Roundwood shipping in the Baltic Sea region

Itämeren liikenteen on ennustettu kasvavan voimakkaasti tulevaisuudessa. Metsäteollisuus toimialana on kuitenkin syklinen. Tällä hetkellä raakapuun tuonti Suomeen on hienoisessa nousussa, kun taas Ruotsissa tuonnin alamäki jatkuu. Tämän diplomityön tavoitteena oli kuvata ja arvioida raakapuun merikuljetuksia Itämeren alueella. Tutkimuksessa esitetään keskeisimmät raakapuun materiaalivirrat Itämerellä ja kuvataan satamatekniikan ja alustyypin valinnan vaikutusta, kun tavoitteena on saavuttaa tehokas raakapuun kuljetusketju. Tutkimuksen merkittävin tulos on teoreettinen edestakaisen matkan laskentamalli, jonka on tarkoitus kuvata aluskohtaista kustannustehokkuutta sekä kapasiteettia tietyllä laivausreitillä. Malli sopii käytettäväksi varsinaisen linjaliikenteen reittisuunnittelun perustana.

Ship Leases under IAS 17, case Fortum Shipping

International accounting standards will be applied from the1st of January 2005 in accounting of member states of the EU with a view of harmonizing the accounting practices in Europe, and on the long term even more widely. The purpose of adopting IAS accounting standards is to make the financial statements and financial information received from companies more comparable and more transparent for investors and other interest groups. IAS 17 introduces the treatment of a lease agreement in the light of the new accounting standards. Finnish companies have used finance leases widely as an alternative, off-balance sheet form of financing capital investments consistently with Finnish GAAP. Along with the appliance of IAS 17 the off-balance-sheet financing possibility of leases classified as finance leases will no longer exist. IAS 17 states that finance leases are going to be recognized in the balance sheet as both assets, in form of fixed assets, and loans in liabilities classified as long and short term loans. IAS 17 will make two major changes to the income statement. Firstly, the lease payments formerly treated as variable costs are moved below the operating profit level to finance costs. Secondly, the depreciations from the leased assets are also introduced. The effects to the case company's, Fortum Shipping's, income statement and balance sheet are remarkable. Along with the appliance of IAS Fortum Shipping's net assets are somewhat going to be doubled, the amount of liabilities increases significantly and the earnings before interests and taxes increases moderately. The preceding factors have a big effect on the case company's financial key figures. So, the IAS originated effects on balance sheet and income statement have essential impacts on a company's key financial indicators. Most significant changes can be found in key ratios measuring profitability, capital structure, and efficiency. This means that when comparing the IAS calculated profits of companies with the profits calculated prior with Finnish GAAP, the analysis should be made with prudence because the figures are not comparable on straight-forward basis.

Externalities of Shipping in the Gulf of Finland until 2015

During the last few years, the discussion on the marginal social costs of transportation has been active. Applying the externalities as a tool to control transport would fulfil the polluter pays principle and simultaneously create a fair control method between the transport modes. This report presents the results of two calculation algorithms developed to estimate the marginal social costs based on the externalities of air pollution. The first algorithm calculates the future scenarios of sea transport traffic externalities until 2015 in the Gulf of Finland. The second algorithm calculates the externalities of Russian passenger car transit traffic via Finland by taking into account both sea and road transport. The algorithm estimates the ship-originated emissions of carbon dioxide (CO₂), nitrogen oxides (NO_x), sulphur oxides (SO_x), particulates (PM) and the externalities for each year from 2007 to 2015. The total NOx emissions in the Gulf of Finland from the six ship types were almost 75.7 kilotons (Table 5.2) in 2007. The ship types are: passenger (including cruisers and ROPAX vessels), tanker, general cargo, Ro-Ro, container and bulk vessels. Due to the increase of traffic, the estimation for NO_x emissions for 2015 is 112 kilotons. The NO_x emission estimation for the whole Baltic Sea shipping is 370 kilotons in 2006 (Stipa & al, 2007). The total marginal social costs due to ship-originated CO₂, NO_x, SO_x and PM emissions in the GOF were calculated to almost 175 million Euros in 2007. The costs will increase to nearly 214 million Euros in 2015 due to the traffic growth. The major part of the externalities is due to CO₂ emissions. If we neglect the CO2 emissions by extracting the CO₂ externalities from the results, we get the total externalities of 57 million Euros in 2007. After eight years (2015), the externalities would be 28 % lower, 41 million Euros (Table 8.1). This is the result of the sulphur emissions reducing regulation of marine fuels. The majority of the new car transit goes through Finland to Russia due to the lack of port capacity in Russia. The amount of cars was 339 620 vehicles (Statistics of Finnish Customs 2008) in 2005. The externalities are calculated for the transportation of passenger vehicles as follows: by ship to a Finnish port and, after that, by trucks to the Russian border checkpoint. The externalities are between 2 – 3 million Euros (year 2000 cost level) for each route. The ports included in the calculations are Hamina, Hanko, Kotka and Turku. With the Euro-3 standard trucks, the port of Hanko would be the best choice to transport the vehicles. This is because of lower emissions by new trucks and the saved transport distance of a ship. If the trucks are more polluting Euro 1 level trucks, the port of Kotka would be the best choice. This indicates that the truck emissions have a considerable effect on the externalities and that the transportation of light cargo, such as passenger cars by ship, produces considerably high emission externalities. The emission externalities approach offers a new insight for valuing the multiple traffic modes. However, the calculation of the marginal social costs based on the air emission externalities should not be regarded as a ready-made calculation system. The system is clearly in the need of some improvement but it can already be considered as a potential tool for political decision making.

