What are the shipping industry trends to look out for in 2024?
Jan 02, 2024 Richard Johnson-Brown, marine and shipping partner at Keystone Law The EU’s Emission’s Trading System for shipping, the resurgence of piracy, and electronic trade documentation are all trends to keep a watchful eye on in the new year according to Keystone Law. Richard Johnson-Brown, marine and shipping partner at Keystone Law | Jan 02, 2024 The shipping industry has faced multiple challenges over the past year with global conflict (with the added cost and supply chain disruption that this causes), a greater push for sustainability, and a gradual (and sceptical) adoption of technological advancements. These will continue to gather pace and affect the shipping industry in 2024. EU Emissions Trading System From 1 January 2024, ship operators will need to purchase carbon credits on the EU Emissions Trading System (EU ETS), where the ship calls in at least one EU port. To start with, operators will need to buy credits reflecting 40% of the ship’s emissions on the voyage, but this percentage will increase year on year until 2027, when operators will in some cases need to buy credits reflecting 100% of the ship’s emissions on the voyage. Operators will also have to monitor and report on their ships’ emissions. Related: Chartering under EU ETS demands full emissions visibility In charterparties, owners are responsible for purchasing these credits, but they may effectively pass the cost of these on to charterers as they arise from the charterers’ employment of the ship. Disputes may arise between owners and charterers under time charterparties where the number and cost of the credits required for a voyage allegedly appear from not only charterers’ employment of the ship, but also from the poor condition of the ship – these may factor, for example, in off-hire and underperformance disputes (assuming also that the carbon credits purchased reflect the ship’s actual emissions). The UK Electronic Trade Documents Act 2023 Another modernising and decarbonising measure is the adoption of electronic bills of lading. The UK Electronic Trade Documents Act 2023 seeks to pave the way for a transition from the use of paper bills of lading (in addition to other related shipping documents) to electronic ones. There is, unfortunately, a chicken and the egg scenario. Given the risk of hacking and other related cybercrimes, the Act requires a “reliable system” to be in place to ensure the security of the e-bill. A number of e-bill platforms/systems have existed for some time but what constitutes a “reliable system” according to the Act will be clarified by the English courts in due course as and when disputes arise about the reliability of any such systems. This will take time and the interim uncertainty may well slow the adoption of e-bills – although generally operators may not oppose the transition to e-bills as a matter of principle, certain operators may prefer to wait until the parameters of a “reliable system” have been defined in more detail by the courts and legal frameworks for e-bills are codified in other jurisdictions. However, if systems are not tried and tested by operators, they cannot be tested by the courts. Resurgence of piracy A challenge that has arisen towards the end of 2023 and will continue into 2024 will be the resurgence of piracy in the Red Sea. Already, many well-known operators are choosing to sail around the Cape of Good Hope instead of sailing through the Red Sea and the Suez Canal (adding significant time and cost to the voyage). Whilst the safety of crews should be of paramount importance when making routing decisions, given the added time and cost of re-routing ships, disputes may arise between owners and charterers about when (and with what added protection/assistance) it may be safe to sail through the region. Shipping companies need to be prepared and have frameworks in place to navigate these challenges in 2024 but also to take advantage of opportunities that are brought by advancing technology. Copyright © 2023. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.
Maersk extends Red Sea transit pause
Maersk announced it will extend a 48 hour pause to transits through the Red Sea and Gulf of Aden until further notice following the attack on one of its ships over the weekend. Gary Howard | Jan 02, 2024 “An investigation into the incident is ongoing and we will continue to pause all cargo movement through the area while we further assess the constantly evolving situation. In cases where it makes most sense for our customers, vessels will be rerouted and continue their journey around the Cape of Good Hope,” the January 2 statement said. Over 20 attacks on shipping have been carried out since late November, with attempted hijacking from small boats, missile attacks, and drone attacks all reported by merchant vessels in an area stretching from off the coast of Oman in the Indian Ocean, through the Gulf of Aden and into the Red Sea.
