Cost-Benefit Analysis of STM Validation Project

STM_Validation_5.3.6Cost-Benefit Analysis of STM Validation Project

2019-06-30

STM VALIDATION – COST BENEFIT ANALYSIS 2

DOCUMENT STATUS

Authors

Name Organisation

Jorge Miguel Lara López Fundación Valenciaport

Amparo Mestre Alcover Fundación Valenciaport

Lucía Calabria Tasa Fundación Valenciaport

Julián Martínez Moya Fundación Valenciaport

Review

Name Organisation

José Andrés Giménez Maldonado Fundación Valenciaport

Approval

Name Organisation Signature Date

Document History

Version Date Status Initials Description


Table of contents

Index of Figures ..................................................................................................................... 5

Index of Tables ...................................................................................................................... 6

1 Introduction .................................................................................................................... 8

2 Methodology ................................................................................................................... 9

3 Socio-Economic Context ...............................................................................................11

4 Definition of Objectives ..................................................................................................17

5 Identification of the Project ............................................................................................19

6 Technical Feasibility ......................................................................................................21

6.1 Demand analysis ....................................................................................................21

6.1.1 Port Calls data .................................................................................................21

6.1.2 Ship metrics data ............................................................................................26

6.1.3 Shore Centres and Service Providers metrics data .........................................27

7 Financial Analysis ..........................................................................................................28

7.1 Initial hypotheses ...................................................................................................28

7.2 Investment costs ....................................................................................................29

7.3 Revenues ...............................................................................................................31

7.3.1 Port Authorities’ revenues ...............................................................................31

7.3.2 Port terminals’ revenues ..................................................................................32

7.3.3 SMHI revenues ...............................................................................................33

7.3.4 SSPA revenues ...............................................................................................33

7.4 Operational costs ...................................................................................................34

7.4.1 Port Authorities’ costs ......................................................................................35

7.4.2 Port terminals’ costs ........................................................................................37

7.4.3 Pilotage costs ..................................................................................................38

7.4.4 Towage costs ..................................................................................................40

7.4.5 Mooring costs ..................................................................................................42

7.4.6 Shore centres costs.........................................................................................43

7.4.7 SMHI costs ......................................................................................................44

7.4.8 SSPA costs .....................................................................................................45

7.4.9 SAR costs .......................................................................................................45

7.4.10 Shipping companies’ costs ..............................................................................46

7.5 Financial profitability ...............................................................................................51

7.5.1 Return on Investment per agent ......................................................................52

7.5.2 Return on Investment of the project .................................................................58

8 Economic Analysis ........................................................................................................61

8.1 Initial observations..................................................................................................61


8.2 Consumers’ surplus ................................................................................................61

8.3 Gross Producer Surplus .........................................................................................63

8.4 Externalities............................................................................................................64

8.4.1 Air pollution .....................................................................................................64

8.4.2 Accidents and incidents at sea ........................................................................67

8.5 Corrected Investments and costs ...........................................................................69

8.6 Overall results ........................................................................................................74

9 Risk Assessment ...........................................................................................................77

9.1 Sensitivity analysis .................................................................................................77

9.2 Qualitative risk analysis ..........................................................................................78

9.3 Risk prevention and mitigation ...............................................................................80

10 Conclusions ...............................................................................................................81

11 Reference Material ....................................................................................................82


Index of Figures

Figure 1: Methodological approach extracted from the Guide. ..............................................10

Figure 2: Global economy activity prospects ........................................................................11

Figure 3: Economic indicators of the European countries .....................................................12

Figure 4: Gross domestic product, merchandise trade and seaborne shipments 1975-2016 (1990=100) ....................................................................................................................13

Figure 5: Intra-EU exports of goods compared with Extra-EU exports of goods by Member State, 2017 (share %) ...................................................................................................14

Figure 6: Modal split of freight transport, EU-28, 2012 and 2017 (%share in ton-Km) ...........15

Figure 7: Main statistics of casualties and incidents between 2011 and 2017 .......................16

Figure 8: Investment of the main actor identified for the analysis in 10-year timeline of the project ...........................................................................................................................30

Figure 9: Evolution of revenues during the horizon analysed per actor involved ...................31

Figure 10: Total operating costs saved for shipping companies ............................................51

Figure 11: Percentage of NPV per agent ..............................................................................60

Figure 12: Financial results of STM Validation Project ..........................................................60

Figure 13: Total GHG emissions tonnes savings in Euros per type of pollutant ....................67

Figure 14: Total accidents avoided per type in STM scenario ...............................................69

Figure 15: Economic results of STM Validation project .........................................................76


Index of Tables

Table 1: List of STM ships ....................................................................................................22

Table 2: Potential STM ships eligible and affected by STM implementation included in the test beds .......................................................................................................................23

Table 3: Total Gothenburg port calls of STM ships per type of ship ......................................23

Table 4: Total Stavanger port calls of STM ships per type of ship ........................................24

Table 5: Total Valencia port calls of STM ships per type of ship ...........................................24

Table 6: Total Barcelona port calls of STM ships per type of ship .........................................24

Table 7: Total Limassol port calls of STM ships per type of ship ...........................................25

Table 8: Total Sagunto port calls of STM ships per type of ship ...........................................25

Table 9: Total Umea port calls of STM ships per type of ship ...............................................25

Table 10: Total Vaasa port calls of STM ships per type of ship .............................................26

Table 11: Total calls selected for the STM Validation project Cost-Benefit analysis ..............26

Table 12: Inputs for the Ship-to-Ship route exchange service calculations ...........................27

Table 13: Inputs for the Enhanced monitoring service calculations for the six shore centres 27

Table 14: Input for the other services included in the ship-to-shore/service provider analysis ......................................................................................................................................27

Table 15: Total investments considered for the development of the STM services ...............29

Table 16: Total investments in the project scenario ..............................................................30

Table 17: Revenues of all Port Authorities during the horizon time of the project..................32

Table 18: Revenues of all port terminals during the horizon time of the project ....................33

Table 19: Revenues of SMHI during the horizon time of the project .....................................33

Table 20: Revenues of SSPA during the horizon time of the project .....................................34

Table 21: Average cost per type of employee and per service ..............................................35

Table 22: Hypotheses for the calculation of Port Authorities operating costs due to Port Call Coordination service ......................................................................................................36

Table 23: Port Authorities’ operating costs for the STM Validation Project............................36

Table 24: Port Authorities’ maintenance costs ......................................................................37

Table 25: Hypotheses for the calculation of port terminals operating costs due to Port Call Coordination service ......................................................................................................37

Table 26: Port terminals operating costs for the STM Validation Project ...............................38

Table 27: Port terminals maintenance costs .........................................................................38

Table 28: Hypotheses for the calculation of Pilotage operating costs due to Port Call Coordination service ......................................................................................................39

Table 29: Pilotage operating costs for the STM Validation Project ........................................39

Table 30: Pilotage maintenance costs ..................................................................................40

Table 31: Hypotheses for the calculation of Towage operating costs due to Port Call Coordination service ......................................................................................................40

Table 32: Towage operating costs for the STM Validation Project ........................................41

Table 33: Towage maintenance costs ..................................................................................41

Table 34: Hypotheses for the calculation of mooring operating costs due to Port Call Coordination service ......................................................................................................42

Table 35: Mooring operating costs for the STM Validation Project ........................................42

Table 36: Mooring maintenance costs ..................................................................................43

Table 37: Shore Centres operating costs related to enhanced monitoring ............................44


Table 38: SMHI operating costs related to Weather ETA service .........................................44

Table 39: SSPA maintenance costs related to Route Optimisation service ...........................45

Table 40: SAR operating costs related to search patterns service ........................................45

Table 41: Number of port calls improved using Port Call Synchronisation ............................46

Table 42: Main hypotheses for calculation of fuel consumption savings ...............................47

Table 43: Main hypotheses for fuel consumptions savings by route optimisation service .....47

Table 44: Shipping companies operating costs related to fuel consumption and ship-to-ship interaction......................................................................................................................49

Table 45: Shipping companies operating costs related improvement of operational aspects on board ........................................................................................................................50

Table 46: Maintenance costs for shipping companies...........................................................51

Table 47: Net Present Value for Port Authorities ..................................................................53

Table 48: Net Present Value for port terminals .....................................................................53

Table 49: Net present Value for Pilots ..................................................................................54

Table 50: Net Present Value for Towage ..............................................................................54

Table 51: Net Present Value for mooring ..............................................................................55

Table 52: Net Present Value for Shore Centres ....................................................................55

Table 53: Net Present Value for SMHI ..................................................................................56

Table 54: Net Present Value for SSPA .................................................................................56

Table 55: Net Present Value for Search & Rescue ...............................................................57

Table 56: Net Present Value for Shipping Companies ..........................................................57

Table 57: Financial Net Present Value of STM Validation Project .........................................59

Table 58: Breakdown of different issues of the analysis .......................................................61

Table 59: Calculation hypotheses for Consumers´ surplus for the STM Validation project ....62

Table 60: Consumers’ surplus results ...................................................................................63

Table 61: Gross producer surplus results .............................................................................64

Table 62: Average emission factors for STM ships ...............................................................65

Table 63: Social cost of GHG emissions...............................................................................65

Table 64: Total tonnes saved in fuel and GHG emissions savings in STM scenario .............66

Table 65: Monetary value of GHG emissions savings in STM scenario ................................66

Table 66: Social costs of accidents at sea per severity range ...............................................68

Table 67: Number of fatalities avoided in STM scenario and average economic costs .........69

Table 68: Corrected investments per agent for STM Validation project ................................70

Table 69: Corrected operating costs of the analysis .............................................................71

Table 70: Corrected maintenance costs of the analysis ........................................................72

Table 71: Corrected revenues calculated for the analysis .....................................................73

Table 72: Total corrected breakdown investments calculated in the analysis .......................74

Table 73: Economic analysis results of STM Validation Project. ...........................................75

Table 74: Sensitivity analysis of variables listed used in the Cost-Benefit analysis ...............77

Table 75: Risk probability classification ................................................................................78

Table 76: Risk severity classification ....................................................................................79

Table 77: Risk level definition ...............................................................................................79

Table 78: Qualitative risk analysis ........................................................................................80


1 Introduction

This report presents the results of the Financial Analysis and the Cost-Benefit Analysis (CBA) of the “Sea Traffic Management Validation Project” developed within the framework of the Trans-European Transport Network, CEF Programme. The CBA has been carried out following the methodology included in the “Guide to Cost Benefit Analysis of Investments Projects” elaborated in December 2014 by DG REGIO1.

This CBA report is consistent with the structure recommended in the Guide that includes the following sections: description of the context; definition of objectives; identification of the project; technical feasibility and environmental sustainability; financial analysis; economic analysis and risk assessment.

Furthermore, all critical issues included in each section are analysed in the context of STM European scope. This document is added to those included in the Grant Agreement of the project that deeply describes the main findings and estimations of STM concept implementation in the maritime sector. Moreover, the report focuses specifically on the financial, economic and risk analysis. However, in order to maintain the structure of the document, all the sections have been included.

The build up of the demand and the data included in the document come from the final results of each of the activities that have developed STM services suitable for adoption by the market. The elaboration of the assumptions has also taken into account the data mining that the project has been collected during the performance of the test beds.

1 Sartori, Davide, et al. “Guide to Cost-Benefit Analysis of Investment Projects”, Economic appraisal tool for Cohesion Policy 2014-2020. Evaluation Unit of the European Commission. Directorate General for Regional and Urban Policy. 364 Pag. Brussels, 2015. European Union. [Online]. Available at: https://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf

https://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf


2 Methodology

The methodology used in this cost-benefit analysis follows the basic principles outlined in the “Guide to Cost-Benefit Analysis of Investment Projects”2 by the Evaluation Unit of the European Commission (Directorate General of Regional Policy). After accurately following all these steps, it can be assured that the project appraisal dossier is complete, consistent and equipped with sufficient quality.

In order to assess the project's costs and benefits and to evaluate the welfare change attributable to it, the CBA analytical framework has been followed considering:

The opportunity cost is considered in the evaluation of the investment decisions in order to avoid socially undesirable outcomes. Input, output (including intangible ones) and external effects are valued at their social opportunity cost so, the return calculated is a proper measure of the project’s contribution to social welfare.

A long-term outlook is adopted; a proper time horizon has been chosen; an accurate forecast of future costs and benefits has been done; an appropriate discount rate has been adopted and the project’s risks have been estimated in order to deal with uncertainty.

The project overall performance has been measured by the appropriate economic performance indicators: Economic Net Present Value (ENPV) and the Economic Rate of Return (ERR) expressed in monetary values (Euros). These indicators have been calculated in order to measure welfare effects of the project.

In order to assess the project’s impact on society as a whole, a microeconomic approach has been taken into account in order to avoid external and indirect effects in the calculation of the main economic performance indicators. However, in another step of the present document, a qualitative description of the indirect effects occurring in secondary markets and its wider impacts has been done.

CBA compares a scenario with-the-project with a counterfactual baseline scenario without the project, using an incremental approach. Two main scenarios have been raised in order to compare the results of project's implementation for the society, and how would be the welfare if the project were not implemented and no action had been done. Those scenarios are Project Scenario (PS) and Business as Usual Scenario (BAU). In any case, most of the information will be presented as potential savings, income and expenses, being motivated in its calculation and explained in quantitative sense.

The six necessary steps used for cost-benefit analysis are:

1. Context analysis and project objectives 2. Project identification 3. Feasibility and option analysis 4. Financial analysis 5. Economic analysis 6. Risk assessment

The first step of the project appraisal is focused on the consistent evaluation of the macro-economic and social conditions of the region, the European Union in this case. In particular, an in-depth forecast for maritime transport has been carried out in order to identify the viability of the investment and the potential impact in the sector.

Through the Feasibility and Option Analysis, the developed CBA provides evidence that the project can actually be implemented or uptaken by the market and it is one of the best solutions among all feasible alternatives regarding safety, efficiency and environmental sustainability innovation projects.

2 Henceforth, the Guide


The financial analysis demonstrates, following the Discounted Cash Flow (DCF) approach, the need of funds from the European Comission and the assistance of the Community in order to make the project financially viable. It has been carried out through subsequent interlinked accounts: Investment costs, Operating and maintenace costs and revenues, financial return on investment cost and Financial Rate of Return: FNPV(C) and FRR(C).

The economic analysis evaluates the project’s contribution to the economic welfare of the country. The economic net present value (ENPV) indicator has been used as the main reference economic performance signal for project appraisal. After calculations, the positive result obtained means that the project needs to be adopted by the market, as it will produce huge benefits for all citizens, high social returns and further development of the European Union maritime-port sector.

The last step in the appraisal deals with risk evaluation. In that way, several models can be applied in order to study the probability that the project will achieve a satisfactory performance. It has been carried out using: sensitivity analysis, qualitative risk analysis and risk prevention.

With regard to the project objectives and the project identification, it has been considered that these steps have already been analysed thoroughly along the STM Validation Project timeline.

Figure 1: Methodological approach extracted from the Guide.

Context analysis and Project objectives

Project identification

Technical feasibility and Environmental

sutainability

Feasibility and Option analysis

Financial analysis

Economic analysis

Risk assessment


3 Socio-Economic Context

In the recently published World Economic Outlook in April 2019, the International Monetary Fund (IMF) highlights that global economic growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, reflecting weaker-than-expected international trade and investment at the start of the year.

After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, with trade and manufacturing showing signs of marked weakness. As noted by the World Bank (WB) in the Global Economic Prospects report in June 2019, heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, has been accompanied by a deceleration in global investment and a decline in confidence. Despite this economic downturn, global growth for 2020 is estimated at 3.6 percent.

As shown in Figure 2, when analysing the growth reached by groups of economies, emerging market and developing economies (EMDE), in a lower stationary state, are contributing more to the global growth generated. However, activity in some large EMDEs as well as in major advanced economies (particularly in the Euro Area) has been weaker than previously expected, as noted by WB.

On the one hand, EMDE growth momentum continues to be generally subdued, as slowing global trade and persistent policy uncertainty in key economies are only partially offset by recent improvements in external financing conditions.

On the other hand, activity in advanced economies is slowing, especially in the Euro Area, in part due to weakening exports and investment. Amid subdued inflation and decelerating activity, major central banks have signalled a more dovish stance. In the United States, the effects of recent fiscal stimulus are waning. U.S. growth is expected to slow to 2.5 percent in 2019 and further decelerate to 1.7 percent in 2020 and 1.6 percent in 2021, as the effects of recent fiscal stimulus wane. Growth is being supported by more accommodative monetary policy than previously assumed and by sustained increases in productivity growth and labour force participation (World Bank, 2019). In China, growth appears to be stabilizing following weakness at the start of the year, but it faces heightened risks. Growth is projected to decelerate from 6.6 percent in 2018 to 6.2 percent in 2019, primarily reflecting softening manufacturing activity and trade. The recent increase in tariffs on trade with the United States is projected to weigh on growth in 2020, which has been revised down to 6.1 percent (World Bank, 2019).

