Global News Maersk, Amazon ink 20,000-FEU green fuel transport deal

Amazon has signed an agreement with Maersk to ship 20,000 FEUs through 2024 on vessels operating on green biofuel, including the carrier’s new 2,100-TEU methanol-powered feeder vessel that will dock in Copenhagen on its maiden voyage on Sept. 14.

The deal is the latest in a series of green fuel offerings made to cargo owners by ocean carriers and forwarders as they prepare for tightening carbon emissions regulations from the International Maritime Organization (IMO) and the European Union.

Adam Baker, vice president of global transportation at Amazon, said in a statement Wednesday the online giant was collaborating with Maersk with a view to finding “actionable solutions to decarbonize maritime shipping.”

Baker said it was the fourth year Amazon had a biofuel deal with Maersk, but for this latest deal the green shipping would include the carrier’s first methanol-enabled feeder vessel as well as vessels using other biofuels.

The green fuel deal with Amazon will be offered under Maersk’s Eco Delivery product and will see a reduction of 44,600 metric tons of CO2-equivalent emissions compared to standard bunker fuel. The deal covers the rest of 2023 and 2024.

Narin Phol, president/North America at A.P. Møller-Maersk, said in the statement that decarbonizing shipping was a significant step that had to be combined with many others in the supply chain.

“We share a common goal with Amazon to reduce our total greenhouse gas [GHG] emissions to net zero by 2040,” he said. “As cosigners of the Climate Pledge, we must constantly create new opportunities to make this a decade of action.”

The Climate Pledge is an environmental effort co-founded by Global Optimism and Amazon and driven by 400 companies in 38 countries that have committed to reaching net-zero carbon emissions by 2040. Signatories agree to measure and report GHG emissions on a regular basis, implement decarbonization strategies in line with the Paris Agreement and neutralize any remaining emissions with credible offsets.

The Maersk statement noted that ECO Delivery will use primary data for fuel consumption in the methodology to report emissions savings with greater precision that will include other GHGs in addition to CO2. The new product will also provide price certainty and stability and will be de-linked from the fossil fuel market.

The cost per TEU compared with conventional bunker fuel will be higher, and although the carrier declined to specify by how much, a Maersk spokesperson told the Journal of Commerce that “we price ECO Delivery reasonably above the cost of carbon.” New regulations creating urgency There is an urgency emerging in the drive to decarbonize. The IMO revised its GHG emissions strategy in July that will see a market-based carbon tax measure imposed by 2027.

From Jan. 1 this year, it also became mandatory for all ships to calculate their energy efficiency existing ship index (EEXI) to measure their energy efficiency, while also initiating the collection of data for the reporting of their annual operational carbon intensity indicator (CII) that will be used to determine a ship’s CII rating. The measures are designed to cut ship emissions.

The European Union has in force its “fit-for-55" package of environmental measures, including the European Union Emissions Trading System (ETS) that will make the reduction of emissions by at least 55% by 2030 a legal obligation. Both measures will drive the uptake of alternative fuels in the coming decades.

In preparation for the measures, carriers such as Hapag-Lloyd, Ocean Network Express (ONE), HMM, Mediterranean Shipping Company and CMA CGM have rolled out green fuel services, and most global forwarders also offer low-emission products as part of their ocean services.

Still, there remains large question marks over the willingness of the wider cargo-owning sector to pay sometimes significantly more for services using lower-emission fuels. The services typically come at a premium to standard ocean transport options as the alternatives to fossil fuels are more expensive.

In Europe, the forecast price for carriers complying with the ETS is about €130 per tonne of CO2. The cost of compliance with the ETS for the maritime industry will top $3.2 billion in 2024 and rise to $9.1 billion in 2026, according to calculations by Hecla Emissions Management. Carriers can’t absorb full costs of green energy Carriers are reporting some limited success with their green products.

Hapag-Lloyd earlier this year launched its Ship Green “book and claim” service that will be underpinned by ships running on biofuel. While the uptake by the market has initially been slow, Hapag-Lloyd CEO Rolf Habben Jansen told reporters in a briefing Monday that demand for the premium services has improved in the last few weeks.

He emphasized that at some point, cargo owners will have to accept that alternatives to fossil fuels will be more expensive.

“It’s just an illusion that over time this will not have to be paid for by the customers, because it’s not something shipping lines, or anyone for that matter, can just absorb,” Habben Jansen said.

“This is a real cost, and it’s quite substantial, and over time that will be thrown into the cost base,” he added.

“Some of it may be compensated at some stage through carbon taxes, but we have to look at the real costs and those are unfortunately higher than for fossil fuels.”