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Everyone who has spent time in or around a port city has seen one: a massive container ship, loaded high with containers bound for various markets near and far. Despite their visibility in port areas, most consumers (and regulators and environmentalists) demonstrate a lack of understanding of just how vital this industry is to our economy, environment, and goals to build a more just and sustainable world for all.
Today, the international shipping industry is responsible for the transport of around 90% of world trade, about 2.5% of global GHG emissions, and is the underpinning of our globalized economy. As companies companies continue to globalize and goods continue to need to be moved between various production centers and consumers, the growth of the container shipping industry is only expected to keep pace. Studies suggest that depending on future economic and energy developments, shipping emissions are set to increase between 50% and 250% by 2050. (EU Commission)
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These findings have been determined by regulators and shippers (those who own the cargo) to be incompatible with both their public and private-sector commitments during COP21 in Paris in 2015, and thus the spotlight has been shown squarely on this previously out-of-sight, out-of-mind industry to make sure to clean up their act. In 2015, the EU Commission and Parliament implemented their Monitoring, Reporting, and Verification program (EU MRV), requiring ship owners and operators to annually monitor, report and verify CO2 emissions for vessels larger than 5,000 gross tonnage (GT) calling at any EU and EFTA (Norway and Iceland) port beginning on January 1, 2018. Similarly, the IMO announced in 2018 that they would also be requiring the reporting of fuel consumption data for any vessels over 5,000 GT making international voyages beginning on January 1, 2019.
There are two pieces of good news here:
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First, it must be said that although regulation has been slow to catch-up to mandate a change in industry behavior, there is already a massive push for sustainability that is coming from within the marine cargo value-chain itself. Shippers – those companies like Nike, H&M, Ikea, Walmart, etc. who own the cargo and contract with carriers like Maersk, CMA CGM, Hapag-Lloyd, etc. who own the vessels – have become increasingly sophisticated when it comes to understanding their emissions from operations as a result of both public and shareholder pressures. Further, these companies are now finding themselves in need of better understanding their emissions from transportation in order to continue to build a more complete picture of their GHG footprint and many are now even integrating sustainability metrics as key decision factors in procurement decisions. These business leaders engage with each other through the Clean Cargo Working Group, a collaborative initiative supported by BSR that was the first ever body to develop a standardized reporting framework from marine cargo shipping built around enabling sustainability-focused business decision.
Second, advances in both energy and network technologies have opened the door for massive efficiency gains, poised to revolutionize the landscape of container shipping before 2050. Alternative fuels such as HVO, LNG, Hydrogen, and yes – even electrification – are already popping up in the fleet composition of global carriers. Further, IoT-sensor-based monitoring, block-chain-enabled port management, and AI-assisted vessel operation and terminal logistics projects are already operational in Hamburg, Los Angeles, Rotterdam and the new IBM-Maersk joint venture TradeLens. According to the IMO, these existing operational and technological advances have the ability to reduce sector emissions by over 75% if fully implemented, and are a crucial step towards ensuring the long-term sustainability of this industry.