Silent Sailing

With the world’s fleet of electric vessels set to grow, Selwyn Parker explores the quiet revolution taking place at sea

The Bastø Electric ferry from Horten to Moss in Norway. Photo credit: Bastø Fosen AS

When a ferry named Bastø Electric began sailing the main Oslo fjord in March 2021, it was a landmark in a crossing that started nearly 440 years ago.

Ferries have plied between two towns – Moss and Horten –  on opposite sides of fjord since 1582, according to local historians. It’s just a 30-minute crossing, but it’s a vital link for locals. In an average year, these ferries, run by a company called Basto Fosen, transport about 1.8 million vehicles and almost four million passengers anxious to avoid the city’s heavy traffic.

It is Norway’s busiest ferry connection. As DNV GL – the classification society – puts it: “The ferries are a constant: a symbol of reliability, stability and trust.”

But reliable and trustworthy as they are, these crossings were diesel-driven. The Basto Electric, however, heralds a new era. At 144 metres long, she is the world’s largest all-electric ferry and can transport up to 200 cars, 24 big trucks and 600 passengers, all borne along by a 7 200 kW battery system.

By 2022 when the company converts two more diesel-powered vessels to all-electric propulsion, the fjord will be quieter and the air will be cleaner. According to DNV GL, the three ferries will slash diesel consumption by six million litres a year in what can only be seen as a portent of things to come in global shipping as the power of batteries continues to grow in ways that few believed possible even a decade ago.

Bastø Electric is a paradigm shift for the route, the shipowner and arguably the wider passenger ship segment in Norway and beyond,” foresees the classification society.

And having written many articles about the electrification of shipping and talked recently with dozens of people within the industry, I can only agree. This is, literally, a quiet revolution. Because the world is much more interested in electric vehicles, the rapid advances in battery-powered shipping have received relatively little attention.

Shipping is a notoriously conservative industry, but it is becoming excited by the potential of electrification, with good reason. As experts point out, it offers huge advantages over diesel-powered propulsion because it is more responsive, more robust, easier to maintain, more reliable because batteries offer more backup, quieter, and of course, cleaner.

So what’s not to like? Well, batteries can catch fire but then so do engine rooms.

Even sceptics can see that the advantages of batteries over fossil fuels become more compelling as they continue to pack more punch for their weight. The latest Blue Whale system developed by Norwegian manufacturer Corvus Energy delivers three and a half times more energy – up from 545 kwh to 1 892 kwh – than its predecessor. It will be installed shortly on a Canadian roll-on, roll-off ferry plying the Salish Sea off British Columbia. Although the system won’t be powerful enough to drive the entire ship in normal operations, it will be able to do so for short periods.

AIDAperla leaves the Port of Hamburg, Germany

Giant cruise ships will soon switch to battery-powered propulsion in ecologically sensitive waters as well as to run some shore operations. One vessel, the 300 metre-long AIDAperla, will this summer go into “silent sailing” mode by virtue of a 10 megawatt battery pack, the most powerful in a passenger ship anywhere. Although these floating hotels can only ghost along under pure battery power – at least for the present, silent sailing is a winner with passengers who, after all, aren’t in a hurry.

Other sectors of shipping have seen the light. Until now, confined mainly to passenger ships, battery power will soon revolutionise that snub-nosed workhorse of the ports, the tugboat. Canada-headquartered naval architect Robert Allan Ltd has unveiled all-electric designs with the power of diesel-fuelled ones – but with none of the pollution. Small though it is, the typical harbour tug pumps out a lot of CO₂ – about 1 700 tonnes a year – which is equivalent to the emissions of more than 300 cars. Thus, as Robert Allan predicts, electric tugs have the potential to clean up some of the world’s busiest marine hubs.

Tugs at work in port

And in Japan, a consortium of companies has thrown its weight behind the development of the world’s first all-electric tanker, a 62 metre-long vessel to be launched in early 2022. Demonstrably good for the environment, the ship will also be congenial for the crew because the vibration is much reduced.

The global fleet of all-electric or hybrid-powered vessels of all kinds currently numbers around 250, if vessels in operation and on order are included. And it’s growing almost by the month. As the vast global fleet of inner-city ferries, for instance, falls due for replacement, all-electric power has become the default option. Rotterdam is converting its water taxis to battery power and Kiel is doing the same with the ferries that work the local fjord as part of the authorities’ pledge to become a CO2-free city by 2050.

The hybrid electric Gaarden ferry on the Kiel Fjord, Germany

Historically speaking, battery-powered ferries aren’t new. Since 1909, in a remarkable technological feat of the time, all-electric passenger boats have sailed the pristine waters of the Konigsee in Germany. But it was the Nordic countries that took zero-emission propulsion into the 21st century under a 45-year-old cooperative initiative that is now led by Oslo-based Nordic Energy Research. As a study by the International Transport Forum called Navigating Towards Cleaner Maritime Shipping noted in late 2020: “It is an approach that holds many lessons for shipping nations seeking to decarbonise their fleet as quickly as possible.”

It’s a fair assumption though that not even the founders of this initiative expected to see an all-electric, 144 metre-long ferry on the Oslo fjord as soon as 2021.


Selwyn Parker is an independent author and journalist who writes for a wide range of publications on transport and related technology in all its forms.

See more ITF work on maritime transport

Stuck in the Suez Canal: Lessons from the Logjam

by Olaf Merk

On 23 March, a mega container ship got stuck in the Suez Canal – and remained stuck for six days. Despite the digging, towing and dredging, the only thing that was unblocked was creativity in the form of Suez memes on the web. The mega-ship proved to be the vessel on which all possible human problems could be projected. Now that she is refloated, hilarity can ebb away and give way to reflections on the implications of this incident.

Let’s start with the principal actors: the Canal and the ship. The Suez Canal is one of the world’s maritime chokepoints. Around 12% of world trade passes through it, approximately fifty ships each day, mostly container ships and tankers. The Suez route is considerably shorter than its alternative, the Cape route. Nevertheless, shipping companies regularly snob the Suez Canal, especially in times of low oil prices and as a way to put pressure on the Suez Canal Authority to cut canal dues.

The other actor was the mega-ship: the “Ever Given” is 400 metres long and 60 metres wide, she can carry more than 20 000 containers. This is exactly the type of ship for which the Suez Canal was widened and deepened in 2016.

What happened?

How exactly did the giant vessel get stuck? Little certainty here so far, and much conjecture. The ship owner remained silent throughout the process, as did the ship operator. The ship manager blamed the wind and denied that there was power failure.  That it is a mega-ship that caused an important global trade route to shut down is no coincidence, and many experts have warned about the risks they create. These gigantic ships are more difficult to manoeuvre and get more easily stuck due to their deep draft. They are also heavier than smaller containership, so more complicated to refloat.

