Ocean Capital Partners

Insights

The Switch to Sustainable Ports

It’s almost impossible to talk about sustainability without first taking a deep look at the current trends of global gas emissions and the effects it has had on the environment. When we analyze the greenhouse gasses emission projection, it is evident we are on our way to reach a temperature increase anywhere from 3-6 degrees celsius. This is a significant difference from the 2 degree celsius target the Paris climate change agreement had set in 2010.

Due to this outlook, different multilateral organisms and government agencies all over the world, are pushing for legislation that will lower the carbon footprint and contribute to the creation of a more sustainable future. Additionally, over the last years there has been a strong increase in societal pressure on environmental performance. This has been specially seen on younger generations, who have a higher chance of experiencing the direct impacts of global warming. These factors have caused a widespread change in different industries, causing them to adapt their growth strategies in order to take into account sustainability principles. Even though the possibility of incorporating the maritime sector in the Paris agreements has long been discussed, this has not happened yet. However, the different policies and international maritime environmental regulations indicate a global transition to a cleaner and greener industry. Some important recent regulatory developments are:

    • SDG 14 aims to sustainably manage and protect marine and coastal ecosystems from pollution, as well as address the impacts of ocean acidification.
    • The new IMO 2020 regulation requires to bring the Sulphur cap in fuel oil for ships down from 3.50 per cent to 0.50 per cent.
    • The initial IMO strategy aims to reduce CO2 emissions from international shipping by at least 40% by 2030, pursuing efforts towards 70% by 2050, and to reduce GHG by at least 50% by 2050 compared to 2008.

      The IMO energy efficiency design (EEDI) index sets standards for new ships and associated operational energy efficiency measures for existing ships.

      This increase in regulation, leaves sustainability as the most important value a company in our industry can adopt. All active players have both a legal, and moral obligation to re assess our entire supply chain – making sure we are taking into account sustainable principles every step of the way. This is the only way a company can drive a sustainable triple bottom line approach. Today, this is more relevant than ever: these regulations are expected to become the most important cost drivers in the upcoming years, and one of the most important differentiating factors in the maritime industry. But, how can we as leaders in our industry catalyze this sustainable change?

      The first step is to start working on an overall mentality shift. It is important to shift from a “bigger and biggest” to a “greener and greenest” mentality. We need to start finding new competitive advantages for our industry. One trend that has been evident these past few years is that the race for economy of scale vessels seems to have come to an end. Large-scale ship building projects are therefore unlikely to continue. Ports are still debating about the need for mega investments in the accommodation of the mega ships to deliver and obtain financial results. Even though, Investments in physical port infrastructure are expected to decline, there has been a shift in focus on investment towards more technological solutions.

      Ports are increasingly implementing innovations in the entire value chain with a wide range of used technologies. Successful ports collaborate to create supply chain synergies within their ecosystem and cluster. By implementing technological solutions, ports are being able to achieve more automatic, digitalized, and connected logistic chains which will drive higher productivity levels. Through the use of data analytics and digital twin technology, route optimization, energy management, fault detection & resolution can be done much more cost efficiently. Advanced data analytics allows for streamlining and optimization of existing infrastructure usage and operations by eliminating unnecessary / empty transport. Therefore, it is safe to assume that ports that have invested in technological advancements have a significant competitive advantage.

      Smartports imply becoming data-minded; creating new approaches to data management, engaging in innovative delivery models and novel governance tactics. The main objective with this technological transition is to significantly improve operational and economic efficiency for all port stakeholders. On the supply side, the key value drivers for terminal operators are improvements in capacity, reliability, support, and costs. On the demand side, the drivers for port users are savings in time, increased security, and traceability: knowing where and how their merchandise is at every point in time. The improvement of the drivers on both sides, is mirrored by the implementation of technological solutions which optimize, automate, and integrate supply chains within their ecosystem and cluster. This leads to the creation of supply chain synergies which drive further economic efficiency, port resilience, and environmental and social sustainability.

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