Three shipping industry trends to watch for in 2023
The shipping industry faced considerable challenges in 2022. We negotiated the continued global pandemic and complex supply chain issues, unprecedented energy costs, and a major European war.
This year will surely bring more challenges, and this blog shares three trends we believe will impact the industry.
1. CII and EU ETS regulations
Two new regulations designed to make the industry more environmentally friendly are expected to shake up shipping in 2023.
The first is the Carbon Intensity Indicator (CII) — a framework that evaluates how a vessel operates from the standpoint of carbon emissions. A ship’s CII rating can range from A at the top of the scale to E at the bottom. You can calculate your vessel’s rating by dividing its energy efficiency by a benchmarking number for your type of vessel. An IMO chart will then show you the grading letter. To achieve a good CII score, you must run your vessel efficiently concerning route optimization, fuel efficiency, and the condition of your ship. As of January 1, 2023, the IMO requires vessels to measure and keep their CII data. If a ship achieves a low rating (D or E), it must take corrective measures.
A well-planned route that avoids extreme weather events could be the difference between a passing and failing CII grade.
This year will also see the phasing in of the EU’s Emissions Trading System Directive for the shipping industry. Shipping companies will now be obliged to surrender allowances for their verified carbon dioxide emissions, and it will start with 40% of verified emissions in 2024 and rise to 100% by 2026.
As shipping companies get to grips with these changes, the importance of using route optimization and weather data will only increase. A well-planned route that avoids extreme weather events could be the difference between a passing and failing CII grade.
This is the year for shipping companies to better leverage the vast amounts of data their vessels produce. The journey towards digitalization has been long, but the industry is beginning to realize the advantages that it can provide, including:
- Improved vessel performance
- Reduced operational costs
- Higher standards of safety
- Easier compliance with new and existing regulations
- Lower fuel consumption
New platforms are lowering data collection and processing costs, making digitalization accessible for more shipping companies.
Digitalization — linking onboard sensors, noon reports, and external data with data analytics platforms — has traditionally been only for larger shipping companies. However, more companies can begin their digitalization journey and start reaping the rewards thanks to the emergence of cloud-native SaaS platforms that lower the cost of data collection and processing.
One of the most interesting new developments is “fit-for-purpose” data, currently exclusive to DTN. DTN route optimization considers your vessel particulars and the onboard cargo when returning an optimized route, ensuring it conforms to all navigational restrictions in force. For example, if your vessel is taller than 40 meters, you would not be able to travel through the Kiel Canal in Germany. Without fit-for-purpose data, you would base your decisions on wrong information and not be able to leverage the full power that data can provide.
3. The power of data sharing
Data siloes help no one, so we hope that 2023 will be the year of data transparency.
For example, shipping depends on vessel owners and charterers making deals. However, both sides don’t always have the same data access, which would make for better faith negotiations. Vessel owners need to determine freight rates when pricing up a voyage, but it’s often based on a lot of gut instinct, which can lead to a deviation between owners in the marketplace and distrust on the part of charterers.
Data sharing can help improve negotiations by supporting the accuracy of voyage timelines and cargo bids.
Data can help owners better price up voyages without coming in too high (which puts off customers) or too low (which can eliminate profit). Weather data based on historical reports can help you determine how long a voyage will take and assess upfront costs a long time in advance.
At DTN, we don’t confine our data to siloes. We provide the data; what you do with it is up to you. It’s why we create APIs that allow data to flow seamlessly into your platform of choice rather than tell you the platforms you need to use. We believe it makes for a more transparent shipping industry.
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