Sea Archives | Page 48 of 71

Sea freight ECO initiatives and their impact on shippers

Sep 27, 2023 | Environment, Sea

Just months after IMO 2023 launched, the International Maritime Organisation raised its carbon emissions targets, which will require more carrier investment and with the EU rolling out its emissions trading scheme from next year, shipping lines will be looking to recover a lot of costs from shippers.

The revised IMO greenhouse gas strategy, adopted this summer, bought forward the target to reach net-zero GHG emissions “close to 2050” and will be achieved through mandatory reduction in carbon emissions for both new and existing ships, with clean or low-carbon fuel alternatives, and pressure growing to impose a carbon levy on international shipping, to fund climate mitigation.

The EU Emissions Trading System (ETS) is effective from the 1st January 2024, which means container shipping lines will need to purchase emission allowances while investing in alternative fuels. And with the lines looking at a potential ETS bill of €1bn in the first year, they will be looking to pass on the increased costs.

The European Union’s Monitoring, Reporting and Verification (EU MRV) regulation requires all ships exceeding 5,000 GT to collect and report data on CO2 emissions released to and from EU and EEA ports and will serve as the basis for shipping’s inclusion in the EU emissions trading system (ETS) from the 1st January 2024.

ETS is a ‘cap and trade’ scheme where a limit (the cap) is placed on the amount to emit specified pollutants and obliges individual shipping lines to hold an allowance for each tonne of CO2 or other carbon equivalent gases they emit.

There will be no set price list for these emission allowances – instead, the price will be defined by supply and demand on the market.

EU ETS is determined on vessels rather than cargo: docked at an EU port 100%; travelling between EU countries 100%; and between an EU port and a non-EU port 50%.

The UK has notified that they will be introducing a similar system, which would have an impact on UK domestic routes and UK-EU routes.

Total annual EU ETS-applicable emissions for the maritime industry amounted to 83.4m metric tonnes of CO2 equivalent which, at the current market value of €90 per emissions allowance (EUA), shipping emissions carried a total worth of €7.5bn for the year.

Taking into account the ETS phase-in period covering 40% of emissions in 2024, 70% in 2025 and 100% in 2026, the shipping industry could be liable for €3.1bn in 2024, €5.7bn in 2025 and €8.4bn in 2026. With container shipping potentially accounting for 30% of overall emissions, despite carrying less than 20% of seaborne trade (source: OECD).

Maersk has calculated potential Q1 2024 emissions surcharge (in EUR) per FFE @ 70 (Far East to North Europe) and 81 (North Europe to USA).

We are following ETS developments, the carriers adoption of cleaner fuel technology and any other initiatives which may offer cost and efficiency savings for our shippers.

Our MVT Eco module measures and monitors the emissions of every shipment, by every mode, with offsetting alternatives, so our customers can work towards carbon neutrality in their global supply chain.

The MVT Eco module is under continuous development, which could include adaptation to measure liabilities under the new EU ETS regime, if this is something we think may be useful to our customers.

To request an MVT Eco demo or to discuss any of the issues raised here, please EMAIL our CCO Andrew Smith.

Metro’s RoRo alternative is cheaper, quicker and greener

Sep 27, 2023 | Automotive, Sea

With a 3-4 month delay for car and truck RoRo (PCTC/PCC) services, automotive clients have looked to container shipping to provide an effective alternative transport solution, that also turns out to be much better for the environment.

As the automotive industry emerged from the Covid pandemic, growing demand has exposed and exacerbated many of the underlying issues that the industry faced, particularly supply chain and capacity constraints.

Globally, sales have increased massively, rising 10% in 2021, with Chinese finished vehicle exports alone exceeding 3 million units in 2022, and the industry on track to overtake 2019 levels by the end of 2023.

However, the reduced global RoRo fleet does not have the capacity to meet this demand and carriers have been hesitant to order new ships, owing to uncertainty and stricter emissions standards that could render a ship obsolete before it is even delivered.

There are only 11 vessels on order for delivery in 2023 and even if all the RoRo vessels due for completion this year are delivered, the global fleet still could not even satisfy the demand for volume shipments out of China.

At the start of 2023 there was a 3-4 month delay in shipping RoRo on the busiest routes, so with RoRo unable to sustain their finished vehicle supply chain and a full order book, our automotive clients have looked to Metro, to use our container shipping expertise to provide an alternative transport solution.

Specially designed racking has massively simplified the securing of cars in containers, reducing time and expense, opening this cost-effective mode up to the mass movement of finished automobiles, including the most-expensive marques.

The largest Pure Car Carriers (PCC) can carry 6,000 cars, distributed across 13 decks, while the largest container ship can carry 25,000, which offers maximum economies of scale.

Containers are loaded on top of each other, so cars are effectively stacked, while on RoRo vessels there’s lots of empty space, with cars on separate decks and the total CO2 omitted on a container vessel is divided by a higher number than that of a RoRo vessel.

Using our MVT ECO CO2 tracking module to look at one indicative trade lane (Antwerp - Sydney) shows that container shipping reduces comparable emissions by 69%. In this example of a live shipment, that is a saving of 1,716 tonnes of CO2.

1,200 cars by RoRo: 2,484 tonnes CO2
1,200 cars by Container: 768 tonnes CO2

The critical unit is the gCO2/tonne-km which is much higher on RoRo than containers.

