SKEMA PROPS Workshop March 1st V14

SKEMA/ PROPS Page 1 1st

March 11

SKEMA/ PROPS Workshop

Economic Recovery through Trade & Transport

Dublin Port Company, 1st

March 2011

Hosted by:

Dublin Port Company, Irish Exporters Association &

Nautical Enterprise


March 11

Document summary information

Person Role Organisation

John Whelan Workshop Chairperson Chief Executive, IEA

Ruairi Quinn, TD Opening Address Irish Labour Party

Lucy McCaffrey Response Dublin Port Company

John Fairley Safety & Security Dublin Port Company

Aoife Trant

Niamh Devlin

John Moore

Workshop Organisers Nautical Enterprise

Irish Exporters Association

Dublin Port Company

Dublin Port Company Workshop Host Dublin Port Company

Dr. Aoife Trant Report Author Nautical Enterprise

Disclaimer

The content of the publication herein is the sole responsibility of the authors and it does not

necessarily represent the views expressed by the European Commission or its services. While the

information contained in the document is believed to be accurate, the authors or any other

participant in the SKEMA consortium or the PROPS consortium make no warranty of any kind

with regard to this material. Neither the SKEMA Consortium nor any of its members, their

officers, employees or agents shall be responsible or liable for negligence or in respect of any

inaccuracy or omission, or for any direct or indirect or consequential loss or damage caused by or

arising from any information herein.


March 11

Contents

1.0 Overview of Workshop4

2.0 Agenda5

3.0 Workshop Attendees7

4.0 Session 1: Transport, Trade and Prosperity

4.1 Quantum Port Improvements essential for the advancement of Transport,

Trade & Prosperity, John Moore, Director, Dublin Port Company.................9

4.2 Advancement of Maritime transport in the New Decade, Helen Nobel, Head of

Maritime Law, Matheson Ormsby & Prentice...16

5.0 Session 2: Management of Knowledge in the Era of Social Networking

5.1 A Maritime Knowledge Platform its Purpose, Accessibility and Sustainability,

Dr. Takis Katsoulakos, Chief Executive, INLECOM Group...27

5.2 Short Sea Shipping connecting Irish Exporters to the Global Economy, Glenn

Murphy, Director, Irish Maritime Development Office......32

6.0 Session 3: Developments that facilitate Maritime Transport and Trade

6.1 Emerging Technological Capabilities facilitating Maritime Transport, Gerard Trant,

Managing Director, Nautical Enterprise Centre Ltd52

7.0 Session 4: Current Realities in Maritime transport and Trade

7.1 Shipping Capacity in Europe Planning for Growth, Peter Baker, Chief Executive,

PRB Associates............................................................................67

7.2 Cooperative Unitised Services a Challenge & Opportunity, Carlos Alvarez-

Cascos, Senior Executive, Trasmediterranea.....75

7.3 The Environmental, Regulatory and Marketing impact of Carbon Footprint on

Trade and Transport, Dr. Catrin Lammgard, Assistant Professor, Logistics &

Transport Research, University of Gothenburg.80

8.0 Posters & Pamphlets......91


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1.0 Overview of Workshop

The SKEMA/ PROPS Workshop Economic Recovery through Trade & Transport was held in

Dublin Port Company, Ireland on 1st

March 2011. The workshop was organised by Nautical

Enterprise (NECL), Irish Exporters Association (IEA) and Dublin Port Company (DPC). Sixty three

people with various Maritime Transport & Logistics interests and from six European states

attended the workshop.

The purpose of the workshop was to draw upon the developments in the European-funded

research projects SKEMA, PROPS and to a lesser extent e-Freight and to present them to the

Maritime & Logistics industry with a particular focus on Ireland. The subject areas of the

workshop were:

Confirming the links between trade, transport and prosperity;

Availing of maritime and transport knowledge in the era of social networking;

Deployment of technologies that facilitate maritime transport & trade;

Addressing current realities that affect the maritime industry.

The workshop was opened by Ruairi Quinn T.D. who gave an inspirational presentation on the

importance of the workshop themes in the prevailing recession; the response was made by Lucy

McCaffrey, Chairperson of Dublin Port Company.

Dr. Aoife Trant

Nautical Enterprise

1st

March 2011.


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2.0 Agenda

Economic Recovery through Trade & Transport

Date: Tuesday, 1st

March 2011

Chairperson: Mr. John F. Whelan, Chief Executive, Irish Exporters Association

Opening Address

08:30 Tea, Coffee and Registration

09:00 Welcome Address Ruari Quinn, TD

Irish Labour Party

09:10 Introduction to the workshop John Whelan, Chief Executive,

Irish Exporters Association

Session 1: Transport, Trade and Prosperity.

09:15 Quantum Port Improvements essential for the

advancement of Transport, Trade & Prosperity.

John Moore, Director,

Dublin Port Company

09:40 Discussion

09:50 Advancement of Maritime Transport in the New

Decade.

Helen Noble , Head of Maritime Law at

Matheson Ormsby and Prentice

10:15 Discussion

10:25 Tea / Coffee / Networking

Session 2: Management of Knowledge in the Era of Social Networking.

11:00 A Maritime Knowledge Platform its Purpose,

Accessibility and Sustainability

Dr. Takis Katsoulakos, Chief Executive,

INLECOM Group

11:25 Discussion

11:35 Short Sea Shipping connecting Irish Exports to the

Global Economy

Glenn Murphy

Director, Irish Maritime Development

Office

12:00 Discussion


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Session 3: Developments that facilitate Maritime Transport and Trade

12:10 Emerging Technological Capabilities facilitating Maritime

Transport

Gerard Trant,

Managing Director, Nautical Enterprise

12:35 Discussion

12.45 Lunch

Session 4: Current Realities in Maritime Transport and Trade

14:00 Shipping Capacity in Europe Planning for Growth Peter Baker, Chief Executive,

PRB Associates

14:25 Discussion

14:35

Cooperative Unitised Services a Challenge &

Opportunity

Carlos Alvarez-Cascos

Senior Executive, Trasmediterranea

15:00 Discussion

15:10 The Environmental, Regulatory and Marketing impact of

Carbon Footprint on Trade and Transport

Dr. Catrin Lammgard

Assistant Professor, Logistics &

Transport Research, University of

Gothenburg

15:35 Discussion

15:45 Closure of Workshop Chairman, John Whelan

16:00 Tea / Coffee / Networking


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3.0 Workshop Attendees

1 Carlos Alvarez-Cascos Acciona Trasmediterrnea Spain

2 Martin Roebuck Air Cargo World Ireland

3 Paul Mason BG Freightline/Leeside Shipping Ireland

4 Gareth Hunt Burke Shipping Group Ireland

5 Colm Fearon Canterbury Christ Church University UK

6 Finbarr Cleary Celtic Forwarding Limited Ireland

7 Dominic Jarvis CETLE Netherlands

8 John Henry Chartered Institute of Logistics &Transport Ireland

9 Alan Horner CMA CGM Shipping Ireland Ltd Ireland

10 Fintan Dawdon Containerships Dublin Ireland

11 John Dolan dAmico Tankers Ireland

12 David Nestor David Nestor Freight Services Ltd Ireland

13 Kieran Mc Kay David Nestor Freight Services Ltd Ireland

14 Garret Doocey Department of Transport Ireland

15 Gerry Keane Department of Transport Ireland

16 Eilish Kennedy Department of Transport Ireland

17 Declan Cleary DFDS Seaways Ireland

18 David Kavanagh Dillon Eustace Ireland

19 John O'Riordan Dillon Eustace Ireland

20 Hugh Finlay Dublin Institute of Technology Ireland

21 Kay McGinley Dublin Institute of Technology Ireland

22 John Moore Dublin Port Company Ireland

23 Deirdre Doyle Dublin Port Company Ireland

24 David Dignan Dublin Port Company Ireland

25 Ciaran Callan Dublin Port Company Ireland

26 Michael Sheary Dublin Port Company Ireland

27 Graham Mulvey Dun & Bradstreet Ireland

28 Frank Allen Dundalk Port Company Ireland

29 Michael Murphy Enterprise Ireland Ireland

30 Joe Dowling Hamilton Shipping Ireland

31 Heather McLaughlin INLECOM Group UK


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32 Takis Katsoulakos INLECOM Group UK

