Hapag-Lloyd is expecting to incur an additional annual cost of US$1 billion due to the implementation of the new IMO 2020 regulation.


Rolf Habben Jansen, Hapag-Lloyd CEO said starting this year, all ships are required to use fuel with a maximum sulphur content of 0.5%. 


While this "marks a milestone for the entire industry on its path to becoming more eco-friendly," he noted that the new cap also presents a "major challenge" to container shipping companies. 


"Since the lion’s share of our fleet will sail with the new low-sulphur fuel oil, we expect additional costs of around 1 billion US dollars per year," said Jansen.


The costs involved in converting vessels and using the new fuel will be high, he explained.


Aside from the stricter requirements of the IMO 2020, the German international shipping and container company also cited other environmental and climate protection initiatives to "play an important role" for shippers like the “Green Deal”, where the European Commission is considering extending emissions trading to the shipping industry.


"This means that shipping companies would have to pay for their CO2 emissions in the future. If this should happen, the question will be: Which sustainable, alternative fuels can be made available to the industry in order to reduce CO2 emissions, meet regulatory requirements and cut costs?" Jansen added.


"And we live in times that continue to be turbulent in political terms."


He said trade conflicts can have an impact on trade routes, and they can steer global economic growth in one direction, but also in the other.


"We will have to live with these possible fluctuations and manage them as best we can," Hapag-Lloyd's CEO further said.


 As part of efforts to achieve this target, Hapag-Lloyd earlier said it retrofitting its 15,000 TEU vessel “Sajir” to use liquefied natural gas (LNG) propulsion/pilot project paving the way for converting large ships to LNG with a 15% to 30% less CO2 emissions possible


The 15,000 TEU vessel will be the first large container ship in the world to be converted to operate using LNG. The pilot project aims to show that the existing fleet can also be retrofitted to operate on LNG.


The “Sajir” is one of the 17 vessels in Hapag-Lloyd’s fleet that were originally designed to be LNG-ready. Its 16 sister ships are also technically prepared for retrofitting, Hapag-Lloyd said.