CLEANSHIP. Study 4.1 Development of future changes for Clean Baltic Sea Shipping. Maritime Institute in Gdańsk. Clean Baltic Sea Shipping

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CLEANSHIP

Clean Baltic Sea Shipping

Study 4.1

Development of future changes for Clean Baltic Sea

Shipping

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Document information

Study 4.1

Development of future changes for

Clean Baltic Sea Shipping

Contributing

Authors _CKRZYSZTOF ONTRIBUTION TO KOŁWZONCHAPTER ,POLISH 4) REGISTER OF SHIPPING (EXTERNAL EXPERT

-Author(s): URSZULA KOWALCZYK,JAKUB PIOTROWICZ,MARCIN BURCHACZ,RAFAŁ KOBA

Issuing entity: MARITIME INSTITUTE IN GDAŃSK

Document Code: CLEANSHIPTASK 4.1

Pages 114

Figures 20

Tables 20

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Disclaimer

This publication is part of the Clean Baltic Sea Shipping project and it is subjected to the publicity rules of the Baltic Sea Programme 2007-2013.

While the information contained in the documents is believed to be accurate, the author(s) or any other participant in the CLEANSHIP make no warranty of any kind with regard to this material including, but not limited to the implied warranties of merchantability and fitness for a particular purpose.

Neither CLEANSHIP nor any of its members, their officers, employees or agents shall be responsible or liable in negligence or otherwise howsoever in respect of any inaccuracy or omission herein.

Without derogating from the generality of the foregoing neither CLEANSHIP nor any of its partners, their officers, employees or agents shall be liable for any direct or indirect or consequential loss or damage caused by or arising from any information advice or inaccuracy or omission herein.

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LIST OF TABLES

TABLE.1 MAIN INTRA-BALTIC FERRY ROUTES ... 7

TABLE.2 RORO CARGO IN THE TOP 10BALTIC PORTS IN 2011 ... 7

TABLE.3 FERRY FLEETS OF BALTIC OPERATORS ... 8

TABLE.4 TOP OPERATORS – PASSENGER CAPACITY ... 9

TABLE.5 CHARACTERISTICS OF SHIP TYPES ON THE BALTIC SEA ... 14

TABLE.6 RORO FLEETS OF BALTIC OPERATORS ... 15

TABLE.7 TOP BALTIC OPERATORS– CARGO VOLUME ... 16

TABLE.8 TOP CRUISE OPERATORS ... 16

TABLE.9 FERRY FLEETS OF BALTIC OPERATORS ... 16

TABLE.10 WORLD SHIPBUILDING MARKET BY MAJOR TYPES OF SHIPS ... 17

TABLE.11 NEW ORDERS BY TYPES OF SHIPS AND REGION OF BUILD ... 18

TABLE.12 NEW ORDERS FOR STANDARD VESSELS ... 18

TABLE.13 ORDER BOOK BY SIZE CLASS AND SHIP TYPES IN 2012 ... 18

TABLE.14 TRENDS OF SHIPS DELIVERIES BY REGION OF BUILDERS ... 19

TABLE.15 SHIPBUILDING OUTPUT FORECAST TILL 2015 ... 19

TABLE.16 FORECAST OF VESSEL SIZES ON NORTH EUROPEAN CONTAINER TRADE TILL 2020 ... 19

TABLE.17 RORO CARGO IN THE TOP 10BALTIC PORTS IN 2011 ... 34

TABLE.18 FERRY PASSENGERS IN THE TOP 10BALTIC PORTS IN 2011 ... 36

TABLE.19 BALTIC CONTAINER/FEEDER OPERATORS 2010 ... 37

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LIST OF FIGURES

FIG.1. BALTIC CONTAINER TRANSPORT MAP ... 10

FIG.2. BALTIC RORO & FERRY TRANSPORT MAP ... 11

FIG.3. RUSSIAN IMPORT/EXPORT TRAFFIC IN CONTAINERS VIA PORTS ... 33

FIG.4. CARGO HANDLED IN THE BALTIC SEA PORTS BY COUNTRY AND ANNUAL GROWTH RATE (%) IN 2010 ... 44

FIG.5. EXISTING AND PLANNED LNG TERMINALS IN THE BALTIC SEA AREA. ... 46

FIG.6. EXISTING AND PLANNED LNG TERMINALS IN SCANDINAVIA. ... 47

FIG.7. MARPOLANNEX VINOXEMISSION LIMITS ... 68

FIG.8. WÄRTSILÄ’S NOR OPERATIONAL AREA ... 71

FIG.9. WÄRTSILÄ (SCR)NOR REDUCTION FUNCTIONAL PRINCIPLE ... 73

FIG.10. MANTHE TIER IIISCR SYSTEM ... 74

FIG.11. MARPOLANNEX VIFUEL SULFUR LIMITS ... 75

FIG.12. COMPARISON OF TYPICAL NOX,SOX AND PM EMISSIONS INFLUENCE OF FUEL TYPE ... 76

FIG.13. CATEGORIZATION OF EGCS SYSTEMS AND MAIN SUPPLIERS ... 79

FIG.14. THE EUROPEAN LNG BUNKERING GRID... 80

FIG.15. OPEN LOOP SYSTEM ... 83

FIG.16. CLOSED LOOP SYSTEM ... 84

FIG.17. HYBRID SYSTEM PURESOX ... 85

FIG.18. CSNOX SYSTEM ... 86

FIG.19. BUNKER FUEL PRICES FLUCTUATIONS BETWEEN OCTOBER 2006 AND MARCH 2009 ... 87

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Executive summary

This report conducted by Maritime Institute in Gdansk is part of the Clean Baltic Sea Shipping Project (CLEANSHIP) co-funded by the European Union through the Baltic Sea Region Programme 2007-2013.

Study 4.1 focuses on current situation of Baltic Sea Shipping stressing future trends and solutions, particularly in terms of ship design, environmental norms and development of port and hubs.

The report points out number of the areas where such regulations established by International Maritime Organization (IMO) and European Union (EU) enforce reduction of marine and air pollution from ships. The main idea is that the fulfilment of the environmental regulations globally and on the Baltic Sea will require new ideas, new ship technologies, services and enhanced cooperation and awareness.

The report consists of four core elements: identification of key worldwide shipping trends, tendencies in the Baltic Sea Region ports development, forecast of shipping until 2030 and trends in ship design according to the clean shipping requirements, together with future recommendations for shipping. Especially high focus was put on technical implications of new regulations on shipping. New tendencies have been also analysed in order to forecast future shape of BSR maritime transport.

The study is based on in-depth analysis of port strategies, legal conventions and regulations. Data published in annual Maritime Institute in Gdańsk‘ ―Maritime Economy Statistics Review‖ have been also used.

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1.

Identification of the key Baltic Sea shipping trends

1.1

Worldwide tendencies and increase in container/passenger

shipping

Among the major determinants of transport sector development, two aspects are subjects of particular concern all over the world: environmental requirements imposing strict emission limitations on the operators as well as depletion of the Earth‘s oil reserves in the context of growing demand for energy. In both respects, the focus is on LNG, as a possible response1_.

Diverse solutions will have to be applied in the BSR in order to implement the high environmental standards imposed internationally today. One of these means, combining various elements: technical, fiscal and other.

The shipping industry is responding to the new tendency and various LNG-related developments are taking place on the Baltic Sea market. There are many design and construction projects underway.

In order to protect the marine environment and to ensure sustainability of its resources, IMO designated the Baltic and the North Seas as Emission Control Areas. The environmental aspects appear to be the main benefits of using LNG as a new fuel in shipping and the main, although not the only, driver behind the anticipated growth of this energy carrier‘s market share.

Therefore, the fact that LNG is showing the best environmental performance of realistic fuel alternatives (emission reduction rates –SOx: 100%, NOx: 90%, PM: 100%, CO2: 20-25%) makes it an interesting choice.

