Global trade is being impacted by climate change as well. A vital canal’s capacity has been cut in half due to the drought at the Panama Canal. As per the reports, the Panama Canal will need at least the rest of 2024 to fully recover from the 2023 drought that depleted water levels, choked vessel traffic and cost shippers millions of dollars.

Argelis Moreno Lopez, senior forecast and market analysis specialist in the Panama Canal Authority’s strategic planning division, told Bloomberg recently that La Nina (the periodic cooling of ocean surface temperatures in the central and east-central equatorial Pacific) was expected to usher in rains during April 2024, providing relief after record dryness afflicted the key transit channel in 2023.

Since trade accounts for around one-third of greenhouse gas emissions worldwide, trade is only beginning to feel the effects of its own medicine. In actuality, greening commerce is not only necessary to ensure that everyone has a sustainable future. For international trade, it is also an existential requirement.

Green Shipping: A Must

Every year, over 11 billion tons of commodities, or 85% of all trade, are transported by sea. By 2050, this number is expected to quadruple. Even while the maritime industry presently contributes only 3% of greenhouse gas emissions worldwide, if nothing is done now, this percentage might rise to 17% by the middle of the century. Given the recent Red Sea interruptions that pushed for longer routes, the share could be considerably greater shortly. In actuality, the maritime sector has contributed to a +42% increase in worldwide CO2 emissions since 2000.

According to C40 Cities Climate Leadership Group, a green shipping corridor is a maritime commerce route on which zero-carbon emissions ships and other emissions reduction programmes are deployed, and emissions reductions are measured and enabled through actions and policies.

Green shipping corridors first came to prominence in Glasgow at 2021’s COP26 Climate Summit, as 19 countries joined the first-ever framework to create zero-emission ocean shipping corridors, with the signing of the Clydebank Declaration for clean shipping corridors.

As per Aylin Somersan Coqui, CEO of Allianz Trade, decarbonising maritime transportation will thus be crucial to making international trade more environmentally friendly. It’s also a pressing race against the clock: In the maritime shipping industry, emissions must stabilise by about 2025 despite projected increases in activity, and then decline until 2030 to reach net-zero emissions by 2050.

“Greening fleets have emerged as the industry’s top concern. Thirteen of the top 30 shipping corporations globally have already established a net-zero aim for the years 2040 to 2060. Naturally, there is a cost associated with these lofty objectives: our projections indicate that the industry must invest a minimum of USD23 billion per year to meet its climate ambitions,” Coqui remarked in her opinion piece for the Global Banking and Finance Review.

And it seems that “Green Shipping Corridors” are actually mushrooming around the world now, after the much-needed consensus at the London headquarters of the International Maritime Organisation (IMO), as industry leaders pitched for the need of turbocharging commercial shipping’s green targets.

As per the latest data from the classification society DNV, the number of green shipping corridor initiatives doubled in 2023 and, as of February 2024, stands at 57 with Los Angeles, Singapore, Antwerp, Rotterdam, the Baltic Sea and southern Japan leading the tally, in terms of fostering dedicated green fuel shipping channels.

More Green Goods Commerce

Only if green products and technologies—from biofuels and mercury-free batteries to vehicle catalytic converters and septic tanks—are created, implemented, and dispersed at a never-before-seen rate will the shift to a low-carbon economy be feasible. The trend is really good in this regard. The percentage of green goods exported worldwide increased by around +5% between 2000 and 2022, Coqui noted.

Europe is leading the way in the trading of green commodities. The United States is now the largest importer of green products and technologies outside of the EU27 as a whole, while Germany alone leads the US in green exports.

The competitive advantage of 19 out of 27 European Union economies in low-carbon economies has been preserved or even increased. Green products made up over 15% of Germany’s total exports in 2022. The nation has also had the most increase in exports of environmental goods as a percentage of GDP (+6.9pps) between 2000 and 2022, trailed only by South Korea and China.

By concentrating on the manufacturing and export of environmentally friendly products, Europe can further penetrate the expanding worldwide markets for clean technology. This has the potential to spur economic expansion and more funding for the green transition. Eliminating tariffs on these products may have a significant impact.

Trade barriers for environmental items remain high, with tariffs standing at a hefty 5.4%, while the overall tariff rate is 8.6%. Lowering the cost of importing green products would increase their accessibility and affordability for both businesses and consumers.

It would also encourage producer rivalry, which would spur innovation both locally and internationally. According to the Allianz Trade’s estimates, the removal of tariffs on environmentally friendly products might increase export volumes by more than 10% annually, or USD 184 billion.