Porto Itapoá will be the first port in Brazil to include carbon credits in its operations
Projects and initiatives reinforce the terminal’s leadership in environmental issues, collecting awards and certifications in the field Porto Itapoá will be the first port in Brazil to include carbon credits in its operations Porto Itapoá has stood out in the business scene, showcasing its commitment to energy transition. An important initiative launched by the company is the Carbon Neutralization Project, in partnership with the Ambipar Group, to offset carbon emissions from customers. As a result, it will be the first port in Brazil to enable the inclusion of carbon credits in its operations. The project officially starts in 2024 and will allow terminal customers to purchase carbon credits to offset their emissions, says Sergni Pessoa Rosa Jr., the director of Operations, Technology, and Environment at Porto Itapoá. “These credits, derived from forest conservation or reforestation, are certified by Ambipar,” he explains. nBy pioneering the carbon credit market, Porto Itapoá offers a new possibility that is expected to impact the entire logistics chain. New energy policy In 2023, Porto Itapoá changed its energy acquisition policy in the national system, opting to consume only renewable energy in new contracts. The transaction is certified by I-REC(e), a global tracking system for renewable energy attributes designed to facilitate reliable accounting of renewable energy attributed to the consumer. Pilot project Porto Itapoá is also developing a solar energy capture project, with panels already installed for a specific study of solar light incidence in Itapoá. “The data we have available today relates to the macro region where we are located, so we need to better understand the specificities of this energy source in our municipality,” emphasizes the terminal director. “These data will serve as a basis for future projects, not only for Porto Itapoá but for all entrepreneurs in the city,” concludes Rosa Jr. Gold Seal The port achieved, for the second time in 2023, the Gold Seal of the GHG Protocol, a program implemented in Brazil by the Center for Sustainability Studies at the Getúlio Vargas Foundation (FGVces) in partnership with the Ministry of the Environment. Additionally, it invested over R$ 25 million in new autonomous RTGs – the first terminal in South America to operate them – which consume up to three times less fuel than conventional ones. Playing a significant role in reducing carbon emissions is an essential premise of Porto Itapoá, according to its director of Operations, Technology, and Environment, Sergni Pessoa Rosa Jr. “Economic development associated with socio-environmental development is the most sustainable way for a company to establish itself. In this way, all stakeholders can coexist harmoniously in a healthy environment,” reflects Rosa Jr. Desempenhar um papel significativo na redução de emissões de carbono é uma premissa essencial do Porto Itapoá, de acordo com seu diretor de Operações, Tecnologia e Meio Ambiente, Sergni Pessoa Rosa Jr. “O desenvolvimento econômico associado ao desenvolvimento socioambiental é a forma mais sustentável de uma empresa se estabelecer. Desa forma, todos os públicos envolvidos podem coexistir de forma harmônica em um ambiente saudável”, reflete Rosa Jr.
