How Extended Sea Routes are Impacting Emissions for Large Shippers

Recent shifts in global shipping routes are significantly impacting carbon emissions, with the United Nations Conference on Trade and Development (UNCTAD) emphasizing the urgent need for the shipping industry to address its carbon footprint.

For large shippers, understanding these changes is crucial as longer detours, like avoiding the Suez Canal for the Cape of Good Hope, not only affect delivery times but also lead to a substantial increase in emissions.

A detailed analysis of how these alterations influence operational strategies and environmental responsibilities are essential for shippers aiming to optimize both efficiency and sustainability.

Trends, Technologies, and Challenges

Governments and organizations around the world are increasingly concerned about carbon footprints and their impact on climate change. The acknowledgment of climate change as a pressing global issue has prompted a growing awareness of the need to reduce greenhouse gas emissions, including those generated by various industries such as shipping.  

In September 2023, in its Review of Maritime Transport, UNCTAD emphasized the importance of addressing the carbon footprint in the shipping industry. UNCTAD highlighted that the shipping industry is a significant contributor to global carbon emissions and underscored the need to transition to cleaner energy sources and technologies.

 

Red Sea Crisis: Increase in CO2 emissions

Overall, there is a growing recognition that addressing carbon footprints is not only essential for mitigating the impacts of climate change but also for promoting long-term sustainability and resilience in economies and societies worldwide.  

The recent events in the Red Sea and Gulf of Aden are concerning, not only for the safety of lives and vessels but also for their implications on reducing container shipping's carbon footprint.

With vessels opting to circumvent the Suez Canal in favor of longer journeys around the Cape of Good Hope, considerable distance and time are added to voyages. This alteration in shipping patterns impacts delivery schedules and results in vessels spending more time at higher speeds, leading to increased emissions and ultimately resulting in a larger carbon footprint for each voyage.  

Sea-Intelligence, a Denmark-based container shipping research and supply chain advisory firm, conducted an analysis to quantify the impact of various factors on the increase in CO2 emissions.  

For the distance factor, emissions rise proportionally with longer sailing distances, maintaining a 1:1 ratio, whereas, for the speed factor, emissions will escalate beyond the 1:1 ratio, as fuel consumption doesn't increase linearly with sailing speed. According to their fuel consumption model, boosting speed by 1 knot from 16 to 17 knots results in a 14% increase in emissions.

Sea-Intelligence also points out that shipping lines may shift from larger vessels to smaller ones that are less fuel-efficient. Some of these smaller vessels experience a significant surge in CO2 emissions, amounting to a 141% increase compared to conventional Ultra-Large Container Vessels (ULCVs). In this analysis shown in the chart above, combining all three components could result in CO2 emissions spikes of 260% and 354% from Asia to North Europe and the Mediterranean, respectively. 

 

Analyzing Shifts in Ship Emissions

Vesselbot, a tech startup based in Greece, has developed a digital system designed to measure vessel emissions. In their January 2024 report, they analyzed the maritime emissions from 2021 to 2023. The report scrutinized emissions across different vessel groups, flag states, regions, and trade lanes to discern trends and their ramifications for the industry. One of their key observations is that in 2023, emissions across all vessel groups demonstrated a decrease compared to the levels observed in 2021 and 2022.

Contrary to the Sea-Intelligence report, the data provided by VesselBot highlights the lack of economies of scale for emissions, with larger vessels consistently emitting higher levels of CO2 per TEU shipped compared to smaller vessels. 

Balancing Efficiency with Sustainability

It is encouraging to observe reductions in emissions over time, but we need to keep in mind that 2023 was characterized by low demand and low freight rates. Lower demand and rates may lead to increased pressure on vessel operators to maximize efficiency and minimize expenses, potentially resulting in operational decisions that prioritize short-term financial gains over long-term sustainability goals.

Additionally, reduced demand and rates may also impact investment decisions related to green technologies and fuel-efficient vessels. Shipping companies may be less inclined to invest in expensive, environmentally friendly technologies or upgrades during periods of financial uncertainty.

On the positive side, the fact that vessel types showed reductions in emissions over time, despite the challenging market conditions, suggests that efforts to implement greener technologies or operational efficiencies may be gaining traction regardless of demand fluctuations.

It's also important to consider that strong demand in preceding years prompted orders for newbuildings. Newbuild vessels typically incorporate the latest technological advancements and design features aimed at improving fuel efficiency and reducing emissions.  

Prioritizing Safety Amid Environmental Goals

The uncertainty and risks associated with navigating through conflict zones in the Red Sea region may deter shipping companies from utilizing more fuel-efficient practices or investing in emission-reduction technologies. Instead, the primary focus may shift towards ensuring the safety and security of vessels and crew, potentially undermining efforts to prioritize environmental sustainability.   

Despite challenges, it is essential for stakeholders in the maritime industry, including governments, shipping companies, and international organizations, to remain committed to reducing CO2 emissions. This may involve exploring alternative routes, optimizing vessel operations, and accelerating the adoption of cleaner fuels and technologies. 

Key Takeaway

For large shippers, the adaptation to changing maritime routes presents a dual challenge of maintaining operational efficiency and meeting environmental responsibilities.

As the industry navigates through these turbulent waters, it becomes crucial to invest in advanced technologies and cleaner fuels to mitigate the heightened emissions caused by longer journeys. Embracing these innovations will not only help in complying with global emission standards but also ensure long-term sustainability in a competitive market, underscoring the importance of strategic flexibility and environmental stewardship in modern shipping practices.