emissions ship

EU Emissions Trading Scheme surcharge

Nov 22, 2023 | , , ,

The EU’s Emissions Trading Scheme (EU ETS) extends to container shipping from the 1st January 2024, with significant legal, commercial and financial consequences for carriers and a new surcharges for shippers.

Under the EU ETS carriers will purchase a capped number of permits, known as EU Allowances (EUAs) at auction that allow discharge of a specified quantity of greenhouse gas emissions (GHGs) over a set time period. 

ETS is a ‘cap and trade’ scheme where a limit (the cap) is placed on the amount to emit specified pollutants and obliges individual shipping lines to hold an allowance for each tonne of CO2 or other carbon equivalent gases they emit.

The cap reduces annually over four years to lower emissions and if a company exceeds its allowance, it may be penalised with a heavy fine.

There will be no set price list for these emission allowances – instead, the price will be defined by supply and demand on the market. 

Taking into account the ETS phase-in period covering 40% of emissions in 2024, 70% in 2025 and 100% in 2026, the shipping industry could be liable for €3.1bn in 2024, €5.7bn in 2025 and €8.4bn in 2026. With container shipping potentially accounting for 30% of overall emissions.

Unlike the standard bunker adjustment factor (BAF) which is adjusted quarterly, based on publicly available fuel prices, that will not be possible with ETS, because the cost is only known post-fact and hence the lines will have to make upfront assumptions.

Maersk and Hapag-Lloyd recently shared their ETS surcharge indications, at €70 and €24 per 40’ but there is no transparency on how these numbers are arrived at and the way legislators have defined ETS makes transparency an almost impossible task.

The EU-ETS high-level surcharge tariff assumption and calculation logic shared by another carrier underlines just how opaque the new surcharge will be with their caveat:

“This is just an estimation of the surcharge tariff with current information, therefore, this will not guarantee the future surcharge tariff or its calculation logic. The actual surcharge tariff will be announced separately before the actual implementation. “

And getting alignment, with carriers agreeing on a common standard for the ETS surcharge, would constitute illegal collusion under EU competition law, so no help there.

This is a complex and evolving issue, which we will continue to monitor, sharing important developments, because the ETS surcharge, including its methodologies are subject to change.

The cost of ETS compliance for the lines will be significant and will keep increasing with the phased implementation.

EMAIL Andrew Smith, Chief Commercial Officer, if you would like to learn more, or have concerns about any of the issues raised here.

container ships

EC to end container shipping alliances

Oct 10, 2023 | , ,

On the 9th August 2022, the European Commission (EC) issued a call for feedback on the Consortia Block Exemption Regulation (CBER) and on Tuesday announced that it will not renew the sector’s exemption to operating shipping alliances when current legislation expires on 25th  April.

The Consortia Block Exemption Regulation (CBER) was introduced in 2009, after the EC banned the old conference system, that had allowed container shipping lines to coordinate on pricing levels.

CBER allowed carriers to continue operating vessel-sharing agreements and pooling capacity, and was extended in 2014 and 2020, but the EC has now decided that CBER is not fit for purpose, as it does not fulfil the criteria of effectiveness, efficiency and EU added value.

The Block Exemption has been under review since 2020, during which time the market has experienced massive fluctuations in demand, capacity and price, driven by the initial impact of COVID, pandemic lockdown, post-COVID demand and now the cost of living crisis.

A period over which, market turmoil should have underlined the need for cooperation between carriers, but instead resulted in a transitory and exceptional phase of excess demand over effective capacity and of record profits for carriers.

The EC’s decision paper said the feedback from carriers and lobby groups showed an incomplete understanding of the CBER and claimed it had failed to bring demonstrable benefits to European consumers, as inelasticity of demand and the limited elasticity of supply reduced the likelihood that any cost efficiencies achieved by carriers would be passed on to users.

The EC refused to blame CBER for causing the chaos seen in container supply chains since 2020, but suggested its effectiveness and efficiency during this period was limited and noted that the widespread opposition from shippers, forwarders, unions and port operators to extending the regulation showed deep divisions among supply chain partners.

The CBER has notably created the impression that carriers had an advantage, while other supply chain stakeholders were treated unfairly and that there was no real level playing field in the maritime sector.

It concluded: “Overall, it appears that the restoration of trust between the stakeholders necessary to build a resilient, integrated and efficient supply chain requires ensuring that the liner shipping sector is not perceived as being subject to looser scrutiny from antitrust enforcers than other industries.”

