Why does the EU believe UK ports are benefiting from carbon scheme avoidance?

The EU ETS Observatory observed that EU-ETS introduced at the beginning of 2024 may incentivize shippers to use non-EU ports first on Asia-Europe routes. If a UK port is the first European call rather than a continental EU port, the intercontinental leg is credited to the UK port, reducing ETS exposure. VesselBot analysis in September confirmed that EU importers face significantly lower ETS charges when cargo arrives via UK ports before continuing to the continent.

What does the BPA say actually drove UK port growth in 2025?

The BPA attributes the 600,000 additional TEU primarily to two structural factors: first, new container capacity at London Gateway coming onstream; second, the reorganization of deepsea shipping alliances at the start of 2025. Approximately 500,000 of the 600,000 additional units were handled at London, aligning with DfT data on London Gateway capacity expansion. Maersk's switch from Felixstowe to London Gateway as the Gemini Cooperation's chief Asia-Europe UK port exemplifies this alliance restructuring rather than regulatory arbitrage.

Is the TEU-mile metric a reliable measure of cargo diversion?

No, according to the BPA. TEU-mile measures transport work (distance times volume) rather than actual cargo handled, vessel utilization, or market share. The metric is highly sensitive to port-call sequencing: if an Asia-North Europe service reverses which European port it calls first, measured UK transport work can spike even if the same vessel calls both ports and cargo volumes remain unchanged. This technical limitation means TEU-mile growth may reflect route sequencing changes, not genuine diversion.

Will the UK-EU carbon pricing difference persist long-term?

No. The UK ETS Authority has proposed extending the scheme to cover 50 percent of emissions from international voyages starting in 2028, mirroring the present EU approach. This alignment will eliminate most of the current regulatory cost differential between UK and EU ports. The BPA notes the current pricing advantage is itself transitional and may affect only individual service rotations at the margin.

What are the implications for shippers and freight forwarders?

Shippers currently enjoy a cost advantage by routing Asia-Europe cargo through UK ports first, but this window is closing as UK carbon policy converges with EU standards by 2028. Freight forwarders should plan network adjustments accordingly. Additionally, port network optimization may continue to reflect alliance realignments and capacity shifts at major gateways, requiring ongoing monitoring of carrier service changes rather than regulatory arbitrage alone.

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The signal

The British Ports Association has rebutted European Union allegations that UK port volume growth in 2025 stems from shippers avoiding the EU Emissions Trading Scheme (ETS). The EU ETS Observatory, citing carbon leakage concerns, suggested that UK ports benefited unfairly from regulatory arbitrage.

However, BPA argues that the 600,000 additional TEU handled nationally resulted primarily from new London Gateway capacity and the restructuring of deepsea shipping alliances at the start of 2025. Maersk's shift from Felixstowe to London Gateway exemplifies this alliance reorganization rather than regulatory avoidance.

While independent freight analysis confirms that some cost differentials exist for EU importers routing cargo through UK ports first, BPA contends these advantages are transitional and structural explanations better account for observed volume shifts. The debate carries implications for future carbon policy design and port competitiveness across the Atlantic gateway region.

#eu-ets-carbon-scheme

#uk-ports-growth

#container-transhipment

#carbon-leakage

#shipping-alliances

#london-gateway-capacity

#regulatory-arbitrage

#asia-europe-routes

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

strategic

What if UK carbon scheme extends to 50 percent of international voyages in 2028?

Simulate the impact of UK ETS Authority's proposed extension to cover 50 percent of international voyage emissions starting in 2028, bringing UK carbon costs into alignment with EU ETS rates. Assess how this regulatory convergence affects routing economics for Asia-Europe services currently routing through UK ports first, and model the resulting shift in port call sequencing and transhipment hub utilization between UK and continental European ports.

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Simulation Suggestion

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What if container alliances restructure further after Maersk's London Gateway pivot?

Simulate additional alliance reorganization following Maersk and Hapag-Lloyd's shift to London Gateway as primary UK gateway. Model the impact on Felixstowe utilization, terminal capacity allocation across UK ports, and overall UK container throughput distribution if competing alliances make similar gateway shifts. Consider cascading effects on feeder services, inland transport networks, and port labor scheduling.

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Simulation Suggestion

strategic

What if EU tightens transhipment port designation rules and reclassifies UK hubs?

Simulate the operational impact if the EU formally designates Felixstowe, London Gateway, and Southampton as neighboring transhipment ports under ETS regulations, potentially reclassifying their cargo handling rules or emissions liability. Model how stricter ETS classification affects routing decisions, feeder service economics, and port competitiveness compared to Morocco's Tanger Med. Assess implications for long-distance Asia-Europe services and direct versus transhipment-based networks.

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