The Swedish EU Presidency and the Ship Supply Industry

Six months of crisis management?

Carl Forsman, Chairman of the Swedish Association of Ship Suppliers reflects on Swedish leadership in the European Union in times of crisis and what it means for EU ship supply.

"Ukraine, Ukraine, Ukraine will be very much on the forefront of the priority of our presidency."

These are the words of Lars Danielsson, Sweden's ambassador to the European Union, when asked about the focus of the Swedish EU presidency (1st of January – 30th of June 2023).

It is, of course, not surprising. Russia's unlawful and brutal invasion of Ukraine has already resulted in thousands of deaths and unimaginable destruction; their relentless barbarism will be felt for years to come. So, I agree with our ambassador. It has to be our focus, not only because supporting Ukraine is the right thing to do, but also because of the ramifications the war imposes on our entire union.

That being said, it cannot be the sole focus. 2023 will, by every imaginable scenario, be an extremely challenging year because of several problematic factors. I will share my thoughts on some of them and look at them from the perspective of our industry.

COVID-19 lingering

Infection numbers are on the rise again, and it is fair to say that the risk of new lockdowns or other regulations is likely, even if we are much more experienced and prepared than we were two years ago. If restrictions are reintroduced, lawmakers must consider the importance of allowing shipping and its surrounding services, including ship supply, to continue. Haltering the flow of goods in times of crisis will help no one.

Additionally, I also think it is essential that the EU have a more harmonized approach regarding the above; last time we had lockdowns (and other restrictions), we could see that ship suppliers in some countries gained an advantage simply because of how restrictions were laid out in their country compared to other member states. Having vastly different rules that directly affect your businesses' operations in different countries of the same union creates confusion and unfair trading conditions. 

 

Inflation, recession & a looming trade war

The consequences of the Russian invasion of Ukraine might not be the only reason for the rise in inflation, but they certainly do not help. This has impacted our industry a lot; notifications with "We are raising our prices!" from suppliers are almost as every day as the GDPR emails of 2018. Even so, this impacts everyone in the supply chain, and the general level of understanding is relatively high. There is, however, another problem that might have more long-lasting effects, and that is the cost of necessities. 

The price of fuel, food, rent, electricity, household items, and whatever else you need in your everyday life has increased dramatically. Eventually, this will lead to a proper recession, which might bring even more dire consequences for shipping and ship supply. With less money in their pockets, people have no choice but to purchase fewer goods and services, which will affect the transport (shipping) and tourist (cruise lines) sectors. As a result, we will have increased operational costs, the price of goods will be higher, and our customers will have reduced purchasing power. 

The response from the EU is currently quite uncertain, as different opinions exist within our union's member states. Furthermore, the Biden administration (US) passed the Inflation Reduction Act (IRA) in August (2022), a US federal law that approves $391 billion in spending to curb inflation. At first, glance, even though the number is staggering, it might seem appropriate since the US is struggling in the same way as we are. The details of this bill will, on the other hand, create problems regarding the EU's decision on how to proceed. For example, the IRA features tax credits for electric vehicles (up to $7500 for new purchases). Still, it will only apply if the product is assembled in the US and if the majority of components are sourced domestically or from a country that is considered a free trade partner to the US. Unfortunately, the US and the EU do not have a free trade agreement and that would exclude our goods from that equation; this situation is what some people describe as the possible beginning of a transatlantic trade war.

Whatever happens, the EU must tread carefully and tend to the situation with utter care; moving forward, we should all expect tough financial times, but the EU has to make sure that we do not go from "struggle" to "disaster".    

Climate change

The EU strives to become the world's first climate-neutral continent by 2050; before that, we should have reduced our emissions by 55% (compared to 1990 levels) by 2030. It is a race against the clock and, considering the consequences of inaction, most likely our most important one.

The war in Ukraine, COVID-19, and inflation are all very problematic situations that we need to combat the implications. However, I fear that it has all been for nothing if we do not simultaneously address climate change. Failing to do so might result in this issue conjuring a far more devastating reality regarding our health, finances, opportunities, and, indeed, an entire way of life. Sweden has always been very committed to this "European Green Deal", and I feel confident that my home country will prioritize climate change during its presidency; however, I worry that more acute problems will cast a large shadow over this existential threat. Therefore, it is vital now more than ever to work towards several goals simultaneously.   

As a ship supplier, I hope the EU keeps the maritime industry in mind when plotting for the future. Large ships are sources of substantial emissions; it is easy to point to our sector and claim that we make out a part of the issue. I admit that the maritime industry is responsible for many of the world's emissions. Still, I also think that people who end their thought there are looking through the wrong end of their binoculars. The maritime industry is necessary for the entire world to function, and there is only one way to make sure that we move forward, and that would be looking at shipping as a part of the solution and not a part of the problem. 

Keep funding innovation, reward progress, educate, share information, and collaborate as much as possible. This is how we limit the consequences of climate change.

 

Takeaway

I've chosen to highlight some significant issues in this blog post. However, they are only some of the challenges that we will face in 2023 (and onwards). I could have included the energy crisis, digitalization, political destabilization, and several other things that might affect our industry. But, there is no doubt, as Sweden holds the presidency for the third time in history – there will be no time to spare. 

For us, the ship suppliers, the work of OCEAN will be critical moving forward. We must have a united voice to speak for us in a world with many issues. We will continue to fight for our interests' concerning customs, fair trading conditions, veterinary affairs, taxation, and all other areas that influence our industry the most. We will also ensure that we keep up with the changing world; adapting is the only way to secure influence.

Our organization's experience, collected knowledge, and expertise allow me to be optimistic about the future. We will endure and keep on fighting for our industry, one day at a time.

 

Photo: Johannes Frandsen, Regeringskansliet (SE)