At the cutting edge, industry leaders are making impressive strides with new fuels, enhanced energy efficiency, and innovative operational models. These pioneers frequently lead discussions on the urgent need for transformation, collaboration, and sustainability.
However, a large portion of the global shipping fleet, particularly smaller vessels vital for transporting essential cargo and raw materials, faces a different set of challenges. Sub-Panamax vessels, which make up 63% of the global dry bulk fleet, are essential for the global economy but are making slow progress in the energy transition.
Many small and medium-sized operators, especially in developing countries, lack the infrastructure and financial flexibility to adopt new technologies. Despite a genuine concern about climate change and a desire to improve, these operators are constrained by several factors that differ greatly from those affecting larger, more affluent shipping companies.
Green finance and insurance initiatives, while beneficial, often increase costs for smaller operators without offering immediate financial returns. The high-risk nature of their daily operations makes the additional financial burden of investing in cleaner vessels even more challenging.
In the dry bulk sector, smaller investors find themselves at a disadvantage, with high-value vessels receiving priority in shipyard slots. Consequently, smaller and less profitable vessels face delays and limited options for integrating new energy-saving technologies.
Data from Clarksons highlights a significant skew in the adoption of energy efficiency technologies (EETs). Larger vessels, such as Very Large Crude Carriers (VLCCs) and Capesize bulkers, show higher adoption rates, while smaller ships, including Handysize bulk carriers and smaller container vessels, lag behind. Currently, only about 11% of the Handysize fleet and 16% of smaller container ships are equipped with EETs.
The trend towards installing EETs during the newbuilding stage is growing, with 60% of recently delivered vessels featuring such technologies, up from 25% a decade ago. However, small ship operators face additional hurdles due to technical limitations and the economic pressures of retrofitting older vessels.
As Vasileios Gkikas of ABS recently pointed out, the design of smaller bulk carriers, particularly those with deck cranes, presents technical challenges for retrofitting new fuels or large-scale EETs. The anticipated trajectory of the energy transition suggests that retrofitting may need to outpace fleet renewal to meet stricter regulations.
Despite ambitious carbon reduction goals and net zero targets, the pace and scope of decarbonization will vary across the shipping industry. The IMO's commitment to a just and equitable transition underscores the need for an inclusive approach that addresses the diverse challenges faced by different sectors.
Recognizing and addressing these disparities is crucial to ensuring that all parts of the shipping industry can effectively contribute to achieving global net zero emissions.