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№ 2/2023 (112), MARCH/APRIL

ISSN 1733-6732

Baltic Transport bimonthly-daily companion

Journal

MARITIME T E C H N O LO G Y The new port culture. Data democratisation. Interview with Patrick Verhoeven, Breaking silos to improve transport Managing Director-Policy and Strategy, (environmental-social-governance) International Association performance of Ports and Harbors S U S TA I N A B I L I T Y The holy grail of transport decarbonisation? E-fuels’ dependence on renewable energy defines transport’s green transition

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Dear Readers,

he spring of 2023 has arrived after a somewhat longer winter (though fairly mild in north-central Poland). With it, too, came the start of the BTJ Trip season! At the end of April, I had the pleasure of visiting Sweden upon the invitation from the Port of Norrköping to see how they are developing to firmly shake hands with the future (coverage will come shortly). Nothing beats seeing with your own eyes what one’s writing about behind the desk. As it happens, the following weeks will be more than abounding with all sorts of travels: transport logistics in Munich (finally, after so, so many years!), our first BTJ Trip \ Finland (and, hopefully, not the last this year), and TOC Europe in Rotterdam. More will come after the summer, just to mention the Port of Ystad hosting this year’s instalment of BPO’s Baltic Ports Conference. During these and other meetings, we will share and discuss our latest map idea, which currently goes under the production title of the Baltic Green Map. We intend to present on it the plethora of infrastructure & solutions offered by the region’s players, who put them in place to make the Baltic more environmentally friendly, not least for exporting the green know-how. For instance, if you’re a seaport running your machinery on HVO, have electric cargo handling equipment, your own farm harvesting solar or wind energy, installed an automatic mooring system or an onshore power supply facility, or you’re an energy company providing liquefied biogas or a firm or academia with tech for optimising shipping or port operations, or have an offshore wind farm, or are a shipping line with green tonnage, THE BALTIC GREEN MAP etc. – that is precisely what we will put the time to show off! map’s spotlight on. Also, it will indicate what’s in the pipeline, say, an e-methanol or green hydrogen production facility that will cater to the transport industry’s needs. I reckon the Baltic Green Map will require loads of research, so it will probably be a thing of this year’s autumn or winter. That said, if you would like to help us, please touch base and share your organisation’s green credentials at bgm@baltic-press.com Most likely, the map will be supplemented with a ‘Baltic Green Dictionary’ to provide more details. Other than that, I’m super glad to hand over yet another issue of our journal (though, like last year, we’ll add the Report on the Baltic port market in 2022 later, all “thanks” to shambles in certain Baltic countries’ national statistics… To brush away tears, the Baltic Port Map 2023 will be ready before long). This edition is also quite green: there is a lot about environmental-social-governance (ESG) responsibility and the hows and whys of our industry approaching these in many ways still for them uncharted waters. Naturally, there are also pieces on future fuels (including one on ensuring green remains green from well to wake). I also sat with Patrick Verhoeven from the International Association of Ports and Harbors to talk about the new port culture (ESG indeed forms a big chunk of it). A read from Technology on data democratisation also ties to the ESG topic. At the same time, the column’s other article shows how one walks the green talk owing to a modern digital solution (of course, made in the Baltic!). Transport miscellany is all about butter and baking cakes. I am joking, manifestly; there are also entries on a unique (quite literally!) island locomotive and how rivers used to serve as airstrips (if you think about it, water is a cheaper infrastructure than concrete). Have a flavourful read! N N O O W W

FF U U TT U U R R E E

EDITORIAL Baltic Transport Journal Publisher

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BEATA MIŁOWSKA

Managing Director

PRZEMYSŁAW OPŁOCKI

Editor-in-Chief

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Proofreading Editor EWA KOCHAŃSKA

Contributing Writers

MARK ARGENTIERI, ANDERS BERG, ARNAUD DIANOUX, MARC GILBERT, MARIE SOLBERG HATTEN, NATASSA KOUVERTARI, NIKOLAUS LANG, GEORGIA MAVROPOULOS, MICHAEL MCADOO, ODDBJØRN SLINNING, ANDRZEJ URBAŚ, ROBERTO VETTOR, TINE ELISABETH VIGMOSTAD

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If you wish to share your feedback or have information for us, do not hesitate to contact us at: editorial@baltictransportjournal.com

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Port of Helsingborg ISSN 1733-6732

№ 2/2023 (112), MARCH/APRIL

Baltic Transport bimonthly-daily companion

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Przemysław Myszka 2/2023 | Baltic Transport Journal | 3

LINER SERVICE EUROPE GREAT LAKES

The first and only yearround liner service between Europe and the Great lakes Quick transit time | Through bills of lading | Onward connections using Spliethoff’s European and American logistic network | Line-supplied containers, project, heavy lift, steel, forest products and bulk| Calling various Great Lake ports, including: - Valleyfield QC - Cleveland OH - Duluth MN - Ramey’s Bend ON - Chicago IL - Monroe MI www.spliethoff.com or greatlakes@spliethoff.com

CONTENTS

26 3

REGULAR COLUMNS

3 Editorial 8 BTJ calendar of events 9 Safety news by TT Club 10 Market SMS 12 What’s new? 14 Map news 17 What’s in the Cabinet 18 Venture forth 20 Chart of the issue: Managing emissions from ammonia-fuelled vessels 62 Transport miscellany 64 Who is who

26 Navigating the muddy waters of sanctions – The impact of the Russian aggression against Ukraine on the shipping legal landscape by Oddbjørn Slinning, Tine Elisabeth Vigmostad, and Marie Solberg Hatten 28 A year in focus – Lessons learnt about a world full of risk by Mark Argentieri

30 22

ECONOMY

22 Protectionism, pandemic, war, and the future of trade by Marc Gilbert, Nikolaus Lang, Georgia Mavropoulos, and Michael McAdoo

LEGAL

MARITIME

30 The new port culture – Interview with Patrick Verhoeven, Managing DirectorPolicy and Strategy, International Association of Ports and Harbors (IAPH) by Przemysław Myszka 34 The digital groundwork – Validating modern tech for better CII performance – and much more by Roberto Vettor 2/2023 | Baltic Transport Journal | 5

Discover the perfect view for a port. Never mind our stunning sea view. Every port has one. We’re talking about the railroad and motorway right outside our office windows. For a port, that’s a view, and a location worth its weight in gold. At the Port of Oxelösund, we have a direct connection to the Swedish railway system, and to Sweden’s biggest motorway, European route E4. This gives us unique possibilities when it comes to processing and transporting goods. If you value logistics with speed and flow, give us a call. The Port of Oxelösund is more than a port. We can handle your entire logistics chain and optimize every part of your goods’ journey, from start to finish. Our goal is to be the Baltic’s leading port terminal, with Europe’s best stevedoring services.

oxhamn.se

CONTENTS

NEWSLETTER BPO

56 BPO powers Baltic Ports for Climate – a determined approach to ambitious goals by Andrzej Urbaś

SUSTAINABILITY

36 Licence to operate – Interview with Anne Katrine Bjerregaard, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping’s Head of Strategy, Sustainability and ESG by Przemysław Myszka 40 Future colours – Using technology to verify a fuel’s true well-to-wake carbon intensity by Natassa Kouvertari 44 Getting shipping on the green transition track – assertively – Key takeaways from T&E’s Why an e-fuel mandate for ships? by Przemysław Myszka 48 The holy grail of transport decarbonisation? – E-fuels’ dependence on renewable energy defines transport’s green transition by Ewa Kochańska

58 53

REPORT

53 Baltic port market in 2022 by Marek Błuś

TECHNOLOGY

58 Data democratisation – Breaking silos to improve transport (environmental-social-governance) performance by Arnaud Dianoux 60 Disproved! – Just-In-Time ship port arrivals and the POLO Digitalization Platform for Ports and Logistics by Anders Berg 2/2023 | Baltic Transport Journal | 7

BTJ CALENDAR OF EVENTS transport logistic, 9-12/05/23, DE/Munich, www.transportlogistic.de/en transport logistic will once again be held in Munich from May 9 to 12, 2023. Being the world’s leading trade fair for logistics, mobility, IT and supply chain management, it unites the entire industry. Ten halls at Messe München will be turned into a 110,000-m2 hub for international innovations and contacts.

Smart Digital Ports of the Future, 16-17/05/23, NL/Rotterdam, sdp.ptievents.com For the first time since 2019, Smart Digital Ports of the Future returned to a live, in-person event on 11th and 12th May 2022 in Rotterdam. The event was attended by the industry’s leading innovators, and representatives from the world’s smartest ports. In 2023, Smart Digital Ports of the Future will return to Rotterdam even bigger and better.

European Environmental Ports Conference, 31/05-1/06/23, ES/Valencia, www.wplgroup.com/aci/event/european-environmental-ports-conference Once again, the event organised by ACI will bring together experts and key stakeholders in the European ports industry, in order to discuss the most recent changes, challenges, and developments. This event will encourage discussions around the latest policy changes, the energy crisis, green shipping corridors, pollution, climate change, and port relationships.

ESPO Conference 2023, 1-2/06/23, DE/Bremen, www.espo-conference.com/en This year’s edition, the 19 th overall in the history of the European Sea Ports Organisation, will combine broadening-the-lens sessions with hands-on debates – as always focusing on the most pivotal issues surrounding Europe’s harbours.

Breakbulk Europe 2023, 6-8/06/23, NL/Rotterdam, europe.breakbulk.com/home Breakbulk Europe is the largest gathering of project cargo professionals covering the entire supply chain. Breakbulk Europe brings together a truly international audience, representing over 120 countries under one roof: 9,000+ attendees, 4,000+ companies, and 500+ exhibitors.

TOC Europe 2023, 13-15/06/23, NL/Rotterdam, www.tocevents-europe.com With an unrivalled 40+ year heritage, here is the place to learn from and network with the world’s leading port decision-makers, policy experts, solution-providers and more underneath one roof, enabling you to both supercharge your strategies and make your port operation visions a reality.

GreenPort Congress & Cruise, 18-20/10/23, PT/Lisbon, www.portstrategy.com/greenport-cruise-and-congress To mark the 135th anniversary of the Port of Lisbon, the 18 th instalment of GreenPort Congress & Cruise will showcase this vital and vibrant Atlantic gateway to Europe from 18-20 October. The event brings together the whole port community and is a platform for the exchange of information on the latest in sustainable environmental practice.

The Motorship 44th Propulsion & Future Fuels Conference, 21-23/11/23, DE/Hamburg, www.motorship.com/propulsion-and-future-fuels-conference The conference provides senior executives with a meeting place to learn, discuss and share knowledge of the latest developments in efficient propulsion technology and low flashpoint, low carbon fuels.

SEE Y'ALL IN MUNICH!

8 | Baltic Transport Journal | 2/2023

B3.116

WORKING TOWARDS SAFER PRACTICES

TT Club is the leading provider of mutual insurance and related risk managment services to the international transport and logistics industry. Its core mission is to make the industry safer and more secure. To find out more visit ttclub.com

SAFETY NEWS BY

THE SAFETY VILLAGE IS BACK – AND BIGGER! TT Club and the International Cargo Handling Coordination Association (ICHCA) have again partnered to set up the Safety Village at the forthcoming TOC Europe 2023 (13-15 June) exhibition & conference in Rotterdam. The initiative is meant as a focal point for discussions, presentations, and promotion of innovations that have either already led to a safer supply chain or aim to in the future. “Following the success of both last year’s Safety Village launch at TOC Europe and the Innovation in Safety Awards presented in February 2023, TT and ICHCA are continuing with their joint campaign to make the international supply chain a safer working environment for everyone involved in cargo handling, and more secure and sustainable for the cargoes and equipment involved in global trade,” the parties underlined in a statement. This year’s Safety Village will feature an enlarged networking area and a stage with presentation facilities as a venue for workshops and panel sessions throughout TOC Europe’s three days. It will also provide opportunities for companies to showcase their innovative safety devices, processes, and products. Dedicated exhibition pods for past entrants of the safety award will be available within the Village (at a discounted rate offered by TOC’s organisers). “The united aim is to champion safety in the supply chain and to help develop new solutions for managing risks,” TT Club and ICHCA underscored. Peregrine Storrs-Fox, the former’s Risk Management Director, also highlighted, “It has been TT’s consistent mission to increase the levels of safety across the myriad of operational functions that constitute the global supply chain. We are delighted that our campaign has continued to attract substantial interest across the industry, again demonstrating the depth of commitment to enhance safety and the will to employ significant resources to minimise risk. The prominent positioning and extensive facilities of the Safety Village at TOC Europe will help bring together such like-minded companies and individuals to further the visibility of their innovations at this leading industry forum.” Richard Steele, ICHCA’s CEO, added, “In the recent past, our efforts together with TT have helped promulgate safety innovations, including Hapag Lloyd’s Cargo Patrol that detects suspected misdeclared dangerous goods; terminal automation advances from Künz and Yardeye in cooperation with CSX Terminals; VIKING’s Life-Saving fire suppressant systems, as well as safety devices developed by PSA International and Cargotec.” He furthered, “The awards early this year added to these with APMT’s Vessel Inspection Mobile App; Exis Technologies and Intermodal Telematics BV’s innovative Tank Container Temperature Monitoring. However, there are many, many more innovative ideas out there, and we are committed to giving them the oxygen to grow. The Safety Village at TOC in June will certainly fill the air with a fervour for safety.”

SHIPPERS AND FORWARDERS CALL FOR STRONGER DATA GOVERNANCE STANDARDS IN DIGITAL SUPPLY CHAINS The International Federation of Freight Forwarders Associations (FIATA) and the Global Shippers Forum (GSF) have jointly issued an agreed Charter for Protection and Governance of Data in International Trade, which sets out the minimum arrangements for data security and confidentiality that providers and operators of digital booking and trading platforms should adopt and incorporate in their End-User Agreements (EUAs). Recommendations in the Charter – approved by members of both organisations and believed to be the first declaration of rights for platform users in the trade and logistics sector – seek to enable a safe and trustworthy environment for conducting business based on a level playing field. “FIATA is committed to enabling the shift of trade from analogue to digital form to increase efficiency and resilience of global supply chains. In this journey, interoperability between platforms and their credibility amongst users are critical for success. This requires clear and fair rules on data exchange to protect confidentiality and ensure trust between stakeholders. FIATA is happy to lead this effort with GSF on the crucial topic of data governance and protection,” Dr Stéphane Graber, Director General of FIATA, commented. James Hookham, Secretary General of GSF, also underlined, “Digitalisation of international trade and transport paperwork offers huge savings and benefits for all parties in the supply chain, but its storage and processing comes with risks of loss, leakage, and unauthorised use that could expose commercially sensitive patterns and trends. Our Charter sets out reasonable expectations of the protections that should be in place to respect the ownership of the data, protect its confidentiality, and guard against unauthorised access and use.” 2/2023 | Baltic Transport Journal | 9

For more Market Statistics Made Simple please visit: www.baltictransportjournal.com

Photo: Energisystem AB

The Port of Ystad:

2.58m passengers served in 2022 (+8.9% yoy) Photo: Euroports Finland

The Port of Rauma:

1.08mt handled in Q1 2023 (+20.7% yoy) Exports totalled 655.2kt (+15% year-on-year), imports – 312.7kt (-0.1% yoy), and domestic traffic amounted to 111.5kt (+860% yoy). The Finnish seaport also took care of 42,834 TEUs (-3.8% yoy). However, when measured in tonnes, Rauma’s containerised freight traffic advanced by 0.7% yoy to 389.4kt.

The Port of Turku:

471,024 passengers served in Q1 2023 (+35.6% yoy) The Finnish seaport also took care of more containers over this year’s first three months, up 4.8% year-on-year to 789 TEUs. Some 449.2kt went through Turku’s quays (-25.7% yoy), including 227.9kt in export traffic (-22.6% yoy), 209.1kt of imports (-26.5% yoy), and 12.1kt handled domestically (-52.6% yoy).

The Port of HaminaKotka: 3.8mt handled in international traffic in Q1 2023 (+7.5% yoy)

Whereas exports contracted by 11.3% year-on-year to 2.39mt, imports advanced by 67.5% yoy to 1.41mt. The Finnish seaports also took care of 54.6kt in cabotage traffic, down 53.4% yoy. HaminaKotka’s container handling totalled 142,020 TEUs, up 0.3% on the Q1 2022 result.

HHLA’s sea container terminals:

6,396k TEUs handled in 2022 (-7.9% yoy) The company’s German facilities in Hamburg took care of 6,071k 20’s, a decrease of 4.1% year-on-year. HHLA’s other sea container terminals handled 326k TEUs (-47% yoy), a drop primarily attributed to the Russian war of aggression against Ukraine and the subsequent closure of the company’s facility in Odesa. On the other hand, HHLA’s intermodal division carried more containers last year, up 0.2% yoy to 1,694k TEUs. Railborne volumes totalled 1,409k (+2.2% yoy), while road 285k TEUs (-8.7% yoy). 10 | Baltic Transport Journal | 2/2023

The Swedish seaport also welcomed cruise guests last year, a total of 2,596. Freight-wise, 3.11mt went through Ystad’s quays (-7.9% year-onyear), of which 3.02 were general cargo (-9.6% yoy) and 85kt – dry bulk goods (+193% yoy). Ferries serving Ystad’s traffic carried 256,066 ro-ro cargo units (-9.6% yoy) as well as 798,105 private vehicles (+6.9% yoy).

The Port of Karlshamn:

154.4k ferry passengers served in 2022 (+12% yoy) Ferries serving the Swedish seaport also carried 45.5k private vehicles, an increase of 17.1% on the 2021 result. Karlshamn took care of 4.94mt last year (-2.1% year-on-year), including 2.68mt of general cargo (-2.2% yoy), 1.69mt of liquid bulk (+8.1% yoy), and 573kt of dry bulk goods (-23.4% yoy). A total of 78,163 ro-ro cargo units were handled (-9.3% yoy), plus 425 TEUs (-62.1% yoy).

The Port of Tallinn: 1,396k international ferry passengers served in Q1 2023 (+54.7% yoy)

The Tallinn-Stockholm route advanced the most – by 90% year-on-year to 102k travellers. The Estonian seaport’s leading ferry service, to and from Helsinki, also noted an increase – by 55.6% yoy to 1,256k passengers. On the other hand, the Muuga-Vuosaari crossing contracted by 14% yoy to 27k people. At the same time, OÜ TS Laevad, the port’s local ferry traffic subsidiary, took care of 350k passengers, up 8.4% on the Q1 2022 result. Cargo-wise, the Port of Tallinn handled 3.36mt over January-March 2023 (-30.6% yoy), including 1.73mt of wheeled (ro-ro) cargo (+4.1% yoy), 527kt of dry bulk (-28.5% yoy), 515kt of liquids (-70.2% yoy), 467kt of containerised freight (-15% yoy; 52,649 TEUs, -22.4% yoy), 104kt of break-bulk (-34.9% yoy), and 22kt of non-marine goods (+354% yoy).

Finnlines:

750k ro-ro cargo units carried in 2022 (-4.5% yoy) On the other hand, the company’s fleet transported more non-unitised freight, up 1.1% year-on-year to 1,426kt. Finnlines also served 648k passengers last year, an increase of 13.3% yoy. At the same time, the shipping line carried 138k pax cars (-19.3% yoy).

MARKET SMS The Port of Gdynia:

28.2mt handled in 2022 (+5.6% yoy) The sharpest increases were noted in the turnover of coal & coke (+174% year-on-year to 3.4mt) and timber (+109% yoy to 533.5kt). General cargo handling (excl. timber), Gdynia’s leading trade, contracted by 4% yoy to 15.55mt. The Polish seaport also took care of 4.74mt of grains (-0.6% yoy), 1.72mt of other dry bulk goods (+0.4% yoy), and 2.25mt of liquid bulk (-10.5% yoy). Alike other major ports in Poland, Gdynia also handled fewer containers, down 7.3% on the 2021 result, totalling 914,448 TEUs. On the other hand, more ro-ro cargo units went through Gdynia’s quays: +7% yoy to 318,050. Passenger traffic also advanced: by 40.9% yoy to 657,020 travellers (of which ferry 600,029, +32.5% yoy, and cruise 56,991, +334% yoy). Ferries visiting Gdynia also brought more private vehicles: +23% yoy to 106,753.

Wasaline:

267,757 passengers served in 2022 (+149% yoy) Photo: Port of Oxelösund

The company’s Aurora Botnia ferry also transported more private vehicles, up 126% on the 2021 result to 55,661 units. On the freight front, Wasaline carried 22,191 ro-ro cargo units between Umeå and Vaasa, an 4.4% year-on-year increase.

The Port of Oxelösund:

4.96mt handled in 2022 (+6.6% yoy) Dry bulk handling, the Swedish seaport’s leading trade, rose 24.8% year-on-year to 4.42mt. On the other hand, the turnover of general cargo and liquid bulk contracted – by 5.9% yoy to 351kt and by 74.5% yoy to 188kt, respectively. Then again, Oxelösund’s container traffic was up 39.7% yoy on the 2021 result, totalling 10,096 TEUs. Wheeled cargo traffic amounted to 6,571 ro-ro cargo units (-13.8% yoy).

Viking Line:

4.95m passengers served in 2022 (+114% yoy) At the same time, the company’s fleet carried 117.8k ro-ro cargo units, down 8.9% on the 2021 result.

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Naantali’s ferry terminal building’s upgrade – underway The Finnish seaport has started modernising its 1974-built facility, with the opening stage of its renovation, the first floor that serves footed passengers, slated for August 2023. Other premises are due for completion in spring 2024. Meanwhile, the geothermal energy project, which will allow for the heating and cooling of the premises, is close to completion. The renovated ferry terminal building will also offer office space for rent.

