Shippers sceptical about EEDI measures

Proposals from the shipping sector and governmental organisations for a levy or tax on fuel that is proportionate to the level of emissions from each and every ship would be based on ships’ EEDIs. Shippers, including the Global Shippers Forum, the British Shippers’ Counciland the European Shippers’ Council(ESC) say this strategy will not work. Based on their track record, the groups say, the shipping industry, and particularly the liner shipping industry, is likely to pass on charges to their customers. Although it may seem reasonable to pay for the service you get, and what it costs to give that service, some shippers would argue that they do not always get the service they pay for anyway. Whether it is a delayed vessel, rolled over cargo (i.e. not loaded), or delivered to a different port at a different time than planned because of service changes, the shipper does not always get a good service. Normally, says Shippers Voice, a business with poor service performance would be looking to rectify the problem and improve service. But, it asks, why bother when costs can simply be passed on in the form of surcharges, or where there is no incentive to provide better value in an over-supplied market?

Shippers believe a levy or tax will merely be passed on to them, and the ships will have little incentive to change practice or improve design in order to reduce emission-related charges.

Nicolette van der Jagt, secretary general of the ESC said: “A uniform levy or tax on all ships and all fuel purchases would be a risk to shippers whichever way you look at it: the added costs will be merely passed on to the customers through surcharges without offering a clear incentive to the carrier to increase the efficiency of the ships or their operation.”

And you cannot blame shippers for thinking this, says Shippers’ Voice. “Every time the liner shipping industry finds another individual cost, it tries to pass it on in a surcharge or ancillary cost, whether it is for fuel price increases, currency fluctuations, being too busy (e.g. peak season surcharges), port strikes, congestion or even fog. Whatever the cost, the shipper is targeted to pay. What is needed is a mechanism which rewards shipping companies which invest in new designs, technology and practices which reduce emissions without reducing service performance; a scheme which does not add to current costs, but clearly provides an incentive to ship operators and owners.”

This view is echoed by van der Jagt: “The preferred approach should be one which provides tangible incentives and rewards to owners and operators of individual vessels who invest in ships and ship technologies that optimise vessel utilisation, operation and fleet sizes, and reduce emissions of GHGs. I believe that shippers will increasingly be drawn to those ships which attract lower costs for the supply chain from lower emissions, provided the service does not diminish.”