More Fascinating Facts about the Shipping Industry

Sarah Foster

Blog Post #4 – Connection to Week 5: Supply Chain Networks

More Fascinating Facts about the Shipping Industry

The McKinsey publication discussed how new technologies and emerging markets would affect the supply chain in the future.  The article discussed the growing importance of “proximity to demand” and the potential impacts of innovations such as 3D printers.  However, none of the reading directly addressed the future of the shipping industry, which I became interested in after reading “10 Fascinating Facts about the Hidden Industry That Touches 90% of What You Own.” I was not aware of most of the “10 Fascinating Facts” about the shipping industry, such as the information regarding safety conditions on ships and the fact that shipping is “so cheap that, rather than fillet its own fish, it is cheaper for Scotland to send its cod 10,000 miles over to China to be filleted and returned to Scotland.”[1]  I also found it interesting how much pollution ships emit and started wondering if there is any new technologies aimed at creating a greener shipping industry.  As expected, some people are working on the issue:

·       “USC Researchers Working to make Shipping Industry Greener,” USC Viterbi School of Engineering, October 24, 2012, http://viterbi.usc.edu/news/news/2012/usc-researchers-working.htm.

In May 2010, a multi-year research partnership between Hong Kong’s Tai Chong Cheang Group and California’s Viterbi School of Engineering was launched, and researchers “are developing technology that improves the combustion efficiency in marine Diesel engines, thereby decreasing the harmful pollutants created, meeting strict environmental regulations, and cutting fuel costs.”[2]  The article goes on to discuss the significant contribution maritime ships make to the world’s greenhouse gases.  Researchers are “using transient plasma ignition (or TPI, a high-voltage electrical pulse applied over nanoseconds) to improve the ignition and combustion process in marine Diesel engines.”[3]

Another article related to greener energy and the shipping industry was published in The Economist in 2013:

·         “Sinking Under a Big Green Wave,” The Economist, March 30 2013, http://www.economist.com/news/business/21574517-shipowners-face-onslaught-new-environmental-laws-sinking-under-big-green-wave. 

This article claims that the shipping industry is struggling to comply with stricter environmental laws, and “to make matters worse, it is in the middle of a slump caused by too many ships chasing too little trade.”[4]  The facts regarding cheap shipping rates in “10 Fascinating Facts about the Hidden Industry That Touches 90% of What You Own” are aligned with The Economist’s conclusion that the supply of ships exceeds demand.  However, I do not think that this is grounds to abandon the stricter environmental regulations.  However, a valid argument is presented in opposition to stricter regulation, one shipping boss who chairs an association of bulk-cargo operators stated: “We carry 90% of world trade and we emit only 2.7% of the CO2 but still we are treated as if we are acting with indifference to the environment.”[5]  When you think about the issue in terms of how much is shipped, one really could argue that the shipping industry omits relatively less pollution than other forms of transportation.  However, I think that reducing greenhouse gases is important, and I support stricter regulations to incentive companies to innovate and find ways to reduce pollution.  Another approach to the problem that the International Maritime Organization is looking into is a market-based – tradable permits to emit CO2.[6]

Questions to Ponder:

•         Do you think the shipping industry needs stricter regulations?
•         Do you think a market-based approach like the proposed tradable CO2 permits would be a viable solution?
•          What solution would you propose?

---

[1]  10 Fascinating Facts About the Hidden Industry That Touches 90% of What You Own (Fast Company, September 5, 2013); www.fastcoexist.com/3016687/10fascinating-facts-about-the-hidden-industry-that-touches-90-of-what-youown?partner=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%

3A+fastcompany%2Fheadlines+%28Fast+Company%29

[2] “USC Researchers Working to make Shipping Industry Greener,” USC Viterbi School of Engineering, October 24, 2012, http://viterbi.usc.edu/news/news/2012/usc-researchers-working.htm.

[3] Ibid.

[4] “Sinking Under a Big Green Wave,” The Economist, March 30 2013, http://www.economist.com/news/business/21574517-shipowners-face-onslaught-new-environmental-laws-sinking-under-big-green-wave. 

[5] Ibid. 

[6] Ibid.