Stolt-Nielsen’s CEO, Niels Stolt-Nielsen, believes the costs stemming from the industry’s switch to compliant fuels as of January 2020, should be met by customers.
Namely, as of January 1st, 2020, all ships will have to consume low sulfur fuel with a sulfur content of 0.5%, down from 3.5% today, if not fitted with scrubbers.
Belgium’s shipowner plans to meet the new regulations by fueling its ships with marine gas oil (MGO) or other type of new fuels are under development by the oil companies.
“ Ships can fit in scrubbers, but realistically, as it stands today, around 5% of the global fleet has announced or has installed scrubbers. So a very small part of it, ” Stolt-Nielsen said in a conference call on Thursday, October 4.
“For us, if you take the current spread between MGO, and high-sulfur fuel oils (HSFO), based on our fuel consumption, if we have an additional USD 300 per tonne cost, our total cost per year is USD 150 million. So it is clear that unless we are able to pass that cost onto our customers, we will be going out of business very quickly. The industry will be going out of business very quickly.”
Stolt-Nielsen explained the move was necessary taking into account that the majority of the industry is losing money.
Container liners have already announced their plans to levy sulphur cap surcharges as of next year, a move which was not welcomed by shippers.
For the third quarter of 2018, the company reported a net profit attributable to shareholders of USD 3 million, after a USD 12.9 million negative impact resulting from a change in the accounting for the company’s investment in Avance Gas Holdings Limited. Revenue for the quarter stood at USD 543.1 million. Net profit was down when compared with a net profit of USD 9.5 million in the second quarter of 2018.
Net profit for the first nine months was USD 51.3 million, with revenue of USD 1.6 billion, up from USD 49.2 million, and revenue of USD 1.5 billion in the same period last year.