New data from Xeneta has shown a significant increase in carbon emissions due to the Red Sea diversion. The Xeneta and Marine Benchmark Carbon Emissions Index (CEI) revealed a 63% rise in emissions in Q1 2024 compared to Q4 2023 for containers shipped from the Far East to the Mediterranean. Emissions into Northern Europe also increased by 23%. The CEI reached 107.4 points in Q1 2024, the highest since it began in Q1 2018.
The CEI measures carbon emissions per ton of cargo across the world’s top 13 trades. According to Xeneta market analyst Emily Stausbøll, container ships traveling from the Far East to the Mediterranean now sail an additional 5,800 nautical miles due to diversions around the Cape of Good Hope. This longer voyage leads to increased fuel consumption and higher carbon emissions.
Maritime shipping accounts for nearly 3% of global greenhouse gas emissions, with the United Nations emphasizing the need to reduce emissions by 2050 to combat climate change. This involves transitioning to zero-emission energy sources like hydrogen, ammonia, methanol, or wind. The transportation sector, including shipping, is the second-largest contributor to global carbon pollution, responsible for about 20.2% of total CO2 emissions worldwide.
The European Union’s Emissions Trading System (ETS), implemented on January 1, aims to decarbonize the shipping sector. Ocean carriers will face charges for emissions, with full compliance expected by 2026. However, the surcharges imposed by carriers under the ETS lack universality. The impacts of these changes on shippers and the industry remain uncertain.
The Red Sea diversion is set to disrupt emission targets and may lead to a two-tiered market for vessels operating in regulated areas. The impact on emissions and sustainability could pose challenges in meeting reduction targets. Additional regulations may be imposed on the logistics sector to address rising CO2 levels.
With ongoing conflicts in the Red Sea and increasing demand for air cargo, the shift to hybrid sea-air services could result in higher carbon emissions per ton of cargo transported. Shippers are also turning to rail services through Russia for transporting goods from the Far East to Europe. These shifts in transportation modes emphasize the significant impact the Red Sea diversion and war have on carbon emissions and climate change.
