Report on Integrated Maritime Policy 2016

August 2016Report by the Rapporteurs of the Baltic SeaParliamentary Conference (BSPC) on developments inIntegrated Maritime PolicyFinal Version5 of August 2016PrefaceThis report summarizes the developments in the Integrated Maritime Policy (IMP) field sincethe renewed appointment of MP Jochen Schulte (Mecklenburg-Vorpommern) and of MPJörgen Pettersson (Åland Islands) as BSPC Maritime Rapporteurs by the Standing Committeeat the conference in Rostock.A number of interesting conferences have taken place throughout the past year, such as theÅland Maritime Day, the European Maritime Day in Turku, or the Vasco da Gama FinalConference in Brussels. For further information on the conferences please refer to the firstpart of the report. One of the striking developments has been the great push from all levels ofgovernance in Europe to greatly invest in skills development in the Blue Economy. This canonly be seen as a positive development and should receive the full support of the Baltic SeaParliamentary Conference, also bearing in mind its Work Programme 2015-2016. For thetransformation of the Blue Economy is driven by skilled people. Industry and educationproviders must be connected to plug the skills gap and to ensure that a new generation ofmarine scientists, professionals, technicians and entrepreneurs is trained.Aside from the information on what is done to promote skills development in the BlueEconomy we have included a number of other important legislative developments at theinternational level in the second part of our report, which are going to affect our ownindustries and those of third countries operating in the Baltic Sea. Among others, HELCOMhas finally agreed on a Roadmap for a Baltic Sea NOx Emission Control Area (NECA). Inthis part of our report we also provide a brief update on shipping companies’ experiences withthe stricter Sulphur Emission Control Area (SECA) regulations, which went into effect on1 January 2015. Further, we update on a number of other legislative acts that were the subjectof previous report. Other updates concern passenger ship sewage discharges, support for“Blue Projects” in education, research and innovation, state aid rules, and the third PortPackage.We call upon stakeholders to realize that sustainability can help drive the growth of a sectorthat already represents €550bn of gross value added and provides 5 million jobs. Butpolicymakers must also push for improved ocean governance that safeguards the marineecosystem and biodiversity, while simultaneously providing legal certainty and providingmarkets for sustainable blue investments.In the third part of this report we included a conference summary by MP Jörgen Petterssonabout this year’s Shippax Conference. The article includes a detailed summary of currenttrends in shipping.Riga 28 August 2016Jochen Schulte Jörgen PetterssonMaritime Rapporteur Maritime Rapporteur2Table of contentsA – Activities of the Maritime Rapporteurs ............................................................................... 4European Maritime Day (EMD) in Turku and follow-up ...................................................... 4Vasco da Gama Final Conference in Brussels ....................................................................... 6Ferry Shipping Conference .................................................................................................... 7Åland Maritime Day in Mariehamn ....................................................................................... 8B – Legislative Developments at the EU level with regard to all BSPC members .................... 9Stricter SECA regulations as of 1 January 2015 .................................................................... 9HELCOM agrees on a Roadmap for a Baltic Sea NECA ...................................................... 9Passenger ship sewage discharges into the Baltic Sea will be banned ................................. 10Research and innovation in the Blue Economy to create jobs and growth .......................... 10Support for “Blue Projects” in education, research and innovation ..................................... 11Targeted review of the General Block Exemption Regulation: extension to ports .............. 11Port Package III .................................................................................................................... 12Safety Rules and Standards for Passenger Ships ................................................................. 12C – Shippax Conference Summary .......................................................................................... 143A – Activities of the Maritime RapporteursEuropean Maritime Day (EMD) in Turku and follow-upSince the end of the BSPC Working Group on Integrated Maritime Policy, the BSPC has beenrepresented at the European Maritime Days through its Maritime Rapporteurs. This year, MPJörgen Pettersson from the Åland Islands participated in the EMD 2016, which took place on18-19 May in Turku, Finland.All of the workshops of this year’s edition ran under the dictum to innovate, learn and adapt,driven by the need for greater sustainability in the Blue Economy.The European Commissioner for Environment, Maritime Affairs and Fisheries, Mr KarmenuVella, underlined that the drive for greater sustainability is opening up new global businessopportunities. For instance, renewable energy from the sea has a huge global potential. TheCarbon Trust – an independent expert organization dealing with carbon reduction, resourceefficiency strategies and commercializing low carbon technologies – estimated a total of€525bn cumulative market value by 2015. The growth of offshore renewable energy has faroutstripped that of more traditional maritime sectors. 90% of wind turbines are located inEuropean waters. Employment in the European offshore industry has now reached half that infishing.In order to ensure the sector’s future, the Commissioner deemed it necessary to encourageinvestors to back smart and sustainable solutions. Accordingly, Blue Growth should beencouraged more systematically than in the past. To do so, the Commissioner outlined 3 fieldsof action:Firstly, the Commission works closely with the industry, Member States and regions toproduce a strategic roadmap for the ocean energy sector by the end of 2016 as part of theOcean Energy Forum. The Commissioner explained that initially, solar and wind power hadbenefitted from electricity prices that had reflected the costs associated with their novelty.Without this support they would not have taken off. As they moved to mass production, costshad plummeted. Lessons should be drawn for tidal and wave energy.Secondly, the Commission has launched three calls over €7.5m to promote innovation andinvestment in the Blue Economy. This is in line with the BSPC’s Work Programme, whichhas identified the labor market in the Baltic Sea Region and labor mobility – among others –as key priorities of its work in 2015/2016.Specifically, the European Commission posits that the transformation of the Blue Economycan only be driven by skilled people. However, the industry repeatedly points out thatqualified professionals are in short supply. Therefore, the Commission has launched a BlueCareers initiative, aiming to connect industry and education providers, close the skills gap andtrain a new generation of marine scientists, professionals, technicians and entrepreneurs. TheBSPC will address similar challenges at its Silver Jubilee edition at the end of this month inRiga.The Commission has also launched a Blue Labs call, encouraging partnerships betweenyoung researchers and the business community, and