Independent journal on economy and transport policy
07:43 GMT+1
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The Global Shippers Forum fears that the decarbonization of shipping will bring another inflationary boost
The association urges the IMO to ensure that it does not lead to a further increase in freight prices and that costs are not passed on to customers
June 6, 2022
The Global Shippers Forum believes that in the proposal of the shipowning industry there are two risks. The first is whereas, under the pretext of withdrawing older ships from the market and uneconomic, shipping companies use capacity of hold in order to further increase the freight rates. Secondly GSF fears that shipping companies will transfer further costs in part or in whole on shippers through the application of the widespread Bunker Adjustment Factor (BAF), i coefficients of variation in the cost of fuel, and through the wave of suppressions for the introduction of low fuels sulfur content introduced in 2020.
"You will forgive the shippers - he put his hands forward the director of the GSF, James Hookham - for thinking that the proposal, and its examination at the IMO, will result inevitably in even higher freight rates. This - has explained - why the shipping industry has a very efficient mechanism to transfer the highest fuel costs in the form of BAF, the surcharge to cover changes in the price of fuel. In the current proposals - has Hookham pointed out - there are few reassurances that a carbon tax will not turn into additional costs for freight forwarders'.
"If the shipping industry takes the market-based mechanisms as a way to decarbonisation - hookham observed - then he has to shelter his own customers from their inflationary effects, otherwise emissions will be reduced by squeezing the demand for world trade rather than encouraging a breakthrough in fuels and propulsion technologies that is so urgent." To avoid this risk, the Global Shippers Forum urged the components of the MEPC to take due account of interest of exporters and importers, who are the driving force behind the international trade, and, in view of the large sums of money involved, to insist that whatever carbon taxation mechanism is absolutely transparent and fully analyzable.
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The Global Shippers Forum believes that in the proposal of the shipowning industry there are two risks. The first is whereas, under the pretext of withdrawing older ships from the market and uneconomic, shipping companies use capacity of hold in order to further increase the freight rates. Secondly GSF fears that shipping companies will transfer further costs in part or in whole on shippers through the application of the widespread Bunker Adjustment Factor (BAF), i coefficients of variation in the cost of fuel, and through the wave of suppressions for the introduction of low fuels sulfur content introduced in 2020.
- Via Raffaele Paolucci 17r/19r - 16129 Genoa - ITALY