33 John Whelan Irish Exporters Association Ireland

34 Niamh Devlin Irish Exporters Association Ireland

35 Colm Walsh Irish International Freight Association Ireland

36 Glenn Murphy Irish Maritime Development Office Ireland

37 Victoria Vogal Irish Maritime Development Office Ireland

38 Derek D'Arcy IWT Global Solutions Ireland

39 Damien McGee Matheson Ormsby Prentice Ireland

40 Helen Noble Matheson Ormsby Prentice Ireland

41 Sam Simington MSC Ireland Ireland

42 Jane O'Keeffe National Maritime College of Ireland Ireland

43 Aoife Trant Nautical Enterprise Ireland

44 Gary O'Connor Nautical Enterprise Ireland

45 Gerard Trant Nautical Enterprise Ireland

46 Grinne Lynch Nautical Enterprise Ireland

47 Olivia Murphy Nippon Express Ireland

48 Michael McCarthy Port of Cork Ireland

49 Stan McIlvenny Port of Waterford Ireland

50 Peter Baker PRB Associates Ireland

51 Shaun Ryan Quality Freight Group Ireland

52 Harry Rice R.F. Conway & Company Ireland

53 Kevin Conway R.F. Conway & Company Ireland

54 Paul Foley Reefercare Ireland

55 Martin Morrissey Shannon/Foynes Port Company Ireland

56 Steve Breen Thyme IT Ireland

57 Russell Simmons Trade Facilitate Ireland

58 Philip Prideaux Ulster Bank Ireland

59 Mary Theresa O'Neill UN World Food Programme Ireland

60 Catrin Lammgard University of Gothenburg Sweden

61 Richard Butler University College Dublin Ireland

62 Sally McClean University of Ulster, Coleraine. N.Ireland

63 Hanna Askola VTT Technical Research Centre Finland


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3.0 Session 1: Transport, Trade and Prosperity

3.1 Quantum Port Improvements - essential for the advancement of transport, Trade &

Prosperity; John Moore, Director, Dublin Port Company.

Quantum Port Improvements Essential for the Advancement of Transport, Trade &

Prosperity

Gerry Trant (NECL), Kevin Riordan (NECL) and John Moore (DPC)

Abstract

This paper investigates the essential role of ports in the facilitation of trade and their value to the Irish economy.

Port organisational structures and port infrastructural developments are examined together with support funding

opportunities that are available through European programmes such as TEN-T. The balance between port

infrastructural development and environmental concerns is discussed. The paper draws upon the experiences of

Dublin Port Company and presents the environmental benefits of Dublin Ports expansion aspirations.

1.0 Trade & Economic Prosperity

It is well understood that wealth emanates from trade and that the focal points of maritime trade are ports. A

formal exposition on the value of trade is attributed to David Ricardo (1772 1823), an influential political

economist and member of the British Parliament. He demonstrated in his famous Theory of Comparative

Advantage that it benefits two states to trade with each other, even if one is more efficient than the other in all

forms of production, as long as the states specialise in areas in which they have comparative trading advantage.

The key for wealth generation, therefore, is for a state to specialise in areas in which it can excel and to import its

residual requirements. Ricardos theory provided a theoretical basis for the expansionist policies of the 19th

century, when many European states strove to secure colonies as captive trading partners. The dominance of the

Britain Empire in world trade at the time and the immense wealth this produced for such a relatively small nation is

a special case. This period of influence still resonates with English being the universal reference language in trade

and transport.

In order to kick-start the world economy after WW 2, the General Agreement on Tariffs & Trade (GATT) was

established in 1948. GATT had the structure of an international agreement and was a parallel development to the

formation of the World Bank and the International Monetary Fund. During its 47 years of existence, GATT achieved

a liberalisation of trade. Its systematic reduction of tariffs helped achieve very high rates of world trade growth,

around 8% per year on average during the 50s and 60s, and enabled countries to reap the rewards of trade. It was

replaced in 1995 by the World Trade Organisation (WTO), which is designed, like GATT, to supervise and liberalise


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international trade through a series of multilateral agreements for the reduction of tariffs; it also introduces

measures to prohibit dumping, to settle disputes and to deal with the complex issues associated with agriculture,

textiles & clothing and internationally traded services. Achieving consensus on the many issues that affect world

trade is a momentous undertaking. The win-win rewards, as initially expounded by Ricardo, have proven to be very

attractive.

2.0 Ports as facilitators of trade

Ports are the facilitators of trade; they are also the conduits whereby the benefits of trade are realised and

distributed to ports hinterlands. An extensive study carried out by Indecon1 quantified the benefits to the Irish

economy from state commercial seaports.

The table below depicts the economic benefits of commercial seaports to the Irish economy. In 2003/04 the net

economic benefit was approximately 4 billion and provided employment to 43,000 people. It is evident that Irish

ports are vital to the success of the Irish economy.

Overall benefits of State Commercial

Seaports

Extra benefits arising from maritime & other logistics activities supported

by State Commercial Seaports

Financial Benefits

( Millions)

Employment

Financial Benefits

( Millions)

Employment

189 2,032 3,844 41,927

3.0 Organisational structures in Ports

A number of factors can influence the way in which ports are organised, structured, and managed:

The socioeconomic structure of a country (market economy, open borders).

Historical developments (for example, former colonial structure).

Location of the port (urban area or in isolated regions).

Types of cargoes handled (liquid and dry bulk, general cargo, or containers / unitised).

The widely used categorisation of port organisational structures is elaborated in the World Banks Port Reform

Toolkit2. Four main categories of ports have evolved; the Service Port, the Tool Port, the Landlord Port, and the

Fully Privatised Port.

1 Economic Impact of State Commercial Seaports on the Irish Economy Indecon (May 2006)

2 Port Reform Toolkit, Second Edition World Bank (2007)


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1. Service ports, which are publicly owned ports in which the full range of port services, including cargo

operations, are carried out by the port authority. This was the standard structure for most ports and is

still used. It can have a number of debilitating limitations:

Restrictive labour practices can be in place, which limit the flexibility and effectiveness of a

port and drive up costs;

There is centralised control of all port, cargo handling and service operations, which results in

port-centred management that can have difficulty in identifying and responding to market

requirements;

There may be inadequate funding for infrastructural developments that reduces

competitiveness.

2. Tool ports are similar to Service Ports in that the port authority owns and maintains the

infrastructure and superstructure, including cargo handling equipment, with the port authoritys

staff operating the equipment. Private stevedoring companies are contracted by the shipping lines to

carry out the ship loading and discharging operations, using the ports equipment. A tool port

structure can be seen as a transition stage between a service port and a landlord port.

3. Landlord ports are characterised by their mixed public-private orientation. The port authority can

act as a regulatory body and landlord, while cargo operations are carried out by private companies.

The port authority usually sheds most commercial day-to-day activities and manages the

infrastructural developments, ship movements and navigation functions. Within a landlord port

structure, some cargo terminals may be leased on an exclusive basis by large shipping lines while

others may be common-user terminals leased by terminal operators. Dublin Port Company is a

Landlord port but has retained some of its more profitable operations.

4. A fully privatised port is the exception and is characterised by a practice initiated in the UK where

many state ports were sold off to private owners in the 1980s by the Government of the day due to

a series of dock workers strikes. In a privatised port, a private company owns the port land,

operates the port as a private venture and may also effectively be the regulator.

In the World Banks Port Reform Toolkit, the Landlord Port, by implication, is presented as the favoured model

because of its important attributes:

Private companies usually manage most aspects of the cargo handling function, which, because of its

24-hour variable nature, requires exceptional adaptability.

Support services, such as warehousing, engineering services, container management, are most

efficiently carried out by organisations that compete for business in an open market.

