MOTORWAYS OF THE SEA
The role of short sea shipping in the EU
Based on its analysis of Eurostat port statistics and its own World Cargo Database, MDS Transmodal has concluded that trade between the 28 Member States of the European Union amounted to about 1.6 billion tonnes in 2014 and of this total ports handled 640 million tonnes (excluding container feeder traffic), a market share of 40%. Rail freight traffic in 2014 was much less at 185 million tonnes, only 12% of the total market. Short sea shipping therefore already plays a crucial role in sustaining an efficient European economy.
Data presented by MDST at DG MOVE’s Motorways of the Sea (MoS) conference in Liverpool on 20 May 2015 shows that between 2010 and 2014 short sea bulk traffic declined by 1.8% CAGR, while at the same time unitised traffic (RORO and LOLO services including feeder services) increased by 2.5% CAGR. During the same period non-bulk traffic as a whole only increased at a rate of 1.9% CAGR. Short sea shipping not only has a significant market share, but the non-bulk sector is securing market share at the expense of road and rail freight. As non-bulk short sea shipping forms the basis of the European Union’s Motorways of the Sea, the data suggests that MoS have been a success over the last few years.
On the supply-side data from MDST’s Ferry and Containership Databanks, shows there were some 1,167 LOLO and RORO vessels operating to and from EU ports in 2014 and between 2008 and 2014 capacity has increased by 49% as competitive pressure forces owners to deploy larger ships and reduce unit costs. While the mean RORO ship size has increased by 20%, short sea LOLO vessels have increased by 66%. However, these larger ships present a commercial challenge to the industry when trade is growing at a slower rate.
Fortunately the opportunity for Motorways of the Sea services to secure additional market share is huge. Our cost modelling suggests that unit load shipping is cost effective over a distance of more than 750-1250 km, depending on whether the service is substituting for a short ferry crossing. Over these distances a very wide range of road haulage flows across Europe could be attracted to the maritime mode.
Cost of transporting a TEU over varying distances by means of a Motorway of the Sea service (“sea”), all-road transport and by road and then short sea crossing (source: MDS Transmodal, 2015)
As competitive pressures are so great in the short sea shipping industry, the lines face start-up risks and cannot easily capture the potential benefits. For the lines the risks are often too great and the rewards too uncertain to start up new Motorways of the Sea services. The ports, on the other hand, benefit commercially through attracting new services to fixed infrastructure, port communities benefit through generating additional gross value added and society in general benefits from being able to switch road traffic to a more sustainable mode of transport. The solution may lie in ports extending their involvement in the distribution chain by diversifying into shipping (not always permitted in every Member State), ports themselves underwriting the service by guaranteeing cargo or by ports seeking to “capture” traffic on behalf of a line through the development of port-centric distribution.