More clarity should come from the investigation of the accident. The flag state of the “Ever Given” has a reputation for dodging such responsibilities, but it is hard to imagine that it dare to do so now given the global attention. Thanks to a heroic effort by the salvage company and the canal authority the ship was freed after a week and traffic on the world’s busiest shortcut could resume. Zoom out, happy ending.

But not really. The backlog of hundreds of other ships waiting to transit through the Canal is creating enormous challenges in ports and throughout the whole supply chain. Some observers calculated the costs of the Suez Canal blockage to be between USD 6 to 10 billion per week. Just remember: the reliability of ship schedules has been in freefall since June 2020. Two out of three container ships are delayed; in the beginning of 2021 the average was five days. If a few days of Suez Canal blockage leads to billions of dollars economic costs, imagine the extent of the loss due to delayed vessels just prior to the incident.

The costs of no canal

The supply chain disruption that we will see in the coming weeks is the quintessence of the mega-ship: maximise the economies of scale on the ships, but leave it up to ports to clean up any mess that may result. Ports will now be put under pressure to catch up and find additional handling capacity when this was already stretched. They will need to keep some vessels waiting and get blamed for “port congestion” that is not their fault.

This is nothing new: various organisations have recently blamed port congestion for increased freight rates, although these already started to rise in May 2020, well before port activity was back to normal after the dip due to Covid-19. Do not expect carriers to pay for the situation that their mega-ships have caused. The Suez blockage has reduced effective ship capacity, so will likely lead to further increases in ocean freight rates. Customers and ports will pay the price instead, and maybe a few insurers.

A report on “The Impact of Mega-Ships“ the ITF published in 2015 described this dynamic, in which mega-ships create benefits and profits for their owners and operators, while the costs they incur – such as those for longer berths or truck congestion in port cities – are left for others to pay.

Deeper causes of disruption

At that time, the mega-ship strategy of carriers was, to some extent, self-defeating: as new mega-ships contributed to oversupply of ships, ocean freight rates were going to be low and profits limited. This has changed now. The intended effect of mega-ships was to force a market consolidation, which has happened. The unintended effect has been increased cooperation between the major carriers. The world’s top ten carriers are now interlinked in various alliances and consortia, providing carriers with the mechanisms to coordinate ship capacity. During the Covid-19 crisis, they used this power to their advantage by stabilising and pushing up freight rates

Thus, the current disruption of the maritime supply chain is not about a mega-ship stuck in the Suez Canal, and it not about lack of adequate infrastructure in ports – ultimately, it is about a lack of effective competition policy for global liner shipping. In Europe, regulators are now urging ports to free up capacity to deal with the after-effects of the Suez incident. There have not been reports that they also urged carriers to reinstate more capacity to Asia-Europe trade routes when trade picked up again in Q3 and Q4/2020, but carriers deployed 4% less capacity than over the same period in 2019.

The mega-ship incident in the Suez Canal has shown the vulnerabilities of the global maritime supply chain. Some stakeholders will no doubt push for a new expansion of the Suez Canal, more port infrastructure and the development of alternative maritime routes, for example the Arctic Sea routes. This would be misguided. The main vulnerability is the mega-ship and the world of integrated mega-carriers that it has created.

Changes in deployed container ship capacity on different trade lanes (YoY)

Source: ITF, MDS Transmodal

Olaf Merk is Project Manager for Ports and Shipping at the International Transport Forum

How shipping can help to avoid pandemics


Diseases like Covid-19 are passed from animals to humans. They spread because of animal trafficking, deforestation and human encroachment into wildlife habitats. Maritime shipping plays an important role here that needs to be addressed.

By Olaf Merk

Cruise ships played a highly visible role in spreading Covid-19
(Photo: Kotenko Oleksandr/Shutterstock)

The exact causes of Covid-19 are still unclear. Yet it is highly probable that it is a so-called zoonotic disease, transmitted from animal to human. Around 60% of existing human infectious diseases are zoonotic, including highly lethal ones such Ebola, Aids, SARS, West Nile Fever and the plague. Zoonotic viruses cause no symptoms in the host animal; for humans they can be deadly.

The main factor behind zoonotic diseases is humanity’s relation with nature. Viruses spill over to people as a result of the exploitation of the globe’s fauna, such as hunting and wildlife trade. Human encroachment into other species’ natural habitats, for instance through logging, mining cultivation or urban development, has increased contact with wild animals and heightened virus spill-over.

“Highly efficient transport networks can propel localised virus outbreaks into worldwide pandemics.”

As humans continue to invade unexplored wildlife areas, more zoonotic diseases are likely to jump the boundary between species and afflict us. Fully 75% of the emerging infectious diseases are zoonotic. Of these, almost half are linked to changes in land use, principally for the production of meat, soy and palm oil.  As science journalist David Quammen, author of “Spillover: Animal Infections and the Next Human Pandemic” put it back in 2012: “If you shake a tree, something will fall out.”

Carrying ballast

The physical interconnectedness of our globe through a finely-woven web of transport links has huge benefits for mankind.  The downside: highly efficient transport networks can propel localised virus outbreaks into worldwide pandemics – as happened with Covid-19.

The main responsibility falls on maritime shipping. This is nothing new – infectious diseases have spread aboard ships for centuries, including the plague in the Middle Ages and the lethal 1918/19 influenza. The role of shipping as an amplifier of infectious diseases has waned somewhat with the decline of sea-borne passenger transport. But ships still spread viral diseases, as the many cases of Covid-infected cruise ships show. A significant part of the spread of Covid-19 in Australia has been associated with infected passengers disembarking from a cruise ship in Sydney.

The ballast water dumped by ships contains alien invasive species
(Photo: Denys Yelmanov/Shutterstock}

Ships also carry pathogens in much more oblique, but no less dangerous ways: via ballast water. Ballast is an essential component of seafaring. During a voyage, vessels take on board sea water to replace weight lost through fuel and water consumption while at sea. The ballast reduces hull stress, optimises manoeuvrability and improves propulsion. No longer needed, the water is dumped into the sea again.

This simple practice can have lethal consequences. Ballast water contains a multitude of microbes, small invertebrates, larvae, and bacteria. Removed from their habitat and dumped elsewhere, they become “aquatic invasive species’ that can cause havoc in their new ecosystem.

“The 1991 cholera epidemic in Peru is believed to have been introduced into three ports through ballast water.”

The 1991 cholera epidemic in Peru is believed to have been introduced into three ports through ballast water from Bangladesh. The disease subsequently spread throughout Latin America, killing more than 10 000 people by 1994. The use of ballast water has been much stricter regulated in recent years, nevertheless it remains a primary conduit for invasive alien species worldwide – with immediate consequences for human health.  

