Ninety percent of all our goods are transported by ship, as Rose George described two years ago in ‘Ninety Percent of Everything’, a book that provides a unique glimpse into the modern-day shipping sector. According to George, who sailed on the biggest container ship in the world for her book, the shipping sector has been largely invisible to us. Major ports rarely form part of the inhabited world and are often difficult to access. Invisible means also: no need to innovate in technology in order to reduce emissions.
A scientific study commissioned by the European Parliament warns that if growth remains unchecked the sector could be responsible for 17 percent of worldwide emissions by 2050. Despite this, like aviation, international shipping has been scrubbed from the Paris Agreement (2015) on climate change. One of the arguments was that the International Maritime Organization (IMO) had already successfully agreed measures to reduce CO2 emissions. These measures are expected to deliver a 50 percent reduction in CO2 emissions by 2050. This creates the impression that the shipping sector is ‘moving in the right direction’.
Lack of innovation speed
But disappointingly, although airfreight has been actively innovating in recent years, total greenhouse emissions from shipping have doubled since 1990. Until recently, ships sailed from one port to the next at top speed, resulting in huge emissions. It has only been since the financial crisis that cargo ships started cutting their speed. This tamed overcapacity to some degree and an added bonus was that fuel costs and CO2 emissions were reduced. But unlike airfreight, the next generation of ships and engines is non-existent.
There are various reasons for the lack of innovation. Since 2008, both the container and bulk shipping sector has been pervaded by malaise. The Baltic Dry Index, an economic indicator for shipping rates, has plummeted since 2008. Galen Hon, who manages Shipping Operations for American organization Carbon War Room, emphasizes that the malaise in the shipping sector is affective the pace of innovation. “One of the problems is the slow speed of innovation for cargo vessels. The useful life of ships means that it could take another 25 years before all vessels currently operating are replaced.”
An alternative solution to replacement exists for the problem of old, polluting technologies. According to a recent study by the IMO, the existing fleet is capable of operating 40-60 percent more efficiently, if changes are implemented such as the use of LNG as fuel. Out of the estimated 90,000 cargo ships sailing the world’s oceans, approximately 600 have now been converted. This allows them to profit from discounts on port authority fees in a small number of world sea ports. You would think that this would encourage the shipping sector to work towards improving efficiency, but that is not the case. As soon as ships arrive in international waters, they sail the longest part of their route burning fuel oil. The shipping sector has only increased in size in recent years and there is an enormous buffer for responding to changing market conditions. Added to this: the shipping sector does not pay any tax on fuel. Fuel costs account for fifty percent of operational costs for shipping.
Overcapacity is another obstacle
Now that the crisis has hit and overcapacity is rearing its head, the growth in the number of ships is declining: figures are the lowest they have been in a decade. Basically, whether replacement or conversion is involved, in both cases increasing sustainability is a slow process. This is also visible in ESI certification for ships, created five years ago by the International Association for Ports and Harbors (IAPH). The index is an indicator for the environmental performance of shipping with regard to air pollution (NOx and SOx) and CO2. Presently, over 3,600 ships have an ESI score – four percent of the worldwide fleet of 89,464 vessels. The most important innovations in the shipping sector are therefore restricted to the land-based logistics chain. One example is the new APMT terminal at Maasvlakte 2 that claims its operations are carbon neutral. All vehicles and cranes are powered electrically and the terminal buys in green power. However, the remainder of the chain – the largest part – remains unchanged.
Aviation: front runner in innovation
How does this differ from air freight? Fuel costs for air cargo companies also forms a significant percentage of operational costs: approximately 30 percent. And like shipping, the aviation sector pays no tax on fuel. The aviation sector has had to deal with significantly sharper competition on prices with marginal profits for a longer period, however. It has had to face huge changes over the past decade, among others through globalization (new airports) and the arrival of low-cost carriers.
The aviation sector has another handicap, which hardly affects the shipping sector. Airports are always located near densely populated areas and planes are audible and visible. To address this, Schiphol works with a ‘noise budget’: the maximum noise production permitted. If airports and aviation companies want to earn more, then they will have to build quieter plants that accommodate more passengers. Bart Kuipers, seaports expert at Erasmus University Rotterdam, endorses this: “Generally speaking, you could say that the shipping sector started innovating later than the aviation sector. Aviation has been working with quieter and more efficient engines and lighter construction materials for years.
Fragmented environmental policies
Many people are disappointed that both the aviation and shipping sectors have been excluded from the climate agreement. The European shipping companies, associated under the ECSA, are also disheartened and are calling for unified efforts to reduce CO2 emissions through the International Maritime Organization (IMO). This can only be accomplished by international agreements and the chance of this happening is smaller without a climate treaty in the background. As long as it lacks financial incentives and the benefits are visible while the disadvantages remain invisible, not much is expected to take place in the shipping sector. Until that time, it would be useful to take a look at Sea Blind – the documentary by Bernice Notenboom that had its premiere at the beginning of this year.