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.
Building on the idea that maritime and rail generate less carbon than trucks, the blueprint for decarbonization suggests shifting transport to those means.
That’s easier said than done. The EU has been working hard for some years on a modal shift to river and rail transport for cargo inside Europe. They have actually had some success— a few percent improvement.
But the geography of the EU is a lot more conducive to waterborne transport of cargoes. There there are quite a few navigable rivers going inland from the coast where the ports are. Many EU ports have set up ‘inland ports’, large distribution areas inland that often can be reached by barge, to offload container cargoes and get them ready for distribution. This foresighted policy offers many advantages, both from an ESG standpoint, and for reducing congestion at the ocean ports. But the US has only one large river, the Mississippi, navigable for a long distance into the heartland, in a land mass much larger. Smaller rivers on the East Coast don’t go as far.
However, particularly on the Mississippi, there is a lot of potential for more barge traffic. I also suspect that maritime transport could be used along the coasts for some kinds of moves, particularly movements of products like refinery outputs, that might travel by truck otherwise.
So there is rail. The EU has a problem with rail; most rail is state-owned, and is oriented around passenger travel, not freight. And rail lines in Europe are not all compatible; not only are their practices disparate, but the physical equipment isn’t even compatible at some borders. That adds transfer delays as well as simple handling delays to transport. The EU will have a much harder and more costly time increasing rail cargo percentages.
In the US, we have seven Class I rail firms, all private, that crisscross the country and offer cargo service. Rail can provide the backbone of distribution from ports to the hinterland. But will it? Rail firms are all private, not public; they are currently focused on their most profitable segments, and have engaged in rampant cost-cutting. Sometimes, it’s referred to as PSR (precision scheduled railroading), but quite often it is more closely allied with old-fashioned cuts driven by short-term accounting. The recent reductions in staffing are claimed to result from PSR, but in fact, simply serve to reduce operating costs and improve operating ratios. They may result in reduced safety, as some of the claims in front of the STB put forward. And the popular step of running really long trains to save labor costs reduces flexibility and adjustability of rail traffic to support less predictable loads. These moves by private firms greatly increase the complexity of carrying out the proposed modal shift in the US.
But certainly a modal shift will reduce carbon output. And there is actually a lot that a government push could accomplish. Some of these things are:
Infrastructure improvements for inland maritime operations;
Streamlining projects for on-dock rail at ports large and small;
Inducing rail lines to improve their rail yards and lines to support a more flexible cargo mix and customer set;
Driving rail common carrier rules that will induce or force rail lines to accommodate cargoes from a broader set of customers, even though the traffic will not be as profitable as long steady coal or grain trains.
Keeping pressure on the rail lines to serve a broad base of customers, particularly intermodal (container on flat car or trailer on flat car). A move to transport this type of cargo long distances to inland container terminals would help with emissions and get trucks off the major interstates.
Supporting inland terminals and distribution points that are rail connected.
There are probably more, and Pete Buttigieg and the President’s commission on supply chain probably are thinking of them.
The biggest problem is how to get private industry and investors on board to finance and support the projects.
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.
Supply Chain and Logistics 