(data sourced from Xeneta)
From 01/01/2024, the shipping lines will apply a new surcharge following new legislation from the European Commission for all cargo carried on their vessels from and to EU countries.
The EU wants to be the first carbon neutral continent in the world by 2050 (as agreed in the ‘Green Deal’).
One tool to reach this target is the Emissions Trading System (ETS). This is based on a “cap and trade scheme” wherein a maximum or cap is set on the total amount of greenhouse gases that can be emitted by companies inside the EU area within a year. Companies subject to the EU EUTS have to buy allowances (carbon credits) based on the amount of greenhouse gases they emit (1 ton of CO2 = 1 ETS Allowance).
The number of available allowances will decrease every year, driving the total amount of greenhouse gas emitted down toward the 2030 and eventually 2050 targets.
The EU ETS will apply to energy-intensive sectors, of which the maritime industry is one.
Not every aspect has been finalized yet. Will transshipment ports be affected, and which ports will be on a possible list for allowed transshipments?
The effect of the ETS for customers/freight payers will be an additional cost. Several shipping lines have already reported some indicative numbers, though the amounts vary based on the current market value of the carbon allowances, fleet per shipping line, head- and backhaul and so on. CMA communicated a calculation with the knowledge they have today, and for Asia to North Europe the cost would be €25/TEU for a dry container. For Europe to North America East Coast, however, the cost would be €43/TEU. This is explained by the difference in vessel types used on the different trades. On the Asia-N.Eur trade you have bigger vessels to better spread the cost, and newer vessels which are often less polluting than the vessels used on the Transatlantic trade.
Every rate agreement which starts on 01/01/24 or later, and every rate agreement which runs beyond 01/01/24, will be affected by this new cost implementation. At the beginning of December, the shipping lines should be able to have more or less correct amounts to communicate to their customers.
The Carbon Border Adjustment Mechanism (CBAM) should not be confused with the ETS. The CBAM will impose a carbon levy on specific imported goods: iron and steel, cement, aluminum, fertilizers, and hydrogen. This mechanism addresses carbon leakage by ensuring imports adhere to emission standards applicable in the EU. Importers will have to pay for a CBAM certificate which is calculated on any difference between the carbon price paid in the country of production and the price of carbon allowances under the EU’s trading system (ETS). The CBAM will enter into force in the last quarter of 2023 as a transitional phase. This phase will serve as a learning period for all stakeholders involved, and allow all the information about the embedded emissions to be collected. From Jan 2026, importers will have to pay in line with the ETS.
In the following graphs, we present a comparative analysis of the economic landscape between the present day and September 2020. These visual representations not only showcase the evolution of contract rates but also highlight the concurrent economic growth rates in various regions, as forecasted by the International Monetary Fund (IMF). This comprehensive perspective will shed light on the changing economic dynamics across the globe and help us better understand the trajectory of different regions in recent years.