Drewry: Decarbonisation in Shipping Brings Up To $14 Billion in Extra Costs

The imperative to decarbonise the global shipping industry is clear and present, however, many of the world’s largest importers and exporters are insufficiently informed about the full implications of the forthcoming new emissions regulations and the billions of dollars that will be added to freight costs in the future.

Besides regulatory changes resulting from decarbonisation policies, emissions limits and related taxes, there will be enormous technological change in the design of ships and their propulsion systems, with a transition to engines powered by low or zero carbon fuels. 

The European Union will be the first region to enforce ‘carbon taxes’ in shipping via its Emission Trading System, which will penalise users of high-carbon fuels such as conventional fossil fuels and apply not only to shipments within Europe, but also to all shipments to and from Europe. 

Drewry announces today the first industry-wide costing of both the European carbon taxes and for transitioning all European container shipments to a greener fuel type. The cost for 2024 ranges between $3.5 billion and $14.5 billion depending on the extent to which the industry switches to LNG and other greener ships instead of keeping to conventional fuel oil. LNG is the main ‘intermediate’ fuel type on the journey to decarbonise container shipping

.Drewry will continue to work with shippers to inform them of the major cost, compliance and contractual implications of new sustainability rules, and will partner with expert organisations to provide specialist support in this complex area. Drewry urges ocean carriers to be as transparent with shippers as possible about the costs associated with sustainability, while retaining confidentiality over any sensitive, technology-related data.

Drewry continues to enhance its range of value-add services for global shippers, including advice, benchmarking, strategy and planning tools covering procurement, costs, carrier contract terms, budgeting, tenders, origin management, sustainability implementation and standard bunker programmes.

“The lack of consistency and visibility regarding carbon neutral shipping and associated costs is something on which all stakeholders; from shippers, ocean carriers, forwarders, regulatory bodies and consultants, need to find common ground. Drewry is committed to this discussion and helping our clients implement sustainable ocean freight practices,” said Chantal McRoberts, head of advisory Drewry Supply Chain Advisors.