Who Is Going to Bite EU ETS Bullet?

Surcharges Will Put Strain on Breakbulk Relationships

By Christoffer Dam-Larsen

As we get closer to the official introduction of the EU’s Emission Trading System within the shipping sector, owners and shippers are surely starting to ask: Who is going to pay? Let’s be honest, the end client will more than likely end up absorbing this additional tax on top of the freight cost. But what seems less clear is how the invoice will be presented… if it is being presented at all.

Container lines have already flagged fixed surcharges on to freight rates. Some liner services, like Maersk, have even added a plot twist: Choose our ECO Delivery and avoid the surcharges. Their alternative is a more environmentally friendly type of fuel, which naturally comes at a premium compared with the most used available bunker types. In other words, there is no escaping from a freight increase regardless of direction you take.

Having said that, this at least gives customers the chance to play the cards to their advantage, especially when forming their sustainability strategy. A clever move by Maersk, and others who may be as like-minded.

For the multipurpose and heavy-lift sector, the horizon seems a bit more unclear in respect to splitting the bill. One could fear that this will become yet another add-on, adding to the already existing list of extras carriers charge shippers for, for example, Bill of Lading fees, engineering fees and maintenance fees, to name just a few.

The method reminds me of a recent experience with a plumber at my apartment. The hourly rate presented in his offer looked fine, but when I received the final invoice, I had paid an additional surcharge for the usage of his car, in addition to road tolls and parking fees, as well as a surcharge for the use of his tools.

Sure, it is difficult to maintain a profession as a plumber without transport and tools and wear and tear should be compensated, but why not include it in the hourly rate? Post-fix disagreement avoided; instead, those two lines on the invoice worth €130 left a bitter taste on a job that cost €6,000.

In the same manner, shipowners should consider whether the time is right to include minor add-ons, as well as the incoming ETS tax, within vessel day rates. Owners and commercial managers should already have software to assist in the calculation of ETS taxes as part of their voyage calculations. From there, it is a reasonable task to create an overview of the average expected cargo moving to and from Europe. This would be a welcome hand for shippers, who are already struggling to guess what tomorrow will look like.

Yes, this would be an administrative initial burden to the carriers. However, considering the potential ongoing stress of generating these invoices for clients, it should be a bullet worth biting.

Christoffer Dam-Larsen is heavy-lift and transport chartering manager at Ocean Installer AS. 
PHOTO: UHL Falcon, Akita wind farm, Japan 2021. CREDIT: UHL