The states interests are protected through


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a. Retention of control of the port infrastructure and of the regulatory function by the Port

Authority or another state agency;

b. Achieving maximum positive impact in terms of numbers of people employed, wages / salaries,

business revenues and taxes through the high levels of overall efficiency that can be achieved

with a landlord port structure.

The categorisation of port organisational structures into Service Ports, Tool Ports, Landlord Ports and Fully

Privatised Ports has become somewhat hackneyed over time and ports do not necessarily fall neatly into one-or-

other of these categories. Nevertheless, it is useful to view ports in this manner and to examine their development

along a discontinuous progression from Service Ports to Landlord Ports, with Fully Privatised Ports being the

exception and not necessarily an ideal end position.

4.0 Port infrastructural developments & funding

Planning infrastructural developments, securing permissions & finance and implementing developments is an on-

going process in most commercial ports for several reasons:

1. Increased cargo throughputs may require greater capacity at cargo terminals and in the port.

The response can follow a hierarchical sequence:

Application of process management techniques to make better use of existing capacity;

Extend working days and hours without the introduction of penal pricing;

Investment in more efficient cargo handling equipment and facilities, associated with increased

volume throughputs;

Investment in operational port infrastructure, such as a new terminal, possibly in conjunction

with improving / deepening an access channel.

2. The need to accommodate larger and deeper ships, usually in response to a cumulative market shift that

favours larger vessels and the scale economies that they provide. The response is similar to that in # 1,

except that it is all-encompassing possibly a deeper channel, larger turning area, possibly a new terminal

with larger and more powerful cargo handling equipment, perhaps a faster and more seaworthy pilot

vessel and contracting a larger tug.

3. Introducing new maritime services may require the installation of special cargo-handling facilities, such as

a double ramp at a RoRo berth or terminal facilities for handling MAFI trailers.

4. Compliance with various regulations can necessitate major investments in a port, such as security facilities,

maritime safety systems, health & safety compliance and facilities required for environmental protection.

5. Improved ship and terminal technologies adopted elsewhere in a transport network can put pressure on a

port / terminal to adopt the new technologies in order to maintain its position in the network.

6. Systemic change, such as silting or inexorable pressure from urban expansion, may force a port to move

some of its operations to a more suitable location, which is a major undertaking requiring massive

resources and fraught with risk.


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Whatever the reasons and particularly in the current economic climate, ports must continuously review, plan and

implement infrastructural developments if they are to remain viable. The difficulties associated with infrastructural

developments can be formidable from socio-economic and environmental perspectives. However, for the Irish

economy to develop, Irish ports must remain competitive and keep pace with intra-European and world-wide trade

growth.

The ability of port authorities to obtain funding for infrastructural developments is crucial for their increased

competitiveness. The likelihood of success of any development project rests on the level of preparedness of its

managers and on the correct application for funding from available sources. The European Commission, acting

through DG-MOVE, has devised the Trans-European Transport Network (TEN-T) programme, which is established

under the EC Treaty (in Articles 154-156). This programme dedicates financial support towards the realisation of

important transport infrastructure projects promoting the wider European objectives of competitiveness and job

creation, together with social and economic cohesion. Grants are allocated to works and also to studies, including

feasibility studies, comprehensive technical and environmental studies and costly geological explorations, thus

helping to overcome early stage project difficulties. Given the substantial grants available for studies, it would be

prudent for port authorities to avail of such funding to better position themselves for development.

Other funding sources include loans from international financial institutions (e.g. the European Investment Bank),

and private funding. Community funding can also facilitate the promotion of pilot schemes for sustainable public-

private partnership solutions. It must be emphasised that Community financial supports are invaluable for both

project preparation and implementation and have a significant catalytic effect in securing private investments.

Some of the most challenging and complex projects (geologically, technically, financially, legally and

administratively) have been facilitated through the provision of EU grant assistance.

5.0 Environmental Improvements through Port Developments

Under the Kyoto protocol Ireland, as part of the European Union, has agreed to limit its greenhouse gas (GHG)

emissions to being no more than 13% greater than 1990 levels3 by 2012. Greenhouse gases are widely believed to

be the cause of an increase in the average yearly temperature of the earth surface, contributing to melting of polar

ice caps and adverse weather conditions worldwide. Despite major improvements in all sectors of its economy,

Ireland has only managed to maintain levels at 23% greater than 1990 levels. Transport is a major determinant of

the amount of CO2 emitted in Ireland, and transport companies continually strive to reduce their carbon footprint.

3 Irelands Pathway to Kyoto Compliance, Department of Transport 2004


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Figure 1 Dublin Port Company

Dublin Port Companys expansion aspirations to facilitate larger ships would make a significant reduction in GHG

emissions from ships using the port. A realistic example can be taken of two container ships, one of 600 TEUs4,

which can currently be accommodated in the port, and another of 1,000 TEUs which could be accommodated at a

somewhat deeper terminal. The necessary analysis has been carried out using a maritime decision support

system5. Both vessels have an assumed average utilisation of cargo capacity of 45%, with both vessels travelling

between Dublin and Rotterdam. The outputs from the analysis are presented in following table.

4 TEU: Twenty Foot Equivalent Unit.

5 Reference Nautical Enterprises TransPlan-IT system.


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Table 2: Reductions in GHG emissions arising from the use of larger vessels to transport cargo

Ship 600 TEU,

45% Utilisation

Ship 1,000 TEU,

45% Utilisation

Ship 600 TEU

45% Utilisation

Ship 1,000 TEU

45% Utilisation

Average

Speed (knots)

GHG Emitted

per voyage

(tonnes per

TEU)

GHG Emitted

per voyage

(tonnes per

TEU)

GHG Emitted per

Year (tonnes)

GHG Emitted per

Year (tonnes)

GHG Reduction

per year (tonnes)

15 0.27 0.16 147,960 87,680 60,280

14 0.23 0.14 126,040 76,720 49,320

13 0.20 0.12 109,600 65,760 43,840

12 0.17 0.10 93,160 54,800 38,360

11 0.14 0.09 76,720 49,320 27,400

Using the larger ship increases the amount of cargo that can be transported per voyage and therefore reduces the

amount of GHG emissions per TEU. For example at 14 knots, the GHG emissions per TEU for the smaller vessel are

0.23t per voyage, while for the larger ship this is reduced to 0.14t, a reduction of 0.09t per voyage. This equates to

a reduction of 49,320 tonnes of GHG emissions per year, as Dublin port has an annual container throughput of

approximately 548,000 TEUs.

In addition, if the turnaround time of the larger vessel in port could be reduced (through the deployment of larger

and faster gantry cranes on each ship) to the extent that the ships speed could be reduced from 14 to 13 knots and

still maintain its schedule, a further reduction of 10,960 t of GHG could be achieved.

The direct transport savings to Irish exporters / importers would be approximately 3.3 M per year, which is not

particularly significant.

The major potential economic benefit to the Irish economy from the deployment of larger, more efficient and

environmentally friendly vessels would be in facilitating new unitised trades. If, through overall more efficient

services and focussing on under-developed trading corridors, new trades could be secured that would increase

unitised trades through Dublin Port by 10% (5% increased exports and 5% increased imports), the benefit to the

Irish economy would be 4386 M per year from the export component of the increased trade.

6. Conclusion

Maritime trade is the sustainer of economic prosperity in Ireland and ports are the heartbeat of maritime trade.

Ports must continuously develop and adapt to changes in the market place and to the trading opportunities that

6 Note: this figure takes into account the multiplier effect of increased exports on the economy as a whole.


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are prevalent in Europe and world-wide. In that regard, the importance of ports to the prosperity of Europe is

recognised by the European Commission, to the extent that attractive infrastructural and study grants are available

for the development of ports in the Community.

The organisational structures of ports may be a dry old subject, but nevertheless it is important that the correct

balance is struck between public ownership of infrastructure and private management of facilities to enable a port

to grow and achieve its potential in the internationally competitive maritime business.

