How Bonkers is all of This?
5 years, 10 months, 13 days, 23 hours
8 September 2023
We ship toilet paper from Europe to the US. We ship live bees from Australia to Canada. We ship shrimps from the North Sea to Morocco. We ship water from mainland Europe to Iceland.
How bonkers is all that?
The global shipping industry is booming, with orders for new shipping capacity amounting to an additional 25% over the capacity today. It is an industry of pure supply and demand that responds to its customers. So it is both part of and reflects the world’s capitalism-based trade model and provides a window into the challenges we face tackling climate change within such a system.
These insights and more came from KPMG’s Global Shipping Dinner in a gloriously sunny Hamburg two weeks ago, hosted by our Global Head of Shipping Monique Giese. Played out in the panel that Monique chaired was a story that I believe resonates across every industry today:
i) the challenge of climate change is deeply understood, as is the imperative of action.
ii) the technology is there (green fuels, e.g. hydrogen), but we are decades away from the supply being scaled up sufficiently (e.g. growing shipping capacity that is ‘e-methanol enabled’, but not actually running on e-methanol).
iii) lead times in capital investment are long (7-10 years) so decisions being taken today either bet on a green future or prolong the transition.
iv) companies want to do the right thing but are beholden to market forces (‘No customer will pay for a greener product’).
v) customer behaviour is exacerbating the challenge (e-commerce is rising, soon to become 50% of the sector, which means more products shipped from one side of the world to the other).
It brings me back to the theme that we need to look to ourselves to drive change, because it is the aggregation of our individual behaviours that is behind a lot of the challenges we face. One of the panel was asked at the end if the shipping industry had been too late to start to change. The reply: ‘It is not the industry that is late, it is mankind that is late’.