In line with the world economy, growth in the merchandise trade by volume and seaborne trade weakened. Nevertheless, the value of the global merchandise exports increased by 19%, whereas the growth recorded in 2010 was 22%. The export of developed economies rose by 5,1% due to exports growth in the United States by 7.2% and in the EU by 6%, while exports from Japan declined by 0.4%. Exports of developing countries grew by 7% driven by Asia which recorded an average growth by 4.5% but India recorded 13.7% growth, China 12,8% and South Korea 11.2%. The import in developed economies weakened. In 2011, imports grew by 3.5%, compared with 11% recorded in 2010. Japan recorded the only 1.9% growth, followed by 3.2% of EU growth and 3.7% of the US. Imports into developing countries grew by 6.2%. Imports into Latin America and Africa grew by 7.1% and 3.9% respectively. The trade volumes are expected to grow by just 2.5% in 20122_.

During 2011, world GDP, industrial production, merchandise trade and seaborne shipments continued to fluctuate. Industrial production decreased in the OECD

1_{BPO seminar, Goteborg 12 January 2012. A business opportunity or cost factor? BTJ 1/2011} 2

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countries from 8.5% in 2010 to 2.1% in 2011. In China the industrial production dynamics reached nearly 14% in comparison with 18% in 2010. The industrial output of Brazil, India and the Russia also expanded at a slower rate than in 2010.

Seaborne trade has followed the development pattern of the world economy. The cargo volume fell to 7.8 billion tonnes in 2009, but then recovered to 8.6 billion tonnes in 2010. In 2011 the global seaborne trade increased by 4%, amounting to the record volume of 8.8 billion tons. The credit for such spectacular result goes to the extended transport of dry cargo, which increased by 5.6% with the substantial share of containerized cargo and dry bulk commodities, accordingly by 8.6 and 5.4%.

In 2011 container trade flows were sustained by non-main lane trade, as the United States and Europe continued to decline. The dry bulk volumes managed to sustain the growth with continued import demand for raw materials in large developing economies, notably China and India. Five major bulk trade flows were sustained by growth in iron ore trade by 6%.

Tanker trade volumes increased barely by 1%. Together, trade in refined petroleum products and gas grew by 5.1%, due mainly to the recent boom in liquefied natural gas trade. The share of oil trade in the global seaborne trade in volume terms continued to account for approximately one third of the total in 2011. Dry cargo trade in 2011, including major and minor dry bulks, containerised trade and general cargo held the remaining two third of the market. Major bulks accounted for 41.6% of total dry cargo seaborne trade, containerised trade for 23.3% and minor bulks for 20.8%. The remaining share of 14.3% was accounted for by other dry goods including general cargo. Further growth by around 4% was expected in 2012.

In terms of ton-miles the seaborne trade had increasing tendencies between 1999 and 2011 and is expected to rise further in 2012. Estimated average distance of global iron ore trade was 6260 miles in 2011, iron ore ton-miles are expected to increase further as new mines in the Arctic and West Africa start up. In 2011, coal trade patterns shifted, with growth in ton-miles exports falling by 2% in the Pacific and rising in the Atlantic at an annual rate 12%. The ore trade and estimated average distances fell came to 3910 miles in 2011.

Refined petroleum products and crude oil recorded the smallest ton-mile growth. Tanker trade patterns, including associated ton-mile demand, are changing as a result of the strategies seeking to diversify crude oil supply sources.

Between 2000 and 2011, crude oil shipments grew annually at an average rate of less than 1%, whereas in 2011 they declined by 1.4%. In 2011 the total volume of crude oil loaded globally amounted to about 1.8 billion tons. Tanker trade has been affected by rising operating costs resulting from the higher oil and bunker fuel prices that prevailed in 2011. Tanker operators had to reduce speed to optimize fuel consumption and also absorb excess tonnage capacity. Slow steaming has been implemented in the tanker trade, with most voyages taking place at an average of 13 knots, compared to previous 14 knots, and at 10–11 knots when sailing in ballast.

In 2011, world shipments of petroleum products and gas including LNG liquefied petroleum gas, increased by 5.1% totaling 1.03 billion tons. The growth rate reflects the booming LNG trade. The world natural gas production in 2011 grew by 3.1%. In 2011, global natural gas trade increased by 4%. Shipments of LNG grew by 10.3% in 2011 totaling 330.8 m³. The forecast for LNG is optimistic and the trade is supported

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by growing demand from Asia. By 2030 Norway and the Russia are expected to lead the global exports of LNG.

The dry cargo trade increased in 2011 by 5.6% amounting to total of nearly 6 billion tons. Dry bulk cargo, including the five major commodities (iron ore, coal, grain, bauxite/alumina and phosphate rock) and minor bulks (agro-bulks, fertilizers, metals, minerals, steel and forest products) increased by 5.6%, in comparison with 12,3% increase recorded in 2010. The total volume of dry bulk trade amounted to 3.7 billion tons in 2011. The five major dry bulks accounted in 2011 approximately 42% of total dry cargo. In 2011, the global volume of thermal and cooking coal shipments totalled 944 million tons, which up by 5.1% compared with 2010. In 2011 coking coal shipments declined by 5.5%, while thermal coal trade increased by 8.7%. The prospects for coal trade remain promising, as developing countries demand for coal is rising3_.

The iron ore trade increase by 6% in 2011, amounting to the total volume of over 1 billion tons. European countries reduced their iron ore imports by 3.7%. The expectations for iron trade remains positive, with shipments projected to grow by 6% in 2012.

World grain shipments totalled 347 million tons in 2011, increasing by 1.5% over 2010. Growth in minor bulks trade in 2011 decreased to 6.1%. Global volumes reached 1.2 billion tons. Exports of metals and minerals grew by 7.4%, agro-bulk by 8.6%, manufactured goods expanded by 5.6% and fertilizers (excluding phosphate rock) grew by 4.3%. Trade in minor bulk is expected to expand further in 2012, but at slower rate.

Containerized cargo transport accounted in 2011 for about 62% of the remaining 2.2 billion tons of dry cargoes. The world container trade in terms of TEU grew by 7.1% in 2011, compared with 12.8% in 2010. Total container trade volumes amounted to 151 million TEU in 2011, equal to about 1.4 billion tons. Global growth in 2011 was limited by the slow down recorded on the main lanes East–West trade. Trade on the trans-Pacific route declined by 0.5%, while volumes on Asia-Europe and trans-Atlantic routes rose by 6.3% and 5.7% respectively.

The container trade volumes increased strongly on the non-main lanes East–West, North–South and intraregional lanes. Non-main lanes East-West trade grew by 9.8%, while North–South and intraregional trades expanded by 8.9% and 9.2% respectively. In 2011, the three mainland trades totalled 47.3 million TEU, while non-mainline trades reached 103.3 million TEU.

As a result of continued new building deliveries and increased demolitions, the average age of the world fleet decreased slightly during 2011 and stood at 21.9 years per vessel. Older ships tend to be much smaller. Container ships continue to be the youngest tonnage in the world fleet, with almost 64% of the ships being younger than 10 years. The oldest ships are general cargo and other types of vessels, about three out of five ships are older than twenty years.

3_{Review of Maritime Transport 2012}

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More tonnage was added to the world fleet in 2010 and 2011 than in any previous year, which was the consequence of orders placed before the economic crisis. The high volume of one-year old tonnage also explains the reduction in the average age of the fleet.

Shipowners tend to invest in larger ships to benefit from economies of scale. The pressure to reduce costs is increased by very low freight rates. However, building more and larger ships also adds to the general oversupply of capacity, thus putting further downward pressure on the freight rates..

Lines are taking different approaches to confront losses. Further mergers among shipping lines can be expected and could be beneficial for carrier profitability. All major shipping lines have in recent years increased vessel-sharing arrangements with other carriers. The Grand Alliance and the New World Alliance have joint forces to form the new G6 Alliance. Feeder operators have also created Alliance among themselves to better defend themselves against competition from the larger shipping lines.

Container shipping companies have systematically reduced the speed of their services by introducing slow steaming. This has allowed them to absorb additional vessel capacity, thus reducing the oversupply of tonnage. It has also helped to reduce fuel consumption per voyage. An estimated 5% of total container fleet capacity is recently absorbed by slow steaming. The average speed of shipping lines is between 15 to 20 knots for different levels of slow steaming. This is still faster than the usual sailing speeds for dry and liquid bulk ships, which tend to be 10 to 15 knots. Depending on distance and speed, cost saving can amount even to between 13% and 3% of vessel operating costs.

