Shipowners reveal the fees they will introduce in 2024 due to ETS expansion

From 2024, maritime transport will be covered by the European Emissions Trading System (EU ETS). Maritime shipowners and logistics operators cooperating with shipping lines are preparing for this.

“First of all, our focus is on providing customers with reliable information about the regulations coming into force, especially if they involve additional fees. Not only do we publish appropriate information as required by law, but we also run a targeted information campaign, such as webinars or emails. We want customers to understand the situation and the mechanism of the changes being introduced, and how they translate into current service and costs,” says Jakub Bączkowski, head of FCL cluster North East Europe at DB Schenker.

Some of the solutions required to reduce and monitor greenhouse gas emissions entail higher transport costs, operators admit.

“Nevertheless, all participants in the supply chain – shipowners, logistics operators, producers and final recipients of goods, should be aware of the need to incur expenses related to the introduction of pro-environmental options, and want to participate in them. Let us remember that we are all responsible for our planet and reducing our negative impact on it,” argues Przemysław Komar, seafreight product director for the CEE region at Rohlig SUUS Logistics.

There’s an extra charge coming

Indeed, the largest shipping companies have, for some time, been publishing estimated price lists of additional fees that their customers will incur due to the EU’s ETS. Depending on the company, route, and type of container (dry or refrigerated), it will range from €20 to even €72 per container.

On the route from Europe to North America, for example, sea transport of a 20-foot dry container at CMA CMG will cost an extra €43. In MSC, the cost is €37 (where the route to North America means transport strictly to the United States, Canada, and Mexico).

In turn, on the Europe – West Coast of South America route, the fee for a dry container via CMA CMG will be €43, for MSC – €19, and for Hapag – Lloyd – €2. For refrigerated containers, the fees are €60, €29 and €21 respectively.

Additional fees introduced by sea freight carriers in connection with the ETS expansion

	CMA CMG		MSC
Route	Fee in per TEU – dry container (€)	Fee in per TEU – refrigerated container (€)	Fee per TEU – dry container (€)	Fee per TEU – refrigerated container (€)
From Europe to North America	43	65	37	56
From Europe to the West Coast of South America	43	60	19	29
From Northern Europe to the Mediterranean	25	35	21	31
Within the Mediterranean Sea	25	40	17	26
Within the ports of Northern Europe	37	48	36	54
From Europe to Oceania and the islands of the Indian Ocean	no data	no data	48	72
From Europe to West Africa	no data	no data	40	60

For now, the fee amounts presented by maritime shipowners should be treated as indicative data. They were prepared primarily on the basis of  “the current market value of carbon dioxide emission allowances (approximately EUR 90 per tonne of CO2),” says CMA CMG.

Additional charge prices are to be updated quarterly.

Meanwhile, shipowners are stressing that they had started preparing for decarbonization long before the inclusion of the maritime transport emissions trading system was known.

“CMA CGM’s path to decarbonization began many years ago with pioneering decisions on the use of biofuels, the procurement of the first LNG container ships powered by biomethane and e-methane, and the optimization of operations, which led to a 50% reduction in CO2 emissions per container and nautical mile from 2008 to 2022,” the shipping and logistics company says in a statement.

MSC also ensures that it reduces greenhouse gas emissions, modernises its ships, manages fleet efficiency and optimises cruise routes. It is also said to be increasing the use of lower carbon fuels such as biofuels, and is preparing to use alternative fuels.

Indeed, both the aforementioned MSC, CMA CMG, and Hapag-Lloyd are on the list of the 20 largest shipowners with LNG ships (on order or already sailing), according to UCL data from the Energy Institute.

What are logistics operators focusing on?

Due to the EU requirements related to the emissions trading system, logistics operators responsible for organising supply chains have also been preparing for the reduction of GHG emissions (from 2025) for some time now.

For example, DB Schenker says that its goal, “regardless of external regulations, is to achieve climate neutrality by 2040″.

