Europe’s freight bills are set to rise as the impact of EU ETS kicks in. The rise in the movement of younger vessels in Europe in 2024 authenticates the preference for more efficient vessels in the region to reduce emissions and reduce ETS-related costs.
EU’s ‘Fit for 55’ package and EU MRV regulation
The cap-and-trade system of emission allowances, which will require shipowners to purchase European Union Allowances (EUAs) equivalent to the CO2 emitted from the vessel during the voyages, came into force on 1 January 2024.
Almost 30% of the vessels trading in Europe are dry bulk carriers, according to the EU MRV data (2023), comprising the largest proportion of vessels that are vulnerable to the impact of the decarbonisation regulations. Hence, the criticality for dry bulk shipping.
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Europe’s freight bills to go up as younger fleet trades in the region
Europe’s freight bills are set to rise as the impact of EU ETS kicks in. The rise in the movement of younger vessels in Europe in 2024 authenticates the preference for more efficient vessels in the region to reduce emissions and reduce ETS-related costs.
EU’s ‘Fit for 55’ package and EU MRV regulation
The cap-and-trade system of emission allowances, which will require shipowners to purchase European Union Allowances (EUAs) equivalent to the CO2 emitted from the vessel during the voyages, came into force on 1 January 2024. Almost 30% of the vessels trading in Europe are dry bulk carriers, according to the EU MRV data (2023), comprising the largest proportion of vessels that are vulnerable to the impact of the decarbonisation regulations. Hence, the criticality for dry bulk shipping.
Figure 1: Share of vessels trading in Europe, 2023
Source: EU MRV data 2023
In tandem with the decline in the total number of vessels calling at EU ports in 2023 compared to 2022, the dry bulk vessels calling EU ports reduced from 4,248 in 2022 to 3,211 in 2023, registering the highest decrease of 24% among all major sectors. The CO2 emissions per dwt reduced 6% in 2023 compared to 2022.
Of the fleet of dry bulk vessels operating in Europe, three-quarters belong to the traditional Supramax, Ultramax, Kamsarmax, and mid-size as well as large Handysize vessel categories. This composition has not changed substantially YoY, with these segments being the top five categories in 2022 and 2023, as substantial commodities such as coal, grain and minor bulk are traded intra-Europe in these segments.
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