Increase Shipping Costs Expected To Drive Prices Higher
As the territory prepares for the festive season and the increase shopping that comes with it, there are concerns that increase shipping fees will drive further price increases for basic goods.
Shipping costs is a sore point for the Territory and is often the reason provided in response to the question of “why is this so expensive”in the BVI.
Now shoppers can expect further price increases this Christmas as shipping companies serving the BVI and those plying routes around the world commence compliance with the International Maritime Organization (IMO) 2020 sulfur emissions regulation that is slated to take effect January 1, 2020.
This regulation was put in place by the IMO as an environmental protection measure. It seeks to prevent or curtail air Pollution from ships through the implementation of means to control airborne emissions of (sulphur oxides (SOx), nitrogen oxides (NOx), ozone depleting substances (ODS), volatile organic compounds (VOC) and shipboard incineration) from ships.
All of these substances are said to contribute to local and global air pollution, human health issues and environmental problems. Therefore, the IMO through its regulation is aiming to reduce sulphur oxide emissions to a new global limit from 1st of January 2020. This new global limit on the sulphur content will be 0.50% m/m.
This new regulation has brought with it an increase in shipping cost as the shipping companies prepare to deal with fuel costs variables and implementation requirements. For example, global shipping giant Maersk Line disclosed that its extra fuel and compliance costs would exceed USD 2 billion based on expected difference in price between the current 3.5 percent bunker fuel and the compliant 0.5 percent.
As a result, Maersk and a number of other shipping companies have decided to cover the cost of adhering to the regulation by implementing a surcharge. It is this surcharge that is being implemented even by companies servicing the BVI and is expected to have a ripple effect here.
One such BVI bound company that has implemented the surcharge is Tropical Shipping.
Tropical announced since September that its customers should take note of the increase as it will become compliant from November.
The company said: “As previously announced, the International Maritime Organization (IMO) 2020 sulfur emissions regulation will take effect January 1, 2020. To ensure compliance with the new regulation, Tropical will have to begin purchasing and burning the Compliant Fuel on November 3, 2019. This is due to the vessels requiring a minimum of two (2) cycles of fuel through their storage tanks to remove the fuel being used today.”
In noting that in coming days it will be implementing the fee increase Tropical announced: “As a result, our Bunker surcharges will increase on November 3, 2019, in accordance with the methodology that was announced this past July.”