Figure 2: Global economy activity prospects3

3 Source: World Economic Outlook (International Monetary Fund, April 2019).


Regarding the Euro Area, as pointed out in the spring 2019 European Economic Forecast by European Commission, Euro area GDP growth is forecast to moderate to 1.2% this year (from 1.9% in 2018) and to pick up to 1.5% in 2020, when the growth rate will be flattered by a higher number of working days. Due to the slowdown in global manufacturing and investment and exacerbated by lingering trade tensions and a cyclical downturn in the IT and communication sector in Asia, global trade flows fell abruptly in the last quarter of 2018 when they were dragged down by a plunge in China’s imports. However, GDP in all Member States is expected to grow over the forecast horizon shown in the next figure.

Figure 3: Economic indicators of the European countries4

The World Bank states that in the overall global economy, uncertainty surrounding the existing economic outlook has increased mainly due to geopolitical tensions and trade protectionism.

With respect to geopolitical tensions related to Brexit and the associated cost of lengthening the negotiating process, these are not optimal circumstances for growth and trade. Within Europe, any deviation from the technical assumption of unchanged trade relationships

between the UK and the EU that underlies these forecasts, and in particular a ‘no deal’ Brexit,

would dampen economic growth, particularly in the UK but also in the EU27, though to a minor extent (European Commission, 2019).

Currently, one of the issues of greatest concern is the increase of protectionist policies in advanced economies that, in the worst-case scenario, threaten to unleash "trade wars". One episode attract attention: the confrontation between China and the United States. Of course, it cannot be ignored that the uncertainty about the outcome of these processes already constitutes per se a brake on growth, and in particular on investment and trade. As consequence, this undesirable situation can trigger a trade war between the two biggest world

4 Spring 2019 European Economic Forecast (European Commission, April 2019)


economies. In addition, this also generates an uncertain environment as it may be considered as the first step towards the implementation of a protectionist trade policy extended to other countries, such as Mexico or Germany. Negative effects on trade and global economy derived from the implementation of this kind of policies would hamper the path of the economic growth achieved.

Under this context, all international institutions agree that in spite of good perspectives in the global economy, a slight moderation in international trade growth is predicted in 2019. The WB predicts a contraction in world trade growth, from 4.1% in 2018 to 2.6% in 2019. As the weakness in manufacturing abates, global trade is expected to stabilize to an average of 3.2 percent in 2020 and 2021. In line with this, the IMF estimates a decline in the international trade path, from 3.8% in 2018 to 3.4 in 2019 and 3.9% in 2020. However, this forecast assumes no further escalation in trade tensions between major economies. Therefore, they may be revised downwards if protectionist measures are even stronger between the world's two largest economies. However, in a globalised world characterised by the fragmentation of global value chains, a product assembled in China is composed of raw materials and components from many other countries. Therefore, these trade barriers may end up having greater negative consequences than expected on third party countries directly involved in this trade war.

Traditionally, the contribution of international trade to economic growth has been key for the development of countries. Although the relationship between economic output and merchandise trade seems to be shifting with an observed decline in the growth ratio of trade to GDP over recent years, these variables remain positively correlated (see next figure).

Figure 4: Gross domestic product, merchandise trade and seaborne shipments 1975-2016 (1990=100)5

In this way, trade is especially important for European Union, as it becomes a driver of economic growth for the majority of the Members States. As shown in Figure 4, a high percentage of total export of goods is intra EU trade, so this fact has some important implications in terms of transport policy.

5 Review of Maritime Transport (UNCTAD, 2017)


Figure 5: Intra-EU exports of goods compared with Extra-EU exports of goods by Member State, 2017 (share %)6

When modal split is analysed in depth one can find an underlying problem: Europe has always had a strong modal imbalance where road reaches a much higher freight transport share than the alternative transport modes. Although road is nowadays the mode that fits best the current needs and requirements of transport demand, it has also benefited from market failures. These market failures, including externalities related to GHG emissions and accidents, have led the European Union and Member States to use the common transport policy with the aim of stopping them and trying to include their cost in transport’s final price.

In the same vein, the support from European Commission has been focused attention on this topic through the implementation of different measures in order to develop a cleaner and greener economy. In this sense, transport is one of the most important contributors to negative environmental externalities. The ambitious goals set by the European Union for 2050 have three main lines of action in the transport sector with the following objectives: to achieve real competition both between modes and intra-mode; to increase the efficiency and competitiveness of alternative modes; and to complete the Trans-European Transport Network.

6 Eurostat. Comext table DS-057009

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Figure 6: Modal split of freight transport, EU-28, 2012 and 2017 (%share in ton-Km)7

Therefore, the biggest challenge is expected to be the promotion of sustainable growth and to decarbonizing transport to achieve a reduction in emissions by using SSS as an alternative to road transport. To achieve this objective, it is essential that users perceive the SSS as efficient and able to offer a high quality service. These must be accompanied by measures that have an impact on SSS/maritime transport by improving its efficiency, safety/security and environmental sustainability.

Regarding operational efficiency, the investment in the latest technologies applied to the maritime transport sector is one of the emerging issues to be analysed. As noted by UNCTAD in the Review of Maritime Transport 2018, the application of such innovations in ports and maritime industry permeates all aspects of a port business, including operations, planning, design infrastructure development and maintenance. Relevant technologies can help optimize traffic; increase operational efficiency, process transparency and speed; automate processes; and reduce inefficiencies and errors. Some examples of this kind of innovative technologies are robotics, big data analytics, smart energy management, safety analytics and predictive maintenance.

Safety and Security need to be also improved, as it becomes a priority for the European Union due to the large economic cost of externalities derived from the accidents occurring in the sea, as reported by European Maritime Safety Agency (EMSA). For this purpose, the development of new technological tools aiming to share information and data between vessels, ports and shore centres are deemed essential to monitor vessel traffic when ships navigating through risk areas.

7 Eurostat


Figure 7: Main statistics of casualties and incidents between 2011 and 20178

Regarding environmental sustainability, the implementation of new technologies on board

enables sharing information flows between land and sea. As a result, shipping lines may use

different strategies aiming to mitigate and reduce GHG emissions, as for example, slow

steaming. Moreover, in the field of trade and in particular maritime transport, the imperative of

drastically reducing sulphur dioxide in the fuel used for shipping already by 2020 cannot be

ignored (regulation of the International Maritime Organization). The IMO has since 2003

developed a strategy to reduce the shipping sector’s emissions. Resolution A.963 (23) ‘urges

the MEPC to identify and develop the mechanism or mechanisms needed to achieve the

limitation or reduction of GHG emissions from international shipping’. Resolution MEPC.203

(62) on July 2011 develops mandatory technical (EEDI) and operational (SEEMP) measures

for the energy efficiency of ships. In October 2016, MEPC70 agreed on a Roadmap for

developing a comprehensive IMO strategy on reduction of GHG emissions from ships, which

foresaw adoption of an initial GHG reduction strategy that was later approved during MEPC

73 on 13 April 2018. The adopted strategy envisages the reduction in the total GHG emissions

from international shipping to at least 50% by 2050 compared to 2008. Emission reductions

should start as soon as possible and that efforts should be pursued to phase out carbon

emissions entirely. The strategy will be periodically reviewed with the aim of strengthening the

energy efficiency design and operations requirements for ships, trying to improve energy

efficiency in each of the phases depending on the type of ship.

On account of this, STM emerges as a potential solution to improve the SSS/maritime transport

competitiveness in Europe. In this way, SSS would be improved as offering real competition

against road and would develop their full potential in this globalised context that is demanding

excellence on its logistic networks.

8 Annual Overview of Marine Casualties and Incidents 2018 (EMSA)


4 Definition of Objectives

As mentioned previously, this report presents the results of the CBA carried out during the STM Validation project, attached to the CEF No: 2014-EU-TM-0206-S. The general and specific objectives of the project have been analysed and quantified during the timeline establishing a set of hypotheses and expected results according to the targeted objectives. These objectives have been included in the STM final report. For that reason, to avoid duplicating information in this section of the CBA, only a brief summary of the objectives will be provided.

The Sea Traffic Management (STM) Validation project is a wide-scale European initiative focused on implementing new digital information exchange services for the shipping and port industries. STM Validation comprises the third stage of this action, initially defined during the previous projects MONALISA and MONALISA 2.0, all of which were co-funded by the Trans-European Transport Network through its Connecting Europe Facility Programme.

The aim of the STM initiative is to push the maritime industry towards more collaborative and digitalized operational environments, enabling the transition of the sector to the “Industry 4.0” paradigm, where digital and real time connectivity is the driver for increasing efficiency, safety and sustainability. STM has been greatly inspired by the aviation sector, where this evolution has demonstrated significant and measurable benefits.

STM is a concept for sharing secure, relevant and timely maritime information among authorized service providers and users, enabled by a common framework and standards for information and access management, and interoperable services. STM relies on four concepts, as follows:

Port Collaborative Decision Making (PortCDM). The overall goal of PortCDM is to support just-in-time operations within ports and vis-à-vis other actors coordinated by an efficient and collaborative port. It is a way of establishing not only a common view of all available information, but also of using this information as a tool to create a common situational awareness and support the particular actors in making efficient collective decisions. Port CDM relies on continuous interactions among the maritime actors involved in a port call.

Voyage Management (VM). VM concerns strategic, tactical and operational decisions about a voyage, such as planned and executed routes of a certain ship and its interaction with nearby ships in a given position. It focuses on the initial planning phase of any sea voyage and the ability to monitor the execution of that plan. VM supports improved route planning, route exchange, and route optimization before and during the maritime voyage. Especially in this phase, VM connects ships, adds intelligent processes and new tools to enable all stakeholders to increase their situational awareness during the voyage, providing faster, more secure and transparent information exchange.

Flow Management (FM). FM supports the optimal coordination of multiple vessels in congested geographical areas. FM will support both VTS control and ships in optimizing overall traffic flow through areas of dense traffic or those with particular navigational challenges. FM’s objective is to improve the overall flow of maritime traffic through superior information sharing and coordination. VM builds common situational awareness and enhances decision-making with information and advice about traffic and safety.

Sea System Wide Information Management (SeaSWIM). SeaSWIM provides a framework for the harmonization of data formats and standards for information management and operational services. SeaSWIM includes the use of the newly established Maritime Connectivity Platform for identity and service management. SeaSWIM will support collaborative decision-making processes using efficient and end-user applications to exploit the power of shared information in STM operational services.


Every day thousands of ships carry millions of tons of cargo worldwide. In complex logistics chains, daily decisions may easily have major consequences. The shipping industry suffers from a lack of shared data between ships and ports, which could lead to monetary loss when vessels are delayed, fuel burned and sub-optimal routes are chosen. Operations in the maritime industry are characterized by infrequent interaction among an extensive number of actors. In many other industries, close partnerships have stimulated systems integration and general standardization of information exchange. In shipping, however, this has yet to happen. Sea Traffic Management, STM, is part of the solution.

STM establishes a global maritime digital infrastructure where standard messages can be sent and received. Interoperability is achieved by specifying not only WHAT format the data should have but also HOW the exchange should be done. When actors follow this design, they can connect seamlessly even on their first encounter. Shipping is often a series of first-occasion encounters, as ships visit new terminals and ports most of the time. Data exchange among port actors can cut waiting times during port calls and assist in achieving just-in-time arrivals. In STM, information owners select the partners with whom they wish share data, thus avoiding business sensitivity issues.

The goal of the STM Validation Project was to develop and validate the infrastructure and the services using it, and to verify the functions and benefits. The benefits predicted in the previous projects defining and designing the STM concept include, common situational awareness among ships and shore actors, reduced administrative burden, green steaming and just-in-time operations.

The STM Validation project has set up big-scale test-beds, namely 300 ships, 9 ports and 6 shore centres, located at Northern Europe Sea and at the Mediterranean Sea. Apart from these operational test-beds, the European Maritime Simulator Network (EMSN) was used to validate complex cases involving many ships. EMSN tests using 30 manned bridges supplied data on the behaviour of mariners and compiling their feedback on STM. The test-beds were supported by the development of a maritime digital infrastructure.

The validation of the port functions took place in parallel with current operations, whereas the ships and shore centres implemented pilots, many of which will remain operational after the project. Examples of functions and services include winter navigation services in the northern Baltic Sea, enhanced monitoring in the Strait of Gibraltar, port arrival synchronization in Limassol and ship-to-ship route exchange among 300 ships wherever they meet around the world.


5 Identification of the Project

The specific objectives of the STM Validation project is to push the maritime industry towards more collaborative and digitalised operational environments, enabling the transition of the sector to the “Industry 4.0” paradigm, where digital and real time connectivity is the driver for increasing efficiency, safety and environmental sustainability.

Several services have been developed and tested during the project for both ports perspective and maritime navigation dimension. The implemented pilots have been analysed in depth in large-scale test-beds that have been carried out during the project and they have facilitated the basis of calculation of the CBA. In addition, some of them have been analysed with simulations to check their functionality, applicability and to receive feedback from stakeholders.

Regarding the financial analysis, four groups of services have been designed in order to facilitate the proper calculations. The four scenarios have been defined according to the agents involved, the functionalities of the services included and the potential savings calculation hypotheses.

The four groups are described as follows:

Port Call Coordination – In this case, the calculation hypotheses are related to an operational optimization of the ship-to-port call management where the agents involved have been Port Authorities, Port Terminals and Nautical Services (mooring, towage and pilotage).

Port Call Synchronisation – It has been calculated taking into account the potential improvement related to the information exchange between the agents, which should enable the application of the Just-in-time arrivals and departures concept. The updating of the ETA from ships will lead to a better resource management in the port and to a reduction of the fuel consumption during navigation due to the speed adjustment. Therefore, the reduction of GHG emissions has been considered in the economic analysis as externalities. The agents involved in this scenario are the Shipping Companies, Port Authorities and Port Terminals.

Ship-to-Ship Route Exchange - This service improves the OOW (officer-on-watch) on board operations, facilitating the management of potential close quarter situations in a more expeditious way. The digital communication and exchange of data between ships will avoid misunderstandings and will enhance safety and security from an economic point of view. The agents involved in this service are the Shipping Companies, specifically ship crew.

Ship-to-Shore/Service Provider: the services included in this scenario are described below and their specific agents involved as well. The financial analysis regarding this scenario is the addition of all of them:

o Enhanced Monitoring Service - This functionality provides accurate information to make navigation safer in complex situations. The information exchanged with the shore centres is crosschecked and this aspect makes more efficient the calculation of the safest route in certain difficult navigational areas. It has a strong economic dimension by encouraging the reduction of accidents such as groundings and collisions. The agents involved in this service are shore centres (including VTS) and Shipping Companies (ship crew).

o Nordic Pilot Route service - This service deals with validated information on safe routes before the arrival at ports and during navigation through inland waters by the Pilots of the Baltic area. The focus is on saving time in calculating the safest route in port approach. The agents involved are Maritime Administrations and Shipping Companies.


o Baltic Navigational Warning Service - Information about unexpected events or situations in coastal navigation in jurisdictional waters is responsibility of the National Maritime Administrations. The fact that the information is automatically sent to the ships bridges saves time for planning the voyage plan, proposing an alternative of reliable navigation with the most updated information. It has a strong economic impact avoiding possible collisions and all types of accidents at sea. The agents involved are National Maritime Administrations and Shipping Companies.

o SSPA Route Optimisation Service – In this service, the potential savings are restricted to bunkering consumption and hence bunker costs for the sailed route. Optimizing the route has a strong impact in the OPEX costs regarding fuel and it is translated into GHG emission savings. The main agents and beneficiaries are Shipping Companies and the Service Provider, in this case, SSPA Sweden AB.

o SMHI Route ETA Forecasts – The service is providing a more probable time of arrival for each waypoint on the route as well as a calculated time-window for the estimated time of arrival. This fact is reducing workload on board regarding the management of weather routeing information from NAVTEX and is providing a tool to enhance the mandatory operational procedures on the bridge. The main agents and beneficiaries involved are Shipping Companies (ship crew) and the Service Provider, in this case, SMHI (Sveriges Meteorologiska och Hydrologiska Institut).

o Winter Navigation Service - The service enables accurate information on available navigable routes through ice waters. It provides simpler and more reliable on-board operational calculation models as well as real time information to calculate the voyage plan. The agents involved are National Maritime Administrations and Shipping Companies.

o STM Search and Rescue - The functionality of this service aims to simplify and improve the information shared from the MRCC (Maritime Rescue Coordination Centre) with the SAR units that collaborate in rescue operations. The information shared is more efficient and reliable. From a safety point of view, time saved when searching for and saving human lives in danger at sea, could represent a significant economic impact. The agents involved are National Maritime Administrations and Public Bodies in charge of Search and Rescue at sea.


