Project title: Mitigating and reversing the side-effects of environmental legislation on Ro-Ro shipping in Northern Europe (short name: RoRo SECA)
Period: 15/06/2015 → 14/06/2017
The main objective of this project is to identify and assess possible technical, operational, regulatory and financial measures for the mitigation and reversal of the negative repercussions of environmental legislation to the market shares of RoRo shipping in Northern Europe. The project builds upon prior research by the Principal Investigator and his colleagues in recent years and will be under the umbrella of Maritime DTU.
With the introduction of new limits for the content of sulphur in marine fuels within the European Sulphur Emission Control Areas (SECAs), Ro-Ro companies operating in these SECAs will face substantial additional cost. As of 1/1/2015, IMO’s MARPOL Annex VI and EU Directive 2012/33/EU (amending Council Directive 1999/32/EC) stipulate, among other things, a 0.1% limit in the sulphur content of marine fuels, or equivalent measures limiting the percent of SOx emissions to the same amount. As low-sulphur fuel (Marine Gas Oil-MGO or Marine Diesel Oil-MDO) is substantially more expensive than Heavy Fuel Oil (HFO), there is little or no room within the Ro-Ro companies current margins to absorb such additional cost and thus significant price increases must be expected. Unlike its deep-sea counterpart, in short-sea shipping such a freight rate increase may induce shippers to use land-based alternatives (mainly road). A reverse shift of cargo would go against the EU policy to shift traffic from land to sea to reduce congestion, and might ultimately (under certain circumstances) increase the overall level of CO2 emissions along the entire supply chain. If the shipping price is no longer competitive with road transport, this will likely have one or more of the following ramifications:
- Shifts and congestion to road transport
- Loss of cargo to the shipping company
- Reduced profits or increased losses
- (Potentially) more CO2 in the overall supply chain
- Increased cost of the produced goods, making these products uncompetitive as compared with sourcing from other areas, including areas outside the EU
The loss of business to the shipping lines as a consequence of 1, 2 and 3 above, may make shipping routes non-viable and thus candidates for closure. A consequence is that all of the remaining cargoes on such routes will need to find alternative transport routes, most likely road.
This problem is already a serious source of concern not only to Ro Ro operators in the Baltic and North Sea, that have or are contemplating shutting down some routes as unprofitable, but also to manufacturing, mining and forest industries in the area. The fear is that many of these industries may be forced to relocate because of the side-effects of such operational and regulatory changes. Such loss of business might force the marginally viable ship operators and ports out of business, channeling even more cargoes towards land-based modes.
The project is funded by the Danish Maritime Fund (DMF)