In: Economics
Answer the following based on the article extract above:
What will happen to the following shipping industry stakeholders as a result of the Sulphur cap implementation?
1. SUPPLY - The supply will reduce as the cost of production goes up due to installing scrubbers, waste processing, or using low sulfur oil which would cost more. You can visualize the supply curve shifting up.
2.DEMAND - The demand in the shipping industry will be impacted.
3.PORTS - With the increase in the cost of carrying out shipping activities the demand for ports will be reduced and their use would reduce.
4.CANALS - The canals will be cleaner and less congested.
5.REGULATORS LIKE IMO - The IMO's primary purpose is to develop and maintain a comprehensive regulatory framework for shipping and its remit today includes safety, environmental concerns, legal matters, technical co-operation, maritime security, and the efficiency of shipping. With sulphur capping, the work of IMO will be facilitated.
6.WORLD FLEET - The world fleet of ships will reduce as only those ships that will remain viable after accounting for the increased cost, will operate.
7.SHIPPING INVESTORS - With a reduction in profit due to an increase in cost, the investment flowing to the shipping industry will be hampered and reduced due to a reduction in expected profitability.
8.FREIGHT RATE - The freight rates will rise as the cost of fuel increases. Low sulphur oil will cost more, the installation of scrubbers and waste storage on board will increase the cost of operating ships per unit of fuel.