Gearing Up by Slowing Down

Authors

• Raj Sapru

  Former Director, Advisory Services, BSR

The international container shipping industry is gearing up to take on a new business environment in which social and environmental performance will play a key role. In our latest industry report, which is based on interviews with more than 30 global customers and key stakeholders, the message is clear: The container shipping industry must reduce its environmental footprint.

Some shipping companies are already riding this trend: The global shipping giant Maersk Line recently decided to voluntarily switch to lower sulfur fuels while in the port of Hong Kong. With more than 850 port calls in Hong Kong every year, Maersk Line estimates this will reduce their sulfur (SOx) and particulate emissions by at least 80 percent.

Maersk Line’s decision is important. In particular because, while ocean shipping is much more efficient on a fuel per ton of goods basis than other modes (trains, planes trucks), these climate-positive benefits are undermined by shipping’s other impacts, such as SOx, nitrogen oxide, and particulate emissions. And with all modes of transportation converging at ports, communities in the surrounding areas receive a disproportionately high concentration of emissions, which are linked to higher incidence of respiratory and other health problems.

While the Hong Kong announcement is the first voluntary fuel switch in Asia, it will not be the last. As we note in our report, the movement of the world’s economic gravity center towards Asia will increase harbor congestion rapidly with significant social, health, and economic costs to follow. Regulation is therefore unlikely to be far away—as we've seen in many European and American coastlines where ships are already required to emit less sulfur.

Other important trends in our report address carbon emissions and the changing attitudes of customers. Stakeholder pressure—and the economic crisis—has brought carbon emissions center stage and convinced nearly half of the global ocean container shipping fleet to “slow steam”—a practice of slowing down vessel speeds to achieve exponential fuel savings. With a clear impact on carbon emissions and lower fuel costs, slow steam is seen as a win-win for carriers and customers.

While so far customers have done little to encourage the container shipping industry to address all of its environmental impacts, this will as both customers and carriers become better at measuring, monitoring, and mitigating the impacts from container shipping. In BSR’s Clean Cargo Working Group, we’ve seen positive collaboration between buyers and carriers in creating reporting standards and new levels of transparency for environmental impacts.

The question now is how will this transparency translate into actions, commitments, and sustained commitment from buyers. Will customers speed up their carbon commitment so carriers don’t have to slow down theirs?