SIMIC

WORLD shipping will soon be taxed by the European Union's emissions trading system (ETS), that will impact shippers and carriers not only in Europe, but worldwide, reports New York's Journal of Commerce.

"Inclusion in the ETS will affect not only the cost of shipping to and from the EU, but also the cost of shipping elsewhere, and it will likely put upward pressure on pricing for cargo that doesn't touch the EU at all," said Lars Jensen, CEO and partner at Vespucci Maritime.



"At first glance, this might seem counterintuitive. Why would a tax in the EU have any effect on trade that has nothing to do with the EU?



"First," he said, "the EU carbon tax also includes shipments to and from the EU. Technically speaking, the ocean carrier will be required to pay a carbon tax for 50 per cent of the emissions on the journey from the last port of call before arriving in the EU to the first port of call in the EU and vice versa. In addition, the carrier is on the hook for 100 per cent of the emissions for any journey between EU ports," Mr Jensen said.



The tax, he said, is levied on the vessel performing the journey, not on individual containers.



Some liner services move through the EU. CMA CGM's Turkey US Express (TUX) service, for example, links three ports in Turkey with the US east coast, calling at other ports in the Mediterranean along the way. The carrier even markets the TUX loop as offering "dedicated coverage from Turkey and West Med to the US east coast."



"Neither Turkey nor the United States is part of the EU carbon tax regime. However, because the TUX service calls several Mediterranean ports in the EU in both directions, as currently designed, it would incur penalties under the EU ETS.