This study finds that the likely cost impact of Arctic HFO ban will be small for shipowners and/or cruise passenger. Notably, if the ban were already in place in 2018, the price of average cruise passenger ticket would go up by only €7/passenger per day (assuming full costs pass-through).
This price increase would be equal to the price of a glass of wine sold on board of MS Rotterdam. If the ban enters into effect in 2021 as proposed by Finland et al. (MEPC 72) the price increase per passenger ticket would be €5/day (assuming full costs pass-through), which is comparable to a price of burger sold on board.
Lower additional costs in 2021 could be explained by the forecasted reduction in price difference between high Sulphur HFO (default fuel) and cleaner marine gas oil (to be switched to in case of HFO ban).
According to T&E, the analysis shows the Arctic HFO ban can be implemented immediately with a insignificant impact on the cruise industry. Such trivial increases in ticket prices for this luxury business should be acceptable for cruise passengers who, in growing numbers – up by 20% in the Norwegian port of Svalbard in 2017 – are paying to see the pristine Arctic environment.
These findings lead us to conclude that Arctic HFO ban can be implemented immediately with limited impact on cruise industry. Considering the luxury nature of cruise shipping, any (small) increase in ticket prices should be acceptable for cruise passengers, especially considering that these costs would serve to the protection of the pristine environment that underpins the very growth in this industry segment.
Last April, IMO agreed to move forward on developing a ban on HFO from Arctic waters on the basis of an impact assessment. Currently, the IMO is inviting submissions on how to assess the impact of the HFO ban on communities and operators in the Arctic. It will be discussed during the next MEPC 73 in London in October.
Find more on the MS Rotterdam case study herebelow: