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Owner bets US$1.1 billion that eco rules will scrap 25pc of world fleet

GREEK shipowner Capital Maritime & Trading chairman Evangelos Marinakis says new environmental regulations will put thousands of ships out of business in the next two years, reports Bloomberg.

Mr Marinakis, who says new rules will roil global trade, is investing US$1.1 billion to upgrade his 71 tankers and box ships.

The rules, designed to clean up vessel emissions, will benefit more modern vessels and contribute to sending many older ones to the scrapyard, Mr Marinakis said.

"As much as a quarter of the current fleet could be scrapped," Mr Marinakis said. More than 20 per cent of the 95,000-ship global fleet is over 15 years old, too old for additional investments. "This could have an adverse impact on world trade," he said.

As of January 1, 2020, the entire fleet, handling about 90 per cent of global trade, must reduce the amount of sulphur emissions according to the UN's International Maritime Organisation (IMO) rules.

Said International Chamber of Shipping (ICS) policy chief Simon Bennett: "We expect full implementation in 2020, but there may be teething issues about the availability of the fuel at the port."

Said Wood Mackenzie refining, chemicals and oil markets vice president Alan Gelder: "The cost of moving things will increase as the vessels will be using more expensive fuel, and there will be fewer of them."

But major carriers association BIMCO (Baltic International Maritime Council) deputy secretary general Lars Robert Pedersen was not convinced.

"World trade is probably not being affected directly to any degree, simply because there is little alternative to seaborne trade," he said.

Ageeing, Brussels eco lobby, Transport & Environment's shipping expert Faig Abbasov said: "The high costs of fuel did not constrain world trade in any way a decade ago, before the 2008 financial crisis. Why would it do it now?"

Fuel prices in Rotterdam exceeded $700 a tonne in mid-2008 and again reached that level in March 2012, data compiled by Bloomberg show. Since then, they've declined to about $340 a tonne.

Less than a third of the world's merchant fleet are eligible to be fitted with scrubbers or technologies to meet the sulphur cap by 2020, according to Mr Marinakis. The company's $1.1 billion modernisation plan includes upgrades and new ships, allowing the vessels to be scrubber-ready and also to meet separate rules regarding water-ballast treatment.