Cost to the shipping industry could be $50bn, says chief executive, and if it cannot be passed on, 'we're all going to go bust'
Customers must understand that the cap is contributing to the health of the globe, says Ikeda, and the extra cost if passed on to customers would be ‘pretty tiny, compared to the value of the cargo’
SHIPPING companies all face “going bust’’ as they struggle to meet new environmental rules for marine fuels, Junichiro Ikeda, president and chief executive of Japan’s Mitsui OSK Lines, told theFinancial Times.
The International Maritime Organization’s cap on sulphur content in marine fuel oil, cutting the limit from 3.5 per cent to 0.5 percent, comes into force in January 2020.
The cost to the shipping industry could be $50bn and will drive many operators out of business if the industry is unable to pass on the cost, Mr Ikeda told the newspaper.
“We’re all going to go bust,” he said.
Shipowners face having to switch to more expensive, higher-quality marine fuel, invest in emissions-cleaning “scrubbers” or use alternative fuels such as liquefied natural gas.
The OECD has said the cost of the cap for container shipping could be $5bn-$30bn.
Last month, consultancy Wood Mackenzie — which earlier this year said the cost of the new rules could be as much as $60bn — said only 80% to 90% of the shipping industry may comply with the upcoming 0.5% global sulphur cap.
Mr Ikeda believes “society as a whole” should help to fund the move to low-sulphur fuel.
Customers must understand “that this [cap] is contributing to the health of the globe,” he told the FT. He said the extra cost — if passed on to customers — would be “pretty tiny, compared to the value of the cargo”.
Mr Ikeda also commented on US steel and aluminium tariffs and a trade dispute with China.
He said a “tit-for-tat” escalation brings “a possibility that cargo volume is going to shrink dramatically”, the FT reported.