The maritime industry is particularly sensitive to geopolitical events, and the past few years have certainly brought fresh challenges. The Covid pandemic and the war in Ukraine have obviously brought huge disruption to demand and supply chains, while the deepening climate crisis is driving new technologies and different approaches to shipping.
Here is a look at the current situation, and what the major trends and challenges are for the maritime industry and the container shipping sector in particular.
In common with all industries, the shipping sector is actively seeking greener ways to operate in an effort to reduce its carbon footprint. It is estimated that the global shipping trade is responsible for 3% of the world’s carbon emissions, an equivalent of 940 million tonnes of carbon dioxide a year.
The International Maritime Organisation (IMO) has set a target to reduce Co2 emissions by 50% by the year 2050. In the UK and also around the world, this has led to a series of innovations with different propulsion methods and alternative fuel systems.
Many shipping companies now use hybrid fuel systems, such as biofuel, hydrogen, or electric batteries, alongside traditional fossil fuels. There have recently been innovations in harnessing wind power using smart aerofoils that automatically adjust to the wind speed and direction, and even vessels that hover above the surface of the water.
There has been an upward trend in the size of container ships over the past decade, and this has resulted in the ‘megaship’ of 20,000 TEU and over. The world’s largest container ship is currently the MSC Loreto, which has a capacity of 24,346 TEU (20ft containers) and is 400 metres long.
Larger vessels can reduce shipping costs, but there has to be enough demand to ensure that they operate at full capacity. They are high risk investments that are costly to insure, although they may reduce the number of journeys required and therefore save on fuel costs and greenhouse gas emissions.
However, currently only a small proportion of ports around the world have the infrastructure to accommodate such large ships. They can also cause congestion in narrow shipping lanes.
The trend for larger ships and the downturn in trade over the past six months has led to higher scrappage rates of older vessels. This is to be expected as shipping companies are under pressure to invest in more eco-friendly and efficient fleets.
Many ships were continuing to operate past their life expectancy as demand peaked in the immediate aftermath of the Covid pandemic. However, a downturn in the world economy has led to a fall in demand and shipping companies have had to lower their rates to remain competitive.
There are however concerns as to how end of life vessels are being scrapped, with multiple reports of substandard breaking yards in Asia, with poor health and safety conditions and few environmental regulations.
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