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Sea and Water was established in response to the Royal Commission's 1994 report on environmental pollution which found that moving freight by water was more environmentally sustainable than other modes of transport.

The 1998 Transport White Paper A New Deal for Transport, which called for better use of the UK's inland waterways, gave rise to a subsequent paper in 2000 entitled Waterways for Tomorrow. This paper called for a study to examine potential opportunities for increasing the amount of waterborne freight in the UK.

In 2000, the then Department for Environment, Transport and the Regions, commissioned such a study and a final report, Freight on Water, was published in 2002. This report revealed that the water-freight industry was hampered by a lack of cohesive representation and recommended that a strong representative body for the industry be established.

By the end of 2002, the government merged both initiatives to create a single representative body responsible for coordinating and promoting the movement of freight by short-sea, coastal and inland waterways.  

As a result, Sea and Water was formally established in 2003.

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