By burning fossil fuels containing sulphur, toxic sulphur dioxide is released which is a major air pollutant. Because ships are the prime source of sulphur dioxide the International Maritime Organization (IMO) and the European Union have been working together on a new legislation for several years.
In force from 1 January 2015 a new European directive (2012/33/EU) requires a drastic cut in sulphur emissions from all vessels operating in the Northern European Seas. This new legislation forces all ferries on the North Sea, Baltic Sea and the English Channel to use fuel with a maximum of just 0.1% sulphur content – down from the current 1% limit – or adopt alternative solutions that achieve an equivalent effect.
To comply with the obligated reduction in sulphur dioxide ship operators can chose to use Marine Gas Oil instead of Heavy Fuel Oil. The costs of Marine Gas Oil are 50% higher than the Heavy Fuel Oil which ship operators are currently using. Besides that, the current global supply of Marine Gas Oil is less than Heavy Fuel Oil which could lead to an increase in prices. On the other hand if refineries choose to support the increased demand of Marine Gas Oil it will lead to lower supply and higher prices of other fuels such as diesel which is an unfavourable outcome for road transport.
Ship operators also have the option to use alternative fuels but this requires uneconomically expensive conversions to existing ships. Using filtering equipment to dilute exhaust gas emissions is also very expensive and will take up a lot of space making it uneconomic for smaller ships. Whatever the solution adopted by ferry operators the increase in operating costs will be passed on in full to their freight and passenger customers.
Higher ferry prices, unprofitable route closures and reduced sailing frequencies will have a direct detrimental effect on the entire road transport sector according to the ferry companies. There is a realistic chance that road mileage will increase due to route closures or reduced sailing frequencies which will lead to a further congestion on the European roads.
Although the exact financial consequences for the road transport sector are not intelligible yet, an increase in transport costs for consignors - to Great Britain and Ireland amongst others - effective from January 2015 is inevitable.
Alongside the estimated cost increase for international road haulage of 1.8% in 2015 in comparison with 2014, the NIWO (National and International Road Haulage Organisation) expects an increase in transport rates of 3.6% due to the new sulphur legislation as published in their annual NEA rapport (in other words 5.4% in total).