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Costs to consumer from shipping likely to rise despite weakening oil price

Costs to consumer from shipping likely to rise despite weakening oil price
UASC cautions that while lower crude oil prices could drive consumer demand, environmental regulations could take the edge off gains for shipping companies.

"Crude oil price is one thing, the price of fuel oil is another thing," Jørne Hinge, president and ceo of United Arab Shipping Company (UASC) told the keynote session at Seatrade Middle East Maritime in Dubai. Despite there being an expected drop in the price of crude oil, " there is a timetable for us to burn cleaner and cleaner fuel, therefore there will be a price increase to the consumer per unit."

Hinge warned that even with a weak oil price, cost increases could still find their way to be passed on to consumers as container lines burn ever cleaner and more expensive fuels.

"We have two areas now where we have the ECAs in service from January next year where we can only burn fuels of 0.1% sulphur, this basically means traditional heavy fuel is out of the question and we must burn diesel or gas oil fuels, so there is a price increase for everybody."

UASC is due to start taking delivery from Hyundai Heavy Industries later this year of its fleet of newbuild container vessels, including the world's first LNG-ready 18,000 teu ultra large container vessels.

"And this is just the beginning, we know that from 2020 right now the IMO directive is to burn only 0.5% fuel, so there will be an increase to the consumer regardless of the crude price."

Seatrade Middle East Maritime opened today in Dubai and runs until 30 October at the Dubai International Exhibition and Convention Centre.