Vestas takes over ST3 Offshore The insolvent manufacturer of steel foundations and other structures for the offshore wind energy (OWE) market located in the Port of Szczecin has a new owner. The receiver of ST3 Offshore has agreed to the purchase sum of PLN170.5m (approx. €36.2m). Vestas plans to build a gondola and wind nave factory nearby Police, including for the V236-15MW wind turbine model. The ST3 Offshore facility will serve as a production & logistics base for the investment. Vestas will supply 76 turbines for the Polish 1.2GW Baltic Power OWE farm (intended to come online in 2026), for which PKN ORLEN’s installation terminal will be erected in the Port of Świnoujście (commissioning scheduled for 2025). ST3 Offshore used to be Europe’s largest producer of OWE steel foundations and transition pieces (in 2018). The company incurred irreparable losses due to inviable projects it signed off on in 2015-2016. In March 2020, the court declared ST3 Offshore bankrupt. Vestas’ takeover was the sixth and final attempt to sell ST3 Offshore’s assets by the receiver.

SKB takes over the harbour in Forsmark Photo: Port of Naantali

Kalundborg grows – with new facilities and Atlantic cargo traffic First, Comet Bio, in partnership with Meliora, has commissioned a production plant in Kalundborg, at the same time renting space in the Danish seaport for storage ahead of export. The 3,816 m2 area, which Comet Bio entered on 1 March 2023, sits within the East Harbour, which previously housed the port’s container terminal (moved to the New West Harbour). In Kalundborg, Comet Bio produces Arrabina, a prebiotic fibre arabinoxylan made from wheat straw. “Kalundborg was chosen because there was already a factory here where bio-ethanol is made from straw. You separate the ethanol from our fibre product in a production process,” Freddy Dybdahl Andersen, Operations Manager at Comet Bio Denmark, explained. The output of Comet Bio’s Danish factory will be stored in tank containers for shipping over the Atlantic, where the product will be dried into powder form for release onto the North American market (the company is awaiting EU approval to sell its goods on the European market too). Next, the Danish seaport is setting up buildings for customs, veterinary and food inspection, and for its own use, such as a workshop, depot and welfare. The brand-new facilities will become part of the port’s New West Harbour and sit next to the container terminal. “The veterinary inspection is an innovation. We don’t have it at the moment, but it is necessary if the container terminal is to be able to accept certain types of goods, e.g. foodstuffs, and the Port of Kalundborg will, with this investment, get additional volumes of goods through the container terminal,” Jesper Wienmann Hansen, Board Chair of the Port of Kalundborg, underscored. The facilities will be ready by this summer.

The Swedish company taking care of spent nuclear fuel & waste is running the Port of Forsmark as of 1 April 2023. The harbour, used for handling Sigrid that transports radioactive waste and spent nuclear fuel from the Forsmark power station to deposits in Oskarshamn, was previously operated by Forsmarks Kraftgrupp, a subsidiary of Vattenfall. “The port is an important link in our activities to take care of and transport radioactive waste. The takeover means that SKB will be responsible for port operations, ship handling, security, and maintenance,” Peter Olsson, the company’s Operational Safety , Security and Transport Manager, said. SKB will develop the Port of Forsmark to serve more ships as well as use the harbour in its construction projects (to lower the use of road transportation), including a repository for short-lived radioactive waste in Forsmark. SKB hopes to receive a green light from a land and environment court by the end of May 2023, after which the company will start upgrading the port.

Photo: SKB

Rauanheimo wins Junnikkala’s sawmill logistics tender The Finnish company has been chosen as the multi-year logistics partner for the under-construction sawmill at Laanila in Oulu, with goods to be exported via the Port of Oulu. The contract – which will be executed alongside Adolf Lahti, another company from the KWH Logistics family – includes logistics operations at the sawmill, transports from it to the lumber dock, and all port services. To make the operations environmentally friendly, Rauanheimo and Adolf Lahti will purchase electric forklifts to process the goods at the sawmill, while a hybrid Mantsinen of the 200 DER model will be employed in the Port of Oulu (which electrified the dock in question). The €75m Laanila investment will come online in December 2023. The 350k m3 of yearly production capacity facility will create 70 direct jobs in Oulu (200 in total). “We were looking for a partner with know-how and ability to manage the sawmill’s product logistics as a whole, from the end of the production line to international transports. By choosing Rauanheimo, we now also have the service and competence potential of KWH Logistics in Oulu and throughout Finland at our disposal. Rauanheimo’s desire to develop sawn timber logistics in a customer-oriented and cost-effective manner played an important role in our selection,” Kalle Junnikkala, CEO of Junnikkala, commented. 12 | Baltic Transport Journal | 2/2023

WHAT’S NEW? A new Liebherr in Gdynia – and tech-upgrade in Gdańsk The cargo handling fleet of HES Gdynia Bulk Terminal has grown with the delivery of a hybrid LHM 550 mobile harbour crane. The new 48 m long boom machinery offers a max 124t lifting capacity. HES Gdynia’s LHM 550 was brought to the Port of Gdynia on board Meriaura’s heavy lift vessel Aura. Also, the manufacturer’s Container Cranes division will provide a hybrid green energy storage solution (ESS) to one of 18 Liebherr rubber-tyred gantries (RTGs) working for the Gdańsk-based Baltic Hub container terminal. The retrofit will see the addition of a Liduro ESS, along with exchanging the existing 13 L genset with a smaller 8 L one. The Liduro LES 200 is a capacitor system designed and developed by Liebherr-Electronics and Drives, designed to capture and store energy generated during hoist lowering and braking that would otherwise be wasted. The stored energy is then deployed during the hoisting cycle to reduce the overall demand on the genset, allowing for fuel & emission reductions. According to the manufacturer, dual-layer capacitors can rapidly charge and discharge many times without a drop in performance, making them a suitable solution for applications requiring high power and short-duration energy storage, such as that found in container handling. The pilot retrofit will help Baltic Hub assess the technology’s viability for upgrading the remainder of the terminal’s Liebherr RTG fleet.

Mukran picked as Baltic Eagle’s TP base port Van Oord has chosen the German Baltic seaport to transship and load 50 transition pieces (TPs) for Iberdrola’s 476MW offshore wind farm (30 km off the island of Rügen). Mukran Port has already handled the first TPs for Baltic Eagle, scheduled to come online at the end of next year, providing 1.9TWh annually (sufficing the electricity need of some 475k households and cutting the local CO2 emissions by almost one million tonnes/year). The TPs come from the Spanish Avilés. Baltic Eagle’s turbines will be provided by MHI Vestas Offshore Wind (the MVOW V174 model of 9.53MW capacity). EEW’s mega-factory in Rostock will supply the monopiles. Van Oord’s heavy-lift vessel Svanen will take care of the installation, while the company’s Nexus and Dig-It will lay the cables (with 50Hertz installing the offshore substation).

Trelleborg’s new heavy-duty gear The Swedish seaport’s cargo-handling fleet has been reinforced with a Konecranes reachstacker of the SMV 4538 CCX4 model that can lift 45t. The new equipment – to run on hydrotreated vegetable oil – has been deployed on Trelleborg’s intermodal terminal, joining two other reachstackers from Konecranes.

Pori completes two port development projects The Finnish seaport has recently added a 270 m long quay to Kallonlahti in the Mäntyluoto Harbour and rebuilt the 1959 oil pier in Tahkoluoto. The investments totalled almost €30m, including €7.3m of support from the EU’s Connecting Europe Facility. The longer quay wall in Kallonlahti will serve, among others, the new concentrates terminal being constructed by Boliden. In the Tahkoluoto Harbour, the pipelines were relocated from water onto land. The port authority says the modernisation here makes it possible to double the liquid bulk traffic. Soon, the Mäntyluoto Harbour will grow with a new ro-ro ramp (also to be used for military mobility following Finland’s joining NATO).

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For Europe-wide maps news on ro-ro & ferry container intermodal please visit: www.europeantransportmaps.com

Tundraland employed outside the Baltic Wallenius SOL has chartered the ro-ro ship to CLdN, which, in turn, put her on the company’s network serving Belgium, the Netherlands, and England on 13 February 2023. The GT 23k, 190.8 by 26.4 m, 2007-built vessel offers 2,774 lane metres (lm) of capacity and is suitable for carrying SECUs. The charter results from Wallenius SOL’s recent deployment of its new flagships of the Enabler class, each offering 6,442 lm. “We saw an opportunity to optimise our liner traffic, assessing a more cautious growth in 2023 than previously planned for,” Ragnar Johansson, Wallenius SOL’s CEO, commented. In turn, Gary Walker, COO at CLdN RoRo, said, “We have seen a significant increase in demand for CLdN’s unaccompanied freight and multi-modal logistics solutions. This charter provides an agile response to customer demand and will enable CLdN to explore new possibilities linking mainland Europe [Rotterdam & Zeebrugge] with destinations in eastern England [a.o., Tilbury].”

More runs on TX Logistik’s Germany-Italy network As of 22 February 2023, the company’s trains between Rostock and Verona run six times per week, up from four in the past. Also, the frequency of the Lübeck-Verona service has been upgraded – up to eight weekly round trips. The Lübeck-Segrate (previously Melzo) connection has been doubled – to four weekly runs. Lastly, TX Logistik’s Leipzig-Sona service now offers ten instead of eight weekly departures.

New England-Poland sea container service Ellerman City Liners kicked off a new rotation linking Gdynia with Teesport and Tilbury, with the first sailing taking off in Poland on 28 April 2023. The weekly service offers a transit time of three-four days. “Customers can expect fast and reliable transhipment options to the USA, Portugal, and Spain through Ellerman City Liners’ Iberia short-sea service. All container size-types will be offered (standard and pallet-wide equipment), and customers will also be able to source equipment from various inland locations in Poland,” Ellerman City Liners shared in a press release. “Together with our UK customer service team and our well-established and experienced Polish partner Safe Shipping, our new service will provide a seamless end-to-end solution that is tailored to our customers’ needs. Through transhipment in the UK, we will offer one of the best transit times to US East Coast out of Poland,” added the company’s Commercial Director, Peter Andrews.

Birka Stockholm changes hands – and prepares to set sail anew Gotland Company has purchased the cruise ship (for about €38m) from Eckerö, with plans to offer intra-Baltic voyages as of spring 2024. With the help of its subsidiary Destination Gotland, Gotland Company will set up the taxfree Stockholm-Mariehamn-Visby itinerary (traffic details dependent on the season). “Birka Stockholm is a refined passenger ship, and we can see ample opportunities for her to complement Gotland’s traffic. In 2022, we continued to streamline our fleet to focus on infrastructure and future shipping. With Birka Stockholm, we further strengthen our passenger ferrying position within the Baltic,” Håkan Johansson, CEO of Gotland Company, commented. Marcus Risberg, Destination Gotland’s CEO, added, “Visby has become an increasingly attractive cruise port, and we see a splendid chance to develop our operations Photo: Arild Vågen/Wikimedia Commons and create new reasons for visiting Gotland. For the island’s dwellers, it means more departures for those having more time and are without cars – or who want to pleasure cruise.” According to the seafarer labour union Seko, the Swedish-flagged Birka Stockholm can provide up to 150-250 job posts depending on the season. The 2004-launched (as Birka Paradise) Birka Stockholm is 177 m long and 28 m wide, offering room for 1,800 passengers. The 1A Super ice-class vessel was providing cruises from Stockholm till the outbreak of the coronavirus pandemic. She plied in the colours of Birka Cruises, a daughter company of the Mariehamn-based Eckerö.

Gotlandias – sold (outside the Baltic)…

… and Star too leaves the Baltic

First, the Swedish Destination Gotland sold the high-speed craft Gotlandia to the Greek Seajet, who will employ the ferry in traffic between Piraeus and Cyclades this summer. The 1999-built ferry was out of service since 2018, laid up in Visby, up for sale or charter. Gotlandia was already reflagged to the Cypriot flag and renamed Superrunner Jet II. “It feels very positive; we have tried to sell or charter the ship for a long time. Vessels cost money, irrespective of whether they sail or not, so it is good for us that she can now operate further and benefit travellers other than from Gotland’s traffic,” Håkan Johansson, Gotland Company’s CEO (the parent enterprise of Destination Gotland), commented. Next, Gotland Company found a buyer for its other high-speed craft, constructed in 2006, also from Greece: Golden Star Ferries (offering a network connecting the country’s mainland with its islands in the Aegean Sea). “We are pleased that Gotlandia II has new owners. For Gotland Company, it means a continued focus on our larger vessels but also on our work on developing next-generation ships,” Johansson said.

Tallink Grupp will bareboat-charter the ferry to the Irish Continental Group (ICG) for 20 months, with a 2+2 years extension possibility and the option to buy the ro-pax. The vessel, flying the Estonian flag, has been serving the Helsinki-Tallinn crossing since 2007, offering room for 2,080 passengers and 2,000 lane metres for freight. Her last Baltic departure will take place on 1 May 2023. Four days later, she is expected to start plying for ICG, most probably across the company’s Pembroke-Rosslare link. “We have been looking for alternative work for our vessel Star for some time now, and the search became more focused as the arrival of our new shuttle MyStar drew closer last year. There has been great interest in chartering her over the years, and I am pleased we have secured a good agreement for her now with the Irish Continental Group. This type of alternative work for our vessels has been and continues to be a good solution, strengthening our company and bolstering income following a long crisis period,” Paavo Nõgene, Tallink Grupp’s CEO, said.

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MAP NEWS New feeder service in the Baltic CMA CGM has launched the Denmark Express CS rotation, linking the region’s Aarhus, Copenhagen and Fredericia seaports with Bremerhaven and Hamburg. The weekly loop is served by the container ship Ruth (868 TEUs capacity).

Bore’s con-ro newbuilding programme – completed Bore Wind, the third & final vessel for carrying containers and ro-ro cargo units ordered by the Finnish shipping line, received her name in Amsterdam. The 120 by 21 m, 7,000 dwt ship offers 435 lane metres for wheeled freight and space for 264 TEUs. Like her sister ships, the latest addition to Bore’s fleet has the 1A ice class. The dual-fuel (LNG) trio – Bore Way (delivered in spring 2022), Bore Wave (January 2023) and Bore Wind – were constructed by Wuhu Shipyard. All three will serve UPM’s (paper cargo) traffic between the ports of Rauma and Rostock under a long-term charter.

Express 5 heads towards the Baltic Austal Philippines has delivered the 115 by 30.5 m high-speed catamaran, which should call Rønne after around 25 days (counting from end-March 2023). Once in the Baltic, Molslinjen’s brand-new LNG-capable, 37 knots of operating speed ferry will start sailing between Rønne and Ystad, flying the livery of Bornholmslinjen and offering room for 1,610 passengers and 617 lane metres for freight. Austal Australia designed Express 5, following its development of the 2019-delivered Express 4. “Express 5 is the largest vessel, by volume, that Austal has ever constructed, and to deliver this new high-speed ferry despite the impact of the COVID pandemic over 2020-2022 and Super Typhoon Rai in 2021, is simply outstanding,” Paddy Gregg, Austal’s CEO, underlined. He furthered, “Despite the challenges faced, the Austal Philippines team has delivered the most impressive vessel ever to join the Molslinjen fleet. The highspeed ferry performed exceptionally well during sea trials and will soon provide a class-leading service to Bornholm in Denmark.”

Germany-Sweden high-speed ferry service Starting 1 April 2023, FRS Baltic’s catamaran Skane Jet connects the Swedish Trelleborg with the German Mukran (Sassnitz) within two and a half hours. The vessel offers room for 800 passengers and space for 200 vehicles. In preparation for serving Skane Jet, the Port of Trelleborg put in place two ramps: 25 m long and 6.0 m wide.

Photo: CLIP Group

2/2023 | Baltic Transport Journal | 15

Karlshamn Trelleborg Karlshamn Trelleborg

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WHAT’S IN THE CABINET Green mobility supported through AFIF A total of 26 projects from 12 EU Member States will receive €189m for installing alternative fuels infrastructure along the block’s Trans-European Transport Network. “Applications for AFIF funding continue to increase, illustrating the transport industry’s interest in the switch to sustainable transport. Our investment of €189 million will translate into approximately 2,000 charging points, plus some 63 hydrogen refuelling stations. Four projects will support the electrification of ground-handling services at airports, for example, by electrifying ground-support equipment and installing recharging infrastructure for service vehicles,” Adina Vălean, EU Commissioner for Transport, highlighted. Among the projects is the over €27.2m (nearly 8.2m of co-funding) Bothnia Heavy Duty Hydrogen Corridor for setting up six hydrogen refuelling stations and two renewable energy-fed electrolysers in northern Sweden. Of all the initiatives, however, only one EU seaport will receive aid – the Port of Amsterdam for providing cold ironing to cruise ships. The Alternative Fuels Infrastructure Facility (AFIF) combines grants from the Connecting Europe Facility with capital from financial institutions.

FuelEU Maritime moves forward The European Parliament and the Council have reached a political agreement on increasing the maritime transport sector’s contribution to reaching the EU-wide target of reducing net greenhouse gas (GHG) emissions by at least 55% by 2030 and achieving climate neutrality by midcentury (in 2021, waterborne transport generated 3-4% of the block’s CO2 emissions, according to the European Commission). The co-legislators agreed on FuelEU Maritime, a new regulation ensuring that the GHG intensity of fuels used by the shipping sector will gradually decrease over time: by 2% in 2025 to as much as 80% by 2050. The targets cover not only CO2 but also methane and nitrous oxide emissions over the entire lifecycle of the fuels. The regulation also provides a voluntary pooling mechanism, allowing GHG intensity compliance balance on a fleet/pool level.

The 2023 GBER amendment The European Commission has endorsed a targeted amendment to the General Block Exemption Regulation (GBER) to facilitate, simplify, and speed up the support for the EU’s green and digital transitions, in line with the Green Deal Industrial Plan, a move welcomed by the Federation of European Private Port Companies and Terminals (FEPORT). Investments for the construction, replacement, or upgrade of port infrastructures are included, meaning that aid can be granted without prior notification as long as the mentioned threshold is not surpassed. The new definition of ‘port infrastructure’ includes green refuelling and recharging infrastructure in ports supplying all transport modes. “In addition, it is very positive to note that the amended GBER now explicitly exempts aid for refuelling and recharging infrastructure supplying mobile terminal equipment. Aid for such infrastructure is key in speeding up the decarbonization of cargo handling operations and will contribute to the competitive position of terminal operators in the EU,” underscored FEPORT.

The ‘High Seas Treaty’ The United Nations (UN) member countries have agreed to protect marine biodiversity in international waters, providing a legal framework for, among others, establishing marine protected areas, a procedure for managing returns from the genetic resources of the high seas, and the requirement to carry out environmental impact assessments for activities such as open-ocean deep sea mining. It will also see the creation of a conference of the parties to monitor the progress, also holding signatory states accountable for the treaty’s implementation, with bodies like the International Maritime Organization tasked with enforcing the treaty’s rules and regulations. António Guterres, UN SecretaryGeneral, commented, “This action is a victory for multilateralism and for global efforts to counter the destructive trends facing ocean health, now and for generations to come.” He furthered, “It is also vital for achieving ocean-related goals and targets of the 2030 Agenda for Sustainable Development, and the Kunming-Montreal Global Biodiversity Framework,” the so-called ‘30 by 30’ pledge to protect 30% of the planet’s lands and inland waters, as well as marine and coastal areas, by 2030 made by a UN conference in Montreal in December last year.