UK review of Consortia Block Exemption Regulation

On the 19th January the UK’s Competition and Markets Authority (CMA) published its report into whether or not the Liner Shipping Consortia Block Exemption Regulation (the retained CBER) should be renewed or varied when it expires on 25 April 2024.

In its CBER review, the CMA met with key stakeholders to gather views on the operation of the retained CBER regime in the UK and is proposing replacing the retained CBER with a Liner Shipping Consortia Block Exemption Order (CBEO).

The CMA added it recommended a similar version of the existing CBER, in order to ensure the continuity of container shipping for UK businesses, because if the retained CBER was allowed to expire without replacement, carriers may be deterred from making direct calls to UK ports in favour of serving the UK by transhipment to and from European ports.

The CMA’s concern was that shipping costs for UK consumers could rise considerably without a regulation aligned to the substantially larger market on the European mainland.

With the EU now intent on ending CBER next April, it is almost certain that the UK will follow suit.

Metro leverage opportunities for our customers across all three of the shipping alliances, with individual carrier relationships that are long established and built on personal relationships, from operations to senior management and executive level.

These relationships across a portfolio of carrier partners, already give our customers access to the widest range of service offerings, port-pairings and rates and they will be maintained, however the container shipping sector is transformed next April.

We will stay close to this topic, as it develops and ensure that you are kept up to date with the most important news. 

If you have any questions or concerns relating the shipping alliances, the Consortia Block Exemption Regulation, or sea freight in general, please EMAIL Andrew Smith, Metro’s Chief Commercial Officer. 

Belfast 1

Get ready for the NI Windsor Agreement processes

Sep 27, 2023 | ,

The Windsor Framework was agreed in February to ease post-Brexit trade between Northern Ireland (NI) and the rest of the UK, but concerns remain about a continuing lack of clarity over the details of the Windsor Framework - which begins to come into force from the 1st October.

Prior to the Windsor agreement the process for movements to NI is under the TSS (Trader Support Scheme) with shippers submitting a simplified declaration, under the UK Trader Scheme (UKTS). 

However, this only complied with the Safety and Security declarations required by the Ferry operators and a second supplementary declaration is made in NI, with commodity code, value of goods, and additional information statements specific to goods.

Most critically of all a percentage calculation of goods “at risk of moving to the South” are applied and duty invoiced to the Consignee for potential sales not actual.

As a result of the Windsor Framework, the Government is able to introduce a scheme to reimburse the payment of EU customs duties paid on goods moved into NI that were not sold or used in the EU - The Customs (Northern Ireland: Repayment And Remission) (Eu Exit) (Amendment) Regulations 2023.

The agreement establishes a new UK Internal Market Scheme (UKIMS) for the movement of goods from the UK to NI and is being phased in from 30th September. 

The existing UKTS will be replaced by the new UK Internal Market Scheme (UKIMS) with effect from 30th September 2023. This will enable businesses established in Great Britain to join and declare goods “not at risk” if they are brought into Northern Ireland for sale or final use by end consumers in the UK.

Traders who join UKIMS will be able to declare their goods as ‘not at risk’ which means they will not be charged duty if entering NI from free circulation in Great Britain. They will, however, be charged UK duty if entering Northern Ireland from outside the EU and the UK, or if the goods were not in free circulation in GB.

Green Lane

The ‘Green Lane’ will significantly expand the range of businesses who can benefit; end the requirement for traders to provide customs commodity codes; scrap supplementary declarations; and ensure that businesses can move their goods using commercial information.

It is worth noting that both lanes are ‘virtual’ and no physical lanes, or markings exist.

Regulatory easements in the green lane do not exist for all types of goods. The focus is on those goods with the most onerous SPS compliance obligations, including pre-packaged products of animal or plant origin, food and food products.

Meat and fresh dairy products are to be labelled ‘Not for EU’ from October 2023, all other dairy products from October 2024, and composite products, fruit, vegetables and fish from July 2025.

Traders will need to be registered on the Northern Ireland Retail Movement Scheme (NIRMS) for SPS goods and the UK Internal Market Scheme (UKIMS) for general goods. 

