The new maritime organisation convention, which aims to radically cut sulphur emissions by 80%, will require international shippers to switch over to fuels with a maximum sulphur content of 0.5% — down from the current 3.5% cap.
Some shipping companies have already fitted ‘‘scrubber’’ technology to clean the ships’ exhausts, allowing them to continue burning the higher sulphur fuel, while others are converting to run on liquefied natural gas, which is sulphur-free.
However, the New Zealand Forest Owners Association says marine fuel costs globally could balloon by 50% from 2020, settling back down by 2022 as production of more refined low-sulphur fuels increases.
Rayonier Matariki Forests’ (RMF) shipping adviser Cecil Grant says while coastal shipping does not yet have to comply as New Zealand has not ratified the treaty, many of the visiting ships are flagged to countries that are signatories, so there will be real costs borne by the entire industry.
"We have been advised that ocean freight costs will rise by about $US200 [$NZ300] per 20-foot equivalent," RMF marketing director Chris Rayes said.
"At the beginning of this year, we roughly calculated this would mean around $US10-$US12 extra in costs per cubic metre shipped."
Mr Grant said that New Zealand had been enjoying relatively low freight rates this year, as northbound cargoes for Asia were sought for vessels because of the drought on the Australian east coast.
The ‘‘dynamic nature of shipping’’, however, means that the favourable rates could disappear once the drought broke, he said.
Higher international fuel prices and strong demand for diesel will be reflected at the domestic New Zealand fuel pump, which will also serve to increase the costs of land-based log cartage and harvesting, the association said.
These costs have already been steadily rising in the past four years on top of higher harvesting costs, labour shortages plus rising health and safety and other compliance costs.
Greenhouse gas emissions would have to be priced in too, the association said.
"New Zealand needs to be a low-costs supplier.
"We are in danger of pricing ourselves out of the market if we allow costs to continue to escalate," Mr Grant said.
