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The costs and benefits for shippers from

reducing ships fuel emissions

Nicolette van der Jagt


Secretary General
European Shippers Council

ESC SHIPPER FORUM


28th September Brussels

European Shippers Council


users of freight transport services
more than 100,000 companies throughout Europe
majority of the volume of goods shipped by sea from/to Europe
national transport user organisations/ shippers councils &
Corporate Membership

Trends in Logistics

Globalisation and Regionalisation (key drivers: price of oil, proximity


to markets, access to raw materials)

Consolidation of supply chains yielding benefits, efficiencies

Carbon intensity/ sustainability will become a major criterion in the


selection of logistics service providers (green tender)

Sustainability is growing in importance

Consumer pressures in food/consumer products

But different tools, standards, measures and minimum standards to


define entry requirements of carriers

What are shippers looking for?

Reduced costs from operational efficiency, including e.g. slow


steaming

Better reputation from improved social and environmental issues

Reduced sustainability foot-print throughout the supply chain

Sustainability innovations and solutions in supply chains and


information on this

Increased efficiencies including optimising container supply chains

Perception on carriers?

Carriers perceived as passive and defensive on sustainability


agenda (shipping already cleanest mode of transport)

Struggling for improved performance in particular in todays


economic climate

Shipping offered as a commodity

Carriers pass the costs of sustainability on

Shippers expect carriers to become more pro-active and less


responsive

The transportation industry can no longer hide in shadow E Kolding

ESCs Customers Charter for a sustainable liner shipping industry

Customers expect
Shipping lines to address their own environmental record with ambitious
targets to reduce emissions of green house gases and other pollutants through
efficient operational practices and application of new technology

In return carriers should expect.

A Customers cooperation to assist in finding practical logistical or supply


chain solutions to help improve as appropriate the shipping lines efficiency
and minimise costs and environmental impact

Reduce carbon emissions in transport by 60% by 2050.

Roadmap
tokey
a Single
European
Area
By 2050,
goals will
include Transport
at least 40%
cut in EU shipping
Towards a competitive and resource efficient transport system
emissions 50% if feasible

Fuel Tax or Levy; a fund raising scheme

Passing on the carbon costs to their customers via a bunker levy


would remove the accountability of the shipping industry without
reducing carbon emissions.

Many questions surrounding avoidance

Revenue derived from the schemes may be used for any


governmental expenditure, and not hypothecated to shipping to
improve environmental performance or mitigate the damage caused
by pollution

Emisssions Trading Scheme

Similar argument of passing on the costs

ETS should be global rather than European

A EU ETS distorts trade; risk of carbon leakage

Mandatory Speed limits for ships


Study

Provides deep emission cuts fast

Applies to all ships (unlike EEDI)

Speed limit cuts are in-sector (unlike ETS)

Top of IMO GHG Study range (25-75%) is only possible with speed
reduction

Holds significant other environmental advantages: SOx, Nox, BC etc

Mandatory Slow steaming

Not supported by the ESC as it would


reduce the service performance
require additional ships to maintain the schedule/frequency of delivery
add to the costs of supply chains
Risk of Modal Shift to air freight or air/sea combined journeys; others will
off-load sooner and tranship to road for a long-distance journey to speed
up the delivery time

Slow steaming is here to stay

Globally implemented (through IMO)

Incentive based system rather than a punitive one; rewarding the reduction
of GHG emissions of each vessel, rather than punishing those that do not

Does not distort the market by favouring carriers with newer or larger
vessels over others

Simple to understand and involves minimal bureaucracy to manage

GHG
Doesemissions
not allow costs or
to merely be passed on to the customers
incharges
shipping

Is transparent

ESC favour a system which is:

Benefits of an incentive-based scheme over


other schemes

Limited administrative costs

Owners and operators financially encouraged to invest in GHG


reduction measures

Shippers financially encouraged to choose those vessels/carriers


with lower GHG emissions

Slow steaming left as a market-driven option

No additional costs for owners or operators or shippers

Summary
Any scheme chosen should ideally be:

Effective in reducing GHG emissions

Cost effective, transparent and easy to administer

Not leading to competitive distortions or carbon leakage

Based on sustainable development without penalising trade or


growth