Shippers face pressing concerns
An exclusive IFPTA interview with Nicolette van der Jagt, Secretary General, European Shippers' Council
Published: August 30, 2011
Shippers face several potential concerns as the European Commission releases its white paper on transport-related issues. Costs and prices, sustainability and the environment, are some of the major talking points for the industry as it looks to set the best direction for the future.
In this exclusive IFPTA interview, Nicolette van der Jagt talks about some of the most pressing concerns for shippers and previews her presentation in Amsterdam.
A featured panelist at PPI Transport Symposium 19, Ms. van der Jagt is the Secretary General of the Brussels-based European Shippers’ Council (ESC). The ESC represents the freight transport interest of cargo owners in Europe, the manufacturing industry, and companies from the retail and wholesale sectors.
IFPTA: What are some of the major issues you’re watching closely right now?
van der Jagt: The ESC is looking at all the modes of transport and in this respect the European Commission’s White Paper on transport has been important for ESC.
On rail:
In rail freight, for example, one must create the right conditions for services to thrive, whether block-train or single wagonload services. Single wagonload services are particularly vulnerable at the moment; many such services have been withdrawn by rail freight operators and many more services remain under threat. The reasoning given by operators for removing these services is cost.
ESC believes the demand for single wagonload services remains strong and would grow further if they could be relied upon. It is also our opinion that the right business models and closer engagement by the rail freight industry with its customers can provide the basis for sustainable single wagonload services.
In order to drive out costs and build reliability, the Commission must enforce policies governing access to the rail infrastructure, greater competition, and ensure the good governance of a competitive rail freight industry and network. The current ‘Rail recast’ proposals would substantially improve the situation in this regard.
On vessels:
Similarly, the Commission’s current policies towards revitalizing the appeal to shippers of inland waterways and short-sea/coastal shipping will similarly contribute to creating a more efficient and reliable alternatives to road freight solutions. Nevertheless, the gains being made in the area of short-sea and coastal shipping, in particular in and around the English Channel, North Sea and Baltic Sea, are at risk of being seriously compromised if IMO rules on low-sulphur content of marine fuels are introduced too hastily.
On road:
By the same consequence, truck efficiency should be encouraged. The recognition of the need to take a fresh look at rules on vehicle weights and dimensions is to be welcomed. ESC believes that in order to allow more efficient ways to operate, optimize the payload of trucks and to reduce the number of trucks and trips required to satisfy transport demand and addressing recurring skilled drivers shortages, the Commission should allow EMS vehicles to operate more widely in and throughout Europe.
The European Commission has focused on costs and prices quite a bit. Should shippers be concerned about this?
Internalization of external costs - infrastructure charging to the layman - remains on the European Commission’s target-list of policies. In respect of road tolls in particular (the Eurovignette III proposals), the Commission places far too much hope in this policy for delivering sustainable modal shift.
Increasing the costs of transport will not by itself produce the modal shift that the Commission might wish to believe it would. Increases in fuel prices, made worse by high levels of fuel duty, demonstrates well how increasing costs of road freight operators causes redundancies, company closures, shortages of freight capacity, and damage to the wider economy.
Only with competitive, viable and practical alternatives, which are accessible, reliable and available, can there be any chance of generating a significant shift away from the roads. Nevertheless, whilst having a number of reservations in regard to this policy, ESC does welcome, however, the notation that this should be implemented in a balanced and non-discriminatory manner – applying it to freight and passenger transport in proportion to their use and relative importance to the wider economy.
Is there a possibility the industry could embrace higher costs?
Congestion on the road transport infrastructure will remain a significant issue, costing companies in additional fuel costs, additional vehicles and drivers required and, ultimately reducing the contribution to Europe’s GDP which the sector provides. Charging schemes, do not resolve issues of congestion except at the local scale: our economy still requires goods to be moved predominantly by road.
Investment in new and upgraded road infrastructure is required to tackle the problems of congestion. The environment and the climate change agenda are shaping transport policy. Attempts to make industry pay for the damage it causes from the use transport, and the emissions of green house gasses this releases are already being formulated into EU policy.
