The drought in Panama has reduced water in the canal. Panama has imposed draft limits on ships. Large container ships sometimes need to offload cargo on one side and have it sent by rail to the other side.
Waiting lines of ships have built on each side of the canal, waiting to traverse it. The delays can be up to 5 days at present, according to the data from eeSea, a forecasting and scheduling company based in Copenhagen, Denmark.
These delays are already causing ships to avoid the canal by using the Suez Canal or even sailing around the Cape of Good Hope to get to Asia. These are much longer routes, but do not have delays. If the issues continue, cargoes will begin to be diverted at the start. That will be bad news for East Coast US ports.
Update: the second article below indicates that ships waiting are in the hundreds, but not as high as some have reported. It’s still a big loss of business for the Panama Canal.
Ship It Zero is a collective of US environmental groups. It has designed a new scorecard, with separate metrics for shippers and ocean carriers, for decarbonization efforts.
Many shippers, such as Costco, scored very low. And shipping lines were also graded low. The exception was Scandinavian lines and shippers. Maersk was graded B; most would agree that Maersk has been trying very hard to make moves for decarbonization, and is probably the leading liner company in that regard. Ikea also got a good grade, still only a B+ at 89/100.
Naturally both shippers and carriers were outraged, and had all sorts of criticisms of the scorecard. Most of those mentioned in the second article were the usual protestations, which no longer carry much weight. It’s abundantly clear that most carriers and shippers are making only minimal changes in practice to decarbonize.
One of the silliest criticisms is to blame it on the IMO (International Maritime Organization), a UN consortium of countries making rules for shipping. With over 130 members, it’s a surprise they can agree on anything. To say we would do more if the rules were stricter is really nonsense. Companies could do something now.
Ship It Zero points out that few shippers are even quantifying Scope 3 emissions. These are downstream emissions created by the firm’s customers. You can read an extensive and defining discussion in the Supplement to the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard.
How could an ocean carrier account for the emissions created by its customers? According to the standard, it could look at how the containers or bulk cargoes were being handled and transported ashore once landed. Are the drayage firms using EVs? What is the power source of the trains? How about storage and pipeline operation, is there leakage, or is excessive carbon or greenhouse gas emission occurring from pumping mechanisms? The same would apply to delivery to the ship.
For instance, Scope 3 emissions would include the GHG emissions treated by the firms producing and selling the fuel for ships. Green fuel sources would get higher scores than conventionally produced bunker fuel. Similarly if LNG were used as fuel, Scope 3 methane emissions from the bunkering sites should be considered, as well as the Scope 1 emissions onboard from burning the fuel.
Retailers can evaluate the Scope 3 GHG emissions created by their suppliers. They can also estimate the Scope 3 carbon emissions from use of the products they sell. Ikea for instance has invested in reducing the weight and materials used in packaging products to lower the carbon impact. Other firms could do the analysis with their products.
So I’m with Ship It Zero when it comes to the score. We can easily debate whether the score is considering all the factors. But there is no question that both shippers and carriers can and should do more, and stop simply greenwashing emissions.
Flag state selection by shipowners is becoming influenced to a great degree by geopolitical concerns. A sign of this change is Panama’s loss of the largest flag state title.
One of the factors is certainly Panama’s recent attempt to improve the quality of the shipping registered under its flag. The Panama Registry purged a large amount of substandard tonnage from its rolls. Much of this tonnage was ships engaged in dark or gray trade, skirting Ukraine War sanctions on Russia, making unsafe ship-to-ship transfers, and hiding locations from the AIS system.
This action is coupled with Panama’s alliance with the US Coast Guard standards for shipping safety. Ships registered in Panama will need to comply with the rather strict safety rules the US uses. These are signs that Panama wants to be considered a premier place to register a ship with no substandard tonnage.
I believe the shift to Liberia and other flag states is largely determined by geopolitics. The records reviewed here, compiled by Clarksons, show also that smaller states like Malta and Cyprus, which are right in the line of fire of the Ukraine War’s shipping, have also suffered.
It is really interesting that Germany has risen markedly in the rankings. Perhaps this reflects renewed interest in German shipping. Germany has been spending money on shipping recently, deepening the Rhine to reach Hamburg, and also aiding inland water routes to reduce truck traffic and save fuel for the tonnage of cargo moved.
The nice figure below shows the rankings today of the flag states.
Supply Chain and Logistics 