Emissions soaring as cargo patterns shift due to Red Sea crisis

Source: The Loadstar
Date: 23rd January 2024

While shipping around the Cape of Good Hope has increased ship emissions, by adding distance and voyage duration, uncertainty in maritime supply chains has led to a shift toward air cargo for some shippers.

This has created a massive secondary increase in CO2, which dwarfs that of the extended shipping route.

The Loadstar has shared data from SeaRoutes suggesting emissions from a vessel travelling around the Cape could be some 27% higher per teu than going via the Suez Canal.

However, this estimate assumes the vessel remains the same before and after the re-routing, and may be a considerable underestimate.

The latest findings from Sea Intelligence suggest a worst-case scenario would see the current supply-chain chaos cascading cargo onto smaller, faster ships. If that happens, CO2 per teu on an Asia-North Europe trade could increase by as much as 435%.

But even that estimate pales in comparison with the emissions implications of shippers’ current strategy – that of moving cargo from sea onto aircraft.

According to International Civil Aviation Organisation (ICAO) calculations, shipping the same amount of cargo via a realistic sea-air route – say, loading in Shanghai, carrying it to Dubai for a transfer to air to Schiphol – gives 36.2 tonnes of CO2 emissions per teu, a 4,872.6% increase over a conventional Suez Canal sea transit.

A Xeneta report finds that air cargo demand from Dubai to Europe increased by 11% in early January, with combined sea-air rates of $1.61 per kg, from a mid-2023 lull. Even with this higher price, rates are still only three times higher than those of China-Europe shipping, despite the gargantuan increases in carbon emissions.

Xeneta suggests that cannier shippers may wish to ship sea-air cargo via Los Angeles, which would reduce the extra freight cost to $1.33 per kg, only 2.6 times pure-ocean shipping. Combining ICAO data with that of SeaRoutes finds a total CO2 emission of 47.35 tonnes of CO2 emissions per teu – an increase of 6,386.3% over a conventional Suez Canal transit.

And another recent report from Xeneta confirmed that air cargo has seen a surge in demand in the weeks following the Red Sea crisis. In the week ending 14 January, air cargo volumes from Vietnam to Europe increased by some 16% year on year. At what is normally a lull period for airfreight, cargo shipped on the same route had increased by 6% compared with the October peak week.

“Routes from Vietnam to Europe are used heavily for apparel, a sector we have been told is switching more goods from ocean to air, due to the Red Sea crisis, so it is particularly noteworthy that we are seeing volumes increase to such an extent on this trade,” said Xeneta’s chief airfreight officer.

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