Environment Archives | Page 10 of 10

Carbon targets may add more cost for shippers

Mar 29, 2023 | Environment, MVT

Environmental efficiency, more ambitious carbon emission targets, the possible introduction of a carbon levy and the EU’s emissions trading scheme all require investment by the container shipping lines’ and they will want to pass that investment and increased fuel cost on.

Just weeks after IMO 2023 launched, there are suggestions that the International Maritime Organisation may increase the current objective of a 50% reduction in carbon emissions by 2050 to 100%, requiring more carrier investment and the introduction of a carbon levy, and with the EU rolling out its emissions trading scheme from next year, the combination is likely to drive up sustainable fuel costs.

To achieve the new target, carriers will need to invest heavily in environmentally friendly vessels and fuel ‘scrubbing’ refits and while costs related to decarbonisation are difficult to estimate, forecasts related to the EU Emissions Trading System (ETS) suggest that on the major Asia-North Europe route, bunker costs and emission-related taxes could increase from $312 per 40ft container for very low-sulphur fuel oil today to $568, or about $458/40ft using methanol, a low-carbon fuel.

The Loadstar reports that methanol-powered ships could have a cost advantage over conventional power of $110/40ft as early as 2026, due to the carbon charges - with the caveat that figures would largely depend on market conditions and bunker fuel price over time.

James Hookham, director of the Global Shippers’ Forum, told The Loadstar that discussions for market-based measures represented a clear risk that shipping lines would pass on any tax directly to shippers through BAF surcharges, as the introduction of low-sulphur fuel regulation three years ago saw the costs borne by shippers and not by carriers.

CLECAT, the European association of freight forwarders, believe that it is for the lines to pay for the carbon they use not their customers. The shippers will pay more, as the cost of shipping will increase, but the type of fuel used by the carrier is their choice, so any carbon tax should be borne by the line.

However, according to the World Shipping Council, which represents the shipping lines, new regulations should apply equally to all, and that there needs to be a standard agreement on what constitutes a ‘green fuel’, which includes life cycle emissions, and market-based measures which provide a cost incentive for the lines to use low-carbon fuels.

There will be many factors that influence the cost impact of the carriers’ environmental investments, the adoption of cleaner fuel and the various carbon levies and we will continue to do everything we can to mitigate their impact on our customers.

The ‘free of charge’ Eco module, that sits in our MVT supply chain platform, monitors the emissions of every shipment through our network, by every mode, globally.

The module is under continuous development, with regular updates, including distance calculators, that can be adapted to measure liabilities under the new EU ETS regime.

To request a demo or discuss your requirements, please EMAIL Simon George, who can outline our ECO strategies and offset projects.

EU carbon tax on shipping is additional cost to IMO2023

Feb 2, 2023 | Environment, Sea

Ships emit around one billion tonnes of greenhouse gases every year, or 3% of global emissions and despite IMO 2023 aiming to reduce carbon emissions from international shipping by 40% by 2030 and 70% by 2050, the EU is including maritime emissions in its emissions trading scheme (ETS).

The EU plan will include shipping emissions in the bloc’s ETS, with a three phase-in from next year and means shipowners, regardless of the flag they fly, will have to buy carbon allowances known as EU Allowance contracts (EUAs), to cover all emissions during voyages in the EU and half of those generated by international voyages that start or finish at an EU port.

Vessel operators will need to surrender EUAs in 2025 for 40% of their emissions in 2024, in 2026 for 70% of their emissions in 2025, and in 2027 for all of their emissions in 2026, based on the preliminary agreement. Full coverage will continue thereafter.

In contrast to the EU’s plan, the UK government is currently proposing only targeting domestic shipping, but there are suggestions that not including international shipping in the UK’s Emissions Trading Scheme will be in breach of its legally binding climate obligations.

Experts suggest that EU ETS carbon prices of around $95 per tonne of CO2 would not make a significant impact in closing the price gap between fossil fuels and zero-carbon fuels for shipping, with a recent report by the University College London’s (UCL) suggesting that an average carbon price of just under $200 per tonne of CO2 is needed to fully decarbonise the shipping industry by 2050, according to the analysis.