Make The Overall Economy Green

To expand the supply and decrease the price of green technologies, we must first pull on five major levers to make commerce more environmentally friendly. First, the world’s most powerful economies should re-engage in promoting and supporting green trade. The second requirement is consensus among all parties regarding what constitutes a green product. Third, through proper labelling and public price subsidies, governments should establish clear norms and standards for sustainable production and consumption. Fourth, to lower the cost of green products for consumers, customs tariffs should be further cut or eliminated. Lastly, governments should establish extra tax advantages for green enterprises and reroute excess savings into supporting those companies.

Nonetheless, to lower the carbon footprint of every produced commodity that is traded internationally, we also need to step up our efforts to green every industry. Businesses will therefore require incentives from the government and other sources in several areas. Regarding borrowing and lowering investment uncertainty through instruments such as contracts of difference; utilising subsidies to make environmentally friendly investments profitable and scalable; tackling climate-related issues through creative jobless plans; transferring to safe and secure supply chains through comprehensive risk management; and advancing a truly circular economy by instituting quotas to allay financial worries.

“We must employ all available technologies and policy alternatives to promote green commerce since it is no longer a choice. Global commerce has significantly aided in the development and decrease of poverty over the past few decades, and it is our responsibility to encourage businesses and pressure policymakers to make it more sustainable going forward,” Coqui concluded.

The post IF Insights: Challenge for global trade to go green or crumble appeared first on International Finance.

Assistive navigation and data-sharing technologies are making the shipping industry more competitive, safer and sustainable. Smart shipping’s operating principle revolves around the autonomous movement of inland vessels/seagoing ships.

The holistic concept covers the on-board vessel technologies and the design of ports and waterways, in order to ensure that the data collected by sensors (installed in an operational smart shipping environment), can help the vessel to either manoeuvre autonomously or prompt the crew to take action.

Understanding the concept further

Smart shipping is all about allowing the vessels to sail more efficiently, and in the long run, making the commercial maritime sector more competitive and investment-worthy. Devices like alarm monitoring, power management, dynamic positioning, integrated navigation suite and electronic engines ensure that the crew members are deployed and performing their tasks as effectively as possible.

While the concept of ‘Smart Shipping’ may give us hints about ‘Futuristic Vessels’, it isn’t the case all the time.

“First of all, a smart ship doesn’t refer to a specific type of ship but rather to the capacities of the vessel. Definitions of smart shipping vary and cover a range of smart concepts and technologies. Autonomous vessels are considered smartships, but not all smartships are autonomous,” said Marine & Offshore.

Smartships optimise onboard and onshore operational processes through digitisation. Crucial subsystems of the vessel are becoming digital, backed by data harnessing and analysing capabilities to assist the crew in conducting informed decision-making.

Whether to increase/decrease the ship’s speed on a particular waterway or to generate more data on the travel route, smart shipping helps maritime professionals to undertake quick decision-making, decisions which affect things like transport costs.

For smart shipping to be successful, the ability of data to be processed, contextualised and transformed into useful information for the right person at the right time is very crucial here. Customised dashboards, insight-generating solutions, notifications and alerts come together and give the smart shipping ecosystem its desired shape. These solutions predict and simulate optimised scenarios to gain a better profile and analysis of the ship’s performance and support operational decisions.

“So if a ship uses connected tech and churns out data, it’s a smart ship, right? Not necessarily. It’s true that each shipping company, from vessels to onshore operations, is a potential goldmine of data. But, several more factors are vital in turning data points into useful information, including data quality, real-time integration, contextualisation and sharing. A mountain of data points does not make a smart ship – but timely valuable information for the right person does,” Marine & Offshore explained the fluidity of the concept further.

An ocean of opportunities

While it will be a natural tendency to term anything denoted with ‘smart’ with entities like autonomy, artificial intelligence and the Internet of Things, ‘Smart Shipping’ is much more than that.

“By transforming a mass of data into action, ships become smart and can reap the benefits. Only with an accurate profile of the ship’s performance, can owners and operators optimise their operations. Through enhanced monitoring, they can measure the improvements, analyse and compare scenarios and define efficient strategies. This gives owners greater visibility and results in time and cost savings,” Bureau Veritas said.

Smartships partly automate data entry and reporting processes, apart from ensuring greater accuracy. Ship owners can then analyse the data and evaluate measures to improve their vessels’ efficiency and sustainability, from voyage planning and weather routing to optimising onboard machinery controls and maintenance planning. Also, the commercial shipping sector can use the above solution to meet emission reduction targets as well.