Infrastructural developments in Dublin Port that would accommodate somewhat larger container vessels would

reduce GHG emissions per year by an amount equivalent to approximately 10,000 dwellings in Dublin. In itself this

is important, as green transport services would complement the production of green products for export from

Ireland. The major benefit would be obtained through increased exports (and imports) through improved services

and targeting markets that are currently under-serviced. The challenge, therefore, is through close cooperation

with relevant state departments and agencies and working closely with shippers, shipping lines and transport

facilitators to achieve an increase in unitised export trades through Dublin Port that is equivalent to 0.5 B per year

to the Irish economy.

3.2 Advancement of Maritime transport in the New Decade, Helen Noble, Head of

Maritime Law, Matheson Ormsby & Prentice.

ADVANCEMENT OF MARITIME TRANSPORT IN THE NEW DECADE

HELEN NOBLE, MATHESON ORMSBY PRENTICE.

1 EXECUTIVE SUMMARY

This paper examines the advancement of maritime transport in the new decade. Demand for maritime

transport services derives from global economic growth. It is for this reason that shipping is inherently

described as the servant of the economy. The International shipping industry is responsible for the carriage

of around 90% of world trade and as such shipping is the life blood of the global economy, without which

intercontinental trade, the bulk transport of raw materials, and the import and export of food and

manufactured goods would simply not be possible. As very succinctly stated by Efthimios Mitrpolous, the

IMO Secretary General: Without international shipping, half the world would freeze and the other half

would starve

The very nature of the industry however means shipping is particularly exposed as an industry to

contractions in global GDP and merchandise trade (imports and exports). The global financial crisis of 2008


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onwards has had a dramatic impact upon the global shipping industry. The downturn in trade in 2009 led

to a rapid decline in the demand for transport and related services. However, the global economy saw

signs of recovery in 2010 and is expected to continue to grow. There will therefore be a correlated demand

for increased maritime transport. As we emerge into a new decade, there are various challenges that will

also impact upon the growth of the industry.

2 INTRODUCTION

2009 saw the worst global recession in over seventy years and a corresponding sharp decline in the

volume of global merchandise trade. This decline was experienced across both developing and developed

economies, albeit developed economies witnessed the worst contractions in growth. The main exception

was China which continued to experience a steady growth in import volumes. Exports in Asia and Pacific

fell at dramatic rates and container traffic volumes witnessed a rapid decline due to reduced consumer

demand in developed countries.

Reported estimates indicate that in 2009 world seabourne trade volumes fell by 4.5%. By way of

illustration in 2009 the total goods loaded on ships amounted to 7.8 billion tons compared to 8.2 billion

tons on the volumes recorded for 20087. The worst hit sectors were the dry bulk sector and containerized

traffic.

With less demand for commodities world-wide freight rates took a severe knock in 2009 with all sectors

witnessing a decline at the beginning of the year. Container port throughput also saw a decline of

approximately 9.7 percent in 2009.

So what is the outlook for the new decade?

There is a keen debate as to when the new decade started. Some theorists take the view that 2009 was

the last year of the last decade and certainly a popular commercial view seems to be that, irrespective of

arguments as to whether year 0 counts, a new decade dawned at the start of 2010. For the purposes of

this paper this popular commercial view is heeded and 1 January 2010 is taken as the start of a new

decade.

If a decade is viewed as a new era and a symbol of fresh hope, then if one takes 2010 as the start of the

next decade, from a recession perspective, the start of 2010 has fulfilled these aspirations and given us

cautionary hope for a global recovery. Financial commentators collectively in early 2010 appeared to share

the view that there were green shoots in the world economy. Recovery however was described and

continues to be described as, uneven and fragile. It is uneven as the more advanced economies are not

7. Review of Maritime Transport 2010 - UNCTAD


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seeing quite the same levels of recovery as those in developing economies. On 14 January 2010, the IMF

Managing Director Dominique Strauss-Kahn reported that the global economy was recovering faster than

had been anticipated but its recovery was dependent upon the maintenance of government stimulus

packages by advanced economies. He acknowledged that emerging market economies were leading the

recovery. The reported fragility of global economic recovery continued throughout 2010 with again IMF

reports in October of 2010 of the fragile and uneven recovery. G-20 ministers in February 2011 reported

on the uneven nature of global recovery and the disparities in growth between emerging economies like

China and debt-laden regions like the U.S. and some European nations and resulting fueling clashes over

policies needed to erase global imbalances and sustain the recovery.

From a maritime transport perspective the uneven nature of global recovery will be a key factor for the

growth of the industry over the next decade. Other significant key factors which will impact upon the

projected growth of the industry for the next ten years are shipping capacity and the current mismatch in

demand and supply, the developing regulatory control of the industry (in particular global climate control),

maritime security issues and finally, of course, ever increasing fuel prices. These areas of concern all merit

in depth analysis far beyond this paper which is an overview only of the industry.

3 GROWTH OF THE WORLD MERCHANT FLEET IN 2010 AND PROJECTED GROWTH OVER

NEXT 10 YEARS - IMBALANCE IN GROWTH RATES SUPPLY AND DEMAND

By the beginning of 2010 the world merchant fleet had grown to 1,276 million deadweight tons (dwt). This

was an increase of 84 million dwt over 2009.8 There was a record 117 million dwt new deliveries in 2010

resulting in a significant oversupply of world tonnage. By way of illustration during the last decade the

world container fleet had grown by a staggering 154% and the dry and liquid bulk fleet by approximately

50%.

Throughout 2009 the worlds shipyards delivered new tonnage fulfilling orders placed prior to the

economic crisis. During 2009 3,658 newbuildings were recorded as delivered compared to 2,999

newbuildings in 2008, constructed mainly in three main countries; Republic of Korea, China and Japan.

Orders for new tonnage declined in 2009 and shipyards also slowed down the delivery of existing tonnage.

Overcapacity has meant the prices for both new and second hand tonnage fell towards the end of the last

decade. Newbuilding prices for dry bulk vessels fell between 24-29% between 2008 and 2009. Second

hand ship prices fell even more with a decrease in value on a second hand bulk vessel of between 45 and

61% and a decrease in oil tanker prices of between 38 and 42%.

8. Review of Maritime Transport UNCTAD 2010


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A corresponding surge in the demolition market has ensued with 23% of scrapping being in the container

ship market and 23% in the dry bulk carrier segment. The scrapping again is limited to three main markets,

China, India and Bangladesh reflecting the availability of cheaper labour costs essential for this labour

intensive work.

With an increase in new tonnage and increase in scrapping of old tonnage the average age of the world

fleet continued to decrease at the end of the last decade. By way of illustration, the average age of all

ships for 2008 was 14.7 years, in 2009 the average age was 13.97 and 13.35 in 2010.

There has also been a noticeable shift at the start of this decade in ownership of the world fleet. China has

overtaken Germany as the third-largest shipowning country. The decrease in the age of the worlds

merchant fleet is welcomed. Newer tonnage with a corresponding scrappage of older tonnage gives rise to

a better, newer and arguably a safer fleet. However despite the downturn in trade in 2009 and decline in

transport, with shipping capacity expanding in 2009 there is a critical imbalance between supply and

demand. Viewed statistically, there was a decline in world seabourne trade of 4% in 2009 and yet the

world fleet grew by 7%.

An oversupply of tonnage means the volume of cargo carried by each vessel decreases. The oversupply

gives rise to a significant drop in container freight rates and a reduction in the cost of charter hire for bulk

shipping. Coupled with a downturn in the volume of trade, the result is significant financial loss for

operators. This phenomenon is by no means new to the industry. The cyclical nature of the industry is why

the industry is likened to the worlds largest poker game in which the ships are the chips9. In times of

growth and high profits ship-owners with positive cash flows order new capacity. The lead in time for

delivery of this new capacity and waiting times of two to three years for new buildings means vessels

ordered in a boom time are often delivered eventually in a downturn which only serves to exacerbate the

downturn.