A seamless (virus) supply chain

With a share of 80% of global freight, maritime shipping is the mainstay of the frictionless and cost-efficient transport chains that lubricate global trade. And therefore it is also implicated in the causal chain that links international trade into the causes of pandemics – both directly and indirectly.

Pangolins are the most trafficked wild animal
(Photo: Afrianto Silalahi/Shutterstock)

Legal and illicit wildlife trade is one aspect. Hundreds of millions of plants and animals are moved around the planet every year, with an estimated annual economic value of over USD 300 billion. Several zoonotic infectious diseases have emerged in part due to the human-animal contact that occurs along the wildlife trade chain.

Maritime shipping plays an important but hardly recognised role in this. Take trade in pangolins, one of the possible intermediary hosts of Covid-19. Pangolins are the most trafficked animal in the world, mostly because of their scales which are used in traditional Chinese medicine. An estimated 596 000 pangolins were illegally traded between 2016 and mid-2019 –  usually via ocean transport, with scales concealed in boxes or sacks in shipping containers and declared as fish or other cargo. Arrests, prosecutions and conviction rates are low, also because of corruption at certain seaports.

The forest for the trees

Another example of shipping’s role in the loss of biodiversity is its indifference towards illegal forestry. Depending on the source, illegal logging accounts for 5% to 40% of global wood production. Too many in the maritime supply chain turn a blind eye on illegal wood trade. Working in separate systems, suppliers, transporters and government agencies report forest products differently, which makes identification of – and action against – illegal wood trade difficult.

Shipping plays an important role in the illegal wood trade
(Photo:  Infinitum Produx/Shutterstock)

Law enforcement is weak in many ports. Some have become downright hubs for “wood laundering”, where the origin of the wood is covered up before it reaches its final destination. Ship operators and agents that do not check the legality of the cargo they transport enable such practices. The anonymity of shipping containers helps, as do vessels operating under “flags of convenience” with little regulatory scrutiny. Critics lament “a lack of due diligence, a denial of responsibility, and even of culpable negligence”.

Lessons to learn

The reaction of transport policy-makers to Covid-19 has so far been to address the immediate effects of the pandemic. Soon, the focus should shift towards how future pandemics can be avoided, and such a strategic reflection will need to consider the role of maritime transport.

Such a strategy should identify shipping-related measures to halt the future propagation of pathogens. It should also address the causes of pandemics, such as wildlife trade, deforestation and other pressures on biodiversity loss via changes in land use. Governments should not be shy about making financial help for shipping companies conditional on the implementation of measures which will help prevent the next zoonotic disease developing into a pandemic.

“Seaports should up their game and improve their capability for effective scrutiny of cargo.”

Maritime transport companies, for their part, could use their pivotal role in supply chains to better scrutinise their cargo. The ongoing digitalisation of the maritime supply chain improves the traceability of cargo and its characteristics, including its legality. That way, shipping companies could show they are serious about implementing due diligence on the cargo they transport.

Seaports should also up their game and improve their capability for effective scrutiny of cargo. Several ports have created Wildlife Traffic Monitoring Units to detect and prevent the illegal transport of wildlife. Seaports should also include combating illegal timber and wildlife trade as objectives in their sustainability strategies, and be accountable for their actions on this. 

Certainly certified

The shipping sector can also do a lot to contain further deforestation around the globe. Commitments to move cargo only for clients that comply with certification schemes that protect natural forests would go a long way. These are common in palm oil, timber and paper supply chains, but rarer in the soy and cattle sectors.

Deforestation is a result of export-oriented, intensive agriculture which needs sea transport
(Photo: Rich Carey/Shutterstock)

Examples include schemes run by bodies such as the Roundtable on Sustainable Palm Oil (RSPO), the Forest Stewardship Council (FSC), the Programme for the Endorsement of Forest Certification (PEFC), the Round Table on Responsible Soy (RTRS), the Amazon Soy Moratorium, and the Zero Deforestation Cattle Agreements and, for fish, the Marine Stewardship Council (MSC).

Last but not least, the international community will do well to think more about the role of maritime shipping in relation to biodiversity – in the oceans as well as on land – and include it in multilateral agreements. The new UN Global Biodiversity Framework, currently in preparation under the Convention on Biological Diversity, will define targets and pathways for the conservation and management of biodiversity for the next decade and beyond. It seems like a good opportunity for a strong signal that long-term lessons from the current Covid-19 health crisis are being learned.


Olaf Merk is ports and shipping expert at the International Transport Forum. Views are his own.

Why Container Shipping is a Lot Like Farming

Transporting massive amounts of containers across the high seas has much in common with the business of rearing dairy cows or growing wheat – and alternative thinking about agriculture holds lessons for the maritime industry.

By Olaf Merk

Remorkers carrying containers to ships in Hong Kong harbour,

I have not always worked on maritime transport. One of my first assignments at the OECD was to conduct a Rural Policy Review of the Netherlands. This is how I met Jan Douwe van der Ploeg, professor at the agricultural university of Wageningen. I mention this because I think that his insights on agriculture are very relevant for container shipping. I will summarise them here briefly.

Van der Ploeg’s analysis of business models in agriculture goes against the received wisdom that economies of scale are always desirable. Over the past decades, farms have grown bigger through consolidation of land, driven by a race for market shares via cost reduction. This has required big investments in expensive equipment and huge loans to finance these.

In the process, agriculture and the local environment have become decoupled. The farmer’s main inputs (machines, seeds) are bought abroad. Most of the work has become automated. Agricultural land has turned into a space exclusively dedicated to production – it is no longer a multi-functional area where work and leisure, production and consumption can be combined.

Van der Ploeg’s merit lies in his detailed calculations showing that smaller but more diversified firms are more productive and profitable. They are less indebted, less dependent on intermediaries and less affected by price volatility, because they have developed economies of scope. And they provide more added value, jobs and biodiversity for the local community.

A container terminal seen from above

Striking similarities

Container shipping has followed a course strikingly similar to agriculture. The dominant idea: more economies of scale. The way to achieve it: cost reductions, ever larger ships and industry consolidation. The result: the large majority of the goods we consume are now moved by a handful of very large global shipping companies that source their workforce from developing countries and register their ships in tax havens. These companies have accumulated as much debt as a mid-size country they emit as much CO2 as a big country and have difficulties to be profitable except in the most bullish of times.

Container ports follow the same pattern. Completely sealed off from their surrounding communities, highly specialised, continuously trying to catch up with ever-larger ships, today’s container terminals leave no room for the intermingling that once gave port cities their charm.

