BAROMETER. Sea freight rates seem to have reached a low point on the main corridors. In 2024, the integration of maritime transport into the emissions trading system could change the rules of the game.
Highlights of July
- Flatlining freight rates
On the majority of major corridors, freight rates now seem to have bottomed out. Shipping companies are now hoping for a revival of orders that could result in an increase in prices in the 4th quarter, but for now, caution must be exercised, which means a permanent readjustment of services.
- IMO's Revised Greenhouse Gas Reduction Strategy
Member States of the International Maritime Organization (IMO) adopted on 7 July a revised strategy for the reduction of greenhouse gas (GHG) emissions from ships. This strategy includes “an enhanced common ambition to reach net-zero GHG emissions from international shipping close to 2050, a commitment to ensure an uptake of alternative zero and near-zero GHG fuels by 2030, as well as indicative checkpoints for 2030 and 2040.”
The pressure is mounting for more binding commitments. Camille Egloff, Senior Associate Director of Boston Consulting Group (BCG), has just presented a vast and brilliant study on the subject, of which here are some key figures:
- The cost of carbon neutrality in the maritime sector is estimated at $2.4 trillion over 30 years.
- The financing of these investments would represent 10 to 15% of the freight rates collected over the period.
- 82% of shippers know that they will have to pay an additional cost but do not plan to spend more than an additional 3% on their maritime transport purchase budget. The study points out that these figures are in positive evolution. Last year, 70% of shippers said they were willing to pay an additional cost, of only 1%.
- The BCG highlights 4 levers for change management: regulation, financing, consumer behaviour and employee behaviour.
The European Union is very active on these issues and as such has adopted a body of regulations based on the legislative package Fit for 55. Furthermore, the recent reform of the EU Emissions Trading System (ETS) resulted in the integration of maritime transport into the system from 2024. This financialization of emissions may obviously allow companies to find an additional source of revenue, but will it be enough to finance the accelerated technological evolution of their ships? This question remains unanswered.
- Fremantle Highway Fire
On the night of July 25-26, a car carrier, the Fremantle Highway, caught fire off the coast of the Netherlands. The ship had left the German port of Bremerhaven for Port Said in Egypt before returning to Singapore, its final destination. It was carrying 3,783 new cars, including 498 electric vehicles, according to the K Line company that chartered the ship. The causes of this fire, which killed one of the crew's sailors, have not yet been determined, but according to some accounts, one of the electric cars may have caused it. This was enough to revive discussions on strengthening regulations, while insurers have already sounded the alarm on the risks related to lithium-ion batteries.