“Therefore, we’re taking active steps in this direction in all our businesses. Today, we offer our customers a carbon-neutral sea freight service, giving them the opportunity to choose biofuel options,” explains Jakub Bączkowski. “In cooperation with three shipping lines, this year we secured 17,000 metric tons of the best sustainable biofuel available on the market, which does not contain palm oil and its residues and does not cause indirect land-use change (ILUC),” he adds.

The company also cooperates with government and private institutions, such as the International Maritime Organization (IMO), Getting to Zero Coalition, and Arctic Commitment, which focus their activities on achieving ecological goals by companies.

Rohlig SUUS Logistics is using a similar strategy.

“From our perspective, as a logistics operator managing global supply chains, issues related to the emission intensity of maritime transport are very important. More and more often, our clients ask us about solutions that reduce the carbon footprint, also when transporting goods on ships. We are happy that new options are constantly emerging. Today, we can offer biofuels that reduce greenhouse gases by over 80%. A great solution is to maximize the use of intermodal transport on the first and last mile,” states Przemysław Komar.

At the same time, he reminds us that an example of actions taken by shipping lines is the use of marine vessels powered by alternative fuels, such as LNG or methanol.

“Let us remember that actions in this area are changes spread over years and will be introduced gradually. Therefore, in the near future, we can expect an increase in costs that sea carriers will try to pass on to customers. These changes will undoubtedly also affect the profitability of the shipowners’ operations,” he admits.

EU ETS introduced gradually

Let us remind you that from the coming year, the EU ETS will cover maritime transport using large ships with a gross tonnage above 5,000 tonnes that call at European Economic Area ports, regardless of their flag.

The European Commission states that the system will include the following:

• 50% of emissions from cruises departing or arriving in ports outside the EU
• 100% of emissions from sailings between two EU ports

Today (and in the case of maritime transport – from 2024), the system applies to carbon dioxide emissions, but from 2026 it will also cover methane and nitrous oxide emissions.

Shipping lines will not have to transform 100% of reported emissions into allowances from the very beginning. In the first year of the inclusion of maritime transport in the ETS, “only” 40% will be required. In 2025, this increases to 70 percent, and from 2026, it reaches 100%.

How does the European Emissions Trading Scheme work?

The ETS determines the maximum amount of greenhouse gases that a given sector can emit. This ceiling is being reduced over time. Enterprises must not only monitor their emissions, but also acquire allowances for them if they exceed the established limits. Within the system, it is possible to trade emission allowances between various companies and greenhouse gas emitters.

 

Emissions increase by almost 146%

The inclusion of maritime transport in the emissions trading system should not surprise anyone who closely follows the direction of EU legislation. Let us recall that the community’s goal is to generally reduce emissions by 55% by 2030, and completely by 2050.

Meanwhile, community data shows that 25 percent of greenhouse gas emissions on the Old Continent come from transport.

The least emission-intensive modes are railways, inland navigation, and pipeline transport, while road transport is the most emissive. Sea shipping accounts for 13.5 percent of emissions, which corresponds to approximately 2-3% of total greenhouse gas emissions in Europe.

These data are consistent with IMO statistics (International Maritime Organization – editor’s note), which state that maritime shipping generates approximately 3% of CO2 and greenhouse gas emissions, as reported by Marta Waldmann from the Poznań Institute of Technology, Łukasiewicz Research Network, during the Conference of the Polish LNG and bioLNG Platform.

However, data from the European Parliament shows that shipping, along with aviation, is one of the sectors in which the level of greenhouse gas emissions is growing rapidly.

“By 2019, emissions from international aviation and shipping had increased by almost 146% and 34%, respectively, compared to 1990. This was the fastest growth in the entire transport sector – the only one where emissions have increased since 1990,” says the European Parliament.

At the same time, the European Parliament notes that the decline recorded during the COVID-19 pandemic was temporary and should not be considered a change in trends.

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Featured image photo (top of page) Bahnfrend, CC BY-SA 4.0, via Wikimedia Commons