Carbon emissions up as ships reroute from Red Sea to Cape

Xeneta, the freight analytics consultancy has reported that its CEI, which measures emissions per tonne of cargo shipped across 13 key trades, reached a peak of 104.7 in the first quarter of this year. The most affected were trade lanes from the Far East to the Mediterranean, where the CEI surged by 63% in the first three months compared to the previous year. Xeneta’s analysis shows that containers transported on this trade route via the Cape of Good Hope travelled an additional 5,800 nautical miles on average. Emily Stausboll, an analyst at Xeneta, pointed out that the issue is not just the distance but also the fact that ships are sailing at higher speeds to make up for lost time. This speed-power curve leads to a significant increase in fuel burn and emissions as ships sail faster.

Xeneta’s data indicates that cargo owners and shippers are exploring new options. For instance, air cargo demand from Dubai Airport to European destinations increased by 190% in March compared to the same month last year. Stausboll noted that while air freight is more expensive than ocean freight, it is also less sustainable. Therefore, the shift to hybrid sea-air services via the Middle East is expected to result in increased carbon emissions per tonne of cargo transported.

There are also notable implications for ocean freight costs. Ships travelling to ports in the European Economic Area will face significantly higher EU Emissions Trading System costs for longer Cape voyages. This is likely to have a substantial impact on supply chains, leading to increased raw material costs, manufactured goods prices, and retail inflation across the bloc. Stausboll stated that carriers will try to pass these costs on to businesses shipping the goods, either through higher ocean freight rates or additional surcharges. She emphasized that while ocean freight container shipping is just one sector, it highlights the significant impact war can have on carbon emissions and the climate.