a Blue Tech call, aiming to develop apipeline of bankable, ready-to-invest demonstration projects in order to help make the leapfrom research results to business ventures.4But skills development in the Blue Economy is also driven by the regions. Please refer to thefollowing section on the Final Conference of the Vasca da Gama project for more informationon the subject.Thirdly, investments should be encouraged by reducing the perceived risk in the BlueEconomy. Financial institutions need to look more favorably on the risk that inevitably comeswith innovation. Therefore, the Commission has launched the European Fund for StrategicInvestment (EFSI). About €315bn has already been mobilized by the EFSI and has been usedtowards large Blue Economy projects. The Commissioner cited Denmark as a best practiceexample for a country that invests in innovation. As such, the country set up a fund worth€2bn to invest in large energy projects, including offshore wind. Denmark is using the EFSIguarantee to convince private investors to contribute to this fund. In addition, the Commissionalso set up a European Investment Project Portal (EIPP), which serves as a bridge betweenEU project promoters and investors worldwide thereby catalyzing and accelerating thefruition of more EU investment opportunities. It is part of the "Investment Plan for Europe"and is one of multiple strands pursued by the Commission with the goal to revive EUinvestment activity. The minimum EIPP project size is €10mn.Lastly, the Commissioner highlighted the need of improved international ocean governance.The current framework would not ensure a level playing field, provide enough legal certaintyand safeguard marine ecosystems and biodiversity. The issue was also raised G7 EnvironmentMinisters’ Meeting on 15-16 May in Toyama, where it was included in the conclusions of thesummit.Further key messages emerging from the two intense days of debate include:- Clusters are enablers that can connect good ideas – of SMEs and others – to industrypartners and finance providers and help drive transitions to new Blue Growthactivities.- Sectors such as ocean energy provide massive opportunities for growth, jobs andglobal environmental gains; we should not be discouraged by the challenges that arestill outstanding, but should tackle them gradually and keep a long term focus.- Ocean Energy also shows how important it is to prioritize strategic investments thatprovide returns not only in economic terms but also in terms of climate andenvironmental benefits.- Access to finance continues to be a challenge. Policy makers have a hugeresponsibility to strengthen risk guarantees, cut red tape and ensure stable regulatoryenvironments.- Action at regional level has a huge role to play in boosting Blue Growth. The mostadvanced regions are systematically developing their transnational partnerships tomaximize their potential and bundle strengths. This could be further facilitatedthrough wider Blue Growth platforms that could turn the ambitions of these actors intoconcrete and joint investments.- If we are to get a return from all the investments in innovation and infrastructure,developing skills is critical. It is hard to predict what future jobs will entail, so it isimportant to educate also for the 'unknown'.- The element to emphasize when attracting capable and motivated young people tomaritime careers is not just the purely technical interest of the profession but also therole of 'steward of the oceans'.5- Blue Growth can only thrive within a strong and reliable international oceangovernance system, for which intense cooperation and stricter implementation andenforcement globally are needed.One of the most interesting topics at the Conference were the use of autonomous vessels inthe future. Some of the conclusions were that the regulators should:- Support research, technology development and standards for autonomous vessels.- Take the lead and coordinate development of a new regulations framework forautonomous vessels with the aim to make proposals to IMO.- Promote a goal/performance based regulatory framework that does not rely heavily onprescriptive requirements and legacy technologies.- Facilitate trials and piloting efforts by making exemptions from current regulationsand establish designated test areas for unmanned vessels.- Support research and standardization within cyber security, with focus on maritimecontext and applications.- Realize the importance of standards for quality assurance and to achieveinteroperability, competition and economies of scale.- Foster data governance in order to enable a fair and fertile environment for new data-driven services that will capitalize on EUs technology excellence and trigger high skilljob creation.Vasco da Gama Final Conference in BrusselsThe issue of skills development in the maritime economy was the core of the project “Vascoda Gama – Training for Greener and Safer Maritime Transport”. Jochen Schulte attended theFinal Conference of the project on 1 March in Brussels.The aim of the project was to contribute to achieving the development of high professionalskills and the development of Education and Training within the EU. In particular, it focusedon improving the skills of persons employed in European shipping with a view to addressingspecific challenges such as maritime safety and the reduction of environmental damage. Italso aimed to lay the foundations for mobility within Europe, involving education and traininginstitutions. The project was led by the Conference of Peripheral and Maritime Regions ofEurope (CPMR), an organization that brings together some 150 regional authorities.The main drivers of the project – the French region of Bretagne and Mecklenburg-Vorpommern – emphasized the importance of maritime professions at the regional level.Jochen Schulte praised the project’s character as an incubator for projects covering a varietyof topics and geographical areas, all focused on promoting mobility and the key role given toregional authorities, while at the same time developing partnerships with other professionaland academic stakeholders from the sector. Jochen Schulte underlined the activities of theBSPC in this respect, not least against the background of the current BSPC Work Programme.The Maritime Rapporteur recapitulated the lessons-learned from the project.1) The importance of exchange programs: The first Vasco da Gama Summer School was heldon 24-29 August 2015. It was organized jointly by the CPMR and Kalmar MaritimeAcademy. Participants from the Atlantic, Baltic, Black Sea and North Sea benefited frombriefings and discussion time with high-level speakers on the issues of maritime safety and6security, integration of the human element and cultural influences in these areas, and greeningof maritime transport. A series of case studies and exercises gave an operational dimension tothe training course. All parties involved had agreed that this first Summer School had been agreat success and that it is worth repeating in the future. It is the stated goal of the organizersthat the lessons learned from this first edition will help to develop the content of future Vascoda Gama Summer Schools. This important milestone should be further developed.2) The contribution to the networking of the stakeholders: For instance, cadets from theinvolved academies can participate in experimental pilot training sessions that will beorganized in 2 different maritime basins. A high-quality cross-national master program inSustainable Shipping at an advanced level has been developed, which ran from January toJune 2015, with the participation of close to 50 people: students and seafarers from