Abstract

International maritime shipping is confronted from 2006 onwards with regulation until 2030 by different policy actors (i.e. International Maritime Organization, hereafter IMO), the EU) in order to improve the ecological performance of maritime shipping, and will face more so in the future. Many of these regulations concern the reduction of air pollution of vessels both globally and in particular in so-called Emission Control Areas (ECA’s).In this research, the economic impact of alternative technologies in order to reduce the Sulphur emissions in existing ECA zones is analyzed both from the perspective of the vessel owner, as well as for the evaluation of generalized chain cost, hence from the shipper point of view.The container carriers can choose different methods to comply with the new regulations, such as switching fuel types (Liquefied Natural Gas (LNG), Marine Diesel Oil (MDO)) or opting for innovative technologies like installing scrubber systems.The goal of this research is twofold: first, to discover alternative available technologies to mitigate Sulphur emissions according to the literature; second, to evaluate economically the selected technologies both from vessel owners and shippers perspectives.In order to study this, an update of an existing model is used. The added value of the extended model is threefold: calculating the generalized chain cost of transporting a container from the origin (US and Asia) to a destination in the EU, incorporating in the model the different ECA zones in the world and integrating more detailed fuel cost calculations and capital cost for different engine types or technologies used.The methodology used in this research is an extension of an existing model which is updated for the purpose of this research. This update includes a new functionality to allow calculating the vessel owner cost for different fuel types and propulsion systems (Heavy Fuel Oil or HFO, MDO and LNG). Next to that, more maritime distance data is collected containing the distance sailed in ECA zones. This means that for each port-to-port combination, in the total maritime distance database in the model, this additional information is added. Based on this information, the fuel cost can be calculated when a vessel is sailing in ECA zones using either MDO, LNG or HFO (including a scrubber).The research is particularly interesting for logistics operators, legislation regulators and academia. The extended model allows calculating the best economic solutions for selected routes. For logistics operators and in particular for shippers, the results allow making the most rewarding investments from an economic point of view and affirm the importance of different technologies on the generalized chain cost. The results indicate that the price of the different fuels (and the spread between them) displays an important factor in the overall outcome.

Highlights

  • The transport sector is one of the biggest energy consumers, resulting in over 26.6% of total energy consumption globally and 33% in Europe, and as a result, it is one of the biggest air polluters with a continuing growth projected by the European Commission (Žaglinskis et al 2018)

  • International maritime shipping is confronted from 2006 onwards and will face new regulation until 2030 by different policy actors (i.e. IMO, the EU) in order to reduce the volume of pollutants emitted from vessels globally and in ECA zones in a more strict way

  • In order to respect the legislation, there are some alternative options for vessel owners, such as Liquefied Natural Gas (LNG) propulsion, Marine Diesel Oil (MDO), and scrubber technology

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Summary

Introduction

The transport sector is one of the biggest energy consumers, resulting in over 26.6% of total energy consumption globally and 33% in Europe, and as a result, it is one of the biggest air polluters with a continuing growth projected by the European Commission (Žaglinskis et al 2018). Shipping is responsible for 90% of international transport and in 2017, freight rates improved across all markets, with the exception of tankers. Global container demand grew by 6.4% in 2017, taking total shipped volumes to an estimated 148 million TEUs. global dry bulk trade grew by about 4% in 2017, bringing total volumes to 5.1 billion tons. Crude oil seaborne trade expanded at a slower pace – 2.4% in 2017 – compared with stronger growth – 4% – in 2016 (UNCTAD 2019)

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