6 Technical Feasibility

The main sources of data were STM Test Beds and the main sources came from three specific entities which are:

PortCDM in eight9 European ports (including port authorities, calculated average port terminals and port services stakeholders). Some of the data produced was processed in order to quantify the number of calls as an input in this Cost Benefit Analysis.

Voyage management testbeds about 300 compliant ships associated with two scenarios in the Mediterranean and the Baltic sea. Those ships were classified into 4 different categories.

Six shore centres that were able to interact with STM compliant ships navigating in their area of influence and that were producing qualitative and quantitative data for the analysis.

This is the baseline on which the demand that has served to calculate the financial and economic analysis. As long as the technical part is sufficiently described in the proposal, in this section only the demand analysis has been deeply studied.

6.1 Demand analysis

As stated in the project, this action aims at building the necessary infrastructure to facilitate and make possible the exchange of updated information through intra and inter port collaboration, ship-to-port collaboration and ship-to-shore/service provide.

To build the demand has been taken into account after three dimensions in the following terms:

Port calls during 2018 linked with ship-to-port metrics during the project for 8 ports selected which are:

o Gothenburg, Umea in Sweden o Vaasa in Finland o Stavanger in Norway o Valencia, Sagunto y Barcelona in Spain o Limassol in Cyprus

STM ships selection taking into account the port calls mentioned above and metrics collected in the test beds for ship-to-ship and ship-to-shore. The ships have been divided into four main types of services in order to select the proper :

o Regular services o Tramp services o Cruise services o Other services

Shore centres’ and service providers metrics : o Horten, Kvitsoy in Norway o Gothenburg in Sweden o Aarhus in Denmark o Tallinn in Estonia o Tarifa in Spain

6.1.1 Port Calls data

One of the most important elements to be able to identify the benefits of STM from the ship-to-port dimension has been to calculate the number of STM ships calling at the eight ports included in this analysis.

9 The port of Brofjorden has not been included in the analysis for not having port calls of regular services that could be studied in this cost benefit analysis.


Those ships that have the STM module installed on-board can facilitate information on their ETA. Moreover, the total number of port calls collected by the PortCDM tool has an impact on Port Call Coordination service from a financial point of view.

A total of 42,658 calls were logged during the project for the eight ports selected. The following table lists alll STM ships per type of ship and percentage included in the test beds. Therefore, a selection of those potential ships that could be improved due to the implementation of STM services has been carried out:

Table 1: List of STM ships

SHIP TYPE NO. OF SHIPS % PER SHIP TYPE

CHEMICAL/PRODUCTS TANKER 81 24.77%

CONTAINERSHIP 50 15.29%

GENERAL CARGO 32 9.79%

SAR - SEARCH AND RESCUE 27 8.26%

RO-PAX 26 7.95%

CAR CARRIER 23 7.03%

PAX 16 4.89%

CRUISE 13 3.98%

ICEBREAKER 12 3.67%

LPG TANKER 11 3.36%

RO-RO 9 2.75%

TUG 7 2.14%

CEMENT CARRIER 5 1.53%

PILOT VESSEL 5 1.53%

BUOY & LIGHTHOUSE 3 0.92%

BULK CARRIER 2 0.61%

INSPECTION SHIP 1 0.31%

LAW ENFORCE 1 0.31%

PATROL VESSEL 1 0.31%

SPECIAL PURPOSE 1 0.31%

SUPPLY VESSEL 1 0.31%

TOTAL 327 100%


Table 2: Potential STM ships eligible and affected by STM implementation included in the test beds

SHIP TYPE NO. OF STM SHIPS % PER SHIP TYPE




RO-PAX 26 9.70%


PAX 16 5.97%

CRUISE 13 4.85%

LPG TANKER 11 4.10%

RO-RO 9 3.36%


BULK CARRIER 2 0.75%

TOTAL 268 100%

The total amount of port calls in the eight selected ports included in the study is 42,658 calls in 2018. One of the conclusions drawn from the project is that ships navigating on regular services are more likely to adopt the Port Call Synchronisation service. Therefore, different calculations have been made for the total calls of STM ships in the ports analysed. Tramp ships are less susceptible to the adoption of this JIT (Just-in-time) service because of their legal and commercial aspects. This is why a more conservative approach has been chosen and they have been discarded from the CBA calculation.

Table 3: Total Gothenburg port calls of STM ships per type of ship

GOTHENBURG TOTAL CALLS IN 2018 % OF CALLS

NON STM SHIPS CALLS 12,593 76.08%

RO-PAX 2,720 16.43%

CHEMICAL/PRODUCTS TANKER 1,069 6.46%


CRUISE 29 0.18%



TOTAL CALLS 16,552 100.00%

TOTAL STM SHIPS CALLS 3,959 23.92%


Table 4: Total Stavanger port calls of STM ships per type of ship

STAVANGER TOTAL CALLS IN 2018 % OF CALLS


RO-PAX 432 3.60%


CRUISE 69 0.58%


PAX 32 0.27%


LPG TANKER 4 0.03%

TOTAL CALLS 11,989 100.00%

TOTAL STM SHIPS CALLS 675 5.63%

Table 5: Total Valencia port calls of STM ships per type of ship

VALENCIA TOTAL CALLS IN 2018 % OF CALLS



CRUISE 70 1.10%

CAR CARRIER 3 0.05%


TOTAL CALLS 6,367 100.00%


Table 6: Total Barcelona port calls of STM ships per type of ship

BARCELONA TOTAL CALLS IN 2018 % OF CALLS


CRUISE 73 1.96%


LPG TANKER 1 0.03%


CAR CARRIER 1 0.03%




Table 7: Total Limassol port calls of STM ships per type of ship

LIMASSOL TOTAL CALLS IN 2018 % OF CALLS



CRUISE 5 0.25%





Table 8: Total Sagunto port calls of STM ships per type of ship

SAGUNTO TOTAL CALLS IN 2018 % OF CALLS


CAR CARRIER 3 0.22%




Table 9: Total Umea port calls of STM ships per type of ship

UMEA TOTAL CALLS IN 2018 % OF CALLS

NON STM SHIPS CALLS 402 62.71%

RO-RO 209 32.61%


RO-PAX 6 0.94%



TOTAL CALLS 641 100.00%



Table 10: Total Vaasa port calls of STM ships per type of ship

VAASA TOTAL CALLS IN 2018 % OF CALLS

NON STM SHIPS CALLS 26 78.79%



TOTAL CALLS 33 100.00%


Finally, from the total of port calls those related to STM ships operating regular services for container, Ro-pax, car carrier, pax and Ro-ro traffics are selected. The next table shows the final figures that have been used for the Cost-Benefit Analysis calculations:

Table 11: Total calls selected for the STM Validation project Cost-Benefit analysis

TYPE OF STM SHIP NO. OF CALLS APPLIED IN THE ANALYSIS

CONTAINERSHIP 247

RO-PAX 3,158

CAR CARRIER 33

PAX 32

RO-RO 209

STM SHIP CALLS 5,291

STM SHIP CALL SELECTED 3,679

According to the total number of port calls, a classification of ports into three types has been established:

Big-sized port - The ports are Gothenburg and Stavanger

Medium-sized port - The ports are Valencia, Barcelona and Limassol

Small-sized port - The ports are Sagunto, Umea and Vaasa

The classification has also served to establish an average number of terminals per port size in order to carry out the calculations. The average number of terminals for a big-size, medium-size and small-size port is 8, 7 and 5 terminals respectively. Finally, this classification has an impact on the time dedicated to deal with port call planning in Port Coordination service but also in the total investments of several actors included in the study.

6.1.2 Ship metrics data

The information about ship-to-ship interaction has been collected in the Voyage management test-bed that provides the following inputs for analysis:


Table 12: Inputs for the Ship-to-Ship route exchange service calculations

2018 TOTAL NUMBER OF ROUTES EXCHANGED DURING THE

PERIOD BETWEEN SHIPS

JANUARY - MARCH 13

APRIL - JUNE 84

JULY -SEPTEMBER 2,011

OCTOBER - DECEMBER 3,482

TOTAL 5,590

6.1.3 Shore Centres and Service Providers metrics data

The following table shows the number of requests sent to each Shore Centre participating in the test-beds during 2018. This information will be used to calculate the costs saved by using Enhanced-monitoring service.

Table 13: Inputs for the Enhanced monitoring service calculations for the six shore centres

2018 NUMBER OF REQUESTS FOR ENHANCED MONITORING

SERVICE

GOTHENBURG SC 4,020

HORTEN SC 256

KVITSOY SC 137

TARIFA SC 1,069

TALLIN SC 530

AARHUS SC 877

TOTAL 6,889

The other services included in the analysis have been logged in terms of total requests received. The amounts are shown in the following table trying to provide some figures to carry out the calculations of the revenues and the operating costs saved.

Table 14: Input for the other services included in the ship-to-shore/service provider analysis

2018 TOTAL REQUESTS

RECEIVED TOTAL REQUESTS

ATTENDED

SMHI WEATHER ETA SERVICE 3,604 691

SSPA ROUTE OPTIMISATION SERVICE 8,760 6,134

NORDIC PILOT ROUTE SERVICE 2,987 2,987

BALTIC NAVIGATIONAL WARNING SERVICE 2,629 2,629

SAR SERVICE 2,140 2,140

WINTER NAVIGATION SERVICE 1,724 51

TOTAL 21,844 14,632

The number of TXT messaged received from ships have been discarded from the analysis. The project is associated with an increase in demand in particular cases.


7 Financial Analysis

The objective of the financial analysis has been to assess the project’s viability by computing its financial performance indicators. It has been carried out following the Discount Cash Flow method in compliance with section III (Method for calculating the discounted net revenue of operations generating net revenue) of Commission Delegated 10Regulation (EU) No 480/2014. The financial analysis is presented in this section according to the structure recommended in the Guide, separately analysing the following components: investments, operating costs and revenues. When necessary, a description of the hypotheses adopted for each calculation is included.

The first hypothesis defined in the financial analysis is the time horizon of the project. The STM Validation Project has been evaluated covering the timespan of 10 years according to the Guideline for innovation projects in which the technology is applied to maritime environments. Therefore, the analysis covers the period 2018 -2027.

The financial analysis has been carried out considering current prices as both the revenues and costs expected flows would be affected by inflation. The inflation rate has been assumed to be 2% on average for the period.

This hypothesis is in line with one of the main objectives of the European Central Bank (ECB). Future current prices have then been discounted whenever necessary to calculate indicators in present value.

As per the Guide instructions, a nominal financial discount rate must be used with current prices when the Financial Analysis is going to be applied. The discount rate that the Guide recommends, in real terms, is equal to 4%, according to Article 19 (Discounting of cash flows) of Commission Delegated Regulation (EU) No 480/2014, for the programming period 2014-2020. The formula for the calculation of the nominal discount rate is defined as:

(1 + 𝑛) = (1 + 𝑟) ∗ (1 + 𝑖)

Where: n – nominal rate, r – real rate, i– inflation rate

Once the formula has been applied, the nominal financial discount rate is equal to 6.08%.

Only cash inflows and outflows are considered in the analysis, i.e. depreciation, reserves, price and technical contingencies and other accounting items, which do not correspond to actual flows, are disregarded. Moreover, all the flows considered are net of VAT and direct taxes.

Finally, the analysis has been carried out taking into account the total investments during the project and the completed pilots developed in the aforementioned ports, ships and shore centres.

7.1 Initial hypotheses

As a starting point, the financial analysis has been built from a set of overall hypotheses according to the Guide and are pointed out hereinafter:

The investments, except for certain agents requiring breakdown of this item, are the sum of the budgets included in the Grant Agreement with some corrections related to travel and communication expenses during the project.

The timespan of the project has been established in 10 years (from 2018-2027) according to the recommendations of the Guide.

The financial analysis is performed at current prices, as set out in the methodology, updating income and expenses annually with an estimated inflation rate of 2% year-

10 ANNEX I to Commission Delegated Regulation (EU) No 480/2014


on-year, in line with the general inflation target set by the European Central Bank for the Euro area.

Following the international methodological line in financial feasibility studies, indirect taxation will not have to be considered, i.e. prices will be exempt from VAT or other indirect taxes.

The financial analysis will study the differences in cash flows between the situation with a project and the situation without a project, i.e. it will be based on a differential approach.

The Average annual traffic growth rate is 1% in line with a conservative position according to the socio-economic forecast in Section 3.

7.2 Investment costs

In the investment section, the STM project budget has been taken into account in accordance with the activities that are directly related to the development of the services that have been analysed in depth as results of the project. These activities are activity 1, related to ports, activity 2, related to ships and navigation and activity 4, related to the SeaSWIM system that enables ship-to-ship, ship-to-port and ship-to-shore communications. From the total budget have been deducted 5% of communication costs and 10% in administrative costs and travel, specific of the project.

The total initial investments are shown in the following table:

Table 15: Total investments considered for the development of the STM services

TOTAL INVESTMENTS

PORT CALL COORDINATION 6,820,449 €

PORT CALL SYNCHRONISATION 5,450,521 €

STS ROUTE EXCHANGE 1,763,612 €

SHIP-TO-SHORE/SERVICE PROVIDER 9,656,902 €

TOTAL INVESTMENTS 23,691,484 €

It is important to highlight that activities 3, 5 and 6 have contributed to the fact that services development activities could be carried out although they cannot be directly imputable to the CBA. The work of simulation, analysis and communication has managed to dimension the STM concept to a point that could become a reality. However, they are not part of the investment costs according to the cost-benefit guide.

The next table shows the investment per actor included in the analysis, taking into account that the shipping companies and Port terminals investments are covered by the budget of the project.


Figure 8: Investment of the main actor identified for the analysis in 10-year timeline of the project

A breakdown of investments should be made from the point of view of ports, ships and port terminals. With regard to ports, the following investments have been made:

Valencia and Sagunto ports – 250,000€

Barcelona, Stavanger, Limassol and Gothenburg – 200,000€ each

Umea and Vaasa – 50,000€ each.

With regards to the ships, the procurements carried out during the project had the budget of 1.5 million Euros in total for a total of 268 ships, with an average of 5,597€ per STM module including development costs. The number of ships included in this analysis per manufacturer is:

Adveto - 32 ships

Furuno - 43 ships

Transas - 129 ships

Wärtsila-SAM - 64 ships

Finally, the total investment applied to the port terminals has been 10,000€ each for 52 terminals in total adding the cost of devices and utility costs. The same investments costs have been calculated for Pilotage, Towage and Mooring actors.

Investments are presented also per actor and year. The following table shows the distribution of the investment costs during the lifetime of the project and classified according to the actor involved regardless of the service by which they benefit.

Table 16: Total investments in the project scenario

Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

STM PROJECT 21,238,556 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

PORT AUTHORITIES 1,150,000 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

PORT TERMINALS 561,600 € 0 € 0 € 0 € 0 € 45,930 € 0 € 0 € 0 € 0 €

PILOTAGE 86,400 € 0 € 0 € 0 € 0 € 7,066 € 0 € 0 € 0 € 0 €

TOWAGE 86,400 € 0 € 0 € 0 € 0 € 7,066 € 0 € 0 € 0 € 0 €

MOORING 86,400 € 0 € 0 € 0 € 0 € 7,066 € 0 € 0 € 0 € 0 €

SHIPPING COMPANIES

0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SHORE CENTER 3,000 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SMHI 100,000 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SSPA 312,000 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SAR 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €


7.3 Revenues

According to Article 61 (Operations generating net revenue after completion) of (EU) Regulation 1303/2013), the project revenues are the “cash in-flows directly paid by users for the goods or services provided by the operation, such as charges borne directly by users for the use of infrastructure, sale or rent of land or buildings, or payments for services”.

Four actors see their revenues increased thanks to the different pilots implemented in the project:

Port Authorities

Port Terminals

SMHI Company

SSPA Company

All these actors receive or expect to receive future revenues for providing the service associated, among other reasons, with the increase in traffic in future years.

The following sub-sections summarize how these calculations are made and how the hypotheses that have been included for each of them.

