ZVT Radio: Carl-Johan Hagman

The shipping situation in ECA

Listen to the interview with Carl-Johan Hagman, CEO of Shipping, Drilling and Ferries at Stena, or read the transcript below.

Carl-Johan Hagman, CEO of Shipping, Drilling and Ferries at Stena, welcome to Zero Vision Tool radio, interviewing at the Motorways of the Sea conference in Gothenburg. Can you please introduce yourself and your role at Motorways of the Sea?

My name is Carl Hagman. I am head of shipping activities in the Stena Group, which consists of ferries, tankers and offshore drilling units. I have been talking here about the effects of SECA and how we are reacting to those new challenges.

What is your view of the growth areas in the Baltic Sea?

The Baltic Sea is interesting. I think that traditionally it has really been a node for both transportation and for shipping. More recently, I think that we are struggling, partially, that we have zero growth in Europe compared to three per cent in America, and five or six per cent in China and Asia. And therefore the background is of course difficult. Also, a lot of trade is Russian, and of course with the embargo situation we have now, that adds another challenge. But it is definitely an interesting part of the world and a very important part of Europe, even though there are short-term challenges.

Can you tell us about your keynote speech on the topic of the shipping situation in ECA?

From our ferry business, we have quite a lot of exposure within the new SECA area as of 1 January this year. I guess the immediate effect is that we will have a cost increase in our company of about SEK 0.5 billion, which is a major challenge and we are currently in negotiations with our biggest customers about how to share this cost. This will make Scandinavian industry so much less competitive. That is a challenge not only for us in the shipping industry, but I guess for the whole region. Having said that though, we now of course have to adopt and adjust to this new reality, and that is why we are looking at a number of technical solutions.

We are not going for one solution. We are looking at methanol, which we think is very exciting, because we think that might be the end solution and could be used globally. We are also installing scrubbers on some of our vessels, we are looking at LNG conversion on existing vessels but also for new buildings, but the main solution will actually be to move from heavy fuel oil to marine gas oil, and that entails this SEK 0.5 billion cost increase, which really is a struggle just now.

Is there anything you would like to tell the listeners about?

I think that the shipping industry is a fantastic industry to be in. We have had phenomenal growth and it is completely globalised. The only way we can succeed from a Swedish and a European point of view is if we have a level playing field. That means that legislation needs to be global. If we are not successful with global legislation, it at the very least needs to be EU-wide. The SECA that we now have is a really original piece of legislation, and that is precisely what the shipping industry has difficulty adapting to, because it puts us at a competitive disadvantage in an otherwise very global industry.

It really is about how we, together with the Motorways of the Seas project and the TEN-T initiatives, can somehow manage to maintain European growth and a European shipping industry despite now having world-class environmental requirements. That is the short term. In the long term of course we are addressing the ultimate challenge of shipping, and that is the emissions issue. SECA will definitely show that shipping is the most sustainable way of transporting goods around the world, so in the long term, this is a positive move.

Where do we go from here on a global scale?

Well, what we hope of course is that we will have globally cohesive legislation. We will just have to see how fast our legislators move. We think we need time to adapt. We now have to manage this area. But in the long term, if we believe that globalisation is only just beginning and that there will continue to be significant increases in the amount of ocean transportation… of course the rest of the world also has to address its emission issues in the same way that we are in Northern Europe.

What is your experience of the Motorways of the Sea conference so far?

I think that it is cool that we are in Gothenburg, that Gothenburg still has the power to attract an international audience and that we are a centre for shipping and shipping discussions on an EU and on a global level. As a Swede and as a citizen of Gothenburg, I am actually very proud and happy today.

Thank you.