Abstract

Introduction

The International Maritime Organization and the European Parliament (EP) have stated that ships must lower sulphur emissions significantly in a specific region in Northern Europe, that is, in the Sulphur Emission Control Area (SECA), where sulphur content in bunkers is not allowed to exceed 0.1 percent.  The Nordic companies have been examined somewhat marginally from the point of view of the SECA-directive, and how it will affect the cost-efficiency of the industry.

Methods

The research data contains information about export to four large European countries that form the biggest markets in Europe for the case mill. The transport costs (freight costs per ton) were taken from the mill database on the customer level. The actual and forecasted mill data was copied into Excel spreadsheets for analysis.

Results

Results of this case study strongly indicate that the sulphur directive has direct impacts to the economy of the Nordic bulk industry. When the bunker fuel prices increase from the year 2015 onward, it reflects directly to sea freight prices in the SECA-region. This will noticeably increase the total transportation costs per ton. The sulphur directive will be an additional cost burden for the Nordic industry, which in turn is something that from 2015 onward local European paper mills and other manufacturing industries will benefit from.

Conclusions

The sulphur directive will probably indicate that from 2015 onward Central European paper mills and other manufacturing industries will benefit from outside the traditional business environment. The impacts of the sulphur directive will vary heavily from market to market and transportation costs from Finland to Europe can increase by average more than 20 percent in €/t; this can also be an underestimation. Profitability can drop by tens of percentage due to more expensive logistics. Logistics costs’ percentage in turnover will increase in the Nordic countries, but existing low oil price (2015) will mitigate the expected price increase of the MDO in the near future.

Keywords: Sulphur directive, SECA, Paper industry, Transportation, Costs.

Article type: Case study