Don Maier
Associate Professor of Practice in Supply Chain
University of Tennessee
Thankfully, in a recent article about green initiatives in maritime transportation, written by Dr. Maier, things appear to be headed in the right direction. As a case in point, he references a new climate strategy signed this past July by 175 members of the International Maritime Organization (IMO), the United Nations global shipping regulator. Rather than setting a fixed timeline for change, signatories agreed to reduce their net-zero greenhouse gas emissions “by or around 2050”—as vague a timeline as there ever was.
While this might seem like a cop-out, what is accomplished here, as Dr. Maier points out, is the creation of conditions in which companies can begin to explore options and technologies to help reach their goals in a way that makes economic sense. After all, companies making massive investments in alternative fuels or emerging technologies need to be able to trust that their investments will pay off, rather than being cut off by government mandate. The hazy end date of the IMO’s goal gives them time to ensure that happens.
“Rather than setting mandates,” Dr. Maier said, “[IMO] provided goals, without telling companies how to get there. Now that is useful. Because different companies will have different approaches.”
As a case in point, Dr. Maier pointed to a challenge faced by Maersk following the recent acquisition of their first dual fuel container ship—where to refuel.
“So, they have this hybrid vessel that they’ll run from Asia over to Europe on continual rotation. They know they’ll need some sort of infrastructure support to refuel those ships and are showing that they have demand and are now expecting the rest of the industry, ports and terminals to come forward and say they have that infrastructure in place too. As an example, if they usually refuel in Rotterdam, but Rotterdam can’t handle methanol, they’ll say ‘Ok, Bremerhaven can do it’ and your trade shifts to Bremerhaven. The result of that is, you’ve now have ports and terminals competing against each other to supply your ship with the fuel you need.” The Port of Rotterdam though, remains a leader supplying alternative marine fuels.
In this example, the competition created by the flexible window (as per the IMO goal), gives everyone enough time to see what works and make the investments need to keep it all afloat, so to speak.
From our point of view, what is nice about the vague approach as outlined, is that it leaves room for those in the logistics industry to find proactive solutions, rather than reactive ones. Certainly, government and regulatory bodies have a role to play in creating the overall playing field, but with such a large industry change needs time. It also needs the input of the stakeholders involved.
A key stakeholder in all of this is of course, the general public—end consumers. With all this investment in new shipping technology, how much of the associated costs will end consumers accept?
“Consumers are saying yes, we need to be more green,” explained Dr. Maier. “We need to be sure that shipping companies clean up their act and use the most environmentally sound fuels available. But the question is, are we really willing, or ready for the additional costs that will hit us? Because it is going to hit us. Are people really prepared for what the world looks like when you have to pay $15 for a watermelon?”
The answer to that question is, well, vague. Some people might be OK with $15 watermelons on supermarket shelves. Others won’t be. The challenge is for governments and regulatory bodies to set environmental goals that create an economic climate in which companies can lower emissions and keep watermelon prices at levels consumers find palatable. It all comes down to finding the sweetest spot possible and that’s the overall goal of all supply chains