For goods moving on or after 30th September 2023, the UK Trader Scheme authorisation will no longer be valid and traders must use the UK Internal Market Scheme (UKIMS) authorisation to declare your goods ‘not at risk’ of entering the EU, if the applicable EU duty is greater than zero.

Green Lane Process
Trader uses commercial info and submits to TSS
Haulier obtains GMR
Goods are moved

Red Lane
Goods not for final consumption in Northern Ireland must go through a red lane
‘At risk’ goods will be charged the applicable EU duty

Red Lane Process
Haulier completed Entry Summary Declaration (ENS)
Simplified Frontier Declaration (SFD)
Haulier obtains GMR
Goods are moved
Supplementary declaration
Pay duty

Key dates
June 2023 - Traders can register for UKIMS
September 2023 - UKIMS must be used for no duty to be applied (Green Lane)
October 2023 - STANMI replaced by NI Retail Movement Scheme (NIRMS)
September 2024 - Full Green Lane implemented

A number of questions remain outstanding including…
- Who will run the Trusted Trader Scheme and what are the costs involved?
- How long will the government fund the TSS – the Trader Support Service (03 10 23 - HMRC confirm extension 31 12 24)
- How will the red and green lanes work in practice, especially where groupage loads are concerned?

At the moment it appears that trailers containing a mix of cargoes eligible for the green lane, will need to go through the red lane, even if just one consignment entering NI is in the red lane.

Retailers, especially the supermarkets, are likely to be the largest users of the Green Lane; while manufacturers in Northern Ireland appear more likely to use the red lane, so that goods can be shown to comply with applicable EU law and so be processed and sold on within the EU market.

HMRC UPDATE, 3rd OCTOBER 2023 - HMRC has confirmed the extension of the Trader Support Service until 31 December 2024, as a free to use service, educating traders on applicable processes and supporting them to submit customs and safety and security declarations.

We will continue to share information on the new framework and processes as they become available.

Our customs team are working directly with affected clients, to ensure that they are prepared and compliant with new customs processes, declarations and requirements.

If you have any questions or concerns about the Windsor Agreement and trade with NI/IE please EMAIL Andy Fitchett, Brokerage Manager, who will be happy to review your situation.

Dover queues

Final stage of EU’s Import Control System 2

Sep 27, 2023 | ,

On the 1st March 2024, the European Union is launching the 3rd and final part of its pre-loading and pre-arrival safety and security programme, which requires pre-advice of mandatory information and failure by shippers to comply may lead to goods being rejected by the airline, shipping line, rail operator or haulier.

The European Union (EU) implemented the European Import Control System (ICS) in the safety and security measures framework in 2011, to perform risk analysis on air, sea, rail and road freight before it enters or transits the customs territory of the EU.

In 2021, the EU began the rollout of ICS2 in 3 phases:  
15th March 2021: Mail/express shipments (pre-loading)
1st March 2023: Air cargo and Mail/express shipments (full)
1st March 2024: Maritime, Road, and Rail

Carriers submit details on cargo before it is carried into the EU, risk analysis on the data decides if shipments can proceed, or need to be presented for inspection.  

The ICS2 process:

1. Lodge the ENS declaration to customs by the economic operators 
2. Safety and security risk analysis performed by customs 
3. Arrival notification of the means of transport by the carrier or its representative 
4. Presentation to customs and examination in case of a potential risk

We have been adapting our processes and systems to meet the new EU requirements, but compliance with ICS2 changes will depend on the active participation of shippers.

Carriers will require relevant data to fulfil their responsibility for the pre-loading and pre-arrival information data set, including the journey details, which is sent to ICS2, where it is automatically reviewed for possible security threats. 

The pre-loading and pre-arrival messages are collectively referred to as the Entry Summary Declaration (ENS).

We will require the following information, so that we can ensure the pre-loading data is made available to the carrier in good time:

Shipper Name
Shipper Address
Consignee Name (including EORI number for cargo staying in Europe)
Consignee Address
Cargo Description (including 6-digit HS codes)
Total Quantity
Total Weight

When the ENS information is not provided to EU customs, shipments will be stopped and will not be processed for customs clearance, which will lead to delays and potential fines.

We are working closely with our sea, road and rail partners, test-submitting these new data sets, to ensure the smooth implementation of this new EU customs process. 

If you have any concerns or questions, regarding the ICS2 roll-out please EMAIL Andy Fitchett, Brokerage Manager.

Category: EU

Brexit | Customs | EU

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