Optimizing Red Sea container shipping routes for efficiency and cost reduction in a post-pandemic world

Posted: August 26th, 2023

Optimizing Red Sea container shipping routes for efficiency and cost reduction in a post-pandemic world
1. Introduction
The stream and volume of liner transport between Europe and Asia has always been an interesting aspect to study due to its involvement in the global economy and trading. An estimate of 90% of non-bulk cargo is being carried by containers, which includes the goods that are being shipped between Europe and Asia. It is amazing how containerization can offer customers a wide range of products, which will enable them to have access to products throughout the world. This provides us with an insight that the volume of container transport will increase in time to come. In recent years, maritime transport accounts for around 80% of the volume of global trade. This indicates that the demand for maritime transport is constantly increasing, and it is crucial for stakeholders to look into improving or improvising on current strategies to maintain their share of the market. Throughout the years, Asian countries, specifically China, have developed themselves into major exporting countries. By identifying China’s GDP in Fig 2, there is a vast increase in the export of goods from China to other parts of the world. This is due to the rise of China’s manufacturing industry, which offers a wide variety of products. Ern and Jutta (2014) have indicated that the increase in the quantity and variety of products offered by manufacturers causes consumers to spend more on foreign goods, which are of higher quality. This explains that there is a positive correlation between China’s manufacturing industry and the volume of goods being shipped to foreign countries.
With the information stated above, the EU is one of China’s most important trading partners. A study by Pham et al. (2018) showed that most goods from Asia to Europe are being shipped to southern and western EU, which includes countries like France, Germany, Italy, the Netherlands, Spain, etc. These goods are being shipped through the Suez Canal and Strait of Malacca. This gives us a focus on the route from East to West (Asia to Europe), and possibly it is important to analyze and identify the best routes and transshipment ports for future references.
1.1 Background
The Suez Canal has always played an essential role in connecting the East and the West. In recent times, the use of the canal, with its new expansion, has seen the Suez Canal become an even more important route for many shipping companies. The change in canal has seen companies reviewing their current routes to see if the Suez Canal is a viable option for them. If companies are currently using the East-about route, which takes ships from Asia around Australia and the Pacific, they are likely to not even consider the Suez Canal as an option. This is due to the fact that the East-about route is long and has the added benefit of many ports in which to restock supplies. An altered short route is faster, but many companies will avoid taking their ships through the piracy high-risk area of the Gulf of Aden adjacent to the Suez and alternate short route. With the recent surge in piracy attacks off the coast of Somalia, companies have already begun avoiding the Suez and alternate short route. This is exemplified in the fact that from 2001 to 2005, the number of ships that took the short route from Asia to Europe doubled as they attempted to avoid the pirate-infested area. With the recent expansion of the Suez Canal, companies are interested in reviewing their position to see if it is now safe to take their ships through the Gulf of Aden and the Suez Canal.
1.2 Objectives
Analysis finds a significant reduction in the length of the shipping routes between China and the Mediterranean that starts in the Mediterranean and goes through the Red Sea, instead of going around South Africa. Also, many of today’s largest commercial ships have been unable to transit the Suez Canal due to navigational draft restrictions and channel improvement problems. These improvements will enable more containers to be carried on the canal route to and from locations as far away as East Asia – reducing the number of container ships travelling the much longer Eastern route to the Mediterranean through the Straits of Malacca, then Indian Ocean, and finally north around the Cape of Good Hope. The research analyses and compares both the direct routes through the Suez Canal to the marginal route of going around South Africa. Future improvements that the canal can make are also considered to increase the number of containers that can be carried on the canal routes. Finally, the alternative and proposed improvements are compared to the increase in fuel consumption on the rising bunker fuel prices.
1.3 Significance of the Study
The globalization of the world has called for the efficient and cost-effective means of transportation due to the increase in international trade. This has led to the increased significance of sea routes, with an estimated 80% of global trade by volume and 70% by value being carried by sea. Sea trade plays a large role in the economic states of current day superpowers, and goes hand in hand with their industrial revolution. One such key player is China, which has seen a rapidly growing economy and has initiated becoming a superpower in current world affairs. Due to the rapid increase in sea trade, there is now a high amount of congestion at some of the world’s key ports at any one time. This leads to increased ship waiting times to dock, and also a high variability in the time it takes for a ship to reach different destinations along the same route. This has led to increased research in the shipping field to optimize trade routes for minimal cost and time. Numerous methods have been employed by industry and researchers such as the development of mega ships, advanced weather routing, and also investigating new canal routes such as the Suez and Panama canals.
