Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio.
Today, there was a news titled “Shipboard CO2 becomes immediately visible, rated at five ranks”, so I will talk about my prediction of market movements derived from it.
Daily Logistics Radio by IINO san in 1st Oct. 2021
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On-time Visibility of CO2 from Ships
Weather news, a major meteorological information provider, has upgraded its CO2 emission monitoring service, called CIM (Carbon Intensity Monitoring) for ships.
First of all, this service makes the CO2 emissions of a ship visible in real time.
In addition, at the end of the voyage, the ship’s environmental performance can be rated on a five-point scale based on not only CO2 emissions but also fuel consumption and voyage distance.
New Regulations for Decarbonization
This tool is in line with a regulation called ” Carbon Intensity Indicator ” to be introduced by the International Maritime Organization (IMO) in 2023.
It ranks the fuel performance (CO2 emissions) of a voyage on a 5-point scale from A to E.
If a particular ship receives E rating once, or D rating for three consecutive years, the ship’s operator or owner will be obliged to submit an improvement plan for the following year.
In 2023, LNG Ship Completion Rush Begins
A lot of ships are being built now, and most of ships based the LNG fuel are scheduled for completion in 2023. I’m sure the new ships will be able to meet the regulations, but what will happen to the ships based heavy oil that we have been using?
I don’t know how ships will be evaluated by the new regulations, but it is certain that the shipping companies will be able to control the amount of shipping capacity.
Therefore, it will not cause to be going to lead to an oversupply of ships and a collapse in market prices, due to overbuilding as Suez boom in the past.
How will the shipping market change?
I think that current ocean freight rates are too high, but in the pre-Corona market they were too low.
Looking at the current market trend, I suppose that freight rates will still be high in 2022.
Also, as I explained in this radio, after 2023, freight rates will most likely not go down due to new regulations, which make possible to control the supply of shipping capacity.
Summary
As you can see, in international logistics, regulations are always updating. If you understand this information, you can predict the general flow of the market.
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