IMO’s New Regulations Turns Into A Challenge For The Greek Ferry Operators
Fleet renewal, oil crisis and the new IMO fuel regulations are gradually become a challenge for the further development of the Hellenic Coastal Lines.
More specific the IMO’s new fuel regulations for low sulphur content (3,50% to 0,50%), which will come into force on 1 January, 2020 have upset the Greek ferry operators as both ship owners and fuel companies are very anxious in order to manage to address the smooth transition to the new low-sulphur fuels in a very short timeline.
The additional cost that is expected for the Greek ferry operators is estimated to reach EUR 70 million per year, while economic analysts predict that it can even reach 100 million. All this burden will fall on the back of a domestic sector that has struggled for many years.
According to the Association of Passenger Ship Operators (SEEN) data, within the Greek Ferry Scene operate 74 ferries, 53 of which are conventional ferries and 21 high-speed crafts. From these, only ten are over 40 years old, while at the end of the next decade 31 of them will be over 40 years old. Fact which means that their replacement will be considered to be necessary.
The Chairman of the Association of Passenger Ship Operators, Mr. Michalis Sakellis, made some interesting points in order to highlight the situation within the Greek Ferry Scene:
- It is well known that the main economic problem of almost all ferry operators, particularly in recent years lies in the constant rise in oil prices.
- From January 1, 2020 the cost of fuel is expected to raise significantly (EUR 60-70 million per year).
- Ferry operators should discuss with the government the possibility of reducing VAT rates to 13% or even 6% like other countries of the European Union that have ferry system. Also, they should discuss the possibility of securing European funds for the financing of public service routes, which will certainly help Greek ferry operators to finance the high costs of their ferries’ compliance to the new regulations. Otherwise there will be a potential increase in ticket fares.
- Scrubbers cannot be installed on all Greek ferries as there are technical problems. Old ferries cannot be converted as there is no commercial logic on that. Ferry operators will not take that money back from such an investment.
- Scrubbers will mainly be installed on ferries that have high fuel consumption. However, in that way the company will have a big investment that it has to support at any cost. So, the solution will inevitably be the VAT reduction.
- Minoan Lines is the only ferry operator in Greece today that has installed scrubbers on its three large cruise ferries that ply on the Piraeus-Heraklion and Piraeus-Chania lines.
- If there is no reaction with direct measures, then the Greek Ferry Scene will kneel down and the Hellenic Coastal Lines will gradually be lost. That sector contributes annually to the Greek GDP 13 billion euros or 7.3%.