Photo: Canva

2/2023 | Baltic Transport Journal | 17

VENTURE FORTH THE LÅNGNÄS MEGA GREEN PORT STUDY • OX2 and Ålandsbanken Fondbolag, the Bank of Åland’s fund management subsidiary, have teamed up to conduct a 12-monthlong feasibility study on setting up a green hydrogen production facility on the Åland Islands. The parties – supported by Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, EuroMekanik, and several other consultancies – will look into the practical, technical, and financial conditions for setting up the 3,000MW electrolyser infrastructure. The inquiry will also see what business opportunities the investment will open: directly on the Åland Islands and beyond, as OX2 develops various projects in the north-to-south Baltic,

including offshore wind energy farms (between Finland and Sweden), energy storage sites (in Poland), or a hydrogen pipeline (from the Nordics to southern Baltic, with potential branch pipes to Bornholm or Gotland). Apart from providing clean marine fuel, the facility could also cater to the needs of the agricultural and manufacturing industries. OX2 and Ålandsbanken Fondbolag are already working together: on the Noatum South and North offshore wind energy farms (3,000MW and 5,000MW capacity, respectively). Most recently, OX2 has initiated the development of the 1,400MW offshore wind farm Tyrsky in the Gulf of Bothnia (about 30 km northwest of Kaskinen). •

SHIP ‘ECO-DRIVING’ IN GÄVLE • Through its new digital queuing system Time Slot Gävle, the Swedish seaport is abandoning the ‘first come-first served’ scheme for vessels calling to one of its energy harbour’s seven terminals. From February 2023, vessels can apply for queue slots in the Port Activity App, which verifies the scheduled times with automatic ship positioning data. “With the app, we optimised the vessels’ turn-around in the port area. The cool thing about Time Slot Gävle is that we can influence the entire journey to the port from, for example, Netherlands, Poland, or the Swedish west coast. We make it possible for all vessels on their way here to choose eco-driving,” Niklas Hermansson, Head of Traffic and Safety at the Port of Gävle, highlighted. Since 2017, the Port of Gävle and its partners have been working on making

vessel calls more efficient and sustainable. This work has led to one of the first mobile apps for real-time data exchange between organisations that collaborate around vessel calls. The Port Activity App was developed with the Swedish Maritime Administration, the Port of Rauma, Satakunta University of Applied Sciences, and the Finnish Transport Agency. The app has now been used for almost two years by the actors in the Port of Gävle. Time Slot Gävle is a continuation of that work, with the Swedish seaport developing the vessel queuing system for over three years in close cooperation with the port’s seven energy terminals, with the support of the Swedish Energy Agency, and in partnership with Tärntank Ship Management, Preem, and the Swedish National Road and Transport Research Institute. •

METHANOL CONVERSION KITS FOR MARINE DIESEL ENGINES • ScandiNAOS, the Chalmers University of Technology, and the Swedish Maritime Administration (SMA) have launched a project to develop dual-fuel kits for converting new and existing diesel engines (up to 1,000kW) to methanol operation. The two-year-long project will see ScandiNAOS develop and implement a dual-fuel kit in a pilot boat owned and operated by SMA (the organisation, which intends to remove fossil fuels from its fleet by 2045, already operates a methanolpowered pilot boat equipped with a single-fuel compression ignited methanol engine which completed successful trials in December 2021, a conversion supported by the FASTWATER consortium). The pilot boat is expected to be ready for field trials in Q3 2023, a process which will

go on for 9-12 months, during which the dual-fuel kit will be tuned and optimised based on operational experience and from the results of the research and laboratory tests carried out by Chalmers. The project has a budget of SEK8.6m (around €1.8m), half of which comes from the Swedish Strategic Vehicle Research and Innovation programme. The methanol producer Proman and the Methanol Institute provide industry funding. “The adoption of dual-fuel kits will enable conversion of more ships and boats more quickly, since a conversion kit can be cost-efficiently applied to existing engines while maintaining the fuel flexibility to run on either methanol, MGO [marine gas oil] or HVO [hydrogenated vegetable oil],” the project parties said. •

NORDIC’S LARGEST E-TRUCK DEPLOYMENT • The Danish shipping & logistics company DFDS has added 20 Volvo FM Electric lorries to its Arendal depot in Gothenburg. The e-trucks can carry a combined total load of 44t, having a range of up to 300-380 km when fully charged. The commission forms part of DFDS’ plan to have 125 e-trucks in its fleet by the end of 2023. The company intends to have 25% of its truck’s battery electric by 2030, a step towards achieving carbon neutrality by mid-century. At the same time, APM Terminals Gothenburg has joined Gothenburg RoRo Terminal and Stena Line in prioritising the flow of heavy-duty electric trucks (the three account for about 90% of the Swedish seaport’s lorry traffic). As of 1 March 2023, such vehicles are being granted priority passage and handling by the container terminal at the Port of Gothenburg to award haulage companies that have already invested in electrification as well as to encourage those considering it. Specifically, the new solution means that e-trucks are 18 | Baltic Transport Journal | 2/2023

fast-tracked through APM Terminals’ gate 4 via a reserved lane, also enjoying prioritised handling within the terminal area. “This creates efficiency gains and planning ability that is particularly important for electric trucks, as there are strict demands on optimisation given the limited range of electric vehicles,” explained the Port of Gothenburg in a press release. “Electric trucks are a major investment, so the fact that we now have priority in the container terminal is really important to us. It means that we can perform more assignments every day, which benefits both us and our customers. It also means that we can recoup the investment more quickly,” Johan Söderström, Chief Commercial Officer at Skaraslättens Transport, underlined (his company has recently deployed three electric trucks in traffic with APM Terminals Gothenburg and decided to invest in two more following the favourable treatment of e-trucks; these will join the company’s fleet this May). •

VENTURE FORTH SEABER CHOSEN – TWICE • First, the Finnish tech company has been entrusted by the also from Finland fuel producer Neste to eco-optimise its logistics. The latter will use the former’s software to plan maritime logistics activities such as shipping schedules and port calls. “Seaber’s intelligent technology provides data-led decision support that optimises fleet TCE (Time Charter Equivalent) and reduces costs per tonne-mile, bringing down shipping’s environmental impact. In addition to single cargo voyages, it supports multi-parcel and multi-port voyages, where unnecessary ballast voyages and low utilisation rates are common,” the tech company explained. Next, Wilson, a Norwegian shipping line

disposing of a 130-big fleet, has commissioned Seaber to digitalise its vessel scheduling to drive efficiency, likewise, reduce costs & emissions. “Our aim is to move cargo safely, on time, and maximise the efficiency and sustainability of European sea transport. We were looking for software solutions that could support our mission and believe that Seaber is the best tool to help us further digitalise our operations. It is important for us to improve collaboration and the service we provide to our customers. This is a pioneer project, and we expect to set a new standard for how the entire industry manages scheduling in the future,” Jostein Bjørgo, Commercial Director at Wilson, underlined. •

NORSEPOWER SCORES ANOTHER ORDER • The Finnish manufacturer of wind-assisted propulsion, in the form of modern automatic Flettner rotors, has been commissioned by MOL to install two sails on a 200k dwt dry bulker. The 35 m tall and 5.0 m in diameter Rotor Sails will be mounted in H1 2024 and

are expected to lower the vessel’s fuel consumption by 6-10% (combined with voyage optimisation technology). The installation results from MOL co-op with Vale, for whom the ship currently carries iron ore under a mid-term contract. •

POWERCELL TO DELIVER THE WORLD’S LARGEST MARINE H2 FUEL CELLS • The Swedish company’s 6MW (green) hydrogen fuel cells will be fitted on two of Torghatten Nord’s ferries, saving the environment 26.5kt CO2 emissions annually. The €19.2m order, won in a tender, will see PowerCell working with SEAM, a Norwegian systems developer and integrator of low- and zero-emission solutions for the marine industry, responsible for the electrical installations on the ferries. The final delivery is to take place in Q4 2024. Torghatten Nord and PowerCell also intend to enter into a long-term service agreement. “[The] announcement comes as

part of a Norwegian government initiative that aims to see all ferries crossing the Vestfjorden between Lofoten and Bodø in Northern Norway be emission-free. With a long and demanding crossing of up to four hours, green hydrogen was deemed the most viable solution to supply the power these vessels require. The ferries – each with a capacity of 599 passengers and 120 cars – are scheduled to operate from October 2025 as part of a replacement programme for similar sized and operable fossil energy-powered ferries,” PowerCell shared. •

STOCKHOLM TO SCRUTINISE CCS • The Swedish port authority will conduct a feasibility study, granted that the country’s Energy Agency awards funding, on setting up a node for captured carbon dioxide in Norvik. The NICE project (Norvik Infrastructure CCS East Sweden) will follow an initial general proof of concept study designed with participating stakeholders to clarify the prerequisites and conditions for establishing an interim storage facility at the Ports of Stockholm’s harbour in Norvik. The feasibility study aims to develop a proposal for a systemic approach to carbon capture & storage (CCS), including a solution for transport and handling between source emission facilities and the end capture site, risk analyses, business models, and permit issues. Once established, the

system would provide third-party access. Clara Lindblom, Chair of the Board at the Ports of Stockholm, underscored, “Stockholm Norvik Port has large potential to become a carbon dioxide hub. The proposed transport solution would be able to handle a significant proportion of the carbon dioxide transport from Sweden, potentially around 9 million tonnes per year, with a potential to become the largest of all similar projects in Sweden.” The port authority added, “The work will also inspire others to establish similar regional collaborations with regard to carbon dioxide infrastructure.” The feasibility study will be carried out in collaboration with Stockholm Exergi, Mälarenergi, Söderenergi, Vattenfall, Heidelberg Materials, Nordkalk, and Plagazi. •

WÄRTSILÄ’S FIRST CCS-READY SCRUBBER ORDER • Four 8,200 TEUs container ships will be equipped with the Finnish tech company’s open loop 35MW scrubber systems, prepared for upgrading to capture & store carbon. The delivery is expected to take place in 2023. Wärtsilä is currently testing its carbon capture & storage (CCS) system at a 70% capture rate; a pilot installation will occur within 12 months. “The scrubbers are termed CCS-ready because, as part of their installation, Wärtsilä will perform additional design and engineering work to ensure that future retrofits for a full CCS system on the vessels have already been accounted for during the newbuilding construction stage,” the manufacturer said. The company also explained, “Wärtsilä will take measures to ensure adequate space for the future

installation of the CCS system, incorporate considerations for minimising idle load and optimising utilities, and prepare the control and automation system accordingly. CCS-ready scrubbers will also be designed for integration with a particulate matter filter.” Scott Oh, Director at Wärtsilä’s Exhaust Treatment Asia, also said, “We are very excited to announce this world-first order for our CCS-ready scrubber solution. By investing in a CCS-ready scrubber, shipowners will future-proof their assets and enable a smooth transition to CCS adoption once the technology is mature in the very near future. CCS is one of the key solutions to enable maritime decarbonisation in a short time frame, and we look forward to progressing our technology further.” • 2/2023 | Baltic Transport Journal | 19

CHART OF THE ISSUE

20 | Baltic Transport Journal | 2/2023

”

Digitalization creates safe, green and efficient intelligence for ports of the future.

Port of Kaskinen (Kaskisten satama) is located on the western coast of Finland, in the Gulf of Bothnia. It is one of the most important Finnish exporting ports for sawn timber and pulp, and it is also specialised in handling chemical industry products and bulk cargo. The Port of Kaskinen handles over 1 million tons of goods annually.

WWW.PORTOFKASKINEN.FI

Protectionism, pandemic, war, and the future of trade by Marc Gilbert, Managing Director & Senior Partner, Nikolaus Lang, Managing Director & Senior Partner; Global Leader, Global Advantage Practice, Georgia Mavropoulos, Knowledge Expert, Team Manager, and Michael McAdoo, Partner & Director, Global Trade & Investment, Boston Consulting Group (BCG) Global trade is slowing as the Ukraine conflict and its consequences have replaced the pandemic as the leading drag on growth. Trade will grow at a slower average rate than GDP in the coming nine years, reversing the pattern of trade-led global growth that has prevailed in recent decades. Familiar trade patterns will shift, not only as a result of the war in Ukraine, but also owing to Western nations’ decreasing reliance on China trade and to the rise of economic blocs such as the Association of Southeast Asian Nations (ASEAN) as companies continue to diversify their supply chain risks.

orld trade will continue to grow, but at a rate of just 2.3% per year through 2031, according to a BCG analysis

– less than the 2.5% annual increase forecast for global economic growth. World trade will continue to grow, but at a rate of just 2.3% per year through

2031, according to a BCG analysis – less than the 2.5% annual increase forecast for global economic growth.

BCG trade methodology

The 2022 BCG Global Trade Model is based on an analytical approach that projects global trade in goods, from 2022 to 2031. BCG Global Advantage (BCG’s global risk advisory group) and BCG X (the firm’s global data and analytics team) established the model in the early 2010s, and they have continued to improve and refine it on an ongoing basis. The model uses ten years of historical data and ten-year forecasts that are based on the correlations among data such as GDP growth, key commodity prices, and certain macroeconomic indicators. Inputs for the raw data forecasts come from reputable sources such as governments, international financial institutions, and economic analysis firms. The baseline output of the model covers more than 180 exporting countries and more than 5,000 product categories in 22 sectors. It includes manufactured products and raw materials; services are excluded. Trade values are expressed in constant 2021 US dollars. Once the baseline is established, the BCG Global Advantage and BCG X teams incorporate adjustments that factor in geopolitical events or trends that influence global trade but are not captured by the baseline model. These factors may include influences such as new trade agreements, trade wars, military conflicts and related sanctions, and climate-related trade policies. The team establishes adjustment scores and applies these, on a percentage basis, to a five-year baseline trade forecast and uses this to create the ten-year trade projection. Assumptions The 2022 model includes a number of notable geopolitical assumptions, including the following: • The ongoing sanctions regime against Russia and Belarus remain in place through 2031: – The EU and US stop trading with Russia for the forecast period, except for critical supplies, – The EU successfully ends its dependence on Russian energy by 2027, – Russia trade is diverted mainly to China, India, and other emerging markets. • No significant new trade agreements are established in the 2023-2031 period. • The EU implements its carbon border tax (CBAM) in 2026, as planned. • ASEAN trade – in particular, ASEAN-US and ASEAN-EU exports – rise at a faster rate than in the past due to a reduction in the growth of China exports to the US and the EU. 22 | Baltic Transport Journal | 2/2023

ECONOMY

Photo: Canva

As economies adjust to changing geopolitical and economic dynamics, including

inflation and potential recession in the near term, the resulting shakeout will produce new

global winners and losers (Fig. 1). The impacts will be especially strong in three areas.

Fig. 1. Future of trade 2031 outlook: geopolitical tensions contribute to reshaping trade flows1, 2

Sources: UN Comtrade; Oxford Economics; IHS; WTO; BCG Global Trade Model 2022; BCG analysis 1 The corridors shown in the map represent ~46% of global trade 2 Estimated inflation-adjusted trade growth within the EU by 2031 will total $1.5 trillion at a CAGR of 1.8%

2/2023 | Baltic Transport Journal | 23

ECONOMY Russia-West fallout Trade between the EU and Russia will decline sharply, shrinking by $262 billion during the period from 2023 to 2031, as Western sanctions on Russia take effect

and Western Europe weans itself from its dependence on Russian oil and gas. Russian trade will shift from Europe to other regions, particularly China and

India. The most disruptive impacts will occur in the energy sector, but the changes will affect other commodities as well.

China trade dynamics Trade between the US and China will decrease by $63 billion through 2031. EU-China volumes will grow, but at

a slower rate than the global average, as companies focus on increasing their resilience. These trends will drive world trade

growth with ASEAN countries, India, and Mexico, as near-shoring and friend-shoring gain pace.

ASEAN trade growth Southeast Asia will be the principal beneficiary of the redrawn trade map. The region will see significantly greater trade with China, the US, Japan, and the EU, driven by companies’ desire to

diversify global supply chains in the face of growing geopolitical tensions and the rising costs of manufacturing in China. ASEAN trade with China will grow by $438 billion, the largest interregional

increase on our 2031 map. Companies will be attracted to Southeast Asia by the region’s lower costs and the growing breadth and depth of its manufacturing capabilities.

Fig. 2. The Ukraine crisis directly led to fallout between Russia and the West and accelerated other trends

Source: BCG analysis

A less friendly trade environment Overall, the anticipated changes will continue to dilute the economic globalization and trade opening that characterized the first three decades of the post-Cold War period (the 1990s to 2010s). By contrast, the rising trade tensions and economic nationalism that have appeared in recent years accelerated during the pandemic and are projected to persist in coloring world trade relationships over the coming decade. In this environment, corporations are diversifying their trading relationships to reduce global investment and supply chain risks. The biggest shock to world trade is attributable to the military conflict in Ukraine, which will have significant economic impacts as both the EU and Russia look elsewhere to fill trade gaps created by the rupture. Over the nine years, from 2023 to 2031, the EU will increase its trade with 24 | Baltic Transport Journal | 2/2023

the US by $338 billion, driven in large part by increased US energy exports to Europe, and will also see a huge expansion in combined trade with ASEAN countries, Africa, the Middle East, and India. Meanwhile, Russia’s trade with China and India will grow by $110 billion, including $90 billion with China alone. The US government’s efforts to promote domestic manufacturing and encourage companies to diversify supply chains started during the Trump Administration and are continuing under the Biden Administration, in the form of such measures as the US Inflation Reduction Act, the US-MexicoCanada Agreement, and the US CHIPS Act, all of which aim in part to lessen the country’s trade dependence on China. The EU has likewise adopted an increasingly China-wary stance as trade and

investment dynamics between the EU and China have become more challenging. An escalating wave of tit-for-tat punitive exchanges started in early 2021 with EU travel bans of Chinese trade officials in a dispute over the EU’s allegations of forced labor in Xinjiang, followed by the EU’s suspension of ratification of the EU-China Comprehensive Agreement on Investment (signed in December 2020). This was followed by the EU’s challenge in the World Trade Organization over China’s trade embargo of Lithuania after that country opened a trade promotion office in Taipei. As a result, trade growth between the EU and China is cooling, with two-way commerce forecast to grow by just $72 billion through 2031, a modest increase in comparison with growth in previous years and lower than the 2.3% average global growth forecast.

ECONOMY One effect of slowing Western trade with both Russia and China will be a corresponding rise in commerce between northern and southern regions as countries find new trading partners in Africa, South America, and Southeast Asia. The clear winners here are the ASEAN countries, which are projected to see new commerce – especially with China, Japan, the US, and the EU – boost trade by more than $1 trillion through 2031. More broadly, the evolving trade map shows relationships coalescing around a new East versus West dynamic – a USand EU-led community and a China-Russia

counterpart – along with the potential emergence of a third bloc of ostensibly neutral nations. In a modern echo of the Nonaligned Movement of Cold War days, this group of mostly developing-world countries – including Indonesia and other ASEAN countries, India, Brazil, and African nations such as South Africa – will find opportunities to expand trade by stepping into trade vacuums created by relationship breakups elsewhere. Certain industries will feel the global disruptions more keenly than others, with energy being the most heavily impacted

sector due to the West’s phasing out of Russian oil and gas and the scramble to replace Russia as an energy source. Pressure on organizations to improve sustainability and increase use of alternative energy sources will also continue to affect corporate energy strategies and operations worldwide. Meanwhile, industries with intricate global supply chains – such as semiconductors, automobiles, and consumer electronics – will also face difficult transformations as companies take steps to improve resilience and reduce their reliance on China manufacturing.

Preparing for risks in a challenging landscape The comparatively secure trade environment that enabled companies to develop extensive world supply networks over the past 30 years has given way to a more uncertain one that will demand a new balance between the traditional objectives of efficiency and lower costs on the one hand and a heightened awareness of global risks and the steps needed to mitigate them on the other. Recent global trade patterns provide clear evidence that many organizations are already prioritizing supply chain resilience and global diversification. In the short term, companies should take several actions to adapt to the evolving global economic situation: evaluate opportunities in the value

chain to improve responsiveness; prioritize steps to increase resilience such as building up buffer inventories of essential commodities and prequalifying alternative suppliers; plan contingencies for at-risk supply inputs identified in value chains (for example, companies can fund R&D to identify alternatives for rare minerals, or they can develop supplier relationships in different global regions). In the long term, companies should pursue a number of additional objectives. First, accelerate efforts to incorporate geopolitical scenario planning into capital allocation and supply chain management processes; scenario plans should aim to improve long-term supply chain resilience

in support of the overall growth strategy. Second, emphasize environmental, social, and governance (ESG) objectives, which have implications for global supply chains. Third, assess available talent, with the goal of having people in leadership roles who can identify and manage global risks as early as possible. And lastly, use modern analytical tools, such as supply chain control tower and digital twins, to improve the early visibility of emerging shocks or disruptions and to visualize scenarios and contingencies. Global trade has been challenged in recent years by protectionism, pandemic, and war. The impacts of these forces will influence trade flows around the world for the foreseeable future. Companies that rely

Fig. 3. Implications for leaders as the future of trade continues to evolve in response to geopolitical tensions and dynamics

Source: BCG case experience and analysis

Boston Consulting Group is a global consulting firm that partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. Our success depends on a spirit of deep collaboration and a global community of diverse individuals determined to make the world and each other better every day. Go to bcg.com to discover more. 2/2023 | Baltic Transport Journal | 25

The impact of the Russian aggression against Ukraine on the shipping legal landscape

Navigating the muddy waters of sanctions by Oddbjørn Slinning, Partner and Maritime Law Expert – Shipping Offshore team, Tine Elisabeth Vigmostad, Partner and Sanctions Expert – Compliance and Sanctions team, and Marie Solberg Hatten, Associate – Compliance and Sanctions team, Wikborg Rein Today’s geopolitical landscape is challenging. The number of sanctions promptly imposed against Russia following the full-scale invasion of Ukraine in February 2022 is unprecedented. Although the shipping industry was already exposed to a heightened sanction risk due to the natural complexity of the industry and the ever-evolving regulatory landscape, the new reality has made the muddy waters of sanctions particularly difficult to navigate. Key risks in the shipping industry In 2020, the US and UK shipping industry-focused sanction authorities issued guidelines on how to deal with illegal shipping and sanction evasions. Among the risks highlighted were shipto-ship transfers, manipulating the automatic identification systems (AIS) on vessels, falsifying cargo and vessel documents, and physical alteration of a ship’s appearance and identity. The highlighted risks affected the entire value chain, from shipowners and charterers to port operators and cargo interests. Since the guidelines were issued, the risks in the industry have increased exponentially. Russia has traditionally played a significant role in the global trade of various goods and services, including coal, oil, gas, and agricultural commodities. In addition, the sanctions against Russia place 26 | Baltic Transport Journal | 2/2023

restrictions on entities, vessels, ports and terminals, as well as individuals with highranking positions in the Russian economy. Against this background, the shipping industry now also has to deal with – first, the risk of direct or indirect dealings with designated parties, noting also the complexity of determining which entities and ports such designated parties own or control. Second: the risk of unlawful trade due to the numerous amounts of restricted products, including coal, fertilisers and oil, if imported, transferred or purchased from Russia. Third: the ban on services and marine transportation of Russian-origin crude or petroleum products, pursuant to which it is prohibited for G7 operators to provide services relating to the maritime transport of such products (unless purchased at or below the relevant price cap).

Fourth: an increasing number of commercial operators dealing in the grey market, attempting to circumvent the sanctions. Fifth: a growing number of ghost ships operating outside the Western maritime service providers; these are not registered with a flag state nor have an International Maritime Organization number and typically have no live AIS tracker. Officially, the ghost ships don’t exist, yet they are transporting restricted goods to and from restricted countries. Sixth: the risk of ending up in possession of frozen assets, also noting the potential cost of storing and maintaining them. In summary, there are several risk factors to consider, and there is a significant risk of circumvention of sanctions, which, in turn, requires increased efforts to ensure sanctions compliance.

