By
7 November 2011

As the shipping industry faces another cyclical downturn, impacting profitability and the viability of weaker industry players, the emphasis on efficiency and lowering the cost base becomes more apparent. An important aspect of driving down costs is fuel efficiency, and increasingly lower emissions are being demanded from stakeholders.

After a brief respite in 2010 from the material losses experienced in 2008-09, the container-shipping market is again plunging to unsustainable shipping rates as it digests the advent of the megavessels. The delivery of these giants has just started, but with the prospect of a breakeven point at US$150 less on a trip to Europe than incumbents, the trend to larger vessels has commenced. The key difference in their efficiency is the reduced fuel consumption, which is 40% lower per container box.

These fluctuations emphasise that shipping companies have little control over pricing in what is a relatively commoditised industry and should continue to focus on the parts of their businesses that they can control, namely their cost base, with efficient operations and providing services that customers require. Increasingly service operators and their end-customers – the consumers – are demanding lower emissions through the supply chain. Those ports and the vessels calling there will be asked to provide a greener environmental service.

While vessel design (exhibited by the latest orders for new vessels) and the adoption of slow steaming are measures to reduce the burning of highsulphur- content bunker fuel, alternative fuel sources are still limited by commercial reality. We need to see an alternative suitability of product, sustainability in terms of not having a detrimental impact on other parts of the environment and finally scalability, with mass production of the product and distribution to the main shipping channels.