Sweden,France and Germany. Various professionals from across the shipping supply chain have beenbrought together in the development of a course module. The project has thus contributed to anetwork of partners, which extends from the Black Sea over other sea basins all the way to theBaltic Sea, and which constitutes the nucleus for exchange and cooperation in this region.3) The necessity of the input from the involved regions: The regions are key actors in theimprovement of the attractiveness and internalization of maritime professions, as they areresponsible for education and training, as they are drivers of regional economies andeconomic sectors, and as they are the ones best equipped with knowledge about the local andregional situations and needs. The difficulty – and the objective of this project – lies incombining these strengths and insights in a mutually beneficial manner.Jochen Schulte concluded by urging stakeholders to continue and build upon the “Vasco daGama” label even after its formal conclusion. The project could be continued in theframework of the separate sea basins, for instance with support from Interreg. GD MAREdistinguishes its Blue Growth initiative among others based on sea basins, and the educationand training in maritime professions should be an integral part of any growth strategy. Theregions could offer their know-how to the Commission and its GDs in so far as personnel andquality needs are concerned, for instance in the areas of sea traffic or the “Blue Economy”.To do so, CPMR should mind the EU context. It must turn to respective priorities andinitiatives to complete them, to develop technical synergies with them and, to participate inthem as appropriate. Special attention should be paid to the initiatives such as the BlueCareers Initiative. The CPMR is already working on sectors such as maritime transport, portlogistics, and shipbuilding as part of discussions on the implementation of technicalpartnerships that should ensure the design and development of European cooperation projects.The regions play an equally important role in this regard. A concept catalogue should bedeveloped based on the experiences gained so far and together with the CPMR GeneralSecretariat interregional projects should be designed and implemented by the regions.Ferry Shipping ConferenceOn 13-14 April Jörgen Pettersson participated in the fourteenth edition of the Ferry ShippingConference that took place on board Silja Symphony, trafficking between Stockholm andHelsinki. Over forty different speakers shared their knowledge, experiences, and analysesduring these intense days. After the moderator Bo-Lennart Thorbjörnsson and Tallink7Group’s CEO Janek Stalmeister opened the conference by tradition; hitting the ship’s bell, thefloor and opening speech belonged to the main sponsor Anders Rundberg, CEO of Carus:“It looks brighter in many ways, but we must never be complacent. It is important to continueto work to attract new customers on board, not just those that are recurring. The UK has beensuccessful with joint ventures – such as National Ferry Fortnight, for people to choose theferries – which we should do in the Baltic Sea as well.”Bo-Lennart Thorbjörnsson went on to set the tone for the two days with the heading "Whereis the industry now?" He highlighted the fact that many of the world’s shipping companiesmade very good results last year. DFDS outperformed all time high while the other majoractors, i.e. Viking Line, Rederi Ab Eckerö and Tallink Group raised its earnings significantly:“We look positively on the future and we have strengthened our office organization to keepdeveloping our service and fleet.”Åland Maritime Day in MariehamnOn 12 May Jörgen Pettersson attended the Maritime day in Mariehamn. At the event therewere both company presentations and seminars. One of the interesting seminars addressed thequestion of how to install scrubbers and methanol installations without malfunctions. TheCEO of Godby Shipping Dan Mikkola said in his presentation that until 2014 the companyconcentrated on running its ships as efficiently as possible: “Today we are looking for goodsecond hand vessels. From 2017 and forward we will be looking at next generation ships.”Per Stefenson, Marine Standards Advisor, Stena Teknik talked about fast and smoothinstallations of scrubbers on existing ships. Everything is loaded during normal harbor timeand installations are made by a team at sea. He also talked about methanol fuel. StenaGermanica is the world’s first methanol ship. Wärtsilä has developed the technique to convertexisting engines. Methanol leads the way to the zero vision it is therefore a sustainable fuelfor global shipping.Tommy Mattila, Sales and Marketing Director, at Skangas talked about LNG as a fuel for thefuture. LNG fulfills all coming emission regulations as such without any extra systems. Thereis no oil spill risk. The price development of LNG is foreseen to be more stable than that ofoil. However the LNG supply chain is more expensive than that of oil especially in the startupphase when the volumes are small. There are currently 165 confirmed LNG projects. Hestated that:- Environmental restrictions will get stricter – natural gas /LNG is a part of the solutionfor Industry, Marine and Traffic segments.- Significant resources of gas and increased infrastructure ensure availability andcompetitiveness.- LNG will be a major fuel for shipping.8B – Legislative Developments at the EU level with regard to allBSPC membersStricter SECA regulations as of 1 January 2015One ongoing theme of our work has been the challenge of vessels being subject to stricterregulations both at global or regional level for 10 years since the creation of the first EmissionControl Area in the Baltic Sea. Since, ECAs have been enlarged to The Channel and NorthSea, as well as North America and the maximum sulphur content has been reduced graduallyfrom 4.5% to 1.5% and 1% up to this date, while the regulations set new limits in 2015 at0.1% sulphur, which presents significant challenges for the industry including oil majors,shipping lines and shippers.Already in our previous reports we informed extensively about SECA and its potentialimpact. Now that shipping companies have had some time to evaluate the situation it must beconcluded that the impact on shipping companies has not been as severe as predicted and thata modal shift from sea to land has not taken place to the degree that could be expected. Thisconclusion is based both on our talks with shipping companies throughout the past two years,as well as on statements made by shipping companies in the context of the EuropeanMaritime Day 2016 in Turku (see also Section A above).However, the reason for the good news is also due to the fact that the context in whichshipping companies operate has been more favorable than could be expected. Mostimportantly, oil prices are at a long-time low. Fuel prices went down with the global reductionof the crude oil price from close to $ 100/barrel to $ 30/barrel (Q3 2014 vs. Q1 2016).Therefore, despite of the fact than shipping companies had to retrofit ships and/or order newbuilds, the additional costs due to the stricter SECA regulations did not have to be borne bythe customers, nor did shipping routes on a larger scale have to be abandoned. However, thismay well still change, depending on the economic context.As was pointed us by us in last year’s report, we therefore continue to urge to investigate, ifand how a modal shift from sea to land has taken place since the introduction of the stricterSECA regulations on 1 January 2015. Should such a modal shift have indeed taken place itwould then be in order