Figure 9: Evolution of revenues during the horizon analysed per actor involved

7.3.1 Port Authorities’ revenues

Port Authorities see their revenues increase from the second year onwards due to improvements in port efficiency thanks to the application of Port Call Synchronisation. Table 11 has been taken into account for the application of the increase of 1% of STM ships calls each year.

The update of the rates is made considering 75% of the inflation rate for the calculation of Port Authorities revenues during the timeline of the project.

0.00 €

50,000.00 €

100,000.00 €

150,000.00 €

200,000.00 €

250,000.00 €

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Port Authorities revenues Port terminals revenues SMHI revenues SSPA revenues


The different charges that have been included in the annual calculation have been broken down by type of ship and type of goods transported, giving as a result:

Average ship charge per type of ship in port call Synchronisation scenario

Average goods/passenger charge

Average Navigational aids charge for the maritime signalling per type of ship

Average activity charge for commercial, industrial and service activities on public port land.

The calculation of these charges has been extracted from average data from different studies and statistical sources that calculate port charges in the European Union as well as the average calculation of goods moved per unit. This information has been contrasted with data from various cost-benefit analysis carried out in several Port Authorities. A conservative approach has been chosen, based on the size of ships, global movement statistics and capacities of the ships operating regular Short Sea Shipping services in line with the VESSL database, used to calculate the project's macro results.

The following table shows estimations of revenues for all Port Authorities in the project scenario.

Table 17: Revenues of all Port Authorities during the horizon time of the project

Year

PORT CALL SYNCHRONISATION

Additional revenues by increasing the STM ships port calls due to Port Call Synchronisation (In Euros)

1 0.00 €

2 202,964.19 €

3 206,008.65 €

4 209,098.78 €

5 212,235.27 €

6 215,418.79 €

7 218,650.08 €

8 221,929.83 €

9 225,258.78 €

10 228,637.66 €

It is important to highlight that these revenues would be generated in the second year thanks to the optimization of the port capacity in terms of more calls.

7.3.2 Port terminals’ revenues

Similarly, the revenues for port terminals have been calculated due to the same traffic used for the Port Authorities’ calculations. The calculation followed the same procedure as for the Port Authorities taking into account the minimum number of cargo movements per type of ship. It is the result of applying the revenue deducted from the costs of moving the goods.

The following table shows estimations of revenues for all port terminals in the project scenario.


Table 18: Revenues of all port terminals during the horizon time of the project

Year


Additional revenues by increasing the cargo operations of more STM ships port calls (in Euros)

1 0.00 €

2 125,615.00 €

3 128,127.30 €

4 130,689.85 €

5 133,303.64 €

6 135,969.72 €

7 138,689.11 €

8 141,462.89 €

9 144,292.15 €

10 147,177.99 €

The calculation has been made for this increase in calls regardless of the port terminal in which it is performed; therefore, the calculation is estimated on average.

7.3.3 SMHI revenues

SMHI's calculation of revenues from the Weather ETA service is priced at approximately €70 per service. With this data, the following table shows the revenues for the total years of the project.

Table 19: Revenues of SMHI during the horizon time of the project

Year

SHIP TO SHORE AND SERVICE PROVIDER

Revenues providing the ETA weather service to the STM

ships

1 0.00 €

2 49,830.77 €

3 51,335.66 €

4 52,886.00 €

5 54,483.16 €

6 56,128.55 €

7 57,823.63 €

8 59,569.90 €

9 61,368.92 €

10 63,222.26 €

7.3.4 SSPA revenues


SSPA’s calculation of revenues from the Route Optimisation service is priced at approximately € 25 per route optimised. With this data, the following table shows the revenues for the total years of the project.

Table 20: Revenues of SSPA during the horizon time of the project

Year


Revenues providing Route Optimisation

service to the STM ships

1 0.00 €

2 157,981.17 €

3 162,752.20 €

4 167,667.32 €

5 172,730.87 €

6 177,947.34 €

7 183,321.35 €

8 188,857.66 €

9 194,561.16 €

10 200,436.91 €

7.4 Operational costs

Operational costs include all the saving in operating costs per actor involved but also the maintenance costs of the systems have been calculated.

The average labour costs associated with each of the actors analysed are set out in the following table:


Table 21: Average cost per type of employee and per service

STM SERVICES DEVELOPED

AGENT AVERAGE HOURLY COST PER EMPLOYEE (€/hour)

PC

CO

OR

DIN

AT

ION

PC

. S

YN

CH

RO

NIS

AT

ION

SH

IP-T

O-S

HIP

RO

UT

E E

XC

HA

NG

E

EN

HA

NC

ED

MO

NIT

OR

ING

NO

RD

IC P

ILO

T R

OU

TE

NA

VIG

AT

ION

AL

WA

RN

ING

WE

AT

HE

R E

TA

RO

UT

E O

PT

IMIS

AT

ION

SA

R

WIN

TE

R N

AV

IGA

TIO

N

PORT AUTHORITIES € 25.00 █ █

PORT TERMINALS € 30.00 █ █

PILOTAGE € 50.00 █

TOWAGE € 25.00 █

MOORING € 25.00 █

SHIPPING COMPANIES € 25.00 █ █ █ █ █ █ █ █

SHORE CENTRES € 30.00 █

SMHI € 25.00 █

SAR € 30.00 █

For a better understanding of the reader, the results will be presented by agent involved. The calculations include the potential savings in operational costs of shipping companies because of the application of the STM Validation project services on STM ships.

7.4.1 Port Authorities’ costs

The Port Authorities are favoured in terms of less cost thanks to two STM services. The following is a qualitative explanation of what these cost savings consist of:

Port Call Coordination – One of the main operating costs are related to the “port call planning” task that deals with the port call information about expected calls every day in each port. An average time to resolve modifications dealing with this task has been also calculated. This task has considered different percentage of saving according to the size of the port. The yearly cost savings regarding licences for IT platforms have been included for this service.

Port Call Synchronisation – Operating costs related to the management of more port calls due to this service has been taken into account as a percentage of costs regarding the increased traffic per year. This percentage is 20%.


Table 22: Hypotheses for the calculation of Port Authorities operating costs due to Port Call Coordination service

PERCENTAGE OF SAVINGS PER TYPE OF PORT

ADMINISTRATION AND REPORT BIG SIZED PORT MEDIUM-SIZED PORT SMALL-SIZED PORT

Average percentage dedicated to deal with information about the port calls planning by Port Authorities

35% 30% 20%

Average percentage to resolve modifications dealing with port call planning tasks by Port Authorities

55% 50% 45%

The following table shows saving costs for all Port Authorities in 10 years:

Table 23: Port Authorities’ operating costs for the STM Validation Project

Year

PORT CALL COORDINATION PORT CALL

SYNCHRONISATION

Total Operating costs (Port Authorities)

Savings costs dealing with

"port call planning" tasks

by Port Authorities

(Euros/year)

Saving costs to resolve

modifications dealing with "port

call planning" tasks by Port Authorities

(€/year)

Additional costs by increasing the STM ships port calls in

Port Call Synchronisation

scenario (In Euros)

2018 0.00 € 0.00 € 0.00 € 0.00 €

2019 -127,487.25 € -2,288.98 € 40,592.84 € - 89,183.39 €

2020 -131,337.36 € -2,358.10 € 41,201.73 € - 92,493.74 €

2021 -135,303.75 € -2,429.32 € 41,819.76 € - 95,913.31 €

2022 -139,389.93 € -2,502.68 € 42,447.05 € - 99,445.56 €

2023 -143,599.50 € -2,578.26 € 43,083.76 € - 103,094.01 €

2024 -147,936.21 € -2,656.13 € 43,730.02 € - 106,862.32 €

2025 -152,403.88 € -2,736.34 € 44,385.97 € - 110,754.26 €

2026 -157,006.48 € -2,818.98 € 45,051.76 € - 114,773.70 €

2027 -161,748.07 € -2,904.11 € 45,727.53 € - 118,924.66 €

Finally, the maintenance costs are detailed in the next table:


Table 24: Port Authorities’ maintenance costs

Year

PORT CALL COORDINATION

Yearly costs saving of maintenance of licences regarding different IT platforms (€/year)

2018 0.00 €

2019 4,896.00 €

2020 4,993.92 €

2021 5,093.80 €

2022 5,195.67 €

2023 5,299.59 €

2024 5,405.58 €

2025 5,513.69 €

2026 5,623.97 €

2027 5,736.44 €

7.4.2 Port terminals’ costs

The Port Terminals are favoured in terms of less cost thanks to Port call Coordination service. One of the main operating costs are related to the “port terminal call planning” task about expected calls every day in their facilities. An average time to resolve unexpected changes in the planning has been considered.

The yearly maintenance costs are also included regarding IT platforms, customer service and internet connections.

Table 25: Hypotheses for the calculation of port terminals operating costs due to Port Call Coordination service



Percentage dedicated to deal with information about the port calls planning

by port terminals 15% 12.5% 10%

Percentage to resolve modifications dealing with port call planning tasks by

port terminals 80% 75% 70%

The following table shows saving costs for all port terminals in 10 years:


Table 26: Port terminals operating costs for the STM Validation Project

Year


Total operating costs (Port Terminals)

Savings costs dealing with "port

call planning" tasks by port terminals

(Euros/year)

Saving costs to resolve errors dealing

with "port call planning" tasks by

port terminals (Euros/year)

2018 0.00 € 0.00 € 0.00 €

2019 -588,852.02 € -70,481.75 € -659,333.77 €

2020 -606,635.35 € -72,610.30 € -679,245.65 €

2021 -624,955.74 € -74,803.13 € -699,758.87 €

2022 -643,829.40 € -77,062.19 € -720,891.59 €

2023 -663,273.05 € -79,389.46 € -742,662.51 €

2024 -683,303.89 € -81,787.03 € -765,090.92 €

2025 -703,939.67 € -84,256.99 € -788,196.66 €

2026 -725,198.65 € -86,801.55 € -812,000.20 €

2027 -747,099.65 € -89,422.96 € -836,522.61 €


Table 27: Port terminals maintenance costs

Year


Yearly maintenance costs of licences regarding different IT

platforms (€/year)

2018 0.00 €

2019 82,742.40 €

2020 84,397.25 €

2021 86,085.19 €

2022 87,806.90 €

2023 89,563.03 €

2024 91,354.30 €

2025 93,181.38 €

2026 95,045.01 €

2027 96,945.91 €

7.4.3 Pilotage costs

The Pilotage at the eight ports analysed are favoured in terms of less cost thanks to Port call Coordination service. One of the main operating costs are related to the “ship calls planning” task about expected calls every day to be managed. An average time to resolve unexpected changes in the planning has been considered. In other words, he time it takes to do the task


and the mistakes that are made are measured. In addition, the time needed to fix these errors is estimated. STM is an improvement in all estimation tables.

The yearly maintenance costs are also included regarding IT platforms, customer service and internet connections, etc.

Table 28: Hypotheses for the calculation of Pilotage operating costs due to Port Call Coordination service



Percentage of time to deal with information about the port calls

planning by Pilots 65% 60% 50%

Percentage of time to resolve modifications dealing with port call

planning tasks by Pilots 65% 60% 50%

The following table shows saving costs for all the Pilots from eight selected ports in 10 years:

Table 29: Pilotage operating costs for the STM Validation Project

Year


Total operating costs (Pilotage)


call planning" tasks by Pilots

(Euros/year)

Saving costs to resolve errors dealing

with "port call planning" tasks by Pilots (Euros/year)

2018 0.00 € 0.00 € 0.00 €

2019 -389,183.81 € -5,837.76 € -395,021.56 €

2020 -400,937.16 € -6,014.06 € -406,951.21 €

2021 -413,045.46 € -6,195.68 € -419,241.14 €

2022 -425,519.43 € -6,382.79 € -431,902.22 €

2023 -438,370.12 € -6,575.55 € -444,945.67 €

2024 -451,608.90 € -6,774.13 € -458,383.03 €

2025 -465,247.48 € -6,978.71 € -472,226.20 €

2026 -479,297.96 € -7,189.47 € -486,487.43 €

2027 -493,772.76 € -7,406.59 € -501,179.35 €



Table 30: Pilotage maintenance costs

Year


Yearly maintenance costs of licences regarding different IT platforms (€/year)

2018 0.00 €

2019 12,729.60 €

2020 12,984.19 €

2021 13,243.88 €

2022 13,508.75 €

2023 13,778.93 €

2024 14,054.51 €

2025 14,335.60 €

2026 14,622.31 €

2027 14,914.76 €

7.4.4 Towage costs

The Towage at the eight ports analysed are favoured in terms of less cost thanks to Port call Coordination service. One of the main operating costs are related to the “ship calls planning” task about expected calls every day to be managed by the Tugboats. An average time to resolve unexpected changes in the planning has been considered. The yearly maintenance costs are also included regarding IT platforms, customer service and internet connections, etc.

Table 31: Hypotheses for the calculation of Towage operating costs due to Port Call Coordination service



Percentage of time dedicated to deal with information about the port calls

planning related to Towage 35% 30% 25%

Percentage of time to resolve modifications dealing with port call planning tasks related to Towage

65% 60% 50%

The following table shows saving costs for the Towage service from eight ports in 10 years:


Table 32: Towage operating costs for the STM Validation Project

Year


Total operating costs (Towage)


call planning" tasks by Towage

service (Euros/year)

Saving costs to resolve errors

dealing with "port call planning" tasks by Towage service

(Euros/year)

2018 0.00 € 0.00 € 0.00 €

2019 -66,274.05 € -1,945.92 € -68,219.97 €

2020 -68,275.53 € -2,004.69 € -70,280.22 €

2021 -70,337.45 € -2,065.23 € -72,402.68 €

2022 -72,461.64 € -2,127.60 € -74,589.24 €

2023 -74,649.98 € -2,191.85 € -76,841.83 €

2024 -76,904.41 € -2,258.04 € -79,162.46 €

2025 -79,226.93 € -2,326.24 € -81,553.16 €

2026 -81,619.58 € -2,396.49 € -84,016.07 €

2027 -84,084.49 € -2,468.86 € -86,553.35 €


Table 33: Towage maintenance costs

Year



2018 0.00 €

2019 12,729.60 €

2020 12,984.19 €

2021 13,243.88 €

2022 13,508.75 €

2023 13,778.93 €

2024 14,054.51 €

2025 14,335.60 €

2026 14,622.31 €

2027 14,914.76 €


7.4.5 Mooring costs

The Mooring at the eight ports analysed are favoured in terms of less cost thanks to Port call Coordination service. One of the main operating costs are related to the administrative burden regarding the ships calls and the data exchange process with different IT platforms. An average time to resolve unexpected changes in the planning has been considered. The yearly maintenance costs are also included regarding IT platforms, customer service and internet connections, etc.

Table 34: Hypotheses for the calculation of mooring operating costs due to Port Call Coordination service



Percentage of time to deal with information about the port calls planning related to mooring

95% 93% 80%

Percentage of time to resolve modifications dealing with port call planning tasks related to Mooring

80% 75% 70%

The following table shows saving costs for the Mooring service from eight ports in 10 years:

Table 35: Mooring operating costs for the STM Validation Project

Year


Total operating costs (Mooring)

Savings costs dealing with "port call

planning" tasks by Mooring service

(Euros/year)

Saving costs to resolve errors dealing with "port call planning" tasks by Mooring (Euros/year)

2018 0.00 € 0.00 € 0.00 €

2019 -149,962.67 € -2,517.00 € -152,479.68 €

2020 -154,491.55 € -2,593.02 € -157,084.56 €

2021 -159,157.19 € -2,671.33 € -161,828.52 €

2022 -163,963.74 € -2,752.00 € -166,715.74 €

2023 -168,915.44 € -2,835.11 € -171,750.55 €

2024 -174,016.69 € -2,920.73 € -176,937.42 €

2025 -179,271.99 € -3,008.94 € -182,280.93 €

2026 -184,686.01 € -3,099.81 € -187,785.81 €

2027 -190,263.52 € -3,193.42 € -193,456.95 €



Table 36: Mooring maintenance costs

Year



2018 0.00 €

2019 12,729.60 €

2020 12,984.19 €

2021 13,243.88 €

2022 13,508.75 €

2023 13,778.93 €

2024 14,054.51 €

2025 14,335.60 €

2026 14,622.31 €

2027 14,914.76 €

7.4.6 Shore centres costs

The fact that the ship shares information about its voyage plan with the shore centre helps to understand the ship's performance in the monitoring area in STM scenario. Although the controllers in the shore centre cannot force the ships to make modifications to their route, there is an interaction or radio communications to resolve possible doubts about the safety route to be followed or how to navigate in that area. Since the controller knows the route information, it takes less time per request to ensure that the ship is performing the correct manoeuvring and navigation. There is thus a saving in operating costs per enhanced monitoring service requested. It has a strong implication in the time that the Officer on board the ship would spend preparing a route with safety waypoints. In this way, the shore centre would be able to monitor much faster and in a wider area all the increasing traffic that passes through it.