“Initially, the ETS is not going to create a hugely impactful [carbon] price, but it will generate a significant amount of revenue,” said Dr Alison Shaw, research fellow at University Maritime Advisory Services and co-author of the report.

Based on the scenarios outlined in the UMAS report, the ETS would raise $5 billion in 2030 at a price of around 50 euros ($56) per tonne of carbon. If this price increased to 103 euros per tonne of carbon ($116) by 2030, the total revenue generated from shipping would be $9 billion, according to Shaw.

The inclusion of shipping in the EU ETS will drive up operating costs for container shipping lines and those costs will inevitably be passed onto shippers, in the form of surcharges.

The first customer circulars on the EU ETS issue from the carriers were in the third quarter of 2022, when the industry was expecting that emissions trading for shipping would come as early as 2023, but due to difficult negotiations at EU level, the plan has been postponed by a year, which is a relief for everyone involved.

The first calculations on cost effects estimate the cost of pollution rights for transports from the Far East to Northern Europe is 170 euros/FEU, and 99 euros/FEU in the opposite direction.

For shipments from European North Range ports to the US East Coast the estimate is 184 euros/FEU, with the costs for reefer transports significantly higher due to the additional energy requirements at 276 euros/FEU from Northern Europe to the US East Coast.

Shipowners, unsurprisingly, strongly oppose the EU measure, which they believe puts the EU in conflict with the IMO 2023 initiative and may lead shipping lines to consider shipping hubs outside the EU to lower their costs.

They could, for example, finish voyages in the Mediterranean (or maybe even the UK) and transfer containers to smaller feeder vessels, with a lower carbon output.

Its seems unavoidable that the shipping lines will not pass on these additional charges in coming years and that additional cost will be added as a result of the ETS scheme in Europe, and by default the UK.

There will be many factors that influence the costs accrued by EU ETS and we will be doing everything we can to mitigate its impact on our customers.

We will follow carriers adoption of cleaner fuel technology, the economies of scale offered by the largest vessels, the benefits of different routing options, intermodal opportunities and anything else which may provide cost and efficiency savings.

The ‘free of charge’ Eco module, that sits in our MVT supply chain platform, monitors the energy emissions, emission costs and CO2 equivalent emissions, of our customer’s consignments, by every mode.

The module is under continuous development, with regular updates, including distance calculators, that can be adapted to measure liabilities under the new EU ETS regime. When it is rolled out.

To request a demo or discuss your requirements, please EMAIL Simon George, who can outline our ECO strategies and offset projects.

Air France and KLM sign inaugural environmental deal with Metro

Jan 5, 2023 | Air, Environment, Metro

Metro is the first of the airlines’ customers in the United Kingdom to invest in their joint, innovative Sustainable Aviation Fuel (SAF) programme, confirming our shared ambition to contribute to the development of reduced greenhouse gases within the aviation logistics sector.

(Pictured above are Grant Liddell (left), Metro's managing director and Arturo Marte (right), cargo director, Air France KLM Martinair Cargo.jpg

Metro has already made its head office operations carbon-neutral and is committed to extending this zero-emission strategy as far down customers’ supply chains as possible, which is why we have become the first forwarder to join the Air France KLM Martinair Cargo (AFKLMP Cargo) SAF programme and invest in sustainable aviation fuel.

IATA member airlines and the wider aviation freight industry are collectively committed to making flying net zero by 2050 and Sustainable Aviation Fuel (SAF), which was first flown on a commercial flight by KLM in 2011, and has been identified as one of the key elements in helping achieve this goal.

Aviation biofuels are produced from plant sources, waste oils, solid biomass, or from synthetic biology and can lower CO2 emissions by up to 98% compared to conventional jet fuel.

Arturo Marte, cargo director, Air France KLM Martinair Cargo said. “I’m pleased to welcome Metro as our first UK customer to join our Sustainable Aviation Programme and helping us raise awareness in our industry.”

Grant Liddell, Metro’s managing director. "We are proud to be partnered with Air France KLM Martinair Cargo and take this collaborative approach directly with the airline.”

“Air France and KLM have been pioneering SAF since 2009, but it is still a pioneering technology and Metro’s participation in the AFKLMP programme will help fund the research and development, which can increase production and make SAF available in greater quantities and in more locations.”