A Golden Age Is Emerging for Green Energy
As digital technology becomes ever more complex and widespread, it draws a lot of power. Fortunately, new technologies are making clean electricity production cheaper than ever before. Renewable energy, batteries and multi-directional grids will be the future of energy. BY STEVE WESTLY JANUARY 01, 2024 We live in a world of search engines, video games and e-commerce. Every product and piece of information is at our fingertips. This is stimulating an explosion of data centers where the hardware that makes all this possible operates. These centers draw almost unimaginable amounts of power. The power demand isn’t going to slow any time soon. The advent of cryptocurrency and generative AI is creating an exponential rise in demand for more data centers and more electricity. We’re witnessing a revolution in electric cars, trucks and appliances. Electric companies will have to meet the demand while moving us toward a carbon-neutral world. We can do this by taking three key steps. The first step is to accelerate the ongoing revolution in renewable energy. In 2022, 83% of all new energy added globally by utilities was renewable, and renewable energy is expected to surpass coal by 2025. While the accessibility of renewable energy has increased, the better news is that costs continue to decrease. Solar manufacturing costs drop every year and will only get more competitive with fossil fuels. Via the National Renewable Energy Laboratory | www.nrel.gov Wind projects have decreased in costs by 40% over the last decade. The Inflation Reduction Act is an essential step in the right direction with an estimated $1.2 trillion in incentives for clean technology by 2032. Clean energy is not only better for the planet, it’s becoming cheaper by the day. Unfortunately, the sun doesn’t always shine, and the wind doesn’t always blow. That’s why advancing battery storage is a key bridge to a clean energy future. When I served on the board of Tesla in 2010, the energy cost for batteries was over $1,100 per kilowatt-hour. This was part of why electric vehicles were prohibitively expensive. Just ten years later, the cost of battery storage had dropped by an order of magnitude to $137 per kilowatt-hour. Tesla has cut electric vehicle prices five times in 2023 alone. Battery manufacturers are driving decreases in battery costs that are leading to a revolution in power storage. Tesla’s energy/battery division is a prime example, deploying 3.98 gigawatt hours of power storage in the third quarter of 2023 alone. That’s enough to power all the homes in Chicago and LA combined. Expect to see some form of battery storage in most homes, offices and schools in the coming decades. Batteries are rapidly becoming a cheaper alternative to natural gas or nuclear, and they are a lot easier to permit next to a school or apartment building. The toughest problem to solve will be building a resilient, multi-directional grid that will connect this new mosaic of storage and energy devices. This new grid will enable utilities and homeowners alike to generate power and store it when the wind is blowing and the sun is shining, as well as to transport it to the areas that need it the most based on the time of day. This will enable us to avoid building excess capacity and help us solve for those critical times of peak energy demand (both winter and summer) by saving up power when it’s cheap and using it during peak demand.
New Technologies and Responsible Management Can Solve California’s Water Crisis
JANUARY 02, 2024 Despite historic rainfalls last winter, California could be back into drought conditions before we know it. If we are not careful, we could end up like South Africa. In 2018, Cape Town’s reservoirs were dangerously low. Although authorities severely limited water usage, the city barely avoided “Day Zero.” This would have meant shutting off water to private homes, forcing residents to queue for water rations. Why such a water shortage? South Africa’s water system is crumbling. The system loses 70 million liters of water each day due to leaks. Like South Africa’s, California’s water infrastructure is outdated and in need of repair. California’s reservoirs are largely full now, but there is only enough water for the state to make it through one dry year. To avoid an outcome like Cape Town’s, California needs to start using new technology and smart public policy to ensure the state has enough water. Managing California’s watersheds Watershed management will be key to ensuring water from rainfall and snowmelt finds its way to reservoirs, lakes and rivers. Restoring meadows and forests impacted by pollution, development and wildfires will allow for slower release of rainwater and snowmelt. This increases the environment’s ability to hold water. California’s Sierra Nevada mountains hold a lot of fresh water in their snowpack. The Sierra Nevada Watershed provides drinking water to two-thirds of the state’s population, but the snowpack is under threat from rising temperatures. The state has was lucky this summer, receiving relatively cool temperatures that left the snow intact. Because California’s watersheds are degraded, they are not able to withstand a great amount of meltwater, so higher temperatures could have caused catastrophic flooding. At the same time, billions of gallons of badly needed fresh water would have been lost. We may not be so lucky next year, so we need to act quickly. Nonprofits