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Photo: Canva

An example of circumvention Even prior to the ongoing war in Europe, the sale of second-hand vessels required comprehensive due diligence on potential buyers, including a requirement to check the ultimate beneficial owners and source of funds. In some cases, it would be necessary to investigate several potential buyers in order to find one that was not acting as a front for someone

else or otherwise did not raise compliance concerns. Today, such due diligence efforts must be further expanded to comply with EU export controls on Russia restricting the sale of vessels to a person or entity in Russia or for use in Russia, and the risks of circumvention where a buyer in a third country intends to use the vessel in Russia

or is actually a front for a Russian buyer. Accordingly, it is advisable to thoroughly check the buyer’s background to identify whether the purchaser may intend to trade the vessel illegally and also contractually regulate sanctions compliance to reduce the risks and exposure should the buyer trade the ship illegally.

Updated risk assessments to ensure sanctions compliance Although the sanctions landscape has become more difficult to navigate, there are precautionary measures to take to minimise sanction risks. A fundamental element in any robust sanction compliance programme is to conduct a risk assessment of your company’s exposure to sanctions. This move should include an evaluation of which sanctions apply to the company as well as to the relevant trades and further determine how the company is exposed to a potential breach

under the various sanction regimes. The risk assessment should consider your business’s specific risks, including clients, products, services and geographic locations. The output of the risk assessment will be used to design risk-based assessments. The risk factors particularly relevant today should be taken into account, and routines should be updated to address red flags, keeping in mind that the sanction regulations are continuously developed and reinforced. Finally, one may note that a violation of

sanctions can lead to a wide array of adverse consequences, including civil and criminal liability, vessels being sanctioned or seized, termination of loans, loss of insurance, trading restrictions – and the list goes on. Needless to say, most companies have a rather low-risk appetite when it comes to sanctions, but on the other hand, ending up in a legal dispute is also undesirable. Improving sanction compliance should therefore be given close attention by all prudent companies.

Violations and sanction-related disputes In spite of a robust sanction compliance programme, the constant reinforcements and expansion of sanctions make it likely that sanction violations will occur in the shipping industry. For instance, in March 2023, Estonia’s Minister of Finance revealed that the Estonian government had uncovered more than 1,500 Russia-related sanction violations (albeit not exclusively related to shipping). This shows that it is also essential to prepare a good emergency response plan in case of violations, including immediately assessing any relevant exposure; taking immediate measures

to prohibit further criminal actions; complying with reporting obligations, both towards counter-parties and the relevant authorities; fact-finding and investigations of what & how it has happened; rectification and clean-up, improving controls going forward; assess the need for legal action to preserve all rights and secure interests; and securing evidence, with both a criminal and civil dispute in mind. On a final note, we leave you with some tips on sanction-related disputes. If one ends up in such a dispute, a court or tribunal will usually decide on the facts based on the preponderance

of the evidence. In simplified terms, if it is more likely than not that a trigger event did not take place or has ceased or that performance does not breach sanctions, then non-performance is a breach of contract. For instance, in the cases of ownership or control by a designated person, this can be particularly challenging. Sanctions, in particular, are not well-known for generalist judges, and appointing expert witnesses on sanctions in arbitrations is often crucial to present the rather challenging legal landscape in the right way – and is, in our experience, key to getting the best result.

Wikborg Rein is an international law firm with headquarters in Oslo and offices in Bergen, London, Singapore, and Shanghai. Our lawyers have expert knowledge in most commercial disciplines and industries. Through the firm’s 100 years of history, they have gained a unique international experience and are highly ranked in leading international ratings, such as Chambers and Partners and Legal 500. Visit www.wr.no to learn more. 2/2023 | Baltic Transport Journal | 27

Lessons learnt about a world full of risk

A year in focus by Mark Argentieri, COO, TT Club As a specialist insurer of international freight transport and logistics operations, TT Club is consistently drawing attention to the ever-changing risk profile of this complex sector. TT’s expert claims executives, underwriters, and risk management professionals have reviewed the risks that proliferated during 2022 and suggest how the industry can learn from the experience.

ur mission is to make the global transport and logistics industry safer and more secure, thus increasing sustainability. The Club believes supporting resilient operations should be a big part of this. To guide the industry in conducting safe and secure operations, even when external factors are unstable and disruptive, 2022 – A year in focus has been published. This publication is a distillation of diverse advice to maximise the effectiveness of transport operators’ and cargo handlers’ risk management actions. Last year, while recovering from the COVID-19 pandemic, the transport industry was again greatly affected by global events: Russia’s war against Ukraine, spiking inflation and a cost of living crisis. The impact of these events on the worldwide supply chain has been painfully obvious, with shortages and delays, higher prices for energy and food and long-term changes to the global patterns of supply and demand. TT is convinced that a thorough understanding of the practical risks is vital in mitigating the dangers to safety and security that are a consequence of these dynamic factors. While maintaining strong and active loss prevention and risk management advice, the Club’s mission of helping to make the industry safer and more secure remains core to the entire TT operation. The publication, therefore, reviews an array of risk management guidance material. Demonstrating the breadth and depth of global expertise, TT specialists offer insights into a variety of threats that they see on a day-to-day basis. Some of the issues covered are outlined briefly in this article. Discharge responsibility Invasive pests have devastating consequences for agriculture and the natural environment in many parts of the world. The seaborne container pathway is under scrutiny. Last year saw heightened activity to understand the risks and identify what measures may be practicable to mitigate the transfer of invasive species. The Sea 28 | Baltic Transport Journal | 2/2023

Container Task Force (SCTF), established to collect data and consider the issues, published its report, including several recommendations. Key amongst these was the convening of the International Plant Protection Convention’s (IPPC) workshop on reducing the introduction of pests through the sea container pathway, which took place in London in September 2022. The problem was set out: an annual 10-16% diminution of harvest across the world, compounded by some 40% loss to the global food supply due to invasive pest activity (stated to cost $222 billion). Workshop participants clearly understood that there are a variety of ‘pathways’ by which invasive pests move around the globe and recognised that it remains challenging to quantify the scale of the problem for seaborne containerised movements. However, they correctly maintained that there is a collective responsibility to consider where the risks arise and what steps can be taken to avoid contamination through the container pathway. Acute awareness by all is the first weapon in the armoury; while independently performed inspections are helpful, each party in the supply chain needs to discharge their responsibility. Further, to avoid an unsustainable impact on trade and logistics, it was posited that there needs to be a layered approach, combining voluntary and mandatory steps leading to significant risk reduction. Any targeted measures that come into force via international regulations must effectively deal with the pest contamination of both containers and their cargoes. Still, they should do so in a way that achieves risk reduction with minimal impact on container logistics. TT will be monitoring developments and advising where and when it can. Handled and moved with great care Lithium-ion (Li-ion) batteries have become more popular in recent years because they are lighter and last longer than their regular alkaline counterparts. The number of products that use these

batteries is increasing and will continue to snowball, particularly since the market for electric vehicles is growing quickly. The problems seen today will only become more acute as the global demand for these batteries advances. Since Li-ion batteries are classified as dangerous cargo, they must be handled and moved with great care, especially if they are to be transported by air. A case study from the Americas underlines this. A freight forwarder arranged to export Li-ion batteries from Miami to Iquique in Chile via a stopover in Santiago. All the necessary documentation was presented and filed; the packaging and labelling were correct. However, the forwarder did not give this stopover due consideration when planning the move, not considering that the air service between Santiago and Iquique was operated by a passenger and not a cargo-only aircraft. It was not until the time of unloading the cargo in Iquique that customs officers discovered that this particular merchandise was not allowed for carriage on board a passenger aircraft. Consequently, multiple fines were given to the airline, the cargo was seized, and an investigation was started against everyone involved, including the freight forwarder. Nobody in logistics should overlook that due diligence is even more crucial than the cargo itself. Before starting any cargo logistics operation, it is of utmost importance that the operator looks carefully at all possible safety risks, the international laws that apply, the mode of transportation and its applicability for each part of the journey. Fortunately, no lives were lost in this case, so it could be considered a happy conclusion; that said, things could have gone very differently. Some people will potentially turn to crime Disruptions through the global supply chain continue to create opportunities for criminals to infiltrate and access cargo. In analysing the 2022 claims data, it became apparent just how impactful the current

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Photo: Canva

economic situation in many countries is in the context of cargo theft. Rising inflation, coupled with the rapid cost of living increases, directly correlates with stolen cargo volumes. The pandemic saw a switch away from targeting luxury and electronic products towards essentials: food, drink, and fast-moving consumer goods. The latest data indicates a return to targeting those luxury and electronic goods. However, there is a high probability that this trend will once again swing as many countries grapple with the effects of recession and inflation. As populations see their disposable income decrease, the focus moves more towards survival. The criminal networks underpinning cargo crime are very much market-driven and are typically very agile and quick to react. Another repercussion is the recruitment of additional thieves or insiders. As the economic situation deteriorates, some people will potentially turn to crime. The insider risk increases through such periods. Employees, who ordinarily would not even consider crime, might find themselves in a financial position whereby a $1,000 bribe for an access code or information about what cargo is in which container could be motivation enough to reconsider. Crime will almost certainly continue at high levels for the near future until economic equilibrium is restored. Those responsible for security through the supply chain should be aware of the emerging risks and, where practicable, take steps to mitigate them.

Many moving components in play TT’s attention also turns to safety risks at cargo storage facilities and warehouses. Some of these can lead to catastrophic incidents, as seen in the tragic events in Beirut and Tianjin, but less startling incidents and near misses are even more common in a congested supply chain. When we consider the volumes of these together, they may have the potential to be just as damaging and disruptive to business operations. As a fundamental component of the global supply chain, warehouses are utilised in various ways, whether for short- or longterm cargo storage, modal interchange, or to facilitate more involved activities such as rework or co-packing. Arguably, warehouses have become an increasingly important node as supply chain managers reconsider just-in-time models, adopting a more conservative approach, nearshoring and generally holding increased stock at the point of production or market. Such trends bring dynamic and variable risks. So much is about people, too, with industry statistics illustrating an uncomfortable number of bodily injuries sustained in the warehouse environment. Many moving components are in play, and the advent of automation introduces

complex safety challenges. Creating a safe environment can reduce the risk of injury to the workforce, increase efficiencies, and reduce cargo damage. Control of personnel as well as visitors and contractors is a fundamental step to sustaining safety. Understanding who is on-site, when and why, restricting access to areas where they do not need to be, and ensuring adequate induction training is provided will all assist in mitigating risk. The running message These are just a few of the valuable lessons contained in 2022 – A year in focus, and TT will continue striving to identify topics and initiatives that add value to its mission of helping to make the industry safer and more secure. Arguably, delivering tailored content provides the greatest value. Working together to understand individual business and industry needs is vital to ensure that risk management guidelines and advice remain relevant. The ‘running message’ throughout this publication is that each and every initiative has been driven by industry feedback and on-the-ground input. TT is hopeful that this interaction level will continue to maintain the accuracy and relevance of its advisory comments.

TT Club specialises in the insurance of intermodal operators, non-vessel owning common carriers, freight forwarders, logistics operators, marine terminals, stevedores, port authorities and ship operators. The company also deals with claims, underwriting, risk management as well as actively works on increasing safety through the transport & logistics field. Please visit www.ttclub.com for more info. 2/2023 | Baltic Transport Journal | 29

Interview with Patrick Verhoeven, Managing Director-Policy and Strategy, International Association of Ports and Harbors (IAPH)

The new port culture by Przemysław Myszka What is the difference between leopards or tigers and ports? The latter can and often have to change their spots and stripes not to fall from the wheel of (business) life. We sat with Patrick Verhoeven, who definitely learned the port ropes over the years, for a talk about reinventing the industry – from within and under external pressures. We also highlighted the more than eventful past year, the pandemic lessons, and what his organisation is doing across many fronts (sustainability, most notably). What is your take on the past year – the good, the bad, and the ugly it brought about? The good would be returning to some normality across supply chains: the disruption issues seem to be behind us. That said, the bad would be not fully following through on the lessons learnt from these disruptions, namely still the lack of widespread collaboration between various stakeholders, particularly in the data exchange field. Everybody voices the importance of information flow for smooth logistics; in reality, we aren’t exactly there yet. Much more can be done in, among others, improving port calls. It isn’t bad per se, but evidently, an area that could improve a lot. For the most part, it requires a cultural change: the port sector has done much of the nittygritty work on the economic & operational aspects of port call optimisation, including what data should be exchanged by whom; likewise, there are already technologies, affordable ones, that can get the job done. The supply chain needs more trust between its actors. 30 | Baltic Transport Journal | 2/2023

Certainly, port authorities, especially those of the landlord model, could lead the charge by acting as neutral brokers between those who use harbours in their logistics. This would have to be a bottom-up effort, as I don’t see how this could be regulated on a global level. Fortunately, we can also observe ports, around 15-20 worldwide, that understand the critical role of data exchange in futureoriented transportation. Not coincidentally, these form chainPORT, a cross-national partnership for sharing innovations or strategic topics, digitalisation among many. But it doesn’t have to be that only large seaports whose influence extends beyond their premises can advance. Smaller ports can also tap into the digital transition. It is the role of organisations such as ours to bridge the gap between the frontrunners and those about to make their first step in a journey of a thousand miles. Interestingly, once they hit the ground running, smaller harbours can advance in leaps and bounds as their ‘chain of command’ is shorter; hence, decisions can be made swifter while they already know the local logistics in and out, so they can onboard the community quicker.

It goes without saying that the aggression against Ukraine is the ugliest thing of all2023, with its share of transport difficulties, to name grain exports. The war has also triggered a relatively rapid change in energy trades, with countries backing Ukraine cutting their ties to Russian oil, gas, and coal. A few floating storage & regasification units have already been moored in northern Europe, among other developments. Much attention has also been devoted to developing alternative land-based trades connecting our corner of the globe with Asia, which omit Russia and their Minsk accomplice. That said, we are yet to see whether it will be a structural change. Redrawing the energy map is in the making, mainly from Europe’s side. The IAPH has been involved in helping the Ukrainians almost from the very start. Together with one of the main labour unions in Ukraine, representing seafarers and port workers, and The Mission to Seafarers, we have set up a fund to aid the country’s transport force. Recently, we received a request, shared among our members, for a special floating barrier that could be placed in port waters,

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Photos: Canva

sheltering them from drones. We act as an ‘in-between’ for Ukrainian seaports and the IAPH community to help each other. I was involved in the Ukrainian seaport industry, helping them move the needle towards a landlord port authority model. This effort is now on the back burner because of Russia’s aggression. That said, rebuilding the country will, in all probability, also cover the port sector. There is a chance that ownership of port areas will go over to those interested in developing them for the sake of transport. Harbours have always been the economy’s flywheel, and that won’t be different for Ukraine when it builds back better. What is the aftermath of COVID for ports and IAPH? Since the coronavirus pandemic, we have restructured a few things at the Association. The three major focus areas that shape our agenda are energy transition, digital transformation, and resilience. One white swan that’s definitely still here, already ‘paddling’ with us before

COVID-19, is innovation, a trend that only accelerated after the beginning of 2020. On the other hand, a black swan would be the assertion that it’s better to keep cards close to the chest, a siloed attitude that continues to be alive and, unfortunately, kicking. Nevertheless, we are in a very productive dialogue with the International Chamber of Shipping, BIMCO, and other such organisations – a development I think wasn’t possible a few years ago. Irrespective of their colours, swans are in the business of doing their things out of the blue. Therefore, we have devised guidelines on resilience. One could fault that it is an exercise in predicting the unpredictable. Yet, as it happens, doing nothing is actively writing the worst-case scenario. Each and every port authority can pinpoint what and with what probability can go south and prepare accordingly. We did a similar thing with the cybersecurity guidelines, which were very well received by the community. They were accepted as an input paper by the International Maritime Organization (IMO), now forming part of its maritime resilience guidelines.

Another silver lining would be that society and policymakers noticed how their lives are linked to ports. Simply put, they realized seaports are those entities that 2/2023 | Baltic Transport Journal | 31

MARITIME make it possible for Joe Q. Public to buy cars or fridges. Whereas we were under lockdown, ports remained open and kept handling goods, including those of utmost significance. As a follow-up to our work on the impact of COVID on our sector, we launched the World Ports Tracker last year. It is a tool that monitors critical aspects of the evolution of the global port industry. The Tracker currently tackles ‘traditional’ aspects: the changes in cargo trades and ship sizes or the availability of workers. We will add a second pillar: all-things-sustainability. If the pandemic taught us anything, resilience is fundamental to weathering out sudden misfortunes. I cannot stress the criticality of across-the-supply-chain-cooperation enough. Besides ports and shipping lines, cargo owners – such big players like Cargill, IKEA, and Inditex – recently became much more vocal about what they would like to see from the ports’ side. We are open to this debate and will host Cargill and IKEA representatives at our World Ports Conference in Abu Dhabi this October. Such opening up directly results from the pandemic and supply chain disruptions.

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How is IAPH progressing on the ‘green’ front? The Sustainability Awards are now in their fifth edition. There are three dimensions of our strives in this field. First, the portfolio through which ports can highlight their projects across six sustainability categories. Today, the database includes nearly 240 entries from 109 ports representing 37 countries. The forthcoming annual conference of IAPH will see the latest handout of the awards. Second, we have developed Port Endeavor, a business game meant to raise awareness of what sustainability means for port management: not only environmental issues but also job opportunities, safety, and, naturally, many more. Funny enough, the game was ready in 2020, yet playing it digitally is nowhere close to getting your hands on it. The vibe is just so much better when you have people around you! Post-pandemic, we have been rolling out Port Endeavor with the help of the United Nations Conference on Trade and Development TrainForTrade team and the APEC-Antwerp/Flanders Port Training Center. The product has been

enormously well received, and different tiers enjoy playing it while sharpening their sustainability skills. Lastly, the third pillar of our sustainability work is looking down the road and helping ports embed sustainability. We are still brainstorming whether it will be a selfassessment tool or accreditation. The 2023 iteration of the World Ports Conference will go under the ‘Reinventing Ports’ theme. How do you reinvent such a complex entity? Energy transition tops the agenda without question – because all ports can partake in it, starting from facilitating shipping’s green transition by providing bunkering of future fuels and onshore power supply. Further ahead, ports can capitalise on their own or the local industrial capacity, becoming stakeholders or enablers of alternative energy carriers’ production, storage, and distribution, not only for vessels. That can be a real game-changer for harbours in countries that can generate excess renewable energy. The waters are yet waiting for detailed charting, but ports are already

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actively positioning themselves on this new energy map. Those who see the opportunity aren’t sitting idly for somebody else to tick off the to-do list. History has – taking a leaf from the container book – proven that early adopters reap the fruits. The difference would be that energy transition is something more than a commercial offer to do things more efficiently; instead, it is a public mission involving governments, international bodies, and regulations, so in the end, it might be more challenging for someone to turn up their nose at partaking in the green transition. Here is the remarkable thing: not so long ago, just a couple of years back, it would be unheard of for the shipping sector to hop aboard the decarbonisation train. I have observed a tangible mentality change since then: from denial (apart from a few reading the green air early on) to proactive work towards cleaning the industry’s act up. That said, it will take some market-based measures-regulation agreed at from the IMO to provide more power to shipping and, subsequently, ports’ elbows investmentwise. Revenues from a carbon tax should be used to facilitate the change. The EU is leading the case by including shipping in its Emission Trading Scheme. For ports in other parts of the globe, especially developing countries, to play their role, we will need a global fund to aid their transition. However, establishing and running such

a fund is easier said than done – but it’s certainly doable and something we need. What is the future of port labour in this context? Reinventing ports won’t happen by itself – people have been, are, and will continue to be the industry’s vital force. New business models, kinds of leadership and technologies are the ‘forms’ that require persons to breathe life into them. The forthcoming IAPH conference in Abu Dhabi will certainly spotlight that issue. Recent events, surely the pandemic and other occurrences, have unearthed how critical ports are to everybody’s life. We are also transitioning from perceiving harbours as these docker-dense places of the past to futureoriented, match-making communities where many industries meet together, including some of the most prospective, to name but offshore wind energy or automation. I also teach at the University of Antwerp’s Port Economics course. For my students, seeing that a modern crane operator can do all the ‘heavy lifting’ by sitting in a comfy office rather than a few dozen feet above the ground and on the quay wall is a real eyeopener. That is already today the reality of training cargo handling personnel. That is the direction in which port authorities are changing: from collecting rent within their premises to reaching out to players from across the whole value & supply

chain to improve overall logistics; likewise, relations with society and the environment. The port of the future will for sure provide exciting labour opportunities, white- and blue-collar-wise. There is also a noticeable mood change towards the port sector from the governmental side, at least in certain parts of the world. For instance, take the US: Washington, D.C., saw what happened during the supply chain disruptions; that, among others, the West Coast was clogged beyond recognition. The Biden Administration has prepared a number of bills to make the country’s port sector more resilient. Generally speaking, the ‘port issue’ has been taken from the level of cities and individual coastal states onto the federal agenda. Again, efficient seaports translate into an efficient economy: it is a strategic affair for small, island-like nations such as Singapore as well as those that dispose of vast territories like the US. I would like all with scope for action to understand that ports can be fabulous meeting places for the public and private sectors. Trade is and will be there, and so are nextgen technologies, while financing also isn’t something we need to wait for like manna from heaven – it is the mindset change that can be that pebble bringing down an avalanche of all sorts of advancement. Leadership and governance will change everything. This new port culture will eat the old strategy for breakfast. 2/2023 | Baltic Transport Journal | 33