The main shipping lines in the world, such as Maersk Sealand, Evergreen, P&O Nedlloyd, Hanjin, Cosco, and many others serve the most complex, profitable routes in the world. The 25 most powerful shipping lines control almost 60% of container transport capacity in world trade. In addition to growing concentration of container activity in the hands of the largest, most powerful shipping lines, there is a process of consolidation and the forging of alliances among the main shipping lines and in consequence they are growing larger. The two most powerful alliances that were recently renewed are the Great Alliance (among NYK, Hapag Lloyd of Germany, the Anglo-Dutch company P&O Nedlloyd, Orient Overseas Container Lines (OOCL) of China, and the Mediterranean Shipping Company (MSC)) and the New World Alliance (among Mitsui OSK Lines (MOL) of Japan, APL/Neptuno Orient Lines (NOL) of Malaysia, and Hundai Merchant Marine (HMM) of Korea)which have focused primarily on reorganizing the main trade routes. The aim of action of these alliances is broader, involving a global strategy and ground services. Due to that, a question about the ability of certain container port terminals to survive emerges.

The cruise ship industry had grown and received massive investments in recent years. It is estimated that over 7 million persons will take a cruise in 2012, a similar figure to last year, and the American market is the main consumer. Recently, high-tonnage ships have been built, such as the Royal Caribbean Voyager of the Seas, at 130 000 tons with the capacity to hold 3 115 passengers, inaugurated last November, and the Royal Caribbean Explorer of the Seas, which has the same characteristics and began service in October 2000. Regionally, the recipient markets are most notably the Caribbean and the new market in the Southern Cone. Ports are competing to attract

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these passenger ships and face the challenge of having the appropriate port infrastructure in place, as well as the complementary service facilities that passengers require, such as taxis, buses, guides, and shopping canters. This is certainly a growing market in every respect, but a very competitive, capital-intensive one.

It is difficult to forecast whether the size of cruisers will grow further. What matters the most is the economy. The price of fuels is going up and the more passengers the lower the costs per passenger can be achieved. Nevertheless, the large ship will not be able to call at any port, and that is why the whole passenger fleet will not switch exclusively for the largest cruisers. Another trend observed is the decline in the average age of passengers. In the cruising sector the number of families with children is growing.

The shipowners‘ ability to provide services for seaborne trade is correlated with the situation in the freight markets and the ship financing conditions.

1.2

Main Baltic Sea Region operators and services

Currently 24 operators are involved in the container business. There are some changes in the services and ownership in the Baltic market but the basic structure remains rather stable. In 2007 Baltic Container Lines merged with IMCL, which was later in 2009 acquired by Unifeeder. Also in 2007 Kuršių Linija merged with Containerships while Saimaa Lines ceased its shipping activities. Team Lines has opened a service to the Iberian Peninsula, Unifeeder to the UK, and Containerships detached network between Mediterranean ports, acquired recently by the Turkish operator Contaz Line. The Green Feeder, Merilinja, Sea Connect and SCA Transforest merged on the Baltic market. Shortly after start in 2007 NYK line closed a two-ship service to St. Petersburg. An innovative feeder service of Combispeed stopped its service from Lubeck to St. Petersburg in 2009.

Container business in the Baltic and its closest neighbourhood is a mixture of feedering and short sea shipping. Many operators carry containers both in overseas and intra-Europe traffic.

Four ocean going container services are operating at the Baltic Sea. Two of them, AE10 and ECUBEX, are serviced by Maersk. The service AE10 operated by the largest containerships is linking the Asian ports with Europe (at the Baltic these are: Aarhus, Goteborg, and Gdansk). The service ECUBEX is linking South America with Europe, of which i.e. St. Petersburg. G6 Alliance (Asia) was planning to launch in April 2012 a direct service from Asian ports to Europe, including Goteborg.

Unifeeder was the first carrier, which launched a regular connection with the port in Ust Luga. The operator is active in cargo transport in the North Sea and the Baltic Sea areas. The company has the largest shipping network in the northern Europe. Its yearly cargo transport volumes is approximately 1.8 million TEU. In December 2011 there was a first call at Ust Luga of this operator‘s ship loaded with 1440 TEU. There are daily calls from Hamburg and Bremen expected at the Ust Luga port. On top of that, Unifeeder wants to launch a weekly service between the port in Antwerp and the First Container Terminal in Sankt Petersburg.

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Table.1 Main intra-Baltic ferry routes

Route RoRo cargo

Part of total maritime trade mln ton % Sweden - Germany 14.8 60 Sweden - Denmark 8.8 55 Finland - Germany 7.4 52 Denmark - Germany 5.3 43 Sweden - Finland 4.5 30 Sweden - Poland 4 50

Source: Baltic RoRo/Ferry Yearbook 2012

Table.2 RoRo cargo in the Top 10 Baltic ports in 2011

Port RoRo cargo

mill tons cargo units (thous)

Lubeck 16.6 893 Trelleborg 9.4 634 Rostock 7.3 494 Goteborg 7.0 444 Helsinki 6.6 520 Stockholm 6.2 422 Puttgarten 6.1 365 Rodby 6.1 365 Helsingborg 4.9 422 Helsingor 4.0 388

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Table.3 Ferry fleets of Baltic operators

Operator Ferries GT Lane metres Pax.

thou. thou. thou.

Finnlines 14 505.7 33.4 4.8 Tallink Silja 11 472.2 12.2 28.1 Scandlines1 19 349.3 24.3 16.7 Stena Line2 10 316.6 20.2 13.6 DFDS Seaways 10 262.6 20.0 7 Color Line 6 250.1 7.8 12.5 Viking Line3 6 195.7 5.4 13.9 TT-Line 6 179.4 14.5 2.9 Unity Line 7 139.8 10.4 3.4 Destination Gotland 4 71.7 3.5 4.5 St. Peter Line 2 71.7 2.1 4.3 Polferries 3 67.0 3.7 3.1 Færgen 7 53.9 2.9 5.9 Eckerö4 3 47.7 2.6 3.6 Smyril Line 1 36.0 1.8 1.5 Fjord Line 2 22.4 0.7 1.6 Kattegat-ruten5 2 20.6 1.2 1.5 Mols-Linien 3 13.6 0.0 1.7 RG Line 1 10.3 0.9 0.3 Total 117 3086.3 167.3 130.9 Remarks:

1_{Including Stena Line’s chips under Scandlines’ brand}

2 _{Including a cargo vessel supporting Gothenburg-Frederikshavn service} 3_{Excluding Cinderella (GT 46,389) operating as a cruise ship}

4_{Including a cargo vessel supporting the Tallinn-Helsinki service} 5_{Including HSC Dolphin Jet planned to start in May}

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Table.4 Top operators – passenger capacity

Operator Units Pax. GT Lane metres

thou. mln thou. thou.

Scandlines 1083 16.7 390.3 28.6

Finnlines 641 - 729 62.1

Stena Line 363 2.7 316.6 20.2

DFDS Seaways 320 2.7 662.5 62.9

Tallink Silja 292 9.1 503.1 -

Source: Baltic RoRo/Ferry Yearbook 2012

Traditionally many ships and services of purely a passenger character (i.e. Linda Line, Christiansofarten) and short cruises (Birka Line, Anedin Line) are also deployed in the Baltic Sea, although they call at Aland Islands due to their special tax regulations. Also specialized industrial RoRo operators working exclusively for the Nordic paper industry (Holmen, M-Real) are part of Baltic RoRo traffic. The services of regular character in the Baltic is also the car-carrier UECC offering service for rolling cargo other than new cars. Some of UECC‘s ships are converted from conventional RoRo ships.

In the Baltic RoRo sector all Danish and Swedish ports are included (also services operating in the North Sea). Practically the cargo turnover there, is destined to their home markets (in the Baltic region.

The beginning of 2012 did not bring significant changes to the Baltic and North Seas ferry trade. Two small companies ceased to operate. Baltic Scandinavian Lines and its service between Paldiski and Kapellskar joined DFDS Group.

