Carbon emissions in ocean container shipping remain high due to ongoing conflict in the Red Sea region and diversions around the Cape of Good Hope – but the picture improved slightly in Q2 2024.
The Carbon Emission Index (CEI), which measures container shipping emissions across the world’s top 13 trades, fell to 98.6 index points in Q2. This is 8.3% lower than in Q1 when it hit 107.5.
The latest data, released by Xeneta and Marine Benchmark, means the CEI is now back under 100 points, a mark which was breached for the first time in Q1 this year. This is a significant milestone because the index is based on CO2 emissions per tonne of cargo carried, with the benchmark of 100 set when the CEI was established in Q1 2018. Therefore, a score over 100 means carbon emissions per tonne of cargo carried are higher than 2018 levels.
Factors behind CEI improvement
The improvement in the average CEI across the top 13 trades is driven by non-Red Sea impacted trades, several of which have achieved their lowest (and therefore best) CEI score to date. In contrast, the three long haul trades most impacted by the conflict in the Red Sea – from the Far East to North Europe, Mediterranean and US East Coast - have seen emissions increase from Q1.
It is also important to note that, while emissions per tonne of cargo have fallen across Xeneta’s top 13 trades, this hides an increase in total emissions across the global container shipping fleet. 2024 has seen record levels of demand for ocean container shipping globally, meaning more cargo is being transported and higher total CO2 emissions.
Four trades hit all time low CEI score
The best performing trade in Q2 2024 is the backhaul trade from the US West Coast to the Far East. At 68.5 points it is the only one of the top 13 trades included in the CEI to score under 70 points in Q2 2024. It is also the first of the top 13 trades to ever pass under this mark.
The lowest score previously was 70.5 points, achieved in Q4 2023 on the fronthaul trade from the Far East to US West Coast. In Q2 2024, this major Transpacific trade is just 0.1 points off its low score from the end of last year at 70.6 points. Compared to Q2 2023, emissions per tonne of cargo carried have fallen by 14.3% between the Far East and US West Coast.
Given more cargo is carried from the Far East to the US West Coast compared to the US West Coast to Far East (and the CEI is measured in CO2 per tonne of cargo moved), even a small CEI improvement on the fronthaul has a far bigger impact on reducing total emissions.
A big driver of the improvements in emissions on trips across the Pacific is an increase in the size of ships operating on this trade. The average size on the fronthaul rose to 10 000 TEU in Q4 2023, though it has since fallen slightly to 9 800 TEU in Q2 this year. Just as larger ships offer economies of scale, lowering the cost per TEU, bigger ships also emit less carbon per tonne of cargo carried – assuming they can keep a high filling factor.
Filling factor
Filling factor has not been a problem between the Far East and US West Coast in Q2, reaching its highest level since 2018 – beating the utilization rates seen at the peak of disruption during the pandemic. This is despite demand on this trade not rising back to pandemic levels, unlike global demand which has set new records in 2024.
The higher filling factors highlight the additional pressure on the fleet due to the Red Sea diversion and disruption caused by its knock-on effects.
Longer sailing distances around Africa will inevitably place additional pressure on trades that usually transit the Suez Canal. However, this situation also impacts trades across the rest of the world as carriers seek to optimize their networks to the new operating conditions – for example by deploying capacity from trades which are unaffected operationally by the Red Sea diversion onto those trades that are (and where freight rates are also highest).
In addition to the two legs of the Transpacific trade, another five of Xeneta’s top 13 trades on the CEI have registered their highest filling factor since at least Q1 2018. Three of these are the fronthaul trades from the Far East to the Mediterranean, North Europe and East Coast South America, while the fourth and fifth are the backhauls from the US East Coast to North Europe and to the Mediterranean.
Sailing speed
When the Red Sea diversions were first introduced at the back end of 2023 and early 2024, some carriers attempted to make up for the longer sailing distances by speeding up, which has a detrimental impact in terms of CO2 emissions. However, this did not last, likely because there was less requirement for speed as more capacity was added to these trades.
A few of the top 13 trades have seen slight increases in speed compared to Q1, but taking a slightly longer view, only the North Europe to the South American East Coast trade has speeds more than one knot faster in Q2 2024 compared to Q2 2023.
Emissions on trades directly impacted by Red Sea conflict
Though average speeds have not increased significantly on the Red Sea impacted trades, new highs have been set for CO2 emissions per tonne of cargo carried, up from the already-high Q1 results.
The Far East to the Mediterranean was already the worst performing trade in Q1 when emissions per tonne of cargo increased by 63% from Q4 – and the score has declined further in Q2. The CEI on this trade now stands at 145.6 points, up by 4.9 points from Q1 and 64% higher than in Q2 2023.
One of the reasons for this worsening score is a slight increase in average sailing distances. In January, some ships were still sailing through the Red Sea and it was not until later that month and into early February that some other carriers decided to divert. That means the Q1 CEI data includes some ships that were still sailing shorter distances through the Suez Canal.
The average distance ships sail between the Far East to the Mediterranean in Q2 stood at 15 400 nautical miles. This would be even higher were it not for some carriers choosing to unload containers from the main deep-sea voyages from the Far East at eastern Mediterranean ports for onwards transshipment, rather than have the ships sail all the way to the western Mediterranean.
The increase in emissions is also partly due to a drop in the size of ships deployed to this trade. As carriers have needed more ships to make up for the longer transit times, they have had to accept smaller ships than they would usually deploy here because the availability of larger ships is limited.
Emissions per tonne of cargo have risen even more in Q2 on the backhaul from the Mediterranean to the Far East, up by 9.8% from Q1 and a 49% increase from a year ago.
Between the Far East and North Europe, the increase in emissions remains lower than to the Mediterranean. This is, in part, because being unable to transit the Suez Canal causes proportionally bigger sailing distances to reach the Mediterranean than to destinations in North Europe.
The CEI from the Far East to North Europe is unchanged in Q2, remaining at 111 points, though it is still 26% higher than at the same time last year. This score is helped in the fact that, unlike between the Far East and the Mediterranean, the average ship size into North Europe has increased in Q2, rising to an average of 18 500 TEU per ship.
This means the Far East to North Europe fronthaul now has the highest average ship size across all the world’s trades.
Looking ahead
There does not appear to be any prospect of a largescale return of container ships to the Red Sea any time soon. Therefore, the CEI scores will continue to be impacted by the longer sailing distances.
However, there may be some cause for optimism that CEI scores could start to improve. Firstly, new ships are being delivered into the global fleet, which will be more carbon efficient.
Some of these ships are also ultra-large which helps to improve CEI scores, as long as filling factor is maintained.
The congestion which has plagued ocean supply chains, particularly in Europe and Asia, is now also easing, which should increase available capacity if ships spend less time waiting at port. This easing of pressure may mean carriers are more likely to reduce sailing speed, especially if spot rates continue to soften as they have started to do in July.
