For centuries, the maritime industry has been central to the development of the global economy, from the ancient maritime Silk Road to modern semiconductor supply chains. Ships currently transport over 80% of the world’s trade volume. As the economy continues to evolve and we shift towards a more sustainable world, the role of the maritime sector is set to become even more important. Although the movement of oil must necessarily fade, new supply chains crucial to the energy transition are emerging: copper, nickel, and hydrogen must be distributed at scale across the globe as green technologies continue to advance. However, as with any industry, the maritime sector is set to be detrimentally impacted by the effects of climate change. In this article we will focus on three of these impacts:
Shipping accounts for 3% of global CO2 emissions and is in the focus of international environmental regulation. The industry has a target to be net zero by 2050. With the International Maritime Organisation’s recent introduction of energy efficiency ratings, ships can be penalised or restricted if they are deemed to have a poor energy performance; compliance is not just a legal requirement, but a strategic advantage.
So how will the maritime industry reduce emissions? Small gains in efficiency will be made from new tech such as AI-driven route optimisation, digital twin modelling, and advanced energy management systems. But the main challenge is to find a reliable, scalable, sustainable fuel source. Currently the leading options are hydrogen, ammonia, methanol, and biomass, but all four have both advantages and challenges.
It remains to be seen which solution will prevail. Given the relative immaturity of this topic, it’s likely that the development of each technology will be constitutive of the industry that emerges.
As climate change accelerates, delays and disruptions to shipping schedules will become more frequent:
As climate change continues to take hold, ports need to make sizeable investments in their infrastructure to ensure resilience. The most serious, long-term issue is sea level rise, which will affect every port on the planet. Most ports do not have a clear long-term strategy to deal with this. Business cycles between owners and leasers of major ports tend to be around 15 to 30 years, making it difficult to assign responsibility for investment in long-term resilience; there is no clear business case for either party. Complex public and private ownership models complicate the situation further. There is progress being made around the electrification of ports, and we should expect this to continue. The US’s flagship Inflation Reduction Act has earmarked $4bn for programmes designed to electrify US ports. This includes electrifying the trucks and handling equipment, as well as funds to help develop climate action plans to reduce pollutants. However, the more pressing problem of ensuring ports are resilient to sea level rises is yet to be fully addressed and we should expect an influx of capital in this area.
As a business leader there are things in your control to reduce these adverse effects of climate change:
The maritime industry faces huge challenges arising from climate change. New technologies aim to make ships more efficient, but finding a scalable, sustainable fuel is a pressing concern. Sea-level rise threatens existing port infrastructure requiring urgent attention and investment, and disruptions from extreme weather events will increase. Business leaders can take proactive action by considering these risks when designing networks, diversifying trade routes, and improving the visibility of their supply chain. Progress is being made; businesses must continue to collaborate, fostering disruptive, pragmatic innovation to successfully navigate the rocky seas ahead.
Author: Joe Miller