Efficiency of the ISM Code in Finnish Shipping Companies

Due to increasing waterborne transportation in the Gulf of Finland, the risk of a hazardous accident increases and therefore manifold preventive actions are needed. As a main legislative authority in the maritime community, The International Maritime Organization (IMO) has set down plenary laws and recommendations which are e.g., utilised in the safe operations in ships and pollution prevention. One of these compulsory requirements, the ISM Code, requires proactive attitude both from the top management and operational workers in the shipping companies. In this study, a crosssectional approach was taken to analyse whether the ISM Code has actively enhanced maritime safety in the Gulf of Finland. The analysis included; 1) performance of the ISM Code in Finnish shipping companies, 2) statistical measurements of maritime safety, 3) influence of corporate top management to the safety culture and 4) comparing safety management practices in shipping companies and port operations of Finnish maritime and port authorities. The main results found were that maritime safety culture has developed in the right direction after the launch of the ISM Code in the 1990´s. However, this study does not exclusively prove that the improvements are the consequence of the ISM Code. Accident prone ships can be recognized due to their behaviour and there is a lesson to learn from the safety culture of some high standard safety disciplines such as, air traffic. In addition, the reporting of accidents and nearmisses should be more widely used in shipping industry. In conclusion, there is still much to be improved in the maritime safety culture of the Finnish Shipping industry, e.g., a “no blame culture” needs to be adopted.

Indicent reporting in shipping. Experiences and best practices for the Baltic Sea

Incident and near miss reporting is one of the proactive tools of safety management. By analyzing incidents and near misses and by corrective actions, severe accidents can potentially be avoided. Near miss and incident reporting is widely used in many riskprone industries such as aviation or chemical industry. In shipping incident and near miss reporting is required by the mandatory safety management system International Safety Management Code (ISM Code). However, in several studies the conclusion has been that incidents are reported poorly in the shipping industry. The aim of this report is to highlight the best practices for incident reporting in shipping and to support the shipping industry in the better utilization of incident reporting information. The study consists of three parts: 1) voluntary, shared reporting systems in shipping (international experiences), 2) interview study at four shipping companies in Sweden and in Finland (best practices), 3) expert workshop on incident reporting (problems and solutions). Preconditions for a functional reporting system are an existing no blame culture, commitment of the top management, feedback, good communication, training and an easy-to-use system. Although preconditions are met, problems can still appear, for example due to psychological, interpersonal or nationality-related reasons. In order to keep the reporting system functioning, the shipping company must be committed to maintain and develop the system and to tackle the problems. The whole reporting process from compiling, handling and analyzing a report, creating corrective actions and implementing them has to be handled properly in order to gain benefits from the reporting system. In addition to avoiding accidents, the functional reporting system can also offer other benefits by increasing safety awareness, by improving the overall safety and working conditions onboard, by enhancing team work and communication onboard and between ships and the land-based organization of shipping companies. Voluntary shared reporting systems are supported in the shipping industry in principle, but their development in the Baltic Sea is still in its infancy and the potential benefits of sharing the reports have not been realized. On the basis of this study we recommend that a common reporting system be developed for the Baltic Sea area which all the ships operating in the area could use regardless of their flag. Such a wider system could prevent some of the problems related to the current national systems. There would be more incident cases available in the database and this would support anonymity and thus encourage shipping companies to report to a shared database more frequently. A shared reporting system would contribute to the sharing of experiences and to the wider use of incident information in the shipping industry.

