LOW SULFUR HFO AND TRANSPORTATION COST
According to IMO expert study, the use of HFO will largely have to be abandoned once the sulfur content limit in fuel decreases to less than 1%. A report by IMO states that approximately 0.5% of the fuel currently used by global maritime traffic is HFO with sulphur content of less than 0.5%. A switch to fuel with a maximum sulphur content of 0.1% will in practice will in practice mean that vessel will have to use gas oil (MGO) as fuel, which is lot more expensive than HFO. As a result sea freight charges will increase considerably when the stringent regulation on maximum sulphur content takes effect. Fuel cost contributes 30-55% of costs incurred in running of ships. The difference in cost rise of fuel oil can be explained as follows:- Let us suppose price of HFO with 1.5% Sulphur be Rs X. ...