An average time to resolve unexpected changes in the suggested routes has been considered in the situation without project, according to the information provided by main actors involved in this initiative. Finally, the calculations carried out have resulted in a 25% operating savings percentage for each request. The table below summarizes this calculation for the timeline of the project.


Table 37: Shore Centres operating costs related to enhanced monitoring

Year

SHIP TO SHORE/SERVICE PROVIDER

Total operating costs (Shore centres)

Savings costs dealing with enhanced

monitoring service (Euros/year)

Saving costs to resolve errors dealing enhanced

monitoring service (Euros/year)

2018 0.00 € 0.00 € 0.00 €

2019 -17,742.62 € -13,129.54 € -30,872.16 €

2020 -18,278.45 € -13,526.05 € -31,804.50 €

2021 -18,830.46 € -13,934.54 € -32,764.99 €

2022 -19,399.14 € -14,355.36 € -33,754.50 €

2023 -19,984.99 € -14,788.89 € -34,773.88 €

2024 -20,588.54 € -15,235.52 € -35,824.05 €

2025 -21,210.31 € -15,695.63 € -36,905.94 €

2026 -21,850.86 € -16,169.64 € -38,020.50 €

2027 -22,510.76 € -16,657.96 € -39,168.72 €

7.4.7 SMHI costs

SMHI's calculation of operating costs from the Weather ETA service provides information about processing requests by the staff of the company. Each request is replied in 10 minutes. According to this figure, the next table summarised the operating costs due to providing the SMHI service during the duration of the project.

Table 38: SMHI operating costs related to Weather ETA service

Year


Operating costs of providing the service to the ship regarding ETA weather

2018 0.00 €

2019 2,995.78 €

2020 3,086.25 €

2021 3,179.46 €

2022 3,275.48 €

2023 3,374.39 €

2024 3,476.30 €

2025 3,581.29 €

2026 3,689.44 €

2027 3,800.86 €


7.4.8 SSPA costs

The service is fully automated, i.e. there is usually no manual intervention needed for each service request. The costs associated with providing the service as is (not accounting for any initial development cost) is linked to hardware, support and potential bug-fixing. An estimated cost for each service request would be 4 € per request. With this information, only the maintenance costs can be calculated and are shown in the following table:

Table 39: SSPA maintenance costs related to Route Optimisation service

Year


Maintenance costs of providing the service to the ship regarding route optimisation service

(Euros/year)

2018 0.00 €

2019 25,276.99 €

2020 26,040.35 €

2021 26,826.77 €

2022 27,636.94 €

2023 28,471.57 €

2024 29,331.42 €

2025 30,217.23 €

2026 31,129.79 €

2027 32,069.90 €

7.4.9 SAR costs

This service offers savings regarding the time it takes to manually enter information into the ECDIS with respect to search patterns in rescue operations in the situation with STM project.

Table 40: SAR operating costs related to search patterns service

Year


Total Operating costs (Port Authorities)

Savings costs dealing with SAR units workload regarding

SAR services (Euros/year)

Saving costs to resolve errors regarding SAR

services (Euros/year)

Savings costs dealing with SAR coordination

workload regarding SAR services (Euros/year)

2018 0.00 € 0.00 € 0.00 € 0.00 €

2019 -22,046.28 € -4,905.30 € -14,278.57 € -41,230.15 €

2020 -22,712.08 € -5,053.44 € -14,709.78 € -42,475.30 €

2021 -23,397.98 € -5,206.05 € -15,154.02 € -43,758.05 €

2022 -24,104.60 € -5,363.27 € -15,611.67 € -45,079.55 €

2023 -24,832.56 € -5,525.24 € -16,083.14 € -46,440.95 €

2024 -25,582.50 € -5,692.11 € -16,568.86 € -47,843.47 €

2025 -26,355.10 € -5,864.01 € -17,069.23 € -49,288.34 €

2026 -27,151.02 € -6,041.10 € -17,584.73 € -50,776.85 €

2027 -27,970.98 € -6,223.54 € -18,115.78 € -52,310.31 €

The service saves at least 20 minutes on each operation on board for each SAR unit. In addition, there is better coordination in the MRCC resulting in savings related to workload that is about 30% of time.


7.4.10 Shipping companies’ costs

Although not being partners of the project, shipping companies are the actors most benefited by the implementation of STM services. The possibility of connecting through the module installed in the bridge with the ports, with ships, with shore centres and the service providers is the actor that has more possibilities of improvement in their operating costs. The list of improvements for this actor is the following:

Ship-to-port communications make it possible to synchronize the call when the port is available for the execution of the service. Information about the ETA is automatically sent to the port and is replied to with a time of arrival suggested, which has consequences on the speed at which the vessel would navigate. In this way, waiting times are reduced and, on the other hand, fuel consumption and therefore GHG emissions are reduced. Therefore, one of the operational costs to be reduced is related to the reduction in fuel consumption thanks to the port call synchronisation.

Ship-to-ship to ship communications allows the officer on the bridge to somehow facilitate the management of risks associated with navigation where there are ships in the vicinity. Communications with the nearby ship sometimes take a long time to manage as well as to find out what the route is going to take. These purely operational steps are reduced thanks to the real information of the route and the accurate intentions of the other ship. This reduces the effective operational time required to manage these types of situations.

Ship-to-shore centre communications offers a number of opportunities for improvement for officers on board when navigating. Almost all the operating costs saved thanks to the STM tool related to these communications facilitate safer navigation and reduce the tasks on board the ship in measuring, monitoring, introducing several changes in the voyage plan, etc. In the CBA, these savings have been reflected for this type of service. There are a number of advantages in relation to the possible reduction of fuel thanks to this assisted navigation, but it has not been taken into account in this section because the way of calculation was complex.

Ship-to-service provider communications offer two solutions related to route optimization. On the one hand, the calculation of the tailor-made weather forecast in each waypoint of the ship voyage plan, which translates into improvements in the interpretation of NAVTEX information and its manual introduction into the system. On the other hand, it offers a real-time tool that facilitates machine-to-machine communications and achieves fuel savings of up to 12%.

The total number of ship calls considered for the calculation of the port call synchronisation was adjusted to a percentage, which reflected the type of ship. Ships carrying passengers have priority of entry into ports and therefore the synchronisation affects to a smaller number of port calls.

Table 41: Number of port calls improved using Port Call Synchronisation

TYPE OF STM SHIP NO. OF CALLS APPLIED IN

THE ANALYSIS

% PORT CALLS THAT ARE IMPROVED DUE TO PORT CALL

SYNCHRONISATION

CONTAINERSHIP 247 15%

RO-PAX 3,158 1%

CAR CARRIER 33 15%

PAX 32 1%

RO-RO 209 10%

STM SHIP CALL SELECTED

3,679 96 ship calls improved


The calculation of the average fuel consumption was one of the most difficult elements to perform. Thanks to the VESSL tool, detailed information has been collected for all STM vessels. Other data include the main and auxiliary engines as well as their consumption during navigation and during port time. For the assumption of hypotheses from the following table all values have been calculated for the total STM vessels and the average per type of vessel has been calculated. In addition, potential savings at ports have been considered for each type of ship, as well as their translation into less fuel consumption during navigation and, hence, less consumption during anchoring time.

Table 42: Main hypotheses for calculation of fuel consumption savings

TYPE OF STM SHIP

AVERAGE FUEL CONSUMPTION

DURING NAVIGATION BY MAIN AND

AUXILIARY ENGINES (TONNES/DAY)

AVERAGE FUEL

CONSUMPTION AT PORT BY

THE AUXILIARY ENGINES

(TONNES/DAY)

AVERAGE HOURS OF ANCHORING/OPERATIONS DECREASED DUE TO PORT CALL SYNCHRONISATION

SERVICE

FUEL CONSUMPTION IN PORT CALL

SYNCHRONISATION SCENARIO (WITHOUT

ANCHORING AND IDLE TIMES BUT NAVIGATION AT

LOWER SPEED)

CONTAINERSHIP 130.55 5.46 3 127.29

RO-PAX 113.05 13.40 0.50 113.03

CAR CARRIER 78.00 10.00 1.50 77.76

PAX 12.80 0.28 0.25 12.80

RO-RO 64.28 4.22 1.50 64.08

For the estimation of the fuel price MGO (Marine Gasoil) has been considered spot price in the Mediterranean Sea in spring 2019, which is 568 €/ton.

One STM service that is also affected in terms of less fuel costs is route optimisation by SSPA. According to the company's estimations, an average of 12% of fuel consumption is saved thanks to the concrete real tests that have been carried out. In order to calculate less fuel costs thanks to this service, the aforementioned navigation fuel consumption has been taken into account, as well as a saving of only 4 hours of navigation time in order to preserve a conservative calculation setting. In addition, a percentage of effectively optimised routes has been applied to the total number of routes pretended to be optimised. These optimised routes have been averaged by the ship type percentage. All this information is shown in the table below:

Table 43: Main hypotheses for fuel consumptions savings by route optimisation service

TYPE OF STM SHIP

NO. OF CALLS APPLIED IN THE

ANALYSIS

% PORT CALLS PER TYPE OF SHIP

AVERAGE TOTAL OPTIMISED

ROUTES PER TYPE OF SHIP

% OPTIMISED ROUTES WITH SSPA ROUTE

OPTIMISATION

CONTAINERSHIP 247 7% 411 100%

RO-PAX 3,158 86% 5,265 10%

CAR CARRIER 33 1% 55 100%

PAX 32 1% 53 10%

RO-RO 209 6% 348 10%


For the rest of the services there have been savings in effective working time on-board extracted from estimated results of STM simulations and information of the procedures from several shipping companies and other experts. The hypotheses assumed are summarized in the following table:

SERVICE ROUTE

EXCHANGE SHIP TO SHIP

ENHANCED MONITORING

SMHI WEATHER

ETA

NORDIC PILOT

ROUTE

BALTIC NAVIGATIONAL

WARNINGS

WINTER NAVIGATION

% working time saved on board

75% 63% 98% 73% 85% 25%

% working time saved resolving errors on board

97% 96% 99% 97% 97% 96%

The following two tables show the operating costs grouped by those services that reduce the fuel consumption and provide ship-to-ship operational improvements and those services related to ship-to-shore interactions reducing the operational workload on board.

Table 44: Shipping companies operating costs related to fuel consumption and ship-to-ship interaction

Year

PORT CALL SYNCHRONISATION SHIP-TO-SHORE/SERVICE PROVIDER ROUTE EXCHANGE SHIP-TO-SHIP

Savings costs of fuel consumption due to Port Call Synchronisation

system (Euros/Year

Savings bunkering fuel costs because using SSPA service (Euros/year)

Savings costs dealing with RESTS (Euros/year)

Saving costs to resolve errors dealing with RESTS (Euros/year)

2018 0.00 € 0.00 € 0.00 € 0.00 €

2019 -520,976.17 € 40,592.84 € -107,977.84 € -1,403.71 €

2020 -536,709.65 € 41,201.73 € -111,238.77 € -1,446.10 €

2021 -552,918.28 € 41,819.76 € -114,598.18 € -1,489.78 €

2022 -569,616.41 € 42,447.05 € -118,059.04 € -1,534.77 €

2023 -586,818.83 € 43,083.76 € -121,624.43 € -1,581.12 €

2024 -604,540.76 € 43,730.02 € -125,297.48 € -1,628.87 €

2025 -622,797.89 € 44,385.97 € -129,081.47 € -1,678.06 €

2026 -641,606.38 € 45,051.76 € -132,979.73 € -1,728.74 €

2027 -660,982.90 € 45,727.53 € -136,995.72 € -1,780.94 €


Table 45: Shipping companies operating costs related improvement of operational aspects on board

Year


Savings costs

dealing with enhancing monitoring

(Euros/year)


dealing with enhancing monitoring

(Euros/year)

Savings costs dealing with ship

operator workload

regarding SMHI service

(Euros/year) including the

price


regarding SMHI service

(Euros/year)

Savings costs dealing with pilot route workload

regarding PR service

(Euros/year)

Saving costs to resolve errors regarding PR

services (Euros/year)

Savings costs dealing with pilot route workload

regarding Baltic Navigational

Warnings service

(Euros/year)


regarding Baltic Navigational

Warnings service

(Euros/year)

Savings costs dealing with

WINTER NAVIGATION

workload regarding WNS

(Euros/year)


regarding WINTER

NAVIGATION service

(Euros/year)

2018 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 €

2019 -73,927.58 € -11,384.85 € -19,872.99 € -2,832.64 € -49,363.54 € -3,275.94 € -38,368.94 € -4,378.57 € -175.13 € -134.85 €

2020 -76,160.19 € -11,728.67 € -20,473.15 € -2,918.19 € -50,854.31 € -3,374.88 € -39,527.68 € -4,510.81 € -180.42 € -138.93 €

2021 -78,460.23 € -12,082.88 € -21,091.44 € -3,006.32 € -52,390.11 € -3,476.80 € -40,721.42 € -4,647.03 € -185.87 € -143.12 €

2022 -80,829.73 € -12,447.78 € -21,728.40 € -3,097.11 € -53,972.30 € -3,581.80 € -41,951.21 € -4,787.37 € -191.49 € -147.44 €

2023 -83,270.79 € -12,823.70 € -22,384.60 € -3,190.64 € -55,602.26 € -3,689.97 € -43,218.13 € -4,931.95 € -197.27 € -151.90 €

2024 -85,785.57 € -13,210.98 € -23,060.61 € -3,287.00 € -57,281.45 € -3,801.41 € -44,523.32 € -5,080.90 € -203.23 € -156.48 €

2025 -88,376.29 € -13,609.95 € -23,757.05 € -3,386.27 € -59,011.35 € -3,916.21 € -45,867.92 € -5,234.34 € -209.36 € -161.21 €

2026 -91,045.25 € -14,020.97 € -24,474.51 € -3,488.53 € -60,793.49 € -4,034.48 € -47,253.13 € -5,392.42 € -215.69 € -166.08 €

2027 -93,794.82 € -14,444.40 € -25,213.64 € -3,593.88 € -62,629.45 € -4,156.32 € -48,680.18 € -5,555.27 € -222.20 € -171.09 €

The total shipping companies operating costs are shown in the following figure as a result of summing up the previous operating costs saved for all the STM services.

Figure 10: Total operating costs saved for shipping companies


Table 46: Maintenance costs for shipping companies

Year


Yearly costs of maintenance of licences regarding different IT platforms (€/year)

2018 0.00 €

2019 561.00 €

2020 572.22 €

2021 583.66 €

2022 595.34 €

2023 607.24 €

2024 619.39 €

2025 631.78 €

2026 644.41 €

2027 657.30 €

7.5 Financial profitability

The Project profitability is measured using the following indicators:

Financial net present value, FNPV (C), and financial rate of return, FRR (C), on

investment.

As stated in the Guide, both financial net present value of investment and financial rate of return of investment compare investment costs to net revenues and measure the extent to which the project net revenues are able to repay the investment, regardless of the sources of financing.

The Financial net present value on investment is defined as the sum that results when the expected investment and operating costs of the project (discounted) are deducted from the discounted value of the expected revenues. It indicates how much the investor’s wealth has increased after recovering their initial investment. The minimum required return on the

YearTotal Operating cost savings for Shipping

companies

2018 0.00 €

2019 1,710,133.74 €

2020 1,761,779.78 €

2021 1,814,985.53 €

2022 1,869,798.09 €

2023 1,926,265.99 €

2024 1,984,439.22 €

2025 2,044,369.29 €

2026 2,106,109.24 €

2027 2,169,713.74 €

0 €

500,000 €

1,000,000 €

1,500,000 €

2,000,000 €

2,500,000 €

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

TOTAL OPERATING COSTS SAVED FOR SHIPPING COMPANIES

Total operating costs saved (Shipping Companies)


investment is implicit in the discount rate, which represents the cost of capital, or opportunity cost of relinquishing the return on alternatives involving the same level of risk.

NPV is calculated using the following formula:

n

jj

o

r

FjICFNPV

1 1)(

Where Fj is the balance of cash flow for t = j; Io is the investment in t = 0; r is the discount rate and n is the time horizon or lifespan of the project (25 years in our study).