The financial crisis has undoubtedly made the imbalance between capacity and demand worse and this is a

huge problem to the industry as it faces the next decade. Some alarming statistics include the fact that the

order book for dry bulk vessels currently stands at two thirds of the existing fleet.10

In order for the industry to adjust the supply/demand difficulties it faces, there are a number of avenues

open to it. The first is for ship owners to stop ordering any further tonnage. This has already occurred. For

example in 2009 there were only nine new orders for container ships compared to 213 in 2008 and 538 in

2007. Tankers likewise have seen a decline in new orders: 2009 orders were 153 compared to 509 in 2008

and 1.54 in 2007. Secondly, owners can try to terminate or postpone existing orders. A key problem lies in

9. Martin Stopford Maritime Economics Second Edition

10. Clarkson Research Services 2010: Dry Bulk Trade Outlook


March 11

obtaining financing for new vessels. One key advancement of the industry in the next decade will be the

opening up of new markets for ship finance. As the developed economies with their crippling financial

lending problems are slow to recover and lend, there is scope for the developing economies to enter this

arena. Notably Chinese banks have stepped into a breach by providing finance to foreign owners

Thirdly vessels can slow-steam with a corresponding maintenance of freight rates and saving of fuel. The

problem is longer delivery times which as trade picks up is potentially less acceptable. Laying up is a fourth

option which was utilised by the global container industry at the start of 2010. Increased demolition of

older vessels also helps redress the balance.

All of these five options will need to be utilised by the industry into the early part of the decade if the

industry is to return to the boom times. These are however all measures that only yield a result over a

long time. There is no real quick fix to the problem. Industry consolidation is also a solution that has been

used previously and is likely to be essential into the next decade. However there is a real need for a

relaxation by the competition authorities to such consolidation.

4 REGULATION/ENVIRONMENTAL CHALLENGES

The international nature of maritime transport requires a global regulatory framework to operate

efficiently. This regulatory framework has been achieved for the last 50 years under the auspices of the

United Nations International Maritime Organization (the IMO) which has made significant strides in the

international regulation of the industry and its impact on the environment.

One very substantive regulatory issue that faces the industry into the next decade is the development of a

regulatory regime to ensure a reduction in the emissions of carbon dioxide and greenhouse gases. Whilst

international shipping is one of the most carbon efficient modes of transport11

, given the volume of

international shipping it is nevertheless a significant contributor to the worlds total greenhouse gas

emissions and there is therefore a recognized need that there must be a reduction in the emissions from

shipping. The ability to reduce emissions however has to be viewed realistically. Levels of emissions

correspond to the demand for international shipping by world trade. As world trade increases there will

be an increased demand for maritime transport and therefore a corresponding increase, irrespective of

emission regulation, in the level of emissions from shipping.

11. Reportedly the contribution of shipping to global CO2 emissions is about 2% - Report International

Chamber of Shipping - Stakeholder Information and Consultation 24 January 2008, OECD Headquarters

Paris


March 11

The Kyoto protocol acknowledges that emissions from shipping are not attributable to any particular

national economy. It is also important to stress an issue raised by the International Chamber of Shipping12

that a number of flag states are not nations under annex I of the current Kyoto protocol. In fact it

appears that 35% of the worlds merchant fleet is so excluded. Regulation of shipping can therefore only

be realistically achieved through international collaboration and through the IMO. Key discussions have

taken place at IMO regarding the development of an international regime to control greenhouse gas

emissions from international shipping. It has developed a package of measures aimed at reducing the

carbon dioxide emissions from shipping. These include a system of energy rating of new ships, a template

Ship Energy Efficiency Management Plan, possible economic measures applied globally to encourage

emission reduction. All measures however need to ensure that competition is not distorted, that any

measures ensure sustainability of the industry without restricting trade and growth, are binding on all flag

states so applied universally and without discrimination.

The industry is of the view that shipping can reduce CO2 emissions emitted per tonne of cargo transported

per kilometre by as up to as much as 15-20% between 2007 and 2020. This can be achieved through a

combination of technological and operational developments and the introduction of new and bigger ships.

Technological developments include changes to the hull, engine and propeller design to achieve a

reduction in fuel consumption. These developments however are largely a longer term solution to be

applied to newer ships as opposed to existing ships.

Two further development on the environmental regulatory front were achieved by the adoption in May

2009 of the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (the

Hong Kong Convention) and the 2010 HNS Protocol.

The Hong Kong Convention is aimed at ensuring that ships, when being recycled after reaching the end of

their operational lives, do not pose any unnecessary risks to human health, safety and to the

environment.

The Hong Kong Convention addresses all the issues around ship recycling, including the fact that ships sold

for scrapping may contain environmentally hazardous substances such as asbestos, heavy metals,

hydrocarbons, ozone-depleting substances and others. It also addresses concerns raised about the

working and environmental conditions at many of the world's ship recycling locations.

Regulations in the Hong Kong Convention cover: the design, construction, operation and preparation of

ships so as to facilitate safe and environmentally sound recycling; the operation of ship recycling facilities

in a safe and environmentally sound manner; and the establishment of an appropriate enforcement

mechanism for ship recycling, incorporating certification and reporting requirements.

12. Shipping, World Trade and the Reduction of CO2 emissions International Chamber of Shipping


March 11

Upon entry into force of the Hong Kong Convention, ships to be sent for recycling will be required to carry

an inventory of hazardous materials, which will be specific to each ship. An appendix to the Convention

provides a list of hazardous materials the installation or use of which is prohibited or restricted in

shipyards, ship repair yards, and ships of parties to the convention. Ships will be required to have an initial

survey to verify the inventory of hazardous materials, additional surveys during the life of the ship, and a

final survey prior to recycling.

Ship recycling yards will be required to provide a "Ship Recycling Plan", specifying the manner in which

each ship will be recycled, depending on its particulars and its inventory. Parties will be required to take

effective measures to ensure that ship recycling facilities under their jurisdiction comply with the

Convention.

The Hong Kong Convention will enter into force 24 months after the date on which 15 States have either

signed it without reservation as to ratification, acceptance or approval or have deposited instruments of

ratification, acceptance, approval or accession with the Secretary General. Furthermore, the combined

maximum annual ship recycling volume of those States must, during the preceding 10 years, constitute

not less than 3 per cent of their combined merchant shipping tonnage. The Convention has been signed

by France, Italy, the Netherlands, Saint Kitts and Nevis and Turkey. It has yet to be ratified by these

countries so we await to see to what extent the Hong Kong Convention is adopted by States in this

decade.

In April 2010 the protocol on the 1996 HNS Convention was adopted to facilitate the entry into force of

the HNS Convention. Once the 2010 HNS Protocol enters into force, the 1996 Convention, as amended by

the 2010 Protocol, will be called: the International Convention on Liability and Compensation for Damage

in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010 (2010 HNS

Convention).

The 1996 HNS Convention established a two tiered compensation system for pollution arising from

hazardous and noxious substances (HNS). The liability of the carrier is supplemented by compensation

from a fund resourced by cargo interests. The ratification of the HNS Convention has been stalled it

appears by the requirement within the Convention for States to report the quantities received of various

hazardous and noxious substances.

The 2010 HNS Protocol amends certain provisions of the 1996 Convention as to the reporting

requirements for States on contributing cargo as at ratification. It also imposes sanctions for non-

compliance with the reporting requirements.


March 11

Even before the 2010 HNS Convention enters into force, States are obliged when they ratify the

convention, and annually thereafter, to report the total quantities of contributing cargo for each account

and sector, which were received in that State in the preceding year. Failing to comply with the reporting

requirements could lead to a suspension of the status of a Contracting State or to withholding of

compensation in relation to the State concerned.

The 2010 HNS Protocol will enter into force 18 months after the date on which it is ratified by at least

twelve States, including four States each with not less than 2 million units of gross tonnage, and having

received during the preceding calendar year a total quantity of at least 40 million tonnes of cargo that

would be contributing to the general account.

