Rising fuel prices: consumer pays for decarbonization of maritime transport

Freight rates are going to rise extremely in the next few years, class society DNV predicts. The cause is the cost of decarbonizing international shipping, where the goal is for all ships to be emission-free at sea by 2050.

Shipping companies will face higher fuel prices. ‘The cost per tonne/mile will increase significantly compared to current prices. The rates will be passed on to consumers. The latter will pay most of the bill,’ DNV CEO Knut Ørbeck-Nilssen predicts.
The CEO is deeply concerned whether the priority regarding the future of sustainable shipping is alive among large shipowners. ‘They need to make energy efficiency measures on ships a top priority. Also, shipping should cooperate with developers developing CO2-neutral fuel,’ Ørbeck-Nilssen said. He makes this call keeping in mind the fear that costs will skyrocket if global scale-up to sustainable technologies and fuels is not quickly achieved.
As the global fleet has not yet chosen one clear replacement for regular fuel oil, predicting the future remains very difficult. ‘What the fleet will look like in 2050 is very uncertain. Many parties are currently waiting to see what others will do, but we really need to start accelerating maritime greening,’ says Ørbeck-Nilssen. […]

Less consumption

DNV expects technical sustainable developments to follow each other in rapid succession in the coming years. These include on-board CO2 capture and storage, fuel cells, wind-assisted propulsion and waste heat recovery systems. It remains to be seen which technologies will eventually break through to commonplace; this largely depends on price and availability.

Higher costs

DNV has had all scenarios for sustainability calculated and expects fuel prices to have the highest impact on the price of goods transport by sea. The price increase in 2050 is 69% to 75% for bulk carriers, 70% to 86% for tankers, and 91% to 112% for container ships.
If ships switch to renewable fuels as early as 2030, the price of transporting a container (teu) is expected to increase by at least US$90 to US$450, depending on the route.

Passing on costs

Due to turmoil on the Red Sea, shipping companies are already having their ships rerouted on the Asia-Europe route, causing higher transport costs. These costs are now being passed on to consumers. DNV therefore expects that the costs of sustainable shipping will also be passed on to consumers and global people should expect higher prices of goods.

Read the whole article by Tessa Heerschop in the Schuttevaer (Dutch, subscribers only).