Smooth Sailing, Minimal Impact: The Complete Guide to EU ETS (Part 3)

Since January, the European maritime sector has been under a regulatory scheme that seeks to reduce carbon emissions and alleviate environmental impacts stemming from climate change. The European Union’s emissions trading system (EU ETS) calls for the maritime sector to cut greenhouse gas emissions by 55% by 2030 and become climate-neutral by 2050.

Complying with the EU ETS will take place in phases, as we’ve previously noted in Part 1 of this series on the EU ETS. As a result of this phased-in approach, shippers might not immediately feel the full impact that the regulation will have on costs. However, Searoutes has estimated that freight costs could increase by as much as 5% by the time the regulation goes fully into effect for the maritime sector in 2028.

Among shippers, there is a perceived lack of transparency over how carriers calculate emissions surcharges because, as we explained in Part 2 of this series, shippers will be paying upfront for carriers’ emissions. Carriers will be paying for their emissions a year later. As a result, shippers are concerned that they might get overcharged.

However, this is where companies like Searoutes come in. Searoutes has technological tools that provide shippers with visibility into the factors influencing the pricing of emissions, such as the variations in emissions output due to a vessel’s size and journey. By using our API tools to compare current conditions against historical trends, shippers gain a better understanding of what costs to expect under the EU ETS. 

The Searoutes Solution: Regulatory Resilience Through Data Analytics

One of the main concerns facing shippers and companies exposed to the new EU ETS for the maritime sector is the lack of transparency over how emissions surcharges are calculated. This, in turn, leads to uncertainty over how much freight costs might increase each year under the new scheme.

But working with companies like Searoutes, a leading provider of maritime data analytics and optimization solutions, can give shippers confidence that they are not only watching costs carefully but that they are also meeting company sustainability goals.

Through each of our APIs — our Sea+Inland Routing API to calculate distances and estimate carbon emissions, our Vessel+AIS API to track the positions of the global fleet via terrestrial and satellite automatic identification systems or AIS, and our Co2 API to get accurate carbon emissions based on detailed vessel consumption and traveled distances — shippers and maritime stakeholders can be equipped to talk with vessel operators about how both parties can comply with the EU ETS fairly and effectively. 

To see an example of how Searoutes has helped a company develop and execute a sustainability strategy, check out our case study involving Latin American logistics provider Andes Integracion Logística. Andes used Searoutes’ tools to identify ways they could help support their clients environmental risks and opportunities, as well as help lower Scope 3 GHG emissions. 

The Role of Searoutes in EU ETS Navigation

Searoutes’ expertise in data analytics and route optimization can help navigate shippers through EU ETS surcharges. Our APIs are key tools for managing emissions and freight costs.

Having historical data at your fingertips via Searoutes’ APIs provides shippers with insight into how carriers configure emissions prices. The historical data shows how carriers can have latitude in setting emissions pricing. 

Searoutes’ APIs also allow shippers to see how emissions pricing varies along different routes and port pairings. Shippers can use this information to ensure they are getting a fair surcharge, while carriers can use this insight to compare the different emissions reductions by service offering.

Historical Data for Future Resilience

Government agencies and their actors, such as the U.S. Coast Guard, collect vessel traffic data, or automatic identification system (AIS) data. AIS data comes from onboard navigation safety devices that transmit and monitor in real-time the location and characteristics of vessels in U.S. and international waters, according to a definition from the U.S. Bureau of Ocean Energy Management and the National Oceanic and Atmospheric Administration. The EU also collects this data.

Companies such as Searoutes use publicly available data and analyze it to glean historical trends and patterns in emissions surcharges. This analysis can help inform strategic decision-making to optimize costs and reduce EU ETS surcharges. 

For instance, through Searoutes’ Vessel API, companies can see the historical trace of a given vessel between two dates in the past, along with the average speed and the route characteristics. Companies can also compare their findings with data points from any time in the last five years.

Route Optimization Algorithms

Knowing how much routes differ in fuel consumption, emissions, and transit times can help companies understand the rationale behind configuring EU ETS surcharges. This knowledge can also help companies monitor costs and fulfill sustainability initiatives.

Routing API addresses all these needs. It uses route optimization algorithms that factor in vessel characteristics, weather conditions, and port congestion to determine which routes might be best to pursue and why.

Our Routing AP tool lets companies decide between different routes by plugging in preferences or constraints. Shippers can choose to avoid specific zones, such as piracy zones, canals, or sea areas where there are limits on SOx and NOx emissions, and they can get more visibility into the estimated time of arrival, factoring in conditions such as maximum vessel service speed and departure time. 

Real-Time Monitoring and Adaptation

The ability to track vessel emissions and performance during voyages can give companies peace of mind, knowing that they are not only meeting their sustainability goals but also complying with regulatory requirements and meeting EU ETS targets. 

Searoutes has several tools with real-time monitoring capabilities. Whether the goal is to track vessel emissions or make proactive adjustments to routes and operations based on real-time data, Searoutes has you covered.

Our CO2 API tool uses proprietary routing algorithms to glean a robust database of historical AIS data and search for optimal routes. We also deploy algorithms to accurately calculate carbon emissions. 

Meanwhile, our Vessel API tool also takes real-time information on a vessel’s last known position, last known speed, and current draft, and it runs that data through our algorithms to calculate an estimated time of arrival for the next port of call. 

Integration with Procurement Processes

Using these three tools can help procurement professionals ensure that they’re receiving fair and accurate pricing from carriers. They enable shippers to see how emissions reductions can occur throughout the supply chain. 

When procurement professionals work with carriers during the tender season, for instance, the insights from Searoutes’ tools can provide leverage during those discussions. That’s because the tools use historical data to analyze trends and patterns within the data. By seeing these trends within the data, shippers can understand the latitude that carriers might have in setting emissions pricing. This insight then helps shippers determine what are reasonable emissions surcharges. 

Get equipped to tackle EU ETS surcharges

As the EU ETS continues to impact shippers, navigating and saving on surcharges becomes paramount. However, shippers and others can be at ease because Searoutes offers comprehensive solutions that enable shippers to manage emissions and costs effectively. Through data analytics and route optimization tools, we enhance resiliency and facilitate strategic decision-making for our customers.

With Searoutes, shippers gain a competitive edge in tender season negotiations while ensuring regulatory compliance and sustainability. Contact us today to learn how various tools can help serve your business needs.