Beyond the supply chain issues currently dominating the headlines, it is worth taking into consideration the future direction of the ship-owning and operating sector in light of the International Maritime Organization’s (IMO) target of reducing the level of carbon intensity by 40 percent between 2008 and 2030 and the even more ambitious goal of 70 percent reduction compared to 2008 by 2050.
There appears to be no obvious solution for the global maritime industry to hit these targets. A typical container vessel has a lifespan of at least 20 years, and given the current high capital cost of large newbuild container ships — OOCL, for example, recently paid $158 million per vessel for an order of 16,000-TEU ships — it might be closer to 25 years.
The world fleet of vessels with over 10,000 TEU of capacity stands at 618 ships, and there are now a further 271 on order, a staggering 44 percent of the current fleet. Among these 889 ships, only 15 vessels in the existing fleet and 64 of the new ships on order can run on liquefied natural gas (LNG).
Simply stated, the industry has a long way to go. The current global fleet, including the ships on order, will still be largely operational by 2050. The alternative fuels on offer, such as ammonia, hydrogen, or battery power, are not yet ready for universal adoption, and it’s a long row to hoe to get there. Slow steaming is a short-term solution, but that will ultimately put further stress on schedules and vessel operation at a time when supply chains are already severely disrupted, making it an unlikely solution.
New regulations will be expensive, and ultimately the costs will be pushed to the shipper, so there is a large upcoming price to pay. It’s going to take a lot of green to go green!