The impacts of carbon pricing on maritime transport costs and their implications for developing economies

Rojon, Isabelle; Lazarou, Nicholas‐Joseph; Rehmatulla, Nishatabbas; Smith, Twp

doi:10.1016/j.marpol.2021.104653

Cited by 36 publications

(12 citation statements)

References 22 publications

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“…For example, the pricing of carbon for the shipping industry is likely to increase the freight costs of 'Small Island Developing States (SIDS)' and 'Least Developed Countries (LDCs)', due to these countries tending to be far from major trading routes, and because port efficiency is low in these countries. For example, a 10% increase in per unit transport cost can lead to an 8.5-18.5% decrease in the quantity of exports from these counties [40].…”

Section: Discussionmentioning

confidence: 99%

“…The question also arises as to the future price of carbon that has to be paid, and how this will impact the costs for ship owners, the freight rates, and other costs payable by shippers and, ultimately, upon trade volumes, as a result of increased transport costs. Rojon et al [40] provide a comprehensive review of a number of works looking at the impact of carbon pricing on freight costs [41][42][43][44][45][46][47]. The authors summarize the works reviewed by stating that, in all except one study, a carbon price on maritime transport would increase freight costs by between 0.4% and 16%, with most concluding that the increase would be less than 10%, with a corresponding impact on import prices of mostly less than 1%.…”

Section: Evaluating the Impact Of Decarbonization On Shipping Costsmentioning

confidence: 99%

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Evaluating the Costs of Decarbonizing the Shipping Industry: A Review of the Literature

Cullinane

Yang

2022

JMSE

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The decarbonization of the shipping industry has risen to a new level of significance on the agendas of policy makers and strategic decision makers. This paper focuses on the likely cost implications for the shipping industry of recently implemented, and future planned policies that seek to reduce the carbon footprint of the sector. The scale of the problem is presented through a summary review of the International Maritime Organization’s fourth greenhouse gas study of 2020. The regulatory context, which is emerging as a response to overcoming this challenge, is analyzed at both the global and EU level. The potential cost implications for the future, in terms of this new regulatory context, are then analyzed on the basis of a review of academic and industry sources. Our paper concludes that alternative, zero-carbon fuels are the best way forward, but that operational and technological innovations will not be sufficient to bring about the complete decarbonization of the industry within the foreseeable future. Thus, market-based measures are required. Finally, the options available, and the likely implications of each of these options, is addressed, suggesting that there will be both winners and losers in the race to decarbonize the shipping industry.

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Section: Discussionmentioning

confidence: 99%

Section: Evaluating the Impact Of Decarbonization On Shipping Costsmentioning

confidence: 99%

Evaluating the Costs of Decarbonizing the Shipping Industry: A Review of the Literature

Cullinane

Yang

2022

JMSE

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“…In addition to the economies of scale mentioned above, trade imbalance is another important factor in international trade affecting maritime transport costs, especially for the container shipping market. Trade imbalance means that carriers need to reposition empty containers [8], and the larger the trade imbalance is, the more significant the cost of empty container repositioning [23]. Most current studies use export and import trade to construct new variables to measure trade imbalances and study their impact on freight rates [2,20,21,24].…”

Section: Literature Reviewmentioning

confidence: 99%

“…Individual fixed effects allow us to control time-invariant factors affecting container rates and international trade, including geographically relevant factors such as distance and islands. In addition, variables such as the market structures on maritime routes, the shipping connectivity of bilateral countries, the location of ports in international liner-shipping networks, and the level of port infrastructure and port efficiency also affect freight rates [2,8,24,25]. However, these variables that define the structure of the shipping routes are only available at the annual base level, and they remain stable in the short term [20].…”

Section: Source Of Freight Rate Datamentioning

confidence: 99%

“…Conversely, maritime transport costs are also a ected by international trade. Maritime transport costs are expressed in the carrier's position as freight rates [7,8], which depend on the interplay between transport demand and shipping capacity [9]. Among them, transport demand is a derivative of international trade, so freight rates are also a ected by international trade [10,11].…”

Section: Introductionmentioning

confidence: 99%

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Container Freight Rates and International Trade Causality Nexus: Evidence from Panel VAR Approach for Shanghai and ASEAN‐6 Countries

Ding

Wang

2022

Discrete Dynamics in Nature and Society

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Container shipping drives the development of international trade, yet previous studies have not fully appreciated the possible bidirectional causal relationship between container freight rates and international trade. In the context of the “twenty-first Century Maritime Silk Road,” we use data on export container freight rates and import/export data from Shanghai to ASEAN-6 countries (Singapore, Vietnam, Thailand, Philippines, Malaysia, and Indonesia) from February 2017 to January 2020 and apply a panel VAR to explore the relationship between maritime transport costs and international trade in the container shipping market. We use the freight rate data are from the Southeast Asia Freight Index, which is used for the first time in an empirical study. The quality and reliability of the freight rate data allow this paper to better identify causal relationships. The results of the panel Granger causality test and the orthogonal impulse response function suggest a bidirectional causal relationship between freight rates and export trade; to further explain, an increase in export trade lowers export freight rates, but an increase in export freight rates hinders export trade, and a growth in import trade unidirectionally raises export freight rates. We believe that international trade may impact freight rates through economies of scale and trade imbalances.

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Environmental impact investigation of combined CCS and SCR on a ship by a case study

Zincir,

Deniz

et al. 2024

Greenhouse Gases

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The environmental and economic performance of a post‐combustion solvent‐based carbon capture system (CCS) combined with a selective catalytic reduction (SCR) system is investigated on a 48,600 kW engine container ship to meet the International Maritime Organization's emission reduction strategies through 2050. The proposed system uses aqueous ammonia to mitigate the produced CO2 and NOX emissions onboard a ship. Moreover, the combined system is investigated through a voyage‐based case study using an engine room simulator, assuming that CCS and SCR are implemented on the reference ship. During the case study, the referenced container ship sailed from Rotterdam to New York, and the estimations were made by using Netpas Distance 4.0 software program. Results indicate that a total of 3,606.04 ton‐CO2 and 92.40 ton‐NOX are produced, while 3,345.43 ton‐CO2 and 40.67 ton‐NOX are captured during the voyage. Furthermore, an economic analysis is carried out after the case study. Findings of the economic analysis are: CAPEX of CCS is $32.07 MM and SCR is $2.19 MM, while OPEX of CCS and SCR are $188,873 and $103,681, respectively. In addition, it was calculated that implementing CCS could avoid the CO2 tax cost of $19,472, while the economic value of the CO2 captured was $113,590. © 2024 Society of Chemical Industry and John Wiley & Sons, Ltd.

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The impacts of carbon pricing on maritime transport costs and their implications for developing economies

Cited by 36 publications

References 22 publications

Evaluating the Costs of Decarbonizing the Shipping Industry: A Review of the Literature

Evaluating the Costs of Decarbonizing the Shipping Industry: A Review of the Literature

Container Freight Rates and International Trade Causality Nexus: Evidence from Panel VAR Approach for Shanghai and ASEAN‐6 Countries

Environmental impact investigation of combined CCS and SCR on a ship by a case study

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