Category Archives: Shipping

Japan and California ink green shipping corridor agreement

Another Green Corridor is in the making.

California and Japan signed a letter of intent (LOI) to establish a green corridor, and also implement some zero-emission infrastructure. There will also be some emphasis on zero-emission fuel infrastructure and offshore wind development. The LOI is backed by two memoranda of understanding (MOU), between the Polr of Los Angeles and the Port of Tokyo and Port of Yokohama.

Some environmental pressure groups such as Pacific Environment applaud the move. They are calling for mandatory enforcement of the green corridors with aggressive interim goals to aim at 100% zero-carbon shipping by 2040.

Green Corridors are an excellent way to get cooperation on emissions and climate initiatives between ports, governments, and carriers.

Michele Labrut, Marcus Hand | Mar 17, 2023

Japan and California ink green shipping corridor agreement

Up to €1.5m per year: understanding the implications of EU ETS

The European Union (EU) has proposed an Emissions Trading Scheme (ETS) including maritime emissions. The hope is to reduce maritime pollution from greenhouse gas emissions by forcing emitters to buy emission certificates. The current cost of the certificates is about 90 Euros; futures can be tracked here. The first monitoring year will be 2024, and will cover:

  • all emissions from vessels above 5000 GT calling at EU ports for voyages within the EU
  • 50% of emissions from voyages that start or end outside the EU
  • all emissions when berthed at an EU location.

The rules will apply to smaller vessels in the following years. The basis for the requirement will be an EU Monitor, Report and Verify (MRV) analysis.

The emissions certificates are going to make ocean shipping more expensive. That’s exactly what is intended. The idea is to internalize the cost of pollution rather than have it be a factor exogenous (in economic terms) to the negotiated rates for shipping. Essentially shippers and carriers will no longer be able to ignore their emissions; they will need to pay enough to cover the cost of the certificates, or use clean ships.

Some carriers have already announced plans to pass the charges through to the shippers. Whatever happens, the emissions cost, measured by the certificate value, will be added to the cost of the product. This should influence shipping markets to reduce emissions. It’s an important stem, and one virtually all economists support.

One can argue whether the price is fair, or enough to completely cover the cost. And one can argue that passing through the cost to shippers stokes inflation. And there’s a question whether a charterer or owner should pay for the certificate, since the charterer has control of the factors on voyages that generate the emissions. But these are smaller points compared to getting action on reducing emissions. And now competition will be extended to reduce emissions for voyages, since ships that don’t pollute will be favored with lower costs.

The Managing Director of software company zero44 interviewed here, Frederike Hesse, says that the cost could well be substantial in the next few years. So shipowners had better prepare. Her company seems to be supplying software for charter planning. Emissions will play a definite role in charter planning and pricing for ships visiting the EU.

Friederike Hesse | Mar 02, 2023

Up to €1.5m per year: understanding the implications of EU ETS

Consolidated Chassis Management Prepares for SACP 3.0 Launch with New Office

Consolidated Chassis Management (CCM), a leading cooperative chassis pool manager, announced it has opened a new, expanded office in Savannah, GA, to accommodate the growing South Atlantic Chassis Pool (SACP) 3.0 team. Launching in October 2023, SACP 3.0 will offer a new chassis provisioning solution that utilizes a single provider pool model.

Chassis pools have made a big difference in the availability of chassis for containers. Pooling chassis is a standard way of covering a varying demand with a lower investment in inventory. If the maintenance is performed to a good standard, the pools will be popular with drivers, because of the standardized agreements for pickup and dropoff.

According to CCM’s CEO Mike Wilson, “SACP 3.0 will revolutionize chassis provisioning in the United States.As we get closer to launch, we are building our teams, expanding our office space and enhancing CIT, our fleet management platform — all to provide the support necessary to ensure SACP 3.0 reaches its full potential.”

With more than 75 sites across Alabama, Florida, Georgia, North Carolina, and South Carolina, SACP 3.0 will continue to be the nation’s largest fully interoperable chassis pool. It will increase and upgrade the existing South Atlantic Chassis Pool with new and refurbished intermodal chassis from major regional port and key intermodal inland hubs.

The South Atlantic region has been a productive location for a chassis pool, with the serious expansion of service to these areas by major container shipping lines. Pools have also played a role on the West Coast at Los Angeles/Long Beach.

SACP 3.0 will transition from the current multi-contributor chassis pool to a single provider utility
type pool, and it will offer over 50,000 chassis to truckers, beneficial cargo owners, ocean
carriers and other port users. The pool is being established cooperatively by The Ocean Carrier
Equipment Management Association (OCEMA), Georgia Ports Authority (GPA), Jacksonville
Port Authority (JaxPort), North Carolina State Ports Authority (NC Ports) and Consolidated
Chassis Management LLC (CCM).

“We are committed to ensuring SACP delivers on its promise, so we will continue to build in our
team and make investments that deepen our presence in the Southeast. The new office is not
only larger, but it is also more conveniently located, bringing us closer to GPA as well as other
members of the supply chain community, including steamship lines and BCO’s,” said Mr.

Some years ago the ocean carriers decided to divest themselves of chassis in the US. They claimed to do this because of American laws that made chassis owners responsible for damage from accidents where they were found to participate in the fault. These liability laws were seen as threats to the liner firms. So CCM was created. As you can see, while independent, it’s related to the Ocean Carrier Equipment Management Association, which is closely allied to the ocean carriers. It’s a liability shifting scheme.

The fact is, ocean carriers must be able to provide chassis for their customers. In the US, it’s not a good business decision for truckers and trucking firms to own their chassis. Customers have different needs, and the chassis has to be chosen for the specific load. A study showed that with economic conditions in the US, a trucker would need to have 90% confidence that customers would want a chassis, to afford owning it. The fraction is nowhere near that.

So the pools and CCA help fulfill that function. It’s a good strategy, and results in considerable savings. I’m glad to see that it is taking off in the Southland of the US.

Liability is also related to maintenance. If maintenance is high quality, a trucker will pick up a good chassis that is not likely to fail on her route. The trucker must bear the immediate expense of a repair on the route, which delays her cash flow. The pool offers a chance for high-quality maintenance. In California, the pools established near LA/Long Beach were required to hire union mechanics, which may have improved the quality of the maintenance. With the CCA pools there is a specific firm to hold responsible for maintaining the chassis.