The dry bulk shipping sector's journey towards decarbonisation is a complex and evolving narrative, with a recent panel discussion at the Geneva Dry conference highlighting the industry's challenges and opportunities. The event brought together key players to explore the practicalities of achieving net zero emissions, with a focus on fuel choices, efficiency upgrades, carbon pricing, and the thorny issue of who pays for cleaner shipping.
The panel, moderated by Mette Asmussen, World Economic Forum's lead on industry and climate, set the tone by emphasising the importance of 'constant care' and 'agility' in the face of uncertainty. This sentiment was echoed by Eman Abdalla, founder and CEO of Seathrew Marine, who noted a significant shift in the industry's mindset over the past two years. From debating the very belief in decarbonisation, the industry has now moved to discussing 'how' and 'by when'.
Despite geopolitical tensions and regulatory uncertainty, Abdalla highlighted progress made through pilot projects, operational efficiency gains, and the adoption of energy-saving devices and dual-fuel newbuildings. However, she stressed that the focus should now be on scalability and making investable decisions for the future.
The economic reality of dry bulk shipping, with its thinner margins compared to tanker or container markets, was a recurring theme. Alastair Stevenson, head of digital analysis at SSY, pointed out that carbon costs have a proportionally bigger impact on bulk shipping economics. EU emissions costs can account for 1-2% of cargo value in bulk trades, significantly higher than in other shipping sectors.
Stevenson also emphasised that the real burden of decarbonisation extends beyond fuel and emissions costs, encompassing legal, compliance, and contractual complexities. This multifaceted challenge was further underscored by Vale's global head of chartering, Michelle Gonzalez, who detailed the company's extensive efforts in shipping efficiency measures through partnerships with owners and technology suppliers.
Vale has invested heavily in scope 3 emissions initiatives and aims to reduce shipping emissions by 15% by 2035. Gonzalez highlighted the company's 15-year journey in testing technologies, from advanced hull coatings and propeller upgrades to wind propulsion systems, with Vale now controlling the largest fleet of vessels with wind propulsion.
Wind-assisted propulsion was identified as a promising short-term solution by several speakers. Engebret Dahm, CEO of Klaveness Combination Carriers, praised wind-assist systems for their combination of lower capital costs and performance gains. Operational measures, such as AI-based weather routing and digital optimisation systems, were also highlighted as relatively low-cost ways to cut emissions immediately.
The importance of collaboration between owners and charterers was repeatedly stressed. Louis Dreyfus Company's shipping decarbonisation lead, Fabian Kowatsch, emphasised the potential for win-win scenarios through joint projects, citing a growth from one decarbonisation initiative in 2022 to 14 collaborative projects last year.
The panel also discussed the role of fuel flexibility and optionality in an uncertain regulatory landscape. Vale's ethanol-fuel plans and Louis Dreyfus' methanol dual-fuel vessels were cited as practical early-stage solutions. However, owners remain cautious about committing to expensive fuel transitions without regulatory clarity or customer support.
Abdalla argued that uncertainty has now become structural, requiring the industry to embed uncertainty into its strategy. This involves balancing immediate efficiency upgrades with long-term flexibility on future fuels and technologies. The question of who ultimately funds decarbonisation was also raised, with Abdalla emphasising the industry's reliance on other industrial players' willingness to pay for cleaner shipping.
Dahm countered that the overall cost impact on end consumers remains relatively small, and that the shipping sector will always find the lowest-cost way to decarbonise. The session concluded with a call for faster implementation rather than continued debate, with Gonzalez stating that decarbonisation is a non-negotiable reality, and the industry must act now.
