The Shipping Industry’s Struggle with Emissions

Apr 3, 2023 | Future in Logistics

Consider the typical transport charter. A shipowner is tasked with moving cargo from point A to point B as quickly as possible, regardless of port traffic. Efficiency is so prized that, in many cases, customers will even pay additional for demurrage—waiting at anchorage.  

Granted, there’s a downside. Ship owners are burning more fuel, rushing across the ocean, and waiting at their destination port. Those ships could wait two to three weeks or more between the anchor and holding zones at peak. While waiting, they’re earning those demurrage bonuses—and, simultaneously, burning even more fuel.  

It’s a “hurry up and wait” approach, adding to the shipping industry’s emission problems.  

The State of Shipping and Carbon Emissions

The shipping industry is responsible for about 3% of carbon emissions—on par with major carbon-emitting countries. Only the U.S., China, Russia, India, and Japan emit more CO2 than the global shipping industry.  

Despite this massive environmental impact, carbon emissions from vessels are widely unregulated—and as a result, the shipping industry is on track to contribute 10% of global greenhouse gas emissions by 2050, with black carbon accounting for 21% of CO2-equivalent emissions from ships. But, not surprisingly, with limited regulations, post-COVID rebounds, and added profit incentives for speedy delivery, striking a balance that satisfies supply chain leaders and sustainability advocates has been challenging.  

The IMO’s Push for Cleaner Cargo Transport

Now though, shipping industry leaders are being pushed to reimagine their charters. In January, the International Maritime Organization (IMO) began enforcing its Carbon Intensity Indicator (CII). The CII provides vessels with an annual reduction factor, ensuring continuous operational carbon intensity improvement. Annual operational CII must be documented and verified against these benchmarks.  

Beyond CII, though, international cargo and container shipping has yet to do much to promote decarbonization. A common argument? It’s difficult, if not impossible, to find an efficient, effective, and readily available means of powering massive ships beyond fuel.  

Through CII and other IMO-driven regulations, the organization is focused on a 50% reduction in industry emissions before 2050. But on the flip side, industry insiders anticipate increased trade to drive maritime volumes up significantly, fueling the “10%-by-2050” projections.  

Decarbonizing The Shipping Industry

Beyond the IMO, port-level strategies that have already shown tremendous promise in helping reduce carbon emissions are being implemented. While not a perfect solution, “just-in-time” (JIT) arrivals—timed properly—could help reduce the industry’s carbon footprint. Using a JIT model, ports coordinate available resources, and incoming vessels manage their course, so they arrive in time for an open berth. While this limits wait times at the port, ships often wind up slowing down their journeys to ensure on-time arrival.  

Likewise, “virtual arrivals” can help reduce emissions. Similar to JIT, with a virtual vessel arrival system, ships are notified of anticipated delays and align arrival times to berth availability. When a delay is expected, operators optimize their speed and routing against weather and ocean conditions, aiming to arrive when a berth is open. This, like JIT, reduces or eliminates wait times.  

Though tricky to implement at scale, using a JIT and virtual arrival containerships can reduce fuel consumption and CO2 emissions by 14.16% per voyage. Even optimizing its speed over the final 12 or 24 hours could cut emissions by 4.23% ad 5.9%, respectively.  

The challenge is implementing JIT and virtual arrivals with meaningful scale. When it comes to virtual arrivals, multiple parties are involved with each vessel’s arrival, and ships must agree to slow down as they approach the port in most cases. Again, with financial incentives often tied to early arrivals—and lengthy waits—promoting this approach may not land with vessel operators.  

At the same time, there are a host of benefits to virtual arrivals. In addition to reduced fuel consumption in transit and anchorage, because there are fewer vessels in the port, there are also fewer collisions—and less budget spent on repairs and legal fees. There are also reduced demurrage fees thanks to shorter anchorage time and better dockside efficiency. Vessel operators may also save by reducing total voyage time by choosing later departure dates to avoid delays at their final port.  

JIT arrivals have similar challenges. Ports utilizing a JIT approach must coordinate customs, tugs, pilots, stevedores, and more. Because each group works independently, JIT has had limited implementation globally.  

