Feature, Freight News, Sea

Plan now to avoid rate rises, urges forwarding boss

[ November 26, 2014   //   ]

Shipping costs could increase by as much as 10 or even 20% as a result of the new SECA low emission shipping area in North Europe, warns David Williams, managing director of Rhenus UK (pictured). The forwarder is telling its customers that there will be an “unavoidable increase in sea freight costs over the next few months“ and is urging them to discuss their long-term export and import patterns now to allow plans to reduce potential price increases wherever possible.

He adds: “Rhenus has adopted an up-front policy, contacting customers proactively, to enable as much pre-planning to take place before these costs become unavoidable. Plus with one of the largest networks in Europe, Rhenus is able to create the shortest supply chain resulting in direct savings for the customer.”

Environmental laws derived from Marpol, due to come into force next year could create a headache for freight forward planners, according to Williams. The legislation to reduce the sulphur dioxide (SO2) content of bunker fuel from 1.0 to 0.1% from January 2015, is estimated to add €3 billion to North European shipping’s annual operating costs, which will inevitability be reflected in an increase in sea freight rates.

All the various options, such as switching to low sulphur fuel or liquefied natural gas (LNG), methanol or exhaust scrubbers will cost money.

The new rules could even lead to a rise in road transport emissions due to logistics managers choosing short sea passages and longer road routes to try and reduce shipping charges, “directly undermining the logic behind the legislative change.”  

A recent report from AMEC estimates job losses in the UK of approximately 2,000. Experts also anticipate an increase of between 1.3 and 3.6 million tonnes of freight coming back onto European roads as a result of the SO2 legislation.

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