European shortsea shipping sector faces both challenges and opportunities in the current market scenario. On the one hand, the sector has to deal with a significant reduction in demand for traditional trade routes due to the pandemic and Russia Ukrainian war. On the other hand, there is an increased focus on the importance of sustainable shipping methods, which puts shortsea shipping at an advantage.
One of the biggest challenges that the sector faces is the ever-increasing pressure from road transport, which has traditionally been the dominant mode of transport in Europe. However, with the implementation of the European Union’s Emission Trading System, there is increasing scrutiny on the carbon footprint of road transport, offering shortsea shipping sector an opportunity to make a greener case for itself. It is important to highlight that shipping sector transfers approximately 90% of the worldwide freight, while at the same time accounts for less than 3% of greenhouse emissions.
Multimodal transport reduces transportation’s environmental footprint, since combining means of transportation results in high environmental sustainability, leading to GHG emissions reduction.
Shortsea shipping provides a greener alternative to conventional, inland transport with significantly smaller CO2 emissions per ton/kilometer carried and at the same time shortsea shipping fleet is ideal for new technological trends application, because of its smaller size. For example, electrical batteries are not suitable for deep sea shipping yet, due to the fleet’s size and distances covered, but shortsea shipping could apply batteries in new buildings, enhancing the transition to a greener fleet.
Moreover, advances in digitalization and technology offer exciting opportunities for the sector. It allows for real-time tracking of vessels and greater accuracy in delivering cargo with shorter transit times, and together with the transition to cleaner, low-carbon fuels, it is set to make shortsea shipping even more attractive.
However, as mentioned in previous European Shortsea Network’s webinars, European Union adopts some negative measures that could risk the motorways of the sea and the modal shift, increasing the operating cost, making SSS more expensive.
The inclusion of maritime sector in ETS will prove out to be very expensive, due to the lack of alternative fuels. At present time the existing technology is not mature enough to support the sector. Specifically there isn’t any alternative fuels sufficiency, which becomes clear if we take a look at the numbers:
• LNG covers the needs up to 8%
• fossil – fuels 0,7% – 1% until 2030
• e – fuels 0,5% – 0,7% until 2030
• bio – fuels 6% – 9% until 2030
• Batteries only 0,1%, as well as methanol
So it becomes obvious that EU’s strategy should include fuel suppliers, together with shipowners to play a key role under the new system. Cooperation between the shipping industry and fuel suppliers is crucial to facilitate the energy transition of the sector and contribute to bridging the price gap between conventional fuels and sustainable fuels. Additionally, EU institutions must ensure that their policy decisions will oblige the fuel industry to invest in bio refineries and develop sustainable fuels for the marine sector.
Furthermore, fuels for domestic use are subject to duties set by individual countries, but the Commission’s proposal intends to remove tax exemption on marine fuels in 2023 by adapting the EU Energy Taxation Directive, while 88,84%, based on the new buildings order book 2021, of the vessels use conventional fuels and only 11,16% of the vessels use alternative fuels. Possible adoption of the Taxation Directive will increase the operational cost and freights for all vessels using conventional fuels.
A major problem in green transition strategy is that most of the adopted measures are sketchily planned without being based on thorough studies. For example, Carbon Intensity Indicators (CII) compliance could affect shortsea shipping fleet, because complying with CCI in not based on technical requirements, but on operational. The CII of a vessel is affected by distance sailed; time remaining in ports, speed, etc. All these factors are a disadvantage for shortsea shipping, because the vessels travel shorter routes and remain at ports for longer time periods factors that reduce the vessel’s rating. Therefore it is essential that all adopted measures remain realistic, while ensuring the sector’s sustainability, if we want green transition to succeed.
Another critical factor to consider is the geographical position of Europe. Its location at the center of the world’s major trade routes can be a significant advantage for the shortsea shipping sector, as it creates opportunities for trade and the development of new routes.
In conclusion, the challenges and opportunities for the European shortsea shipping sector are numerous, requiring a creative approach and a sustainable mindset. However, the potential for significant growth, along with a reinvigorated commitment to sustainability, makes the future of the sector appear promising.