to evaluate how counter-measures could be initiated and how theaffected sector can be supported, bearing in mind EU state aid rules.We will continue to monitor the development and inform the BSPC accordingly.HELCOM agrees on a Roadmap for a Baltic Sea NECAOn 10 March 2016 the Annual Meeting of the Helsinki Commission (HELCOM), consistingof the Baltic coastal countries and the EU, agreed on a Roadmap, which includes acommitment to submit to IMO a proposal for a Baltic Sea NOx Emission Control Area(NECA) - according to the IMO MARPOL Convention Annex VI - in parallel with the NorthSea. According to the Roadmap it will be submitted to the IMO MEPC 70 meeting, scheduledfor next autumn.9Nitrogen Oxide (NOx) emissions from shipping is a major source of airborne deposition ofNitrogen, aggravating the serious eutrophication of the Baltic Sea. According to estimates,Baltic Sea NECA has potential to cost-efficiently and significantly - around 7 kilotons -reduce Nitrogen input to the Baltic Sea annually after a time lag needed for fleet renewal asthe regulation addresses only new ships.The initiative for a Baltic Sea NECA emerges from the HELCOM Baltic Sea Action Plan,agreed by the nine coastal countries and the EU in 2007.Beginning tomorrow the coastal countries and the HELCOM Secretariat will prepare for asubmission to the MEPC 70 Meeting, scheduled to take place in October 2016. This BalticSea NECA submission is planned to take place parallel to a similar NECA submission fromthe North Sea countries.Passenger ship sewage discharges into the Baltic Sea will be bannedIn April 2016 the International Maritime Organization (IMO) agreed that the Baltic Seaspecial area for sewage discharges from passenger ships under Annex IV or the MARPOLConvention will take effect by latest 2021 for IMO registered passenger vessels. However, incertain cases of direct passages between St. Petersburg area and the North Sea there is a two-year extension to the deadline, until 2023.The decision means that by 2021 all IMO registered passenger vessels sailing in the BalticSea, as the first region in the world, must discharge all sewage at port reception facilities, ortreat it with an on-board treatment plant certified to meet stringent special area requirements.For new ships built on or later than 2019, these requirements will apply earlier.By the IMO meeting in April, all Baltic coastal countries had sent confirmation of adequatereception facilities in Baltic ports, as a result of substantial work on port reception facilitiesfor sewage and their use in the Baltic Sea area by national administrations, ports and thepassenger ship industry (see also last year’s IMP report).The Baltic Sea parliamentarians have always supported the notion of bringing economic andecological aspects together, as much as possible. Especially for the tourism sector, the goodecological state is an indispensable pre-condition in the competition with other regions. Andfor this reason, we also have to bear in mind economic aspects when devising strategies forthe protection of the Baltic Sea. Against the background of these challenges we will continueto call for the implementation of an EU-wide concept for the set-up of port receptionfacilities.Research and innovation in the Blue Economy to create jobs and growthOn 8 September 2015 the European Parliament adopted a resolution on untapping thepotential of research and innovation in the Blue Economy to create jobs and growth. It refersto a Commission communication of 8 May 2014 entitled ‘Innovation in the Blue Economy:realizing the potential of our seas and oceans for jobs and growth’. The Commission regardsaquaculture, coastal and maritime tourism, blue biotechnology, ocean energy and deep seamining as economic sector with special economic potential. The European Parliament regards10this definition and approach as too narrow, as it does not cover all important aspects of BlueGrowth, and demands a comprehensive action plan. The EP especially considers maritimeresearch and good vocation training and education an important basis for the Blue Economy.The precautionary principle and the eco system approach should form the basis of the BlueEconomy. Regarding the financing of the Blue Economy the different EU financialinstruments should be better integrated, among others also a knowledge and informationcommunity.Support for “Blue Projects” in education, research and innovationOn 13 September 2016 the EP Intergroup ‘Seas, Rivers, Islands and Coastal Areas’ discussedprospects for Blue Growth in the Baltic Sea Region. DG MARE announced a call for bluetechnologies for the spring of 2016, which has now been launched. €2.5m shall be madeavailable for the different European sea basins. The gained insights shall form the basis for aEuropean master plan “Blue Technology” and support Blue Growth in the European seabasins.The call is part of a larger initiative that the Commission announced on 2 February 2016,which with “Blue Projects” in education, research and innovation are supposed to be funded.The call “Blue Careers in Europe” aims at contributing to fill existing skills' gaps bysupporting activities that will increase the employability of various target groups in BlueEconomy sectors (e.g. students, workers, unemployed people etc.). It is intended to contributeto training a new generation of students, scientists, professionals, technicians andentrepreneurs equipped with the appropriate skills to match the needs of the industry and toprovide people already working in the field with the new skills required.On 5 April 2016 the Commission formally launched the aforementioned calls for the BlueEconomy. With over €7.5m projects in the following areas will be supported: “Blue Jobs”(€3.45m for up to 7 projects), “Blue Labs” (€1.7m for up to 6 projects), and “Blue Technology”(€2.52m for up to 4 projects. For further information on the Blue Careers initiative, please referto the summary of Commissioner Vella’s speech in the context of the European Maritime Day2016 in Turku under Section A of this report.Targeted review of the General Block Exemption Regulation: extension to portsOn 10 February 2016 DG COMP passed a roadmap, which intends to simplify the scope ofEU state aid rules, codify the existing decision-making practice, abolish reporting obligations,and yield cost savings. To this end, the Commission intends to include ports in the generalblock exemption within the EU competition laws. The prerequisite for a correspondingchange of the general block exemption would be a sufficient case practice.According to EU competition laws Member State are obliged to have state aids approved bythe Commission in advance. Certain infrastructural investments in ports can be affected bythis. With the inclusion of ports in the general block exemption could be exempt fromnotification, given certain prerequisites. If implemented, port projects could be implementedfaster and cheaper. The Commission announced two public consultations, including theMember States. However, the roadmap did not contain details regarding concrete changes tothe general block exemption, nor regarding the concrete timing.11On 7 March 2016 DG COMP then opened a public consultation to adapt the general blockexemption Regulation. It proposes exemptions from the notification obligations for ports. Theconsultation ended on 30 May 2016. Investment aid in ports for projects up to €100m (€120mfor TEN-T ports) shall be exempt from the notification obligations. State aid should under nocircumstance exceed the funding gap of a project. Furthermore, the infrastructure has to be beavailable to all users in a non-discriminatory fashion. The following