News / UECC shows how 'forward-thinking' can avoid price hikes

United European Car Carriers (UECC) says surplus money from early adoption of alternative and green fuels has enabled it to maintain its pricing structure into 2025, with no additional surcharges.

While carriers have generally adopted or raised surcharges to pass on additional costs to customers, UECC introduced biofuel to its 15-vessel fleet as early as 2020, and bio-LNG last year, meaning it has been able to offset increased operating costs using compliance surpluses.

“We have previously informed our customers that their support for our investment in multi-fuel LNG vessels would insulate them against regulatory penalties and this is exactly what is happening,” explained Daniel Gent, energy and sustainability manager, UECC. “This demonstrates the clear benefits of being ahead of regulation, investing in progressive technology and in the process, generating savings for our customers.”

Introducing B100 biofuel in 2020, UECC subsequently introduced cashew nut shell liquid (CNSL) as fuel in 2022. CNSL is less than ideal as a fuel for vessels, and can generate problems in engines including clogs and blockages if improperly handled; but has the advantage of sidestepping the market for used cooking oil (UCO), the most prevalent biofuel feedstock, which is fraught with abuses.

Last July, UECC introduced bio-LNG, a drop-in alternative to LNG made by harnessing methane released from biogenic sources. Bio-LNG will be a “heavy lifter” in reducing CO₂ emissions from the UECC fleet, Mr Gent said.

The non-compliance costs imposed by FuelEU are set to increase over time, resulting in a more exaggerated delta between the cost of non-compliance and the potential reward for a compliance surplus, which can be traded. Over time, then, UECC will expect to see its dividend from compliance increasing.

“As we are going ‘above and beyond’ in terms of our commitment to alternative fuels such as LBM and biofuel, we expect to have a significant compliance surplus under [FuelEU Maritime],” Mr Gent said. “With the investments we are planning in such fuels, UECC will never be in a position of needing to buy or borrow compliance units.”

Albrecht Grell, CEO of OceanScore, told The Loadstar recently that the tactic could result in a shipping line “making money by bunkering”.

Mr Grell has however tempered his remarks, discouraging the placing of too much emphasis on fiddling and speculation with EU emissions-derived instruments, saying that while “…there will be a significant opportunity to generate revenue… this is not shipping. We should focus on running ships and crews, leave speculation and financial engineering to those whose profession it is,” he added.

This week, Japanese liner group ONE, of which UECC parent NYK is part, announced that it too would be launching a biofuel insetting service, Leaf+.

But disillusionment is growing with biofuel this week, after Hapag-Lloyd and Louis Dreyfus Armateurs highlighted the risk of first-generation crop biofuels making their way into supply chains.

Experts told The Loadstar this week that mixing virgin crop biofuel into fuels marketed as UCO-based  biofuels is an endemic issue, and that industry biofuel accolades such as the International Sustainability Carbon Certification could mean little.

“Relevant authorities at both national and EU level need to take control of the issue and not depend on third-party certifiers to do the policing for them,” said Sam Hargreaves, spokesperson for Transport & Environment.

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