Expert Column Paradigm Shift in the Shipping Industry: An Era of Sustainability and Technological Innovation

In recent years, the shipping industry has faced various challenges, including environmental sustainability, technological innovation, regulatory changes, and supply chain diversification. Key issues such as reducing carbon emissions to combat climate change, transitioning to eco-friendly ship fuels, and enhancing operational efficiency through digital transformation have emerged as major priorities. These changes are driving a paradigm shift in the shipping industry, which will be critical for the industry's long-term survival and competitiveness. Decarbonization Environmental sustainability has emerged as a central task for the modern shipping industry. The International Maritime Organization (IMO) implemented a regulation starting January 2020 that limits the sulfur content in ship fuels to 0.5%. This regulation pressures shipping companies to consider using low-sulfur fuel, installing scrubbers, or adopting alternative fuels. Such measures are crucial for protecting the marine environment, aiming to reduce marine pollution and improve air quality. The regulation significantly decreases the emission of sulfur oxides (SOx), contributing to better air quality in port cities and reducing air pollution.

In July 2023, the International Maritime Organization (IMO) adopted the "2023 IMO Strategy on Reduction of GHG Emissions from Ships." This strategy aims to reduce carbon emissions by at least 20% (up to 30%) by 2030, at least 70% (up to 80%) by 2040, and achieve net zero emissions around 2050, compared to 2008 levels. This is an enhanced target from the previous goal of a 50% reduction by 2050. However, the 2030 and 2040 reduction targets are more of an indicative benchmark to encourage voluntary national efforts, unlike the mandatory 2050 target. This strategy imposes greater responsibility on the shipping industry while serving as a guide for sustainable development.

Consequently, the 2020s will be a crucial turning point. Securing more environmentally friendly fuels and devising practical measures to reduce carbon emissions are of paramount importance. The adoption of low-carbon or carbon-neutral fuels such as LNG (liquefied natural gas), hydrogen, ammonia, and methanol, alongside maximizing the energy efficiency of existing ships, will be critical. For instance, methods to reduce energy consumption include hull designs that minimize resistance, efficient engine technologies, and optimized routing.

To achieve successful decarbonization by 2030, the shipping industry will require 17 million tonnes of oil equivalent (Mtoe) of carbon-neutral fuel, which represents 30-40% of the world's total production of such fuels. Meeting this demand will necessitate global cooperation. Governments and companies must collaborate to support technological development and infrastructure, thereby stabilizing and expanding fuel supply chains.

Technological Innovation : Big Data and Analytics Big data analytics play a crucial role in maximizing operational efficiency and optimizing resource consumption for shipping companies. This technology analyzes vast amounts of data in real-time, enabling shipping companies to make faster and more accurate decisions. Consequently, it strengthens the competitiveness of the shipping industry and enables sustainable operations.

Through big data analytics, shipping companies can precisely analyze vessel operational data, playing a crucial role in reducing fuel consumption. Analyzing patterns of fuel usage and setting optimal sailing speeds and routes can enhance fuel efficiency. Additionally, optimizing maintenance schedules can maximize vessel uptime and reduce costs associated with unnecessary maintenance.

Big data analytics is also valuable for predicting changes in shipping freight rates using market data. By analyzing indices such as the Shanghai Container Freight Index (SCFI) and the China Containerized Freight Index (CCFI), companies can understand market trends and make strategic decisions accordingly. This predictive capability allows shipping companies to respond quickly to market changes and maximize profitability.

Supply Chain Diversification Geopolitical risks are significantly impacting the maritime industry. Trade disputes between the United States and China, conflicts between Russia and Ukraine, and instability in the Middle East directly affect shipping routes and volumes, disrupt logistics flows, increase shipping costs, and heighten trade uncertainty.

For instance, after Yemen's Houthi rebels began attacking ships passing through the Red Sea in December 2023, trade volume through the Suez Canal decreased by 50% in January and February 2024 compared to the previous year. In response to growing risks, global shipping companies opted to bypass the Suez Canal, a major route to Europe, and chose alternative routes such as the Cape of Good Hope.

When ships opt to bypass the Suez Canal and choose the Cape of Good Hope route, shipping times increase by over 10 days, and transportation distances increase, leading to significant increases in shipping freight and insurance costs. Consequently, the Shanghai Containerized Freight Index (SCFI) surged for five consecutive weeks after recording 1730.98 on March 29, surpassing the 2500 mark.

Supply chain restructuring will be a key factor in shaping new strategies for shippers and shipping lines in the global economy. Therefore, reducing dependence on specific countries in supply chains, establishing dual systems, and enhancing supply stability through inventory expansion and advanced demand forecasting are essential. The Future of the Shipping Industry The shipping industry is entering an era of paradigm shift centered around sustainability and technological innovation. This presents both challenges and opportunities, as shipping companies need to adopt eco-friendly technologies and enhance operational efficiency through digital innovation to achieve environmental sustainability. Additionally, a strategic approach is needed to analyze and respond appropriately to international regulatory and policy changes. The future of the shipping industry will be determined by how effectively it adapts to these changes.

In January 2025, the 2M Alliance between Maersk and MSC will come to an end. Following this, MSC will opt for independent routes, while Maersk will start a new cooperation called Gemini Cooperation with Hapag Lloyd from February 2025 onwards. The announcement of the formation of Gemini Cooperation is expected to trigger a catalyst for reshaping the shipping alliance landscape by inducing shifts in alliance rankings and widening the gap in vessel capacity. Consequently, discussions on reshaping shipping alliances are expected to become more active.

The shipping industry will move towards a more efficient and environmentally friendly direction through sustainability and technological innovation. This will enable the shipping industry to continue to play a central role in the global economy. Shipping companies must enhance their competitiveness and build a sustainable future through proactive responses to these changes. This paradigm shift will serve as an opportunity to strengthen the shipping industry, leading to positive impacts on the global economy. # Reference [1] IMF, Red Sea Attacks Disrupt Global Trade .

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