The definition of HNS is based on lists of individual substances identified in a number of IMO Conventions

and Codes, designed to ensure maritime safety and prevention of pollution. HNS represent a wide array of

chemical substances of varying properties and hazards, which include both bulk cargoes and packaged

goods. Bulk cargoes can be solids, liquids, including both persistent and non-persistent oils, and liquefied

gases, such as liquefied natural gas (LNG) or liquefied petroleum gas (LPG). Low hazard substances, such as

coal and iron, are generally excluded from the HNS Convention. There are a large number of substances

covered by the convention, such as, the International Maritime Dangerous Goods Code (IMDG Code),

which represents only one of the Codes covered by the Convention and lists hundreds of substances which

can be dangerous when shipped in packaged form.

Under the 2010 HNS Convention if damage is caused by bulk, the shipowner will normally be able to limit

his financial liability to an maximum amount of 100 million Special Drawing Rights (SDR) of the

International Monetary Fund (approximately USD 150 million), depending on the gross tonnage of the

ship. Where damage is caused by packaged HNS, the maximum liability for the shipowner is SDR 115

million (approximately USD 175 million). Once this limitation is reached, the HNS Fund will provide an

additional tier of compensation up to a maximum of SDR 250 million (approximately USD 380 million),

including any amount paid by the shipowner and his insurer.

Other non-climate related regulatory/legal changes will be necessary in the next decade to ensure the

advancement of maritime transport. In 2009 the introduction of the Rotterdam Rules created a stir within

the industry. The Rules opened for signature in Rotterdam in September 2009. The Convention on

Contracts for the International Carriage of Goods Wholly or Partly by Sea will enter into force when 20

States have ratified, accepted or approved the Convention. The Rotterdam Rules have produced huge

debate world-wide on their adoption. The Rules however are the culmination of a number of years work

aimed at achieving harmonisation and clarity. Although criticised amongst other things for their length and

their failure to fully embrace multi-modal issues, the Convention has appeared to have achieved now


March 11

industry support. The European Community Shipowners Association (ECSA), the International Chamber of

Shipping (ICS), BIMCO and the World Shipping Council (WSC) have all endorsed a clear recommendation by

the European Parliament that EU Member States should move speedily to sign, ratify and implement the

Convention. As of September 3, 2010, there are 23 signatories to the treaty. it. The most recent country to

sign the treaty was Luxembourg, which signed on August 31, 2010. Spain was the first country to ratify the

convention on January 2011. In 2010, the American Bar Association House of Delegates approved a

resolution supporting U.S. ratification of the Rotterdam Rules. It now seems possible therefore that the

Rotterdam Rules regime will be in play within this decade.

The Comite Maritime International continues its work for unification of maritime law. Current work which

will contribute to the advancement of maritime transport in the next decade is work on legal regimes in

the Arctic and Antarctica (important as these areas open up as shipping routes), on existing private

maritime law conventions, recognition of foreign judicial sale of ships and the development of procedural

rules for limitation of liability.

5 MARITIME SECURITY

Issues of maritime security will continue to headline throughout the next decade and hence merit a

separate section of mention. The IMO has made significant strides in the area of maritime security through

its Maritime Safety Committee. An issue of ever increasing concern remains piracy. The death of four

American sailors on 22 February 2011 once again thrusts into the limelight the ever increasing violence of

Somali pirates.

In 2009 there were a reported 406 incidents of piracy and armed robbery. In 2011 there have been thus

far 65 attacks worldwide and 11 total hijackings worldwide. In Somalia the total number of incidents is 48

and total hijackings 11. Currently in Somalia there are 33 vessels held by Somali pirates and 712

hostages.13

On 28 July 2010 the 2005 Protocol to the Convention for the Suppression of Unlawful Acts against the

Safety of Maritime Navigation (SUA Convention), 1988 entered into force. The protocol extends the list of

criminal offences actionable under the 1988 SUA Convention and introduces provisions for cooperation

and procedures to be followed if a State Party desires to board a ship on the high seas that is flying the flag

of another State Party if the requesting party has reason grounds to suspect the ship or a person on board

has been or is about to be involved in the commission of an offence under the SUA Convention.

13. Statistics of the International Maritime Bureau Piracy Reporting centre


March 11

Authorization of flag state is a prerequisite to boarding. The Protocol should contribute towards increased

maritime security and ability to fight piracy.

The IMO Assembly has also adopted by resolution A.1025(26) at its twenty-sixth session in

November/December 2009 a Code of Practice for the Investigation of Crimes of Piracy and Armed Robbery

Against Ships and resolution A.1026(26) on Piracy and Armed Robbery Against Ships in Waters of the Coast

of Somalia. These resolutions collectively provide for the development of further guidance by the IMO in

the area of piracy. In April 2010 the United Nations Security Council also adopted a resolution urging all

States to criminalize piracy under their domestic law and favourably consider the prosecution of suspected

pirates and imprisonment of convicted pirates apprehended off the coast of Somalia. These are really just

some highlights of the measures being introduced and adopted to combat piracy. Clearly there will

however have to be significant advancement in handling and the avoidance of incidents of piracy into this

decade.

6 ENERGY TRANSPORT COSTS/BUNKER FUEL PRICES

Fuel costs have increased by about 300% in the last ten years. The underlying reason for escalating costs is

the inability of oil supply to keep up with the increasing demand. The increasing demand for oil from

developing regions in Asia simply means that demand is exceeding the level of oil exploitation. This

staggering increase had a huge impact obviously on the shipping industry where fuel costs represent a

significant proportion of operational costs. Operators have already been hit by the significant increased

cost of marine bunker fuels because of the need to burn fuels with lower sulphur content. With the

downturn in freight rates the price of bunker fuels is of significant concern to an operators viability.

As maritime transport embraces the new decade it is difficult to see how alternative fuels can be adopted

as a source of fuel of the industry. Alternatives to fossil fuels do not deliver the industry with all the

answers it requires. There may be some benefits derived from use of biofuels and renewable sources such

as wind but these alternatives cannot at this stage provide anywhere near the energy required to cater for

the fuel requirements of the industry. The rising cost of fuels will therefore be one of the major difficulties

facing the industry in the next decade. On short sea routes competition is likely to increase from other

forms of transport. To add to the burden of increasing fuel prices is an anticipated supply crunch within

the next few years which will drive prices even higher. The problem of supply is going to be even more

compounded as the political unrest seen in the middle east over the last few weeks continues. How this

problem develops and how it can be resolved remains to be seen. However, given that fossil fuels are finite

(the Society of Petroleum Engineers estimate remaining official reserves represent 44 more years of oil) it

may be that the increasing price of oil will mean more research and development into alternative fuels.


March 11

7 CONCLUSION

The biggest challenges to maritime transport over the next decade are clear. Where challenges are

however recognised, debated and ideas formulated there is a forum for advancement. Increasing fuel

prices mean there is a joint interest in more environmentally friendly fuel efficient ships. Increasing the

size of ships will help achieve greater fuel economy. As technology develops larger more fuel efficient ships

are being designed to pave the wave for the challenges of this decade. These larger ships will move at

slower speeds, a practice already adopted by operators to save fuel and tackle the mismatch between

supply and demand. Slower speeds will help reduce emissions. However without larger ships slower

speeding to achieve a reduction in fuel emissions will only result in more ships to transport the same

quantity of cargo and a corresponding increase in emissions. Slower speeds will also mean that customers

will have to wait longer for goods so there will need to be an adjustment in customer/consumer

expectation and practice. Larger ships also mean an increase in port capacity and development of

infrastructure to accommodate such ships. Cargo handling methods will need to develop to create

efficiency. Larger ships however appear to address the challenges faced.

Maersk have fully embraced the advancement of maritime transport for the next decade and beyond with

the news announced on 21 February that they have signed a contract for 10 Triple-E mega ships with an

option to buy another 20. The ships will be the worlds largest, most efficient container vessels with a

capacity of 18,000 TEU with a range of delivery from the Korean DSME shipyard from 2013-2015. The triple

E,as its title indicates, fulfils three main purposes: Economy of scale, Energy efficiency and

Environmentally improved. The ships are a staggering 400 metres long, 59 metres wide and 73 metres tall.

