Climate objectives are challenging operators

Two seaguls sitting on top of a bollard in Vuosaari harbour.

The global trade imbalance continued in 2021 due to the COVID-19 pandemic, while on the other hand, the EU published its 2021 Fit for 55 package in the summer, indicating a strong desire to reach carbon neutrality in seafaring. These two were perhaps the past year’s biggest challenges for trade and seafaring.

The coronavirus in all of its variants spread widely, and the viral waves necessitated restrictions and even some port shutdowns. These factors can cause economic fluctuations in 2022 as well.

After the initial shock of the pandemic, consumption began to increase, and online shopping in particular took off on a rising trajectory. At the same time, many operators had decreased their production of goods. Having undelivered containers standing in the wrong places congested many major ports. The pandemic threw global supply chains off balance.

Now, global trade has already exceeded its pre-crisis level and the demand for consumer and investment goods is high. Still, the imbalance in Asian exports and imports caused a global shortage of cargo containers. Prolonged waiting times for containers have caused ships to be stuck at the world’s major ports, container cargo costs have increased tremendously and delivery times have become uncertain. For businesses and ordinary consumers, the effects have manifested themselves as product shortages. Finland’s security of supply has been unaffected by the container crisis.

For trade logistics, the situation was not made any easier by the Ever Given’s obstruction of the Suez channel in March. The vessel became stuck and prevented all traffic through the key logistics route for six days. The multiplier effects on cargo deliveries across the globe were sizeable.

In late 2021, supply chains were slowly recovering from the situation. However, the increase in container cargo prices indicates that to a degree, cargo deliveries have been transferred from containers to lorries and trailers.

According to the annual shipping company barometer published by the University of Turku in 2021, the turnovers and capacity utilisation rates of shipping companies showed a positive development in 2021. Shipping companies have cited capacity limitations and the availability of professional nautical staff, as well as increasing labour costs, as factors currently limiting growth.

New technology and energy sources needed

Like many other industries, the maritime logistics sector is facing challenges related to climate change, the solving of which will require major financial efforts and new technology. Route and delivery optimisation is a conventional way to mitigate emissions and energy consumption, but it is not enough by itself. Fossil fuels will be gradually replaced with renewable alternatives in seafaring as well.

Fuel prices increased drastically in 2021. Consequently, the high prices of low-carbon fuels or energy, as well as challenges with their availability, are slowing down efforts towards carbon neutrality and are seen as obstacles for growth.

Towards the achievement of climate objectives through regulation

In February 2021, the European Commission published its extensive Fit for 55 regulation proposal package. The purpose of the package is to ensure that the EU will achieve its climate objectives by 2030, at which point the goal is for the Union’s greenhouse gas emissions to be 55% lower than in 1990. The ultimate objective is to achieve carbon neutrality by 2050. The Commission’s proposals have long-term effects on many industries, including ports and logistics, due to the elimination of emissions trading and changes to the objectives for renewable energy use alone.

The Port of Helsinki’s own Carbon-neutral Port 2035 programme was put into practice in 2019. The programme aims at carbon neutrality in the Port of Helsinki’s own operations and decreasing the port area’s carbon dioxide emissions by more than 30% by 2035. The Port is currently assessing how the programme could be tightened so that the objectives could be reached already by 2030.

Shipping Company Barometer 2021, Brahea Centre at the University of Turku (in Finnish)
OP Ekonomistit, Economic Prospects December 2021 (in Finnish)
Press release of the Ministry of Employment and the Economy 14 July 2021: EU’s Fit for 55 legislative climate package seeks to tighten renewable energy and energy-efficiency targets