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Growth in spite of SECA

Date: 10/06/2015

Predictions about the dramatic drop in volumes due to SECA (Sulpur Emission Contol Area) have been many. SECA requires that ships in the North Sea and the Baltic Sea keep their exhaust sulphur content below 0.1% and ship owners must buy a low surphur fuel that increases their bunker cost with up to 50%.

A Norwegian consulting group in October claimed that for Norway "Between 1 and 2 million tonnes of goods in the short term will be transferred from sea to road as a result of SECA. This corresponds to between 95 000 and 190 000 more truck loads annually on Norwegian roads." The volume represents 25% of the current container volume in Norway.

Meanwhile, oil prices have fallen dramatically and consequently the bunker price. This has given shipping companies the opportunity to offer the same rates as before. Admittedly, also the price of auto diesel has fallen, but this has so far not resulted in lower truck prices.

We have asked all the ports in the Oslo Fjord how their container volumes has evolved. The graph shows the results.

Despite dire predictions, teething problems with Yilport in the new container terminal in Oslo, and challenges with new volumes in Drammen, the first quarter of 2015 gave record volumes. Overall, cargo in containers passed 1 million tons. The Port of Drammen has experienced extraordinary growth with close to three times the volume compared to the average for the previous year, thanks to Maerks' cargo and continued growth for Tschudi Line. The Port of Oslo, who lost the Maersk volumes to the Port of Drammen, managed, in spite of this and in spite of teething problems with Yilport, almost to maintain the average volume for 2014. Grenland has also experienced solid growth with a volume that is 14% higher than the average for 2014. Also other ports have strong volumes.

In Western Norway, Risavika, the port of Stavanger, increased the number of tonnes in container by 27% for 1st quarter compared to the average for 2014, and in Bergen the increase was 15%. Ålesund lost 19% and in Trondheim, the volume remained almost the same as last year.

Currently, therefore, developments are positive and we are keenly looking forward to the coming quarters. The prospects may still be grim. The falling price for auto diesel may result in lower trucking prices. Also, the oil prices may increase again, although this does not seem very likely in the short term. We therefore hope that 2015 may prove to be as good as 2014 for shortsea shipping.

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