Chinese Bill Could Increase Shipping Costs in Hong Kong
A proposed law to control ship emissions in Hong Kong could result in price hikes for international shippers. The law would be the first jurisdiction in Asia to control sulfur content, according to the Hellenic Shipping News.
The bill would require all ocean vessels to switch to fuel with a maximum 0.5 percent sulfur content while docked in Hong Kong, with a violation of HK$200,000 ($25,759 in U.S. dollars) and six months in prison.
Officials are hoping the law takes effect on July 1. Low-sulfur fuel costs $200 to $300 more per ton than standard marine bunker, which is 3 to 3.5 percent sulfur and makes up 20 to 30 percent of total operational costs for an ocean carrier.
A manager for a European shipping line told the South China Morning Post that the shipping industry could not "bear the entire cost for clean air." The source added that the industry might implement surcharges like those in North America and Europe's emission control areas (designated areas that must comply with emission standards). There are currently three in the world-North America, the Baltic Sea and the North Sea.
Shipping lines have historically fined US$30 to US$90 per container on ships for the extra cost of clean fuel. According to the South China Morning Post, 19 shipping firms volunteered to switch to the low-sulfur fuel, and covered all of the extra costs, which reached an average of $2 million per year. They did not receive any cash subsidies from the city government until nearly three years later, which covered less than half of the extra cost.
Frankie Yick Chi-ming, a legislator for the transport constituency, told the Morning Post that this bill will add additional costs for all shipping lines that use the Hong Kong port. He hoped that the measures would be implemented at other ports at the same time—otherwise the Hong Kong port would lose valuable business to neighboring ports.
The Shenzhen government encouraged carriers to switch to the low-sulfur fuel last September, claiming it would cover up to 100 percent of the additional charge, but no action has been taken so far.