Exhaust Gas Emissions – Impact on Cruise Industry

New report to analyse potential impact of IMO fuel emission regulations upon cruise ship operators

Limits set out by the Marine Environment Protection Committee will reduce the maximum levels of sulphur in marine fuels to 0.1% and will come in to force in 2015.

This regulation is a positive step towards improving the environmental reputation of the maritime industry.  However it also presents a significant challenge to the cruise industry, which has enjoyed an exceptional rate of growth in recent years.

The costs of low-sulphur fuels are set to rise and it remains to be seen what, if any, market-based mechanisms and incentives will be put into place to encourage emission reductions and soften the economic impact on operators.  Cruise lines now have three years to come up with a technological solution to the dilemma of regulations which will be expensive to adhere to.  Most major cruise lines already use fuel efficiency monitoring systems to maximise their fuel consumption, and unless a similar method of reducing and regulating the emission levels of high-sulphur bunker fuels is discovered cruise lines will be forced to purchase and use more lightweight fuels, causing prices to skyrocket and resulting in massively elevated expenditure.

Cruise lines will be left with little option if a technological miracle is not achieved and will be forced to significantly adjust their business models, perhaps even passing on this reduction in profits to the consumer.

It is of high importance to understand how the industry will respond to these new regulations.  Tony Peisley, an expert cruise industry consultant, has produced a report at the centre of which is an evaluation of the impact of the new low-sulphur fuel requirements on the industry as well as projecting the industry’s plans for the second half of this decade.

Cruising Through the Perfect Storm will be published on May 31st and will feature 300 pages of analysis, including 200 pages of industry statistics.  As well as its focus on the impact of fuel regulations, chapters will include an evaluation of the financial performances of the major cruise companies; a survey of shipyard cruise ship orderbooks; detailed reviews of source markets; comparisons of economic impact studies for cruise industries and destinations; and an overview of global cruise infrastructure developments.  Along with this are three new chapters on: the potential of China; river cruising; and also the implications for the industry in light of the Costa Concordia tragedy.

Copies of the report can be ordered here.