Corporate Social Responsibility and Shipping Views of Baltic Sea Shipping Companies on the Benefits of Responsibility

The safety of shipping operations in the Baltic Sea is an extensively studied issue due to the density of traffic and the ecological sensitivity of the area. The focus has, however, mainly been on ship technology or on traffic control measures and the operative safety aspect of shipping is in a minor position in maritime safety studies and is lacking in terms of solutions. Self-regulatory and voluntary measures could be effective ways to improve the operational safety of shipping. Corporate social responsibility, or CSR, is one example of a voluntary measure that the shipping companies can take. CSR can enhance maritime safety and improve the shipping companies’ competitiveness. The aim of this study is to increase the knowledge of CSR in the maritime sector and study its applicability and benefits to the shipping companies. The research comprises of a theory part and a questionnaire study, which examine the significance of corporate social responsibility in shipping companies’ maritime safety and competitiveness. The aim of the questionnaire study is to find out how corporate social responsibility is implemented in the shipping companies. According to the literature review, responsible actions can produce financial and time costs, but due to these actions cost savings in the form of learning and increased efficiency can be achieved. Responsible actions can also produce concrete improvements and a reputation of responsibility that can lead to both cost savings and increase in the company’s income. CSR is recognised as having real business benefits in terms of attracting customers and high-quality employees. In shipping, CSR usually focuses on environmental issues. Environmental social responsibility in shipping is mainly motivated by the need to comply with existing and forthcoming regulation. Shipping companies engage in CSR to gain competitive advantage and to increase maritime safety. The social aspects of CSR take into account the well-being and skills of the employees, corporation and other stakeholders of the company. The questionnaire study revealed that the most common CSR measures in shipping companies are environmental measures, and that environmental concerns are considered to be the most important reason to engage in CSR. From the preliminary question about the concept of CSR it can also be seen that safety issues are commonly considered to be a part of CSR and safety gains are the second most important reason to engage in CSR. From the questionnaire, it can also be extrapolated that gaining a better reputation is one of the most important reasons to engage in CSR in the first place. For example, the main economic benefit was seen to be the increase of customer numbers as a result of a better reputation. Based on the study, it would seem that companies are starting to realise that they might gain competitive advantage and be favoured as shippers if they engage in sustainable, responsible operations and present themselves as “green”.

The effect of environmentally differentiated port fees to shipping companies’ environmental investments

The pressure has grown to develop cost-effective emission reduction strategies in the Baltic Sea. The forthcoming stringent regulations of the International Maritime Organization for reducing harmful emissions of shipping in the Baltic Sea are causing increasing expenses for the operators. A market-based attitude towards pricing of economic incentives could be seen as a new approach for a successful application for the additional emission reduction of nitrogen oxides (NOx). In this study the aim is to understand the phenomenon of environmentally differentiated port fees and its effects on shipping companies’ emission reduction investments. The goal is to examine empirically the real-life effects of the possible environmental differentiated port fee system and the effect of environmentally differentiated port fees on NOx reduction investments in the Baltic Sea. The research approach of this study is nomothetical. In this study research questions are answered by analyzing the broad database of the Baltic Sea fleet. Also the framework of theory is confirmed and plays an important role in analyzing the research problem. Existing investment costs of NOx emission reduction technology to ship owners are estimated and compared to investment costs with granted discounts added to the cash flows. The statistical analysis in this study is descriptive. The major statistic examination of this study is the calculation of the net present values of investments with different port fee scenarios. This is done to investigate if the NOx technology investments could be economically reasonable. Based on calculations it is clear that the effect of environmentally differentiated port fees is not adequate to compensate the total investment costs for NOx reduction. If the investment decision is made only with profitability considerations, sources will prefer to emission abatement as long as incomes from the given subsidy exceeds their abatement costs. Despite of the results, evidence was found that shipping companies are nevertheless willing to invest on voluntary emission abatement technology. In that case, investment decision could be made with criteria of, for example, sustainable strategy or brand image. Combined fairway and port fee system or governmental regulations and recommendation could also function as additional incentives to compensate the investment costs. Also, the results imply that the use of NPV is not necessarily the best method to evaluate environmental investments. If the calculations would be done with more environmental methods the results would probably be different.

