Category Archives: Sustainability

No green shipping corridors without landside infrastructure

Green shipping corridors are the latest effort to create strategies for ESG compliance, particularly environmental, for the global shipping industry. These corridors are starting to show up in the planning stages. The intent is to create a connected system of ports that have all the improvements necessary to allow those ships using it to achieve a high level of compliance with green shipping standards.

That means the availability of fuels that meet international green standards such as those of IMO 2022, as well as green technology for loading and storage of containers and other products; and yard equipment that meets green operating standards.

Of these perhaps ensuring the availability of the fuels required is the most challenging. Availability alone is not enough; the price must be competitive, and sufficient storage must be in place; and long-term availability must be assured. The variety of fuels now under consideration for green ocean transport is a challenge. In addition to LSFO, some ships will soon require green methanol; major players such as Maersk and CMA-CGM are investing in methanol-powered ships. And recent studies have shown that fuels can burn greener, but the means of their production and storage have to be included in the fuel evaluation. An interesting study of this was made by Bureau Veritas (BV), a classification society, which described in detail the greenness from well to wake of a wide variety of power options from biodiesel and HS/LSFO to methanol and ammonia. Not all of these are easy to make and store.

So infrastructure will be incredibly important for the green corridors.

Some newly-announced corridors start from Singapore, which already has a large fuel infrastructure, and is a globally important financial center for dealing in fuels. That will be a tremendous advantage. European ports like Rotterdam and American ports like New York already have quite a bit of financial and storage infrastructure. These ports are already part of announced green corridors. However, even at these developed ports some of the alternative low emissions fuels are not available, nor is there the handling capability present.

The interview with the CEO of GCMD casts useful light on what’s needed.

Prof Lynn Loo, CEO of GCMD, in an interview at TOC Asia.

Much of the focus in decarbonising shipping is on the vessels, however, without developing landside infrastructure projects such as green corridors cannot take off.

Marcus Hand | Nov 30, 2022

No green shipping corridors without landside infrastructure

Counting the cost

Richard Butcher has written an interesting article on the large quantity of excess containers floating around the world today. Many of these containers are plugging up the yards of major and minor ports, causing longer delays in cargo handling. The space issue is important because with more space you can arrange inbound and outbound containers for easy loading and easy drayage to the customer or warehouse.

He makes a strong point— that containers are held as assets on the books of ocean carriers, and they don’t want to write off too many at a time. Obviously, the costs of holding them don’t outweigh the value of keeping them in the container liners’ eyes.

While managing the inventory of empty containers and aging them aggressively is a great idea, I don’t believe the container carriers have enough motivation to do much. It’s very true that we now have the software and technology for tracking and identifying these containers easily, and managing them one by one.

But empty containers are packaging materials, and already we have seen in domestic industries the close attention retailers and firms such as Amazon have paid to the waste caused by packaging. One of the reasons is the downstream cost of disposing of it.

Containers are also packaging waste, and should be if extra cost were added to storing them empty, it would induce carriers to cut down their stocks. We have evidence of this. Moves by ports to add detention costs to containers that sit idle for days have already induced carriers to move out their containers, even though in some cases the charges have never been enforced.

One difference between containers and the Amazon box you get with your shipment is that the container is reusable. Actually, the customer may reuse the Amazon box; I know I do. But that is relying on a chance event; after a while if I have nothing to ship, I may send it to our local recycling. Of course I pay for the recycling through my taxes, and Amazon doesn’t directly pay, nor do the charges show up in their books. This strategy is not effective for a major item like a container.

However, I propose that ports and yards, or perhaps political entities, such as the US or EU, or state governments, institute a recycling charge for containers left beyond the limit of days set. Containers left past that time would be carted off, cut up for scrap steel, and the costs of the removal and disposal be charged to the ocean carriers. I further propose that the scrap steel value be retained by the governments, perhaps for use in port and yard improvement projects; I don’t care much, since I don’t think it will be too big. It’s like condemning an unsightly property that is blighting a neighborhood.

This proposal would immediately place an accounting cost on ocean carriers. They would have to plan for how many containers would be lost through this process, and accrue the charges they are likely to receive for container disposal. This additional cost should certainly be enough to encourage efforts at tracking, removing containers from yards, and getting them back to exporting ports for reuse. Loss of the asset and paying for its loss will provide motivation for the ocean carriers to take care of their own waste.

If the US or EU would put such provisions into effect it might do the trick. These are the largest importing nations in the world, and they have the most empty containers around. But I think if they led, other nations around the world would follow.

China might not; it would put a dent in their container manufacturing business, which is mostly state-owned. But it would put a stop to the practice of buying new containers instead of recycling old ones, and charging the shipper for the new container.

Actually, since China is a major source of steel production, one could view the manufacture of containers as a form of ‘dumping’ at below the cost of manufacture. But trying to resolve this through the WTO would take forever, and have no certain outcome, like most of the past disputes on trade presented there.

Taxing the old empties and disposing of them would cut through the noise and begin placing the cost of the packaging and the ‘pollution’ it generates squarely on the ocean carriers. And it would force them to recognize the costs they are generating in their books, hurting their bottom lines.

Richard Butcher | Nov 14, 2022

Counting the cost

MSC: CII to soak up 7-10% of container fleet

The new measurements of carbon intensity for ships have gone into effect. The International Maritime Organization (IMO) created new regulations that went into effect on November 1, 2022. One of the measures is the Carbon Intensity Indicator (CII), intended for existing ships. It’s calculated as CO2 emitted per unit of ship cargo carrying capacity and nautical miles sailed, says DNV, classification society for maritime and an assurance and risk management expert (What is the CII?)

There are two different measures used in the calculation. One is the Annual Efficiency Ratio (AER), the annual emissions per ton mile, for segments where cargo is weight critical. The other is cgDist, emissions per gross ton-miles, for volume-critical cargo.

One of the criticisms of the measure is that it uses distance sailed rather than anything related to the amount of cargo. Actually, as of today, a similar rating using actual cargo carried, the EEOI, can only be reported on a voluntary basis, and may not be substituted for the CII. This has provoked some stern criticism from the large carriers that are heavily loaded, such as Maersk and MSC, though they will comply with the reporting regulation.

But these carriers and others have called for an early reform to the measure, to prevent a ship logging empty miles in order to improve its CII. Emissions are lower when running empty, since you’re not moving the weight of the cargo. So a tanker, for instance, can improve its CII ratio by deadheading back to its pickup point, rather than moving another cargo.

But these concerns are nits compared to the concept of rating all ships by their carbon emissions. These measures begin the process of making actual emissions available to the public, so shippers can make a choice to lower emissions.

One of the ways to reduce emissions is to sail more slowly, or slow steam. Gary Howard’s article quotes MSC, the large container line, that the new CII will cause a 7% to 10% loss of capacity due to slower steaming.

It’s an interesting number. It forces shippers to accept longer voyages before getting cargoes, a clear tradeoff between emissions and prompter delivery. For many customers this will not be an issue; they can alter resupply schedules if the reliability of getting it at the predicted time is high. However, reliability of shipments is another serious problem for container carriers— it’s down around 40% for most carriers. Most of the delay of recent shipments is due to blanked sailings, and to congestion loading and unloading in some major ports. Blanked sailings don’t affect the CII for ships. But congestion delays at ports cause fuel to be burned and push the CII up even if the ships don’t move many miles. the fuel is still used.

I think introducing the CII is a very good idea. True, it could be improved; but we have to start somewhere.

Gary Howard | Nov 01, 2022

MSC: CII to soak up 7-10% of container fleet