Discussing smart shipping’s role in the maritime industry’s future can give the impression of a homogenous digital solution for all vessels. But that is not the case.

In fact, ‘Smart Shipping’ doesn’t come with a ‘one size fits all’ approach as the degree of digitalisation and data quality management, in most cases, vary as per factors like vessel type, operations to location and business models.

“Classification plays an important role in facilitating the shift toward smart shipping and supporting maritime stakeholders’ effective adoption of data-driven processes,” says Bureau Veritas, which itself has developed and deployed Smart Shipping solutions to its clients.

The Netherlands, for example, has been proactive in embracing smart shipping solutions. The country, which reportedly encounters 140 accidents every year on its waterways, is now enhancing the maritime safety game with ‘Smart Warning and Navigation Systems’, where technology is now assisting the ship skippers to perform the necessary tasks during their journey and in that process, bringing down the threat called ‘Human Errors’.

Smart Shipping technologies can coordinate a ship’s navigation plan with the opening and closing times of locks and bridges, and take account of the available mooring space in harbours and port terminals while using the environmental data to help a vessel adapt to its speed as per the weather conditions and save fuel.

The Dutch Ministry of Infrastructure and Water Management has now allowed the trials of Smart Shipping methods on its inland and territorial waterways. These trials will help the country to determine its policy direction on the overall shipping industry.

Practical examples

In September 2023, news emerged about maritime industry player Ascenz Marorka being awarded a contract from LNG shipping services provider GasLog, under which the latter’s fleet of over 35 LNG carriers will be upgraded with Ascenz Marorka’s ‘Smart Shipping2 Solution’. The contract revolves around the integration of high-frequency sensor data and manually reported data, along with a comprehensive set of online applications for managing, monitoring and optimising the energy and environmental performance of GasLog’s ships.

In August 2023, South Korea saw the arrival of an LNG-powered bulk carrier, fitted with artificial intelligence (AI)-based machinery monitoring and safety systems. HL Nambu 2, built by Hyundai Samho Heavy Industries, is claimed to be the first ship in the world to reportedly sport AI engineers, in the form of HiCBM, an integrated ship status monitoring solution, and HiCAMS, an integrated safety control solution. These two systems diagnose the ship equipment in real-time and automatically recognise emergencies like onboard fire.

In July 2023, a new partnership to incorporate blockchain technology into marine energy trading was launched by British multinational professional services network Deloitte, marine solution provider KPI OceanConnect and payment services provider ZTLment. These three parties entered into a collaboration on the creation of a digital platform for trading carbon credits in the shipping industry.

Two months after that, a government-level £1.5 million fund was initiated to enable feasibility studies for planned green shipping corridors between the United Kingdom, Norway, Denmark, and the Netherlands. These green shipping corridors will see the operation of low/zero emission vessels.

Introducing ‘SmartShipping’

Let’s discuss ‘SmartShipping by Komorebi’, an AI-powered tool that optimises maritime transport operations while reducing its environmental impact through weather routing and performance optimisation.

Maritime traffic, as of October 2023, is producing 2.5% of the planet’s total CO2 emissions. While the International Maritime Organisation aims to reduce the stat by 40% before 2030, the industry also faces the situation where fuel is occupying some 60% of the total operational cost of sea transport, thereby pushing the bill in this area to €120 Billion per year. The sector is looking for ‘Route Optimisation’ to save 3-10% of the current fuel expenditure figures. And last but not least sailing under adverse weather conditions is causing 48% of total maritime casualties. ‘SmartShipping by Komorebi’ has emerged as an answer for the above industry challenges through its ‘Data Driven Optimisation Model’.

The innovation uses advanced mathematical models to accurately simulate the interaction of waves, currents and wind on a specific vessel while combining the evolutionary optimisation algorithms and gradient descent variation methods to find the optimal route according to the user-defined criteria.

“Oceanographic and weather conditions are constantly changing, so optimal routes will change every day. Also on a given day, the optimal route will be different for each vessel. All our data are daily updated from main weather and ocean data providers,” commented ‘SmartShipping by Komorebi’, while explaining the product.

In conclusion, ‘Smart Shipping’ heralds a transformative era for the maritime industry. Beyond mere autonomy, it’s a nuanced blend of digitalisation and data management tailored to each vessel’s unique needs. From enhancing safety in Dutch waterways to AI-equipped LNG carriers, real-world applications are diverse. The ‘SmartShipping by Komorebi’ initiative exemplifies how AI, weather routing, and performance optimisation can drive efficiency, sustainability, and cost savings—a crucial course for an industry navigating the seas of innovation.

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