2. Red Sea Container Shipping Routes
Potential Benefits of Optimization
An optimally derived route for the given time period will save the company in fuel costs and depreciation costs of the ship due to minimized travel times and minimized risk. It has been suggested that due to the substantial price difference between the two canal routes, there may be a case where larger ships with cheaper fuel costs may benefit in taking the longer route around the Cape of Good Hope despite the longer travel time. With the recent further escalation of fuel prices and additional charge of canal passage, it is quite possible that this scenario may need to be reconsidered. The possibility of armed security teams on board ships has to be evaluated against insurance premiums in the case for the safety of each route, and the avoidance of certain high-risk areas may have bearings on a decision to trans-ship goods to a safer location at higher costs. All of these possibilities are quality decision variables in a dynamic optimization model for a shipping company.
Current Challenges and Limitations
In focusing on the study of Red Sea shipping, it must be noted that many ships utilizing these routes may not necessarily have their origination or final destination within this region. An example of this would be shipments from Europe to the Far East, or vice versa, which may utilize the Red Sea as a channel between the Mediterranean and Indian Oceans. Despite this, the area itself is highly significant due to the quantity of oil transported from the gulf to various other regions across the world. This is evident since around 216 million tonnes of crude oil pass through the Bab-el-Mandeb strait annually, accounting for around 4.9 million barrels a day according to a 2005 estimate as mentioned by an article on Red Sea piracy by de Sirowy, A. Heaton, D. (2010). It is a predetermined statistic that the majority of shipping will be of the container variety rather than oil tankers due to the rate of return empty containers in efforts to maximize profits. This is a key issue to the risk analysis which will be described later due to the vastly different values of human and artificial targets, with the consequence of pirate attacks being quite severe in either case.
Overview of Red Sea shipping routes
Container shipping in the Red Sea is just one part of the global logistics chain. It encompasses a series of stopovers at ports and a number of potential routes which may be taken, with the general strategic decision being either to use the Suez Canal or avoid canal fees and charges by taking the longer alternative route around the Cape of Good Hope. Most companies look to employ the use of the Suez Canal despite the charge due to its substantially shorter travel time; this in itself depends on the direction of shipping due to the Canal only allowing for single direction traffic convoys at different times of the day. This decision regarding which exact route to take will generally depend on current fuel prices, global economic conditions, and potential pirate threats as mentioned by Beres, B. (2010).
2.1 Overview of Red Sea Shipping Routes
Major shipping routes in the Red Sea connect to the Mediterranean, the Northern Indian Ocean and North-South traffic through the Suez Canal. The famous bridge position in international shipping between East and West lies in the approaches to the Suez Canal. Modern traffic reflects the pattern of traditional trade, particularly in the case of Europe-Far East traffic which follows a linear pattern and is notable for its concentration. North and Southbound traffic is split, the former tending to hug the Arabian shore to avoid strong headwinds and the latter following the centre line of the Red Sea, which is then the meeting point for opposing traffic.
In general, Red Sea shipping routes are dictated by the confined nature of the waterway and the need to avoid diving operations or fisheries, which are most likely to occur at depths of 500m or less. Limited depths in the southern approaches to the Suez Canal (particularly at the Suez Canal container terminal) restrict Southbound traffic, requiring larger loaded vessels to take the long way round, bypassing the canal access to the container ports in Egypt. An example of a modern geographic factor is the Bab al Mandab Straits. The danger of attacks on ships from Somalia has led to a convoy system for larger vessels and increased use of protective measures such as shipboard security teams and the use of armed forces. This may be seen as limiting free transit through direct costs and increased insurance, thus altering the way the Red Sea is used as a highway between different regions.
