EU shipping needs €40 billion per year to decarbonise and develop European maritime cluster

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By Marek Grzybowski

Maritime transport is key to Europe’s security. European shipowners published their position on the European maritime industry strategy on 16 September, which should be implemented as part of the new Clean Industrial Deal. The CRIST shipyard, the ASE Group, UMG and Polish maritime schools have the potential to support changes in European maritime transport.

Shipowners intend to build competitiveness based on the guidelines contained in the Draghi report published a week earlier, in which he stressed the need to maintain the competitiveness of European shipping in the international arena.

European shipping is a geopolitical asset for Europe and a cornerstone of the security of the energy, food and supply chains on the continent – notes a press release published in mid-September by the European Community Shipowners’ Associations (ECSA). European shipowners control 39.5% of world tonnage. This makes Europe a leader in global transport chains and – according to ECSA – contributes to the competitiveness of the European economy, which is largely dependent on maritime trade.

However, only Greece is among the five leading fleets in the world. Its shipowners manage fleets with a total value of almost USD 167 billion, according to Vessel Value. There are three more EU countries in the top 10. The value of the Norwegian fleet is close to USD 60 billion, the British shipowners have fleets with a total value of close to USD 54 billion, and the Germans around USD 49.5 billion. Therefore, the value of the Greek fleet is the total value of the three fleets mentioned. The Greeks are behind the Asian fleets. Japan, with a fleet worth USD 206.4 billion, opens the top ten countries with fleets with the highest value. The People’s Republic of China, with a fleet worth over USD 204 billion, is in second place. We wrote more about this here

EU strong in container ships

In the case of container fleet operators, the top five are 4 EU shipowners. Alphaliner is ranked first by MSC with a 20% market share, second by Maersk with a 14.3% share, and third by the CMA CGM Group based in Marseille, which has a 12.5% ​​market share.

Mediterranean Shipping Company (MSC also owns WEC Lines and Log In Logistica) has 859 ships with a capacity of almost 6.1 million TEU (3.1 million TEU within its own fleet of 558 ships). Second place is occupied by Maersk (with Hamburg Sud and several other brands) based in Copenhagen, with a 14.3% market share and 711 ships with a cargo capacity of almost 4.34 million TEU, of which 333 own ships have a capacity of almost 2.55 million TEU.

The CMA CGM Group (with APL, ANL, CNC and several other operators) headquartered in Marseille has a 12.5% ​​market share. It has 650 ships with a capacity of almost 3.83 million TEU. The group has 281 of its own ships with a total capacity of over 2 million TEU. In fifth place with a share of 7.4% is Hapag Lloyd with NileDutch, DAL and UASC. The Hamburg-based shipowner manages a fleet of 293 container ships with space for 2.25 million TEU. The operator has 128 of its own ships with a capacity of over 1.32 million TEU.

Container fleets are building their advantage by creating more or less open agreements, including forwarding companies, container terminals, intermodal connections, inland terminals and storage centers and yards in their orbit. Business consolidation is taking place on a large scale, which weakens the competitive position of ports, as we wrote here

100 days for von der Leyen

Maintaining and increasing the international competitiveness of European shipping is essential for the security of our continent and is a prerequisite for a strong European maritime industry cluster. A European Maritime Industry Strategy must be a pillar of the upcoming Clean Industrial Deal, which President Ursula von der Leyen has committed to present within the first 100 days of the new Commission, ECSA stresses.

In a published document, European shipowners present recommendations aimed at increasing the competitiveness of European shipping and the maritime industry cluster while ensuring a green and digital transformation, and mention that it is essential to “maintain the international competitiveness of European shipping”.

According to the European Shipowners’ Association, “maintaining a level playing field between European shipping and its competitors outside Europe is crucial to maintaining shipping companies in Europe and supporting a vibrant European maritime cluster”. An appropriate regulatory and tax framework is therefore needed. They are key to ensuring that EU shipping companies remain competitive internationally.

It is essential to ensure that 40% of clean fuel production for shipping takes place in Europe. To achieve this, it is essential to increase the production capacity for clean fuel for shipping in Europe. According to ECSA, this will be key to the green and digital transformation of shipping. At least 40% of clean fuels must be introduced into maritime transport from European refineries and factories if we want to achieve the FuelEU targets. This will be in line with the provisions of the Net-Zero Industry Act.

EU ETS for innovative maritime transport

It is also important to ensure that 40% of European industrial capacity is focused on the development of innovative technologies to be applied in shipping companies. It is emphasised that “Europe is a leader in cutting-edge innovative technologies for the green and digital transformation of shipping”.