The vessels will ensure Maersk Lines reaches its environmental goals to produce the lowest possible

emissions of CO2 50% less than current average on Asia-Europe trade and 20% less CO2 than the

currently most efficient container vessel in operation today, the MV Emma Maersk. The vessels will

consume 35% less fuel per container than 13,100 TEU vessels currently on order and to be delivered to

other container lines in the next few years. Its a big bold move but demonstrates the companys

commitment not only to the growth of the industry but also to improving the global environment.

Despite the 2008/2009 downturn, the growth in merchandise trade in 2010 seems set to continue into

2011. Maritime Transport will therefore grow yet again. As an industry, however it will need to embrace

advancement like the example of Maersk to emerge in this decade as a profitable industry. Addressing the

challenges that we face will ensure the industry will advance in this decade and beyond to the benefit of

all. At the end of the day, there will always be a need for maritime transport.

God must have been a shipowner. He placed the raw materials far from where they were needed and

covered two thirds of the earth with water.

(Erling Naess)


March 11

4.0 Session 2: Management of knowledge in the Era of Social Networking

4.1 A Maritime Knowledge Platform its Purpose, Accessibility & Sustainability, Dr. Takis

Katsoulakos, Chief Executive, INLECOM Group.


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March 11

4.2 Short Sea Shipping connecting Irish Exports to the Global Economy, Glenn Murphy,

Director, Irish Maritime Development Office.


March 11


March 11

6.0 Session 3: Developments that facilitate Maritime Transport & Trade

6.1 Emerging Technological Capabilities facilitating Maritime Transport, Gerard Trant,

Managing Director, Nautical Enterprise Centre Ltd.

Technological Capabilities facilitating Maritime Trade & Transport

Gerard Trant (NECL), Kevin Riordan (NECL), Capt. Michael McCarthy (PoCC)

Abstract

This paper is based on studies carried out in the PROPS, SKEMA and e-Freight projects. It has five interrelated

sections that address areas of interest in European transport and trade, with specific focus on Ireland. These are:

1. Comparison of transport modes, from the SKEMA study Weathering the Economic Crisis.

2. Unitised cargo flows into and out of Ireland, primarily based on the PROPS study Business Case for Short

Sea Shipping / Intermodal Solutions.

3. Technological supports for Co-Modal Transport Networks, from the e-Freight paper Co-Modal Transport

Networks Specifications, Benefits and the Liability Issue.

4. A business case based on Port of Cork.


March 11

1. Comparison of Transport Modes

There is a considerable amount of misinformation regarding the relative merits of the different modes of transport.

For that reason, a comparison is made between the different modes,

a. for a medium distance (300 nautical miles 556 km),

b. for a longer distance (800 nautical miles 1,482km).

In both cases, a port is situated at the beginning and end of the journey and the different transport modes have to

load and discharge at both ends.

1.1 Comparisons between Trucks, RoRo, LoLo, Dry Bulk and Freight Trains

In the comparisons between Trucks, RoRo, LoLo, Dry Bulk Shipping and Trains, trucks are used as a reference

because they set the standard with which other modes have to compete. The trains used in the comparisons are

the trains carrying freight between Gothenburg and Stockholm. Approximately 90% of Swedens electricity is

generated from nuclear and renewable sources, so the trains have negligible carbon footprint. The quantifiable

criteria used in comparing the different modes are:

Port -to-Port (P2P) cost per trailer ( / trailer),

P2P delivery time per trailer (hours / trailer),

CO2 emissions per trailer (t / trailer).

It should be noted that in practice one transport mode may have a distance advantage over others, which would

change the comparative tables completely.

Distance 300 Nautical Miles (556 km)

EuroV Truck RoRo Ship LoLo Ship Bulk Ship Freight Train Comparison Criteria

75% Utilisation 45% Utilisation 45% Utilisation 75% Utilisation 20 Trailers

P2P Cost/ Trailer

( / Trailer)

1 0.75 0.50 0.33 0.27

P2P Delivery Time

(hours)

1 2.78 3.89 5.46 1.49

Green House Gas emissions

/ Trailer (t)

1 2.57 0.57 0.71 0.03


March 11

Distance 800 Nautical Miles (1,482 km)

EuroV Truck RoRo Ship LoLo Ship Bulk Ship Freight Train Comparison Criteria

75% Utilisation 45% Utilisation 45% Utilisation 75% Utilisation 20 Trailers

P2P Cost/ Trailer

1 0.53 0.29 0.19 0.20

P2P Delivery Time

1 1.05 1.45 1.98 0.52

Green House Gas emissions

/ Trailer

1 2.50 0.50 0.61 0.03

Overview of the comparison of transport modes:

Criteria EuroV Truck RoRo Ship LoLo Ship Mini-Bulker Freight

Train

P2P Cost/ Trailer

Most competitive

for short / medium

distances

Very good for

medium distances

Excellent for

medium / long

distances.

Poor for short

distances

Excellent Excellent

P2P Delivery

Time

Good for all

distances

Good for medium

distances

Moderate Moderate /

poor

Excellent

Green House

Gas emissions

per trailer

Good / Moderate Poor Excellent Excellent Excellent

Adaptability Incomparable Moderate Inflexible Inflexible Inflexible

Reliability Excellent Very Good Moderate / poor Variable Excellent

1.2 Features of the Transport Modes from the Comparative Tables

Features of a Euro V Truck:

a. For relatively short distances, such as pertain within Ireland, a truck has no competitor.

b. For short-to-medium distances it has low-to-medium cost, fast delivery times, relatively low Green House

Gas (GHG) emissions; it is adaptable and reliable at all distances.

c. The cost competitiveness of long-haul trucking reduces with increasing distance compared to alternative

transport modes.


March 11

Features of a large RoRo vessel

a. For medium distances a RoRo vessel has many advantages: it is significantly less costly than trucking, it has

good-to-moderate delivery times, it is reliable and moderately adaptable. In effect, there is an annulus

around a port of departure within which RoRo is competitive for certain cargo segments compared to

trucking and LoLo.

b. A weakness with RoRo that will become increasingly significant is that its GHG emissions per trailer,

compared to trucking and LoLo, is poor.

c. A RoRo vessel with a relatively small carrying capacity compares poorly with a larger RoRo vessel on all

criteria, except delivery times for which it is marginally better because of its shorter port turnaround

times.

Features of a LoLo vessel with 14 knot service speed and 868 TEU capacity:

The most notable positive features of LoLo vessels are:

a. Over medium-to-long distances they provide low transport cost per TEU or per trailer-equivalent, lower

than trucking or RoRo. Over short distances they are not economical because of their relatively long port

turnaround times.

b. They have low GHG emissions, which makes them an environmentally friendly mode of unitised transport.

c. LoLo vessels are sensitive to economies of scale; they can achieve significant reductions in unit transport

cost and GHG emissions with increasing capacity. This is offset by increased delivery times due to

increased turnaround times in port. Distance, ship capacity, ship speed and ship average utilisation are

determining factors in achieving an optimal balance.

Against this, LoLo vessels have a number of notable negatives:

d. Their delivery times over short-to-medium distances are dreadful-to-poor because of their long port

turnaround times. This reduces their suitability to certain market segments for these distances, primarily

low-to-medium value durable goods for which delivery times are not of the essence.

e. A further weakness of intra-European LoLo services is that they can be unreliable in their deliveries.

Reliability is an assumed attribute of modern transport and logistics; unreliability is damaging to the

reputation of a service and can reduce it to commodity status. The reliability issue of LoLo vessels is

addressed in Section 3 of this study

f. Feeder vessels, especially, are notoriously unreliable because of uncertainties in delivering and collecting

cargo in large hub ports. This adversely affects berth availability in regional ports; it contributes to the

unreliability of deliveries and is damaging to the reputation of intra-European LoLo services. The solution

that is advocated by the Commission is for hub ports to build loading berths adjacent to their

international terminals to accommodate feeder vessels and, hence, reduce uncertainties in feeder vessels

accessing international terminals.