“Although it is currently early in the switch to full SAF on cargo flights, this will gather pace over the coming years, and we are already promoting the benefit in greenhouse gas reductions to our customers that are using time-critical modes across the industry."

The signing ceremony took place at Metro’s head office in Birmingham, with officials from both companies attending, including Arturo Marte, cargo director for the United Kingdom & Ireland at Air France KLM Martinair Cargo, and Grant Liddell, managing director of Metro.

The same toolkit we use to measure, reporting and offset our emissions, to achieve carbon neutrality, is available ‘free of charge’ to our customers.

Part of our MVT supply chain platform, the ECO module monitors the energy emissions, emission costs and CO2 equivalent emissions, of customers’ consignments, by every mode.

Reports and key eco statistics related to their movements, allow them to see which areas will benefit most from emissions offsetting and where efforts can have the most impact.

To request a demo or discuss your requirements, please contact Simon George, who can outline our proven carbon reduction strategies and the availability of offset projects.

Carrier IMO 2023 fears may be misplaced

Dec 14, 2022 | Environment, IMO 2023, Sea

In just over two weeks, IMO 2023 will require containers ships to comply with new environmental efficiency and carbon intensity regulations, which older ships will have difficulty complying with and may prompt early scrapping, removing vast swathes of capacity from the market.

According to one of the world’s largest container shipping lines, 5 to 15% of additional capacity will be required as a result of IMO 2023 rules, while Hapag-Lloyd puts it at 5 to 10%. In effect a drop in current capacity, which could go a long way to shoring up rates with this added dilemma to the infrastructure of the worlds shipping fleet.

Beginning in January, the new IMO rules will require individual ship’s to measure and report its carbon impact, using a complex set of rules, which will effectively grade ships A through to E, with vessels that receive a grade of A, B, or C deemed to be compliant within that year.

Vessels graded D have a three-year grace period to achieve compliance, while those graded E will have one year to do so and, critically, the grading criteria will get increasingly tougher every year. That is just based on the current global legislation which could be further fettled and change.

Which means that a vessel which obtains a B grade in 2023, could score a D or even E in subsequent years, if the vessel’s environmental efficiency was not enhanced.

If the owner cannot make vessel’s rated D or E compliant, or fails to maintain and enhance compliant vessels ongoing, those vessels will have to be removed from service and likely scrapped. Removing capacity.

With container freight rates falling in recent months, the container shipping lines appear to be in for a tough year ahead, but limited shipping capacity growth is a likely by-product of IMO 2023 regulations that lead to vessel scrapping or speed reduction, that effectively removes capacity from supply.

Heavy investment in new container ships would be expected to add supply side pressure, but what seems to be massive capacity growth coming in 2023 and 2024 is going to be severely tempered both by scrapping and the new environmental regulations. A new market dynamic that may not have been considered or factored in by many outside of the shipping industry.

IMO 2023’s stricter emission limits, will further reduce sailing speed from 2024 and the impact may become significant in scrap activities from 2025 onwards with favourable age profile. Fourteen vessels were available for scrap on Monday. From an industry which only scrapped eleven in the last two years. That’s a huge impact already being directly implemented within the industry.

An unintended consequence of IMO 2023 might incentivise higher demurrage costs to reduce vessel time at berth and release tied-up capacity. As an observation.

While a significant drop in freight rates and with high bunker (fuel) prices has already reduced sailing speed, it is likely that IMO 2023 will prevent potential speed recovery, keeping available capacity subdued against the general market expectation of growth.

We share the most important IMO 2023 detail and developments, so that you are informed and prepared to make critical decisions.

Metro are huge advocates in achieving the reduction of further environmental damage caused by global logistics and supply chains. Please contact us to assist you with your own objectives and goals to ensure that you are both compliant and delivering a cleaner and clearer environmental strategy. Every action will contribute and we are able to proactively assist and deliver greener policies and ambitions.

Please contact Elliot Carlile, or Andy Smith to discuss your supply chain and the potential impact of IMO 2023. A greener environment and restriction on greenhouse gas emissions is always welcome – but it will come with an impact which may be invisible to many outside of the industry, for the short term.