Freight shipping accounts for over 3% of global emissions. With countries such as the UK seeking to switch from local trade to global trade, shipping is forecast to continue growing year on year. Whatsmore, greenhouse gas emissions from the world’s maritime fleet are heading in the wrong direction. Between 2020 and 2021, they went up by 4.7%, with most of the increase coming from container ships, dry bulk carriers and general cargo vessels. The fleet’s average age is also rising, which is another concern for the environment since older ships pollute more. New research suggests this is also having a detrimental impact on our children’s health.
Here’s what Ivan Ladan founder of Marine Digital has to say on the subject:
In recent years, we have witnessed unprecedented natural disasters, which has led us to ask ourselves: what is the cause? The issue of climate change has become extremely urgent.
In our daily lives, everyone can contribute by sorting waste, saving electricity and water, using less plastic, and striving to be responsible. These actions have become the norm. However, at a global level, we see significant blind spots, especially in the supply chain. It accounts for up to 70% of emissions.
The way completely eco-friendly products reach our shelves, whether it’s avocados or electric bicycles, biodegradable plastics or fertilizers for trees in the park, all of it is transported by trucks and ships that are still highly inefficient and hidden from the average person’s view — we don’t walk through industrial zones every day.
Less than 100,000 maritime vessels, responsible for transporting over 80% of global cargo, move 11 billion tons each year. Not many pay attention to these numbers, but 100,000 seems like a small figure compared to 50 million freight trucks. Yet, these 100,000 commercial ships account for 15% of the world’s black carbon emissions—sulfur oxides and nitrous oxides. They directly contribute to diseases like cancer and asthma, especially in children. Each 5th childhood asthma case is related to the maritime industry emission.
When international forums discuss Industry 4.0 and widespread automation, people working in maritime logistics smile sadly because faxes and mechanical engines are not relics of the past in this industry. Over 60% of the world’s fleet consists of retrofits. Each year, approximately 2,000-2,500 new ships are built, and you can imagine the inertia—it is immense.
Moreover, not many understand the complexity and fragmentation of logistics. More than 7 different roles are involved in transporting goods from point A to point B: ship owners, ship managers, chartering companies, cargo owners, agents in ports, terminal operators, insurance companies, banks, and each of these roles can be represented by multiple companies. The most challenging aspect is that the participants are not motivated to help each other increase efficiency.
When we speak with ship owners, I often hear them ask, “Who will pay for digitalization? Why should I invest?” Many market participants simply do not know what advanced technologies can offer.
It is also important to note that major technological players and maritime logistics is a market for technological giants, are not rushing to upgrade. They have already incurred costs for previous-generation technologies, and their investors want to recoup and earn returns on their capital.
All of this creates a rather complex coordinate system. In the venture environment, experts often say that unicorn projects are simply not possible due to the high complexity of this industrial market.
However, there are significant changes happening, both technological and regulatory.
For example, Elon Musk and Starlink have significantly reduced the cost of internet connectivity, leading to a transformation of the satellite communication market. The price has dropped from 3,000-5,000 euros per month for unlimited connection on a ship to 250 euros per month for 50 GB. And this is already sufficient for telemetry data or digital services.
Data collection technologies and wireless communication have taken significant leaps forward, and in the coming years, we will witness a disruption in ship digitalization, a decrease in costs, and an acceleration of digitalization efforts. This undoubtedly plays a role in the fight for our environment.
Furthermore, the wave of regulations that began in the 2020s has started the adaptation process this year. While carbon intensity ratings may spark discussions, they are undoubtedly a step forward, motivating participants to cooperate and driving the industry towards innovation.
This year, I have observed a significant increase in the activity of ship owners and managers seeking solutions to reduce fuel consumption and emissions.
This year, I see a significant increase in the activity of ship owners and managers searching for solutions to reduce fuel consumption and emissions. Within the next 2.5 years, they are required to reduce emissions by 11%, which is a challenging task, especially for non-digitalized vessels.
There is a wide range of technologies aimed at reducing emissions, but in my opinion, the main bottleneck is the implementation cost and payback period.
Hydrogen fuel cells are still quite expensive, scrubbers have only recently become truly efficient due to a two- to three-fold increase in fuel prices, and the adoption of sail or kite technologies is still far from widespread. The majority of the market will undoubtedly seek simple solutions.
Reducing engine power, utilizing weather routing, and improving technical ship management are significantly cheaper than retrofitting or upgrading a vessel for millions of dollars.
We have developed a solution focused on quickly collecting data from ships, creating an accurate digital twin, and identifying potential optimizations on a fleet scale. I believe this technology is crucial because, before retrofitting a vessel or investing in a specific solution, it is essential to understand which measures will bring the greatest efficiency gains. Additionally, considering that sea conditions constantly change, imagine the fuel consumption difference of more than 20-30% between two identical vessels sailing the same route with a 5-hour interval. It is not always clear whether this discrepancy is due to weather conditions, crew error, or the technical condition of the vessel.
Even when it comes to navigation, despite having satellites covering all seas and powerful weather forecasting models, there are limitations. For instance, the minimum pixel size for weather data is approximately 10 km square. Now, consider the margin of error when it comes to surface currents. Another issue that still causes significant conflicts in the industry is the synchronization of actual engine performance with navigation algorithms. If you have a 15-year-old engine that is 20% less powerful than when the ship was built, imagine how useful the most advanced artificial intelligence would be in planning the navigation route for such a vessel.
These small details contribute to significant inefficiencies. I can confidently say that the energy efficiency losses of an average commercial vessel exceed 30%. This results in massive emissions and budgetary implications.
In preparation for COP28 in the United Arab Emirates, together with several market stakeholders, we are working on presenting a practical implementation of artificial intelligence to significantly reduce emissions in maritime logistics—around 10%+ on average and up to 25% in cases where fragmentation in the supply chain is successfully resolved (warehouse-port-ship-port-warehouse).
My mission, along with the mission of my team, is to assist maritime professionals in using modern technologies to transform the impact of maritime logistics on our planet.