Friday, April 17, 2015

Supply Chain Report Indicates Container Shipping Emissions Down - As Are Freight Rates

Ocean Cargo Environmental Footprint is Smaller but Elsewhere All is Not Well
Shipping News Feature

WORLDWIDE – As one of the most respected names in the field of transport analysis, a sector where many strive, often unsuccessfully, to analyse and predict past and future trends, this month’s Logistics Executive Briefing for Importers and Exporters from Drewry Supply Chain Advisors on emissions from the global container fleet has deeply impressed the World Shipping Council (WSC), the liner shipping association which represents around 90% of the ocean freight carriers.

Using its proprietary databases and the results of other consultancy work to take a look at how container carriers are performing when it comes to reducing their carbon footprint, Drewry has concluded that ‘overall, international shipping is playing its part to protect the environment and the measures taken so far by both government and the private sector seem to have been very effective’, a statement that will be welcomed by those involved in the global trade at a time when emissions from all transport sources are under the microscope.

The Drewry briefing memo is available here and it points out the three vital factors which are influencing the lowering of noxious emissions: new regulations by individual ports to restrict pollution (and the establishment of Emission Control Areas (ECA) by the IMO – the International Maritime Organization); the continuing trend toward building ever larger container ships fitted with the latest technologies; and slow steaming, thus cutting fuel consumption, now an almost universal practice. Chris Koch, WSC President and CEO commented:

“The World Shipping Council and its member companies are pleased that Drewry decided to pursue this independent assessment. Ocean carriers have a large incentive to reduce carbon emissions, which are directly tied to the amount of fuel consumed. Reducing fuel consumption reduces operating costs and reduces carbon emissions, which is good both for the environment and the bottom line.

“Ocean carriers’ liner services must endeavour to meet the transportation and service needs of the world’s importers and exporters. The Drewry Supply Chain Advisors report shows that the container shipping industry is providing those services while improving its energy efficiency, cutting its fuel consumption, and reducing its carbon emissions.”

From an environmental point of view the only real concern about the ever increasing size of the box vessels is whether they remain more efficient considering the biggest factor in their raison d’être is economy of scale. Half fill a giant ship with containers and is it really more environmentally friendly than a vessel half the size which travels at the same speed? Only individual voyage assessment can truly determine the answer.

This month we have seen box rates plummet to new recent lows causing the suspension of sailings amongst the new alliance partners who simply cannot afford to send the new 13,000 plus TEU vessels on voyages whilst carrying payloads below an economical threshold. Shippers will be delighted by the sharp fall in freight rates, less happy about the delays to their goods.

With slow steaming already now the norm, and causing the inevitable delays in the arrival of goods, we are entering yet another phase of the eternal merry go round of rates versus service. The incoming giant vessels are being trailed by a plethora of newbuilds, many even larger than those we have witnessed coming off the blocks over the past couple of years. The inevitable pattern is likely to mean less frequent service schedules, but with fierce competition for traffic, even between alliance partners, keeping rates artificially low.

The result of this somewhat confusing picture is that whilst the lines continue to work toward a more acceptable environmental face for ocean shipping we may yet see some of the new orders to Far Eastern shipyards for the new generation of containerships cancelled, something other worldwide builders are familiar with, and possibly vessels laid up, an historical problem last solved by the adoption of slow steaming, now a universal practice and therefore unavailable if once again the world’s ocean fleet exceeds the traffic it is required to transport.

All of course depends as ever on the quantity and quality of international trade, something the analysts always try to predict but often with widely differing opinions.