2.2 Current Challenges and Limitations
The current Red Sea shipping routes have evolved in a dynamic fashion. This evolution was based on the prevailing global economic activity, the advent of ever larger and faster container ships, and the opening of new container terminals. The key driver of evolution has been the desire to link East Asia and the Far East with the lucrative markets of Europe and the Mediterranean. To date, the evolved routing has been somewhat ad hoc and is based on making use of the latest navigational technology while avoiding the ever-present threat of piracy. An example of this is the opening of the Gulf of Aden TSS, borne out of the need to provide a counter-piracy measure to those ships heading towards the Suez TSS off the coast of Yemen. From a navigational standpoint, the current routing has largely been dictated by the existence of Traffic Separation Schemes (TSS) and expansive No-Go areas that were designated as a result of security concerns such as piracy and terrorism. These navigational TSS and No-Go areas are often overseen by a coalition of different nations and are supervised by NATO or some other form of Maritime Security operations desk. Ashore in the Red Sea region, there are numerous national and international governmental stakeholders in the regional security. This includes but is not limited to the Saudi-led ISF (Combined Task Force 150) operations and the Djibouti Code of Conduct, an agreement being implemented in the region of Eastern Africa. The Chinese Belt and Road initiative will also bring about new development to the region with potential construction of new port and container handling facilities in order to facilitate the overland Silk Road to Europe. While this may bring economic benefits to the region, the security and navigational status quo that it seeks to challenge may exacerbate the situation of an already complex and difficult to determine navigational risk. With the expanded scope of modern vessels and the slow transit and response time of changes in No-Go and TSS areas, it can be expected that future revisions to these TSS and No-Go areas will bring about bewilderment to mariners and increase the danger of ground and collision incidents. This will, in turn, raise the risk of delay and potential for disruption to the supply chain and increase the insurance cost of shipping in the region. As the above situation demonstrates, the modern shipping environment in the Red Sea region is complex and comes with much risk and onus on the shipper.
2.3 Potential Benefits of Optimization
Implementing a comprehensive strategy for improving the current state of Red Sea container shipping operations has the potential to yield significant improvements. Optimizing the use of shipping routes can bring about cost savings and efficiency gains across all other scenarios that are investigated. With optimized routes, cost savings on bunker fuel and engine maintenance can be achieved by reducing travel time through an increase in vessel speed. Furthermore, shipping companies could potentially aim to provide a higher frequency of services, possibly even the same transit time with fewer vessels, effectively reducing vessel chartering and labor costs. This has the potential to lead to a significant reduction of transshipment volume and increased direct port-to-port services, particularly if a more centralized ports-of-call strategy is adopted, further reducing costs and transit times.
With an increase in globalization and offshore manufacturing, demand for container transport has steadily increased. A study of current global container trade growth rates predicts a near doubling of current container volume by 2020. Current fleet sizes are increased annually to meet demand, but an overproduction of tonnage has led to the present state of overcapacity and the struggle to achieve respectable freight rates. The overcapacity combined with the recent economic downturn has several ocean carriers on the brink of bankruptcy. By enabling more efficient routes, an industry with more than enough cargo volume to go around can potentially downsize its fleet and still provide sufficient service, increasing freight rates and reducing the likelihood of carrier bankruptcy.
3. Factors Affecting Efficiency and Cost Reduction
Port infrastructure and capacity remain highly significant to total transportation time and cost. Most Red Sea cargo is containerized and transhipped. Such cargo usually has to be warehoused at least twice, both at the mother port and again at the transfer port. The addition of storage time to total port time can vary depending on trade patterns and port restrictions. However, modifying such restrictions could vastly reduce costs and increase efficiency in the shipping of cargo. Ports that are not constrained by draft are more densely networked by liner shipping routes between each other and to intermodal transportation. Cargo from these ports generally has a lower transport cost.
Factors that affect the routes search efficiency and cost reduction can be grouped under five headings: weather and climate conditions, port infrastructure and capacity, vessel types and capacities, trade patterns, and market demand. Changes in the Suez Canal by Egypt in recent times have not only resulted in changes in tariff structure, but also in changes in pilotage requirements. The efficiency and safety of Red Sea navigation depends heavily on weather conditions, with the major constraints being wind and visibility due to sand storms. During the summer months, wind conditions from the northwest typically reduce the carrying capacity of tankers. Visibility is important for obvious safety reasons, although fog during winter months can sometimes close the Suez Canal to navigation.
3.1 Weather and Climate Conditions
Particular attention is necessary in the future for reefer cargoes with tightly defined temperature tolerance limits (e.g. pharmaceutical products), as even small variations in ambient temperatures can affect their quality and viability. Although beyond the scope of the current study, if climate change scenarios result in adverse variability of temperature/humidity conditions compared to present averages, this may influence the types of vessels and technologies used for shipping reefer cargoes, and even locate future production of temperature-sensitive goods closer to consumer markets.
