Ocean shipping amounts to 80% of the global physical trade, and contributes to 2% of the total CO2 emissions from fuel consumption every year. Fuel costs account for half of the total maritime operating costs, making the sector the single largest stakeholder concerned with fuel price inflation, which has been seeing a steady rise from last July.
The situation behind the fuel price rise is quite relatable to trickle down economics – while the shipping industry is in the direct line of fire, the end consumers would eventually feel the heat as a large part of what they consume has been on a deck at one point – finished product or otherwise.
The International Maritime Organization (IMO) had introduced Energy Efficiency Design Index (EEDI) in 2013, as a measure to reduce the CO2 emissions from the industry. Though shipping remains the most efficient form of commercial transport for every tonne of cargo being hauled, the industry is so massive that it produces more than a billion tonnes of CO2 every year. Wilting to global concerns, the IMO had instructed shipping lines to reduce their CO2 emissions gradually over a space of a decade, by mandating a 1% annual improvement in the efficiency of fleets between 2015 to 2025.
On top of this arrives the new global sulfur cap regulation that comes into effect in 2020. As per the standard, fleets would be required to limit the sulfur content in their fuel to 0.5% which could have far-reaching consequences, as this move would force fleets to seek better alternatives for fuels.