MSC to establish container terminal in Aarhus
NewsThe Port of Aarhus will lease land to MSC’s TiL for a new 170,000 sqm container terminal, set to be fully operational by 2027.
Ocean Alliance faces notable ETS cost disadvantage
Sea-Intelligence found MSC’s network design nearly halves reportable sailing distances, giving it a cost advantage in ETS expenses over Ocean Alliance’s modest 7% reduction.
Sea-Intelligence calculated the reportable ETS (Emissions Trading System) sailing distance for each service in the new alliance networks, including MSC, as the company will soon operate at the scale of an alliance.
This calculation covered sailings from non-EU to EU ports, and the reportable distance was then compared to the notional round-trip distance between Singapore and Algeciras to estimate potential ETS savings.
As shown in Figure 1, MSC’s network design allows it to almost halve the reportable sailing distance between Asia and Europe. Gemini Cooperation and Premier Alliance are expected to maintain a similar competitive position, while Ocean Alliance will see only a modest 7% reduction in its current network.
This gives MSC a significant cost advantage, while Ocean Alliance faces a notable cost disadvantage regarding ETS expenses.
Sea-Intelligence also emphasised that the Ocean Alliance has not yet released its 2025 network update. However, the alliance is expected to publish a revised Asia-Europe network soon, likely focusing on lowering its ETS cost exposure.
What is the Emissions Trading System (EU ETS)?
The ETS (European Union’s Emissions Trading System) serves as a de facto carbon tax for shipping within the EU. All vessels operating within, to, or from the EU are required to pay a carbon emissions tax.
This tax is applied to 100% of emissions between two EU ports and 50% of emissions between an EU and a non-EU port.
To maximise ETS savings, a vessel should call at a non-EU port that is closest to its first or last EU port of call.
These savings are determined by comparing the “modified” journey to the shortest possible benchmark, which in this case is the sailing distance from Singapore to Algeciras.
This means that a vessel calling a non-EU port between Singapore and Algeciras, for example, will only have to pay ETS on 50% of the emissions from that port to Algeciras, as opposed to a vessel that sails directly from Singapore to Algeciras, which has to pay ETS on 50% of the emissions of a much longer journey.
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