FNPV is one of the most commonly used measures to decide whether or not to go ahead with a project. A project is profitable for an investor if FNPV is greater than zero. Therefore, the decision making rule is as follows:

NPV > 0 Profitable Project (go-ahead recommended)

NPV < 0 NON Profitable Project (should be rejected)

NPV = 0 Going ahead with the project would yield the same return as the alternative that was used to calculate the opportunity cost.

The second indicator used is the FRR, which is defined as the discount rate that produces a zero FNPV. Mathematically speaking, the FRR is calculated on the basis of the following expression:

n

jj

o

IRR

FjI

1 10

Where Fj is balance of cash flows in t = j; Io is investment in t = 0 and n is the time horizon or lifespan of the project.

The FRR is frequently used to evaluate projects. The decision making rule would be to give the go-ahead to a project if the FRR is higher than the opportunity cost of the investor (discount rate), but not to set the project in motion when the FRR is lower than the discount rate.

The return on investment has been calculated considering:

Investment costs and operating costs as outflows;

Revenues and residual value as inflows.

Owing to the complexity of presentation of results, will be presented by agent involved.

7.5.1 Return on Investment per agent

From henceforth, the results of the financial analysis by agent involved are shown, keeping in mind that most of the investments are made by the project according to the budget.


Table 47: Net Present Value for Port Authorities

YEAR PORT AUTHORITIES

2018 - 1,150,000.00 € 2019 287,251.58 € 2020 293,508.47 € 2021 299,918.30 € 2022 306,485.15 € 2023 313,213.21 € 2024 320,106.82 € 2025 327,170.39 € 2026 334,408.51 € 2027 341,825.87 €

FRR (%) 22.16 % FNPV (€) 903,711.98 €

PAYBACK (YEARS) 2

Table 48: Net Present Value for port terminals

YEAR PORT TERMINALS

2018 - 561,600.00 € 2019 702,206.37 € 2020 722,975.70 € 2021 744,363.52 € 2022 766,388.33 € 2023 743,139.43 € 2024 812,425.73 € 2025 836,478.18 € 2026 861,247.35 € 2027 886,754.69 €

FRR (%) 127.73 % FNPV (€) 4,437,021.30 €

PAYBACK (YEARS) 2


Table 49: Net present Value for Pilots

YEAR PILOTAGE

2018 - 86,400.00 € 2019 382,291.96 € 2020 393,967.02 € 2021 405,997.26 € 2022 418,393.47 € 2023 424,100.62 € 2024 444,328.52 € 2025 457,890.60 € 2026 471,865.12 € 2027 486,264.59 €

FRR (%) 445.51 % FNPV (€) 2,644,423.65 €

PAYBACK (YEARS) 2

Table 50: Net Present Value for Towage

YEAR TOWAGE

2018 - 86,400.00 €

2019 55,490.37 €

2020 57,296.02 €

2021 59,158.80 €

2022 61,080.49 €

2023 55,996.79 €

2024 65,107.95 €

2025 67,217.57 €

2026 69,393.76 €

2027 71,638.60 €

FRR (%) 66.18 %

FNPV (€) 312,838.18 €

PAYBACK (YEARS) 2


Table 51: Net Present Value for mooring

YEAR MOORING

2018 - 86,400.00 €

2019 139,750.08 €

2020 144,100.37 €

2021 148,584.64 €

2022 153,206.98 €

2023 150,905.51 €

2024 162,882.91 €

2025 167,945.33 €

2026 173,163.50 €

2027 178,542.19 €

FRR (%) 164.73 %

FNPV (€) 913,994.08 €

PAYBACK (YEARS) 2

Table 52: Net Present Value for Shore Centres

YEAR SHORE CENTRES

2018 -3,000.00 €

2019 30,872.16 €

2020 31,804.50 €

2021 32,764.99 €

2022 33,754.50 €

2023 34,773.88 €

2024 35,824.05 €

2025 36,905.94 €

2026 38,020.50 €

2027 39,168.72 €

FRR (%) 1032.09 %

FNPV (€) 217,431.20 €

PAYBACK (YEARS) 2


Table 53: Net Present Value for SMHI

YEAR SMHI

2018 -100,000.00 €

2019 46,835.00 €

2020 48,249.41 €

2021 49,706.54 €

2022 51,207.68 €

2023 52,754.15 €

2024 54,347.33 €

2025 55,988.62 €

2026 57,679.48 €

2027 59,421.40 €

FRR (%) 48.07 %

FNPV (€) 239,878.60 €

PAYBACK (YEARS) 2

Table 54: Net Present Value for SSPA

YEAR SSPA

2018 - 312,000.00 €

2019 132,704.18 €

2020 136,711.85 €

2021 140,840.55 €

2022 145,093.93 €

2023 149,475.77 €

2024 153,989.94 €

2025 158,640.43 €

2026 163,431.37 €

2027 168,367.00 €

FRR (%) 43.38 %

FNPV (€) 652,668.28 €

PAYBACK (YEARS) 2


Table 55: Net Present Value for Search & Rescue

YEAR SAR

2018 - €

2019 41,230.15 €

2020 42,475.30 €

2021 43,758.05 €

2022 45,079.55 €

2023 46,440.95 €

2024 47,843.47 €

2025 49,288.34 €

2026 50,776.85 €

2027 52,310.31 €

FRR (%) -

FNPV (€) 294,158.96 €

PAYBACK (YEARS) 2

Table 56: Net Present Value for Shipping Companies

YEAR SHIPPING COMPANIES

2018 - €

2019 1,709,572.74 €

2020 1,761,207.56 €

2021 1,814,401.86 €

2022 1,869,202.75 €

2023 1,925,658.75 €

2024 1,983,819.83 €

2025 2,043,737.51 €

2026 2,105,464.83 €

2027 2,169,056.44 €

FRR (%) -

FNPV (€) 12,197,196.31 €

PAYBACK (YEARS) 1


7.5.2 Return on Investment of the project

The Financial Net present Value result of the STM Validation project has a positive figure of 2,792,060€ with a FRR of 8.77% and a payback of 9 years. This means that the project is profitable and the investment is retrieved within the timespan of project that is 10 years.

Table 57: Financial Net Present Value of STM Validation Project

YEAR

STM PROJECT –

OTHER AGENTS

PORT AUTHORITIES

PORT TERMINALS

PILOTAGE TOWAGE MOORING SHORE

CENTRES SMHI SSPA SAR

SHIPPING COMPANIES

TOTAL NET BENEFITS (€)

2018 -21,238,555.50€ -1,150,000.00€ - 561,600.00 € - 86,400.00€ - 86,400.00 € - 86,400.00 € - 3,000.00 € - 100,000.00 € - 312,000.00 € - - - 23,624,355.50 €

2019 0.00 287,251.58 702,206.37 382,291.96 55,490.37 139,750.08 30,872.16 46,835.00 132,704.18 41,230.15 1,709,572.74 3,528,204.58 €

2020 0.00 293,508.47 722,975.70 393,967.02 57,296.02 144,100.37 31,804.50 48,249.41 136,711.85 42,475.30 1,761,207.56 3,632,296.20 €

2021 0.00 299,918.30 744,363.52 405,997.26 59,158.80 148,584.64 32,764.99 49,706.54 140,840.55 43,758.05 1,814,401.86 3,739,494.53 €

2022 0.00 306,485.15 766,388.33 418,393.47 61,080.49 153,206.98 33,754.50 51,207.68 145,093.93 45,079.55 1,869,202.75 3,849,892.83 €

2023 0.00 313,213.21 743,139.43 424,100.62 55,996.79 150,905.51 34,773.88 52,754.15 149,475.77 46,440.95 1,925,658.75 3,896,459.06 €

2024 0.00 320,106.82 812,425.73 444,328.52 65,107.95 162,882.91 35,824.05 54,347.33 153,989.94 47,843.47 1,983,819.83 4,080,676.55 €

2025 0.00 327,170.39 836,478.18 457,890.60 67,217.57 167,945.33 36,905.94 55,988.62 158,640.43 49,288.34 2,043,737.51 4,201,262.91 €

2026 0.00 334,408.51 861,247.35 471,865.12 69,393.76 173,163.50 38,020.50 57,679.48 163,431.37 50,776.85 2,105,464.83 4,325,451.26 €

2027 0.00 341,825.87 886,754.69 486,264.59 71,638.60 178,542.19 39,168.72 59,421.40 168,367.00 52,310.31 2,169,056.44 4,453,349.80 €

FRR (%) 8.77% FNPV (€) 2,792,059.81 € Payback

(years) 9

The following figure shows the financial results for all the agents involved in percentage according to the total calculation of the financial net present value:

Figure 11: Percentage of NPV per agent

As can be seen from the results, the positive financial result of 73% is for Shipping Companies and Port Terminals while 21% comes from Port Authorities and Port Services. This represents an impact of 94% on the shipping sector compared to only 6% for Service Providers and other agents.

This is a clear example of the tangible benefit in favour of the competitiveness of the European Union's Port-Maritime Sector, which has an impact on external and intra-European trade and therefore on the consumers. Without these funds, it would not have been possible to achieve these benefits and the potential future benefits if the introduction of STM became a reality for the European Union.

Figure 12: Financial results of STM Validation Project


8 Economic Analysis

As per Article 101 (Information necessary for the approval of a major project) of Regulation (EU) No 1303/2013, an economic analysis has been carried out to determine welfare impacts that the Financial Analysis neglects. Some of these indicators, such as externalities and indirect effects, are needed for an additional investigation of the project's net impact on economic welfare. Since market prices from the financial analysis do not reflect the social opportunity cost of inputs and outputs, the approach that has been followed is to convert them into accounting shadow prices using appropriate conversion factors.

The social discount rate has been applied according to Annex III to the Implementing Regulation on application form and CBA methodology, for the programming period 2014-2020. In this project, it is recommended to use a social discount rate of 3%.

In transport projects, the main direct benefits are measured by the change of the following variables:

Consumer´s surplus

Gross Producer´s surplus

Externalities

Conversion factors

Corrected investment and costs

Overall results

8.1 Initial observations

As a starting point, the economic analysis has been built from a set of overall hypotheses according to the Guide and are pointed out hereinafter:

Social discount rate of 3%

The conversion factors estimated for Investments, operating costs and maintenance are the following:

o Labour – 12% o Energy – 35% o Other – it has not been corrected

The breakdown of investments, operating and maintenance costs are shown in the following table:

Table 58: Breakdown of different issues of the analysis

Labour Energy Others

Breakdown of Investments 95.0% 1.0% 4.0%

Breakdown of operating costs 80% 10% 10%

Breakdown of maintenance costs 14% 1% 85%

Breakdown of Operating costs Shipping Companies 25% 74% 1%

8.2 Consumers’ surplus

The calculation of the consumers' surplus has taken into account the shipper as the main customer to be focused in this analysis. The calculation tries to reflect how the final consumer


is benefited thanks to the implementation of STM. Currently, shipping companies offer a certain frequency according to their schedules. In order to evaluate the improvement of the capacity of the ports, the STM project offers a solution that optimizes port calls and gives the possibility to receive additional calls.

This has an impact on the shipper, the final customer, who has more alternatives to load/unload their cargo. From the point of view of passengers, these have more availability of Passenger ships calls to be carried that can result in a less price to pay for the ticket.

Following this argument, thanks to a better synchronisation of the calls, the number of additional calls from the second year onwards have been estimated.

The same assumptions that were taken into account in the calculation of traffic increases in the financial analysis serve to estimate both the number of calls affected and the number of average movements for each additional port call of STM ships.

The calculation is completed by multiplying the additional number of port calls by the average number of goods/passenger movements (measured in TEU, cars, lorries or passengers). The resulting amount is multiplied by the average revenues per unit load (in the case of passengers a ticket 1€ less price than usual) and by the average percentage improvement in logistical and storage costs thanks to a scenario with more port calls, and therefore possibilities for the shipper. This percentage is 0.50% of improvement costs.

Table 59: Calculation hypotheses for Consumers´ surplus for the STM Validation project

NO. OF ADDITIONAL

CALLS FROM THE 2ND

YEAR ONWARDS

AVERAGE NO. OF MOVEMENTS PER ADDITIONAL CALL

TOTAL CONSUMERS’ SURPLUS PER TYPE OF

SHIP

CONTAINER SHIPS 3 600 TEU 6,300 €

RO-PAX 32 100 LORRIES 728 €

CAR CARRIER 1 1,500 CARS 371.75 €

PAX 1 180 PASSENGERS 180 €

RO-RO 2 135 LORRIES 61,43 €

The results are shown as follow:


Table 60: Consumers’ surplus results

Year CONSUMERS’ SURPLUS (Euros)

2018 - €

2019 7,641 €

2020 7,717 €

2021 7,794 €

2022 7,872 €

2023 7,951 €

2024 8,030 €

2025 8,111 €

2026 8,192 €

2027 8,274 €

TOTAL 71,582 €

8.3 Gross Producer Surplus

The producer surplus, defined as the revenues accrued by the producer (i.e. owner and operators together) minus the costs borne. The change in the producer surplus is calculated as the difference between the change in the producer revenue (e.g. rail ticket income increased) less the change in the producer costs. This might be particularly relevant for public transport projects or toll road projects, especially if the project is expected to feature significant traffic (generated or induced) or a substantial change in fares.

In this case, the project is expected to change traffic volumes or when transport-pricing strategies are introduced or expected to be changed, the fares paid by users will not be cancelled out. Therefore, the Gross producer surplus is the sum up of revenues for Port Authorities and port terminals, calculated in the financial analysis. The results are shown in the following table:


Table 61: Gross producer surplus results

Year GROSS PRODUCER SURPLUS (Euros)

2018 - €

2019 421,483 €

2020 438,433 €

2021 448,271 €

2022 458,202 €

2023 468,372 €

2024 478,787 €

2025 489,456 €

2026 500,385 €

2027 511,580 €

TOTAL 4,214,968 €

8.4 Externalities

An externality arises from a particular action that has happened and produces either a positive or a negative effect, which is not internalised in the price of the service or product for sale, for instance air pollution from road transport services. This includes any cost or benefit that results from the project, which affects other parties without monetary compensation. As externalities are not included in the financial analysis, they need to be estimated and valued in the economic analysis.

In the process of financial calculation of the STM Validation Project, two types of externalities have been identified:

Less GHG emissions due to a less fuel consumption applying Port call Synchronisation and optimising some routes thanks to the SSPA service.

The possibility to reduce less accidents and incidents at sea, mainly collisions and groundings, due to the use of several STM services. It can be translated into lives saved and less injured crew at sea.

The following sub-sections presents the results of these estimations.

8.4.1 Air pollution

For the calculation of potential GHG emissions saved by using STM services, the following emission factors have been taken into account for each of the pollutants analysed


Table 62: Average emission factors for STM ships

AVERAGE EMISSION FACTORS IN MARITIME TRAFFIC T/T

CO2 3.2038

SOx 0.0020

PMx 0.0015

NOx 0.0783

CO2 and SOx emissions are related to the fuel used by ships, which in this case has been simulated as consuming MGO, fuel that complies with the restrictions produced in the Baltic Sea (one of the STM testbeds) and that would also comply with the 2020 scenario in which the SOx emissions limit must be lower than 0.5%. It is important to highlight that for NOx and PMx the calculation is related to the engine that each ship is equipped with, in terms of power delivered, engine characteristics, etc. In this case, average emission factors have been considered for all ships included in STM and those that cover regular SSS and cabotage routes in Europe, included in VESSL.

Table 63: Social cost of GHG emissions

MONETARY VALUE FOR EMISSIONS (IN EUROS/TONNES)

CO2 emission allowances 25.89

SOx damage costs 17,240

PMx damage costs 6,080

NOx damage costs 3,790

In addition, the monetary value of each pollutant has been calculated taking into account the social costs identified in the Guide. CO2 emissions are valued at market prices of emissions allowances.

There are two services mentioned in the financial analysis that offer an alternative to reducing emissions through lower fuel consumption: Port Call Synchronisation and SSPA Route Optimisation. The total tons in the ten years of the project have been added and the tons of emissions have been calculated according to the tables above. The following table summarises the information on tonnes saved.