In both agriculture and container shipping, policies – notably those of the European Union – are designed to pursue economies of scale. In agriculture the tool was subsidies; container shipping’s equivalent is the tonnage tax. Both sectors have special regimes that make them hybrids: market-driven sectors in name, but dependent on public support in practice.

In both, creating local synergies is an afterthought that goes by the name of rural development policies in one case and maritime cluster development in the other. In both sectoral policies, building large firms is more important than guaranteeing competition. In both cases, policy reform has become very difficult considering sunk investments, path dependency and regulatory capture by corporate lobbyists.

Cargo ship entering Singapore harbour, one of the busiest ports in the world.

Where the parallel ends

There are of course differences. Probably the most important is the extent of what economists would call the symmetry between buyers and sellers. Farmers buy from very large companies (seeds, pesticides) and sell to very large companies (food industry and retailers). In this constellation, company size could be a countervailing force to the monopoly power of buyers and sellers: larger farms – or cooperatives of farms – might better able to negotiate with the large multi-national companies in seed production, the food industry and supermarket chains.

In container shipping, liner companies buy from fragmented suppliers (shipyards, ports and port service providers) and sell to fragmented buyers (the companies that import and export), so it is the shipping company itself that is the major source of monopoly power. 

There is of course another major difference: agriculture is vital, in the true sense of the word. Container shipping is essential to the extent that global trade is. With many world leaders pleading for more regional sourcing, long-range containerised transport might be less inevitable than thought – which opens the perspective for possible fundamental change.

A policy choice

Professor Van der Ploeg proposes an alternative to the large-scale industrialised agriculture: smaller, more localised, quickly adapting to demands of clients. It is time to imagine similar alternative perspectives for container shipping, if only because that will make shipping more resilient.

The first step in sketching potential new futures would be to realise that there is nothing self-evident or inevitable about the strategy of economies of scale. It has been stimulated by public policies – and these policies can change.


Olaf Merk is ports and shipping expert at the International Transport Forum. He is the (co-) author of The Impact of Alliances in Container Shipping (2018) andContainer Shipping in Europe: Data for the Evaluation of the EU Consortia Block Exemption Regulation (I2019). Views are are his own.

Global pandemics and transport systems in an age of disruptions

The Coronavirus is the most recent in a list of global pandemics – and it is the most impactful. The human and economic costs of Covid-19  go far beyond those of Sars, the Swine flu or Ebola. Its immediate impact on transport activity has been nothing short of dramatic. Will it also change human mobility and freight transport in the long run?

By Francisco Furtado

Arriving passengers are tested for Coronavirus symptoms at Bologna airport in Italy | Source: Shutterstock

It is still early in the cycle of this global pandemic and care needs to be taken not to draw rash conclusions. But some of the striking effects of the Coronavirus on transport and related sectors are evident.

Air travel demand decreased for the first time in a decade from mid-February, according to estimates by IATA, the global association of airlines. In the Asia-Pacific region, air travel is forecast to fall by 8.2% in 2020 compared to 2019. Worldwide, the sector will shrink by 0.6%.

The bulk of this reduction is associated with the domestic Chinese aviation market, which is set to contract by USD 12.8 billion in 2020. Foreign airlines reduced capacity for flights to and from China by 80%, and Chinese airlines by 40%, according to ICAO, the UN aviation body.

More container ship tonnage is idle now than during the global financial crisis. Port operators in China say that volumes for container shipping were 20 to 40% less than last year. On the land side, warehouses and factories are unable to receive or send goods as imposed quarantine exacerbates the existing shortage of truck drivers.

Cancelled and postponed

Supply chain disruptions have led to factory closures and the shutting down of assembly lines – from Hyundai in South Korea to JCB in the United Kingdom – mainly because of the cessation of activity in China and the lack of components sourced from there.

Tourism is another highly visible victim of the Coronavirus. Up to 90% of tourism-related bookings for March are cancelled in some parts of Italy. Preliminary estimates for France point to a 30 to 40% drop in the number of tourists compared to what would be expected for this time of the year. The practically complete absence of Chinese tourists in Europe since the outbreak of Covid-19 points to lost revenue in the order of EUR 1 billion per month.

Rail passengers wearing face masks in Bangkok, Thailand | Source: Shutterstock

The cancellation and postponement of events worldwide has hit big-ticket meetings from the Mobile World Congress in Barcelona, the Paris and Milan Fashion Weeks, or the US-ASEAN summit in Las Vegas. The cancellation of the Berlin Tourism Fair ITB, scheduled for early March, meant 160 000 expected visitors did not travel, use their hotel rooms, or visit the German capital’ s restaurants. Where organisers maintain events, attendance drops dramatically as big employers like Amazon take steps to limit staff travel.

Will things get worse?

Much of this activity should pick up towards the end of the year. To what extent that probable resurgence can make up for the first-quarter plunge is an open question. Some of the above figures, for instance for the aviation sector, were published before the virus reached Europe and other regions outside China. So while they take into account the impact on China, the effects of the global spread of Covid-19 are not yet included. Worse may be to come.

The economic impact was most vividly reflected on the stock markets. The week of 24-28 February was the worst week for stocks since the 2008 crisis. Covid-19 could shave 0.5 percentage points to 1.5% of GDP growth in 2020 compared to previous estimates according to the OECD’s Interim Economic Outlook published on 2 March. In a more severe “downside scenario” global economic growth would halve.

Unlike 2019, NO2 levels in Wuhan did not rise after Chinese New Year | Source: NASA

Nasa images show the dramatic extent to which transport activity and industrial production came to a grinding halt across China – not just in Wuhan province – as drastic anti-virus measures were put in place. The levels of nitrogen dioxide (NO2) in the air were 10 to 30% lower in January and February 2020 than the average of the same period for 2005-19. Such a dramatic drop across such a vast area has never been registered before – an indication to how much drastically reducing transport and industrial activity can impact emissions.

Figure 2. Pollutants in early January 2020 across eastern and central China compared to mid-February

Pollutants across eastern and central China in early January and mid-February 2020 | Source: NASA

Are telework and virtual meetings the new normal?

The contraction of transport activity is twofold: Right now, restrictions on travel and voluntary cancellations of trips compound the impact of reduced economic activity that is beginning to be seen. Later, when transport activity resumes towards the second half of 2020 – which is not a given – the bounce back to compensate for the earlier stoppage might lead to congestion on certain nodes of the transport networks, with increased costs and travel times as a result.

Most likely, Covid-19 will also have more long-term effects on transport systems and the demand for their services. Widespread cancellations of business trips and global events could drive the wider adoption of remote meetings and virtual conferences. Rather than an exception, virtual attendance might become a standard practice or even the norm. Improved digital connectivity and changing corporate cultures could work in the same direction.

