Maersk responds to T&E report claiming shipping lines are cashing in on ETS

A report by Transport and Environment (T&E) has claimed that major shipping lines are cashing in on the EU’s Emissions Trading System by overestimating costs. However, Maersk has issued a swift critique of the report’s methodology, describing it as “flawed”.

The report, produced by environmental NGO T&E, is based on an examination of over 560 single journeys from 20 ships from four major European shipping companies: MSC, Maersk, Hapag-Lloyd and CMA CGM.

In the report, T&E claims European container shipping companies are “likely to make significant windfall profits by setting these surcharges higher than their ETS costs”.

However, Danish shipping giant Maersk, subject to much scrutiny in the report, has taken issue with T&E’s methodology.

On the opening page of its report, T&E claims that on a single journey from China to Germany, one Maersk ship will make over €325,000 in windfall profits.

The organisation also claims that the Elly Maersk container ship is forecast to make profits of €1.76 million each year.

“Our analysis shows that profits from the ETS surcharges are likely to outstrip shipping companies’ actual ETS costs. Based on these findings, container liners are projected to generate considerable windfall profits up to €325,000 per journey. Annually, some ships will bring in more than €1 million in windfall profits,” the report states.

T&E adds:

“The economies of scale with which shipping operates enable this type of cost pass-through; consumers would pay negligible amounts for final products while shipping companies increase their margins.”

In addition to the above, the T&E report makes the following conclusions:

• Although some predicted that shipping lines could stop more often at neighbouring EU ports to avoid ETS, this has not turned out to be the case as stopping within the EU is more profitable.
• Emissions pricing alone will not lead to effective price signals in the shipping industry. Therefore, bespoke energy efficiency legislation at both EU and IMO level is needed alongside emissions pricing.
• Profits from the ETS surcharges are likely to outstrip shipping companies’ actual ETS costs.

Most profitable journeys according to T&E report ‘Profits uncontained: An analysis of container shipping ETS surcharges’

How did T&E come to its conclusions?

The methodology used by the T&E to assess if shipping lines were overcharging due to the EU’s Emissions Trading System involved analysing 80 ships from Maersk, CMA CGM, Hapag-Lloyd, and MSC. These ships undertook 565 journeys between June and December 2023. The study aimed to represent each company’s fleet energy efficiency and fell under the ETS Directive’s scope.

The analysis defined “windfall profit” as the difference between the ETS surcharges imposed by the companies and the actual ETS costs incurred. To calculate this, the organisation used the ships’ actual 2023 routes, average emissions per nautical mile (from EU MRV regulation data), and journey distances to determine total emission costs, which were then compared against the revenue from ETS surcharges applied to the container capacity utilised on each route. This comparison yielded the ETS profit margin for each journey, revealing whether customers were overcharged.

Maersk’s reaction

In a statement sent to trans.iNFO concerning the report, Maersk said it was “positive” about the finding that competition exists when it comes to EU ETS cost, but added that T&E’s methodology was “flawed”.

“We find it positive that the analysis demonstrates that there is a competition between shipping companies when it comes to the EU ETS cost. Overall, the analysis lacks many of the factors that affect EU ETS costs for shipping companies and therefore the surcharges. The methodology underpinning the analysis is flawed, which in turn leads to inaccurate conclusions that do not reflect reality in our industry,” said the Danish shipping company.

The Maersk statement also cast doubt on the €90/t CO2 figure used in the report:

“Transport & Environment’s analysis uses a €90/t CO2 figure as a general ETS price for Maersk even though the article it quotes clearly states that the figure is only for estimation purposes. No fixed price of €90/t CO2 has been announced. Instead, Maersk updates the Emissions surcharge on a quarterly basis to ensure alignment to the latest EUA price.”

Finally, the statement claimed T&E’s report had used “outdated surcharge estimates”:

“A key feature in the analysis is the focus on selected trades. However, the analysis relies on outdated surcharge estimates for these trades. These older estimates reflect a higher EUA price, leading to higher costs. This in turn leads to the wrong conclusions when compared to the current levels. Newer surcharge estimates are available on Maersk.com and reflect lower EUA prices,” Maersk said.