Maersk shares 2022 ESG highlights, reports higher carbon intensity amid supply chain woes

A.P. Moller Maersk has been a strong supporter of decarbonization in the maritime industry and it is targeting to become a net zero-company by 2040.

Nevertheless, despite strong ambitions and targets, the business works in such a way that achieving these targets is often impacted by market conditions and supply chain disruptions that are out of shipping companies’ control, further hindering their progress toward reaching their green goals.

The container shipping major pointed out that 2022 proved to be another challenging year for the industry as a whole with regard to the implementation of efficiency measures due to ongoing post-pandemic port congestions and capacity shortages.

Improving fuel efficiency is at the core of Maersk’s strategy of cutting ocean-related emissions.

Based on Maersk’s figures, the company has made substantial progress over the past decade in improving fuel efficiency, reducing emission intensity by close to 43% between 2008 and 2020.

These have been made possible thanks to fleet and network optimisation, i.e., by using more efficient, larger vessels, and improving network execution such as port productivity and reducing vessel waiting times.

However, the company said that the carbon intensity of its Ocean business increased by 7 percent, compared to the 2020 baseline.

The figure was shared as part of the company’s ESG performance highlights in its Sustainability Report for 2022, the release of which coincides with the reporting of historic business results.

“Despite a reduction in fuel consumption, emissions intensity in Ocean (EEOI) continues to be negatively impacted, with a 7% increase since 2020 due to continued global supply chain disruptions, port congestions and capacity constraints,” Maersk said.

“Maersk is, however, optimistic that these systemic issues are resolving, and we will be able to bring efficiency gains back with strong momentum in 2023,” the container shipping major said.

Maersk’s terminals businesses achieved a 5.4 percent reduction in scope 1 and scope 2 emissions through sourcing of renewable electricity in its European Terminals and in the Port Elizabeth (US) terminal.

Retrofitting is expected to play a major role in the company’s efficiency improvement efforts moving forward. These are likely to involve bow and propulsion modifications. A great deal of these retrofits will involve its chartered fleet, and Maersk has over 400 ships on charter.

The shipowner has seen encouraging interest from charter vessel owners to retrofit their vessels as part of their own sustainability efforts. As informed, there are currently 40 undergoing retrofits.

During 2022, Maersk’s average operated capacity was 4,285k TEU increased by 2.7%. The fleet consisted of 318 owned and 389 chartered vessels, of which 302k TEU or 7.2% of the fleet were idle (41 vessels), mainly due to repairs.

Maersk’s share of ocean freight transported with green fuels in 2022 was 2 percent, according to the Danish container shipping major.

The 2 percent accounts for biofuels, which the company started using on its fleet back in 2019.

The company said that the use of biofuels tripled in 2022 when compared to 2021, driven by the increased uptake of Maersk’s EcoDelivery ocean product by customers. The product involves the utilization of sustainable biofuels on selected company vessels to cut emissions.

As disclosed, 35% of Maersk’s ECO Delivery volume comes from regions outside Europe and North America, a promising sign that climate change is not only on the agenda of more mature markets.

Maersk believes that methanol is the only scalable green fuel option this decade as it can be safely used and it is relatively easy to handle. But, it will take time to reach a sufficient scale to cover the demand, so an alternative ‘drop in’ fuel is necessary to fill the gap: biodiesel.

The company currently uses only second-generation biodiesel, made from waste and feedstock. Nonetheless, the fuel has constrained availability and unpredictable price subject to volatile swings.

In line with its 2030 emission reduction targets of cutting emission intensity in the ocean space by 50 percent, Maersk has set sights on having at least a quarter of its ocean cargo transported with green fuels.

The gargantuan task ahead of the company is expected to be accelerated with the delivery of the company’s first methanol-powered feeder vessel (2,100 TEU capacity) this year.

The feeder will be followed by 18 large ocean-going vessels of 16,000-17,200 TEU capacity which are scheduled for delivery in 2024 and 2025.

In order to ensure the supply of green methanol for its newbuilds, Maersk has entered into strategic partnerships with nine companies in 2022 with the intent of sourcing at least 750,000 tonnes of green fuel per year by the end of 2025. In addition, the company has engaged in dialogues to explore opportunities for large-scale green fuel production in Spain and Egypt.

The moves are part of the company’s planned portfolio of around 5 million tonnes of bio and e-methanol by 2030.

“Such partnerships are critical to scaling up new fuel production capacity as well as technology and business model innovation,” Maersk said.

Moving forward, the company is keeping a close eye on green ammonia as a potential carbon-free solution. Conversely, it is expected to take much longer to scale ammonia due to its toxicity along with necessary safety, environmental, and health regulations that need to be put in place to support its production and development of the necessary infrastructure.