Future climate change will likely result in altered reefer cargo regimes, with increased temperatures especially in the Gulf of Suez and southern Red Sea.
There are distinct variations in temperature and humidity between the northern Red Sea and the Gulf of Suez / southern Red Sea.
Most reefer cargoes shipped through the Red Sea experience low to moderate temperature ranges, with few instances of exceeding 25°C.
Primary data collected from Hapag-Lloyd and Maersk Line on reefer container cargoes shipped through the Red Sea was used to investigate the current temperature and humidity regimes, and potential shifts in the future based on climate change predictions. A few key points should be highlighted:
3.2 Port Infrastructure and Capacity
With the recent pandemic and decrease in cargo and container production, shipping industries will need to re-evaluate their existing infrastructure and port selections. This is especially relevant for the Red Sea, which will foresee a drop in container demand due to trades between Far East and Europe circumventing Africa to cheaper and quicker means by using the Cape of Good Hope route. This will cause all Red Sea routes to become overcapacity with a decrease in current port capabilities. Prior literature has analyzed the effect on infrastructure in the event of a downturn in economic conditions for the Malaysia Singapore Second Link bridge project, which uses the theory of real options to propose its flexibility in postponing construction activities until there is a resurgence in economic conditions. This can be transposed onto the situation of the Red Sea container shipping network, which could benefit from downsizing port infrastructure improvements and in some cases delaying these activities until there is an increase in market demand.
The efficiency of a shipping line is dependent upon the existing infrastructure and the available resources. The major part of which consists of the ‘port’ as it is the nodal point of any transportation network. The capability of a port can be measured by its throughput performance and its nature of adaptability with the changing needs of the client. Port selection is a long and difficult process and making changes to a network’s existing ports of call can be very costly and can impact on other factors affecting service such as transit time and cost. The potential for efficiency and cost improvements lie at ports where carriers can make big savings by consolidating cargo at regional hub ports or at transshipment ports with quick handling of import and export cargo. By centralizing import and export cargo at a single port of call, carriers can convert from a relay type system with cargo shuttling back and forth between a number of ports of call and transshipment points into a direct service. An example of current work focused on improving efficiency by consolidating cargo. This is being launched by Maersk Line and Mediterranean Shipping Co. through the creation of a new joint venture company that will operate a number of services between Asia and Europe with the main purpose of transporting cargo between the two continents and limiting the necessity for transshipment in the Mediterranean.
3.3 Vessel Types and Capacities
The types and sizes of vessels used to ship goods between the Far East and Europe have varied considerably in the past. Changes in the size of vessels serving the route have a significant impact on the number of services provided, the overall capacity provided, the competitiveness of the route, and the costs per container. Although the period 2009-2016 has already been covered in detail elsewhere, the broad trends in the types and sizes of vessels used on the route will be summarized here, adding information on how carriers on the route have been changing the size of vessels deployed in response to changing market conditions. These changes (often referred to as “cascading”) have a significant impact on the ports which handle the container vessels. An understanding of these trends is essential for any analysis of the future prospects for the route and the costs and benefits of possible changes to the Suez Canal dues system. In particular, it is important to know whether the current vessel size is close to the “optimum” for the Canal. Step changes in vessel sizes may have very different effects than gradual evolutionary changes. A major concern is that any changes leading to larger average vessel sizes may have negative impacts for the ports on the Mediterranean side of the Canal, which have recently been investing heavily in facilities to handle large container vessels.
Since the 1960s, improvements in container technology and changes in world economies have led to increases in the size of container vessels. Current designs of large Post-Panamax and New Panamax vessels have been the result of growing trade imbalances between Asia and Europe and the East Coast of North America. These vessel sizes have been optimized to minimize costs per container on long-haul routes by taking advantage of economies of scale. However, these vessels are not always used on every route due to differences in regional economics, transshipment costs, and constraints caused by physical characteristics of some of the world’s more narrow or shallow waterways.