Validating modern tech for better CII performance – and much more

The digital groundwork by Roberto Vettor, Senior Research & Innovation Manager, NAPA Shipping Solutions New research led by NAPA on Marubeni’s fleet has confirmed the value of voyage optimization in reducing ships’ emissions and boosting their Carbon Intensity Indicator (CII) performance. But this is just one of the many ways in which the digital era is laying the technological ground for the successful implementation of CII on fleets around the globe. Data analysis and simulation tools are evolving to play an even broader role: as a single source of truth that enables owners and charterers to collaborate for more efficient voyages.

s we unpacked the results of our joint study with ClassNK and Marubeni, the main conclusion confirmed what many in shipping were already suspecting: weather routing will be an important tool to help ships reduce their greenhouse gas (GHG) emissions and ensure their compliance with the International Maritime Organization’s (IMO) CII regulations. After all, it stands to reason that routing vessels more efficiently to slash their fuel consumption would help those ships achieve better outcomes under, and in compliance with, the regulation that precisely rates their operational fuel efficiency. But although the connection was clear, just how big of a difference could voyage optimization make on a vessel’s CII in real life? This is what the joint research set out to evaluate. Based on actual operational data, the study’s main contribution was to measure and validate the emission savings and CII improvements that voyage optimization can achieve on a real-world fleet. It was carried out using data on all voyages, weather, and ocean conditions in 2021 for a group of bulk carriers owned and operated by Marubeni. Using NAPA’s ship performance model and voyage simulation tools, the potential fuel consumption and CO2 emission reductions were measured by ‘retro-optimizing’ each voyage to incorporate weather routing. Importantly, we were only using 34 | Baltic Transport Journal | 2/2023

information available at the time of the journey and maintaining the same departure and arrival times – rather than optimizing voyages with the benefit of hindsight and knowledge that no captain would have had at the time! ClassNK provided advice on the simulations, verified the calculated values, and confirmed the results. Better rank, longer life From the results, two figures stood out. The first is 7.3%, the average reduction in CO2 emissions that can be achieved with NAPA Voyage Optimization. The second figure is 5-6%, the average improvement in vessels’ CII ratings delivered by optimizing voyages. This boost is significant, as it enables most ships to achieve a better grade by one rank (moving from B to A, for example). The study also found that voyage optimization allows vessels to maintain their CII ratings for two to three years more as the requirements for each category gradually become stricter. For the industry, the implications are twofold. On the one hand, the joint study demonstrates in tangible terms how optimizing voyages can substantially impact a vessel’s emissions and CII score, which in many cases could make the difference between compliance (from A to C) and non-compliance (D or E). On the other, the opportunity to maintain their f leet’s ratings for longer gives shipowners vital additional decision-making time

on decarbonization measures, enabling them to ensure that their vessels meet CII requirements in the meantime. A common co-op platform These insights come as the decarbonization transition shifts some of shipping’s paradigms. The need to comply with new regulations, including the IMO’s CII and the EU Emission Trading Scheme, has increased the immediate pressure on the industry to reduce GHG emissions. This has, in turn, turbocharged demand for ‘low hanging fruit’ solutions that can slash emissions immediately, including digital tools that help route vessels more efficiently. But the potential of data analysis and simulation tools to support the industry in this new regulatory era does not stop there. We are also seeing growing interest in solutions that give owners better visibility of their CII performance and enable them to take a proactive approach to ensure compliance with the new regulation. Such a proactive approach must also be collaborative. To make CII a success story, we need greater cooperation, especially between shipowners and charterers. This is because while the former oversee any technical improvements made to a ship and will be on the receiving end of a good or bad CII rating, the latter, for the most part, determine how the vessel is operated. To meet new regulations, both parties need to work together more closely on

MARITIME operational decisions to improve a vessel’s fuel performance and ensure compliance. Digital tools are essential to the success of this collaboration in practice. In essence, owners and charterers will need a common Fig. 1. The typical CII improvement potential with weather routing according to the study

platform where they can develop a shared understanding of how a vessel’s CII evolves throughout the year and what can be done to improve or maintain it. This is why we worked with both sides to develop our NAPA CII Simulator module. In a nutshell, the new tool uses a ship’s digital twin, together with data on a vessel’s past and current operations and performance, to predict its CII rating for every sea passage and any desired date (such as the end of the year or after a given chartering period). Crucially, the software can model the impact of operational or technical measures, including weather routing, hull cleaning, slow steaming or installing energysaving devices, on the vessel’s rating. This gives owners and charterers a common understanding of whether they are on track to achieve the agreed CII, helping them make the best possible choices and

Fig. 2. An illustration of NAPA Voyage Optimization comparing the shortest navigable route with the weather routed voyage

Fig. 3.NAPA CII Simulator showing the CII prediction for a bulk carrier

knowing what will achieve the best outcomes for that specific ship. Owners and charterers can compensate for unexpected events, including bad weather or a less efficient journey, to bring the vessel’s CII back in line with expectations. They can also identify when they have enough margin to take a hit on CII optimization and seize a business opportunity involving a less efficient or faster journey. A trusted, neutral, and objective platform is essential for this collaborative approach. This can also help prevent or resolve disputes under charter party agreements, which will be particularly important when maintaining a certain CII is part of the contract. The true impact While it is still early days, CII ratings are expected to influence a ship’s competitiveness moving forward, marking a substantial shift in how environmental performance will impact asset value. Pressure will come from both ends of the logistics chain. On the one hand, cargo owners, consumers, and companies conscious about their environmentalsocial-governance standings will increase demand for sustainable shipping. On the other, top-rated vessels may receive better freight rates, loan conditions and interest rates, or lower insurance costs. As a result, shippers may refuse poorly-rated ships, which will struggle to secure financing, while top-class vessels are likely to have a competitive advantage. How markets play out in the years to come will depend on several factors, but this will be a powerful incentive towards emission reductions – and will define the true impact of CII. With simulation, performance monitoring and voyage optimization, the technological groundwork for CII has already been built. Now it’s time to use this experience and these tools collaboratively to advance shipping’s decarbonization in harmony with business strategies. With 34 years of operation, NAPA is a leading maritime software and data services provider to enable safe, sustainable and future-proof shipping. With 90% of new vessels built by NAPA customers, NAPA’s design software is the global standard. For ship operations, NAPA provides ship stability and data management, and its cloud-based solutions for performance monitoring and optimization support shipping decarbonization. Visit www.napa.fi to see more. 2/2023 | Baltic Transport Journal | 35

Interview with Anne Katrine Bjerregaard, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping’s Head of Strategy, Sustainability and ESG

Licence to operate by Przemysław Myszka A shipping line may be past the whys of going green, entering now the even more critical part of putting its finger on the hows of decarbonising the company’s operations. To help chart the environmental-socialgovernance (ESG) challenges & opportunities, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and the Boston Consulting Group (BCG) have developed the ESG Playbook for Shipping. We asked the Centre’s Anne Katrine Bjerregaard to tell us what’s in this toolbox, the different attitudes & approaches towards ESG, and why these issues somewhat force shipping to stick its head out of the industry’s silo (and why that’s a good thing).

Could you introduce the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping: why it has been set up, as well as what are its main goals and the tools it wants to tick them off with?

over half are seated here in Copenhagen. Additionally, our partnership model dictates that all the Strategic Partners (24, currently) send their people to Denmark’s capital for some time so that we can work together on specific issues face-to-face. It is one of the Centre’s core strengths: people from all parts of the supply chain contributing their expertise – persons fully committed to the mission and with their sleeves rolled up to get the job done. The people visiting us are also invaluable in that they directly link the Centre with their organisations, connecting the dots further up & down the value chain. Times are such that the green transition can no longer be just a side gig. It would be excellent for this to be the dominant approach across the board. The beginning was challenging, if nothing else. The coronavirus pandemic capsized how we used to work without much warning. We were gearing towards launching the Centre just before COVID hit everything; hence, we had to carry out the development under lockdown. It took courage from companies

to commit to a very much conceptual at that time project. Even though we were a bit nervous about the timing, the Centre took off in June 2020 with seven Founding Partners on board. They were asking many questions on the way, but you could sense they were into the idea, backing it up with high ambitions. From today’s perspective, it was a fantastic experience. That said, meeting now in person trumps anything else. Last year, we opened the project to another partner category: Mission Ambassadors for organisations unable to commit people but still wanting to contribute to the effort and support the agenda. The ecosystem grows and is full of energy. The shipping industry is rife with challenges, but there is also a tangible willingness to do the right thing for the environment. Why have you, in co-op with BCG, created the ESG Playbook for Shipping?

We work systematically around the numerThe Centre was established in 2020 because ous challenges around decarbonisation, there was a need for industry-wide collaboration on decarbonisation. It is just too big of a challenge for anybody to solve alone: the A company’s environmental impact includes sub-topics such as CO e emissions, entire value chain has pollution, waste, biodiversity, and natural resource management incl. circularity. A to be engaged. A lot of company’s performance on the environmental the work ahead of us can Environmental dimension is increasingly being scrutinized by investors, regulators, and customers still be regarded as precompetitive, so something everybody can have interest in workHealth and safety of employees, product liability and the assumption ing around. Greening of responsibility within a company’s environment shape its public image the shipping business Social must be done collectively. The Centre was thus set up to facilitate cooperation between Corporate governance such as leadership’s orientation on ESG-aligned various stakeholders to company policies and supply chain perform on the decarmanagement are steering mechanisms of ESG implementation bonising challenge. Governance Today, the Centre is almost 100-people strong, out of which Photo: Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and Boston Consulting Group’s ESG Playbook for Shipping

What is ESG?

36 | Baltic Transport Journal | 2/2023

SUSTAINABILITY

Value of ESG ESG can be deployed to capture new sustainable business value and mitigate current and future business risks The ESG imperative Value destruction avoided

Value creation captured

Value destruction

Current business value

Source: BCG & MMMCZCS analysis

Captured new profits

Mitigated business risk

Business value with ESG

Business value without ESG

Shipping companies that choose to lead on ESG capture superior value TSR index: 12/31/2019 = 1001

Annualized TSR 1/1/2020-3/31/2022 264

270 255

+49% 8 p.p.

240 225

207

210

Shipping companies with robust ESG strategies deliver better shareholder returns

+41%

195 180

ESG2 score ≥ median

165

ESG2 score < median

150 135 120

ESG score: Environmental + Social + Governance commitment and effectiveness

105 90 75 60 1/1/2020

7/1/2020

1/1/2021

7/1/2021

1/1/2022

TSR: Total Shareholder Return (share price return and dividend yield)

Note:1. Median rebalanced monthly total return of a set of 40 Marine Transport players; 2. ESG score measure a company’s relative material Environmental (e.g., Toxic Waste & Emissions, Carbon Emissions), Social (e.g., Health & Safety) and Governance (e.g., Corporate Governance, Corporate Behavior) performance, commitment and effectiveness

including technical projects on alternative fuels and energy efficiency. We, naturally, also scrutinise regulations. We are building up data & knowledge based on our tech focus, which will be then used to drive the regulatory change. Much of our energy goes into creating a techno-economic framework to help us model the implications of introducing new rules or future fuels. This industry-broad, generic work is very much transition-oriented. With the ESG Playbook for Shipping, we want to do something else. The industry in question more or less takes the shape of a bell: green frontrunners sit on the one end, the opposite end is taken by those who, for various reasons, don’t want to get involved with

organisations such as our Centre, and the rest are falling in between. The majority takes a defensive stance: let the regulations come, and we’ll see how to comply. At the same time, however, there is mounting pressure from customers and societies, not to mention investors, to up shipping’s sustainability behaviour. Decarbonisation in general, and that of the supply chain in particular, cannot be ticked off if we leave behind Scope 3 emissions – and shipping makes it into this category more often than not. It will be increasingly difficult for a shipping company to shrug off the requests on their ESG performance. Shipping is as diverse as it gets, and some may not have the capacity to address such

inquiries as adequately as possible, even though they would like to do so. ESG may be something new for them, and they need to wrap their heads around it; equally, earn the badge of skill in handling ESG issues. And it is safe to bet that more regulations on these matters will come – not only from the EU but also from the US or South Korea. The ESG Playbook for Shipping is thus our contribution to helping shipowners, who might feel a bit scared before entering uncharted waters, accommodate that change systematically. Yet, I don’t want to create some ‘winter (of regulations) is coming’ atmosphere. The ESG field also promises many benefits to harvest. For instance, while ESG doesn’t directly & instantly 2/2023 | Baltic Transport Journal | 37

SUSTAINABILITY lower one’s carbon footprint, gathering data, setting targets and following through on them actually motivates companies to be more ambitious. This will only grow with increased transparency: seeing how your business stacks up against the competition. Ideally, this will better the performance of the entire sector. Ultimately, ESG performance will become a licence to operate. Risk mitigation and compliance are essential, but these are just parts of future-proofing one’s business. The ESG value proposition goes beyond the minimum by grabbing the opportunities that increasingly stem from sustainable operations. The message is that ESG is far more than ‘just reporting.’

A shipowner knocks on the Centre’s doors and says: I need an ESG strategy. What is the modus operandi of devising one? The first step would be to understand where a shipping company is on its journey. We have two products to help with that, starting with the free version of the Playbook – something to get the ESG conversation rolling, understand its particulars in an orderly manner, what to spotlight during discussions within one’s organisation, and what stakeholders need to be engaged. In short, it is about pinpointing what and whom we treasure & cherish – which necessitates a company to catapult itself from

the ‘shipping silo’ by looking at the bigger picture – and what can we do to walk the value talk, say: invest in new green technology, at the same time training people in using it to the fullest. That would be a good point of departure for whom ESG is a new thing. The other group consists of those who already did their homework and want to progress – doing it efficiently and relatively quickly by hiring consultants. To that end, our BCG partners have developed a commercial service built upon the Playbook. Here, the Centre primarily contributes to the area of decarbonisation. Both approaches rely on the level of ambition an organisation has. Someone will be

Phases The strategy process consists of 3 phases and 10 key meetings

Phase 1

Phase 2

Phase 3

Why is it important to you?

What will you prioritize?

How do you execute?

Baseline walkthrough

Prioritization & ambition workshop

Roadmaps & Anchoring workshop

Kick-off meeting

Target setting workshop

Wrap-up meeting

Individual materiality topic interviews

Main initiatives workshop

Materiality assessment workshop

Sign-off meeting

Strategic approaches Companies can take one of four approaches to ESG High

Questions to consider

Growth explorer

Future fit

Capturing new sustainable profit pools from material ESG topics

Two-sided approach

Non-strategic Low

One-sided approach

Risk mitigator

Non-strategic approach Low

38 | Baltic Transport Journal | 2/2023

Mitigating key business risks from material ESG topics

High

Page 22 of 64

SUSTAINABILITY

What puts the brakes on a broader ESG commitment? There are still shiploads of work ahead of us. Our analysis shows that too many shipping

Shipping Industry Matrix The matrix for the shipping industry shows the importance of Reducing Emissions and Health & Safety High

Importance for stakeholders

Ferry

Prevention of major accidents

Transparency, accountability & Reporting Human rights Community engagement & impact

Tanker Reducing emissions

Client experience & satisfaction Company financial Systematic risk management performance Corporate Regulatory compliance & reform governance Employee recr., dev. & retention Diversity & inclusion Waste mgmt Innovation & research & circularity Supply Chain Responsible products & services Management Cybersecurity

Climate strategy

Offshore vessels

Health & safety

Corporate ethics

Protecting biodiversity

Cruise

Bulk

Data governance & privacy

Water management

Governance Social Container

Shipping industry

Environmental Low

Low

Special purposeRelevance ships for long-term business success

RORO/Car carriers

High

Note: Includes ESG topics mentioned by at least 10 times by the 47 analyzed companies Source: BCG’s Materiality Mapping Analytics Product (MMAP)

RORO/Car Carriers Consolidated materiality matrix for the RORO segment High

Importance for stakeholders

Ferry

Tanker Human rights Employee recr., dev. & retention

Offshore vessels

Prevention of major accidents Company financial performance

Health & safety Corporate ethics

Supply chain mgmt. Product quality & safety

Protecting biodiversity

Diversity & inclusion Waste mgmt. & circularity

Innovation & research Noise Pollution

Cruise

Bulk

Client experience & satisfaction

Reducing emissions

Climate Strategy

Corporate governance Water mgmt

Systematic risk mgmt Governance Social Container

Shipping industry

Environmental Low

Low

Special purposeRelevance ships for long-term business success

RORO/Car carriers

High

Note: Sample size 4 RORO companies Source: BCG’s Materiality Mapping Analytics Product (MMAP)

Ferry Consolidated materiality matrix for the ferry segment High

Ferry Importance for stakeholders

perfectly fine with an ESG strategy that handles the regulatory affairs: mainly mitigating the risks that otherwise could destroy value. Others, in turn, will focus their ESG actions on exploring growth opportunities, seeing how this tool could help them capture new profit pools. And there are those targeting both sides: organisations that view ESG as a means of becoming fit for the future. The Centre does not expect everybody to fill in the ranks of the last category, the types of organisations that blaze the trail and for whom the horizon is limitless. We fully acknowledge the capacity differences that exist throughout the shipping business. The desire to excel is laudable, but it’s best to shine at what you can effectively polish. ESG requires a solid anchor. After all, it is also about credibility: it won’t do you any good if you trumpet your ambitious goals but don’t see them through. Transparency is key, and so is patience. Rome wasn’t built in a day, and no one expects an organisation to deliver on its ESG overnight. What we want is progress, for example, disclosed annually. As such, an ESG strategy isn’t as much a thing one has, a static folder that gathers shelf dust, but rather a dynamic work in the making. The ‘governance’ part is critical here – ESG should be embedded into each & every tier of an organisation. It should be part of the CEO and front-line worker’s day, so to speak, with a dedicated team somewhere in the middle coordinating the whole undertaking. ESG is an extensive exercise. It may look complex, where the entire thing may fall apart because of one misaligned link. Yet, the reality proves much more positive, with companies integrating ESG into their DNAs. It can also stand for something more than ‘just’ business development, namely enabling green change by other stakeholders. We see it in the will to develop the so-called Green Corridors, end-to-end transport & logistics chains that require diverse organisations to come together and play on the same team. We can notice it happening in the Baltic, where the ferry and ro-ro lines are increasingly cautious about their relations with port communities and the environment, thus, investing in solutions that reduce pollution, not only their carbon footprint. By axing down their CO2 emissions or noise generated at berth, they also enable their trucking clients and port partners to perform on the ‘E’ and ‘S,’ respectively, in their ESG strategies.

Tanker

Consumer health Health & safety Systematic risk mgmt. Employee recr., Reducing emissions dev. & retention Waste mgmt. Client experience & satisfaction & circularity Plastic & packaging Responsible marketing Supply chain mgmt. Protecting biodiversity Corporate ethics Regulatory Cybersecurity Responsible products & services compliance & reform Corporate Data governance & privacy governance Transparency, Climate Strategy accountability Corporate philanthropy & reporting Company financial performance Community engagement & impact Diversity & Inclusion Human rights Water mgmt. Product quality & safety

Offshore vessels

Cruise

Innovation & research

Bulk

Governance Social Container

Shipping industry

Environmental Low

Low

Special purposeRelevance ships for long-term business success

RORO/Car carriers

High

Note: Sample size 7 ferry companies Source: BCG’s Materiality Mapping Analytics Product (MMAP)

companies aren’t reporting their ESG performance – if they have such a strategy at all. Outside media coverage full of news bits on green investments, the glamourless reality is that not enough is happening industry-wide – and we need to talk about that. Therefore, regulations are critical in moving the green needle. We, on our part, channel our message to that middle section of the bell curve, trying to drive home that there is value

in acting before regulators nudge us or in going beyond the current regulatory minimum. My wish and something I keep my fingers crossed for – not to mention working on it at the Centre, day in-day out, would be for anybody in a position to act to realise how severe the climate change situation is, hence begin doing what’s in their power. ESG is a more than workable tool for focusing that ‘yes we can (and should, and will)’ energy. 2/2023 | Baltic Transport Journal | 39

Using technology to verify a fuel’s true well-to-wake carbon intensity

Future colours by Natassa Kouvertari, Project Manager, Lloyd’s Register’s Maritime Decarbonisation Hub As maritime stakeholders evaluate zero-carbon fuel options, the verification of carbon intensity, as well as the full lifecycle impact of these fuels, will present a significant challenge. Ammonia and hydrogen, two of the most promising long-term alternative fuel candidates for shipping’s energy transition, are often produced using fossil fuels. This situation poses a dilemma for fuel purchasers in distinguishing between a fuel produced using non-renewable methods and one mixed with fuel molecules produced using green sources. Modern technology could lift the barrier of tracing the true carbon intensity to prevent mislabelling and illicit blending.

ithout assurance, the industry will be left idling to cope with uncertainty. Cheaper and more carbon-intense versions of hydrogen and ammonia will be rife, and with the operational cost of fuel still being a key driver for business decisions in shipping, corners will be cut. Grey, blue, and green Hydrogen and ammonia have different carbon footprints based on the energy source used at production. They are thus categorised as grey, blue, or green to highlight their carbon intensity and production method. Grey fuels are produced using fossil fuels and are moderate-to-high in carbon footprint. This category can include grey hydrogen, created from natural gas or methane using Solar, wind, green electricity

steam methane reformation, and grey ammonia, produced from hydrocarbon feedstocks. Blue fuels are also produced using fossil fuels. However, the carbon emissions from the production process are captured and safely stored using carbon capture usage and storage technology, making these fuels low-carbon. Green fuels are produced using renewable sources and are, therefore, zero-carbon options; an indicative example is hydrogen which is created by using clean electricity from surplus renewable energy sources (such as solar or wind power). This type of green hydrogen can be directly used to produce green ammonia. Currently, less than 0.1% of the production facilities globally are dedicated to water electrolysis, which is the source of hydrogen for both green production processes. Blending with other sources

However, as the demand for green fuels increases, the number of facilities is also expected to increase. With this growth, the amount of high-purity product coming from green processes will equally increase. Technology’s role in future fuel assurance In a recent report jointly published by the Lloyd’s Register’s Maritime Decarbonisation Hub and Safetytech Accelerator, Tracing the true carbon intensity of sustainable marine fuels, the role of innovative technologies in the end-to-end assurance of the green fuel supply chain is presented. The report features a collaboration of two technology vendors, TYMLEZ and Authentix, who each apply a different yet complementary approach to confirming the green credentials of a fuel.