UECC – two new brands emerged. German FRS Group bought two of Mols-Linien‘s ro pax vessels and resumed the Aarhus-Kalundborg service with one of them. The new service is branded Kattegat-ruten and it will be strengthened by the fast catamaran Dolphin Jet. Another player, North Sea RoRo, started a pure cargo link between Göteborg and Killingholme, operating two sister ships of 2 600 lane meters each.

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Fig. 1. Baltic container transport map Source: Baltic Transport Journal website [www.baltictransportmaps.com, 13.05.2013]

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Fig. 2. Baltic RoRo & ferry transport map Source: Baltic Transport Journal website [www.baltictransportmaps.com, 13.05.2013]

Out of 18 common carriers only three companies, namely Green Feeder, Team Lines and X-Press Feeders, have not declared tit involvement in short sea services although they also carry 45‘ containers, which are rather common intra-Europe‘s boxes. Twelve companies declare door-to-door services and operate their own or leased containers. The capacity of Containerships and Unifeeder is around 15 000 box units each.

The shipping companies operation on the Baltic Scan be grouped in three categories. The first consists of two largest independent common operators. Unifeeder and Team Lines, with a wide network to all shores of the BSR. The share of both companies in the market is estimated on 40% of the total feedering capacity. The second group includes global carriers, CMA CGM, Maersk Line, MSC, KLine and OOCL, with a 30% share. The remaining 30% is the share of medium and small operators, which usually serve just one loop or one destination, FESCO-ESF. Recently the share of global carriers has grown to about 36% at the expense of Unifeeder and Team Lines and local operators. At the beginning of 2010 the share of local operators declined to 25%, which indicates the importance of the local market and cluster relations in it.

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1.3

Fleet and orderbook

The world fleet is on the rise with 10% growth over the year 2011. The global tonnage reached 1 534 million dwt with 104 305 of seagoing commercial ships in service. The dry bulk carriers tonnage increased by 17%, acquiring a 40.6% share of the world total. This is followed by oil tankers, which grew by 6.9% and accounting 33.1% of the world fleet. The container ships reached 12.9% share of the world fleet when their tonnage grew by 7.7% during 2011. The general cargo fleet continued to remain the only major vessel type with smaller tonnage and during 2011 it experienced slight decline.

Oil tankers tonnage reached more than half a billion dwt at the end of 2011. Part of this tonnage is used for storage, rather than for transporting oil. In the medium term, the release of the stored oil will reduce the demand for oil transport and at the same time will increase available tanker capacity, which again might cause an oversupply of tonnage4_.

In terms of deadweight tonnage, container ships have a 12.9% share in the world fleet, however in the global trade the container ships play much more important role than the tonnage share would suggest. In terms of value, 52% of seaborne trade is containerized. On average each dwt of container ships carries 27 times more seaborne trade in terms of value. An average container carrying capacity of a ship reached 3074 TEU at the end of 2011, which represents an increase of 6% over the previous year. New containerships delivered in 2011 were 34% larger than those delivered throughout 2010.

Owners of specialized reefer tonnage have suffered from the competition of container ships that also serve refrigerated containers. Containers today account for about 60% of reefer cargo, and new container ships increasingly include large reefer capacities. While the trend of containerization of refrigerated cargo will continue, the replacement of older dedicated reefer ships by more modern tonnage in the nearest future will lead to further decrease of specialized reefer fleet.

Containerized cargo accounts for an estimated 52% of the value of global seaborne trade and countries with a high share of containerized tonnage also have a high share in global seaborne trade transported by their nationally owned ships.

Germany is the largest owner of containerized tonnage. The share of German fleet in the global seaborne trade accounted for over 23% in 2011. The second largest shipowner is Japan with share of 11.2% of global seaborne trade, followed by Greece with 9.8% share, China 7.5% and Denmark with 5.6% share in global seaborne trade. Container ships are often owned by charterers and they do not themselves provide the liner shipping service, but rather charter their vessels out to the operators. The German owned container ships are frequently chartered out to liner shipping operators based in other countries, such as Danish Maersk, Swiss MSC or Chilean CSAV.

The largest container ship operators continue to be Maersk Line of Denmark, MSC of Switzerland and CMA CGM of France. These three companies together operate almost

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30% of the global container carrying capacity in TEU. Compared with the beginning of 2011, the largest growth was recorded by MOL of Japan, with the increase in TEU of 23.6%, followed by CSCL of China with 20,9% increase and Hapag Lloyd of Germany with 15.8% increase. The largest decline in capacity was recorded by CSAV of Chile, which recorded 9.1% decrease in TEU.

World shipyards continued to expand their deliveries, despite difficult situation in the world shipbuilding market, and a new record delivery of 162.5 million DWT equal to 100.9 million GT took place in 2011. The output is projected to decrease by about 5% in 2012.

Demolition increased from 14.2 million dwt four years ago to 41.4 million dwt in 2011. It is expected that about 50 million dwt will be scrapped during 2012, which is about one third of the new ships deliveries. However the age profile of the world fleet does not favour continued high levels of demolition.

At the same time continued deliveries and a drastic downturn in new orders following the economic crisis has led to a reduction in the world order book by one third. The orderbook at the end of 2011 stood at approximately 21% of the existing fleet tonnage, while in 2010 it was about 44%.

Contracting of new ships has also continued, but well below the level of deliveries. In 2009 orders decreased to 32.7 million GT, followed by 88.8 million GT in 2010 and 55.2 million GT in 2011. It shows that the shipyards will not be able to sustain current output levels beyond 2012. It is expected that the deliveries will fall to 94 million GT in 2012 and 70 million GT in 2013.

Also the type of vessels being ordered over the last two years has changed, moving from bulk carriers and tankers towards specialized and offshore vessels. In 2011 specialised vessels accounted for two thirds of the ships ordered, including 4.2 million CGT of LNG tankers, 4.1 million CGT of offshore vessels, and 9.1 million CGT of containerships. Orders for tankers were only 2.6 million CGT and bulkers 8.3 million CGT.

Offshore supply vessels continued to grow in 2011 at an above-average rate of 12.8%, reaching a share of 2.4% of the world fleet at the end of 2011.

In 2011 almost 39% of ships deliveries in terms of GT were built by Chinese shipyards, followed by shipyards from South Korea with 35.2% of deliveries, Japan with 19%. All other countries together accounted for only 5.3% of GT built in 2011. Among major investments in RoRo tonnage are 4 Finnlines‘ vessels of the Finnbreeze class of 3 326 lane meters, the largest pure RoRo operating in the Baltic. These ships represent a new subcategory of cargo vessels, equipped with hoistable decks for better utilization of capacity in case new cars are to be carried.

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Table.5 Characteristics of ship types on the Baltic Sea

Ship type Code Number

of ships Engine (w kW) Additional engine Feefer RC 338 2 515 171 732 664 General cargo GC 2172 5 546 590 1 302 312

Tanker crude oil T_PROD 270 1 854 899 362 987

Container CONT 324 5 283 246 1 158 465

Chemicals T_CHEM 842 5 126 000 1 508 702

Tanker T_CRD 332 4 254 381 761 446

Bulk cargo BULK 936 7 137 109 1 104 540

RORO RORO 165 1 744 183 442 945

RO-PAX RO-PAX 226 3 437 141 774 072

Car carrying ship V 208 2 622 450 502 378

Gas tanker T_PLG 119 611 003 17 076

Cruisers PAS_CR 80 2 016 636 9

Source: Baltic Transport Outlook

Two new RoPaxes were introduced by DFDS Seaways (Scottish Viking and Watling Street) and other investments are following. Scandlines decided to replace both its vessels vessels operating on Gedser-Rostock route (Berlin and Copenhagen from P&S Werften in Stralsund). In 2012 Fjord Line introduced the first of two ordered cruise ferries built by Bergen/Gdańsk (Stavangerfjord) in order to start a new service from Hirtshals to Langesund.

In the northern Baltic the Viking Line was ready to put into operation in 2013 the Viking Grace (and in February 2012 the Eckero Group bought Moby Freedom in order to replace Norlandia on its Tallinn-Helsinki service.

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In the HSC segment, after delivery of Leonora Christin in 2011, the first catamaran in the Baltic of 10 000 GT and 300 lane metresfor track, the Mols-Linien purchased the catamaran Norman Arrow from LD Lines. Ex Norman Arrow is slightly bigger than Leonora (GT 10 503 versus 10 371) and the capacity for trucks is almost 560 lane metres, which equals 32 large lorries. Data about the fleet and orderbook are presented in tables below.