3.4 Trade Patterns and Market Demand
Supply and demand is a concept that speaks volumes in the world of container shipping. In essence, a carrier would opt to impose drastic rate restoration and increase capacity in times of high demand and decrease the same when demand is low. While this seems to be to the benefit of the carrier, shippers of freight using the Red Sea route can actually benefit from this. With estimated seasonal slowdowns and changes in deployment of carriers dependent on the market, there are often deals to be struck which can free up space on vessels for freight at reduced rates. Ultimately, choosing the right service (price and transit time) using knowledge of what in the market is in the short and long term can save shippers additional cost in comparison to what they originally had available, therefore they may then be in a position to purchase more space on a vessel and increase the amount of freight they are exporting. This can trigger a snowball effect in stimulating economic recovery from the COVID-19 pandemic, with businesses finding it more affordable to sell goods to foreign markets, especially if import duties and taxes have remained the same and are low-cost in comparison to pre-pandemic.
This can be a crucial element in determining an increase in throughput in container traffic using the Red Sea, particularly in the case of laden exports from Asia to the Middle East and West Africa. Studies on the UCL MSc Shipping and Finance programme have determined that an increase in demand for Asia-Middle East services can lead to increased activity in transshipment hubs at the entrance to the Red Sea, particularly Port Said and Jeddah. This can allow carriers more opportunity to consolidate cargoes bound for the same destinations and improve economies of scale, with potential measures to increase vessel sharing agreements and coordinated services. Economic recovery and increased import demand in the Middle East and West Africa can also result in increased direct services from the Far East, particularly higher rated services aiming to avoid transshipment and serve import/export manufacturing industries in these regions.
4. Strategies for Optimizing Red Sea Container Shipping Routes
The importance of planning and scheduling in container shipping has been well recognized since the dawn of the industry. For the aspiration of achieving cost reduction and efficiency in the post-pandemic world, the importance of efficient and effective route planning and scheduling has never been greater. The traditional approach for shipping lines in scheduling their services has been to offer a weekly service calling a number of ports in a particular region in a logical sequence, and then to duplicate this same pattern of port calls in subsequent weeks. However, this approach is now outdated, inflexible, and unresponsive to the changing pattern of supply and demand. Moreover, over recent years, the competitive environment in container shipping has caused an increase in the number of transshipment port calls and a need for shipping lines to offer more differentiating products by having services with varying port calls and frequency. Thus, this adds further complexity to the task of constructing schedules. In optimizing its services, a shipping line will generally first look to try and improve the existing schedule for a particular service without making any major changes. This involves reviewing the service’s current level of reliability and the transit time for shipments on the service. The advent of the electronic log has made this task easier with the ability to capture and analyze the historical movement of the vessel. A shipping line will assess the reliability of a service by comparing the actual port arrival and departure times against the schedule. This can be done by measuring the percentage of on-time port calls or by calculating the service’s average deviation from the schedule in terms of port days or time. High levels of reliability are generally preferred by shipping lines as it allows customers to better plan and execute their shipments. An improvement in the schedule’s transit time can often be achieved by enhancing the service’s operational efficiency at ports and sea or by making changes to the pattern of port calls and the allocation of time for the different activities. Comparing Red Sea’s schedule and improving upon it may help determine a future course of action for Singapore on where its fast and slow steaming services can best be deployed. However, it is the construction of entirely new schedules which often present the most difficult and complex optimization problems. These are typically achieved through heuristics and trial and error methods using optimization algorithms and mathematical models. Transshipment services, in particular, are often high in complexity and require advanced methods to determine an optimal schedule. An example of this would be the development of a transshipment ‘hub and spoke’ system and optimum transit time differentiation for the activities subject to time windows. In the changing context of COVID-19 and the post-pandemic world, it is likely that the pattern of supply and demand will have changed for many regions and types of container shipping services. This will require shipping lines to reconstruct schedules so as to best meet a new set of customer requirements, and it may also provide opportunities for shipping lines to reorganize and consolidate existing services.
4.1 Route Planning and Scheduling
The traditional method is to perform manual trial and error to design a service and gauge its quality through the resulting simulated operational performance. Unfortunately, this approach is not effective in finding high-quality solutions in complex problems and does not readily support the impact of design decisions on the feasibility of the service pattern. In recent years, there has been much progress in the use of optimization models to automate the search for improved solutions in liner service design and the related problem of schedule recovery from disruption. This research has the potential to produce substantial cost savings, but there are many practical and contractual requirements that give rise to complex optimization problems. High-quality solutions tend to be found with models that incorporate an extremely large number of variables and constraints, but at the cost of lengthy computation time.
