This paper presents the comprehensive state-of-the-art on the challenges that short sea shipping currently faces across the world. The concept and its relationship with coastal shipping are introduced, followed by a review of the EU policies for short sea shipping and its practical impacts in modal split. A survey of the literature on the strong and weak points of this form of transportation is carried out, aimed at explaining the difficulties in achieving relevant modal shifts from road to sea. The experience with short sea shipping across the world is described and discussed, providing a global perspective. The paper then discusses the main challenges and opportunities in this field, namely decarbonisation, autonomous navigation, and digitalization. Conclusions are drawn on the possible impact of these game changing developments in this segment of the shipping industry.