Low Sulfur Requirement

2014-07-02

Commencing January 1st 2015 all Ocean Carriers operating within the North American and Puerto Rico & USVI Emission Control Areas (ECA) under MARPOL Annex VI will be required to utilize fuel with significantly lower sulfur content. As of 2012, vessels currently operating in these areas currently use 1% m/m (10,000 ppm) low sulfur fuel. On this day, the sulfur content of the fuel oil used on board ships operating within the ECA may not exceed 0.1 % m/m (1,000 ppm). Ships will be required to maintain and, upon request, make available to Port State Control authorities the information regarding compliance with this regulation. The boundaries of the North American and Puerto Rico & USVI ECA are defined in IMO MEPC.1/Circ.723 and outlined below:

Image Credit: EPA
Crowley, as a steward of the Environment will comply fully with this new regulation and welcomes the initiative. The ability to comply with this reduced sulfur emission requires the conversion from low sulfur fuel oil to ultra-low sulfur diesel, which comes with substantially higher cost.

Currently, the per container cost impact to our bunker fuel levels is uncertain, however we anticipate that increased demand of ultra-low sulfur diesel (essentially the same fuel currently used today in tractor trailers) could drive the price per metric ton upwards and increase cost significantly. This would be in addition to the premium already paid on low sulfur fuel oil. Once clarification of this cost is available we will advise accordingly.

Our San Juan service has been using ultra-low sulfur diesel since 2012. However, the purchase price of that fuel could also be affected by increased demand.
For further information on this subject, please refer to the below links:

EPA – Emission Requirements

Similar to the 2012 conversion from IFO (intermediate fuel oil) to low sulfur fuel oil, we anticipate the additional costs of purchasing this fuel to be realized weeks or perhaps months ahead of the January 2015 implementation date. This transition period is required to remove higher sulfur fuel from storage tanks in advance of implementation date. We will try to furnish as much information as possible in the days and weeks ahead leading up to this milestone date of January 1st 2015.

If you have any questions please, contact your sales representative or the Customer Care Department at 1-800-276-9539.