The EMMA expert article calls for rethinking and redoing in order to introduce a fourth means of transport in Sweden.
Sweden has an IWW legislation, yes, but do we have any registered IWW ships, NO!
This April we have seen 40 months pass since the date when Sweden finally had its IWW legislation in place – which happened on December 16th, 2014.
Already a few months earlier, when the legislation was made public by the Swedish Transport Agency (STA), it was met with strong doubt by the shipping community and most other concerned parties as to its functionality. Still, at that stage, there was probably few that could even have guessed that the number of ships registered as IWW ships in Sweden would stay flat for well over three years – i.e., at zero.
The background to the present situation
The background to this situation ought, probably, to include more factors than what will be mentioned here in a short summary. The description takes its point of departure in the early 1990’s, in the years when Sweden started to negotiate its conditions for a coming EU-membership. Geographically and topologically Sweden has no direct connection to the large and intensively used IWW systems in Northern and Central Europe. Any ship that wants to cross from these systems to Sweden on its own needs to be towed or to have a double-registration, IWW and SOLAS, to be allowed to cross. The solution on the Swedish side became a pragmatic one – the IWW chapter was dropped and the two big lakes, Lake Vänern and Lake Mälaren were considered as SOLAS areas. The lakes were treated as SOLAS areas already, and therefore did not need any new aids to navigation. The lakes were not seen as inland waters, despite the fact that both could only be accessed through locks. However, as time went by, volumes shipped from the lake areas continued to decline and more so the number of ships’ passages - although much due to the fact that each ship’s carrying capacity increased, despite the un-changed locks.
With practically only export and import cargos being handled in the ports located in the lakes, and no domestic cargo, the idea to make better use of existing waterways gained increasing support. A support that was largely being built through initial campaigning by the Maritime Forum and its members, and with support, first of all, from the communities bordering the lakes, further supported by the fact that it is the means of transport with the lowest emissions per ton/km of all means of transport. Slowly, the pressure mounted, and the Ministry of Infrastructure called in the former Chairman of IMO Council, Johan Franson, to lead a public investigation: An investigation that should look into what formal changes were needed in the Swedish legislation to introduce a fourth, new, means of transport in Sweden. The instructions also included an estimate of the possible traffic volumes and what effects this change could have. However, the 350 pages that were presented in 2011, focused nearly exclusively on the legislative changes necessary and left out practically all commercial aspects. The work volume needed to change the legislative text only was estimated to cover over ten man-years.
With no practical experience of the capacity of IWW and the competitive aspects related to IWW, the new legislation, worked out by the Swedish Transport Agency in 2013 – 2014, took its point of departure in SOLAS shipping. In addition, it became largely uniquely Swedish, i.e. with a considerable number of exceptions from what had over hundreds of years developed, based on practical experience on European rivers. This became a major problem. As a result, it proved impossible to just bring in second-hand tonnage from Europe that some possible start-up companies had planned. That was because the standard of these ships now proved too low for the new Swedish legislation. Especially when it comes to two aspects this is perfectly true, as there is more winter ice on Swedish lakes but also larger surfaces of open water. Especially so on Lake Vänern, which resulted in initially misguided measurements and discussions about wave heights. Ice and wave heights were two factors that came to be much discussed and that further contributed to the insecurity when the legislation was presented. Many had also expected that the water areas to be classified as IWW would cover much larger areas than just the two major lakes and the Göta River between Gothenburg and Lake Vänern.
In addition, Sweden is one of the very few countries that have applied fairway dues for calling ships, with fees dependent on the size of the ship and the weight of the cargo carried. To complicate things further, regulations demand the use of pilots on board all ships with a length above 70 meters, which comes at a cost that ruins all ordinary business plans. Two examples of where the introduced legislation brand IWT as another form of shipping and not a means of transport in its own right, but obviously, not fully understanding that IWT is a competitor to trucking – a competitor that sees no fairway dues, no cargo dues and no needs for pilots on board of larger trucks.
In parallel to the work with preparing for a new IWW legislation, the government conducted a consultative process to work out a Swedish Maritime Strategy. With increasing problems with lagging maintenance and congestion on both roads and railways, the use of readily available waterway capacity should be promoted. With a mounting debate about environmental considerations the fact that waterways are highly energy efficient rendered further support to these ideas. Despite strong verbal political support and repeated mentioning in the strategy as well as elsewhere of the need to offload road and rail, no noticeable change took place. Instead, the road and rail congestion appeared to increase further. With the purpose of investigating in more detail the potential of making better use of coastal and IWW-shipping and reducing trucks and trains volumes, a new state investigation was initiated - this time to be conducted by the Swedish Maritime Administration and to be presented in late December 2016. Again, it was concluded that there is potential to attract cargo transported on road or rail but the volumes were said to be limited. It was also stated that the largest potential was found to be for coastal and short sea shipping, but when neighbouring countries could be included. The lack of established IWW connections to showcase the advantages of IWT as well as the indicated high costs due to handling in ports, need for pilots and fairway dues, make IWT unable to become a real competitor.
