In a bid to steer the maritime industry towards a sustainable future, the United Nations Conference on Trade and Development (UNCTAD) has sounded a clarion call for a “just and equitable transition” to a decarbonized shipping sector. 

Released in anticipation of World Maritime Day on September 28, the Review of Maritime Transport 2023 underscores the urgent need for cleaner fuels, digital innovations, and an equitable shift to combat the persistent issue of carbon emissions and regulatory uncertainties within the shipping industry.

The maritime industry, responsible for a staggering 80% of global trade volume and nearly 3% of worldwide greenhouse gas emissions, has witnessed emissions surge by 20% in the last decade alone. 

Rebeca Grynspan, UNCTAD secretary-general, emphasized the urgency of decarbonization, stating, “Maritime transport needs to decarbonize as soon as possible, while ensuring economic growth. Balancing environmental sustainability, regulatory compliance, and economic demands is vital for a prosperous, equitable, and resilient future for maritime transport.”

Advocating for Cleaner Fuels

UNCTAD is pushing for a transition towards cleaner fuels in the shipping sector, stressing the importance of an environmentally effective, procedurally fair, socially just, technologically inclusive, and globally equitable transition strategy. 

The organization underscores the importance of working together, implementing quick regulatory actions, and making significant investments in eco-friendly technologies and fleets.

Though the shift to cleaner fuels is still in its infancy, with nearly 99% of the global fleet relying on conventional fuels, promising developments are on the horizon. This includes 21% of vessels on order designed for alternative fuels.

Counting the Costs of Decarbonization

However, this transition comes with a hefty price tag. UNCTAD reports that between $8 billion to $28 billion annually will be required to decarbonize ships by 2050. 

To develop infrastructure for 100% carbon-neutral fuels by the same year, even more substantial investments ranging from $28 billion to $90 billion annually will be necessary. 

Full decarbonization could increase annual fuel expenses by 70% to 100%, potentially impacting small island developing states (SIDS) and least developed countries (LDCs) that heavily rely on maritime transport.

To ensure an equitable transition, UNCTAD is advocating for a universal regulatory framework that applies to all ships, regardless of their registration flags, ownership, or operational areas. This approach aims to avoid a two-speed decarbonization process and maintain a level playing field.

Shamika N. Sirimanne, UNCTAD’s director of technology and logistics, proposed, “Economic incentives, such as levies or contributions paid in relation to shipping emissions, may incentivize action, promote the competitiveness of alternative fuels, and narrow the cost gap with conventional heavy fuels. These funds could also facilitate investments in ports in SIDS and LDCs, focusing on climate change adaptation, trade and transport reforms, as well as digital connectivity.”

An Aging Global Fleet and Digitalization

UNCTAD also expresses concern over the aging global shipping fleet. At the start of 2023, commercial ships were, on average, 22.2 years old, two years older than a decade ago. More than half of the world’s fleet is over 15 years old.

In addition to cleaner fuels, UNCTAD highlights the role of digitalization in expediting decarbonization efforts. They cite benefits in enhancing efficiency and reducing delays. 

Shamika N. Sirimanne added, “Investing in digitalization and technology will improve predictability and reliability of shipping, and applying technologies such as AI, machine learning, blockchain, and the Internet of Things will result in performance optimization for monitoring, routing, speed, and predictive maintenance – which can all help accelerate decarbonization.”

Shifting Global Trade and Resilience

This year’s Review of Maritime Transport delves into the shifting global trade patterns and the impact of events such as the war in Ukraine. It underscores the resilience of the shipping industry while acknowledging the challenges of balancing supply and demand.

Despite a 0.4% contraction in total maritime trade volumes in 2022, the industry anticipates a 2.4% growth in 2023. 

Containerized trade, which declined by 3.7% in 2022, is expected to expand by 1.2% in 2023 and more than 3% between 2024 and 2028. Oil and gas trade volumes showed robust growth in 2022, while tanker freight rates saw a strong revival driven by geopolitical events. 

Dry bulk rates experienced volatility due to shifting demand, port congestion, geopolitical tensions, and weather disruptions.

In conclusion, UNCTAD’s call for a just and equitable transition to a low- and zero-carbon future in global shipping serves as a call for system-wide commitment and regulatory action to combat the escalating environmental challenges faced by the maritime sector. 

Bold and timely action and collaborative efforts are essential to ensure a sustainable, resilient, and prosperous future for global maritime transport.

Key takeaways:

• UNCTAD is advocating for a green transformation in the global maritime sector.
• The Review of Maritime Transport 2023 emphasizes the need for cleaner fuels and digital innovations to combat carbon emissions and regulatory uncertainties.
• UNCTAD’s Secretary-General Rebeca Grynspan stresses the urgency of decarbonization while ensuring economic growth.
• Cleaner fuels and an environmentally effective transition strategy are promoted, with a call for collaboration, swift regulations, and investments in green technologies.
• Promising signs exist, with 21% of vessels on order designed for alternative fuels.
• Transitioning to cleaner fuels comes with costs ranging from $8 billion to $90 billion annually, potentially impacting small island developing states (SIDS) and least developed countries (LDCs).
• A universal regulatory framework is recommended for fairness.
• Shamika N. Sirimanne suggests economic incentives like levies on shipping emissions to promote alternative fuels and digital connectivity in ports.
• Concerns are raised about the aging global shipping fleet, with average commercial ships being 22.2 years old.
• Digitalization, including AI, machine learning, blockchain, and IoT, can improve efficiency and reduce emissions.
• The Review of Maritime Transport 2023 analyzes shifting global trade patterns and industry resilience.
• Despite a 0.4% decline in total maritime trade volumes in 2022, a 2.4% growth is expected in 2023.
• Containerized trade is projected to expand by 1.2% in 2023 and over 3% between 2024 and 2028.
• Oil and gas trade volumes grew in 2022, and tanker freight rates revived due to geopolitical events.
• Dry bulk rates experienced volatility due to shifting demand, port congestion, geopolitical tensions, and weather disruptions.
• UNCTAD calls for collective commitment and regulatory action to create a sustainable and prosperous maritime transport sector.