Route planning and scheduling is a complicated and time-consuming task. Shipping companies commonly face the task of designing a liner service among a given set of ports with the objectives of minimizing the operational cost of the service and maximizing the transport revenue for a given demand. The service must satisfy a variety of practical and contractual requirements, and be robust to the disruptions of the operating environment. The ports must be served in a sequence with a fixed frequency (the service pattern) and mainline ships must exchange containers at transshipment ports to maintain the designed frequency on feeder services. Typically, there are various possible patterns of calling and exchange along with a variety of alternative vessels and many other options about the assignment and stowage of containers on the vessels.
4.2 Utilization of Technology and Data Analytics
The ‘Route Exchange’ is a web-based service, which enables ship operators to buy and sell container slots on each other’s vessels, matching supply with demand. It allows carriers to optimize their networks, and in so doing, optimize their fleet by ensuring that operations are undertaken in the most efficient manner. By buying slots on other lines’ vessels, carriers can offer the same level of service with a smaller fleet, and consequently reap the economic and environmental benefits. This concept is particularly relevant to slow steaming, a method of sailing at lower speeds, proven to significantly reduce fuel consumption. Slow steaming however, results in a loss of direct port-to-port connections. With the ‘Route Exchange’, carriers can form vessel sharing agreements to offset this loss. The service has recently extended to airfreight, as the International Air Transport Association (IATA) and INTTRA announced the successful completion of a joint project which enables electronic communication between forwarders and airlines.
This concept of slot buying/selling is also feasible between carriers and terminals. Carriers can agree to make a certain port of call on their service a dedicated call to that terminal, and through ‘inter-terminal coordination’ with other lines, can switch slots to allow all carriers to service their agreements. This will lead to more efficient and reliable operations on fewer, but more heavily utilized vessels. INTTRA’s vision for the ‘digitalization’ of global container shipping directly reflects our strategy for optimizing Red Sea container shipping. The creation of a digital network to connect carriers with customers, and to facilitate the myriad of interactions between carriers, be it procurement of services or chartering arrangements, will enable more efficient and informed decision making at every step.
4.3 Collaboration and Partnerships
There are many ways in which shipping lines can work together to improve efficiency whether in a vessel sharing agreement for ship owners, chartering on break bulk or container vessels, or through alliances between lines. Often collaboration can lead to supply chain integration and in the case of the RSSL this can lead to more efficient logistics for shipments throughout the region. One of the key concepts of collaboration in the shipping industry is in the sharing of information. Often seen as a more low key approach to collaboration, information share between lines can often lead to improved efficiency for both parties and can provide opportunities to work together in the future. An example would be from a change to the ETA of a particular vessel in port, if this information was shared with a port authority and another shipping line, it could present an opportunity for faster stowage and lower quay rent. This also significantly increases the importance of communication in changing market conditions as discussed at the beginning of the article.
Collaboration and partnerships are a key feature in supply chain management across industries. The complex nature of supply chain activities, coupled with increasing globalization, is leading to a dramatic increase in the number of companies involved in the supply of a single good or service, driving companies to work together to improve efficiency and effectiveness. This is ever present in the shipping industry where companies are constantly seeking new ways of operating more efficiently and cost effectively. The Red Sea Shipping Lane (RSSL) is no different as a number of lines strive for higher market share and increased efficiency on their trade lanes across the region.
4.4 Environmental Considerations
This section provides an overview of the impact of vessel exhaust gases on the marine environment specifically within the Red Sea, by identifying the problem and its effects before offering a range of potential mitigation measures. Given that shipping is a fossil fuel powered industry and that no immediate change over to alternative forms of power is possible, regulations that directly target the reduction of harmful emissions from ships are one of the main ways in which the environmental impact of international shipping can be improved. This is highlighted by the regulations set out by the International Maritime Organization (IMO) in Annex VI of the MARPOL convention, outlining global standards for limiting harmful sulphur oxides and nitrogen oxides and for this the introduction of emission control areas. Measures to reduce carbon dioxide emissions are not as specific for the shipping industry, given that these emissions are directly related to fuel consumption. However, with growing global awareness of climate change and pressure from intergovernmental organizations, the shipping industry must be prepared to regulate CO2 emissions in the future.