Labelling and quality testing

Carbon capture

Fossil fuel

40 | Baltic Transport Journal | 2/2023

Production

Transportation and storage

Bunkering and ports integration

Alternative fuel sold at different prices

SUSTAINABILITY Fig. 1. Carbon emissions from different methods of producing hydrogen Tonnes of CO2 emitted per tonne of hydrogen produced

0.3

Renewable electricity

Fossil gas

Gas-fired electricity

Coal-fired electricity 0

Source: IEA 2019; Hydrogen Council 2021

Source: IEA 2019, Hydrogen Council 2021

TYMLEZ’s guarantee of origin (GO) scheme uses blockchain technology for green hydrogen and green ammonia tracking systems. As part of the solution, each unit of hydrogen or ammonia is certified Transparency Significant compliance cost through a live facility data platform that can Credibility Complexity capture emission data during the production process, such as water, fuel usage, and Transferability of certification Lack of connection to grid electricity consumption. Individual existing schemes Low compliance costs technologies and information validation Self-certification Simplicity enable the platform. They can follow any Fragmentation of scheme Third party verification methodology, including the procedures of into state-based schemes the International Partnership for Hydrogen International acceptance and Fuel Cells in The Economy, to calculate Technology agnostic greenhouse gas emissions. Unambiguous metrics Moving from the production side to the transportation and bunkering, Authentix Flexibility proposed using synthetic markers, which Consistency are injected into the fuel to detect blending and mislabelling, as well as the origin of 1 Global Witness. 1 September 2022. The Trouble with Hydrogen. Retrieved online: The problem with hydrogen | Global Witness the fuel, to assure that it matches the digital signature even after blending. Authentix has developed a system for Source for figs. 2-4: Lloyd’s Register’s Maritime Decarbonisation Hub and Safetytech Accelerator’s Tracing the liquefied petroleum gas (LPG), which true carbon intensity of sustainable marine fuels

FEATURES TO AVOID

FEATURES TO INCLUDE

Fig. 2. Features to include/avoid in designing a GO scheme

Photo: Canva

2/2023 | Baltic Transport Journal | 41

SUSTAINABILITY Fig. 3. An example implementation of blockchain-enabled GO for green hydrogen plant

H2 SHIPPING Certificate of Green NaOH / KOH

GO Certificate Certificate of Green Catalyst Metals

L/min

kWh Consumed

L/min

Water

Trust Chain Renewable Energy

Water & Alkaline Treatment

kWh Produced

kWh Consumed

Electrolysis Treated water

Wet H2

L/min

Gas Purification

Compression

Hydrogen

Dry H2

L/min

kg/min

Transport

kg/min

End use

kg/min

Audit Level Report

Fig. 4. The principle of fluorescence detection Sample Monochromator

Excitation light source

Flourescent Light is scattered within the sample

Monochromator Spectral output Detector

is stored and transported similarly to ammonia. The company’s solution involves injecting a chemical marker in the LPG as it is pumped into tanks, agitating the tank filling to provide homogeneous mixing. The LPG can be sampled and tested with an analyser containing a specially designed high-pressure fuel cell to identify and quantify the amount of marked LPG. A genuine energy transition – together Whilst novel technologies provide insight into how they can provide the endto-end assurance of the green fuel supply

Photo: Authentix

chain, industry regulation will be pivotal in ensuring operators are incentivised to use green fuels. Schemes which reduce port fees for low-carbon users are an example of how the industry could lead this without waiting for mandatory regulation; however, the introduction of rules and standards for the fuel supply chain to mandate the use of green or blue fuel would avoid the potential scenario of cost discrepancy. Although some consumers are willing to pay a premium for green fuel in support of their environmental and corporate commitments, with fuel costs representing

as much as 60% of the total ship operating expenses (OPEX), a disparity in price with grey fuels being significantly cheaper may drive its consumption over the blue and green energy sources. Mandating guidelines for a smooth transition from grey to blue and then to green fuels would safeguard the OPEX for companies whilst ensuring that shipping continues on its path towards a renewable future, one in which owners and operators are assured of fuels’ green credentials from well to wake, allowing the industry to commit to a genuine energy transition together.

Launched in 2020, the Lloyd’s Register Maritime Decarbonisation Hub is a joint initiative between Lloyd’s Register Group and Foundation. It brings together thought leaders and subject matter experts with the skills, knowledge and capability to help the maritime industry design, develop and commercialise the pathways to future fuels required for decarbonisation. Click www.lr.org/en/marine-shipping/maritime-decarbonisation-hub to learn more. 42 | Baltic Transport Journal | 2/2023

it’s out!

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Key takeaways from T&E’s Why an e-fuel mandate for ships?

Getting shipping on the green transition track – assertively by Przemysław Myszka The world of news can disturb what we take for reality. On the one hand, not a week goes by without stories about this-and-that investment that will move the transport industry’s green transition needle – and indeed, the Baltic Sea region is rife with such examples. On the other hand, Transport & Environment (T&E) reminds us in one of its latest briefs that shipping, as a whole, still runs almost entirely on fossil fuels. That is the reason behind releasing the Why an e-fuel mandate for ships? analysis, in which the organisation explains why governing bodies, the EU in this particular case, should require the shipping business to use a certain minimum of renewable fuels.

n October 2022, the European Parliament (EP) proposed for the FuelEU Maritime regulation to mandate shipping to use at least 2% renewable fuels of non-biological origin (RFNBOs) by the end of the current decade. At the beginning of its brief, T&E highlights how this move differs from another EU initiative set forth by the European Commission (COM) of establishing a target on greenhouse gas (GHG) intensity

reduction (of 6% by 2030, whereas 13% was T&E’s proposal). The NGO states that although technologically neutral on paper, the latter effectively gives the upper hand to marine fossil fuels over RFNBOs. The reason is twofold. First, “[…] given the decade-long EU subsidies towards LNG [liquefied natural gas] and biofuels, these fuels have lower production costs than RFNBOs. As a result, the proposed system makes investments in short-term solutions such

as fossil LNG and biofuels more attractive than in truly sustainable and scalable solutions.” Second, RFNBOs get a sustainability criterion they must meet: at least 70% greenhouse gas emission well-to-wake reduction. By contrast, there is no such requirement for LNG. “It thus appears that adopting an RFNBO sub-quota in 2030 is the only way to guarantee a minimum switch to sustainable and scalable marine fuels in

Fig. 1. Projection of EU shipping fuel mix based on European Commission-proposed GHG intensity reduction targets and fuel costs

Source for all figs.: T&E’s Why an e-fuel mandate for ships? (2023)

44 | Baltic Transport Journal | 2/2023

SUSTAINABILITY Fig. 2. Production pathways of renewable electricity and RFNBO suitable for different ship types

this decade,” T&E answers its publication’s title question. The authors also underline that, if any, RFNBOs are tech-neutral: both when it comes to the fuels themselves (hydrogen and its derivatives) and propulsion types (internal combustion engines, fuel cells, gas turbines). Demand & supply The EP’s 2% proposal would demand about 21.5 petajoules (PJ) of RFNBOs by 2030, which translates to around 205237kt of green hydrogen (up to 800kt if T&E’s sub-quota of 6% would be agreed on). Some 2.2GW of electrolyser capacity would be needed to feed that amount of

hydrogen at the cost of €0.8-1.4b. The 2% target would replace 514kt/year of fossil fuels the shipping sector consumes. “This will create a guaranteed market and business certainty for H 2 investments, acting as a regulatory-driven business guarantee of announcements already made by some shipping companies. Moreover, it would directly contribute to reducing Europe’s dependence on imported oil and gas, as shipping currently relies 99% on fossil fuels […],” rounds up T&E in Why an e-fuel mandate for ships? The organisation suggests that compliance should occur on the company’s fleet-level rather than for individual ships.

In this regard, T&E criticises the exemption (for 2030-2035) proposed by EP: that the sub-quota should apply to companies disposing of more than three vessels. If inked, this move would exclude half of the shipping companies, which account for 15% of European shipping’s energ y use. Instead, lines should pool together and “[…] share surplus between themselves, so that both sma ll and large companies can optimise their investments.” Compliance surpluses should be exchanged, and T&E gives thumbs up to the COM: “ This f lex ibi lit y option […] designed by the European Commission precisely to avoid situations where every ship complies with the GHG intensity targets by blending minimum amounts of alternative fuels a nd i nc ent iv i s e i nstead compl iance with new, fully renewable ships.” The 2% sub-quota will create demand from the (regulatory) top to the (shipping) bottom. The supply will, it appears, go the other direction (at least partially). The COM’s RePowerEU plan sets the target supply of 40mt of renewable hydrogen by 2030, of which half will be produced in Europe. By whom? By shipping lines, it seems. Which may turn out to be better than it initially sounds; according to T&E, “Today, shipping companies investing in e-fuel capable ships often have to invest themselves in e-fuel production capacity to secure enough supply. A sub-quota would have the advantage to guarantee a minimum uptake of green hydrogen-based fuels in the maritime sector, providing legal certainty for investments undertaken by fuel 2/2023 | Baltic Transport Journal | 45

SUSTAINABILITY Fig. 3. Potential renewable hydrogen supply needs, EU-EEA distribution of 2% RFNBOs by 2030 based on current bunker fuel sales

suppliers, shipowners and ports. In the long term, it should also help to achieve much needed economies of scale across the green e-fuel supply chain.” The NGO brings forth a few green fuel production investments by the shipping sector. Maersk alone aims to produce 2.0mt of e-methanol in its Spain facilities (around 40PJ, so way above the 2%’s 21.5PJ). The Danish company has 19 e-methanol container ships in its order book, scheduled to hit the ground in 2025 (and already at that point in time, half of them are to sail on made-by-Maersk e-methanol). But one mustn’t be as big as Maersk to become a fuel supplier. In the 46 | Baltic Transport Journal | 2/2023

previous issue, we hosted an article on how the Finnish Meriaura, by all means orchestrating a smaller f leet than that of the Copenhagen-based carrier, has been for many years producing its own green marine fuels, a capacity that will only become bigger soon. The Baltic Sea region will house marine/transport e-fuel production sites too. The latest announcement came in late January 2023, when the Swedish Liquid Wind shared that it chose the country’s up-north Umeå as the potential location for its third production plant. All documents required for an investment decision are to be ready in 2024,

with an expected production of 100kt/ year starting in 2026. Interestingly, the demand will come from different directions, not only from spanking-new & sky-scraping container carriers. In late February 2023, ScandiNAOS, Chalmers University of Technology, and the Swedish Maritime Administration (SMA) launched a project to develop dual-fuel kits for converting new and existing diesel engines (up to 1,000kW) to methanol operation. The two-year-long project will see ScandiNAOS develop and implement such a solution for a pilot boat owned and operated by SMA (the institution, which intends to remove fossil fuels from its fleet by 2045, already operates a methanol-powered pilot boat equipped with a single-fuel compression ignited methanol engine which completed successful trials in December 2021). Why an e-fuel mandate for ships? lists existing and near-future RFNBO ships: 23 already sailing on methanol (of fossil origin) and 42 on order, plus 130 ammoniaready on order (per October 2022 data). T&E also underscores the engine manufacturers’ readiness: two- and four-stroke ammonia engines will be available from 2024 and by 2025, respectively. The organisation is also in favour of requiring fuel suppliers to deliver a certain minimum of RFNBOs to the shipping sector. The EP’s proposal assumes that at least 1.2% of all transport RFNBOs should be earmarked for the needs of the maritime industry. This figure would translate into covering 10% of shipping’s fuel demand in 2030, so plenty to satisfy the 2% sub-quota. T&E also invites the EU to set targets on its ports to provide adequate e-fuel bunkering infrastructure. In practice T&E details several scenarios of shipping lines complying with the 2% sub-quota. First, running an RFNBO vessel (fully or partially on green fuels) and banking on the created surplus. Second, blending RFNBOs with compatible marine fuels (like synthetic LNG/diesel with LNG/diesel). Third, investing in RFNBO auxiliary engines to check off the 2% for the vessel’s total energy consumption. Fourth, entering into a pool and ‘buying’ compliance. Fifth, paying fines and getting a FuelEU certificate this way (EP’s proposal speaks of penalties equivalent to about three times the price spread between the fuel used and the RFNBO compatible with the ship). “In practice, and especially if the pooling system is made easily accessible to companies [...], the 2% RFNBO sub-quota

SUSTAINABILITY Fig. 4. EU Parliament proposal of RFNBO mandates matching supply and demand in shipping under FuelEU Maritime and RED III

Fig. 5. By 2030, 15% of shipping energy will come from new vessels built after 2025

is likely to be met only with new ships, able to run on RFNBOs. Using existing literature on the average lifetime of vessels, we estimate that by 2030, about 15% of EU shipping energy demand will come from vessels built after 2025. This date coincides with announced orders of vessels able to run on e-methanol,” reads Why an e-fuel mandate for ships?

The second scenario is particularly interesting because of another EU initiative: the sub-quota for e-kerosene in the aviation sector (COM proposed a 0.7% target, while EP – 2% by 2030). E-diesel is a by-product of making e-kerosene; as such, COM’s target would produce 7.7PJ and EP’s 22PJ of e-diesel, corresponding to around 36% and matching the shipping

industry’s demand created by its 2% subquota, accordingly. “Rather than using e-diesel volumes in road transport, where consumers would pay the high price, a more appropriate use-case could indeed be the shipping sector, especially considering the need for diesel pilot-fuel in ammonia and methanol ships,” advises T&E. ‘Crude’ mathematics say that higher fuel prices must translate into more expensive transportation, hence increases on the tags. RFNBOs are, as things stand today, four times more costly than current marine fuels. Still, T&E attempted to calculate the impact they would have on the price of end products. According to the NGO, sailing 100% RFNBO from China to Belgium would add €0.08, €1.0, and €8.0 to buying a pair of shoes, TV, and fridge, respectively. Choose to think ahead Transport & Environment tops its analysis by examining the multiplier effect for RFNBOs, used to multiply the use of each tonne of such fuels towards reaching the GHG intensity reduction targets. The NGO proposed a multiplier of five, but EP and the European Council went for that of two. Undeterred, T&E nevertheless supports the move, “[…] if combined with a sub-quota, even a multiplier of 2 could deliver a powerful boost to investments in e-fuel ships. Before 2030, it would work as a pure incentive for early investments in e-fuels. When the sub-quota kicks-in, it would reward shipping companies going beyond minimum compliance, encouraging them to use more than the required 2% e-fuels in their f leet. What’s more, the compliance surplus obtained would be multiplied by 2 until 2030 and by 1.5 after 2030 in the Parliament’s proposal, generating revenues thanks to the pooling system. This means double benefits for companies choosing to think ahead rather than choosing unsustainable or unscalable fuels.” There is much debate around the various initiatives of the EU to get shipping on the green transition track. The main practical ‘why’ in Why an e-fuel mandate for ships? seems to be getting all hands on deck from the very beginning to avoid the chicken-andegg situation (as was experienced with the proliferation of LNG in the Baltic). Shipping lines, fuel suppliers, ports, and other relevant stakeholders are to be ready to play their part from the onset – the more assertively, the better. For the sake of the environment (and business), and with a minimal negative impact on customer pockets. 2/2023 | Baltic Transport Journal | 47

E-fuels’ dependence on renewable energy defines transport’s green transition

The holy grail of transport decarbonisation? by Ewa Kochańska A report by the International Transport Forum and the Corporate Partnership Board, The potential of e-fuels to decarbonise ships and aircraft, makes an argument that while across their life cycle, e-fuels can generate dramatically lower land, water, and greenhouse gases (GHG) than fossil fuels, it is all dependent on the carbon footprint of electricity used to produce them. The authors explain how interlocked e-fuel deployment is with green hydrogen and renewable electricity production, technological innovation, and well-thought-out government action.

-fuels can be in a gas or liquid form and are produced from renewable or decarbonised electricity. Gas e-fuels include renewable hydrogen and e-methane. Hydrogen (H2) is produced by electrolysis using (renewable) electricity making it the simplest of all e-fuels. Liquid

e-fuels include e-methanol and e-crude (synthetic crude oil), producing e-kerosene and e-diesel, while synthetic ammonia (NH3) can be in a gas or liquid form. Ammonia can be produced by combining hydrogen and nitrogen via the Haber-Bosch process. It has an advantage over pure hydrogen fuel

Fig. 1. Pathways for producing e-fuels

Source for fig.1 and tabs. 1-2: The potential of e-fuels to decarbonise ships and aircraft (2023)

48 | Baltic Transport Journal | 2/2023

because its liquid form and higher energy density make it easier to handle. E-fuel options in maritime include green hydrogen, ammonia, and e-methanol. At the same time, e-diesel and e-methane can serve as drop-in substitutes for marine diesel and liquefied natural gas.

SUSTAINABILITY

Photo: Canva

Hydrogen Hydrogen, the simplest and the most abundant element in our environment, has garnered quite a bit of interest as a fuel, especially green hydrogen produced from renewable or nuclear electricity. Unfortunately, at this point, the most commonly utilised hydrogen – over 99% of production – comes in grey, generated through steam reforming from natural gas. This method emits fewer emissions (but not by much) than black or brown hydrogen – produced using coal.

Green hydrogen is also so alluring as a fuel of the future because in liquid form it has three times the energy density of heavy fuel oil (HFO) and is a nearly zero-waste fuel, as its only by-product is water vapour (although it does produce ‘minimal’ GHG emissions in the form of nitrogen oxides, which, a.o., aren’t neutral to human health). Disadvantages of hydrogen include space: if using hydrogen directly as a fuel in liquid form (instead of producing other renewable fuels), it requires almost eight times more

space than, e.g., the energy equivalent found in marine gas oil. Other logistics issues pose even more challenges since storing liquid hydrogen needs exceptionally low temperatures (under -253°C). Because of the extreme temperature, insulation is vital: air condensation on pipework could lead to explosions; this is in addition to the overall threat of leaks on board simply because hydrogen is so highly explosive. Then again, the empty salt caverns used for natural gas can be utilised for land storage.

Ammonia Many hydrogen-as-marine-fuel problems can be resolved using it as part of a more forgiving chemical compound such as ammonia. It, like hydrogen, does not produce carbon emissions when burned in engines, but unlike hydrogen this time, it can be stored in liquid form at just -33°C (or under 10 bar pressure). Furthermore, liquid ammonia

– compared to hydrogen – has a higher volumetric energy density, is not explosive, and can utilise liquefied petroleum gas storage tanks. Ammonia is also readily available because it is commonly used for fertilisation. Nonetheless, it has its drawbacks: toxicity even in small amounts poses serious concerns for vessel crew, personnel,

and the marine environment. Its production process is also energy intensive and currently uses fossil fuels. Also, while “ammonia can be a hydrogen carrier for vessels if split in an upstream process on the ship to release hydrogen,” this process diminishes systemic energy efficiency, “making it less practical than its direct use without splitting,” according to the report.

Methanol E- methanol is another option for maritime which has also seen an uptake in interest, as it is one of the easiest fuels to handle and is compatible with existing, albeit modified, ship engines and infrastructure. And while it requires larger tanks than, e.g., diesel

oil (two-to-three times), they don’t have to be cryogenic or pressurised; therefore, the initial investment for the shipowner is relatively low. Emissions-wise, when burned, methanol only produces nitrogen oxide in very small amounts. Methanol is also biodegradable,

mixes with water, and is less toxic to the environment than gasoline or diesel in case of a spill. It can also be used in fuel cells. Alike other ‘potential greens,’ for the time being, most methanol is made using fossils such as natural gas or coal. Further, 2/2023 | Baltic Transport Journal | 49

since the producers are still trying to figure out the demand for e-methanol, its production level remains a question mark. As

such, the stakeholders are left uncertain whether there will be enough of it and at what price point. Still, as the report points

out, methanol is “already available through existing infrastructure in more than 100 ports globally.”

