Editorial:

“Motorways of the sea”
– the key to a new ro-ro era

Of about 40,000 cargo and passenger vessels in the world merchant fleet, approximately 1,200, or three per cent, are ro-ro cargo vessels. In addition almost 2,300 vessels are combined ro-ro and passenger vessels.

All in all, less than 10 per cent of the world fleet consists of vessels capable of hosting rolling cargo. Being a relatively small niche in maritime transportation, even a small change in demand and in market foundations can have significant implications for the industry.
As in all markets, also prices in the ro-ro market change when the balance between supply and demand change. This is however a market without the spectacular ups and downs seen in the tanker and bulker markets.

When the US and British armed forces swooped the market for ro-ros in the beginning of last year for the war in Iraq, charter rates peaked at levels three to four times higher than just a few months earlier. According to shipbroker Barry Rogliano Salles, 1,300-lane metre vessels could be fixed for USD 18,000 per day and owners of 5,000 lane metre vessels could expect daily rates of USD 46,000 over a period of three to six months. Although ro-ro owners celebrated, these levels would probably not make a tanker owner lift his eyebrow more than a notch or two, especially when considering the current levels in the tanker market.

For most ro-ro owners, the economic driving force is to receive a healthy, steady but not presumptuous return on their investments. That is not the case today.

There are very few orders for pure ro-ro cargo carriers in the global orderbook and the ro-ro industry need a sustainable raise in freight rates if this situation is to change.

The key to this change is not primarily in the hands of the customers, but in the hands of our politicians and civil servants. Much have been said over the years about lifting cargo transports from land to sea to reduce traffic congestion, but little have been done.

It’s a paradox that the same politicians aiming at reducing cargo transports on land uses tax grants to subsidise road traffic to such an extent that it is impossible to compete with seaborne cargo freight alternatives. In most European countries, shipping covers its own costs to a much larger extent than land-based transport modes. The problem isn’t that shipping pays – the problem is that the other transport modes don’t.

If the potential of short sea shipping is to be utilised, concrete measures have to be introduced. This includes fair and competition neutral traffic charges. Also development support is needed from the society, and in this respect there are positive signs. The “Motorways of the Sea” concept introduced recently by the EU Commission has already found support in several member states, with France and Italy in the lead. Talks have also started to launch a sea motorway in the Baltic Sea.

This could very well be the beginning of a new era for ro-ro shipping in Europe.

Rolf P. Nilsson
Editor-in-Chief