Shipping Industry Overhaul – Cleaning Up the Maritime Industry
Shipping Industry
The Shipping Industry Faces a Major Environmental Overhaul
It has been estimated that nearly 90% of the goods and services transported around the planet are moved via ocean freight. China is currently the United State’s largest trade partner, with a total of $635.4 billion exchanged for both imports and exports in 2017. Most cargo transported across the sea is containerized in 8ft, 20ft or 40ft metal containers. The impact of international container shipping cannot be overstated, and the US economy relies heavily on overseas manufacturing for goods and services. The average consumer has become accustomed to the low prices that outsourced manufacturing allows, and according to economist, historian and journalist, Marc Levinson, this global exchange “Has made the world smaller and the world economy bigger.” A good thing potentially, when you consider international relations, but in terms of the environmental impact of the shipping industry, a major overhaul seems to be in order.
The Main Problem – Fuel
When it comes to air pollution and the release of particulate matter into the atmosphere, the shipping industry is a key contender. Cargo ships generally use four types of fuel – heavy fuel oil (HFO), low sulfur fuel oil (LSFO), diesel oil, and liquid natural gas (LNG). Heavy fuel oil is a residue from crude oil refining. As a commodified byproduct, it is highly affordable, but in terms of the environmental impact, “bunker fuel,” as it is called, is anything but green. High in sulfur content, the use of heavy fuel oil – the predominant fuel source within the shipping industry – has been recognized as having a detrimental impact on public health for communities located in and around shipyards. To minimize air pollution, such as in Port Houston, Texas, cargo ships are required to switch from heavy fuel oil to low sulfur fuel oil. That is a step in the right direction, but with coastal weather patterns, air pollution generated hundreds of miles offshore can still travel inland. Air pollution has been linked to stroke, heart disease, lung cancer and both chronic and acute respiratory disorders such as asthma.
The Pending Solution – Low Sulfur Fuel
Spurred by environmental concerns, the global maritime industry is poised on the brink of a revolutionary overhaul. The International Maritime Organization (IMO) is instituting a mandate stating that by 2020, all ships hauling cargo must make the transition to fuel with no more than 0.5% sulfur content. What is referred to as the “Sulfur Cap” will dramatically reduce current sulfur fuel levels from 3.5% to even lower than the industry average of 2.7%. In an article published by the Yale School of Forestry and Environmental Studies, it is suggested that “Public health experts estimate that once the 2020 sulfur cap takes effect, it would prevent roughly 150,000 premature deaths and 7.6 million childhood asthma cases globally each year.” Says James Corbett, professor of Marine Science and Policy at the University of Delaware, “There are very few examples of air quality regulations that have as broad a reach of benefits as this one. This is going to benefit children and adults in coastal communities located along major shipping lanes — not only where ships are delivering cargo.”
The Impact on Carbon Emissions
In an effort to decrease the shipping industry’s contribution to carbon emissions, the IMO’s Marine Environment Protection Committee (MEPC), in conjunction with efforts proposed by the United Nations (UN) are setting out to cut greenhouse gas (GHG) emissions from international shipping “As a matter of urgency… phasing them out (entirely) as soon as possible.” They aim to reduce the overall total of greenhouse gas emissions globally by a minimum of 50% by 2050, as well as exploring possibilities for a complete GHG phase out. The IMO’s efforts are also in alignment with the sustainable development goals of the Paris Climate Agreement.
The Pending Sulfur Cap
For most shipping operations, switching to a low sulfur fuel isn’t all that easy, and it certainly isn’t cost effective. Low sulfur fuels are more expensive and are less widely available than bunker fuel. This reality has shipping companies and manufacturers worried about resulting shortages in fuel and the inevitable rise in cargo rates. Increased cargo rates travel upwards to the consumer, along with the cost of raw materials, processing and manufacturing. One way that companies are working to be in compliance with these pending regulations is to install exhaust scrubbing systems that remove sulphur oxides from a ship’s engine. Some are also switching to liquified natural gas. The International Maritime Organization does not have the authority or regulate the sulfur cap. Enforcement of the proposed cap falls to individual countries, states and individual ports to enforce. It remains unclear as to how inspection and monitoring will be managed to maintain compliance, but ships that are out of compliance may incur steep fines and suffer damage to their organization’s reputation as well as potential insurance repercussions.
The Bottom Line
The shipping industry shows no sign of slowing down, and according to UN trade statistics, cargo ships transported 10.3 billion metric tons of imports and exports in 2016 – a 300% increase from cargo shipping volumes of the 1970’s. It will be interesting to see how organizations maneuver the environmental pressures of cleaning up their fuel patterns, as the shipping industry lags behind only the energy sector in creating the highest percentage of airborne contaminants in the form of carbon, sulfur and nitrogen oxides. Many countries are leading the charge in reducing high levels of greenhouse gases and harmful airborne contaminants resulting from the shipping industry by switching to low sulfur or ultra-low sulfur fuels when approaching heavily populated coastal regions. Referred to as sulphur emissions control areas (SECAs), in the European Union, the Baltic Sea and the North Sea (including the English Channel) are now designated SECAs, and in the US, such regions are called North American Emissions Control Areas (NA-ECA) and include ports across California from the San Francisco Bay, to San Diego and Los Angeles.
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