Carriers vow to continue use of low-sulphur fuel

Several shipping lines using low-sulphur fuel while berthed in Hong Kong have indicated they will continue using the costly fuel next year even though the government has failed to introduce laws mandating its use.

Eight carriers making regular calls to Hong Kong said they still plan to use the low-energy fuel after a clear-air pact expires in December in an effort to improve Hong Kong's polluted air.

This is despite the container shipping industry still reeling from the impact of the global downturn, with leading carriers set to see loses of US$5.2 billion last year.

Low-sulphur diesel adds US$600,000 to US$1.5 million to a line's annual fuel bill compared with cheaper but more heavily polluting marine diesel.

Carriers that use low-sulphur diesel will start to receive payments in June or July from a HK$260 million three-year government subsidy, However, the cash will only cover 30 per cent to 50 per cent of the extra fuel cost. There will also be a 50 per cent reduction on port dues for ships using low-sulphur diesel.

The firms comprise Orient Overseas Container Line, Swire's China Navigation, Taiwan's Yang Ming Marine and European operators, Maersk, CMA CGM, Hapag-Lloyd and Hamburg S?d, which has a Brazilian offshoot, Alianca.

They are among the 17 shipping lines that signed the Fair Winds Charter in late 2010 agreeing to use low-sulphur fuel for two years while berthed in Hong Kong.

The Post contacted the lines and of the 10 that replied before the holiday, eight saw no reason to stop using low-sulphur fuel, while two were unable to give an immediate answer.

Tim Blackburn, managing director of China Navigation, said the use of the fuel was part of the firm's commitment to 'leadership in providing sustainable shipping solutions'.

Joseph Tsao, managing director of Yang Ming Marine in Hong Kong, said the company 'will continue to use low-sulphur diesel oil now and after the expiry of Fair Winds Charter' at the end of the year.

A spokesman for Hapag-Lloyd in Germany added: '[The company] welcomes the support by the government for the Fair Winds Charter programme and we don't see any reason to stop our commitment ... at the moment.'

Tim Smith, chairman of the Hong Kong Liner Shipping Association and head of Maersk in North Asia, said he planned to poll association members to see which carriers would continue using low-sulphur diesel.

The cleaner fuel has a sulphur content of 0.5 per cent or less compared with normal marine fuel, which has a sulphur content of 2.8 per cent to 4.5 per cent.

Roberto Giannetta, secretary of the association, said: 'Lines that continue or start to switch fuel will find themselves in a disadvantageous competition situation vis-a-vis those carriers who chose not to participate in this programme.'

He added: 'So, while our members have not given us any indication of whether they have reached a conclusion as to what is going to happen after December 31 ... the decision to continue switching fuel will not be an easy one so long as there is not a level playing field and/or the cost for fuel switch is not more fully recovered.'

As part of the charter, the firms outlined a six-point agenda which they hoped would be implemented. Top of the list was for the government to work with the Guangdong authorities to introduce laws requiring the use of low-sulphur fuel in the Pearl River Delta by the end of the year.

They also urged the government to provide incentives to encourage the use of low-sulphur fuel and hoped container terminals would use less polluting trucks and cargo handling equipment.

Officials from both sides have held talks on ways to introduce controls on ship exhaust emissions using low-sulphur fuel. But these will not be in place by the end of the year.