Table 64: Total tonnes saved in fuel and GHG emissions savings in STM scenario

YEAR TOTAL TONNES SAVED IN STM

SCENARIO

TOTAL CO2 TONNES SAVINGS

TOTAL NOX TONNES SAVINGS

TOTAL SOX TONNES SAVINGS

TOTAL PMX TONNES SAVINGS

2018 0.00 0.00 0.00 0.00 0.00

2019 2,411.35 7,725.38 188.76 4.81 3.60

2020 2,435.46 7,802.64 190.65 4.86 3.64

2021 2,459.81 7,880.66 192.56 4.91 3.67

2022 2,484.41 7,959.47 194.48 4.96 3.71

2023 2,509.26 8,039.07 196.43 5.01 3.75

2024 2,534.35 8,119.46 198.39 5.06 3.79

2025 2,559.69 8,200.65 200.38 5.11 3.82

2026 2,585.29 8,282.66 202.38 5.16 3.86

2027 2,611.14 8,365.48 204.41 5.21 3.90

In the following table, the social cost of these emissions is estimated and expressed in Euros (See Table 63). The estimation of the tons of fuel saved was already calculated during the financial analysis.

Table 65: Monetary value of GHG emissions savings in STM scenario

YEAR

TOTAL TONNES OF CO2

(IN EUROS)

TOTAL TONNES OF NOX

(IN EUROS)

TOTAL TONNES OF SOX

(IN EUROS)

TOTAL TONNES OF PMX

(IN EUROS)

TOTAL GHG EMISSIONS

(IN EUROS)

2018 0 € 0 € 0 € 0 € 0 €

2019 207,735.57 € 715,418.60 € 82,932.96 € 21,897.66 € 1,027,984.79 €

2020 217,615.56 € 722,572.78 € 83,762.29 € 22,116.64 € 1,046,067.27 €

2021 227,672.38 € 729,798.51 € 84,599.91 € 22,337.81 € 1,064,408.61 €

2022 237,908.58 € 737,096.50 € 85,445.91 € 22,561.18 € 1,083,012.17 €

2023 248,326.73 € 744,467.46 € 86,300.37 € 22,786.80 € 1,101,881.35 €

2024 258,929.45 € 751,912.14 € 87,163.37 € 23,014.66 € 1,121,019.62 €

2025 269,719.40 € 759,431.26 € 88,035.01 € 23,244.81 € 1,140,430.47 €

2026 280,699.25 € 767,025.57 € 88,915.36 € 23,477.26 € 1,160,117.43 €

2027 291,871.72 € 774,695.83 € 89,804.51 € 23,712.03 € 1,180,084.09 €

Finally, the following graph compares the tons and the monetary value for each one of the emissions and that help to calculate the total externalities related to air pollution.


Figure 13: Total GHG emissions tonnes savings in Euros per type of pollutant

It should be noted that the tonnage savings calculations have only been calculated for a percentage of STM ships that effectively optimise their routes or synchronise their calls at STM ports. This conservative perspective helps to grasp the potential savings that would be achieved by introducing STM services at European level.

8.4.2 Accidents and incidents at sea

Another of the externalities that has been calculated, in line with the objectives of the STM Validation Project, is the social cost of accidents and incidents at sea that would potentially be avoided thanks to the implementation of various project services.

In order to carry out this analysis, the different STM services that could help to calculate this externality have been specifically studied in safety issues. The services that do offer an improvement in account to that case are the following:

Route Exchange Ship-to-Ship - allows two ships to know their true intentions and not be involved in close quarter situations. Getting into a complex manoeuvre, in certain weather conditions, at night, etc. where you have to apply ColReg is not always easy. It depends on a radio communication between two people who give each other instructions by radio and who sometimes only have the radar and the ECDIS to resolve the situation. These situations, in a very small percentage, end in collision and the possible consequences of the collision are significant.

Port Call Synchronisation – Most of the operations in which Just-in-time is applied in port waters have not been deeply analysed. One of the main problems is the maritime traffic management near the port. Minimum safety and security standards would include stress in “on time” operations and this would lead to some risks. The approach of this service does not change regarding the port services operations; therefore, the risk associated to this service has not been studied.

SMHI – Weather ETA – The service is not related to safety. There is a circumstance when the ship is assisted during extremely conditions during navigation but has not been the approach of the analysis for this services related to safety.

Enhancing monitoring – VTS are aware of specificities of those areas monitored and controlled. The concept is that a ship shares its voyage plan to be assisted onshore.


Those ships often are not navigating through those areas in which some casualties arise. The shore centre assists the ship and suggests a route with safe waypoints. This could results in less casualties, mainly groundings.

Navigational warnings - This case solves the non-updating of the nautical charts as for the possible dangers that there are in jurisdictional waters of the Member States. In addition, it provides updated information on events at sea that are temporary and could pose a risk to navigation. Normally this information arrives by NAVTEX, and now it arrives at the ECDIS. Groundings and collisions could be avoided in some way.

Baltic Exchange Pilot route – It is similar, but it offers "safe" waypoints from experts in a maritime area (usually pilots) to make approaches to port or crossing geographic areas with shallow waters like Oresund. This service could avoid groundings.

Search and Rescue service – Optimising and make it reliable and automatic on board SAR units would lead to less time to start searching. Human lives saved can be the result of this optimisation of operations in search and rescue situations.

SSPA Route Optimisation, Port Call Coordination do not have a safety implication and are not included in the assumptions.

The following table summarizes the average social cost by type of casualty that will serve to quantify the value of this externality in the economic analysis.

Table 66: Social costs of accidents at sea per severity range11

AVERAGE SOCIAL ACCIDENT COSTS, AT MARKET PRICES (PPP) IN EUROS (2010)

FATALITY SEVERE INJURY SLIGHT INJURY

1,870,000 € 243,100 € 18,700 €

In order to draw up the following table, EMSA (European Maritime Safety Agency) statistics from 2016 to 2018 have been analysed taking into account only the accidents categorised as collisions and groundings in the area of STM testbeds. These accidents have been accompanied by statistics of loss of human lives, serious injuries and slight injuries. Data have been extrapolated for the total project time series and the suitable reduction percentages have been applied. In the case of loss of human lives, a reduction of 5% has been considered, while in the case of injured people a reduction of 10%.

11 Gibson G., et all “Update of the Handbook on External Costs of Transport – Final Report”. Ricardo-AEA. Report for the European Commission – DG MOVE. 139 Pag. London, January 2014. United Kingdom. [Online]. Available at: https://ec.europa.eu/transport/sites/transport/files/handbook_on_external_costs_of_transport_2014_0.pdf

https://ec.europa.eu/transport/sites/transport/files/handbook_on_external_costs_of_transport_2014_0.pdf


Table 67: Number of fatalities avoided in STM scenario and average economic costs

YEAR NUMBER OF

LIVES SAVED IN 10 YEARS

NUMBER OF INJURED

PEOPLE SAVED IN 10 YEARS

NUMBER OF SEVERE INJURED PEOPLE SAVED

IN 10 YEARS

NUMBER OF SLIGHT INJURED PEOPLE SAVED

IN 10 YEARS

AVERAGE ECONOMIC COSTS OF

FATALITIES AND PEOPLE INJURED

(IN EUROS)

2018 0 0 0 0 - €

2019 0 2 0 2 37,400 €

2020 1 2 0 2 1,907,400 €

2021 0 2 0 2 37,400 €

2022 1 3 1 2 2,150,500 €

2023 0 3 1 2 280,500 €

2024 1 4 1 3 2,169,200 €

2025 0 6 2 4 561,000 €

2026 1 7 2 5 2,449,700 €

2027 0 8 3 5 822,800 €

The total number of lives that could be saved in 10 years is 4, while 10 severely injured people and 27 slightly injured could be avoided.

Figure 14: Total accidents avoided per type in STM scenario

8.5 Corrected Investments and costs

When market prices do not reflect the opportunity cost of inputs and outputs, the usual approach is to use conversion factors (CFs) in order to convert investments and costs into shadow prices to be applied in the economic analysis. At present, there is no method to calculate the shadow price; several approaches exist but it is uncertain whether any of them would be more or less suitable for certain typologies of goods and sectors.

In addition, since some of the primary CFs are a mix of tradable and non-tradable inputs, these items are valued as the aggregation of the values of its own production inputs.

4

10

27

EXTERNALITIES - TAXONOMY OF ACCIDENTS AVOIDED

No. Of lives saved in 10years

No of severe injuredpeople saved in 10 years.

No of slight injuredpeople saved in 10 years.


Derived CFs are the result of the combination of other 'primary' inputs that can be valued by using ad-hoc conversion factors. Furthermore, not only primary items may determine the cost of some of the derived items, but also by other derived costs. These are computed as the average of the CFs of the inputs, suitably weighted by the share to which each input item contributes to the total value of the derived item. The weights to which primary inputs enter the production of each derived item have been determined based on the technical feasibility studies carried out previously. Finally, distortions on personnel costs are corrected using a specific conversion factor for labour. The following table groups the correction factors that have been applied for the different investments and costs incurred in the STM Validation Project.

The conversion factors estimated for investments, operating and maintenance costs have been 12% for labour and 35% for energy. The calculations have been applied taking into account the breakdown of Table 58.

Table 68: Corrected investments per agent for STM Validation project

Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

STM PROJECT 18,743,025 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

PORT AUTHORITIES 1,014,875 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

PORT TERMINALS 495,612 € 0 € 0 € 0 € 0 € 40,533 € 0 € 0 € 0 € 0 €

PILOTAGE 76,248 € 0 € 0 € 0 € 0 € 6,236 € 0 € 0 € 0 € 0 €

TOWAGE 76,248 € 0 € 0 € 0 € 0 € 6,236 € 0 € 0 € 0 € 0 €

MOORING 76,248 € 0 € 0 € 0 € 0 € 6,236 € 0 € 0 € 0 € 0 €

SHIPPING COMPANIES

0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SHORE CENTER 2,647 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SMHI 88,250 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SSPA 275,340 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

SAR 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 € 0 €

Table 69: Corrected operating costs of the analysis

Year

TOTAL CORRECTED OPERATING

COSTS (PORT AUTHORITIES)


COSTS (PORT

TERMINALS)


COSTS (PILOTAGE)


COSTS (TOWAGE)


COSTS (MOORING)


COSTS (SHIPPING

COMPANIES)


COSTS (SHORE CENTRES)


COSTS (SMHI)


COSTS (SAR)

TOTAL CORRECTED OPERATING COSTS (ALL)

2018 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 €

2019 -75,980.75 € -561,726.52 € -336,542.88 € -58,120.74 € -129,906.70 € -1,168,690.01 € -26,301.87 € 2,552.29 € -35,126.47 € -2,389,843.65 €

2020 -77,255.92 € -567,343.78 € -339,908.31 € -58,701.95 € -131,205.77 € -1,180,376.91 € -26,564.89 € 2,577.81 € -35,477.74 € -2,414,257.45 €

2021 -78,541.31 € -573,017.22 € -343,307.39 € -59,288.97 € -132,517.83 € -1,192,180.68 € -26,830.54 € 2,603.59 € -35,832.51 € -2,438,912.86 €

2022 -79,837.05 € -578,747.39 € -346,740.47 € -59,881.86 € -133,843.01 € -1,204,102.49 € -27,098.84 € 2,629.62 € -36,190.84 € -2,463,812.31 €

2023 -81,143.24 € -584,534.86 € -350,207.87 € -60,480.68 € -135,181.44 € -1,216,143.51 € -27,369.83 € 2,655.92 € -36,552.75 € -2,488,958.26 €

2024 -82,460.00 € -590,380.21 € -353,709.95 € -61,085.48 € -136,533.25 € -1,228,304.95 € -27,643.53 € 2,682.48 € -36,918.27 € -2,514,353.17 €

2025 -83,787.46 € -596,284.01 € -357,247.05 € -61,696.34 € -137,898.58 € -1,240,588.00 € -27,919.96 € 2,709.30 € -37,287.46 € -2,539,999.55 €

2026 -85,125.72 € -602,246.86 € -360,819.52 € -62,313.30 € -139,277.57 € -1,252,993.88 € -28,199.16 € 2,736.40 € -37,660.33 € -2,565,899.94 €

2027 -86,474.91 € -608,269.32 € -364,427.71 € -62,936.43 € -140,670.35 € -1,265,523.81 € -28,481.15 € 2,763.76 € -38,036.93 € -2,592,056.87 €

The agents with operating costs are Port Authorities, port terminals, pilots, tugboats, mooring, shipping companies, shore centres as well as SAR

and SMHI.


Table 70: Corrected maintenance costs of the analysis

Year

TOTAL CORRECTED

MAINTENANCE COSTS (PORT AUTHORITIES)

TOTAL CORRECTED

MAINTENANCE COSTS (PORT TERMINALS)

TOTAL CORRECTED

MAINTENANCE COSTS

(PILOTAGE)

TOTAL CORRECTED

MAINTENANCE COSTS

(TOWAGE)

TOTAL CORRECTED

MAINTENANCE COSTS (MOORING)

TOTAL CORRECTED

MAINTENANCE COSTS (SHIPPING

COMPANIES)

TOTAL CORRECTED

MAINTENANCE COSTS (SSPA)

TOTAL CORRECTED

MAINTENANCE COSTS (ALL)

2018 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 €

2019 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 24,278.30 € 145,672.93 €

2020 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 24,521.08 € 145,915.71 €

2021 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 24,766.29 € 146,160.92 €

2022 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 25,013.96 € 146,408.58 €

2023 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 25,264.09 € 146,658.72 €

2024 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 25,516.74 € 146,911.36 €

2025 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 25,771.90 € 147,166.53 €

2026 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 26,029.62 € 147,424.25 €

2027 4,702.56 € 79,473.26 € 12,226.66 € 12,226.66 € 12,226.66 € 538.84 € 26,289.92 € 147,684.55 €

The agents with maintenance costs are Port Authorities, port terminals, pilots, tugboats, mooring, shipping companies, as well as SSPA.


The corrected revenues are shown in the following table:

Table 71: Corrected revenues calculated for the analysis

Year

TOTAL CORRECTED REVENUES

(PORT AUTHORITIES)

TOTAL CORRECTED REVENUES

(PORT TERMINALS)

TOTAL CORRECTED

REVENUES (SMHI)

TOTAL CORRECTED

REVENUES (SSPA)

TOTAL CORRECTED

REVENUES COSTS (ALL)

2018 0.00 € 0.00 € 0.00 € 0.00 € 0.00 €

2019 159,971.78 € 98,521.57 € 39,082.96 € 123,906.80 € 421,483.10 €

2020 164,769.85 € 102,460.86 € 41,052.11 € 130,149.70 € 438,432.52 €

2021 167,278.46 € 104,551.04 € 42,308.46 € 134,132.78 € 448,270.75 €

2022 169,788.20 € 106,642.90 € 43,586.52 € 138,184.67 € 458,202.29 €

2023 172,335.04 € 108,775.77 € 44,902.84 € 142,357.87 € 468,371.52 €

2024 174,920.06 € 110,951.29 € 46,258.90 € 146,657.08 € 478,787.34 €

2025 177,543.86 € 113,170.31 € 47,655.92 € 151,086.13 € 489,456.23 €

2026 180,207.02 € 115,433.72 € 49,095.13 € 155,648.93 € 500,384.80 €

2027 182,910.13 € 117,742.39 € 50,577.81 € 160,349.52 € 511,579.85 €

Finally, the total corrected breakdown of investments are shown in the following table:

Table 72: Total corrected breakdown investments calculated in the analysis

YEAR TOTAL INVESTMENTS PERSONNEL ENERGY OTHER

2018 20,848,493.73 € 19,749,961.20 € 153,558.31 € 944,974.22 €

2019 - € - € - € - €

2020 - € - € - € - €

2021 - € - € - € - €

2022 - € - € - € - €

2023 59,240.56 € 56,119.10 € 436.33 € 2,685.12 €

2024 - € - € - € - €

2025 - € - € - € - €

2026 - € - € - € - €

2027 - € - € - € - €

TOTAL 20,907,734.29 € 19,806,080.30 € 153,994.64 € 947,659.34 €

8.6 Overall results

Once the financial investments and maintenance costs have been corrected by the above-mentioned correction factors, the following tables show the main results calculated in the Economic Analysis. These calculations have been performed in order to evaluate the net benefits that the STM Validation project will produce in terms of economic welfare.

The main results obtained in the economic analysis are the reduction of operating costs and the potential reduction of the negative externalities (greenhouse gas emissions) because of the optimised route due to two services: Port Call Synchronisation and SSPA Route optimisation.

The socio-economic analysis shows that the project is generating a positive welfare change. The results obtained definitively show that the STM Validation Project is desirable from a socio-economic perspective meaning that the society would benefit if the project were to be implemented. This is backed up and demonstrated by the economic analysis result and by achieving a positive Economic Net Present Value (ENPV). The ENPV is the most important and reliable social CBA indicator. It shows the amount of the net benefits and it is calculated as the difference between the total discounted social benefits and the costs.