The aim is to maintain and build on this leadership position. Therefore, EU Member States should swiftly implement the production rate of at least 40% under the Net-Zero Industry Act for key technologies.

In order to implement innovations in maritime and inland navigation, access to financing for key investments must of course be ensured. It is emphasised that “increasing access to public and private financing is key to unlocking the investments needed for the green and digital transformation”.

The source of the budget for these activities is the EU ETS revenues. They should be allocated to activities related to the energy transition. In order to mobilise these budgets, “different tools and sources of financing are needed”. It is indicated that bank financing, capital markets and private investors are mentioned. The aim is “to enable better risk sharing of innovative and transitional projects”.

The implementation of innovative technologies is possible provided that Europe’s energy security is ensured. And it should be noted that the EU imports a significant part of its energy resources through tanker and bulk carrier fleets. For example, 46% of gas imports and 88% of oil imports to the EU are transported by sea. The European fleet accounts for only 26% of the world’s LNG carrier fleet, but 35% of oil tankers and 20% of LPG tankers.

Time for education and clean fuels

The transformation of maritime transport cannot ignore the human factor. It is therefore stressed that “the European maritime modernisation strategy must recognise the need to invest in new skills for the green and digital transformation of shipping”. It is estimated that 800,000 seafarers need to be retrained for the green transformation by mid-2030. The European Commission and the Member States must support the joint efforts of the social partners in this regard.

– The Draghi Report firmly recognises the global leadership of European shipping and the need to maintain its international competitiveness – noted Sotiris Raptis, Secretary General of ECSA, who emphasised that “this is a prerequisite for the development of a European maritime industry cluster”. However, it should be emphasised that the Report identifies shipping as one of the most difficult sectors to decarbonise, requiring around USD 40 billion in annual investments.

Raptis hopefully states: “We strongly believe that there is an opportunity to place European shipping and the entire maritime industry cluster as a pillar of the upcoming Clean Industrial Deal”. In his opinion, the energy transformation of shipping can be a catalyst for investment in European production capacities in the field of clean fuels and innovative technologies.

– We call for 40% of the clean fuels and innovative technologies that we need for the green and digital transformation to be produced in Europe and we are ready to work with policymakers and the maritime cluster to make this happen – appeals Sotiris Raptis, Secretary General of ECSA.

Polish opportunity for CRIST, ASE and maritime schools

Polish companies can get involved in the areas mentioned in the ECSA announcement. The CRIST shipyard, which recently delivered units for the construction of the tunnel between Denmark and Germany, has been operating on the market of innovative structures for a long time. The CRIST shipyard has a whole range of innovative units in its portfolio. At the beginning there was Innovation – an installation vessel for the construction of offshore wind farms and its successor VIdar, and then JACK-UP BARGE B392. After them, the shipyard implemented further innovative individual projects.

The original design was a self-elevating barge called Zourite (octopus). It had 8 legs, hence the name. A whole series of various types of innovative equipped hulls with a unique shape were built for Ulstein Verft. The zero-emission ship production hub coordinated by CRIST has electric (hybrid) ferries and wind farm service ships under its belt.

The ASE Technology Group also has the knowledge necessary to participate in the transformation of shipping. It has innovations focused on systems related to the use of hydrogen technologies and energy storage and energy management systems. The Green Energy Tricity Conference is to be about how green energy will change maritime transport and industry.

In maritime education, the Maritime University in Gdynia and the Maritime School in Gdynia have undoubted potential. UMG holds one of the leading positions among maritime universities, which is reflected in the fact that the Rector of UMG, prof. dr hab. inż. kpt. ż.w. Adam Weintrit has been elected chairman of the International Association of Maritime Universities (IAMU) and at the same time head of the Policy and Planning Committee.

Appreciating the activity of UMG in recent years, the members of the International Executive Council decided that UMG is in the term of office for 2023-2025 on the International Executive Board as a permanent representative of a wide range of all maritime universities associated with IAMU. This decision means that UMG, which until March 2023 serves as a regional representative of the so-called Europe/Africa Region, from April 2023 is in the group of the so-called At Large Representatives, i.e. 3 universities that were nominated due to their involvement in activities in individual committees, working groups, conferences or webinars and participation in research projects.

In turn, the Maritime School in Gdynia has a whole range of courses certified by leading international institutions. It prepares for work on units equipped with the latest systems on commercial ships, offshore and seagoing yachts.