aid intensities areenvisaged:- Projects up to €20m: 100% aid intensity- Projects between €20m and €50m: 80% aid intensity- Projects between €50m and €100m (€120m for TEN-T ports): 50% aid intensity.On the basis of the results of the consultation the Commission will rewrite its proposal andlaunch a second consultation, most likely this fall, before the final EU regulation will bepassed.Port Package IIIOn 25 January 2016 the Transport Committee of the European Parliament approved the draftreport regarding the third port package. Key elements of the report include the financialtransparency in ports, as well as rules regarding education and training of port employees andthe strengthening of social dialogue (see also previous IMP reports).In the same vein as the Council, the committee significantly eased proposed rules, for instanceregarding piloting and dredging services, which were exempt. With a view to state aid law theEP asks of the Commission to clarify the notion of State aid with regard to the financing ofport infrastructures, and to include port infrastructures in the general block exemptionregulation with adequate threshold values.On 8 March 2016 the plenary of the European Parliament submitted its position regarding theproposal for a regulation of the European Parliament and of the Council establishing aframework on market access to port services and financial transparency of ports, and followedthe vote of the EP Transport Committee from January.Safety Rules and Standards for Passenger ShipsOn 6 June 2016 the Commission adopted a number of legislative proposals to simplify andimprove the common rules on safety of ships carrying passengers in EU waters. The update isa response to lessons learnt, including from accidents, and technological developments.The revision aims to simplify and streamline the existing EU passenger ship safety regulatoryframework, in order to maintain EU rules where necessary and proportionate; ensure theircorrect implementation; and eliminate potential overlap of obligations and inconsistenciesbetween related pieces of legislation.An overarching objective is to provide for a clear, simple and up-to-date legal framework thatis easier to implement, monitor and enforce, increasing thus the overall safety level.12Commission proposal amending Directive 2009/45/EC on safety rules and standards forpassenger ships – Among others, it is proposed to clarify and simplify the safety rules andstandards for passenger ships so that they are, in line with the Commission's REFIT program,easier to update, monitor and enforce. In view of increasing legal clarity and certainty, theproposal also intends to remove a number of outdated, redundant and inconsistent legalreferences.The proposal amends the corresponding definitions and requirements of Directive2009/45/EC.In addition, the proposal provides for the alignment of Directive 2009/45/EC with the changesbrought about by the Treaty of Lisbon in regard of the powers of the Commission to adoptdelegated and implementing acts.Commission proposal on a system of inspections for the safe operation of ro-ro ferry andhigh-speed passenger craft in regular service – Council Directive 1999/35/EC2 providesfor a number of types of inspection addressing particular safety characteristics of ro-ro ferriesand high-speed craft (HSC). These address specific risks related to undivided vehicle decksgiving rise to stability and fire vulnerabilities, very intense activity, the risks of cargo shift,water-tightness issues, hoistable ramps and wear & tear.The requirements of this Directive no longer match the realities and will therefore have to beadopted.It is therefore proposed to update, clarify and simplify the existing survey requirements forroro ferries and HSC while maintaining the same level of safety and key deliverymechanisms. This is in line with the Commission's REFIT program and aims to furtherrationalize the inspection effort of national administrations and to maximize the time in whichthe ship can be commercially exploited.In this vein, in order to ensure clarity and coherence, the proposal repeals the currentDirective and replaces it with a new Directive. It also includes ancillary changes to Directive2009/16/EC.13C – Shippax Conference Summary“Grounds for optimism” (by Jörgen Pettersson) published in Shippax CFI 6/2016There is a vibrant future in passenger and ro-ro traffic.It’s not a coincidence that 404 delegates and thirty exhibitors participated in the fourteenthedition of the Ferry Shipping Conference that took place on board Silja Symphony, traffickingbetween Stockholm and Helsinki on 13-14 April 2016. This kind of rallying is a new recordand leaves great promises for the future.Over forty different speakers shared their knowledge, experiences, and analyses during theseintense days. After the moderator Bo-Lennart Thorbjörnsson and Tallink Group’s CEO JanekStalmeister opened the conference by tradition; hitting the ship’s bell, the floor and openingspeech belonged to the main sponsor Anders Rundberg, CEO of Carus:– It looks brighter in many ways, but we must never be complacent. It is important tocontinue to work to attract new customers on board, not just those that are recurring. The UKhas been successful with joint ventures – such as National Ferry Fortnight, for people tochoose the ferries – which we should do in the Baltic Sea as well.Rundberg went on to highlight the Åland Islands where the IT company, which doubled itsbusiness last year, has its headquarters:– We have since 1850 developed shipping and made Åland to a wellknown maritime hub.Therefore, Carus could be formed in 1999. We live and breathe ferries, both in passenger andcargo operations, and today we have a diversified and global customer base.Bo-Lennart Thorbjörnsson went on to set the tone for the two days with the heading "Whereis the industry now?" He highlighted the fact that many of the world’s shipping companiesmade very good results last year. DFDS outperformed all time high while the other majoractors ie Viking Line, Rederi Ab Eckerö and Tallink Group raised its earnings significantly.– The vast majority of shipping companies showed noticeable improvement, even in theMediterranean, and the battle of the channel between P&O and DFDS is over, he said.There are several reasons but the most obvious one is that there are stronger markets withmore purchasing power, low interest rates, trimmed organizations and a low bunker price.– It is thus, against this background question itself, you ask yourself where all shipbuildingorders are. Are all shipyards full? Are shipping companies unsure of what type of ship suitsthe future best? Are the fuel costs of the future what baffles shipping companies or have theylost the internal know-how required for new construction projects?The rhetorical questions will get their answers eventually, and Bo-Lennart Thorbjörnssonadded that there are also exceptions:– Attica, Stena, Destination Gotland and DFDS are some examples of ship owners who hassettled the matter and signed new shipbuilding contracts.14After prosperous years there are years of setbacks, but Thorbjörnsson do not think it willhappen in the next two three years. However, he does not believe the expected industryconsolidation takes place in the short term.– We may even get to see new shipping companies appear with older tonnage and try to enterthe markets, maybe we can even get to see high-speed ferries make a comeback.One of the reasons that ferry traffic has a brighter future are the travellers wish to be able tomove from door to door.