EU cannibilising itself with ECA

Low-sulphur rules have some unfortunate and ironic consequences for modal-shift initiatives.

For years, the EU has provided grant assistance to encourage modal shift – to move freight from our roads onto trains and ships and barges. The schemes have different names – Marco Polo, Motorways of the Sea, Reefer Express, CGTK, Via Danube and so on.

In its wisdom, the EU justified this market distortion by claiming that relieving congestion and lowering pollution was politically desirable. And most Europeans would probably agree: laden trains and ships and barges do relieve road congestion and everyone knows that they are ‘greener’ on a tonne-km moved basis.

But all this good work risks being undone – by the EU! It is ‘cannibalising’ itself.

From January, new EU emissions regulations governing the burning of sulphur ‘rich’ bunkers in the Baltic, North Sea and English Channel will be in force. Either ships will have to burn Marine Gas Oil (MGO) which is (currently) 40% more expensive than the Heavy Fuel Oil (HFO) it replaces (and rising) or fit exhaust ‘scrubbers’.

Both of these will add significant costs to the supply chain or drive cargo back onto Europe’s congested roads. Is that what we really want? Not only might all that lovely grant cash have been squandered, but we’re back in the traffic jam breathing in fumes.

Indeed, there have already been some casualties – with LD Lines and DFDS pulling services.

No-one doubts that cleaning up ships’ engines is desirable – but ships are still the ‘cleanest’ way to move cargo.

There’s also another problem with these regulations.

If you’re shipping goods around the Mediterranean, Atlantic, Irish Sea and so forth, life is unchanged. That’s because these areas are outside the zone. (I wonder what the Competition Directorate makes of that? The EU would seem to have broken its own regulations concerning market distortion!)

This means that cargo moving from Rennes to London is now better of going from Nantes to Bristol (outside the zone) than from St Malo to Portsmouth (inside). Certainly, more Asian cargo for Europe will be offloaded in the Med and then trucked further than being shipped to Rotterdam and trucked less far.

This is great news for the Med, Portuguese, north Spanish, west French, Irish and west coast UK ports, but not for the rest. In fact, these westerly and southerly ports will benefit most from re-routed trans-Atlantic services as the emission zone for these forms a larger percentage of the total distance steamed.

As an interesting aside, the Channel Islands, which are not part of the EU, appear to be bound by the regulations as well, but maybe there are other benefits from living there!

So, if you’re running a port in Bristol, Cardiff, Liverpool, Cork, Belfast, Dublin, Heysham or Glasgow – you’re on a winner. If your ships don’t need to enter the SECA (Sulphur Emissions Control Area), ditto. For everyone else, it’s a loser.

The scenario is most eloquently – and definitely most ironically – summed up by Transfennica: “Transfennica has decided to cease its ‘Motorways of the Sea’ Ro-Ro service between Bilbao, Portsmouth and Zeebrugge at the end of December 2014. The route started in September 2007 and saw a steady increase in volumes and results. Due to the upcoming SECA legislation per 1 January 2015, which will result in increasing fuel costs, it is expected that up to 50% of the trailer volumes will return to the road. (Therefore) there is no profitable future for a Ro-Ro service on this route.”

Source: European Shortsea Network