Backhaul trades can prove problematic for carriers attempting to balance carbon emissions requirements with the need to protect profitability on the fronthaul, says an article published on xeneta website.
Challenges In Balancing Carbon Emissions And Profitability
Backhaul trades pose a dilemma for carriers as they strive to align with carbon emission requirements while safeguarding profitability. The balance between climate change concerns and global profitability becomes a critical consideration for carriers.
Q3’23 CEI Carrier Ranking
To delve into this challenge, the Xeneta and Marine Benchmark Carbon Emissions Index (CEI) focuses on the significant backhaul trade from North Europe to the Far East. Carriers are ranked based on carbon emissions, with lower scores indicating better environmental performance.
Declining CEI Performance
In Q3, the leading performer on the CEI for this trade was CMA CGM with a score of 94.6. Despite securing the top spot, CMA CGM’s Q3 performance marked a decline compared to Q2, reflecting the global increase in the CEI across trades during Q3.
Factors Impacting CEI Scores
CMA CGM’s positive CEI score was influenced by factors such as the average age and size of deployed ships, filling factor, and sailing speed. While the average age decreased and ship size increased positively impacting the CEI, a record-low filling factor at 64.7% and an increased sailing speed at 14.9 knots negatively influenced the score.
Comparative Analysis, CMA CGM, Maersk, And ONE
CMA CGM’s ability to claim the top spot with a low filling factor and increased sailing speed raises questions. In comparison, Maersk and ONE, ranking in the top three on the CEI, registered higher filling factors in Q2. The age of ships deployed on the trade emerges as a crucial factor, with CMA CGM’s average age surpassing competitors.
Overall Increase In CEI For The Trade
The collective efforts of carriers on the North Europe to Far East backhaul trade resulted in an overall CEI score of 101.8 in Q3, marking a 6.2-point increase from Q2. The trade witnessed the lowest-ever filling factor at 69.3%, while the average speed across all carriers increased marginally.
Carrier Prioritization, Profit Vs. Carbon Emissions
The declining CEI performance on this backhaul trade suggests carriers may prioritize financial performance on the fronthaul, possibly at the expense of carbon emissions concerns. Data indicates improved CEI performance on the fronthaul compared to deteriorating performance on the backhaul.
Complexity Of Carbon Emissions Performance
The complexities of carbon emissions performance are evident, as highlighted by carriers like Hapag-Lloyd. While propping up the CEI on the North Europe to Far East backhaul, the same carrier achieved a significantly different CEI score on the Far East to South America East Coast trade. This emphasizes the dynamic and evolving nature of carbon emissions performance on a global scale.
2024 Outlook And Regulatory Impact
The landscape is anticipated to become more complex in 2024, especially for trades involving Europe, with the introduction of EU ETS regulations. Ongoing updates on carriers’ carbon emissions performance will be crucial for understanding their success in balancing climate change responsibilities within a challenging market.
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Source: Xeneta
