Shipping companies fear higher freight costs due to carbon tax

The Global Shippers Forum (GSF) is a global business organization which represents cargo owners exporting and importing to international supply chains. The reason is the new carbon tax that will be discussed at this week’s meeting of the Marine Environment Protection Committee (MEPC) at the International Maritime Organisation (IMO) and it seems that it will increase freight costs for shippers beyond the already record levels.

After decades of efforts by the IMO to reach an agreement on the so-called IMO 2023, a set of energy efficiency measures for existing ships, which will take effect next year, MEPC will now consider a further proposal for the introduction of a carbon tax on bunker fuel.

Such a tax will be imposed as an incentive to switch to fuel options with lower carbon emissions and could eventually double the current price of traditional fuels.

GSF, in trying to mitigate the effects, urges regulators to ensure that the ability of shipping lines to remove older capacity from the market, which they consider uneconomical to upgrade to progressively more demanding levels of performance, is not used as a disguised mean for capacity management resulting in higher freight rates.

James Hookham, GSF director: “Shippers will be forgiven for thinking that the proposal, and its consideration at the IMO will inevitable result in still higher freight rates. That’s because the shipping industry has a very efficient mechanism for passing through higher fuel costs in the form of BAF; a surcharge to cover variations in fuel price. There are few reassurances in the existing proposals that a Carbon Tax won’t just be passed through as an added cost for shippers.”


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