Ship owners face €77.5bn bill over ballast change

HAPAG-LLOYD and Maersk Line are among ship owners facing a $100 billion (€77.5bn) bill to cleanse ballast water that spreads diseases such as cholera and invasive species, including mitten crabs, adding to costs as cargo rates slump.

A binding convention drawn up by the International Maritime Organisation requires shipping lines to retrofit 60,000 vessels with gear that kills unwelcome organisms and costs from $200,000 (€155,000) for an offshore-supply craft to $4m (€3.1m) for an oil tanker.

The rules add to pressure on margins at shipping companies from Hamburg-based Hapag-Lloyd and Denmark’s Maersk to Evergreen Marine of Taiwan, which all posted tumbling third-quarter earnings.

Waertsilae Oyj of Finland and OceanSaver of Norway, providers of cleaning equipment and filters, expect to benefit.

“It’s right that we shouldn’t move dangerous species around the world,” said Jan Fritz Hansen, executive vice-president of the Danish Shipowners’ Association in Copenhagen, whose members carry 10% of global shipments. “But the limits being set look very costly and will require substantial investment at a time when international shipping and trade is in the red.”

Shares of Copenhagen-based DS Norden, Europe’s largest listed commodities line, have dropped 23% over the past year. Torm, the continent’s largest publicly traded shipper of refined oil products, has declined 90%. Both stocks were trading 0.2% higher as of yesterday.

The convention, likely to be ratified later this year and effective 12 months later, aims to clean up seawater used to stabilise ships by lowering their centre of gravity when lightly laden.

Tanks are emptied and thousands of gallons of water discharged when a heavier load is taken aboard, often on the other side of the world and in a different oceanic zone.

A requirement for ballast water to be purged even on ships making short international journeys is particularly onerous, Hansen said.