Those ports that do implement JIT, though, are seeing significant improvements in carbon emissions. In several pilots surrounding both container and bulk terminals, idle time was reduced significantly. One pilot saw a 20% reduction in idle time on Shell vessel departures. Another reduced Maersk vessel idle time by 36%. Operational efficiency and asset utilization then skyrocket port-side while carbon emissions decline.  

Future-Focused Measures to Solve Shipping’s Emissions Problem

In addition to IMO regulations and shifts in port efficiencies, several strategies can help curb emissions while ensuring vessels meet delivery mandates. Speed reductions and ship and engine designs that slow steaming could also contribute to decarbonization efforts. Reducing speed by just 10% across the global fleet would have a 23.3% impact on carbon emissions (based on 2010 numbers). Slowing some ships by just five knots—20%—could drive 50% cost savings on fuel while reducing carbon emissions, nitrogen oxides, black carbon, and nitrous oxide released into the environment.  

Similarly, weather routing, fuel switching, and specialized hull coatings could help curb emissions.  

The shipping industry is at a clear crossroad. Left unchecked, industry emissions are expected to grow to 130% of their 2008 levels over the next 25 years. While cost and speed to port will always be a concern, many organizations are leading the decarbonization charge. Maersk, for example, has set internal goals, aiming for net zero by 2040 and reducing emissions by half per container in the next seven years.  

Ideally, other industry leaders and ports will follow suit, with an eye on tightening internal guidelines and adhering to IMO and local mandates. With this added commitment, shipping and supply chain companies can both contribute to long-term environmental well-being while, at the same time, finding and activating new strategies to boost speed, efficiency, and customer satisfaction.  

Sign up for OL USA's weekly Industry Snapshot

* indicates required

Navigating Trade Policy Changes: The Crucial Role of 3PL Partnerships in the Shipping Industry

International trade operates within a complex web of policies and regulations, with trade policies significantly shaping the shipping industry. Changes in these policies can disrupt supply chains, increase costs, and impact shipping routes. In such a dynamic...

The US-UK Trade Relationship

The US-UK trade relationship is one of the largest in the world, with two-way trade between the countries valued at over $200 billion annually. The US is the UK’s largest single trading partner, while the UK is the seventh-largest trading partner of the US. Each...

The Future of Freight Forwarding

Every industry changes over time, and ours is no exception. The past few years have already reshaped the landscape in a ton of ways, as we’ve all had to overcome challenges nobody saw coming. We faced multiple crises, saw high peaks and low valleys, and the scrappiest...

Artificial Intelligence is Transforming Shipping and Logistics Operations

When we think of artificial intelligence, our minds often conjure up images of futuristic robots or complex algorithms. However, AI is more than just a sci-fi concept; it has rapidly made its way into various industries, revolutionizing the way we work. One area it’s...

Recent Wins and Challenges in the Ocean Freight Industry

COVID-19 hit the ocean freight industry hard. First, it was the disruptions, as global supply chains crashed under historical consumer demand and sky-high expectations aired with equally meteoric slowdowns and shutdowns.   But the rapid evolution of shipping and...

What’s Changing in the Shipping Industry?

The ocean freight industry is facing multiple challenges that are driving significant changes in the way carriers operate. From environmental concerns to digitization and automation, and increasing price competition, carriers must navigate a complex landscape to...

U.S. Imports Gained in March

Imports gained in March. What do experts say about the future?  Sales of imported products in the US in recent quarters have been declining, and businesses have been struggling to bounce back. Primarily, that decline has been driven by the huge volatility in consumer...

The Impact of Price Volatility

It’s been a perfect pricing storm for shipping and logistics companies. COVID-19 and subsequent rebounds, labor unrest, and supply chain disruptions have led to massive price volatility and wildly fluctuating shipping rates. For brands that rely on a steady supply...

Durable Goods Sales Are Still Down. Will They Bounce Back?

Products that people sell mainly fall into two categories: “durable” or “consumable.” They’re pretty much exactly what they sound like. Consumable goods are made, shipped, and sold to be used and discarded or recycled within a short period of time—things like paper...

Traditional Statistics as Market Indicators: Do they still work? 

The February 2023 jobs report showed some serious job growth, estimating that over 300,000 new jobs were added to the economy. During an average year, that would be tremendous; during a period of economic hardship, like the current global marketplace is still...