Editorial: A Very Small Beginning

Chennai, 22 March 2023:

As part of a broader plan to have net-zero greenhouse gas emissions by 2040, shipping giant Denmark’s A.P. Moller–Maersk has ordered 19 ships it says will run on carbon-neutral methanol. CMA CGM, a French operator, has ordered 12, as has COSCO Shipping, the Chinese container ship company. But again, less than 50 ships out of almost 55,000 container ships worldwide is a very small beginning.

Virtual Arrival Policy (VAP) – Also known as just-in-time arrival policy in the shipping industry, which is identified by the International Maritime Organization (IMO) as an energy efficient operational measure

if a service delay at the discharge (next) port due to unavailability of berth and handling equipment is foreseen, the ship can reduce its sailing speed to save bunker fuel and avoid a long unproductive waiting time in port.

However, the pace of implementing VAP in shipping practice is slow. If during a vessel’s passage it becomes clear that a berth won’t be free upon arrival at port, the ship will simply slow down so it shows up when there’s room. Before launching a VA, one should decide whether it should be launched and what is the compensate rate for extra time.

When finishing a VA, bunker saving by taking into account speed reduction and weather/sea conditions should be calculated and might be further shared between two sides.

International cargo and container shipping is responsible for 3% of global greenhouse gas emissions.

Despite this, the industry has made few inroads toward decarbonization, a fact regularly attributed to the difficulty of finding alternative ways to power big ships.

The International Maritime Organization (IMO), the agency responsible for regulating shipping, has set ambitious goals, aiming to cut emissions by at least half before 2050 (using 2008 as a baseline).

But with trade swelling, maritime volumes are projected to triple by then. Indeed, the IMO concedes emissions could be 30% higher by 2050 if nothing is done. But in many ways, the industry is looking to rethink everything but its biggest, dirtiest problem of all.

Traditionally, when a shipowner is chartered to transport cargo, the contract requires the vessel to arrive at its destination as quickly as possible, regardless of traffic at the port. The customer will even agree to compensate the shipowner for waiting at anchorage, something known as demurrage.

Given the incentive, shipowners have traditionally hurried across oceans, burning more fuel at higher speeds only to wait upon reaching their destination.

According to a 2020 report, tankers and bulk carriers spend as much as 10% of their time waiting to get into a port. As they wait, they burn more fuel—but make more money.

Though this practice of “sail fast, then wait” is inherently wasteful, attempts to kill it have failed in part because of the complexities of reaching contract terms that satisfy all parties (and of course the profit incentive).

A seemingly similar strategy is the “just-in-time” or JIT arrival. Rather than a contract between one shipowner and a charterer, ports coordinate their resources with all incoming vessels to ensure they optimize speed to arrive when there’s an available berth.

High fuel costs have been making virtual and JIT arrivals more palatable to the shipping industry. But what’s really driving their appeal is a regulation the IMO has been enforcing since January, the Carbon Intensity Indicator, which requires shipowners to improve their vessels’ carbon emissions.

“These operational measures are relatively straightforward and can be implemented today without huge investments into technology and infrastructure,” said Minglee Hoe, a technical analyst with the IMO. “Even just small optimization on a large scale can result in big savings in emissions.”

A 2022 report concluded container ships can reduce fuel consumption and CO2 emissions by 14% per voyage if they optimize speed this way. Studies suggest that removing wait times at anchorage can cut global shipping emissions by around 20%.

But it’s doubtful virtual and JIT arrivals can be implemented at scale. With virtual arrivals, the problem is the number of parties involved with each vessel, where everyone has to agree to a contract that allows the ship to slow down.

While all of these ideas could bring emissions reductions, the inescapable truth—as is the case with air travel—is that nothing big will happen until fossil fuels are replaced as a means of propulsion.

The industry is beginning to explore various green alternatives, including methanol, hydrogen and ammonia, but they’re difficult to scale. Ships that operate on these fuels are more expensive because they require advanced engines and huge fuel tanks. Green fuels have a lower energy density than heavy fuel oil, and consequently more volume is needed to generate the same power.