Our MVT Eco module has measured over 100,000 shipments, with a total CO2 equivalent of more than 300,000 tonnes in 2023.

Using reporting methodology that is in conformance with the Global Logistics Emissions Council (GLEC), we create low-carbon multi-modal supply chains that blend air, road, sea, inland waterways and rail, together with NGV and electric vehicles.

The MVT ECO module is available free-of-charge to customers on their MVT dashboard. To request a demo or discuss your requirements, please EMAIL Elliot Carlile.

Metro is exporting finished vehicles in containers, with significantly lower port to port freight costs, for a number of UK manufacturers. EMAIL Ian Tubbs to learn more.

Carriers blank Golden Week sailings

Sep 27, 2023 | China, Sea, Supply Chain

The cancellation of multiple October sailings from Asia to Europe is an attempt by the carriers to push capacity down and raise rates, but if they fail, they may not have another opportunity to significantly raise prices before Chinese New Year, next February.

Container shipping lines across the three alliances have announced additional blank sailings ex Asia to North Europe and the Mediterranean, around the Chinese Golden Week holiday in the first week of October, and through to the end of the month.

According to data from Sea-Intelligence, the capacity operated on the Asia-Europe trade in September is 10% higher than last year and on the Asia-Med service it is 27% more and while the carriers are planning significant capacity cuts after Golden Week, we are wary of unannounced blank sailings in the coming weeks.

Overall 14% of scheduled sailings have been cancelled from mid-September to mid-October and this we expect are announcements to counter balance the lower demand during China’s Golden Week holiday.

The current blanking represents Ocean Alliance (5%) and THE Alliance (7%) with MSC blanking SWAN service weeks 38-43 removing 45k TEU of capacity.

MSC has radically cut capacity on the Mediterranean lane between weeks 40 and 43, but it is not clear whether HMM will blank any sailings of its Asia, India to Mediterranean standalone loop that launched in August.

The aggressive blanking announced by all three alliances means it may be challenging to find space for exports from China to Europe next month, which is why we recommend that you share shipping forecasts as early as possible, so we can reserve the space you need.

There will also be the knock-on effect of limited export sailings from North Europe during November and December, which underlines again the importance of shipping forecasts.

Carriers will, of course, be looking to raise rates on backhaul trades, as prices for oil have surged to $90 a barrel, with December Brent Crude now priced at around $95, driven by OPEC’s supply cuts, which have been extended to the end of the year.

The price of Rotterdam-sourced industry-standard low-sulphur fuel (VLSFO) jumped on Friday by another $8 per ton to $643 and has now increased by 22% since the end of June.

We are watching closely…

Whatever the market challenges are, our sea freight team keep our customers’ cargo moving, finding capacity and alternative services in the event of unforeseen blankings.

Providing us with regular forecasting, helps us to understand critical dates and intended volumes, so that we can secure the right amount of capacity to keep your supply chains running.

If you have any questions or concerns about your Asia supply chain or the developments outlined here, please EMAIL our Chief Commercial Officer, Andy Smith.

Risk of Panama Canal disruption rising

Sep 13, 2023 | Sea, Supply Chain, United States

Unpredictable weather patterns and drought for most of 2023 have driven the Panama Canal Authority to impose numerous draft restrictions, reducing vessel transit numbers, and cutting vessel booking slots for lock usage, due to low water levels.

The Panama Canal consists of the man-made lakes of Miraflores and Gatun, with the panamax locks taking vessels with up to a 12.5 m draft and the neo-panamax locks for vessels up to a 15.2 m draft.

The dual system is run on fresh water, with only the new system able to reuse some of the water used to transit the vessels, and with the lowest rainfall this century, the Panama Canal Authority’s limits on daily transit and vessel draft restrictions will stay in place for the rest of the year and throughout 2024.

While the ongoing restrictions have not impacted shippers yet, we are monitoring the canal situation closely, because extended delays for goods coming into the US for the coming autumn and winter seasons, could impact capacity, schedules and prices.

The backlog of ships trying to enter the Panama Canal is growing, with current estimates putting the number at over 200 vessels. Containerships are the canal’s biggest users and are usually given preferential status, which means most have avoided the worst of the disruption, but neo-Panamax ships are waiting up to 18 days for northward transits, with similar delays for southbound transits.

Despite the wait, delays have not translated into noticeably late arrivals at US East and Gulf coast ports and with vessel capacity utilisation currently low, there has been capacity to absorb, and it will probably be a while yet before any delays are seen at the ports.

The number of daily transits through the canal has been capped at 32, compared with the 34 to 42 it can handle at peak capacity, in a bid to conserve water and some carriers are re-routing to avoid the backlog.

Ordinarily, neo-Panamax vessels move through the canal at an average 50 feet of draft but this has now been reduced to 44 feet to cope with the drought conditions, which means large container ships with good utilisation may have to offload containers, to make the vessel lighter and match the lower water draught.

In view of the draft restriction, some carriers have reduced maximum payloads, while others are still accepting heavyweight cargo and carriers have not yet been aggressive in imposing Panama Canal surcharges, though there is a suspicion that many have already rolled them into the ocean freight rate.

If you have any concerns about the issues raised in this article, we can review your situation and explain your options, including alternative carriers, ports and routes.

With a collaborative approach, we will provide the most efficient and cost-effective solutions, to ensure that your supply chain expectations are met.