Proposed European Union infrastructure spending of €50bn ($63.8bn) will directly affect the continent’s shipping, according to European Commissioner for Transport Siim Kallas.

Mr Kallas told Lloyd’s List that the Connecting Europe Facility will help shipping to meet “the modernisation challenge”, both by stimulating the shortsea sector and by modernising its ports.

“Tapping the significant potential of shortsea shipping requires a better integration of ports in the intra-European logistic chains,” said Mr Kallas, who is also vice-president of the European Commission.

“With CEF, national authorities and ports will have an important funding mechanism for meeting the modernisation challenge.”

The proposed €50bn CEF is, however, part of the disputed 2014-2020 EU budget.

In October, the Cyprus-held presidency of the EU proposed €50bn in cuts to the budget, specifying a cut of around 20% to the proposed CEF.

“Within this [proposed cut], the transport part bears the most severe reduction, about 30% as compared to the original commission proposal,” said Mr Kallas.

“This is highly disproportionate and by no means acceptable, neither for the commission, nor for the European Parliament. The average cut for other budgetary lines is about 5% [and] many member states, too, appear to share this view. As always, a compromise is likely to be found somewhere in the middle.”

If successfully ring-fenced in the EU budget, the wider aim of the CEF will be to improve Europe’s internal transport infrastructure, contributing to competitiveness of European businesses and “reducing transport costs” and “generating jobs and growth”.

The proposed infrastructure spend comes at a time of austerity in many EU countries, but Mr Kallas is optimistic that “by ensuring adequate accessibility to ports, the CEF will provide a strong stimulus for expanding shortsea operations”.

“We need to spend our money better. CEF has been designed with this principle in mind,” he said.

The commission recognised how the challenge to European ports is based on the increasing size, and changing specifications, of many vessels.

“Throughput will increase in the future, as will the size of ships. Advances in shipping design and technology have to be matched by adequate developments in ports,” Mr Kallas said.

The commission also forecasts a continued trend towards larger container vessels and innovations in reefers, oil and chemical tankers, gas carriers and passenger vessels, all of which will strain the current ability of European ports to service EU seaborne trade.

There is also the critical issue of the high cost of doing business with many European ports.

“Today, for some trades, the cost of ports and terminals may exceed 25% of the total door-to-door logistic cost,” Mr Kallas said.

“Improving quality and efficiency of port services is a bare necessity for defending the international competitiveness of European industries.”

Mr Kallas also emphasised how seaborne trade remains “a catalyser of economic growth” and said that the €50bn CEF “should serve to attract private investment to ports, not only for new greenfield investments, but also investments which help existing facilities to remain vital and modern”.

The proposed CEF spending will therefore be accompanied by other measures aimed at a better business environment for shipping, such as the review of EU ports policy and the Blue Belt initiative on administrative simplification, which aims to reduce bureaucracy in ports, Mr Kallas said.

Given the potential benefits to European shipping, and despite controversy over the EU budget, Mr Kallas is optimistic about the CEF’s prospects.

“The commission urges European leaders to be consistent. If they want the European economy to grow, they need to provide it with the appropriate resources,” he said.

“I trust the CEF budget allocation will, in the end, allow for the financing of the most important infrastructure projects to connect Europe.”

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