How shipping companies will balance costs for greener practices

In the drive towards a greener planet, the shipping industry finds itself at a crossroads. With sustainability becoming an increasingly pressing concern, carriers are faced with the challenge of transitioning to more environmentally friendly practices while balancing economic viability.

One key aspect of this transition is the adoption of green methanol fuel, which promises to significantly reduce carbon emissions compared to traditional fuels. However, this shift comes at a cost. The production and use of green methanol fuel are notably more expensive, raising questions about how carriers will recover these additional expenses.

Shipping companies will need to depend on the willingness of cargo owners to pay a significant surcharge for environmentally friendly shipping in order to offset the higher cost of green methanol fuel.

Recently reported by Alphaliner, carriers are exploring the idea of offering ‘green slots’ on vessels powered by conventional fuel. These slots come with a condition: they cannot exceed the number of ‘green TEU miles’ generated on carbon-neutral ships.

To simplify, if a carrier operates ten ships of equal size, with only one powered by green fuel, then 10% of the total TEU miles travelled by the fleet would be considered ‘green’. The shipping company could then sell 10% of its TEU miles as ‘green’, including cargo transported on conventionally fuelled vessels. However, the cost of these green slots is expected to be significantly higher compared to the price of a regular TEU mile.

However, it’s important to note that this transition won’t come without its challenges. The cost of these green slots is expected to be significantly higher than that of regular TEU miles, reflecting the premium associated with sustainable shipping practices.

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