These initiatives will be far more palatable to industry if the revenue generated from any related charges and taxes are ring-fenced. Revenue should be used for pollution abatement schemes and new transport infrastructure, which reduces the environmental impact of freight transport.
Charges and taxes on transport emissions and pollution should also be based on accurate and standard measurements. ESC believes that the European Commission should consider doing more to help in the development of standard measurements.
Sustainability and the environment are becoming larger issues for shippers. How can those in forest products logistics prepare to deal with them effectively?
The regulators expect industry and shippers to play a key role in reducing the environmental impact of transport – transport which industry uses. But to make effective modal and supply chain management choices based on environmental criteria will require tools, which accurately measure such things.
Shippers need to prepare by having the information in what is coming and they should know which measurement tools they can rely on and which will be widely accepted as international standards of measurement for things like CO2 emissions. ESC supports exchanges and supports ideas, innovations, best practices, that enable shippers to capitalise on the move towards increased environmental corporate policies in their own companies. It is also important shippers understand the full cost implications of all of this on them, and we support them with this.
New regulations and measures on greenhouse gases (GHGs) and other emissions are expected on the horizon. What can shippers expect on this front?
The European Commission has adopted a proactive role in the development of climate change strategies in order to meet its 20 per cent target GHG emissions reduction from transport by 2020. The Commission is in the process of developing a regulatory proposal to cover emissions from international shipping.
If by the end of 2011 the necessary steps are not taken at a global level, the Commission will finalise a legal proposal in early 2012 with the intention it becomes effective in 2013. Whether global or regional, a uniform levy or tax on all ships and all fuel purchases would be a risk to shippers whichever way you look at it: the added costs will be merely passed on to the customers through surcharges without offering a clear incentive to the carrier to increase the efficiency of the ships or their operation.
A regional scheme, as opposed to a global one, would be worse for European shippers, because of the distortion of competition this would create.
How do these issues affect the global industry, beyond the scope of European transport?
These are some very pressing issues that will have lasting impacts on global supply chains. The risk exists that if the new EU or international regulations do not facilitate mitigation of the effects of pollution or sustainable and viable alternatives in order to avoid producing the pollution, then we are simply adding costs to our economy and solving nothing.
Having assessed the different ideas put forward in the debate, at the IMO and within the EU, ESC believes that the preferred approach should be one which provides tangible incentives and rewards to owners and operators of individual vessels who invest in ships and ship technologies that optimise vessel utilisation, operation and fleet sizes, and reduce emissions of GHGs.
We think that shippers will increasingly be drawn to those ships which attract lower costs for the supply chain from lower emissions, provided the service does not diminish. First, movers in a scheme that rewards best practice rather than punishes existing practice, should gain market advantage, and that should speed up its implementation.
It is worth noting that ships traveling into the Sulphur Emission Control Areas (SECAs) of northern Europe will incur significant additional costs starting in 2016 to comply with the IMO’s limits on the sulphur content of marine fuel, i.e. 0,1%. Installing ship/engine technology that can use low sulphur fuel or remove the sulphur from emissions will be costly and in many cases impractical; the time available to comply is also very short indeed. This is not good news for shippers based around the SECA areas (North Sea and Baltic Sea), who will be forced to either revert to road freight alternatives, relocate south, or suffer severe competitive disadvantage.
How can forest products logistics professionals help and promote the ESC?
By giving us a voice to speak on behalf of shippers! We are happy to be involved in events such as the PPI Transport Symposium 19 in Amsterdam. ESC membership is open to all shippers and shippers’ organizations in the wider European area.
We also organize our own events for shippers and the transport industry, such as the upcoming ESC Shipper Forum 2011 on September 28, 2011 in Brussels.
Nicollette van der Jagt has been the Secretary General of the Brussels-based European Shipper since 2002. Prior to this role, van der Jagt was a policy advisor with ECS. Through her career, she has worked in public affairs with the Dutch organization of transport and logistics (EVO) and for the Brussels office of the Freight Transport Association.
