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28 June 2022 The on-line newspaper devoted to the world of transports 13:59 GMT+2

June 6, 2022

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The Global Shippers Forum fears that from decarbonization of shipping comes another inflationary push

The association urges the IMO to ensure that it does not involve a further increase in freight prices and that costs are not passed on about customers

The Global Shippers Forum (GSF) fears that the shipping industry can exploit the energy transition, and in particular the proposal put forward by the same sector to decarbonise the shipping, to further raise transport rates maritime that they have long surpassed, and by a lot, record levels. On the occasion of today's start of the 78th meeting of the Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO), which will discuss a further proposal submitted by the shipowning industry to introduce a carbon tax on marine fuel with the aim to promote the transition to low-fuel fuels carbon emissions, the GSF association, which represents shippers and shippers, warned that the new tax on Carbon seems to be set to increase maritime freight.

The Global Shippers Forum believes that in the proposal of the shipowning industry there are two risks. The first is whereas, under the pretext of withdrawing older ships from the market and uneconomic, shipping companies use capacity of hold in order to further increase the freight rates. Secondly GSF fears that shipping companies will transfer further costs in part or in whole on shippers through the application of the widespread Bunker Adjustment Factor (BAF), i coefficients of variation in the cost of fuel, and through the wave of suppressions for the introduction of low fuels sulfur content introduced in 2020.

"You will forgive the shippers - he put his hands forward the director of the GSF, James Hookham - for thinking that the proposal, and its examination at the IMO, will result inevitably in even higher freight rates. This - has explained - why the shipping industry has a very efficient mechanism to transfer the highest fuel costs in the form of BAF, the surcharge to cover changes in the price of fuel. In the current proposals - has Hookham pointed out - there are few reassurances that a carbon tax will not turn into additional costs for freight forwarders'.

"If the shipping industry takes the market-based mechanisms as a way to decarbonisation - hookham observed - then he has to shelter his own customers from their inflationary effects, otherwise emissions will be reduced by squeezing the demand for world trade rather than encouraging a breakthrough in fuels and propulsion technologies that is so urgent." To avoid this risk, the Global Shippers Forum urged the components of the MEPC to take due account of interest of exporters and importers, who are the driving force behind the international trade, and, in view of the large sums of money involved, to insist that whatever carbon taxation mechanism is absolutely transparent and fully analyzable.

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