– This can only happen with the help of cars and such cannot be taken on a plane. Peoplewant to move around themselves on their vacation and drive to where they want, when theywant, he said.On the cargo side Bo-Lennart Thorbjörnsson noted that growth continues to be stable with theadded plus for Poland and the UK, where the quantity of goods has grown considerably. Aremaining challenge instead is a lack of suitable second-hand tonnage.– It has become a seller’s market, which is a huge difference compared to two years ago.To build new is far from uninteresting but the wait is long because the ship yards already havetheir work sheets fully booked. One solution that more people choose to do is to build inChina. Both Stena and Destination Gotland used this option.– If you want a new passenger ferry you must be prepared to wait five or six years of delivery,he said.A solution, against this background, is that more and more ship owners are investing more onrenovation and renewal of aging tonnage. There is also a clear trend where the onboardexperiences of the passengers are highlighted more and more. The digitalization is still in itsinfancy and the future will be crucial when it comes to attracting passengers. Shippingcompanies needs to be on their toes ahead of the trend.In summary:– There are many good reasons for optimism in the industry!"Sure there is money to make on shipping"Even directors of shipping companies are increasingly positive about shipping and itspotential.– Sure you can make money in the future, says Tallinn Group’s CEO Janek Stalmeister.But then you have to be attentive to travellers’ wishes and requirements.The first program item was a panel with some of the industry’s most influential leaders. JanekStalmeister (CEO of Tallink Group), Spiros Paschalis (CEO of Attica Group), Mr Grimaldi(Deputy Managing Director of the Grimaldi Group), Niclas Mårtensson (Deputy CEO forStena Group) and Jan Hanes (CEO of Viking Line) began with a brief analysis.15Stalmeister:– There are still lots of opportunities to make money in shipping. We see, for example, moretravellers from Asia and Latin America that discovers the Baltic Sea. New times require newconcepts on board. It is important to keep in constant contact with customers and ensure thatwe are constantly analysing their needs. Shopping behaviour has changed and the passengershave different needs than before. On the risk side, we have previous competition from low-cost airlines but also the thoughts and plans of Hyperloop, which challenges the entireindustry as well as the larger geopolitical uncertainty.Paschalis:– Tomorrows travellers have different expectations about us than what we are accustomed to.We must be able to show social responsibility and greater transparency in what we do. It willfocus on the Global Distribution System where a call will arrange everything for thecustomer. Passengers require internet access on board and constant entertainment andpersonal service. We must also remember that the low price of fuel will not last forever, so wecannot relax when it comes to continuing streamline operations.Grimaldi:- I want to thank you for a fantastic event. Shippax and Ferry Shipping Conference is animportant gathering for the entire industry, even if we are at an upswing right now, the futureis always uncertain. The European shipping industry has environmental, political and strategicchallenges to overcome. It may for example include terrorist threats and refugee crises thataffect us all. With a close call we’ve managed to escape the new SECA regulations due to thefalling oil price but it has also enabled us, for example in the Mediterranean we see old ships,forty years of age, and more, only picking the cherries out of the big cake. It is not good foranyone. We still have twenty-five ships today and are optimistic about our future.Mårtensson:– When it comes to safety, we must never forget to practice and practice and yet againpractice. Just by doing that and always following the rules, we avoid new ill-conceived laws.We shall also be proactive in the implementation of new Directives. The next ballast rules arein themselves good for the environment but have negative consequences. Our ships travelingbetween Liverpool and Belfast (nationally) are not affected by the rules while runningbetween Liverpool and Dublin (international) must follow them. Although the traffic goingover the same sea!Hanses:– Ballast Convention is a distraction right now as well as the weak economy in Finland and inRussia. We are also a constant topic of discussion within the Finnish government about stateaid which is challenged at every new forming of Government. To handle the customers’requirements when it comes to on board experiences, and because some of our ships aregetting older, we are also actively working around the possibility of ordering new built ships.I think it will be a reality within five or ten years.The panel discussion revolved around the many common challenges and opportunities of theindustry.16– Eventually, it is possible to start traffic between the US and Cuba. When that happens, itwill be extremely interesting for the entire industry, said Guido Grimaldi.– If Britain chooses to leave the EU after the referendum on June 23 the only advantage wecan resume is the duty-free sales on board! I hope that this does not happen. There is a clearadvantage in many other ways than this that the EU holds together, said Niclas Mårtensson.– If we are about to order new ships? Well, Viking Line, we are a bit old-fashioned when itcomes to the balance sheets. But we are investing heavily in the renovation of the existingvessels. I though believe we will place a new building order within the next five ten years,said Jan Hanses.– It’s all about balance when to buy new ships. The old vessels are the ones we can makemoney off, added Mårtensson.The issue of joint IT solutions dedicated the interest of the panel. UBER driving taxis withouttheir own cars. Airbnb is a world leader in overnight stays, but does not own hotels and so on.Is it also time for the ferry business to seek similar partnerships? The question is not simple.– We have invested millions in our own IT-systems. That is not something we will throwaway. Our customers are mostly local, and buy our brand. However, when it comes, forexample, Asian clients who do not know our circumstances, it could be an idea, thought JanekStalmeister.– Internet reservations are clearly increasing, but the dynamics of the system is still missing.In the future I think we need to find global systems for ferry journeys the same way as, forexample, made in air transport, said Guido Grimaldi.– When a system like UBER and Airbnb reaches shipping industry it is clearly a GameChanger, stressed Niclas Mårtensson.The moderator Bo-Lennart Thorbjörnsson addressed a direct question on how shippingcompanies are looking to hedge fuel now that the price is affordable. There was no consensus.– Yes, we have hedged the bunker in a conservative manner. Not as a financial instrument,but bought in advance. So far it hasn’t been very successful, said Jan Hanses.– Yes, we have hedged but if it’s good or not, we will know only later, said NiclasMårtensson.– No, I know that some see it as a part of business but we don’t. Everything is based still onpure speculation. That we are not well served by, said Guido Grimaldi.– To some extent, about twenty percent, said Spiros Paschalis.– We have locked a third of our purchases until the end of this year, said Janek Stalmeister.17Europe is moving towards better timesFrom the financial world came Denise Baum working at KfW IPEX-Bank GmbH inGermany. She invited a European outlook that looked mostly decent but not lackingchallenges.