Obstacles: environmental, economic, and technical E-fuels garner much attention simply because some versions will have to be used under existing International Maritime Organization (IMO) regulations. But it is largely unknown what environmental consequences a large-scale use of e-fuels could bring – direct, such as spills, or indirect, like climate change. Equally significant are the financial constraints of e-fuels, currently significantly more expensive than fossil bunker. Renewable ammonia costs about $7201,400/tonne and is expected to fall to $310610/t by 2050; 90% of that high price is dependent on hydrogen costs. The commonly used shipping intermediate fuel oil and HFO cost about $450/tonne. Additionally, liquefied hydrogen and ammonia are lower energy density fuels than typical shipping bunkers (4.6 and 3.1 times lower, respectively). Also, neither one of the e-fuels is a drop-in fuel in maritime. “This means that the speed of their adoption in the maritime sector is partly constrained by the turnover of the shipping fleet and the speed that ammonia/hydrogen-capable powertrains enter new builds or retrofits,” points out the report. Next up for consideration are carbonbased e-fuels, a very convenient option in

decarbonising maritime due to their similarity to fuels already in use and drop-in capabilities, with little modification to engines and fuel infrastructure. Carbon-based e-fuels qualify as green/blue thanks to several technologies, a.o., carbon capture technologies that remove carbon dioxide (CO2) either from the atmosphere or the processes that emit it. These technologies include carbon capture and storage (CCS), which ‘grabs’ CO2, transports it away from the site, and stores it in deep geological formations. There is also carbon capture and utilisation (CCU), which uses CO2 from industrial point sources to produce e-fuels, and direct air capture (DAC), which is one of the most expensive methods and removes the CO2 from the atmosphere – to be stored or reused, in a solid (known as S-DAC) or liquid form (L-DAC). The last method, however, requires high-temperature process heat, which, for now, is provided via the combustion of natural gas – again releasing CO2. While that CO2 can also be directly captured during the process before it pollutes the air, that significantly lessens the efficiency of the initial CO2 capture. The S-DAC variant does not require the same high-temperature heat but costs 1.5 times more than L-DAC.

Furthering the carbon-based e-fuel generation methods topic, the report discusses the Fisher-Tropsch (FT) process and methanol synthesis, which are catalytic reactions producing liquid hydrocarbon (HC) fuels from syngas (a mixture of carbon monoxide and hydrogen). Fuels produced this way from fossil feedstock are not e-fuels, but both FT and methanol synthesis can produce carbon-based e-fuels by using CO2 feedstocks from DAC or CCU with hydrogen from electrolysis. Further, since FT and methanol synthesis create excess heat as a side product, waste heat recovery or combining them with other processes that involve heat (e.g., DAC or high-temperature hydrogen electrolysis) can improve the efficiency of all processes involved. However, there are economic barriers to carbon-based e-fuels, such as the price; the cost of carbon-based e-fuels depends on the price of hydrogen and CO2 feedstock (with the former responsible for 66-83% of the price). Since the costs of renewable hydrogen and DAC carbon depend on the costs of green energy used during the production process, the economic viability of e-fuels will always rely on the affordability of renewable energy.

Tab. 1. Feasibility of e-fuels compared to the most commonly used fossil fuels E-fuel

Gravimetric energy density (lower heating value) [MJ/kg]

Density at atmospheric pressure (atm) and 20°C [kg/m3]

Boiling point [°C]

Technical feasibility in shipping

-252

Potentially feasible

-33 65

Potentially feasible Feasible

0.67

Volumetric energy density [MJ/l] 0.0108 (at atm); 3.12 (350 bar); 8.5 (liquid) 12.8 (liquid) 15.6 0.0378 (atm); 20.8 (liquid)

Hydrogen [H2]

120

0.08

(E-)Ammonia (NH3) (E-)Methanol (CH3OH)

18.8 19.9

0.73 0.79

(E-)Methane (CH4)

-163

Feasible

Diesel fuels (MGO, MFO, VLSFO, HFO)

~43

0.82

~41

>250

Feasible

No future fuels without renewables: public support – welcomed! The contrast between the carbon footprint of fossil bunkers and e-fuels is that the former use relatively little electricity during production, and their carbon emissions are generated for the most part during combustion. Regarding environmental sustainability, e-fuels’ ability to decrease GHG emissions depends on the carbon intensity of the energy used to produce them and, in the case of carbon-based e-fuels, the origin of the CO2 . Therefore, since the global energy mix 50 | Baltic Transport Journal | 2/2023

still relies on fossils, the expansion of renewable electricity is critical if e-fuels are to be the answer to maritime’s decarbonisation efforts. “Additionally, all e-fuels rely on renewable hydrogen; the electrolyser capacity to produce hydrogen from renewable energy is one of the main impediments to the widespread adoption of e-fuels,” says the report. In 2020, just 0.03% of the total hydrogen supply was green. The global green hydrogen capacity must increase by 6,000 to 8,000

times compared to 2021 to fulfil the Paris Agreement climate goals. Next, it must be considered that due to the scarcity of green hydrogen, at least in the beginning, various sectors will compete for it. Hence, regulatory preference should be made for industries that cannot decarbonise without H2, while the remaining sectors should be prioritised based on their decarbonisation potential. Price-wise, as things stand at present, e-fuels cannot compete with conventional

SUSTAINABILITY bunkers. While costs may decrease with growth in production, demand, and technological innovation, they will not fall below the current fossil levels since these price points do not reflect ecological costs. When reaching the climate objectives of the next few years, e-fuels can complement biofuels, which are more financially accessible, but may face sustainability challenges in decarbonising economies. “Targeted support for e-fuels within broader lowcarbon fuel strategies, for example, through multipliers in incentive programs or subtargets within fuel mandates, could enable the industry to make them a mainstream technology,” says the report. Governments can manipulate the carbon price as an emissions trading system or by carbon taxes. The latter option targets CO2 emissions generated from fuel combustion but should also include other consequences, such as air pollution and energy security. Regulation-imposed carbon-pricing schemes can increase the price point of fossil fuels, creating a chance for e-fuels to compete. These methods are usually met with some ‘creativity’ from the regulated actors who seek ways of getting around them – in this situation, by using other emissionsdecreasing solutions instead of investing

in e-fuels. Carbon price manipulation can work only as long as cheaper options than e-fuels are unavailable. Consequently, the report advises enacting more fuel blending mandates and lowcarbon fuel standards (LCFS). The former measure promotes low-carbon fuel production investment because it lowers carbon intensity. It requires blending conventional fuels with low- or zero-carbon fuels to decrease carbon footprint, leaving the blending responsibility with entities such as fuel suppliers or ship operators. Furthermore, LCFS set a lifecycle-based carbon intensity target for fuels sold in a given area and allow regulated actors to trade credits to comply: fuels with a lower carbon intensity than the set standard generate credits – and those above it result in deficits. The regulated entities in this scenario are fuel suppliers and companies which produce, import, distribute, or sell fuel. The fuel blending mandates and LCFS offer more targeted incentives than carbon pricing as they bring a determined quantity of fuels to the market; however, they do not offer price certainty. This is where governments must provide financial instruments for research & development and first production assets in the e-fuel sector by assisting in securing

financing from lenders, offering subsidies, or providing incentives. “Programs may focus on industry activities that would not be realised without government support, for example, where high uncertainty related to a new technology holds back private investments,” says the report. The report points out that the IMO’s strategy for reducing GHG emissions to meet the Paris Agreement targets does not consider the entire lifecycle emissions of fuels – instead, focusing on direct CO2 emissions only, creating an environment where the adoption of inappropriate fuels can and will happen. A regulation proposed by the European Commission in 2021 – FuelEU Maritime – covered this issue with specific targets about GHG fuel intensity – well-to-wake. The targets aim to reduce the GHG intensity of fuels in maritime by 2% by 2025, 13% by 2035, and 75% by mid-century. FuelEU seeks to achieve 6-9% renewable and low-carbon fuel adoption in 2030 and 86-88% by 2050. Another policy promoting the take up of e-fuels in maritime is the Clydebank Declaration, an initiative launched at 2021’s COP26 in Glasgow calling for establishing by 2025 at least six “green shipping corridors” only for vessels with zero emissions.

Tab. 2. Financial instruments to assist investments in decarbonisation technologies1 Instrument Debt service reserves Government-held Credit insurance products for bond financing

Government insurance agrees to make bond payments in case the issuer defaults.

Public loans and loan guarantees

Include export credits for technology, where governments can lend directly to the private sector or act as a guarantor for the private sector to obtain a market loan with a lower interest rate. Can fully or partially cover payments on private loans or specific project expenses. Helps share commercial risk between the public sector and private partners. Governments guarantee the purchase of a number of aircraft or an amount of fuel that meets specified emission characteristics. In the case of fuels, these include offtake agreements – i.e. arrangements between a producer and a buyer to purchase or sell the (low-carbon) energy that will be produced. Commit the government to pay part of all of the cost difference between conventional fuels, vessel or aircraft and lower-emission versions. Advantageous tax treatment of R&D expenditures and incomes attributable to R&D or patents.

Grants Co-investment Market commitments Contracts for Difference Tax incentives 1

Description Governments keep cash deposits to make interest and principal payments in case a private borrower fails to make scheduled payments. The public agency agrees to take on a lower priority position for debt repayment than senior debt holders, allowing senior debt holders to be repaid fully before other debt holders. This eases the borrower’s access to private capital.

The list is not exhaustive

Significant proliferation vs bold-turned-flop announcements Fundamentally, e-fuels offer vital sustainability benefits over fossil fuels, enabling maritime to lower the sector’s emissions in a meaningful, long-lasting way. The International Transport Forum and the Corporate Partnership Board underline in their The potential of e-fuels to decarbonise ships and aircraft that effective government policies can help

bring e-fuels to scale by concentrating on significant renewable energy proliferation, which will be necessary to meet the global energy demand for the next two to three decades. Yet, their publication also underscores that relevant regulation currently targets e-fuel carbon intensity only at the point of combustion rather than cover the entire

fuel lifecycle. Additionally, governments’ “bold announcements” about decarbonisation are often not backed by actual investments, which are vital to widespread growth in the production of e-fuels. Clearly, e-fuels are only useful in sectors such as maritime if they can be produced sustainably and inexpensively compared to their fossil counterparts. 2/2023 | Baltic Transport Journal | 51

The traffic with Poland continues to develop Port of Trelleborg is the largest RoRo port in Scandinavia as well as in the Baltic Sea. When it comes to the freight traffic between Sweden and Poland, the route Trelleborg-Swinoujscie is the largest. The success depends on good shipping companies and a satisfying cooperation with Szczecin and Świnoujscie Seaports Authority. The route Trelleborg-Sassnitz was opened by Unity Line in 2007. In 2014 TT-Line also started to operate the route. In 2007 the volumes for trucks and trailers were 71,300 and in 2022 the volumes had increased to incredible 283,900. Intermodal transport, i.e. a combination of rail, sea and road, is the most environmentally friendly way to get your goods. Port of Trelleborg has worked to ensure that a larger proportion of trailers and containers choose the train to and from Trelleborg, a work that has had a fantastic development in recent years.

Port of Trelleborg is therefore very positive to the new intermodal terminal in Swinoujscie where we can tie together the intermodal solutions in quarter 3 this year, to increase the volumes further. The rail networks in Poland are moreover widespread and in good condition. Port of Trelleborg has invested a lot in the new port and so has Port of Swinoujscie. With increased capacity in Port of Trelleborg, we intend to increase the volumes and we look forward to strengthen and develop the traffic in the corridor between Sweden and Poland.

www.portoftrelleborg.se

REPORT

Baltic port market in 2022 by Marek Błuś Last year, we wrote that 2022 might be a completely different animal because of the Russian aggression against Ukraine and the subsequent bundle of sanctions imposed on the Kremlin regime. Top viewwise, 2022 didn’t bring about any changes, with the total volume of port traffic in the Baltic Sea region advancing by an almost negligible 0.3% year-on-year to 915.52mt. Such a conclusion, however, wouldn’t do the market justice: in turbulent times, the regional harbours kept working hard (though there were stark country-by-country differences, from up 23.1% yoy and 15.2% yoy in Polish and Latvian seaports, respectively, down to -15.4% yoy and -18.5% yoy across Estonian and Lithuanian harbours). With 337.62mt (+7.8% yoy), liquid bulk was again the top commodity shipped to & from the Baltic, dethroning general cargo with its 315.94mt (-7.6% yoy). Dry bulk remained at a solid level of 261.96mt (+1.5% yoy). 2/2023 | Baltic Transport Journal | 53

REPORT Tab. 1. Baltic Sea region’s (BSR) ports’ total cargo turnover in 2021-2022 (thousand tonnes)1 № 1 2 3 4 5 6 7 8 9 1

Country Russia Sweden Poland Finland Denmark Germany Latvia Lithuania Estonia Total

2022 245,500 168,251 118,972 106,566 97,196 57,080 48,078 40,537 33,339 915,519

2021 258,580 168,181 96,680 103,727 94,255 60,626 41,731 49,751 39,404 912,935

yoy -5.1% +/-0% +23.1% +2.7% +3.1% -5.8% +15.2% -18.5% -15.4% +0.3%

Share 2022 26.82% 18.38% 13.00% 11.64% 10.62% 6.23% 5.25% 4.43% 3.64%

Share 2021 28.32% 18.42% 10.59% 11.36% 10.32% 6.64% 4.57% 5.45% 4.32%

Share 2022-2021 [percentage points; pp] -1.51pp -0.04pp +2.41pp +0.28pp +0.29pp -0.41pp +0.68pp -1.02pp -0.67pp

All tabs.: only Russian and German Baltic ports; all Danish ports; Russian ports – estimated

Tab. 2. BSR’s ports’ liquid bulk turnover in 2021-2022 (thousand tonnes) № 1 2 3 4 5 6 7 8 9

Country Russia Sweden Poland Finland Denmark Lithuania Estonia Latvia Germany Total Liquid’s share of total

2022 148,600 54,740 38,825 32,300 23,414 16,487 11,610 8,577 3,063 337,616 36.88%

Photo: Port of Helsingborg

54 | Baltic Transport Journal | 2/2023

2021 134,608 56,968 29,890 28,000 22,985 14,811 13,770 8,824 3,224 313,080 34.29%

yoy +10.4% -3.9% +29.9% +15.4% +1.9% +11.3% -15.7% -2.8% -5.0% +7.8% +7.5pp

Share 2022 44.01% 16.21% 11.50% 9.57% 6.94% 4.88% 3.44% 2.54% 0.91%

Share 2021 42.99% 18.20% 9.55% 8.94% 7.34% 4.73% 4.40% 2.82% 1.03%

Share 2022-2021 [pp] +1.02pp -1.98pp +1.95pp +0.62pp -0.41pp +0.15pp -0.96pp -0.28pp -0.12pp

REPORT Tab. 3. BSR’s ports’ general cargo turnover in 2021-2022 (thousand tonnes) № 1 2 3 4 5 6 7 8 9

Country Sweden Finland Denmark Germany Poland Russia Lithuania Latvia Estonia Total General cargo’s share of total

2022 83,604 44,666 40,882 40,656 38,453 26,400 13,926 13,791 13,559 315,937 34.51%

2021 83,652 44,207 39,720 43,297 38,247 48,850 12,462 13,352 17,984 341,771 37.44%

yoy -0.1% +1.0% +2.9% -6.1% +0.5% -46.0% +11.7% +3.3% -24.6% -7.6% -2.93pp

Share 2022 26.46% 14.14% 12.94% 12.87% 12.17% 8.36% 4.41% 4.37% 4.29%

Share 2021 24.48% 12.93% 11.62% 12.67% 11.19% 14.29% 3.65% 3.91% 5.26%

Share 2022-2021 [pp] +1.99pp +1.20pp +1.32pp +0.20pp +0.98pp -5.94pp +0.76pp +0.46pp -0.97pp

Tab. 4. BSR’s ports’ dry bulk turnover in 2021-2022 (thousand tonnes) № 1 2 3 4 5 6 7 8 9

Country Russia Poland Denmark Sweden Finland Latvia Germany Lithuania Estonia Total Dry bulk’s share of total

2022 70,500 41,694 32,900 29,907 29,600 25,710 13,358 10,124 8,170 261,963 28.61%

2021 75,122 28,526 31,550 27,561 31,520 19,555 14,105 22,478 7,650 258,067 28.27%

yoy -6.2% +46.2% +4.3% +8.5% -6.1% +31.5% -5.3% -55.0% +6.8% +1.5% +1.2pp

Share 2022 26.91% 15.92% 12.56% 11.42% 11.30% 9.81% 5.10% 3.86% 3.12%

Share 2021 29.11% 11.05% 12.23% 10.68% 12.21% 7.58% 5.47% 8.71% 2.96%

Share 2022-2021 [pp] -2.20pp +4.86pp +0.33pp +0.74pp -0.91pp +2.24pp -0.37pp -4.85pp +0.15pp

Photo: Port of Gävle

2/2023 | Baltic Transport Journal | 55

BPO powers Baltic Ports for Climate – a determined approach to ambitious goals by Andrzej Urbaś, Owner, WORTKEKS Copywriting & Communication The first edition of the Baltic Ports for Climate event took place on 15 March during this year’s Transport Week conference in Gdynia. The gathering, organised in cooperation with the Baltic Ports Organization (BPO) and Actia Forum, was attended by nearly 100 participants who focused on the regional ports’ approach to climate responsibility.

t won’t surprise most experts from all corners of the maritime industry that new environmental regulations and policies, introduced at a very brisk pace, are one of the main factors impacting the sector’s development. As of right now, average annual emissions from maritime transport worldwide equate to 2.5% of global CO 2 emissions (for reference, the Baltic Sea region’s EU countries were responsible for 3.08% in 2021). At the same time, four-fifths of the world’s commodities are transported by sea. The EU is set to lead the charge in reducing the level of emissions from maritime transport, and the number of recently introduced regulations clearly shows that they are not joking around. Dariusz Kryczka (EY’s EU Green Deal Center of Excellence Leader) described the pace of introducing new regulations and policies not as an evolution but a revolution, and it seems a very apt characterisation. With FuelEU Maritime, Alternative Fuels Infrastructure Directive/Alternative Fuels Infrastructure Regulation (AFID/ AFIR), and the inclusion of shipping in the EU Emissions Trading System (EU ETS) on the horizon (to name a few), the time for preparation is there. Still, it is short and requires the industry to act now (if not ‘yesterday’): e.g., companies will have to submit 56 | Baltic Transport Journal | 2/2023

to the verifiers a monitoring plan for each of their ships by 31 August 2024, as part of FuelEU Maritime. The regulation itself is set to come into force on 1 January 2025. The successful implementation of these regulations hinges on rapid technological and infrastructural development. And this will require both money and time. Baltic ports at the forefront of change More deadlines are just years away: AFIR will require ports to provide onshore power supply (OPS) for container and passenger ships by 2030. And just as the EU is one of the main driving forces behind introducing these initiatives, the Baltic ports may serve as role models for preparedness. According to Bogdan Ołdakowski (BPO’s SecretaryGeneral), there are already well over 20 OPS installations operational in the Baltic, with nearly ten more on their way. The BPO is deeply involved in supporting the region in such endeavours, as illustrated by its latest project and the namesake of the event – Baltic Ports for Climate. The project aims to further develop and construct OPS systems in the region’s seaports by bringing together experts and stakeholders to create a platform for exchanging expertise and knowledge already gained during the successful implementation of existing projects.

The initiative will also consider the differing needs and characteristics of EU TEN-T Core and Comprehensive Ports, differentiating the approach. Baltic Ports for Climate application has been successfully delivered to the European Climate, Infrastructure and Environment Executive Agency at the beginning of 2023 (more information is available upon contacting the BPO Secretariat). Patrik Hellman (the Port of Kaskinen’s CEO) delivered a very important remark regarding the financial side of meeting the demands set by regulators: the regulations are not market-driven and rarely consider the ports’ take on the actual costs involved. Furthermore, technological uncertainty is an issue that must be carefully considered when planning such overarching regulations. Patrik also took part in the discussion on ports’ in-house green initiatives, giving a summary of the Port Activity App, a tool used on a national level by Finnish ports, allowing for the optimisation of vessel traffic, hence port operations too. A singular feature of the software is that it’s built with data sharing in mind: ports have access to each other’s data allowing for an even greater level of vessel call prediction. The panel was joined by Daria Mróz (Manager of the Port of Gdynia’s

Environmental Protection Department), who briefed the audience on CO2 mapping that allowed her seaport to pinpoint the primary sources of emissions: first & foremost vessels, followed by electricity and heat consumption. These findings, in turn, enabled the port to develop an emission reduction strategy tailored to its unique characteristics, ensuring the most bang for the buck and limiting the risk of asset waste. Defining climate responsibility The path to carbon neutrality is not easy, but some Baltic ports have already made great strides towards this ambitious goal and are even on the verge of achieving it. The Copenhagen Malmö Port (CMP), represented by their Chief Communications & Sustainability Officer Ulrika Prytz Rugfelt, aims to become carbon-neutral as soon as 2025. One of the actions that allowed the ports to get within reaching this goal was the switch from fossil fuels to bio-diesel (HVO) for all machines operating within CMP’s Swedish part. Copenhagen is set to follow shortly after the completion of the new container terminal. Others mirror this part of the rich portfolio of green actions undertaken by CMP. Jan Jarmakowski (Hutchison Ports’ Gdynia Container Terminal’s Managing Director) also mentioned the switch from diesel to green fuels in the context of powering his

terminal’s machinery. The company is also looking towards other possible energy sources, such as hydrogen. Still, the supply chain isn’t mature enough for commercial use: it will take a couple more years to be viable (though GCT’s parent company is boldly exploring producing & using green hydrogen, as, it seems, several transport players, also in the Baltic, already are or gear towards becoming energy producers to secure their sustainable future). Given the broad scope of challenges today’s ports face, it is reassuring that many tools are at their disposal. The complexity and multi-faceted character of port operations means that over decades they have naturally been amassing considerable amounts of data available to them. Stefan Leschka (DHI’s Head of Ports Advisory) demonstrated how these data sets could be combined and employed to develop models aiding port authorities in the decision-making process, improving efficiency and minimising risk. Cold ironing returned as a topic later during the day, with Björn Boström (the Port of Ystad’s Managing Director) firmly stating that it should always be prioritised as a solution contributing to the reduction of greenhouse gas emissions, likewise noise pollution. Yet, it needs to be approached as any other business case, carefully considering the costs involved (including going

the extra mile to get shipping lines ‘plugging in’). Tommaso Spanevello (HAROPA PORT’s Head of European Affairs) added that it is also vital that the legal framework governing the implementation of OPS takes variable demand and supply into account. Another point he touched upon was the growing pressure ports face from policymakers and their customers. It appears that environmental awareness has firmly embedded itself in our culture. The Baltic Ports for Climate event concluded the 2023 edition of the 200-participant-strong Transport Week, the first day of which covered the main trends impacting the development of the transport sector in the Baltic Sea region: geopolitics, smart solutions, cybersecurity, and offshore wind energy projects. The Organizers would like to thank the City Host – the City of Gdynia, the Strategic Partner, all the other Partners, the Honorary Patrons and the Media Partners for their continuous support. We are looking forward to meeting you all again next year! Meanwhile, BPO’s working on its next events, including the Ports 4.0 Conference in Riga (in its third instalment, the meeting will put a rich mix of exciting tech developments in the limelight!) and the Baltic Ports Conference in Ystad (the go-to gathering for all wanting to keep their ear to the Baltic seaports ground!).