Table.6 RoRo fleets of Baltic operators

Operator Ships GT Lane metres

thou. thou. DFDS Seaways 12 335.9 42.9 Transfennica 11 232.8 26.1 Finnlines 11 223.3 28.7 UECC 5 112.5 2.6 TransAtlantic 4 88.0 9.5 CldN 4 86.4 9.2 UPM Seaways 7 74.3 10.6 SCA Transforest 3 60.5 6.3

North Sea RoRo 2 46.5 5.2

Scandlines 2 41.0 4.3

Anship 2 40.8 3.5

Swedish Orient Line 2 40.5 4.3

Tallink Silja 2 30.9 3.0 Power Line 1 21.2 2.2 Mann Lines 1 18.2 2.3 Sae Cargo 2 16.7 2.7 Lillgaard 1 6.0 0.8 Total 72 1475.5 164.2

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Table.7 Top Baltic operators– cargo volume

Operator Units Pax. GT Lane metres

thou. mln thou. thou.

Scandlines 1083 16.7 390.3 28.6

Finnlines 641 - 729 62.1

Stena Line 363 2.7 316.6 20.2

DFDS Seaways 320 2.7 662.5 62.9

Tallink Silja 292 9.1 503.1 -

Source: RoPax Statistics 2010

Table.8 Top cruise operators

Operator Pax thou. Tallink Silja 28.1 Scandlines 16.7 Viking Line 13.9 Stena Line 13.6 Color Line 12.3 DFDS Seaways 7

Source: RoPax Statistics 2010

Table.9 Ferry fleets of Baltic operators

Operator Ferries GT Lane metres Pax.

thou. thou. thou.

Finnlines 14 505.7 33.4 4.8 Tallink Silja 11 472.2 12.2 28.1 Scandlines1 19 349.3 24.3 16.7 Stena Line2 10 316.6 202 13.6 DFDS Seaways 10 262.6 20.0 7 Color Line 6 250.1 7.8 12.5 Viking Line3 6 195.7 5.4 13.9 TT-Line 6 179.4 14.5 2.9 Unity Line 7 139.8 10.4 3.4 Destination Gotland 4 71.7 3.5 4.5 St. Peter Line 2 71.7 2.1 4.3

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Polferries 3 67.0 3.7 3.1 Færgen 7 53.9 2.9 5.9 Eckerö4 3 47.7 2.6 3.6 Smyril Line 1 36.0 1.8 1.,5 Fjord Line 2 22.4 0.7 1.6 Kattegat-ruten5 2 20.6 1.2 1.5 Mols-Linien 3 13.6 0.0 1.7 RG Line 1 10.3 0.9 0.3 Total 117 3086.3 167.3 130.9 Remarks:

1_{Including Stena Line‘s chips under Scandlines‘ brand}

2 _{Including a cargo vessel supporting Gothenburg-Frederikshavn service} 3_{Excluding Cinderella (GT 46,389) operating as a cruise ship}

4_{Including a cargo vessel supporting the Tallinn-Helsinki service} 5_{Including HSC Dolphin Jet planned to start in May}

Source: Baltic Transport Journal 2/12

Table.10 World shipbuilding market by major types of ships

YEARS

Total Tankers Bulk carriers General cargo ships Container ships Chemical

carriers Gas tankers RoRo

Refrigerated cargo ships in mln DWT Existing fleet 2005 960 353.5 346.7 75.4 128.3 9.1 22.5 8.3 6.6 2006 1042.3 374.5 369.9 78.3 144.7 9.9 24.2 6.8 6.7 2007 1117.8 399.8 395 80.4 161.9 10 26.8 7 6.5 2008 1192.3 418,3 418.4 92.5 161.9 9.3 30.2 6.7 6.6 2009 1276.1 450,1 456.6 92.7 169.2 9.4 35.9 6.7 6.4 2010 1395.7 474,8 532 109 183.9 8.5 40.8 6.8 6.3 2011 1534 507.5 622.5 106.4 198 6.9 43.4 6.3 6 Ships completed 2005 65.6 28 22.3 1.6 12 5.3 1.8 0.7 0 2006 71.1 23 25.5 2.2 16.8 5.8 2.8 0.9 0 2007 83.3 28.7 28.6 2.8 16.6 7.2 3.7 1 0 2008 97.2 33.2 32.6 3.1 18.7 10.3 6.9 1.4 0 2009 124.7 45.7 48.3 3.3 13.6 8.6 5.2 0.2 0 2010 144.5 38.9 80.6 3.3 16.5 7.1 3.3 0.2 0.1 2011 163.6 39.7 99.2 . . . . . . Order book 2005 225.5 70.8 64.7 5.1 50.9 14.3 13.8 3.1 0.1 2006 299.7 118 77.4 8 51.7 21.8 16.6 3.2 0.1 2007 490.4 124.8 216.3 13.4 78.3 30.8 15.4 4.3 0.2 2008 566.4 140.5 287.4 17.9 69.6 28.7 10.6 4.8 0.2 2009 491 134.6 275.1 15.6 55.6 17.6 5.6 1.3 0.2

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2010 421.9 100.4 239.9 13.5 43.2 18 5.6 1.3 0 2011 404.3 103.6 232.4 16 52 18.2 5.5 1.1 0 New orders 2005 77.2 24.3 18.2 2.7 17.8 5.7 5.5 1.4 0.1 2006 142.3 65.6 35.1 4.1 17.8 12.6 5.7 0.9 0 2007 250.8 31.7 149.1 6.4 40.5 13.6 3 2 0.1 2008 137.7 44.8 69.7 4.8 10.7 4.1 1.2 1.5 0.1 2009 73 20.2 47.3 2.4 1.2 0.9 0.1 0 0 2010 134.4 38.5 83.5 . . 1.6 . . . 2011 63.3 9.2 28 . . 0.5 . . .

Source: „World Fleet Statistics 2011”, Lloyd’s Register/Fairplay, London 2012.

Table.11 New orders by types of ships and region of build

REGIONS OF BUILD

Total Tankers Bulk carriers Container ships Others

2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 in mln CGT TOTAL 33.9 23.6 7.7 2.2 19.4 6.6 3.4 8.8 3.3 6 Korea, South 12.2 11.8 3.9 1.4 5.1 0.8 2.2 5.7 0.9 4 Japan 4 2.4 0.5 0.2 2.7 1.6 0.1 0.1 0.6 0.5 China 15.2 7.4 2.7 0.6 10.7 4 1 2.1 0.8 0.7 Other Asia 0.9 0.9 0.1 0 0.7 0.2 0.1 0.7 0 0 Europe 1.5 1 0.5 0 0.1 0.1 0 0.2 0.9 0.7 Others 0 0.1 0 0.1 0 0.1 0 0 0 0.1

Source: The Platou Report 2012.

Table.12 New orders for standard vessels

SPECIFICATION

2009 2010 2011

in mln DWT

Tankers over 25000 DWT 11.5 31.1 8

Bulk carriers over 15000 DWT 20.4 79 43

Container ships over 300 TEU 0.1 9.3 21

Source: BRS Annual Review 2010, 2011, 2012

Table.13 Order book by size class and ship types in 2012

DWT – SIZE CLASS

Tankers Bulk Carriers Container ships existing fleet order book existing fleet order book existing fleet order book

% share

<10000 50.7 35.1 11.1 1.2 14.8 3.3

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Handymax <60000 15.5 16.9 36.1 43.1 29.1 23.5 Panamax <85000 5.4 7.6 18.5 29.1 13.6 10.5 Capesize <120000 7.4 8.6 4 7.1 7.6 23.3 <200000 3.7 9.2 11.3 8.1 2.1 22.5 >200000 4.7 10 2.6 6.4 - - Source: SSMR January/February 2012.

