Regulation introduced to decarbonise shipping could lead to the demise of certain deepsea shipping sectors, delegates at the World Ports Conference in Hamburg were told this morning.
Tim Power, MD of Drewry Shipping Consultants, noted a recent prediction from class society DNV that the cost to operate container shipping services were expected to double, due to decarbonisation costs, and suggested that some scenarios could lead to a fundamental reworking of long-distance supply chains.
“Most of the views of the energy transition envision world maritime trade looking very much like it does now, but slightly different,” he told delegates.
“However, if shipping costs are sustained at higher levels, there is a chance that intercontinental shipping becomes too expensive for certain key commodities.
“If higher shipping costs come together with geopolitical tensions, whereby freedom of navigation is hampered – as we have seen in the Red Sea – we could be faced with a tipping point where it is just too expensive to ship goods around the world,” he said.
“And we cannot take freedom of navigation for granted; we have had a relatively open trading environment, but if the Strait of Hormuz – through which 30% of the world’s crude passes – was closed for an extended period, I don’t think the global economy would be able to function.”
Mr Power said the main problem with many of the alternative fuels being considered was lack of supply. He explained: “This is why Maersk has abandoned methanol and reverted to LNG.”
Of the prospective alternative fuel types – ammonia, methanol, LNG, hydrogen and biofuels – he suggested that only LNG had sufficient availability, but it would only serve the decarbonisation agenda if there wasn’t substantial methane slip.
“This means shipping faces increased regulatory risk. However well-intentioned regulations are, they have unintended consequences, such as the way the EU ETS has undermined transhipment services in EU Mediterranean ports.
“When you look at the fuels being presented as alternatives, the availability is simply not there,” he said, adding that the development of green shipping corridors remains viable for shorter trade routes.
“We think the Chinese coastal trade would be perfect for a ‘green corridor’ – the distance isn’t very big, the sailing time between the Bo Hai Bay and Guangzhou is four days and, with enough intermediate ports, you could even electrify the ships.
“Intra-Europe is another possibility – but not for deepsea shipping,” he added.