Since the start of the Israel-Gaza conflict, about 20% of global shipping has been rerouting from Suez, through the Cape. That adds about 40% more travel time, which translates to roughly a 6–8% increase in global fuel demand. This also results in a similar increase in CO2 emissions, as the industry is still in the early stages of addressing decarbonization. The premiums, however, have not been impacted as drastically as initially expected. The global marine fuel supply chain has adapted, with changes in demand shifting predominantly toward the East, especially China and Singapore.
Your thoughts on the decarbonization journey in the shipping sector?
There’s more awareness and activity toward decarbonization across the shipping and marine fuel industries. But if you look at the data, unfortunately, the ambition versus the reality seems quite different. Currently, there are about 61, 000 ships in the global merchant fleet, and less than 1, 500 of those have the capacity to use alternative fuels. That’s only about 2.4% of the global fleet. Another important factor is the order book - ships scheduled to be built over the next few years. There are about 5, 200 ships on order, and the good news is that roughly half of those will be capable of using some form of alternative fuel. However, even combining these
with the current fleet, we’re still looking at no more than 5% of the global fleet being alternative fuel-capable over the next few years. A key challenge is not only ship financing but also the capacity to build new ships, which is directly tied to shipyard capacity. That utilization is quite high, which means there are significant bottlenecks in getting new, alternative fuel-capable ships in the water before the end of the decade. Additionally, new regulations are coming into play, such as the EU ETS, which is a trade of carbon emissions for use in conventional fuels with the matching EU allowances.