ECSA calls for well-balanced COVID-19 recovery package to aid shipping

European shipowners represented by ECSA have called for a well balanced recovery package that will ensure a sustainable recovery of European shipping.

Following the special European Council meeting of 17-21 July, EU leaders agreed on a €750 billion recovery fund to help the EU tackle the crisis caused by the COVID-19 pandemic. The agreement will now go through scrutiny by the European Parliament but at its first hurdle, MEPs voted in favour of a resolution that threatens to withhold their backing for the deal. The resolution states that MEPs “do not accept” the terms of the EU’s €1.07tn draft budget that was drawn up after four days of negotiations between members of the bloc’s leaders this week. The bloc’s budget is intertwined with a pandemic recovery package that will empower Brussels to borrow €750bn on the capital markets and hand it out in the form of loans and grants to stricken economies. The parliament will use the vote as a mandate in negotiations to try and get improvements to the deal.

Following announcement of the aid package, ECSA published its priorities for a recovery plan for the EU shipping industry and its second survey report of the impact of the COVID-19 crisis on the European shipping industry.

“ECSA finds it is essential that a well-balanced recovery package is agreed upon, in order to ensure a sustainable recovery of the European shipping industry and safeguarding its strategic importance to Europe. ECSA’s proposal for a recovery package consists of short-term measures aimed at the continuity of hard hit segments of the EU shipping industry and medium- and long-term measures supporting the decarbonisation and greening of the EU shipping industry,” said Martin Dorsman, ECSA’s Secretary General.

Since the onset of the COVID-19 pandemic, the shipping industry was faced with massive negative demand shocks, supply chain disruptions, a steep decrease in foreign and domestic trade, and overall reduced mobility. These effects are not only short-term, but also longer term – some of which will only be experienced after a time lag.

“As a strategic asset, European shipping enables the EU to safeguard its geopolitical independence and increase its economic and industrial resilience as well as sovereignty. To be able to continue and step up that role, ECSA expresses some of its main expectations, concerns and opportunities in this document,” continued Dorsman.

Specifically, the industry sees a clear need to separate between measures addressing short-term goals on the one hand, and measures addressing medium- and long-term goals on the other. Also, measures aiming at medium- and long-term goals, such as decarbonisation, have to be implemented quickly to support the industry to reach the defined ambitious climate targets.

ECSA’s input and priorities document also expresses the industry’s deep concerns about the contradictions of the extension of the Emissions Trading System to the maritime sector as an identified possibility of future EU own resources, explained Dorsman, “The European shipping industry is fully aligned with the UN International Maritime Organisation’s 2030 and 2050 CO2 reduction targets, and is committed to the EU Green Deal’s ambition to be the world’s first carbon-neutral continent. The industry has identified some effective ways to reach that objective, among others, through the establishment of a US$ 5 billion maritime R&D fund, financed by the global shipping industry via a surcharge on bunker fuels.

“In the Commission’s proposal, there seems to be a strong anomaly in seeking additional income to ensure recovery of the current crisis from one of the sectors that is hardest hit by the same crisis (as referenced in the European Commission’s own analysis). In addition, there is a contradiction in trying to maximise own EU resources through the ETS extension while the ultimate aim of such a market-based measure policy initiative, should be to reduce CO2 emissions from the covered sector and not maximise income which would lead to encouraging keeping the ‘high emission’ sectors as income source.”

ECSA has also conducted a second survey on the impact of the crisis on the industry in the month of June. This second survey shows that the industry has not got over the initial shock of the crisis. Across all segments, some 40% of the companies see a pick-up in turnover. The remaining 60% expect a stabilisation or a further decline of turnover.

“It’s undeniable that the crisis has hit hard on the sector. With only 40% of the companies expecting turnover to recover, companies do not expect to see a positive hiring pattern for both seafarer and office positions next year, with some even expecting a minimum 40% decline in seafarer jobs should there not be national measures put in place,” said Dorsman.

The findings support ECSA’s comments regarding the EU Recovery Package, that concrete support measures need to be put in place so that it takes into account the complexity and specificities of the European shipping industry, characterised by the huge diversity of ship types, of operations, and of company sizes. “European shipping has to be competitive at both global and EU levels. Any new policy actions should support the industry in its decarbonisation commitments and efforts and not unnecessarily and disproportionately put burdens and costs on businesses,” concluded Dorsman.