Table.14 Trends of ships deliveries by region of builders

REGION 2011 2012 2013 2014+ 2011:2014 in thou. CGT % TOTAL 51 126 64 300 32 759 14 383 -71.9 China, PR of 19 737 27 585 11 132 2159 -89 Korea 15 954 15 640 12 342 7547 -52.7 Japan 9162 9162 5028 1941 -78.8 Europe 3173 4337 1674 1340 -57.8 India 224 1297 263 84 -62.5 Brazil 132 694 492 432 227.2 Others 1178 2645 581 227 -80.7

Source: OECD, based on IHS Fairplay World Shipbuilding Statistics, December 2011.

Table.15Shipbuilding output forecast till 2015

SPECIFICATION

2010 2011 2012 2013 2014 2015

in thous CGT

Output potential estimates - 64 882 60 527 62 411 64 284 66 239

Order book 57 967 46 479 17 964 5474 814 -

Still available potential - 18 403 42 563 56 937 63 470 66 239

Rate of increase in estimate output potential in % over preceding year

- 3.69 -6.71 3.11 3 3.04

Source: World yards, January 2010

Table.16 Forecast of vessel sizes on north European container trade

till 2020

SPECIFICATION 2000 2008 2010 2015 2020

TEU

East Asia

Average vessel capacity 4800 6750 8500 10500 12500

Largest vessel 7500 14 500 14 500 14 500 14 500

North America

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Largest vessel 4550 6740 8500 10 000 10 000

South and Central America

Largest vessel 2500 5560 6600 6600 8000

Indian Subcontinent

Largest vessel 1850 5060 5060 6800 10000

Sub-Saharan Africa

Largest vessel 3150 5060 5100 5500 6600

Australia

Largest vessel 3750 4130 5500 5500 5500

North Europe-Mediterranean

Largest vessel 1465 5925 6000 6000 6000

Intra-North Europe/Feeder

Largest vessel 1100 1440 1500 2000 2000

Source: Ocean Shipping Consultants Ltd.

The significance of the Baltic region as a ship supplier to the world market is decreasing. In 2010 Baltic shipyards delivered 37 seagoing vessels, of over GT 1,000 each, and four vessels below that limit. The total gross tonnage was 1,089,834, which was by 19% less than in 2009. In comparison with 2008 it was a drop by 47%. The share in world production fell from 3.8% in 2008 to 1.1% in 2010, whereas the world shipbuilding reached a record level of over GT 96 million, increasing by 24.7% in 2010. The number of Baltic shipyards which delivered vessels over GT 1 000 dropped from 18 in 2009 to 10 in 2010

.

1.4

Major Baltic seaports overview

Currently there are only three out of the 12 biggest cruise ships ports around the Baltic Sea, Helsinki, Stockholm and Visby, that meet European Cruise Council‘s (ECC) conditions. The normal sewage storage capacity for a cruise ship is between one and three days. This means in practice that a considerable amount of sewage is still being dumped into the sea.

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The Baltic Sea receives between 250 and 350 cruise ships each year and the waste-water produced is estimated to contain 113 tons of nitrogen and 38 tons of phosphorus, substances that add to the eutrophication of the sea. The waste-water dumped by the ships also contains bacteria, viruses and other pathogens5_{. The most} obvious thing that could be done by the shipping companies is to install storage tanks large enough for them to carry the waste to the next port.

The ports need reception facilities for the waste-water (black and grey water) or pipes linking the quays with waste-water treatment plants. In practice still cruise liners calling at Baltic ports seldom discharge their sewage waters into Port reception facilities. In the opinion of shipping companies, the advanced waste - water purification systems on-board the vessels are adequate.

Copenhagen Malmö Port (CMP) is developing into a central hub for transport and logistics in Scandinavia. The CMP is strategicaly located, with the new port in the close proximity of a well-developed motorway net, Copenhagen Airport and the bridge between Denmark and Sweden. The whole of the Nordic and Baltic regions can be covered by a simple combination of ships, trains and trucks. Maximal draught is 10 m. CMP is the primary container port in the Region. Many goods exported from the south of Sweden pass through CMP. The port is CMP is the biggest automobile port in the Nordic Region, with a turnover of more than 350 000 new cars per year. CMP has six car terminals covering a total of 800 000 m².

The CMP two oil terminals can receive fully loaded Panamax ships. CMP's annual liquid bulk turnover is about 5 million tonnes: 3 million tonnes via the Copenhagen terminal and 2 million tonnes via the Malmö terminal. CMP is also a busy center for RoRo ships. There are several calls daily and trailers are able to deliver goods to and from North and Eastern Europe in a short time. Ferry traffic in CMP includes passenger traffic as well as combined passenger, private car and trailers with cargo traffic. Nearly one million ferry passengers are passing the Copenhagen or Malmö port on a ferry board. CMP is hosting several cruise companies and has approximately 300 cruise visits per year. In recent years, Copenhagen has become Northern Europe's leading cruise port. With more than 330 calls every year and over 600 000 cruise passengers a growing number of people are cruising to Copenhagen.

Copenhagen Malmö Port AB intends to contribute to achieving a positive environmental impact on the marine environment through the sound management of ship operations and cargo waste. The port has, in accordance with national and international rules, regulations and recommendations established receptions facilities for solid waste, sewage, oil residues, oil-bearing tank washings and ballast water, the residue of noxious liquid and solid substances, sewage as well as chemical waste. Copenhagen Malmö Port's reception facilities for sewage utilise the tankers or tanks of a haulage company registered by the Center for Environment, Copenhagen Municipality. After collection, the sewage is pumped via a pump station and sewer system to the municipal sewage treatment plant. The planning of 10 kilometers of

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pipes for draining and waste-water is in progress. This plan includes pipes for fire rescue stations at the quays.

The Port of Aarhus, due to the weekly calls by the world‘s largest container ships of Maersk Line and daily connections to most of the Baltic Sea region through fourteen shipping companies, is Denmark‘s largest container port and currently has a market share of 65% of the containers handled in Danish ports. The maximal draught presently is 14 m at all terminals.

The Container Port of Aarhus has around 1,500 ships call per year. With approximately 900 000 containers handled each year Aarhus became an important hub in the region and the Baltic Sea, with liner connections to large ports in the Nordic countries, north, south and eastern Europe and to ports in the UK, the eastern Mediterranean and Asia. RoRo facilities in the port of Aarhus are located in the Container Harbour and in the Multi Terminal. RoRo vessels from Finland, Sweden and Lithuania are frequently calling at Aarhus. The port has spacious areas for trailers. The Ferry Terminal is hosting Mols-Linien‘s combi ferries to Zealand.

The Tank Terminal in Aarhus is equipped with facilities for tank lorries, which can collect oil and petrol from fully-automatic pumps. In private tank installations it is possible to store a wide range of fluiding products. Over the past years, bunker facilities at the oil harbour have been used by ships calling at the port of Aarhus. The Port of Aarhus is capable to accommodate three cruise vessels at a time. The yearly cruise passenger traffic is around 25 thousand people.

As for environmental issues, the port of Aarhus is connected to the organisation EcoPorts. Ordinary waste from ships has to be disposed in waste containers placed throughout the harbour. Discharge of residues of hazardous substances must be agreed with the Traffic Service. The sewage connections can be used for pumping sewage ashore for an agreed period and without charge. If no connections are available, or if the Traffic Service finds that the cost of shifting to the area will be disproportionate or that shifting will be too difficult, a maximum of 15 tons of sewage can be received in a road tanker placed alongside the ship. Sewage has to be pumped ashore by the ship‘s own pumps. The Port of Aarhus does not accept Ballast Water and tank washings containing oil but refers to companies offering shipment of or receiving oil.

The Port of Klaipeda is the only seaport in Lithuania, apart from the Butinge oil terminal. The port has the capacity to handle containers, general and bulk cargo. The maximum draft in port is 13-14 meters. One berth is allocated for passenger/cruise vessels. Number of cruise passengers is around 10,000 per year but is expected to grow significantly in the future.

The tank farm for oil cargoes belongs to the refinery. The container terminal and the ferry terminal with connection to Germany and Sweden, is located in the inner part of the port area.

Currently the Klaipeda Passenger and Cargo Terminal carries out functions of the operator of waste collection from the ships. This company has its own treatment facilities. Klaipeda Passenger and Cargo Terminal has no plans to install pipes between the Passenger Terminal and waste-water treatment plant. Existing water treatment plant will be removed from Passenger-Cargo terminal to an other place in southern part of Klaipeda Port. Concerning shore side electricity it is not considered to install

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shore side electricity as the electrical frequency shoreside (50 Hz) doesn‘t match the needs of vessels unless further investments6_.