– The refugee crisis, market volatility and the new Cold War creates ANGST (Germanexpression). And as if that wouldn’t be enough put the threat of Brexit into the picture. Itwould be bad for Britain, Europe and the entire Western world, she said.However, economic indicators are pointing upward for most European countries. There’s atwo percent GDP growth and declining numbers of unemployment rates, partly thanks to thestructural reforms implemented in some of the earlier countries in crisis.– It is far from really good but it’s for the better. Increasingly private purchasing powershould lead to greater investment and more consumption, she summed up.The countries which are the worst affected are Greece, Spain, Portugal and Italy. They haveworked hard on their government finances and are now finally on the right track.Opportunities in CubaBruce Nierenberg came from the United Caribbean Lines and delivered a speech filled withhope in regard with what happens the day that the traffic between the US and Cuba andMexico opens. Rush to the ports are to expect for a variety of reasons. The US is the world’slargest nation in terms of consumption, and Mexico is its second largest trading partner. Inaddition, the Caribbean is a continent characterized by long-term political stability.It is an understatement to call this an opportunity for it is much more than that. Those who arefirst on the scene have the advantage to reach a market of historic proportions. Cuba is theCaribbean’s strongest economy and air travel is expensive.– Travelling there by sea is guaranteed to become as much as fifty percent cheaper than flyingand it will take a lot of capacity when Cuba will be rebuilt, said Bruce Nierenberg.Tourism in the Caribbean is in constant growth. Last year, the number of incoming travellersto Cuba increased by 17 percent, half of all from the United States. Cuba today has elevenmillion inhabitants, and before the revolution in 1959, Cuba was number one for Americantourists. In addition, there are two million Cuban exiles in the United States that can lookforward to easier travel between the countries.US travel restrictions to Cuba are to disappear before 2017 is over. This is not wishfulthinking, but probably crass reality; there are plenty of American companies that want to startinvesting in Cuba. The conditions are good. Cuba has five deep-sea ports and infrastructurecan handle the first ferries to arrive.18Reach customers with WiFiTo deliver what customers want in the future WiFi and smart mobile phones are necessarytools. Jan Erik Norli from Telenor Maritime lined up arguments and evidence on howpassengers can be reached.– It’s all about keeping track of where they are on board. When they pass the store, we canreach them with a direct message, he gave as one example.Today, almost nothing is technically impossible that are commercially desirable. Thebackground is that people love deals and are moreover happy to exploit them.Major investment for StockholmPorts of Stockholm is investing 800-900 million euros in the three major port projects thatwill take the company and Sweden to the future. It is largely to upgrade three different portsbelonging to the company; Värtahamnen in Stockholm, where a state of the art terminal arebeing completed right now, Kapellskär expanded considerably and Nynäshamn where acompletely new cargo port is built.Deputy CEO Henrik Widerståhl for the Ports of Stockholm gazes with great confidence intothe future of the ports of Stockholm, which is currently the fourth largest cargo port inSweden. On the passenger side, Stockholm is by far the largest with 250 cruise ships visitingevery year. This works strongly in Stockholm’s favour. It generates about EUR 550 millionevery year and create 4,100 jobs. The guests of the hotels in Stockholm are representing asmuch as 1,000 overnight stays or seven fully booked hotels every day. According to surveys,95 percent of the visitors are satisfied with their visit to Stockholm, and three out of four isplanning to return within five years. Yet it’s the same with the ports like much else, they’llhave to be there for a long time to come.– Our plan right now focuses on what should be done about forty to fifty years from now,says Henrik Widerståhl.This business is still not completely without risks. Stockholm is growing with 35,000inhabitants per year, and the city is one of Europe’s strongest growth areas but the neighbourHelsinki are struggling harder.– And the Russian market is unpredictable.Electricity from land connectionsAs part of the work for a more sustainable society and to save on bunker it is more and morecommon that shipping companies are looking for shore connections during their stays inports. Ingemar Gustavsson represents the company Process Control Electric AB which arebehind eight land sites in Sweden and Norway and is the European leader in its segment. Thelargest sites are in Ystad and has an output of 10 MW, which corresponds to about 1,000electrically heated homes on a normal winter day.– And also produce less emissions, less noise and lower costs, says Gustavsson.19The payback period on investment is of course difficult to calculate given the variations in oilprice, but the savings are substantial and a facility that can fit in a twenty-foot container costsapproximately 500,000 euros.– No traffic interruptions are necessary. Installation takes place during travelling.Finnlines’ view of the futureGrimaldi owned Finnlines is one of Europe’s largest shipping lines and closely follows theglobal trends in trade and economic cycles, something that has never been easy. Marketingand sales manager Staffan Herlin highlights the slow recovery following the economic crisisin Europe and its effects on exports and imports.– We see infrastructure changes that alter the balance of traffic. In Finland, we are back on the2009 numbers and have more imports than exports. We’ve gained back only a third of whatwe lost then. In Sweden and Germany it is very different, says Herlin.It addition, there’s the sanctions against Russia, which are also hard on the traffic and theSECA regulations that could have been devastating.– Fortunately the decline in oil price played a positive role and saved us.Even the cargo routes are changing. More and more goods are shipped on wheels of ViaBaltica which Finnlines can sense. The competition is, like always, about price.– SECA regulations caused more shipments to be moved up on land where there are cheapdrivers, cheap fuel and cheap trucks. Had not the price of shipping fuel dropped so much wehad suffered an enormous carbon footprint as a result of the traffic on the roads.This will happen in 2025In the passenger sector it is important to know your travellers. Not just as they are today, butalso how they will behave in the morning and ten years down the road. Ferry investments areextremely long term deals so it’s important to bet right from the start. Chief CommercialOfficer Janette Bell delivered a future reconnaissance based on her current role and herbackground from Tesco and Procter & Gamble, two giant chains that constantly analyses itscustomers.The trends are, according to Bell, clear. It is about "wanting everything and immediately",convenience and immediate delivery, clicks versus bricks, the new green reality and digitalconnectivity.