like the Sierra Nevada Conservancy provide grants for watershed management projects including fire mitigation and land conservation. The state should follow their lead and invest in similar restorations now. In addition, new, strategically-placed reservoirs like the proposed Alder Creek Reservoir could be game-changers. This proposal would see the reservoir located in higher elevation to better catch snowpack melt and upstream so water would not have to ever be released to prevent risks of flooding. California should also invest more in below-ground water storage. Previous projects have seen substantial results. In 2016, Los Angeles Mayor Eric Garcetti broke ground on the largest underground reservoir in the western US, called the Headworks Reservoir. Since completion, it has stored over 110 million gallons of water for LA and helped the city meet state quality levels. In January 2023, LA received heavy winter rains. The Headworks Reservoir and the newly expanded Tujunga Spreading Grounds rose to the occasion and helped to capture the stormwaters. In fact, the Tujunga Spreading Grounds can capture enough water to supply 64,000 households per year. Below-ground water storage contributes immensely to our elastic water supply. Its ability to adapt with the constant ebb and flow of water supply makes it a vital solution to the state’s water scarcity. Using our water resources more efficiently Along with capturing more water, we can leverage new technologies to make more efficient use of the water that we have. Advanced water recycling, or direct potable reuse (DPR), could save enough water for 2 million Californian households. Currently, wastewater is treated and then dumped into the rivers and ocean — 400 gallons a day in Los Angeles County alone. As climate change alters rain and snowmelt patterns, this water becomes less likely to find its way back to reservoirs and aquifers. With DPR, wastewater is highly treated and purified to meet drinking water standards before being introduced directly into public water systems. Recycled water from a DPR system is considered the cleanest drinking water available. Texas, Arizona, and Colorado are already using DPR systems in drought-stricken cities. The State Water Resources Control Board should do the same in California especially in areas hardest hit by drought. New technologies can also help us efficiently transport water. Using renewable power, we can move water across the state at low cost.
Shipping starts shelling out for EU Allowances
Shipping starts shelling out for EU Allowances January 2, 2024 Piet Sinke / Maasmond Maritime The largest regional green regulations in the history of shipping came into effect yesterday with the industry included in the European Union’s emissions trading system ( EUETS), a market-based measure that sets a cap on allowed emissions. From yesterday, vessels visiting EU ports will be required to offset their applicable CO2 voyage emissions through the purchase of an equivalent number of EU Allowances (EUAs). Clarksons Research has put together a graph estimating EU ETS costs for certain ship types on the basis of this year’s average EUA price of $90 per tonne of CO2 and 2022 trading patterns. The data shows that for a VLCC heading from Ras Tanura to Rotterdam EU ETS costs will be around $200,000 per voyage next year equivalent to 4% of today’s freight cost, increasing to $0.5m and 10% in 2026 when the regulation is fully phased in at 100%. The new regulations were branded as “bullshit” and “a complete waste of effort” by one of Greece’s largest shipowners, George Procopiou, while speaking at an event in Cyprus in October. “We always go to the shipyard, and we try to improve — through air lubrication and new engines, for example. Although our ships are 11 years old, we order a huge number of assets because the new models are 35% or 40% better in consumption. These are the little steps. The rest is just bullshit,” Procopiou said.
Maersk Broker to rebrand as MB Shipbrokers in management buyout.
January 1, 2024 Maersk Broker has completed a management and employee buyout from its long-standing owners, the Mc-Kinney Møller family. The Copenhagen-based ship brokerage, established in 1914, will continue to operate under its new name, MB Shipbrokers. “The change of ownership is based on a common ambition of the seller and the buyer to preserve the more than 100 years legacy and to secure the company’s position long-term, under a new name with a new ownership structure,” Maersk Broker said on social media. Although the transaction details have not been disclosed, the move has ended earlier Clarksons takeover speculations. No operational changes are expected, as it should be “business as usual in all aspects,” the company added. Commenting on the buyout, Kristian Mørch, chairman of Maersk Broker, said: “The owners and the board of directors have for some time explored different ownership structures to ensure the company remains strongly positioned for the future. Acknowledging the unwavering commitment of the management and employees to preserve the legacy and values that have been the foundation for Maersk Broker’s success for generations, we believe they are the right owners to ensure the continued success of the company in decades to come.” The brokerage has been privately owned by the Mc-Kinney Møller family since its foundation. Today, the outfit has offices in all major shipping hubs and employs nearly 250 people.