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Features of a dry bulk vessel with 10.5 knot service speed & 2,000 dwt capacity:

Small-to-medium dry bulk ships service a myriad of small tidal ports all over Europe. They carry such

cargoes as coal (a staple cargo of the not-too-distant past), fertilizer, animal feed, scrap, stone, aggregates

and timber. Their costs per unit of cargo are the lowest amongst the ships examined. Their delivery times

are the longest. They service a particular niche in the transport industry in which they excel. Their scale

economies are legendry; hence, the world fleet of massive dry bulk carriers that move steam coal, coking

coal, iron ore, minerals and grains around the world.

Features of Freight Trains:

The example that is used is based on trains that carry unitised and bulk freight between Gothenburg and

Stockholm. Gothenburg, including its surroundings, has a population of about one million people and is

the largest port in the Nordic states. Stockholm, with a metropolitan population of approximately two

million people, is the capital of Sweden and accounts for approximately 28% of its GDP. The distance

between the two cities is 448 km. The train services connecting the two cities are therefore hugely

important for the economic and social wellbeing of the two populations and for all of Sweden. The trains

are electrically powered. With approximately 90% of Swedens electricity generated from nuclear and

renewable sources, the trains have negligible carbon footprints. The freight train example that is used is

therefore in the top echelon of European freight trains and may not readily be mimicked in different

circumstances. Its unit costs are only equalled by the bulk ship for medium and long distances and its

delivery times by the Euro V truck for the medium distance.

Inferences drawn from the comparison of transport modes:

For each of the five transport modes that are considered in the analysis long-haul trucking, RoRo, LoLo,

bulk shipping and freight trains there are particular advantages as well as disadvantages. Even the

Swedish freight trains between Gothenburg and Stockholm, which provide a superlative service, have the

disadvantage of being difficult to replicate in different circumstances.

In summary, optimality from the perspective of a service provider implies providing a service or

combination of services that use the best features of transport modes and that meet the requirements of

the shippers that they service. From the perspective of the shipper, optimality means specifying and

selecting the service or combination of services that connect them most efficiently with their markets. In

both cases, optimality can be achieved with the aid of a maritime decision support system.


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2. Unitised Cargo Flows between states

2.1 Cargo flows between Ireland and France

Unitised cargo flows between Ireland and France are used as an example of an approach that can be used between

two states.

There are three competing modes of transport for trade between Ireland and Continental Europe:

1. Truck and ferry using the British Land bridge,

2. Direct RoRo / RoPax between Ireland and Mainland Europe,

3. Direct LoLo between Ireland and Mainland Europe.

A large proportion of trucked cargo is transported via the British Land Bridge, partly for historical reasons, but

mainly because it is convenient & efficient and the momentum of current practice sustains it. Against this, road

congestion in Britain is increasing and European policy initiatives are aimed at diverting traffic from road to sea,

with increasing restrictions on long-haul trucking. The tables below were compiled using a combination of annual

port data (Irish Central Statistics Office), SITC14

data (Eurostat) and a software programme devised by Nautical

Enterprise. The Top-20 tables account for approximately 90% of unitised imports and exports, albeit about 30% of

the different types of goods. Concentrating on the Top-20 cargoes is therefore a Pareto-style approach to analyzing

cargo flows.

14 SITC: Standard International Trade Classification


March 11

Top-20 Unitised Imports into Ireland from France ( 2008)

Rank SITC

Code SITC Description Est TEUs

% of

Total

TEUs

Value

000

Value/

TEU

1 4 Cereals & cereal preparations 6,848 12 18,523 2,705

2 67 Iron & steel 6,006 11 48,052 8,000

3 57 Plastics in primary forms 5,333 9 56,721 10,635

4 6 Sugar, sugar preparation & honey 5,093 9 38,688 7,596

5 5 Vegetables & fruit 5,062 9 60,573 11,965

6 78 Road vehicles (include. air-cushion vehicles) 3,314 6 286,601 86,486

7 66 Non-metallic mineral manufactures 3,088 5 17,953 5,814

8 11 Beverages 2,952 5 106,028 35,920

9 56 Fertilisers (other than those of Division 27) 2,817 5 7,937 2,818

10 64 Paper, paperboard & articles thereof 2,446 4 31,985 13,078

11 8 Feeding stuff for animals (excl. unmilled cereals) 1,279 2 3,116 2,436

12 69 Manufactures of metals 1,159 2 29,495 25,440

13 33 Petroleum, petroleum products & related materials 1,068 2 3,529 3,303

14 1 Meat & meat preparations 1,066 2 29,878 28,028

15 55 Essential oils, perfume materials; toilet & cleansing 1,026 2 79,225 77,196

16 89 Miscellaneous manufactured articles 959 2 53,829 56,150

17 2 Dairy products & birds eggs 842 1 14,370 17,061

18 74 General industrial machinery & equipment 697 1 62,108 89,107

19 58 Plastics in non-primary forms 554 1 20,238 36,541

20 72 Machinery specialised for particular industries 487 1 36,693 75,318

Total for Top-20 52,098 92 1,005,541

Total for all unitised imports into Ireland from France 56,924 100 1,882,068


March 11

Top-20 Exports from Ireland to France (2008)

EXPORTS

Rank SITC

Code SITC Description Est TEUs

% of

Total

TEUs

Value

000

Value/

TEU

1 27 Crude fertilisers & minerals, excl. coal, petroleum 12,533 23 1,479 118

2 1 Meat & meat preparations 10,945 20 291,840 26,665

3 2 Dairy products & birds eggs 3,540 6 76,719 21,671

4 3 Fish, crustaceans, molluscs and preparations 2,951 5 77,390 26,225

5 89 Miscellaneous manufactured articles 2,849 5 286,921 100,718

6 75 Office machines & data processing machines 2,582 5 968,243 375,009

7 63 Cork & wood manufactures (excl. furniture) 2,530 5 14,300 5,651

8 55 Essential oils, perfume materials; toilet & cleansing 1,587 3 364,340 229,571

9 54 Medical & pharmaceutical products 1,475 3 737,547 499,970

10 59 Chemical materials & products 1,346 2 531,024 394,589

11 74 General industrial machinery & equipment 1,266 2 172,522 136,282

12 25 Pulp & waste paper 1,097 2 820 747

13 28 Metalliferous ores & metal scrap 974 2 1,857 1,907

14 72 Machinery specialised for particular industries 950 2 33,515 35,275

15 21 Hides, skins & furskins, raw 829 2 6,498 7,835

16 11 Beverages 817 1 30,360 37,174

17 58 Plastics in non-primary forms 704 1 47,480 67,479

18 32 Coal, coke & briquettes 587 1 264 450

19 57 Plastics in primary forms 560 1 15,498 27,691

20 9 Miscellaneous edible products & preparations 479 1 24,429 50,951

Total for Top-20 50,601 93 3,683,046

Total for all unitised exports 54,649 100 4,659,670


March 11

2.2 Segmentation of Unitised Cargoes based on Top-20 Tables:

The Top-20 cargoes can be grouped into the following segments, which give an indication of preferred transport

characteristics and corresponding transport modes:

Segmentation of Unitised Cargoes: Ireland France

Description Preferred Transport

Characteristics

Most Likely

Transport Mode

Unitised Imports

into Ireland from

France (2008)

Unitised Exports

from Ireland to

France (2008)

Consumables;

perishable goods

Fast, Reliable

deliveries

Trucking via Land

Bridge, or RoRo

21,894 18,732

Medium value,

durable goods

Price, Reliability LoLo, RoRo or

Trucking via Land

Bridge

16,458 2,339

High value, durable

goods

Reliability , secure &

timely deliveries

Trucking via Land

Bridge, RoRo, LoLo

5,524 11,808

Low value, durable

goods

Price LoLo 8,252 17,721

Note 1: The Top-20 tables can be computed for a number of

Documents

SKEMA PROPS Workshop March 1st V14