The Port of Ventspils is located at the Venta river approximately 40 km south of the border to Estonia and 90 km north of Liepaja. Ventspils can be considered as an important port for transhipment of northwest Russian crude oil. There are eleven specialized terminals in Ventspilts: petrochemical products, coal and wood ships. Ventspils has a capacity of about 75 million tons and it handles oil, oil products, potash, chemical goods and general cargo. Oil and oil products throughput is around 25 million tons per year. There is a regular cargo/passenger ferry line from Ventspils to Nynashamn and a ferry line from Ventspils to Rostock.

In order to improve the environmental protection measures the infrastructure project ―Protection of Environment Against Oil and Oil Product Pollution‖ was implemented. The implementation of the project has resulted in decrease of oil pollution spreading risk.

Riga is the largest city of the Baltic States. The Port of Riga handles all types of goods: containers, timber, oil, coal, various metals, fertilizer and food provisions. Maximum permissible length of ship is 250 m and draft is 12.2 m. There are two regular passenger and cargo/passenger ferry lines from Riga to Stockholm and from Riga to Lübeck.

The of Riga works in compliance with the environment policy approved in the framework of the Environment Management System. The aim of the policy is to make the port of Riga one of the most environments-friendly ports in the North-Eastern region of the Baltic Sea. To ensure air quality control, the air monitoring system was installed on the right bank of the River Daugava, where the largest stevedore companies are based. Liquid sewage is transported to Riga Municipal Waste-water Treatment Plant

In the Port of Tallinn there are five port sites operated by the port authority: Old city port, Paljasaare port, Paldiski south port and Saaremaa port.

The Old City port is the berthing place for passenger and Ro/Ro ferries, cruise ships and high speed vessels as it allows best access for passengers to the city centre. Round the year regular lines of Tallinn-Helsinki and Tallinn-Stockholm are served. In Muuga Port the volume handled accounts for around 80% of the total cargo volume of Port of Tallinn and approximately 90% of the transit cargo volume passing through Estonia. Muuga is among the deepest (up to 18 m) ports in the Baltic Sea region. Paldiski harbour, located 45 km west of Tallinn, is focused on the handling of Estonian export, import and transit cargo. Mainly RoRo cargo, scrap metal, timber, peat and oil products are handled there. Developing fields of activity include transit of new cars for neighboring markets and pre-sale service.

Paljassare Harbour is a mixed cargo port, handling coal and oil products, as well as timber and perishables. The harbour is also used for cooking oil shipments by the neighbouring refinery.

The Port of Riga has over 300 cruise ship calls calls per year.

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Crude oil and oil products are nearly ¾ of cargo loaded in Muuga, but the harbour also serves dry bulk (mostly fertilizers, grain and coal) and other types of cargo.

Surveillance of air quality is carried out. Since August 2009 the Port of Tallinn is member of Ecoports.

The Port of Helsinki operates three sites: Southern Harbour, Western Harbour and Vuosaari Harbour. Ferry connections are serving frequent calls to/from Stockholm, Tallinn, Travemünde, Rostock and Gdynia.

The recently new developed Vuosaari at the eastern shore of Helsinki is planned to be the new centre of container and RoRo traffic and attracts the trucks and trailers. Passenger traffic is concentrated in the Southern and Western Harbour. The four terminals at Southern Harbour all serve for passenger traffic. The West Harbour (Länsi satama passenger terminal is used mainly by passenger ships from Helsinki to Tallinn. It is the largest passenger harbour in Finland, and 5.4 million passengers travel through it every year.

The new Vuosaari Harbour serves container and Ro/Ro traffic. Vuossari it‘s the Hansa Terminal which serves for combined cargo and passenger traffic.

On board of around 300 cruise ships calling at Helsinki every year, over 360 000 tourists per year are visiting the city.

As for ship waste-water treatment, black water and grey water from ships to the sewer system can be received at all berths in South Harbour, at several berths in West Harbour and at all berths in Vuosaari Harbour. Pipelines are in state for pumping the waste-water from every berth in Helsinki West harbour, South harbour and Vuosaari harbour to the city sewerage and waste-water treatment plant of the city of Helsinki. RoRo-passenger ferries are exempted from the mandatory delivery of waste used the port sewer network for discharging sewage.

All three harbours of the Port of Helsinki facilities exist to discharge the sewage from ships directly into the municipal waste-water treatment plant. Additionally, international cruise ships can leave their sewage onshore at Hernesaari and Katajanokka cruise quays.

Despite that the legislation provides for discharging the sewage into the sea, more and more ships leave the black and grey waste-waters to be treated onshore. Starting from 2009, the Port of Helsinki is not charging more for wastewater left by ships in the port sewer system.

A new shore power centre at Pakkahuone Quay is installed, capable to provide a maximum output of 400V/250A. Port of Helsinki plans to build shore side electricity facilities for ferries between Helsinki and Stockholm. Currently such facilities for high speed catamarans in Helsinki South harbour are in place7_.

In the seaport Sankt Petersburg are 11 terminals for turnover of cargo with a capacity of 78 berths for all kinds of goods: berths of the trading port St. Petersburg (JSC ―Sea Port of Saint-Petersburg‖), the former timber port (operator OJSC „PetroLesPort―), the fishery and inland port, the oil and passenger terminals and the

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berths of the ship building and repair companies. Moreover, there are more berths available in Kronstadt, Lomonossov/Bronka and in Gorskaya.

The cargo area Gutuevsky Kovsh at the mouth of the Neva River services ships of up to 185 meters in length and a draught of 9.8 meters.

Generally port development follows the intention to reduce dependency on ports in the Finnish and Baltic states, which to a large extent function as transit ports to and from Russia. A Multi-purpose Terminal is being constructed as part of the port complex STP Ust-Luga in the southern part of the Luga Bay in the Gulf of Finland. In addition to the terminals for bulk, oil and oil products a facility for liquidation of gas is planned.

The Multi-purpose Terminal shall consist of a Ro/Ro/ferry Terminal and a Container Terminal. The new container terminals under construction is intended to accommodate 150 thousand TEU containers.

For cruise ships Sankt Petersburg intends to offer seven berth , three cruise ship terminals and one ferry terminal for a ship of 300 m on an area of 400 ha in 2010. When finalized it is planned to check up to 12 000 passengers per day.

Since 2002 there is a Port Waste Management Plan in place in the port of Sankt Petersburg. It includes also ship generated wastes and cargo residues.

Kaliningrad port is located in the mouth of Pregol river, situated in an enclave bounded by Lithuania and Poland. There are three port areas: 1) The City Harbour, the oldest and largest port which comprises the Sea Commercial Port of Kaliningrad (located in the mouth of the Pregolya River), Kaliningrad Sea Port (the former deep sea fishing port) and River Port of Kaliningrad, 2) The Baltisk Port located on the peninsula between the Baltic Sea and the Primorskaya Bay and at the entrance of the channel to the city of Kaliningrad, 3) The LUK-oil export terminal located on the Vostochny peninsula along the channel through the Primorskaya Bay.

Kaliningrad Oil Terminal loading export oil cargoes has 310 m loading berths and about 35 000 m³ tank storage capacity. Baltiysk Oil Handling Terminal loading export oil cargoes has 1 loading berths, about 15 000 m³ tank storage capacity. LukOil Terminal loading export oil cargoes has 3 loading berths, about 120 000 m³ tank storage. The sea routes from Kaliningrad port to Kiel, Hamburg, Sankt Peterburg and Lubeck are under operation on a regular basis.

Discharge of slops and garbage in Kaliningrad is compulsory for Russian flag vessels and not compulsory for foreign flag vessels. Reception facilities are available upon request. Slops/garbage reception carges are levied in any way as Sanitary Dues. Vessels having modern equipment for complete utilization of slops and garbage have 50% rebate on sanitary dues8_.

