Charterers can kickstart a commercial decarbonisation in shipping

September 23, 2022

Commercial decarbonisation is when commercial players in the shipping ecosystem make carbon conscious shipping decisions in a profitable way. Decarbonising the shipping industry might seem like an overwhelming challenge that is far from a charterers main task. However, for early movers, the challenge can be turned into significant opportunities and competitive advantages.

The shipping industry is going through major changes in efforts to decarbonise, and even for ship owners it is hard to get an overview of the myriad of global, regional and national regulations and industry decarbonisation initiatives that are popping up on the horizon. For charterers this could seem like an overwhelming challenge, but as it often turns out, early movers can turn these challenges into commercial opportunities. Commercial decarbonisation summed up is commercial players in the shipping ecosystem making carbon conscious shipping decisions in a profitable way. At Siglar Carbon we emphasize the charterer’s role because their decisions highly impact shipping’s carbon footprint.

The best time to avoid emissions and carbon cost exposure is when planning the voyage  

The best moment to avoid unnecessary shipping emissions is when planning the voyage. Commercial shipping decisions made by the charterer in the cargo planning phase, like “What to transport where?”, “By what ship (size, position)?” and “At what time and speed?” highly impact shipping emissions. Factoring carbon emissions and the coming carbon cost into these decisions might trigger flexibility and disclose opportunities to slash emissions at scale, reducing the charterer’s carbon cost exposure at the same time.

How to turn the complexity of shipping emissions into commercial opportunity

So, how can you factor emissions into your decisions in a way that transforms your emissions challenges into opportunities? You need two things:  

  1. To understand how your historic chartering and trading patterns impact emissions, so that you can identify main emissions drivers (Historical emissions analytics)
  2. To know the carbon consequence of different choices regarding future voyages, so that you can locate the most carbon efficient alternatives (Predictive emissions analytics)
Turning the complexity of shipping emissions into a competitive edge

How reporting emissions becomes reducing emissions

To analyse chartering and trading patterns (historic emissions analytics) and understand how they impact emissions, is the best place to start. An example is understanding the emissions impact of the choice of chartering strategy. Our experience with, for example large cargo owners, shows that voyages done with a contract of affreightment (COA) are normally more carbon efficient than spot voyages which again are more carbon efficient than those done with time charter contracts (TC).

Understanding the emissions impact sounds easy, but it requires extensive background work.

  • Step 1:  Reporting for reporting
    Reporting is often initiated to comply with internal or external requirements. However, you cannot manage emissions if you do not measure emissions. So, reporting can also be the first step to understanding the emissions impact of your decisions. We know that it can be a hassle, and that’s why we have a team ready to manage the reporting from all your chartered ships.  
  • Step 2: Reporting for insights
    The next step is to tailor your reporting to make sure you get the insights you need to fully understand your own emissions history, disclose emissions drivers and find the most efficient ways to reduce them. This is taken care of in the Siglar Carbon reporting service.
  • Step 3: Reporting for opportunities
    The last step is to analyse the data and present it in a way that makes it easy to spot and cut emissions drivers and their related commercial opportunities. Guess what, we've done it for you in the Siglar Carbon Efficiency Platform.
From reporting emissions to reducing emissions

How predictive emissions analytics becomes a competitive edge  

Using emissions estimates to support your future cargo planning empowers further emissions reductions and improves your competitive edge. The Siglar Carbon Ship Finder is our primary tool to support the spot charterer’s most carbon driving decision - choosing the best ship in the spot market.

The Siglar Carbon Ship Finder ranks all available ships according to their estimated carbon emissions so that you can find the most carbon efficient ship at the click of a button. With this information, you can start factoring carbon into your commercial shipping decisions and position yourself for the carbon cost that could be added to your freight rates already from 2023.

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