Developing short sea shipping transportation chains at Helsinki-Tallinn route

Short sea shipping is an important part of the European economy and an alternative to road transport of goods in Europe. It represents an intermodal transport combination of sea and land on a Door-to-Door basis, and it aims to develop more sustainable transport network with the least negative impacts by the transport modes. This Master’s thesis addresses the development of short sea shipping transportation chains at Helsinki-Tallinn route. The Master´s thesis explores the development of short sea shipping at Helsinki-Tallinn route by analyzing the shipping costs per unit transported by different ship types and sizes between port of Helsinki-Vuosaari harbour and port of Tallinn-Muuga harbour, and examining the possibility of Ro-Ro traffic as well. The study is qualitative-quantitative method and it is based on a case study, data is collected from secondary and primary sources, and mixed methods analysis is used to implement the interviews and observations results with the databases analysis. In the thesis factors affecting on short sea shipping are explored and analyzed, also the possibility of Ro-Ro shipping is examined, by comparing the shipping cost and the environmental impact of different ships like container ships, Ropax, and CONRO ships. The finding of this research shows the importance of time at port and utilization as a shipping cost determinants, the relationship between ship type and costing, and the possibility of Ro-Ro shipping.

A service perspective to digital innovation: exploring the emergence of autonomous shipping

Current research describes digital innovation largely similar to product innovation. Digital innovation is seen as an object of coherent activities, however in reality digital innovation results from convergence of variant technologies and those related actors with versatile business goals. To account for the dynamic nature of digital innovation, this study applies a service perspective to digital innovation. The purpose of the study is to understand how digital innovation emerges within a service ecosystem for autonomous shipping. The sub-objectives of this study are to 1) identify what factors motivate and demotivate actors to integrate resources for autonomous shipping, 2) explore the key technology areas to be integrated to realise the autonomous shipping concept, and 3) suggest how the technology areas are combined for mutual value creation within a service eco-system for autonomous shipping. Insights from autonomous driving were also included. This study draws on literatures on service innovation and service-dominant logic. The research was conducted as a qualitative exploratory case study. The data comprise interviews of 18 marine and automotive industry experts, 4 workshops, 4 seminars, and observations as well as various secondary data sources. The findings revealed that the key actors have versatile motivations regarding autonomous shipping. These varied from opportunities for single applications to occupying a central role in an autonomous technology platform. Thus, autonomous shipping can be seen as an umbrella concept comprising multiple levels. In technical terms, the development of the concept of autonomous shipping is largely based on combining existing technology solutions, which are gradually integrated towards more systemic entities comprising areas of the autonomous shipping concept. This study argues that a service perspective embraces the inherently complex and dynamic nature of digital innovation. This is captured in the developed research framework that describes digital innovation emerging on different levels of interaction: 1. strategic relationships for new solutions, 2. new local networks for technology platforms, and 3. global networks for new markets. The framework shows how the business models and motivations of digital innovation actors feed the emergence of digital innovation in overlapping service ecosystems that together comprise an innovation ecosystem for autonomous technologies. Digital innovation managers will benefit from seeing their businesses as part of a larger ecosystem of value co-creating actors. In orchestrating digital innovation within a service ecosystem, it is suggested that managers consider the resources, roles and institutions within the ecosystem. Finally, as autonomous shipping is at its infancy, the topic provides a number of interesting avenues for future research.

Viability of part cargoes in tramp shipping company’s routing and scheduling decisions

Operational excellence of individual tramp shipping companies is important in today’s market, where competition is intense, freight revenues are modest and capital costs high due to global financial crisis, and tighter regulatory framework is generating additional costs and challenges to the industry. This thesis concentrates on tramp shipping, where a tramp operator in a form of an individual case company, specialized in short-sea shipping activities in the Baltic Sea region, is searching ways to map their current fleet operations and better understand potential ways to improve the overall routing and scheduling decisions. The research problem is related to tramp fleet planning where several cargoes are carried on board at the same time, which are here systematically referred to as part cargoes. The purpose is to determine the pivotal dimensions and characteristics of these part cargo operations in tramp shipping, and offer both the individual case company and wider research community better understanding of potential risks and benefits related to utilization of part cargo operations. A mixed method research approach is utilized in this research, as the objectives are related to complex, real-life business practices in the field of supply chain management and more specifically, maritime logistics. A quantitative analysis of different voyage scenarios is executed, including alternative voyage legs with varying cost structure and customer involvement. An on-line-based questionnaire designed and prepared by case company’s decision group again provides desired data of predominant attitudes and views of most important industrial customers regarding the part cargo-related operations and potential future utilization of this business model. The results gained from these quantitative methods are complied with qualitative data collection tools, along with suitable secondary data sources. Based on results and logical analysis of different data sources, a framework for characterizing the different aspects of part cargo operations is developed, utilizing both existing research and empirical investigation of the phenomenon. As conclusions, part cargoes have the ability to be part of viable fleet operations, and even increase flexibility among the fleet to a certain extent. Naturally, several hinderers for this development is recognized as well, such as potential issues with information gathering and sharing, inefficient port activities, and increased transit times.