The same is true for teleworking. The cost to organisations of having staff members in quarantine to contain the spread of Covid-19, is being considerably softened where those concerned can telework. The likely effect is that this form of work will become more widely accepted, reinforcing an already existent trend.

Will virtual meetings become the new normal?

A boost for re-shoring and resilience?

The tendency for nations to trade relatively more with countries of the same region than with the rest of the world is another trend this health crisis could reinforce. The disruption caused to supply chains by events on the other side of the world highlights security, safety and strategic concerns associated with off-shoring industrial production. The 2008 crisis triggered a rise in protectionism and the regionalisation of trade. In recent years, shutdowns of factories resulted in shortages of components “Made in China”, resulting in a push for the diversification of supply sources, including re-shoring.

A third relevant issue for which the pandemic could become a turbo-charger is resilience. The interest in strengthening transport networks’ ability to absorb shocks, deal with slumps and peaks, or to adapt to shifting trade flows was originally stimulated by extreme climate events, such as the 2004 Indian Ocean earthquake and tsunami. The rise of global trade disputes in recent years further nourished it.

Resilient transport networks feature different transport modes that can be used alternatively, they offer multiple route options to circumvent stoppages, and possess built-in flexibility –  for instance to easily mobilise resources to deal with activity peaks and repurpose them for other needs during slumps. More resilience reduces the costs of shocks to the system and increase safety and security of supply – but it also comes with a price tag.

There is still a great degree of uncertainty about this pandemic’s long-term legacy with regard to the mobility of people and the transport of goods. What emerges more and more as the situation evolves is that it could be significant and long-lasting.


Francisco Furtado is an Analyst and Modeller at the International Transport Forum. He is currently working on a project on Decarbonising Transport in Emerging Economies.


Read more about disruptions to the transport system in the ITF Transport Outlook 2019

No Big Bang on the High Seas

Maritime transport is dominated by shipping line consortia and alliances that are exempt from European competition rules. The EU wants to keep it that way, but its case does not look too strong.

By Olaf Merk

On 20 November, the European Commission released its proposal on the “Consortia Block Exemption Regulation” for shipping lines. What sounds like some obscure bureaucratic rule of little interest managed to upset almost everyone in the maritime logistics chain – from shippers to freight forwarders and the towage sector to port terminal operators. The latter qualified the proposal as “alarming and bewildering” and even threatened court action.

What is the fuss about?

Liner shipping has traditionally been organised in so-called “shipping conferences”, de-facto cartels. Within the European Union, conferences are no longer allowed. But shipping companies can co-operate in the form of consortia, or in bundles of consortia called alliances.

The difference between a cartel and a consortium is that cartel participants collude to improve their profits and dominate the market. Consortia, on the other hand, are tools for co-operation in practical matter, for instance for sharing ship capacity.

The EU’s Consortia Block Exemption Regulation (BER) for liner shipping sets the rules for such co-operation. It exists since 1995 and was revised in 2010. Since then, it has been renewed, without modifications, every five years. The Commission’s proposal that created such a storm is to once more renew the BER without modifications.

Cartels in disguise?

So what caused the backlash now, when in the past the extension of the BER was a mere formality?  At the heart of the controversy is the fear that a cartel-like constellation might be re-emerging under the guise of the current regime. For consortia could, in practice, act like cartels if they effectively co-ordinated not just schedules and other practicalities of operation between competitors, but also the price or the available capacity.

And indeed the cost calculation models in the three global shipping alliances allow carriers of the respective alliance “to develop a fine sense of the costs of other carriers”, according to a recent ITF study on liner shipping alliances. And the European Commission raised concerns that carriers might have engaged in price signalling via their announcements of general rate increases.

Joint capacity planning for “adjustments in response to fluctuations in supply and demand” is allowed by the BER. But there is evidence that carriers might have co-ordinated orders for new mega-ships as well as the timing of ship dismantling within alliances.

Also, most of the so-called blank sailings – the cancellation of a scheduled weekly service – are done simultaneously by different consortia and alliances, as shown in Figure 1. While some interpret this as joint “capacity adjustments in response to fluctuations in supply and demand”, others might suspect concerted action to influence freight rates. Because the different shipping consortia and alliances are heavily intertwined (Figure 2) even detailed co-ordination between them is not particularly difficult.

Figure 1: Blank sailings per month per alliance (2012-2019)

Figure 2: Overlapping consortia links between carriers (for trades to/from Europe)

Will there really be legal certainty?

For many observers, renewing the BER without modifications in this context raises three major questions. The first relates to legal certainty, which the BER is said provide for carriers. Without the BER, consortia would need to carry out self-assessments to ensure they meet the EU’s general competition regulation.

Yet an unmodified BER may not provide this legal certainty, because it is unclear which consortia are still covered by it: it applies only to consortia with a market share below 30%, which is difficult to monitor in practice. The reason is that the Commission uses the “combined market share”, which takes the cross-linkages between consortia into account (illustrated in Figure 2).

That is the right benchmark to look at in principle, but also creates uncertainty as to which consortia fall below and above the ceiling (Figure 3). The Commission recognises that it does not have the data. Collecting it would help to provide legal certainty, but that does not seem to be on the cards.  

Other updates would also provide added legal certainty. It is not quite clear whether alliances are still covered by the BER, for instance. And the definition of “relevant markets” no longer reflects the reality of today’s port competition.

Figure 3: Ranges of uncertainty on combined market shares on consortia covering Europe

Diapositive1.jpg

A matter of market share

The second question is about economic concentration. Consortia were invented as tools to allow smaller shipping lines to achieve scale and compete. Since then, consolidation in the shipping sector has surpassed any previous expectations. The market share of Danish shipping giant Maersk alone was 19% in 2018, larger than the share any alliance had until 2012. So consortia have not been the alternative for market consolidation, they have in fact come on top of consolidation and provided an additional tool for an increasingly consolidated sector to benefit from scale.

The result is that a few alliances have huge buying power and can play off their service providers, such as ports, against each other. For the alliances’ customers the result is reduced choice to transport their goods, because the ocean transport offers are mostly similar.

These aspects are mostly absent from the considerations by the European Commission, which concludes that service quality has remained stable. But the number of direct port-to-port connections has fallen, as have weekly service frequencies. The Commission paper also finds no indications for market power of carriers vis-à-vis ports, yet several examples are documented, including the ports of Malaga, Taranto, Gioia Tauro, Zeebrugge or Genoa.

The politics of liner shipping

The third question being asked is about the transparency of the process leading to the decision to extend the BER. The Commission’s stakeholder consultation ended in December 2018 but the document was not released until almost a year later, in November 2019. This was only days before a new Commission took office. Some might think the continuation of the BER will protect European liner shipping companies. But in fact the BER has arguably done the opposite, by helping the emergence of Chinese liners. Asian liner companies have ordered large numbers of mega-ships recently (see Figure 4) and to fill that capacity they will need the alliances and consortia more than the Europeans. Interestingly, the Chinese liner company COSCO submitted a document to the European Commission arguing for extending the BER.

