Red Sea Conflict Leads to Surge in Carbon Emissions in Ocean Freight Container Shipping

A recent report by Xeneta and Marine Benchmark reveals a significant increase in carbon emissions in ocean freight container shipping due to the ongoing conflict in the Red Sea region. The Carbon Emissions Index (CEI) reached the highest point of 107.4 in Q1 2024, marking a substantial rise since its inception in Q1 2018.

The escalation of conflict near the Red Sea, particularly involving threats from the Houthi militia, has compelled major shipping routes to circumvent the Suez Canal. This diversions around the Cape of Good Hope in Africa has resulted in longer transit distances and subsequently, a surge in carbon emissions.

Analysts at Xeneta noted that containers plying the route from the Far East to the Mediterranean witnessed a staggering 63% increase in carbon emissions in Q1 2024 compared to the previous quarter. Similarly, shipments to North Europe saw a 23% surge, indicating the environmental toll of the geopolitical tensions.

Due to the avoidance of the Red Sea region, cargo vessels now travel an additional 5,800 nautical miles on average, significantly up from the earlier figure of 9,400 nautical miles. The longer distances, along with higher sailing speeds to compensate, have led to heightened fuel consumption and subsequent carbon footprint.

Moreover, the disruption in the region has prompted some shippers to resort to air freight services to safeguard their supply chains. Cargo landing in ports like Jebel Ali in the Arabian Gulf is being flown from Dubai Airport towards European and North American destinations, resulting in a substantial spike in air cargo demand.

The shift towards hybrid sea-air services through the Middle East has raised concerns over increased carbon emissions per ton of cargo transported. Additionally, the revival of rail services through Russia for transporting goods from the Far East to Europe as an alternative mode is also contributing to higher carbon intensity.

These developments in the maritime sector coincide with the International Maritime Organization’s (IMO) ambitious target of achieving net zero emissions in global ocean freight shipping by 2050. The introduction of EU-ETS regulations in 2024, requiring shipping providers to pay based on carbon emissions, adds another layer of complexity to the carbon footprint dilemma.

While the IMO’s targets focus on carbon intensity, the actual emissions data revealed by Xeneta underscores the challenges posed by ongoing conflicts on sustainability efforts. The financial implications of longer sailing distances, increased fuel cost, and higher emissions on ocean freight carriers are poised to impact shipping rates and potentially lead to additional surcharges.

As the industry navigates through the environmental and economic repercussions of geopolitical strife, the inevitable trade-offs between supply chain continuity, emissions reduction, and financial sustainability are coming to the forefront.