into alternative inspectiontechnologies Sweden: Good results with testing the smoke from the vessels by flying

over them in helicopter.

Denmark: Will try to use unmanned drones to test the smoke Denmark: Institute a sniffer on the Great Belt Bridge

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Country Fines

Denmark

Equal to the cost

advantage thecarrier had on that

voyage

SwedenWill be establish

when the firstcase goes to court

Germany 2,000-5,000 Euro

Netherlands [Declined to

comment]UK Up to 50,000

FinlandWill be establish

when the firstcase goes to court

Poland Up to 45,000 Euro

Estonia Up to 2,000 Euro

Norway Start at 10,000Euro

Lithuania

Up to 1,500 Euro,plus the price of

taken proper fuelon board

Significant differences in the finelevels

Fines do match the potential savingsof not complying

The authorities do have othersanctions than fines

Potential savings (one way)

Destination Savings (Euro)

Rotterdam 7,500

Hamburg 12,000

Gdansk 21,000

St. Petersburg 28,000

An added cost of 180 USD/ton for 0.1% sulphur

fuel has been used.


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Will the ECA-zones lead to moretransshipment?

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Based on a 14.000 TEU vessel doing 16 kts, and turned-

around in Rotterdam instead of doing a second call inHamburg as well

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Annual fuel cost saving


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Only if 1,500 TEU or less has to be moved from Rotterdam

further onwards to Hamburg is the transshipment scenariorealistic

Otherwise will the added handling costs at the portssuperseed the savings

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Cost savings per TEU


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Savings per TEU on the distance cut out of the ECA routing

for the mother vessel E.g. is the distance from Rotterdam to Gdansk and back

1600 nm

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Cost savings depending ondistance sailed


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Conclusions

Fines for non-compliance with the low-sulphur regulations do

not match the potential savings

Unless inspections are conducted more often, especially at highseas, some carriers may be tempted to choose the non-compliance alternative

The low-sulphur regulations could mean that we end up in asituation where non-complying carriers will get a competitiveadvantage

At least the Danish and Dutch Maritime authorities are aware ofthese problems, and are trying to work out a solution with therelevant authorites around the ECA-zones

The ECA-zones will have minimal impact on the transshipmentvolumes

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EURO ECA Inspections Jun 2014

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