Figure 4: Mega-ship deliveries for Asian and European carriers (2013-2022)

The BER might benefit global liner shipping companies, a few of which are headquartered in Europe. It will do less for European shipping companies operating exclusively in Europe, such as feeder companies and tonnage providers (i.e. ship owners who charter out their vessels to liner companies).

Evolution or Big Bang?

The agenda of the new European Commission that took office in December 2019 emphasises industrial policy, geopolitics and a European Green Deal. How the extension of the current BER aligns with these priorities is not so clear. But if it is deemed essential to keep a shipping-specific exemption from EU competition rules, maybe this is the time to re-imagine its conditions.

One could think of a block exemption that only applies to liner companies that pre-dominantly operate in EU waters, or only for consortia on intra-EU routes, or for types of ships (“Europe class” vessels) that meet certain criteria, for instance with regard to energy efficiency, shares of EU seafarers and use of EU-approved ship recycling facilities. Not exactly a Big Bang, but at least some steps that could help implement the agenda of the new Commission, as exemplified by the Green Deal, and give the blanket exemption a new legitimacy that is currently in some doubt.

Olaf Merk is ports and shipping expert at the International Transport Forum. He is the author of Container Shipping in Europe: Data for the Evaluation of the EU Consortia Block Exemption Regulation (ITF, 2019). This article draws on research for this report. It does not necessarily represent the views of ITF members

Getting Maritime Subsidies Right

by Olaf Merk, ports and shipping expert at the International Transport Forum

Many countries support their shipping industry via maritime subsidies. The value of well-functioning maritime transport for trade is undisputed. But is this, in itself, a justification for passing taxpayers’ money on to operators? Clearly, the private sector can provide shipping services. Subsidies would only make sense if they serve a clearly defined public interest that cannot be achieved otherwise. They would also need to be designed in ways that will not distort shipping and logistics markets.

In practice, this appears to be challenging. To begin with, nobody really knows how much governments spend on maritime subsidies. Support often comes in the form of favourable tax treatment, which is largely invisible in most government budgets. Even countries that make an effort to monitor maritime subsidies, notably in Northern Europe, have difficulties in establishing the actual numbers. Many countries seem to be little fussed, perhaps even happy, that the monetary value of their maritime subsidies remains unknown.

More worryingly, maritime subsidies often do not have a clearly defined public interest purpose. The usual justification is that they support the competitiveness of the shipping industry. The standard threat evoked is the relocation of a shipping registry or of ship management activities to low-tax jurisdictions. The problem with that is that hosting these is no guarantee for good maritime connectivity or for a maritime cluster that adds significant value to the economy.

Many subsidy schemes assume specific outcomes, but do not actually make direct or indirect financial support conditional on achieving them – be it on ships flying a domestic flag, operators hiring domestic seafarers or vessels reducing emissions. Unsurprisingly then, only a few subsidies seem to actually achieve their stated goals. Despite an impressive range of subsidies, only 16% of the world fleet sailed under the national flags of OECD countries in 2019, down from 54% in 1980. The share of domestic seafarers has continuously declined in maritime countries like Germany, France and the UK.

A vicious circle is also at work. Maritime subsidies by one country provoke subsidies by others. This happened already in the 19th century, and it continues to be the case. This perverse dynamic has been fuelled by “flagging out” of vessels to countries with low taxes and little regulation. This development has led to the emergence of the tonnage tax in the European Union: a very favourable tax the shipping sector pays in lieu of corporate income tax. In some cases, regulations have been put in place to avoid a race to the bottom. The proliferation of tonnage tax schemes within the EU has prompted the European Commission to formulate maritime state aid guidelines to avoid tax competition between EU member states. Yet the tendency over time has been to allow more generous schemes that opened the door for other countries to apply similar generosity.

Finally, there is evidence that maritime subsidies distort wider logistics markets. A new study by the International Transport Forum at the OECD found that many tonnage tax schemes for shipping companies can also be applied to their cargo-handling operations in ports. The European Commission has approved this practice in its decisions when it reviewed the tonnage tax schemes of individual EU countries. This creates a competitive advantage for shipping companies that are vertically integrated with terminal operators, by allowing theses to profit from a lower tax burden compared to corporate income tax. This distorts the market for cargo handling, as independent terminal operators do not have these fiscal advantages.

How can these challenges be solved? Governments should be more transparent about the money they spend on maritime subsidies, as well as the impacts generated. And subsidies could be better justified if more conditions were set regarding those impacts, tying support closely to specific outcomes governments want to see. Distorted markets should not be among those, and subsidy schemes ought to be carefully crafted to this. Finally, governments should understand that it is in their own best interest to avoid a maritime subsidies race.

Download the report for free at this link

How shipping got its own Paris Agreement – and what that means

by Olaf Merk

pexels-photo-262353.jpeg

 

Maritime shipping now also has its “Paris Agreement”. On Friday, 13 April, the International Maritime Organization (IMO) and its member states agreed on an “Initial GHG Strategy” for shipping. This strategy sets out an absolute target to reduce shipping emission by “at least” 50% by 2050. It also commits the sector to pursue efforts to phase out CO2 emissions in line with the objective of Paris Climate Agreement.

Is this compromise (for that’s what it is) a historic achievement or a collection of weasel words? How did we get here? And what still needs to be done? In my view, the deal struck at IMO is a huge step – for at least three reasons.

First, the IMO’s Initial GHG Strategy is the first big response of shipping to the climate change challenge since the introduction of an energy efficiency measure for ships, the Energy Efficiency Design Index (EEDI), in 2012. The EEDI, developed in the wake of the 1997 Kyoto Protocol, the predecessor of the Paris Agreement, is a binding global regulation. But it has at best a moderate positive impact on shipping’s greenhouse gas emissions,which will materialise only over the long term (given that the EEDI only applies to new ships, while the average life time of ships is more than 25 years).

Looking good

Second, the new agreement makes shipping – seen as a laggard by some – suddenly look better than the aviation industry, the other transport sector that was exempt from the Paris Agreement because its emissions defy national boundaries. The International Civil Aviation Organisation (ICAO), IMO’s sister body that regulates global aviation, was much faster than the IMO to respond to the Paris Agreement. However, its solution now seems less robust than what the maritime sector is now undertaking. For the moment, aviation has adopted a voluntary offset scheme but avoided to set an absolute emission reduction target as the one just agreed at IMO.

Third, shipping and IMO delegates have come a long way in their approach to combatting climate change. An absolute emission target for shipping was unthinkable a few years ago, and even two weeks ago far from certain.

