Is this the 2023 shipping landscape?

Authored by HullWiper.

We're well into the first month of a new year, and experts in the maritime industry have started sharing their predictions for 2023. It will be an interesting year for our sector, and while we wait to see how it all plays out in the coming months, here are some forecasts along with a roundup of our own thoughts about shipping's decarbonisation journey.

Bottom line

Navigating the COVID storm of skyrocketing ocean freight and shipping rates was a challenge for carriers. Rates decreased in the fourth quarter of 2022, though not to levels seen prior to 2019. This decline has been attributed to a number of factors, including increased vessel space availability brought on by fleet consolidation, expansion, and the return of overcapacity in container shipping, decreased backlog and lower consumer demand as a result of rising living expenses.

Rates are anticipated to remain low for the foreseeable future, and they may even fall further. In an effort to slow or stop increases, shipping lines are likely to streamline services and use blank sailing* to adjust capacity to demand.

*Blank sailing is when a shipping line cancels a call or bypasses a particular port, region, or entire route on a planned itinerary.

Slow lane

The world ground to a halt at the start of the pandemic, and the ripple effects of this were felt across all trades, including the shipping sector. Unprecedented levels of port congestions as a result of controls imposed by local port authorities to “flatten the curve”, left many vessels in hot lay ups as support services and workforce levels were reduced.

Prior to the pandemic, approximately 3% of container ships were held up due to bottlenecks. This figure rose to 14% in January 2022 before falling to 8% at the end of last year. It is expected that congestion problems that have plagued ports will begin to improve in the first quarter of 2023.

Tech trends

The use of digitalisation and voyage optimisation technology is the quickest and most efficient way to comply with the maritime industry's transition to carbon-neutral operations. Remote monitoring using onboard sensors, regular observational data and weather reporting tools are some of the methods that will assist ship owners and operators in understanding the energy intensity of vessel operations in order to save fuel, improve operational efficiencies and report on emissions reductions to authorities

When combined with comprehensive and eco-friendly hull care support, proactive management of biofouling on vessel hulls will help our sector move to sustainable operations and comply with regulations such as The Baltic and International Maritime Council (BIMCO) reclamation standards, biofouling development assessments in line with The International Organisation for Standardization (ISO) 19030 standards and the IMO strategy to cut annual greenhouse (GHG) emissions from international shipping by at least half by 2025, compared to 2008 levels.

Regulatory agenda

Compulsory regulations for ship owners and operators to transition to sustainable operations are on the horizon, with some already in effect at the start of this year.

On 1 January 2023, The International Maritime Organization’s (IMO) mandatory Energy Efficiency Existing Ship Index (EEXI) came into force. All ships must calculate their achieved EEXI to measure their energy efficiency and start gathering data to report their yearly operational carbon intensity indicator (CII) and CII rating. Starting in 2024, CII ratings for the previous year will be determined based on how close the achieved CII is to the required CII. A is the highest passing grade, C is the lowest, while D and E are considered non-compliant. Ships having a rating of D for three consecutive years or E for one year will need to develop an approved plan for corrective actions in order to be compliant by the next year. If the plan is not created or validated, a declaration of compliance will not be issued.

The International Convention on the Control of Harmful Anti-fouling Systems on Ships (AFS Convention), which prohibits the use of harmful organotin (compounds tin linked to hydrocarbons) in anti-fouling paints on ships, was amended to add restrictions on the use of biocide Cybutryne as of 1 January 2023. Cybutryne, a biocidal active substance, is both acutely and chronically toxic to a variety of marine organisms with long last effects. Anti-fouling systems containing this ingredient may not be applied or reapplied to ships, including fixed and floating platforms, floating storage units, floating production storage, and offtake units.

The European Union’s (EU) Emissions Trading System (ETS) is the EU’s key tool for lowering greenhouse gas emissions in an efficient and cost-effective manner. The ETS, which currently covers electricity and heat generation, energy-intensive industries (oil refineries, steel industries, cement, glass, and paper production), and commercial aviation (flights within the European Economic Area), will be expanded to include maritime transport with a phase-in period beginning in 2024. By 2026, shipping companies will be required to pay for the carbon emissions they produce while traveling to and from the EU, as well as between EU ports.

Australia recently joined the likes of New Zealand and California in requiring international vessels entering their territorial waters to provide information on how biofouling has been proactively managed. Biofouling, also known as biological fouling, is the unwanted accumulation of microorganisms, plants, algae, or small animals on vessel hulls that poses a significant threat to the health of our oceans.

Collective action

Cross-sectoral collaboration on international, regional, and national levels is an effective way to employ industry resources and knowledge to integrate sustainable development, implementation, and practices into what can sometimes be a complex issue.

Bringing together global maritime leaders to support an energy efficient and low carbon maritime transport system, The Global Industry Alliance (GIA) for Marine Biosafety, a partnership initiative of the IMO under the framework of the GEF-UNDP-IMO GloMEEP Project, helps support the sector’s move to energy-efficient, low-carbon systems for shipping.

The Sustainable Shipping Initiative (SSI) is a multi-stakeholder initiative of like-minded and leading organisations that lays out the pathways and defines tangible milestones to be collectively achieved in the face of current and future challenges in their Roadmap to a Sustainable Shipping Industry.

The World Ports Sustainability Program (WPSP) seeks to demonstrate port leadership in achieving UN Sustainable Development Goals. The initiative empowers global port stakeholders to collaborate with business, governments, and society partners to create sustainable value for their local communities and wider areas. WPSP has formed strategic alliances with the American Association of Port Authorities (AAPA), the European Sea Ports Organization (ESPO), the International Association of Cities and Ports (AIVP), and the World Association for Waterborne Transport Infrastructure (PIANC).

An industry-led initiative dedicated to accelerating the transition to a zero-emissions shipping industry in British Columbia, The Vancouver Maritime Centre for Climate (VMCC) recognises that maritime operators are facing large regulatory hurdles to reduce emissions. They are working together to help facilitate the mobilisation and implementation of green technologies to get to zero emissions faster.

As we have witnessed most recently in Australasia, where a fourth luxury ship was banned from New Zealand waters due to biofouling, the world is starting to be more proactive on the prevention of alien invasive species, and whilst these reported events have been very subjective as to the extent of biofouling attached to the ships in question, nonetheless, it shows a proactive stance in applying a higher standard of ships cleanliness than previously applied, this actively aligns to reducing the ships emissions, carbon footprint, and maybe not significantly but it’s a start, and hopefully it is the beginning of a trend or better still a routine that all will follow, proactive cleaning before it becomes a newspaper article.