War changed the operating environment

Just as the pandemic began to ease in 2022, war broke out in Europe when Russia invaded Ukraine. This also triggered new challenges for trade and shipping. It is now particularly difficult to predict the future, and the economy is expected to face a worsening economic outlook. Yet the challenges of climate change require solutions.

As Finland is located on the edge of Europe, efficient maritime logistics is vital for the country and its foreign trade. The Russian invasion of Ukraine, which began in February 2022, drastically changed the operating environment. Tensions also increased in the Baltic Sea, and the European Union imposed sanctions and export restrictions on Russia. Ensuring the functionality and continuity of maritime transport proved to be even more important for Finland. Ports for foreign trade also play an important role as part of the security of supply chain in times of emergency.

The energy crisis and high inflation are increasing transportation costs

Finland’s economic growth slowed towards the end of the year as rising energy prices caused inflation to peak in November. There are uncertainties about economic developments and the development of consumer purchasing power. However, if there is a recession in Finland, short cruises may become more popular as they are less expensive than longer journeys abroad.

Economic indicators also show that the global economy is gradually slowing down. In the eurozone, fears of a worsening energy crisis have eased slightly, but not completely.

For shipping companies, a major obstacle to development and growth continued to be the increase in the price of energy or the fuel they mainly use. Naturally, the increase in the price of energy has also increased costs in ports, and the rise in inflation has pushed up the price of infrastructure investments, for example.

Shipping to be included in emissions trading

Maritime operators are looking for different options to reduce emissions and achieve low-carbon transport, for example by exploring different fuel solutions and optimising routes and speed. The UN’s International Maritime Organization (IMO) has set a target of reducing absolute greenhouse gas emissions from shipping by half by 2050.

Meanwhile, the EU’s climate goal is to reduce emissions in the EU by at least 55% by 2030 and to achieve climate neutrality by 2050.

At the end of the year, the European Council and Parliament reached a preliminary agreement on the EU Emissions Trading System. Under the European Green Deal, shipping will be included in the EU Emissions Trading System in 2024. The Fit for 55 climate package is expected to significantly increase the costs of Finland’s foreign trade. It is in the interests of both the climate and sustainable business that ambitious emission reductions are achieved in shipping as well. However, Finland will continue to need ice-strengthened vessels, whose safe year-round operation causes Finland to have higher energy consumption and emissions compared to many other countries. It is vital for Finland that our competitive position is not distorted by our winter conditions.