 

In short, this commitment goes further than anything in the past or in similar sectors. And it surpasses what seemed possible only since very recently. So yes, this was probably the best possible outcome for all those who wanted shipping to align with the Paris temperature goals. Even if the Initial GHG Strategy does not quite achieve that (a 50% cut will not suffice to get shipping on a pathway to the famous 1.5-degree scenario),  it sends a clear signal that the sector needs to decarbonise. This will not be without impact on how ship owners act. It will also drive technological innovation for cleaner shipping. Not least, the IMO agreement is a boost for multilateral solutions; all too rare these days.

So, the agreement on the IMO Initial GHG Strategy provides a good reason to uncork some champagne – for those who need a reason for that.

 

Olaf video image
ITF port and shippping expert Olaf Merk talks about hoe maritime transport can decarbonise

 

 

Litmus test of statesmanship

How did this little miracle happen? A combination of things was at work: A technical debate became politicised. A powerful actor threatened unilateral action. Laggards were effectively shamed. Evidence made an impact.

Politicisation took the form of the Tony de Brum declaration. This text, supported by more than 45 countries, demanded that shipping align itself with the goals of the Paris Agreement. Pushed by French President Emmanuel Macron and Hilda Heine, President of the Marshall Islands, during the One Planet Summit in November 2017 the declaration was a political masterstroke: It made shipping emissions a strategic political priority and a litmus test of statesmanship, rather than the arcane topic for shipping technocrats and corporate lobbyists it had been for so long. Intense cooperation among officials of the most ambitious countries, sailing under the flag of the “High Ambition Coalition”, provided important backup.

Another success factor was the threat of unilateral action by the EU. Lack of progress at IMO, the Europeans made clear, could lead (and can still lead) to inclusion of shipping in the emission-trading scheme of the EU-ETS. This was a rather big stick to wield: The prospect of scattered regional rather than global regulation horrifies the shipping sector. EU parliamentarians attended  IMO meetings and added pressure by lending support to the European Commission’s Plan B.

A new degree of transparency

Added Into this mix was a new degree of transparency. Journalists are not allowed to report on what countries say during IMO meetings. Yet social media and leaks to media made it possible for the public to follow the positions of individual countries. Public blaming and shaming by environmental NGOs and activist Twitter accounts like @imoclimate as well as extensive coverage of country’s respective positions in the press seem to have had an effect – most of the countries less eager to commit to strong ambitions backed down in the end.

Report Cover
ITF report “Decarbonising Maritime Transport: Pathways to zero-carbon shipping by 2035”

Finally, there were the facts. Over the past years, ample evidence has been collected which shows that zero-carbon shipping is possible and will create new opportunities. Innovative ship-owners demonstrated what is possible in practice, for example in Sweden. A range of studies, emanating from the research community (like or the University Marine Advisory Services, ship classification societies (like Lloyd’s Register) and policy think tanks like the International Transport Forum.

That said, much remains to be done. Finding agreement on short-term measures to reduce emissions will be a tough job. One of the guiding principles in the IMO Initial GHG Strategy is the concept of “common but differentiated responsibilities” (“CBDR” in climate-change speak), meaning while there is a shared obligation to address climate change, not everyone can be held responsible at the same level.  The introduction of this approach (adopted from the UN Framework Convention on Climate Change, UNFCCC) to the context of shipping (where all ships are treated equally,  irrespective of whether they fly the flag of a developing or developed country) is likely to make discussions on the concrete measures to cut CO2 complex and heated.

But that will come tomorrow. For now, let us just enjoy a historic moment.


Olaf Merk is a port and shipping expert at the International Transport Forum.

Rough waters for container shipping. Why Hanjin, the world’s seventh largest container line, went under

13100_teu_class_hanjin_sooho
End of the line

Olaf Merk, Ports and Shipping Project Manager, International Transport Forum. We are co-publishing with the OECD Insights blog.

Sad news. After months – even years – of pain and suffering, the South Korean container shipping company Hanjin finally sank and passed away. Not just any casualty, but the largest shipping bankruptcy in history: Hanjin was the world’s seventh biggest container line with a fleet of 90 ships. Was this an accident, an isolated case of bad luck, or is something more structural going on?

Like with any bereavement, there are the immediate arrangements to make. Terminal operators and maritime service providers were not paid for their services and need their money, so they have seized Hanjin ships in ports to have some sort of guarantee. Hanjin’s clients are eager to know that their goods will be delivered and not be stuck on ships. Competitors are circling around the deceased to pick up some of the ships that Hanjin leaves behind.

At the same time, people start to wonder how all this could have happened. Forensic analysts talk about the sluggish demand for container transport, hit by declining trade from China, the overcapacity in container shipping and the resulting low ocean freight rates that have made it very difficult to make profits in container shipping. All this sounds very logical, but also pretty abstract, and – more fundamentally – it obscures an uncomfortable truth: This was not an accident, but market forces at play – and it will happen again.

The story starts – in a way – in a corporate boardroom in Copenhagen in 2010. Then, the world’s largest container shipping company, Maersk Line, decided to order a set of new container ships that were larger than the world had ever seen, able to carry 18 000 standard containers. Putting more containers on a more fuel-efficient ship would save costs and thus give it a better position in a very competitive market.

For a weekly container service between Asia and Europe – the route on which the largest ships are deployed – ten to eleven ships are needed; a lot of capital that smaller companies would not be able to collect. As the order for the new mega-ships was placed while the global economic crisis was still unfolding, banks were unwilling to lend much to a risky business like shipping, especially the smaller ones with high risk profiles. Timing was excellent, with ship prices low due to overcapacity in shipbuilding yards. The new mega-ships were smartly marketed as “Triple E” ships, providing economies of scale, energy efficiency and environmental performance. They also provided a life-time opportunity for the market consolidation that big players hoped for.

Yet things worked out differently: Other firms reacted by ordering similar mega-ships and by organising themselves in alliances. They agreed to share slots on each other’s vessels, which means they can offer networks and connections that they would not be able to offer if they would go it alone. Alliances had existed before, but the Triple E-strategy involuntarily resulted in stronger alliances in which more carriers were involved. These consortia were also used to share newly acquired mega-ships, so individual carriers would only need to buy a few of these, instead of having to shoulder a whole set of ten ships. Consequently, many carriers were able to rapidly catch up and also order mega-ships, many more than expected. The alliances became such powerful mechanisms that even the largest companies found themselves forced to find alliance partners.

This gave a different twist to the play, but with a similar outcome. The combined mega-ship orders in a period of sluggish demand created a sensational amount of overcapacity: way more ships than were needed. This overcapacity resulted in lower freight rates, lower revenues and several years of losses, of which we have not started to see the end. Who has the longest breath and biggest pockets will survive; the others won’t and will suffer death by overcapacity, like Hanjin.

