Seaborne Trade and Decarbonisation
by Richard Scott FICS, member of London & South East Branch Committee, 12 November 2021
Amid the climate change COP26 conference deliberations, the main focus from a shipping angle was the aim of reducing or eliminating carbon emissions from the world fleet of merchant ships over the next three decades. But what are the implications of the wider global decarbonisation target for the shipping industry’s activity?
During the years ahead towards 2050 “seaborne trade volumes are likely to shrink for some of the shipping industry’s largest cargo categories including crude oil, oil products, coal, and natural gas”. Adding to these reductions “that could also be the case for some of the largest container vessels, albeit for different reasons”.
This comment is made in the latest (November) edition of the Shipping Market Review published last week by Danish Ship Finance and available free on their website (as detailed below). To clarify the reasons for a negative view of these trades, DSF explain that decarbonisation could change the demand outlook for “vessels currently serving coal-fired blast furnaces for steel production, coal- or gas-fired cement kilns, ethylene plants, chemical plants and aluminium production plants”.
While broad prospects for trends in some cargo flows - impacted by sustained pressure to use cleaner energy sources - may appear fairly clear, however, the precise pace of change over many years ahead is not so obvious. The DSF analysts, perhaps wisely, do not try to predict at what rate changes in this extended weakening process may actually happen.
Currently, in direct contrast to expectations for the longer term future, two of the commodities – coal and gas - are seeing increased demand and global seaborne trade volumes. Energy demand revival after the downturn resulting from the pandemic is providing a boost which, for coal, may be of limited duration.
The DSF report contains valuable analysis of many aspects of the global shipping scene - demand, supply, and market changes in the container ship, bulk carrier, crude tanker, products tanker, LPG carrier and shipbuilding sectors. Each section contains an analysis of recent trends and what influenced these, accompanied by thoughts on what could happen in the next twelve to eighteen months.
Shipping Market Review, available at:
(Danish Ship Finance, November 2021 and previous issues)