The Economic Net Present Value is calculated from the point of view of society and not just the project perspective, therefore that is the reason why it uses accounting prices or the opportunity cost of services instead of imperfect market prices, including any social and environmental externalities.

The Economic Rate of Return (ERR) is defined as the discount rate that balances out the net present value of flows of costs and benefits of an investment. It is an indicator of the efficiency and quality of an investment. This is in contrast with the financial net present value, which is an indicator of the value or magnitude of an investment. One advantage of the ERR is that it is a pure number and this makes it easier to compare projects that are similar, apart from their size. As for the results obtained and shown in the following tables, the investment is considered acceptable because its internal rate of return is greater than the cost of capital.

http://en.wikipedia.org/wiki/Magnitude_(mathematics)

Table 73: Economic analysis results of STM Validation Project.

YEAR CONSUMER SURPLUS (EUROS)

GROSS PRODUCER SURPLUS (EUROS)

GOVERNMENT SURPLUS (EUROS)

EXTERNALITIES (EUROS)

TOTAL BENEFITS

CORRECTED INVESTMENTS

MAINTENANCE COSTS

OPERATING COSTS

TOTAL COSTS NET BENEFITS

2018 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 20,848,493.73 € 0.00 € 0.00 € 20,848,493.73 € -20,848,493.73 €

2019 7,640.68 € 421,483.10 € 0.00 € 1,065,384.79 € 1,494,508.57 € 0.00 € 145,672.93 € -2,389,843.65 € -2,244,170.73 € 3,738,679.29 €

2020 7,717.08 € 438,432.52 € 0.00 € 2,953,467.27 € 3,399,616.87 € 0.00 € 145,915.71 € -2,414,257.45 € -2,268,341.74 € 5,667,958.61 €

2021 7,794.25 € 448,270.75 € 0.00 € 1,101,808.61 € 1,557,873.61 € 0.00 € 146,160.92 € -2,438,912.86 € -2,292,751.94 € 3,850,625.55 €

2022 7,872.20 € 458,202.29 € 0.00 € 3,233,512.17 € 3,699,586.66 € 0.00 € 146,408.58 € -2,463,812.31 € -2,317,403.73 € 6,016,990.39 €

2023 7,950.92 € 468,371.52 € 0.00 € 1,382,381.35 € 1,858,703.79 € 59,240.56 € 146,658.72 € -2,488,958.26 € -2,283,058.97 € 4,141,762.77 €

2024 8,030.43 € 478,787.34 € 0.00 € 3,290,219.62 € 3,777,037.39 € 0.00 € 146,911.36 € -2,514,353.17 € -2,367,441.81 € 6,144,479.19 €

2025 8,110.73 € 489,456.23 € 0.00 € 1,701,430.47 € 2,198,997.43 € 0.00 € 147,166.53 € -2,539,999.55 € -2,392,833.02 € 4,591,830.45 €

2026 8,191.84 € 500,384.80 € 0.00 € 3,609,817.43 € 4,118,394.07 € 0.00 € 147,424.25 € -2,565,899.94 € -2,418,475.69 € 6,536,869.76 €

2027 8,273.76 € 511,579.85 € 0.00 € 2,002,884.09 € 2,522,737.70 € 0.00 € 147,684.55 € -2,592,056.87 € -2,444,372.33 € 4,967,110.03 €

TOTAL 71,581.87 € 4,214,968.40 € 0.00 € 20,340,905.80 € 24,627,456.07 € 20,907,734.29 € 1,320,003.54 € -22,408,094.07 € -180,356.24 € 24,807,812.31 €

ERR (%) 18.31%

ENPV (€) 17,876,813.55 €

Payback (years) 6

Figure 15: Economic results of STM Validation project

The socio-economic analysis show that the project is generating a positive welfare change and therefore the funds received by the EU for its implementation are profitable. The ENPV is the most important and reliable social CBA indicator. The present amount of the net benefits is calculated as the difference between the total discounted social benefits and costs.

The results of the economic analysis show the interest of the projects in terms of its benefits for the society that amounts in an ENPV of 17,876,814 € and an ERR of 18.31% with a payback of 6 years for the whole STM Validation Project.

Finally, it is key to highlight that applying the real market costs of the required investments to the total ports, the ships operating in the European Union and port terminals for SSS and cabotage traffic would be translated into a huge financial and economic impact. The adoption of STM services by the sector would have a very substantial impact in savings costs and a remarkable reduction of externalities. These assumptions are in line with the macro results shown in the previous section and the main objectives of the STM project related to efficiency, safety and environmental sustainability.


9 Risk Assessment

The risk assessment deals with uncertainty that is related to investment projects, which has to be included in the CBA according to the Article 101 of Regulation (EU) No 1303/2013. The recommended steps for assessing the project risks are as follows:

Sensitivity analysis;

Qualitative risk analysis;

Probabilistic risk analysis;

Risk prevention and mitigation.

From this point onwards, the next sections describe and explain the aforementioned steps.

9.1 Sensitivity analysis

The sensitivity analysis aims at identifying the project’s ‘critical variables’, these are the ones which variations have the largest impact on the financial and economic performance of the project.

According to the common practices, a sensitivity analysis should be carried out to demonstrate that the economic case of the project is robust to downside scenarios. The main indicators of the economic analysis i.e. Economic Rate of Return (ERR) and Economic Net Present Value (ENPV) should be recalculated for the following scenarios:

Increases of 25% on investments costs

Delays to Project completion to the 3rd year

Increases of 25% of annual operating costs over the reference period

The list of variables and the results of the sensitivity analysis are displayed in the following table.

Table 74: Sensitivity analysis of variables listed used in the Cost-Benefit analysis

FINANCIAL INDICATOR

FINANCIAL ANALYSIS

ECONOMIC ANALYSIS

REFERENCE PERIOD

2018-2027

STM VALIDATION PROJECT SCENARIO

INTERNAL RATE OF RETURN

8.77% 18.31%

NET PRESENT VALUE

2,792,059.81 € 17,876,813.55 €

INCREASES OF 25% ON INVESTMENTS COSTS


3.82% 12.32%

NET PRESENT VALUE

-2,775,520.21 € 12,816,499.54 €

DELAYS TO PROJECT COMPLETION TO THE 3rd YEAR


7.15% 14.31%

NET PRESENT VALUE

989,867.79 € 14,352,749.74 €

INCREASE OF 25% ON ANNUAL OPERATING COSTS


6.52% 14.85%

NET PRESENT VALUE

447,444.86 € 13,458,011.92 €


As it can be seen in the above table, all the analyses are favourable except the increase of 25% on investment costs, which can be explained because the demand is limited to a certain number of STM ships. This scenario is unlikely since the main part of the developments have been carried out with the investments presented in the financial analysis and the new ships would have the STM modules at a lower price than with a development from scratch. The standards and infrastructure have been developed without additional costs. This suggests that this scenario is unlikely.

The rest of values shows that the project provides similar results according to the results of the economic analysis without stress scenarios.

9.2 Qualitative risk analysis

The qualitative risk analysis has been illustrated through the elaboration of a risk matrix, which includes the following components:

Adverse events or risks

Probability of occurrence

The severity of the risk

Risk level

Mitigation and prevention measure

Residual risk

The probability of occurrence and the severity of the risks have been classified according to the Guide indications, summarised in Table 75 and Table 76. The combination of both characteristics defines the risk level according to the indications displayed in Table 77. Finally, the last table in this section presents the results of the qualitative risk analysis of the STM Validation project.

Table 75: Risk probability classification

Rating Associated probability

A Very unlikely (0-10% probability)

B Unlikely (10%-33% probability)

C About as likely as not (33%-66% probability)

D Likely (66%-90% probability)

E Very likely (90%-100% probability)


Table 76: Risk severity classification

Table 77: Risk level definition

Rating Associated severity

I No relevant effect on social welfare even without remedial actions.

II Minor loss of the social welfare generated by the project, minimally

affecting the project long run effects. However, remedial or corrective

actions are needed.

III Moderate: social welfare loss generated by the project, mostly financial

damage, even in the medium-long run. Remedial actions may correct the

problem.

IV Critical: High social welfare loss generated by the project; the occurrence

of the risk causes a loss of the primary function (s) of the project.

Remedial actions, even large in scope, are not enough to avoid serious

damage.

V Catastrophic: project failure that may result in serious or even total loss

of the project functions. Main project effects in the medium-long term do

not materialise.

Severity /

ProbabilityI II III IV V

A Low Low Low Low Moderate

B Low Low Moderate Moderate High

C Low Moderate Moderate High High

D Low Moderate High Very High Very High

E Moderate High Very High Very High Very High


Table 78: Qualitative risk analysis

RISK PROBABILITY (P) SEVERITY (S) RISK LEVEL

PREVENTION AND/OR MITIGATION MEASURES

RESIDUAL RISK

Demand risk B IV Moderate A consortium of ECDIS suppliers of ships has been formed to explore ways of collaboration for the implementation of STM modules on existing ships in their business and for new ships. The ports that have been working during the project have the will to continue developing the PortCDM tool in order to optimise calls. The other services remain operational after the project.

Low

Mistakes in calculation of technical parameters of the works to be done or budget

B III Low One of the elements taken into account at the time of the calculations has been a conservative position of little growth, scenarios where the data have been evaluated below of the expectations. It is important to frame this project as innovation, which offers a high development value that can be exploited by future customers. The standards in the services offer a very high degree of maturity to be put on the market during the period that the project lasts.

Low

Delays in the implementation of STM Validation project

A II Low Most of the services are now operative and the main actors have included those in their business

Low

Delays due to other administrative procedures

A III Low The Project has disbursed the budget during last year and the administrative procedures have been carried previously out during the timeline of STM Validation project

Low

9.3 Risk prevention and mitigation

Previous sections summarise the main issues in the risk prevention plan of the STM Validation

project. Specifically,


Table 78 identifies the main risks associated with the project and measures taken (or to be taken) in order to mitigate them. The coordinator of the Project, as the main risk manager of the project will work in the creation of a Project Implementation Unit that will monitor the project and guarantee its correct execution from a technical and economic point of view.


10 Conclusions

This document contains the results of the Financial Analysis and Cost-Benefit Analysis (CBA) of the Project “SEA TRAFFIC MANAGEMENT VALIDATION PROJECT) (TEN-T PROJECT NO: 2014-EU-TM-0206-S)” submitted to the Trans-European Transport Network - CEF of the Connecting Europe Facility 2014-2020 Programme. The CBA has been carried out following the methodology included in the Guide to Cost Benefit Analysis of Investments Projects12 elaborated in December 2014 by DG REGIO.

The methodology employed follows the recommendation of the Guide and includes the following steps: description of the context; definition of objectives; identification of the project; technical feasibility and environmental sustainability; financial analysis; economic analysis and risk assessment.

The Action covers the long-term development project affecting the European waters, containing 8 ports analysed (Valencia, Barcelona, Sagunto, Stavanger, Gothenburg, Limassol, Umea and Vaasa) of 5 countries, 6 shore centres in Norway, Spain, Estonia, Denmark and Sweden and 268 STM ships of more than 30 different companies. The objective is to know the potential impact of STM project in the European Union. The estimations have been carried out from a conservative point of view and with the results of testbeds during the STM project development phase.

The total investment needed to carry out the project amounts to 23,691,484 Euros, to be completed by 2027.

The STM Validation project presents a Financial Rate of Return on investment of 8.77%, and a positive Financial Net Present Value of €2,792,060. This means that the project will cover the costs and European Union co-financing is clearly needed to be able to make possible the project and obtain the very positive economic impact that it will generate.

An economic analysis has been carried out in order to complete the financial analysis and include the effects of the project on the general welfare. The results of the analysis show the interest of the project in terms of its benefits for the society, that amounts to an ENPV of € 17,876,814€ and an ERR of 18.31%.

All the data, from a conservative point of view, offer positive results for society in terms of reduction of GHG emissions as well as the reduction of accidents at sea which has a very important impact on the reduction of environmental costs due to accidents during navigation.

12 Henceforth, the Guide.


11 Reference Material

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Network”. Unit B3 – Ports and Inland Navigation. Directorate General for Mobility and Transport. 26 Pag. Brussels, September 2013. European Union. [Online]. Available at: http://ec.europa.eu/transport/infrastructure/tentec/tentec-portal/site/brochures_images/ports2013_brochure_lowres.pdf

European Commission, 2019. “European Economic Forecast. Spring 2019.” Institutional paper 102. May 2019. European Union. [Online]. Available at: https://ec.europa.eu/info/publications/european-economic-forecast-spring-2019_es

European Commission. “Commission Delegated Regulation No. 480/2014 supplementing Regulation No. 1303/2013 of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund”. Brussels, March 2014

European Maritime Safety Agency, 2018. “Annual Overview of Marine Causalities and Incidents 2019”. [Online]. Available at: http://emsa.europa.eu/implementation-tasks/accident-investigation/items.html?cid=141&id=3406

Gibson G., et all “Update of the Handbook on External Costs of Transport – Final Report”. Ricardo-AEA. Report for the European Commission – DG MOVE. 139 Pag. London, January 2014. United Kingdom. [Online]. Available at: https://ec.europa.eu/transport/sites/transport/files/handbook_on_external_costs_of_transport_2014_0.pdf

International Monetary Fund, 2019. “World Economic Outlook. April 2019. Growth Slowdown and Precarious Recovery”. April 2019. [Online]. Available at: https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019

Sartori, Davide, et al. “Guide to Cost-Benefit Analysis of Investment Projects”, Economic appraisal tool for Cohesion Policy 2014-2020. Evaluation Unit of the European Commission. Directorate General for Regional and Urban Policy. 364 Pag. Brussels, 2015. European Union. [Online]. Available at: https://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf

UNCTAD, 2018. “Review of Maritime Transport”. United Conference of United Nations. New York, [Online]. Available at: https://unctad.org/en/PublicationsLibrary/rmt2018_en.pdf

World Bank, 2019. “Global Economic Prospects. June 2019. Heightened Tensions, Subdued Investment”. June 2019. [Online]. Available at: http://www.worldbank.org/en/news/immersive-story/2019/06/04/the-global-economy-heightened-tensions-subdued-growth

http://www.bunkerindex.com/

http://ec.europa.eu/transport/infrastructure/tentec/tentec-portal/site/brochures_images/ports2013_brochure_lowres.pdf

http://ec.europa.eu/transport/infrastructure/tentec/tentec-portal/site/brochures_images/ports2013_brochure_lowres.pdf

https://ec.europa.eu/info/publications/european-economic-forecast-spring-2019_es

http://emsa.europa.eu/implementation-tasks/accident-investigation/items.html?cid=141&id=3406

http://emsa.europa.eu/implementation-tasks/accident-investigation/items.html?cid=141&id=3406



https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019

https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019

https://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf

https://unctad.org/en/PublicationsLibrary/rmt2018_en.pdf

http://www.worldbank.org/en/news/immersive-story/2019/06/04/the-global-economy-heightened-tensions-subdued-growth

http://www.worldbank.org/en/news/immersive-story/2019/06/04/the-global-economy-heightened-tensions-subdued-growth


38 partners from 13 countries,

containerising maritime information

Demonstrating the function and business value of the Sea Traffic Management concept and its services.

Seaing is believing!

SAFETY - ENVIRONMENT - EFFICIENCY Swedish Maritime Administration ◦ SSPA ◦ Viktoria Swedish ICT ◦ Transas ◦ Chalmers

University of Technology ◦ The Swedish Meteorological and Hydrological Institute ◦ Danish Maritime Authority ◦ Navicon ◦ Novia University of Applied Sciences ◦ Fraunhofer ◦ Jeppesen

◦ Carnival Corp. ◦ Italian Ministry of Transport ◦ SASEMAR ◦ Valencia Port Authority ◦ Valencia Port Foundation ◦ CIMNE ◦ University of Catalonia ◦ Norwegian Coastal

Administration ◦ GS1 ◦ Cyprys University of Technology ◦ Port of Barcelona ◦ Costa Crociere ◦ Svitzer ◦ OFFIS ◦ Finnish Transport Agency ◦ Southampton Solent University ◦ Frequentis ◦

Wärtsilä SAM Electronics ◦ University of Flensburg ◦ Signalis ◦ Maritiem Instituut Willem Barentsz ◦ SAAB TransponderTech AB ◦ University of Oldenburg ◦ Magellan ◦ Furuno

Finland ◦ Rörvik ◦ University of Southampton ◦ HiQ

www.stmvalidation.eu

http://www.stmvalidation.eu/

Cost-Benefit Analysis of STM Validation Project

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