There will very likely be more Hanjins. Hardly any container shipping line is making profit nowadays and the perspectives are bleak. Sputtering trade growth and gigantic ship overcapacity will continue to depress ocean freight rates. Banks, creditors and governments might well get impatient with some of the liners and cut life lines again.

Economic theory champions the notion of “creative destruction”, in which inefficient firms are replaced by more efficient ones. So, even if it is hardly any comfort for employees that lose their jobs in the process, one could consider it a natural thing that weaker shipping firms disappear.

There is just one problem. If this process continues, it will soon lead to a very small group of powerful carriers dominating an already concentrated market, enabling them to put a lot of pressure on clients and ports. We are starting to see what the results of this are: less choice, less service and less connections for shippers, the clients of shipping lines. The ports that accepted the offer they could not refuse and invested in becoming mega ship-ready may find out that they placed their fate in the hands of a few big players who frequently change loyalties at fast as the wind.

Hanjin is gone; the problem is still very much there.

Useful links

The impact of mega-ships Olaf Merk on OECD Insights

The Hanjin case is a practical illustration of the complexity of sectors such as international shipping. The OECD is organising a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

Carbon emissions all at sea: why was shipping left out of the Paris Climate Agreement?

This article, by Shayne MacLachlan of the OECD Environment Directorate, is co-published with the OECD Insights Blog.

surfNewcastle, Australia has the dubious honour of being the world’s largest port for coal exports. There’s even a coal price index named after it: The NEWC Index. Surfing Novocastrian beaches not only means “watching out” for great-white sharks, but also “being watched” by the lurking great-red coal ships out beyond the breakers, waiting to come in to port for their fill (see photo). Growing up accustomed to these ever-present leviathans, I never questioned what ships did to the environment and to our health apart from when they crash and leak oil. This all changed recently as I discovered a raft of statistics about the shipping industry that indicate we’ve been sailing too close to the rocks since the engine started replacing sails and oars in the early 1800s.

A stern warning for climate change, and our health

Shipping brings us 90% of world trade and has increased in size by 400% in the last 45 years. Cargo ships, tankers and dry-bulk tankers are an essential element of a globalised world economy, but they are thirsty titans and they won’t settle for diet drinks. There are up to 100,000 working vessels on the ocean and some travel an incredible 2/3 of the distance to the moon in one year. Some stats floating around state that the 15 largest ships emit as much as all the 780 million cars in the world in terms of particulates, soot and noxious gases. The International Maritime Organization (IMO) says sea shipping makes up around 3% of global CO2 emissions which is slightly less than Japan’s annual emissions, the world’s 5th-highest emitting country. Ships carry considerable loads so they’re reasonably efficient on a tonne-per-kilometre basis, but with shipping growing so fast, this “broad in the beam” industry is laying down a significant carbon footprint. And local pollution created by ships when they are moored and as they rev hard to get in and out of port can be severe as most use low-grade bunker oil, containing highly-polluting sulphur. Ships also produce high levels of harmful nanoparticles, but encouragingly we’ve seen IMO collaboration to raise standards on air pollution from ships.

Mal de mer with rudderless regulation

A recent estimate forecasts that CO2 emissions from ships will increase by up to 250% in the next 35 years, and could represent 14% of total global emissions by 2050. This could wreck our hopes of getting to a well-below 2°C warming scenario. Even though many, including Richard Branson, called for emission reduction targets for international aviation and shipping to be included in the COP21 Paris Climate agreement, we failed. The IMO has introduced binding energy-efficiency measures so by 2025 all new ships will have to be 30% more efficient that those built today, but in my view there are questions about stringency and seemingly they don’t go far enough.

projected-annual-co2-emissions-from-the-shipping-sector_9ecd-768x662

http://www.grida.no/graphicslib/detail/projected-annual-co2-emissions-from-the-shipping-sector_9ecd

Navigating alternative routes to <2°C

As the Arctic ice sheet melts, a route across the North Pole would be about one-fifth shorter in distance than the Northern Sea route. But this isn’t what I have in mind for reducing shipping fuel consumption and emissions. We need to develop a copper-bottomed response to the challenge by further boosting investment in innovation and research. It’s great to all these sustainable shipping initiatives in the offing:

  1. Fit wind, wave and solar power such as kite sails, fins and solar panels. There’s some research into other energy sources underway such as nuclear cargo ships, but of course that presents another element of risk if something goes wrong.
  2. Increase carrying capacity of ships and future proofing of ships for a further 10-15 years with increased fuel efficiency by retrofitting vessels with more technologically advanced equipment.
  3. Use heat recovery technology to harness waste energy from exhaust gases to create steam, then mechanical energy, then electrical energy to power elements of the ship’s systems.
  4. Construct ships with sleeker design to reduce drag and install more efficient propellers.
  5. Use Maritime Emissions Treatment Systems (METS) in the form of a barge which positions large tubes over ships’ smoke stacks and captures and treats emissions from berthed vessels.

Let’s sink fossil fuels

Innovation and efficiency is hardly a “cut and run” approach. And typically when an industry reduces fuel costs they use the savings to increase activity, meaning carbon reduction is limited. This “rebound effect” could happen in maritime shipping. Truly green shipping will require vessels that are 100% fossil-fuel free. To help drive down fossil-fuel use, a carbon charge for shipping (and aviation) has been proposed. The International Chamber of Shipping (ICS) queried the carbon price of $US25 per tonne. Indeed this is higher than the price on CO2 for onshore industries in developed countries. What’s needed is a system where emitters that aren’t linked to a country’s climate policies are accountable. At COP17 in Durban, delegates discussed a universal charge for all ships that would generate billions of dollars. The money could be channelled to developing countries’ climate policy action. Phasing out subsidies on bunker fuel used by ships is also needed to get us on the right course.

You can’t cross the sea by standing and staring at the water

Following Paris it’s time for specific shipping emissions targets. It appears we know the co-ordinates but the fuel tanks are full of the wrong stuff. Earlier this month, the Marine Environment Protection Committee (MEPC) of the IMO discussed emissions targets but only got as far as approving compulsory monitoring of ship fuel consumption. This is a key step if one day we introduce market-based mechanisms to reduce shipping emissions. What’s needed is accelerated action consistent with the Paris agreement.

In the doldrums of COP21, it seems shipping (and it’s by no means the only sector) is rather like that surfer, sitting on their board waiting for the next wave. At the same time it’s trying to avoid the lurking great white shark.

Useful links

International Transport Forum work on maritime transport

Did shipping just fail the climate test? ITF’s Olaf Merk on Shipping Today