During 2017, the Swedish Maritime Forum conducted the first larger interview study that evaluated the attitude of major cargo owners towards the possibility to use IWW and coastal shipping. Generally, cargo owners see potential in using IWW and other shipping alternatives - especially from an environmental point of view. However, it would require access to more small-scale loading / unloading quays, preferably in central locations, and if possible, with access to railway tracks. Changes in the logistics concepts is required, and several see larger shipment sizes as problematic, although it is generally considered as an advantage of shipping. Not to be forgotten is the fact that some larger international companies already use IWW in other European countries, and if it had been feasible, say that they would have introduced the same system in Sweden.
The position of the Government
From the governmental side, several processes and initiatives appear to be supportive to an increased use of more energy efficient means of transport. Energy efficiency, and as a result, less emissions per ton-km, remains a strong argument in favour of all forms of transport on water. Since the signing of the Paris Declaration in 2015, where all the EMMA partner countries are among the signatories, the importance of keeping track of emission factors have increased further. The stance of the Swedish Government is further complicated by the fact that the official intention is to transform Sweden into the first fossil free welfare society. To make this possible, a radical transformation of the transport sector looks inevitable. That is while facing a situation where the transport volume is expected to increase by some 50% until 2030 and Government plan prescribes that emissions from the sector should be reduced by 70% by 2030.
Over all, the costs for truck transport has, relatively, not increased as much as costs for shipping and rail over the last years in Sweden. As a result, the modes of transport that have the least negative consequences for the environment become more expensive, while the most negative has become less expensive.
A striking Swedish example are the increased fairway dues of an estimated SEK 100 million per year from 2018 - necessary to keep the budget of the Maritime Administration in balance at the same time as more cargo should leave the road and railways and use ships. In parallel, one of the initiatives taken in the 2018 state budget was to set aside an Eco-Bonus of SEK 50 million per year over three years in support for shipping companies that upgrade or start a new a service i.e. lines that ship cargo along the coast to new destinations and reduce traffic pressure on road and rail. After a maximum of three years the operation should be established and self-sustained, as no more support will be given. For a shipping line that wants to use the Eco-Bonus, and intends to make several calls along the coast, the need to pay fairway due for each call most often erases all possible economic sense in such a business model.
For a potential start-up with IWW on its mind, the abolishing of cargo dues between ports on the Swedish West Coast and ports in Lake Vänern, which is another part of the reform initiative, it will most likely collapse any such business idea. The list of examples could be prolonged, but the view from Swedish authorities to compare IWW to standard oversea shipping needs to change. Among those that have considered taking up IWW, the lack of a focal-point, in one or the other ministry or administrations, assigned the duty to guide IWW initiatives past administrative hurdles, has made start-up give up.
Any cargo volumes that could be transported by IWW ships in Sweden will always lead to cargo avoiding road and rail – i.e. freeing capacity and clearly reducing air emissions. It increasingly looks like such a transfer will not happen if e.g. the demand for full fairway dues and pilot regulations will remain in place. That is without further discussing the need for pilots onboard (necessary until the mariners onboard have obtained the expensive permission to navigate in the local area).
Are there any solutions?
The regulations should secure that only ships of good quality are being used on Swedish waters. At the same time regulations should remain as streamlined as possible to the European regulations. If not, there can be no exchange of tonnage and few foreign operators, bringing the necessary experience, will risk entering. As IWW ships always stay close to shore on inland waters, ships can be constructed lighter and sail with a reduced crew - a crew that with modern route exchange systems can combine both the function of being assisted (if so needed) and remain under constant surveillance from shore-based centres to ensure safe navigation. The safety records from European IWW shipping is impressive. When stating this, it should be remembered that some 35% of transport work in the Netherlands is done on IWW, carrying a yearly volume more than twice the turnover in all Swedish ports combined. What should be suitable requirements when it comes to ice strength and wave heights is starting to become better known. Reasonable regulations could well be worked out during 2018.
From a political point of view, the Swedish state has nothing to lose by not requesting fairway dues from IWW ships. That is because with dues, there will probably never be any IWW-ships sailing in Sweden, and the contribution from the dues will remain non-existent. Instead, it can be expected that every tonne transported on water will offload roads and rails in Sweden, with all the advantages in the form of reduced congestion and increased road safety that this will bring.
It remains important to remember that IWW shipping is not a competitor to SOLAS ships and international shipping. IWW competes with road and rail for domestic cargo, and most obviously for different low value cargos shipped in larger quantities, although many other categories like containers are also carried.
Sweden has had its IWW legislation in place over three years now, but still the authorities have not seen one single application from an owner to use an IWW classified ship in Sweden - a clear sign of the Herculean assignment faced when trying to enter into the Swedish market under the current market conditions. That is because this is a market where so many of the basic indicators, controlled from authorities and indirectly the political side, contradict with what could have supported the introduction of a fourth means of transport in Sweden.
Why do we have a legislation in place since years, but no ships are sailing? If anything, it indicates that it is time to rethink, redo, and do right - politically, environmentally as well as technically - when it comes to the introduction of IWT in Sweden.
The article is written by the Swedish EMMA partners.
Per-Erik Holmberg/ EMMA Country coordinator in Sweden
RISE Research Institutes of Sweden AB
Tel: +46 70 266 58 51