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Here’s How Climate Change Can Really Affect Shipping

Nov 30, 2018 10:33:11 AM / by Fauad Shariff

Climate change is a global concern that affects all aspects of life -- and logistics is no exception. Slowing or reversing its impact will require changes not just in logistics technology, but also in the whole way we conceive of transporting goods from one place to another. But it’s even more complex than that: shipping both affects and is affected by climate change.

Here are some of the ways climate change has impacted and will impact the shipping industry.


The impact: new trade lanes

Over the summer, Maersk sent a container vessel through the newly-expanded Northern Sea Route, an Arctic trade lane in Russia’s exclusive economic zone. The expansion of the route, which runs from Russia to the Bering Strait, is expected to reduce sea transit times between Asia and Europe drastically -- if it can be used broadly. Its expansion is attributed to melting arctic ice caps, allowing ships to make the journey without icebreakers. While the Maersk voyage was a preliminary test, the route’s viability is promising.

What it means

Melting polar ice is a scientifically-recognized symptom of climate change. As ice sheets break, new channels for sea-based traversal will open up in areas where that wasn’t previously possible. Around the Arctic Circle, this means shorter distances between major global ports. Shorter transit times means a higher volume of goods can be shipped in a given time frame. Development of previously impassable trade lanes is big news for the shipping industry and, based on current models of the impact of climate change on ice formations, many new sailing routes are expected to remain open for business for a long time.


The impact: Shifts in global policy

The United Nations (UN), the International Maritime Organization (IMO), many countries, and countless independent researchers and scientists have confirmed that climate change is real, and its fallout can be devastating. As a result, corrective action through agreements, legislation, and regulation have been recommended and implemented.

The most notable change for the shipping industry is the new sulfur cap introduced by the IMO. The cap, which will be enforced by 2020, requires ships to cut fuel sulfur content to 0.5% from 3.5%. The goal is to dramatically reduce the harmful emissions created by burning bunker fuel, a heavy viscous oil that powers container vessels.


What it means

The economic benefit of bunker fuel is that it’s relatively cheap because it doesn’t require as much refinement as other fuel types. But its environmental impact is massive: container ship emissions account for 3% of all greenhouse gas emissions in the world, and the IMO estimates that that number could jump to 20% by 2030 without regulation. The change in fuel refinement will almost certainly be enforced.

Imposing refining policies on fuel will likely increase costs, which could then raise the price of the fuel surcharge shippers will have to pay. The best path to reducing costs could be through technological developments that limit the dependency on expensive fuels, especially if the cheaper alternative is no longer allowed. Battery-powered ships, which have already been in development for years, may see their development speed up to meet demand for cheaper shipping alternatives. China is already testing a battery-powered container vessel, while Rolls Royce made battery-powered ship engines ready for order earlier this year.

And of course, all of these technological improvements require up-front capital investment. Although that may hurt the balance sheet in the short term, the hope is that the resulting changes will not only help fight climate change, but also make economic sense in the long run.


The impact: Resource conservation and capacity efficiency

Production and consumption of physical goods are resource-intensive, and necessarily produce a lot of waste. That waste has a noticeable impact on climate change. We often think of counteracting climate change with resource conservation. Examples include greater use of recyclable packaging and a general reduction of single-use resources.


What it means

Yes, the transport of physical goods is resource-intensive, but changes in resource management to slow the impact of climate change can’t just be limited to using less plastic. Capacity is a resource as well, one that, in the shipping industry, has a long way to go before it is allocated at maximum efficiency. Poor capacity management can be as damaging as using the wrong kind of packaging peanuts. Sending half-full ships to sea is neither economically friendly nor environmentally responsible.

Unsurprisingly, having adequate capacity supply in order to meet demand fluctuations is a requirement for logistics to have any positive effect on climate change. This concept is just as (if not more) important than the physical aspects of packaging, vessels, and fuel. Logistics needs to develop elasticity to remain sustainable in a business environment looking to reduce its climate impact.

And that must be enabled by new technology. Capacity is a resource, and if it’s not optimized, then all the changes to bubble wrap may prove to be a drop in the ocean.


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Topics: Shipping, Technology, Green shipping, Climate change

Written by Fauad Shariff

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