A report released by the Research Triangle Institute, RTI International, a nonprofit research institute for the Environmental Defense Fund (EDF), has shown that climate change impacts could cost the shipping industry an additional $25 billion every year by 2100 if actions are not expedited to reduce emissions.
The report, titled, ‘Act Now or Pay Later’, showed that average total operating profits for the global container shipping industry were less than $20 billion annually from 2018 to 2020.
It showed that after growing rapidly in the last 25 years, shipping is now responsible for about 20% of global transportation-related emissions while shipping-related emissions rose nearly 5% in 2021.
“This report clearly shows that without bold action, the impacts of climate change will severely strike the shipping sector,” Marie Hubatova, senior manager for EDF’s Global Transport team said.
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According to the report, some of the Impacts that climate change has on the shipping industry and ports include:
· Sea level rise.
· Severe tropical storms.
· Inland flooding.
· Drought.
· Extreme heat events.
Hubatova explained that while the decarbonization debate is currently focusing on the costs of new fuels and technologies, it is important to consider the costs of postponing that transition in delays, disruption and damage from climate change impacts — which reach tens of billions of dollars annually.
“Without action from shipping and all transport sectors to cut emissions, we can expect supply chain crises like last years to become a regular occurrence,” she said.
While stronger storms at sea require rerouting, RTI estimated that each additional day a vessel is at sea would cost roughly $75,000 if it consumed 150 tons of fuel daily.
The report showed that the cost of previous major storms adds up to:
· $2.2 billion at U.S. ports for Hurricane Katrina in 2005.
· $46 million at U.S. ports for Hurricane Florence in 2018.
· $10 million at the Port of Shanghai due to a two-day disruption from Typhoon Haikui in 2012.
· $65 million at China’s Port of Dalian due to a five-day disruption from Typhoon Lekima in 2019.
The report further explained that In 2019 for instance, record water levels on the Mississippi River led to transportation disruptions for exporting agricultural goods, leading to nearly $1 billion in losses.
In the same year, the shipping industry lost $230 million to $370 million due to severe drought in the Panama Canal region and limits on through traffic.
It is also estimated that the increased annual costs due to port disruptions and storm damage will increase by $2.9 billion to $9.8 billion by 2050. That range was estimated to increase by $7.6 billion to $25.3 billion by 2100.
Story was adapted from Freight waves.