Port of Primorsk is owned and operated by Transneft, Russia's state pipeline monopoly. Primorsk is situated 137 km west of St. Peterburg. It is the largest crude oil port in the Baltic Sea. The port offers 2 berth and is accessible for ships of overall length of 307 m and the draft of up to 15 m. In Primorsk tankers to a size of 80.000

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BRT can be handled. Pipeline capacities are for 11 mill tons per year and are planned to be enlarged to 17 mill tons. LNG- and container terminals are located in the port as well.

Sludge and bilge water is to be barged, but reception of slops and washings (from the tank) is not foreseen.

The Port of Kiel is situated in a fjord in the wider Kiel bay. The most important feature is the Kiel Canal linking the North Sea with the Baltic Sea. Norwegenkai, Schwedenkai, serve the big ferries to Oslo and Göteborg. Norwegenkai, Bollhörnka and Ostseekai serve most of the cruise ships while Sartorikai serves smaller cruise ships and sailing ships. All these keys form the Inner City Harbour with water depths of 10 m.

On the eastern shore of the Kiel fjord with water depth of up to 10 m the LoLo and RoRo and RoPax Traffic to St. Petersburg, Klaipeda and Kaliningrad is concentrated. Nordhafen and Scheerhafen, both 8,5 m of depth, form the Kiel Canal Harbour are serving for import of mineral oil and export of agrarian goods.

The port of Kiel is being visited by around 130 cruise ships per year. Ferry and cruise traffic sum up to 1.8 mill passengers per year. New built Ostseekai is ready to check up to 3 000 cruise passengers.

Ship wastes and cargo residues are to be discharged before leaving the port. Discharge of oily residues has to be pre-announced and is carried out by certified service providers. Black water and grey water also can be discharged in foreseen discharge sewage pipes to communal water treatment plant. The Norwegen Kai was build with provisions for eventual later installation of cold ironing cables.

The Port of Lübeck is located approximately 40 km northeast of Hamburg, in the Lübeck Bay. Port of Lübeck comprises several terminals from the city of Lübeck to the outer part of river Trave.

The Skandinavienkai as one of the largest ferry terminals in Europe records 90 departures per week at 9 jetties, of which 3 have railway siding.

The Nordlandkai surrounding the "Vorwerker Hafen", is the largest terminal of the Lübecker city ports with a quay length of 1 550 m and five Ro/Ro berths. The basin depth is more than 9.5 m. The services offer daily traffic to Helsinki, Rauma, Turku and other Finnish ports. Terminal Konstinkai is a multi-functional port among Lübeck's city ports. The emphasis of the sea connections is targeted on Finland. The port of Hanko is served on a daily basis, offering a RoRo service to and from Finland. Cellulose is regularly handled by Lo/Lo technique. It serves as RoRo Terminal also for newly introduced ferry line to St. Petersburg.

Terminal Schlutup is the distribution center for paper products and the new container and Ro/Ro terminal Seelandkai.

Reception facilties for all ship wastes, cargo residues and oily liquids are as defined by MARPOL 1-5. There is shore side power supply since 2007 for the Skandinavienkai and Seelandkai. Since 2005 ductworks for each further quay are provided.

The Port of Rostock is situated at the mouth of the river Warnow is accessible for ships with a draught of 13 m, but ships longer than 230 m need an extra permission.

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There are several port areas on the western bank of the river Warnow between the Warnemünde Cruise terminal in the North and the Rostock Stadthafen in the South. The Overseas port in Rostock , including Oil Harbour is the main port area of Rostock . The Oil harbour provides several berth with two of 13 m depths and 260 m length. Pipelines link the oil port with the refineries in Böhlen, Leuna and Schwedt. The port is handling over 4 mill tons of liquid goods per year.

At Warnemünde Cruise Center, opened in May 2005, around 2.500 passengers can be checked a day. Over 100 cruise ships are calling at the center every year.

The port has a ferry terminal with 6 berths offering several daily routes to Gedser, Trelleborg

and a RoRo ferry service operating on Liepaja. The Superfast ferry operates a daily ferry connection to Hanko.

The removal and disposal of ship-generated wastes and cargo residues for the area of Rostock seaport and Warnemünde Cruise Terminal is available on demand and is carried out by a waste management company after the ship‘s command notification of the intended waste disposal. Pumpable wastes is collected by a tank truck.

The Port of Göteborg is a combined river and seaport. It is the largest Swedish port and directly called by transcontinental liner services. The newer port facilities are concentrated on the northern bank of the river mouth. Older facilities, for passenger and cargo ferry traffic, are located further upstream. Both, ferry traffic and the majority of cruise ships call at the inner harbours, close to the city centre. Each year, 2.3 million passengers pass through Göteborg.

Göteborg's Oil Terminal is the most important general oil terminal in Scandinavia. The port provides land for depots and quays, and equipment for loading and unloading/bunkering oil. Each year about 2 500 ships call at the port. The annual turnover of crude oil, oil products and chemicals is over 20 million tons. The Port of Göteborg also functions as a reloading hub of Russian crude oil. It offers intermediate storage of chemical products, petrol, renewable products such as ethanol and bio-oils and other oil-based products.

Göteborg has the largest container terminal in Scandinavia and is also the only port in the Nordic region with deep-sea direct calls to all parts of the world.

Ferry and cruise terminal Stena Line is the dominating ferry company that due to high frequency is an important ro/ro operator.

Around 25 cruise ships call at the Port of Göteborg each year, but the port has the capacity to receive considerably more cruise ships than it currently does.

The Port of Göteborg works locally, regionally and globally with environmental matters by participating in different networks, like EcoPorts Foundation.

The collection of waste from vessels calling at the port is handled by the Port of Göteborg by means of waste depots at the quayside. These are either stationary or mobile and the separation of waste according to type is encouraged. Sludge (oil and grease waste from the vessels' engine-rooms, etc) is taken care of using special road tankers or a special vessel. The service is performed by an independent company. The Port of Göteborg was the first in the world to provide high voltage Onshore Power Supply for cargo vessels. This was achieved at the Ro/ro Terminal in 2000. Currently there are two quays at the Ro/ro Terminal that can offer Onshore Power Supply and

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six vessels operating for Stora Enso (three Transatlantic and three Wagenborg) regularly use these connections. Moreover, Stena Line has one quay with high voltage suppl

CLEANSHIP. Study 4.1 Development of future changes for Clean Baltic Sea Shipping. Maritime Institute in Gdańsk. Clean Baltic Sea Shipping

CLEANSHIP

Disclaimer

Table of Contents

4.2.1 TECHNICAL AND OPERATIONAL MEASURES ... 91

LIST OF TABLES

TABLE.1 MAIN INTRA-BALTIC FERRY ROUTES ... 7

TABLE.8 TOP CRUISE OPERATORS ... 16

TABLE.14 TRENDS OF SHIPS DELIVERIES BY REGION OF BUILDERS ... 19

LIST OF FIGURES

FIG.1. BALTIC CONTAINER TRANSPORT MAP ... 10

FIG.6. EXISTING AND PLANNED LNG TERMINALS IN SCANDINAVIA. ... 47

FIG.13. CATEGORIZATION OF EGCS SYSTEMS AND MAIN SUPPLIERS ... 79

Executive summary

Identification of the key Baltic Sea shipping trends

Main Baltic Sea Region operators and services

Table.1 Main intra-Baltic ferry routes

Table.3 Ferry fleets of Baltic operators

Table.4 Top operators – passenger capacity

Fleet and orderbook

Table.5 Characteristics of ship types on the Baltic Sea

Table.6 RoRo fleets of Baltic operators

Table.7 Top Baltic operators– cargo volume

Table.9 Ferry fleets of Baltic operators

Table.10 World shipbuilding market by major types of ships

YEARS

Total Tankers Bulk carriers General cargo ships Container ships Chemical

REGIONS OF BUILD

Total Tankers Bulk carriers Container ships Others

SPECIFICATION

Table.13 Order book by size class and ship types in 2012

DWT – SIZE CLASS

Tankers Bulk Carriers Container ships existing fleet order book existing fleet order book existing fleet order book

Table.15Shipbuilding output forecast till 2015

SPECIFICATION

Table.16 Forecast of vessel sizes on north European container trade

SPECIFICATION 2000 2008 2010 2015 2020

East Asia

Australia

Major Baltic seaports overview