(Reuters) – Some shipping firms will likely go out of business and others will be forced to close routes in 2015 when environmental rules on fuel oil are tightened in parts of Europe, a senior executive told Reuters.
“‘Low sulfur regulations can change the industry fundamentally’, chief executive of Danish shipping group DFDS A/S, said. ‘If the politicians maintain these plans, we’ll see routes being shut … and companies fail,’ said Smedegaard, interviewed in his office with views over Copenhagen Harbor and which is decorated with pictures of steam boats and sailing vessels.
“Smedegaard, born in 1962, was relaxed in discussing the impact of International Maritime Organization rules that will from 2015 dictate that shipping fuel sulfur content should be cut to 0.1 percent from 1.0 percent in coastal waters such as the North Sea, the Baltic and the English Channel. The European Union adopted the regulations last September … the new rules will have a major impact, as cleaner replacement fuels are around 40 percent more expensive.
“DFDS spends around 1.8 billion Danish crowns ($ 320 million) a year on fuel and has invested 400 million equipping eight of its ships with scrubbers – 70 ton devices that remove sulfur from exhaust gases. The new regulations allow for such solutions as long as they have the same environmental effect as using low sulfur fuel.
“But not all ships are able to use a scrubber and some are just too old to be worth lavishing millions of crowns on. DFDS is therefore considering relocating some vessels to southern Europe, where the regulations come into effect only from 2020.
“DFDS – which has a stock market value of just over $ 1 billion – has only one route in the Mediterranean, operating between Marseilles in southern France and Tunis in north Africa.
“‘The ships not equipped with a scrubber could be recycled to other areas, but we would need more routes,’ said Smedegaard, who was casually dressed in a light colored open-necked shirt and no jacket.
“Oil and shipping group A.P. Moller-Maersk last week sold its 31.3 percent stake in DFDS to a group of institutional investors and to DFDS itself.
“Despite shares worth 628 million crowns, DFDS says it still has a war chest which could be used for buying rivals. ‘If we find something that fits into our strategy and creates value for our shareholders we are ready,’ Smedegaard said.” –
[You don’t have a snowball’s chance in hell, Mr. Smedegaard. This whole environmental scam has been set up by folks with large enough “war chests” to force many, many firms to go out of business. And those folks will pick up the pieces without dipping into those “war chests”.]