Mon 10 Mar 2014 12:18

Surcharge heads-up: Bunker costs will 'substantially increase', says shipper


Shipping firm highlights the challenge it faces in educating the market about higher fuel surcharges as a result of increased bunker costs.



Irish Continental Group (ICG) - a Dublin-headquartered business that specializes in operating roll on/roll Off passenger, freight and container freight services on routes between Ireland, the United Kingdom and Continental Europe - has warned that it expects bunker fuel costs to increase 'substantially' in 2015 as a result of the EU Sulphur Directive, highlighting the challenge it faces in educating the market about the subsequent rise in fuel surcharges.

In a statement, ICG said: "A further challenge will be to educate the marketplace regarding the effects of the EU Sulphur Directive which will come into effect for all of Eucon's operations from 1 January 2015. The effect will substantially increase the cost of bunker fuel and will result in increased fuel surcharges. This increased cost will have to be borne by the end customers. This action will be necessary in order to maintain a viable freight network for the benefit of Ireland's exporters and importers."

Under existing regulations, global limits on the sulphur content of marine fuel are set to be reduced from 3.50 percent to 0.50 percent on January 1, 2020.

From January 1, 2015, sulphur limits within Emission Control Areas (ECAs) covering the Baltic, North Sea, North America and the Caribbean Sea will be cut to 0.10 percent. As a result, shipping firms operating in ECAs will be given the choice of either investing in scrubber technology in order to be able to continue burning marine fuel with a sulphur content above 0.10 percent, or switching to using more expensive marine gasoil (MGO).

In its latest financial results, ICG revealed that its ferries division, which comprises Irish Ferries - the leading ferry operator to and from the Republic of Ireland and the group’s ship chartering activities - achieved an operating profit (before non-trading items) of €24.9 million last year compared with €22.4 million in 2012. Revenue in the division was 1.1% higher than the previous year at €161.7 million.

ICG said that the increase in profit was due principally to increased freight revenue and lower bunker fuel costs, partially offset by reduced passenger revenue.

Fuel costs for the ferries division were down €3.5 million (8.9%) to €35.8 million in 2013. Revenue in the first half of the year was virtually flat at €69.4 million (2012: €69.5 million), while the second half saw an increase of 2.0%, to €92.3 million (2012: €90.5 million).

Meanwhile, fuel costs for the container and terminal division declined by 6.5% to €13.0 million (2012: €13.9 million). Revenue for the division increased to €104.3 million (2012: €97.4 million). Operating profit was up 24.4% to €5.1 million (2012: €4.1 million) and overall container volumes shipped rose by 10.4% compared with the previous year at 279,200 teu (2012: 252,900 teu).

Overall earnings before interest, taxes, depreciation, and amortization (EBITDA) for ICG in 2013 rose by 7.4%, to €49.2 million. This was said to be mainly due to higher freight volumes in both RoRo and LoLo and lower fuel costs (down €4.4 million to €48.8 million). Revenue for the year was up 3.4% to €264.7 million. Earnings before interest and taxation (EBIT) increased by 13.2% to €30.0 million.

Commenting on the results, ICG said: "2013 was a successful year for the Group with a solid financial and operational performance in a competitive passenger and freight market place. The improving economic outlook in Ireland has encouraged us in our recently announced investment in the charter of an additional vessel, the Epsilon, which has been trading since mid December. RoRo freight volumes are up 18% year on year, to date, despite adverse weather conditions which have led to cancelled sailings."

Opening of the IMO Marine Environment Protection Committee (MEPC), 83rd Session, April 7, 2025. IMO approves pricing mechanism based on GHG intensity thresholds  

Charges to be levied on ships that do not meet yearly GHG fuel intensity reduction targets.

Preemraff Göteborg, Preem's wholly owned refinery in Gothenburg, Sweden. VARO Energy expands renewable portfolio with Preem acquisition  

All-cash transaction expected to complete in the latter half of 2025.

Pictured: Biofuel is supplied to NYK Line's Noshiro Maru. The vessel tested biofuel for Tohoku Electric Power in a landmark first for Japan. NYK trials biofuel in milestone coal carrier test  

Vessel is used to test biofuel for domestic utility company.

Pictured (from left): H-Line Shipping CEO Seo Myungdeuk and HJSC CEO Yoo Sang-cheol at the contract signing ceremony for the construction of an 18,000-cbm LNG bunkering vessel. H-Line Shipping orders LNG bunkering vessel  

Vessel with 18,000-cbm capacity to run on both LNG and MDO.

Stanley George, VPS Group Technical and Science Manager, VPS. How to engineer and manage green shipping fuels | Stanley George, VPS  

Effective management strategies and insights for evolving fuel use.

Sweden flag with water in background. Swedish government bans scrubber wastewater discharges  

Discharges from open-loop scrubbers to be prohibited in Swedish waters from July 2025.

The ME-LGIA test engine at MAN's Research Centre Copenhagen. MAN Energy Solutions achieves 100% load milestone for ammonia engine  

Latest tests validate fuel injection system throughout the entire load curve.

Terminal Aquaviário de Rio Grande (TERIG), operated by Transpetro. Petrobras secures ISCC EU RED certification for B24 biofuel blend at Rio Grande  

Blend consisting of 24% FAME is said to have been rigorously tested to meet international standards.

Avenir LNG logo on sea background. Stolt-Nielsen to fully control Avenir LNG with acquisition  

Share purchase agreement to buy all shares from Golar LNG and Aequitas.

Seaspan Energy's 7,600 cbm LNG bunkering vessel, s1067, built by Nantong CIMC Sinopacific Offshore & Engineering Co., Ltd. Bureau Veritas supports launch of CIMC SOE's LNG bunkering vessel  

Handover of Seaspan Energy's cutting-edge 7,600-cbm vessel completed.


↑  Back to Top


 Related Links