– Growth continues but the costs are being pushed down. Expectations for Just In Time (JIT)will be higher and travellers requiring more sustainability, says Janette Bell, whoserecommendation was clear:– It is time for collaboration and partnership.20"Too many dead corners "Dr. Bruce Peter works every day at the Glasgow School of Art but is also a true shipenthusiast. He has just recently, after six years of work, put the finishing touches on DFDSlarge 150-year history book given out this year. It is a magnificent work of 500 pages of texton the shipping company which has grown along with Denmark.Dr. Peter is not completely satisfied with what he sees on board the ferries of today:– There are too many dead corners. Some places look like the ones where dogs lies down todie... We should take lessons from the Apple Store, where every place breathes content.Should we manage to attract young people on board we are required to create moreatmosphere and better decorations, he says.There are exceptions and Bruce Peter mentions Silja Symphony and Silja Serenade as goodones with their large arcades amidships.– It creates a tremendous sense of generosity and it’s hard to find a place that doesn’t feelpleasant.Dr. Peter calls for more spas, health and sports. Tomorrow’s customer engages less time indrinking contests and more to the wines.– It is not enough to open up more games corners like many today seem to believe that theyoung people want.Container giants for the greatToday’s container giants have become too large. It is Henrik Tidblads conclusion ascommercial manager in DFDS.– The infrastructure on land is not enough. Stocks and parking garages are too small for theloads to be handled rationally. The roads to and from the ports are inadequate, he says.Tidblad also lifts the international refugee crisis as one of the industry’s challenges as well asgeopolitical developments in Europe and the world. All this uncertainty is also creating newopportunities for those who embrace the digital opportunities in new technology.– Remote-controlled vessels, optimized propulsion, more automation, cargo handling and soon.Upgrade vessels oftenCEO Anders Ørgård Hansen from OSK-ShipTech A/S made a reconnaissance into the futurearound RoPax traffic. As key factors, he cites the ability to deal with the new mobiletechnology, Facebook, social media and their relationship to the purchasing behaviour ofcustomers. He also calls for faster decisions when it comes to constantly upgrading the designboard.21– Change the style more often and adapt the design to the customers. It increases sales,recommends Anders Hansen Ørgård.It is also very important that the shipping company’s management and board have insight andinterest in digital opportunities.Shipping is changing and it’s important to be part of and embrace the new digitalopportunities.Duty free trade continues to increaseSince the 1980s, the world’s duty-free trade, with a few exceptions due to the crisis, hasincreased. The trade is growing by seven percent (roughly) annually and the sales are thosearound 65 billion dollars. It is even more than the growth of the number of travellers in theworld (+ 6%). Still, there is room for even greater growth, according to Frederick Lindh, whoruns Generation Research and has great insight on the statistics and the future.– Today only 55 million Chinese have a passport. There are 1.4 billion... When all starttravelling you can just imagine the potential, he says.According to the forecasts duty-free trade should reach USD 125 billion by the year of 2025.The largest product segments are cosmetics, followed by wines and spirits and tobacco.Together they account for nearly 60 percent of sales.This kind of duty-free sales are mostly happening at airports. Only 3.5 percent of the world’sduty free sales are done aboard the ferries, according to Fredrik Lindh. The Nordic countrieshowever are different. There ferries account for about 40 percent of all duty free sales. Thetrends in the Nordic countries are similar to those in the world. All travellers plan theirpurchases in advance and are also willing to pamper themselves.– That fact requires communication before they come on board. When that happens they havealready decided.Although the price of the products obviously play the role, and this is where the smart phonescome into the picture. Twelve percent of the passengers compare prices directly in theirhandsets.– The shopping is clearly a part of the travel experience.Understanding digital marketing?The question about the shipping companies real approach to digital marketing is rhetoricallyasked by John Crummie as a consultant in the industry. He answers himself:– It could be much better. 48 percent of the travel industry describes itself as "fast followers"when it comes to digital technology. It takes advantage of the mainstream trends to avoidrisks. That’s why it can sometimes move a little too slowly.80 percent of European passengers make their travel bookings today directly on the Internet.89 percent of adults have a cell phone and 66 percent of those are smartphones. The digital22trend is unstoppable and therefore with the Internet of Things in the future there will be manymore opportunities. Among those who are traveling, it is even clearer. Nine out of ten carry asmartphone.– Is there sufficient digital capacity in the boardroom? It is an important issue for the future,says John Crummie.Think about search enginesVictor Velton works on Versonix and states that Search Engine Marketing is essential forsuccess.– A Majority of people are using search engines to make purchasing decisions’. Companiessuch as Google understands this and therefore make it more difficult and costly to reachcustomers.– It is important to avoid digital fluff, it should be easy and fast.New companies coming upFrom IESE Business School came Koert Grever to inspire a new vision of the world. Hebrought up some examples of companies that in a short time changed the whole industry.UBER is the world’s biggest taxi company but does not own a single car. Facebook is theworld’s largest media company, but produces no content. Alibaba is the world’s largestretailer, but do not have a warehouse. Airbnb is the world’s largest accommodation providerbut does not own any real estate.When this happens in the shipping industry all that is taken for granted today changes.Therefore, it is important to constantly monitor developments and act quickly.– A common rule is to overestimate what you have time to do within a year whileunderestimating what you can do in five years, says Koert Grever.Lobbyist top tipsMagnus Ehrenberg is from Sweden, he is based in Germany and belongs to Shippax mostprolific contributors. It’s not that strange. Lobbying requires contacts and lots of friends. Hiscompany Ehrenberg Communications is working with both governments, companies, andeverything in between. His message is clear. Keep constant contact with politicians if youwant them to listen to your arguments.What is a lobbyist? The lobbyist is an influencer, trying to affect decisions that are favourableto their clients. Lobbyists can be individual citizens, organized interests groups or businesses.Does lobbying work?, Magnus Ehrenberg asked and gives the answer by quoting Ann-Therese Enarsson who ran the campaign to ban smoking in bars and restaurants in Sweden in2004:23”Before I started, I imagined bought people who ran in the corridors of Brussels. But the moreI think about it, I realize that it is about pursuing an issue over a long period of time. The factis, that a lobbyist can just be a committed enthusiast. It’s exciting when you discover thatindividual people can actually make a difference.”Magnus Ehrenberg finally offers some things to consider when it comes to influencing:- Focus on few and specific questions.- Select a spokesperson.- Find a strategic partner to raise your questions together.- Be open and honest.- Combine with efforts on social media.- Find political ambassadors.- Reach out before any problems occur.24