How does the Red Sea crisis affect carbon reduction efforts?

The repercussions of the Red Sea traffic crisis due to attacks by the Yemeni Houthi group on passing ships continue to affect maritime shipping, supply chains and the cargo shipping industry.

The most prominent of these repercussions are the increase in the cost of maritime shipping, insurance for goods, the increase in the length of cargo shipping trips with the resort to other routes such as the Cape of Good Hope, and the delay in the delivery of goods.

While these repercussions are reflected in economic forms such as increasing commodity prices, contributing to inflation, affecting trade volumes, and other forms of impact, there are also environmental impacts of the ongoing Red Sea crisis and its impact on maritime shipping with the increase in carbon emissions from cargo ships as the length of voyages increases.

Emissions increase in the first half

Container shipping saw the largest increase in carbon emissions in the shipping sector in the first half of 2024, with emissions from ships operating in the industry increasing by around 15% year-on-year, according to CZapp , a platform focused on improving supply chains, particularly in the food and energy sectors.

Analysis by Xeneta , a platform for ocean and air freight market data, reveals that carbon emissions from ocean container shipping were very high in the first half of the year, although there was a slight improvement in the second quarter compared to the first three months.

The platform’s Carbon Emissions Index, which measures container shipping emissions across the world’s 13 largest trades, reached a record high of 107.5 points in the first quarter of 2024 but fell to 98.6 points in the second quarter.

The Red Sea crisis significantly affected three long-haul trade routes – from the Far East to Northern Europe, from the Far East to the Mediterranean, and from the Far East to the US East Coast – all of which saw quarterly increases in carbon emissions, according to the Xeneta report.

“It is important to note that while emissions per tonne of cargo across the top 13 trades fell [in Q2], this masks an increase in total emissions across the global container shipping fleet,” said Emily Stausboll, market analyst at Xeneta . “2024 has seen record levels of demand for ocean container shipping globally, meaning more cargo being moved and total CO2 emissions increasing.”

These figures underscore the significant challenges facing the shipping industry as it seeks to meet the IMO’s emissions targets. Despite the industry’s commitment to reducing its environmental impact, the recent rise in emissions continues a long-term upward trend, driven in part by factors outside the sector.

High speed increases ship emissions

Speed is a critical factor in shipping carbon emissions. Especially in the first weeks of the Red Sea crisis, many shipping companies decided to increase the speed of their ships in order to mitigate the impact of rerouting to other routes on voyage times. This decision, as expected, led to a significant increase in shipping carbon emissions.

In December 2023, when ships began rerouting, average transit times increased by about 50%, leading to a corresponding increase in carbon emissions.

The United Nations Conference on Trade and Development noted in a report that “disruptions in the Red Sea and the Suez Canal, along with factors related to the Panama Canal and the Black Sea, could erode the environmental gains achieved through ‘slow sailing’, as redirected ships increase their speed to cover longer distances.”

This is particularly evident among container ships, where a 1% increase in speed typically results in a 2.2% increase in fuel consumption. For example, accelerating from 14 to 16 knots increases fuel use per mile by 31%.

The United Nations Conference on Trade and Development noted that “the longer distances resulting from the rerouting from the Suez Canal to the Cape of Good Hope mean a 70% increase in greenhouse gas emissions for a round trip from Singapore to northern Europe.”

A large container ship travelling from the Chinese port of Shanghai to the German port of Hamburg has a 38% increase in carbon dioxide emissions when it is rerouted around Africa instead of passing through the Suez Canal, Reuters reported citing LSEG data.

Signs of improvement in the future

So far, there are no signs of improvement in the Red Sea region. Therefore, shipping companies are unlikely to return to the Suez Canal in the near future.

However, there is optimism about reducing shipping-related carbon emissions for two main reasons, according to CZapp . First, as time progresses, shipping companies adapt to the situation by finding more efficient alternatives, such as deploying larger ships or introducing additional routes, which helps them avoid the need to increase ship speed.

The second reason is that most shipping companies are engaged in an ongoing new shipbuilding campaign, with the first carbon-efficient and environmentally friendly ships already being delivered. As these new ships are deployed in shipping line services, carbon emissions are expected to fall further.

Source: CNBC