BALTIC PORTS ORGANIZATION • Secretariat Office – Actia Forum Ltd. ul. Pułaskiego 8, 81-368 Gdynia, POLAND, ph.: +48 58 627 24 67, fax: +48 58 627 24 27, e-mail: bpo.office@actiaforum.pl, bpo.sg@actiaforum.pl, www.bpoports.com 2/2023 | Baltic Transport Journal | 57

Breaking silos to improve transport (environmental-social-governance) performance

Data democratisation by Arnaud Dianoux, Founder and Managing Director, Opsealog Shipping has a long history of regulatory interventions to protect the environment, from the London Convention to MARPOL, through the Ballast Water Convention, and now the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). All these initiatives involve data collection. In most cases, however, these data sets are stored on paper, in spreadsheets, or lurk elsewhere in the email box: all inaccessible, siloed, unsecured locations where the gathered information adds no value and serves no purpose beyond compliance. We can deliver a step-change in mitigating shipping’s environmental impact – likewise, better its social responsibility & governance – if we break data silos and share information more seamlessly along the value chain.

or each new regulation, it is common to ‘simply’ add another spreadsheet. In the past, this was a reflection of the data recording methods available at the time, but it also demonstrates an absence of motivation. As such, the value of the data was overlooked. Now, in the age of accountability, the case for change is more compelling. Companies will increasingly pay for the harm they cause, so conversely, they will reap the benefits of the proactive steps they take to mitigate that harm. With the digital technologies available today, once idle data becomes a sustainability-building opportunity that pays dividends because it can now be entered once, verified, shared, and mined for insights. Demonstrating impact Our mission at Opsealog is to support data democratisation across the maritime community, up & down supply chains so that all organisations, big or small, can contribute their data insights and collectively harvest the fruits. Our goal is to help companies harness the potential of data to deliver constant improvements, demonstrate their positive impact, and reinforce partner trust. Shipping’s digital transformation is not a one-company initiative: if the entire maritime sector takes steps towards democratising data within our communities, networks, and supply chains, we all stand to gain. Raising the data maturity of one partner enables them to better support the shared goals of the others. Digitalisation can then close the gap 58 | Baltic Transport Journal | 2/2023

between environmental ambitions and the proper measuring of results, guiding the sector towards its goals while bringing transparency to the industry. This makes the difference between greenwashing and meaningful action and extends the democratic process to include society as a whole. After all, we are all stakeholders in sustainability. The shipping industry already supports a similar approach through reporting requirements for the International Maritime Organization’s Data Collection System regulations, which will bring more information to the industry. For example, CII rankings will be made available to charterers, giving them better awareness of a ship’s sustainability credentials. Moving forward, companies will – if they aren’t already – face growing scrutiny from cargo owners, financial institutions, and investors about their genuine efforts to reduce their emissions – and their actual impact. Puzzles that fit Thankfully, the actionable insights derived from data are becoming more sophisticated, broadening the consideration horizon beyond self-evident fuel consumption and how to lower it. We now see digitalised reports that enable us to act on more complicated operational challenges, such as giving companies insights on why their vessel is late, why they had to increase speed (hence use more bunker), and why they had to reimburse customers or pay an extended invoice to the ports, among others. Further advances will be as much about

organisational advancement as technological change. Part of the needed cultural evolution is greater collaboration between different data providers, acting as suppliers for a specific ship or company, to ensure seamless data integration. No single digital solution will achieve everything; instead, we need an ecosystem where different data providers and analytical services work together and share data to generate added value and achieve the best possible outcome for their common customer. This is becoming an expectation on the client side – that the companies providing data services can talk to each other. This push is a game-changer, and we’re already seeing more willingness to collaborate for that reason, as data providers know that they must work with others to keep and expand their customer base. As the number of providers grows exponentially, the capacity to connect and integrate data seamlessly will be even more critical. Otherwise, companies’ data ecosystems will look like a puzzle containing only mismatched pieces, limiting their capacity to extract meaningful insights and act on them. The winding rivers of mindset change On a technical level, there is no doubt that we can solve the data integration challenge. However, equally important is grappling with the task of evolving mindsets if we are to really take advantage of new solutions. An illustrative example of this is engine utilisation in the offshore sector: it seems obvious that crews should ensure

TECHNOLOGY the engine configuration for a specific action and being prepared for subsequent requirements. Moreover, they often face this decision without access to specialist technology that would help them make more spot-on resolutions. We can bridge this gap by collecting and analysing engine data for easy and timely evaluation. Armed with this intel, crews can assess the options, make the right decision, and take action. Opsealog’s experience in the offshore sector has shown how much impact this can have. In collaboration with Identec Solutions and Shell’s f leet in Nigeria, we improved vessel performance using GPS positioning and weather data, along with the ship’s operation as reported by the captain through noon reports and e-reporting solutions. As part of a pilot project, nine vessels were equipped with a GPS-SAT removable transponder, configured to send their positions every 30 minutes through the Globalstar network. The insights gained enabled Shell to identify inefficiencies, reduce emissions from its fleet of offshore support vessels in the winding rivers of the Niger Delta, and maximise safety and security in those harsh environments.

Photos: Igor Kardasov

it adequately depending on the type of operations, but this is not always the case. When faced with fast-changing schedules and urgent operations, captains and chief engineers must juggle between adjusting

A process, not an end Embracing data democracy will solve today’s inefficiencies and position us for the challenges ahead. Digitalisation is a process, not an end. For example, present decarbonisation measurements are based on the current market bunkers. The way we collect and process data will have to evolve in response to the arrival of new low- and zero-carbon fuels. Robust data must accompany the transition to new fuels to measure consumption and emissions, plus the impact on other operational costs, including the logistics of getting these fuels on board and potentially a complete well-to-wake analysis. We see data democracy as essential for making shipping’s decarbonisation a reality. Our vision for the maritime sector is one of openness and accountability, capable of delivering a step-change in curbing the total impact of maritime operations on the environment. Opsealog’s solutions have been designed with this goal: accessible in a way that is available to all, beneficial to all, and affordable to all. Opsealog is a French company specialising in performance management for the energy and maritime industries. Regarding the latter, Opsealog guides maritime leaders in their digital transformation, offering no-hardware-needed solutions that add to flexibility and agility by making data actionable. Head to www.opsealog.com to discover more. 2/2023 | Baltic Transport Journal | 59

Just-In-Time ship port arrivals and the POLO Digitalization Platform for Ports and Logistics

Disproved! by Anders Berg, Senior Manager Maritime Solutions – Unikie Sweden The Baltic Sea region, with its unique environment and favourable conditions for path-breaking, is fast becoming a hotbed for maritime innovation development. With the proximity of several countries with diverse transport industries, strong research & development centres, local & national government support, and considerable market prospect, it is no surprise that the region has gained recognition for its creative potential. This article delves into one of the recent concepts that have emerged in the shipping industry, the Just-In-Time (JIT) arrival and the advantages it brings about for ports & shipping, likewise, the platform that powers it: the POLO Digitalization Platform for Ports and Logistics.

n a nutshell, JIT is a strategy that aims to optimise vessel port arrival times by reducing anchorage, which, in turn, is achieved by coordinating port & shipping operations. Vessels are given a specific time slot to arrive at the port, taking into account factors such as weather, resources (e.g., access to cargo handling equipment), and berth availability. JIT implementation in seaborne cargo carriage challenges the older-than-dirt First-Come-First-Served principle, a culprit of many ineffectiveness still sadly present in trade, not to mention its negative impact on the environment as ships burn fuel at anchor ground. As such, the benefits of JIT are numerous. For shipping companies, reduced waiting times translate to significant savings in fuel costs and reduced carbon footprint. Ports also benefit from increased throughput, improved predictability, better planning, and reduced congestion. These trickle down the entire supply chain: improved reliability and predictability of the shipping industry reduce delays overall. Adapt to evolve However, getting JIT on board shipping & port operations is easier said than done. Yet, it’s far from being impossible! We at Unikie, together with our partners and ports, have developed the Open-Ecosystem POLO Digitalization Platform for Ports and Logistics. This end-to-end tech solution provides an array of features tailored to meet the demands of professionals. Its highly adaptable and tailored user interface offers personalised access to functionalities, 60 | Baltic Transport Journal | 2/2023

features, and data, depending on the user’s role and needs. The platform enables realtime communication, data sharing, and collaboration between port operators, shipping companies and other logistics stakeholders. POLO was initially developed as Open Source, recently becoming an Open Ecosystem. In practice, this means anyone can join and freely share lower user rights with their partners, low or zero starting costs (though local integrations might be needed), and pocket-friendly software-as-aservice fees based on features and customisation level. Moreover, anyone can further develop the platform: alone or with other ecosystem partners (the result can be either a private or public feature – or something in between). Development work can be executed by Unikie or by third parties, and our organisation will always integrate and test all new features and maintain the platform. The system has open application programming interfaces to help the development, while old open-source code can be utilised. Lastly, the platform can be used as a basis for larger enterprise features integrated into POLO or as a dedicated private app. In short, what we have here is an Open Ecosystem enabling fast(er) expansion, low(er) maintenance costs, more features, and 100% accuracy for all investments. Probably, that is why POLO is the fastest-growing digitalisation toolset for ports & logistics. The POLO platform is a critical enabler of JIT arrival, facilitating the coordination and optimisation of vessel port arrivals. It integrates data from various sources, including the automatic identification system, weather

forecasts and real-time traffic information, to provide accurate and timely information to all stakeholders involved in vessel port calls. This information is then used to optimise the planning and coordination of vessel arrivals, reducing waiting times and thus improving efficiency. The POLO platform also offers a range of other features, such as berth management, service orders, and invoicing. The platform is designed to be scalable and customisable, with the ability to integrate with other systems and adapt to the evolving needs of the industry. Ship ‘eco-driving’ The Port of Gävle’s Time Slot Gävle is one of the most notable examples of successfully implementing the JIT concept and the POLO platform. From February 2023, vessels calling one of the Swedish seaport’s energy harbour’s seven terminals can apply for queue slots in the Port Activity App, which verifies the scheduled times with automatic ship positioning data. “With the app, we optimised the vessels’ turn-around in the port area. The cool thing about Time Slot Gävle is that we can influence the entire journey to the port from, for example, the Netherlands, Poland or the Swedish west coast. We make it possible for all vessels on their way here to choose eco-driving,” Niklas Hermansson, Head of Traffic and Safety at the Port of Gävle, highlighted. Claes Möller, CEO at Tärntank Ship Management and one of the companies initiating Time Slot Gävle, also underscored, “We already use slow-steaming between

TECHNOLOGY Fig. 1. The Open Ecosystem based end-to-end digitalisation platform for ports and logistics

Fig. 2. Examples of POLO features

Preem’s own terminals. Through the Time Slot Gävle project, we can also reduce emissions when traveling to ports with quays shared between several terminals. It enables great environmental benefits!” According to Lennart Knutsson, Commander of Tärntank’s Tern Fors tanker, up to ten tonnes of fuel can be saved sailing between Gävle and Gothenburg. It is an excellent example of the benefits of collaboration or as Linda Astner, the port’s Head of Sustainability, summed it up, “We hope to inspire more ports to introduce similar systems. Shipping is a good example of how important it is that we work with interfaces between organisations and system connections. Everyone wants to change, but we need to work together to remove the obstacles. We have learned a lot through

the cooperation within Time Slot Gävle. Together, we have also come a small step closer to our shared climate goals.” A change for the better Time Slot Gävle is also a testament to the potential of the POLO Digitalization Platform for Ports and Logistics, helping improve the port and shipping industries’ efficiency and reliability while cutting their environmental impact. The simplicity of this system disproves the notion that

transport chains are just too complex and involve overmany players to change. As the shipping industry continues to face mounting pressure to clean up its act, environment- and efficiency-wise, the JIT arrival concept and the POLO platform will likely play a vital role in the sector’s transformation. With continued investment in modern tech solutions, the Baltic Sea region is poised to remain at the forefront of changing the maritime industry for the better, driving sustainable growth and innovation in the years to come.

We are a Finnish forerunner in intelligent, real-time decisionmaking applications for vehicles, cars and industry (including maritime & logistics). Our technology – developed to safely unite people, processes and vehicles using AI – combines data from different sources and derives actionable information from these pools to enable live steering of devices and procedures. Head to www.unikie.com/en to learn more. 2/2023 | Baltic Transport Journal | 61

TRANSPORT MISCELLANY

Hanko’s 150th anniversary Steamships widened the horizons, so to say, making it possible to trade by sea also during the wintertime. As such, Finland eyed erecting its first winter harbour; the HyvinkääHankoniemi railway was put in place in 1873, likewise a breakwater and the first quay. Exports followed promptly, with wood products & paper, also butter – first to Copenhagen, then to England. In 1905, Finnish butter exports totalled 15.9 tonnes, of which 15.3t Photos: Port of Hanko went through Hanko (Smörmagasinet, ‘the Butter Warehouse,’ houses now the Harbour Office). Then came the Winter War, and according to the peace treaty, Hanko was leased to the Soviets for 30 years in March 1940, which forced its citizens to abandon the town and its port. Fortunately, in December 1941, the Red Army left – for Hanko to wave the Finnish flag again. On 9 May 1965, 181 Škodas were brought from Lübeck and unloaded using the ro-ro technology, the first such instance in Finnish ports’ history. The next breakthrough occurred on 1 April 1973, when the port ownership was transferred from the state to the municipality, powering Hanko’s development, including building a 14.2 m deep quay. The latest milestones cover the 2015 takeover of the Koverhar Harbour and the 2019 enlargement of Western Harbour. Hyvää vuosipäivää! And, naturally, sisu!

Unique island – unique loco

How to grill-bake an iron cake

When visiting an isle, we typically expect monuments made of boats, anchors, propellers, etc. That is maybe why a steam locomotive on the Frisian island of Wangerooge could thunderstruck us at first. However, the initial bafflement fades away as quickly as we learn that the island is car-free and the narrow-gauge railway has existed since 1897. It used to link piers in the three extreme corners of the nine-kilometre-long piece of land with its capital (also called Wangerooge). Till 1958, the network’s length was over 11 kilometres, but after the demolition of the connection to the abandoned East Pier, only 5.9 km were left. The preserved loco 99.221 was built in 1926 and served till 1958, when a diesel vehicle replaced it. The first four numbers mark the class, whilst the last ‘one’ designates the prototype that never had serial followers.

Maybe the Baltic isn’t Westeros (thank heavens!; though, the region has its own old, bald & ugly version of Cersei Lannister), but we know all the angles of winter. On the land side of logistics, low temperatures can make operations a bit tricky, such as when iron ore gets frozen together with the railcar it is transported in. In the 1960s, for example, it took a whole day for six-seven men to skewer through a single wagon. In 1971, the electrical engineer Knut Lindström and experts from ASEA devised ‘The Grill,’ tested in the Swedish Port of Oxelösund. It was the world’s one & only 6,000-ampere/minute induction device for simultaneously heating two railcars. The innovation worked even too well, melting the ore into some kind of iron dough, which sometimes had to be split using dynamite…

Photo: Stefan Flöper/Wikimedia Commons

62 | Baltic Transport Journal | 2/2023

Photo: Port of Oxelösund

TRANSPORT MISCELLANY

Liquid airstrips In the 1920s, water was the cheapest aviation infrastructure (although aircraft needed additional investment in floats). In the past editions of this column, we mentioned old (Stockholm, Helsinki) and modern (Aarhus, Copenhagen) air-in-sea-ports – now it’s time to recall those air-in-river. The first regular air-hydro-line using inland waters existed since 1920 in Colombia (Cartagena-Bogota, about 1,000 km long). Europe came later, but some companies from the centre of our continent operated waterplanes (mostly Junkers F13). The Hungarian Aeroexpress was among them, flying between Budapest and Vienna; Die Österreichische Luftverkehrs from Austria with domestic services along the Danube, and the short-lived Wasserflugline AltonaDresden. The latest started in August 1925, and after 132 somewhat

Photo: Deutsche Fotothek

irregular flights, it was closed in the summer of 1926 when the Dresden-Heller airport received a paved runway and could serve planes with wheeled undercarriage. We present photos depicting two busy river airports against bridge backgrounds: the Albert Bridge (made of stone) in Dresden and the (iron) Liberty Bridge in Budapest. The latter holds a bridgehead plaque in Hungarian, “Between 1923 and 1926, the Aeroexpress hydroplane airport was located in this place. Flights to Vienna and Balaton started from there. The most famous pilot of the Company was György Endresz, who later flew over the ocean.” Let’s just add that Endresz crossed the North Atlantic in July 1931 (sadly, he enjoyed the glory of a hero for a short time only: a year later, he died in a plane crash near Rome).

Photo: Wikimedia-Commons

Photo: Weygand Tibor

2/2023 | Baltic Transport Journal | 63

WHO IS WHO ELVIR DZANIC MD, Wallenius SOL

CARL-JOHAN HAGMAN President & CEO, NYK Group Europe

Having spent the past four years as the Port of Gothenburg’s CEO, Dzanic will take on the new role of heading the Swedish shipping line. He holds a B.Sc. in Shipping and Logistics (Maritime and Supply Chain Management) from the Chalmers University of Technology and a Diploma of Education, Leading Change and Organizational Renewal from Stanford University Graduate School of Business. Dzanic began his career at Unifeeder and also worked for Schenker Logistics, GEODIS, and CEVA Logistics.

Carl-Johan Hagman, since 2011 the CEO of Stena Rederi, will succeed Svein Steimler at the helm of the European arm of the Japanese shipping line (with Steimler further supporting the company as Special Advisor). Before joining Stena, Hagman was President & CEO of Höegh Autoliners, Rederi AB Transatlantic, Eukor Car Carriers (where he also served as Chairman), and Wallenius Lines (and earlier working there as EVP for Marketing & Sales in Asia, Head of Korea, and Legal Counsel).

MATILDA JARBIN Scanlog’s Chief Sustainability & Communications Officer

HENRIK KARLE COO, Wallenius SOL

Jarbin, who holds a B.Sc. and M.Sc in Environmental Science (the latter on Applied Climate Strategy) from Lund University, now heads the Swedish transport & logistics’ sustainability & comm activities in a newly created post. She also runs her lecture & consulting firm, Jarbin invest, highlighting the importance of a circular & sustainable economy. Jarbin previously worked for Godsinlösen Nordic (first as Head of Environment & Quality and most recently as COO).

With over 20 years of experience and an extensive track record in the shipping industry, including at sea, Henrik Karle took the Chief Operating Officer position with the Swedish shipping line. He comes from a role as Technical Manager at the marine insurance company The Swedish Club, and before that, he held the Managing Director post at AdMare Ship Management. Karle graduated from the Chalmers University of Technology as Marine Engineer.

CASIMIR LINDHOLM Cargotec’s President & CEO

SARA ROMEBORN Port of Luleå’s Head of HR

A member of Cargotec’s Board of Directors (since 2021), Lindholm has been appointed to lead the Finnish manufacturer of cargo handling equipment. He holds an M.Sc. in Marketing from the Hanken School of Economics and two MBAs: from the University of St. Galen and the Helsinki School of Business. Lindholm’s experience is as comprehensive as it gets, having held executive positions and board memberships across multiple organisations (mostly based in Helsinki and Stockholm).

Romeborn, a graduate in HR from the Luleå University of Technology, is no stranger to the Swedish seaport as she has been serving as its HR Chef for the past one and a half years part-time. She has extensive experience in the field, having worked for, a.o., ByHart (as Project Leader and HR Specialist), Norra Finans (Head of HR), and Region Norrbotten (HR Partner). Romeborn also volunteered for Save the Children Sweden, helping young girls.

PATRICK RYAN ABS’ Chief Technology Officer

DANIEL STERNSÉN Country Manager Sweden (Industry & Logistics), Visy

The American Bureau of Shipping’s SVP, Global Engineering and Technology (since 2019) will now serve as the lead technologist for the company, understanding broad industry trends and aligning innovations with ABS’ mission and client needs. Ryan will continue to lead and be responsible for the Bureau’s global engineering, technology research and development, digital class, engineering software organizations, Global Simulation Center, and the Global Ship Systems Center.

64 | Baltic Transport Journal | 2/2023

Daniel, who has over 15 years of experience in sales and logistics, will now be responsible for sales of Visy Access Gate systems for industrial sites and logistics centres in the Swedish and Norwegian markets. Before joining the Finnish tech company, Sternsén worked at DACHSER, DHL, TNT Express, and Minacs. He also has an extensive educational background, a.o., from Huthwaite International (in SPIN Coaching and Selling Skills).

For full details, please visit Baltic and Black Sea Ports & Shipping 2023 event page: www.transportevents.com