Can shipping join the circular economy?

In case any doubt remained, it should be clear to everyone remotely involved in shipping that the next 20 years will be nothing like the last couple of decades. The decarbonisation agenda is reshaping whole industries with the global economy trending towards a more circular, renewable and locally focused model.

This may come as a surprise to some in the industry, but shipping will have no choice but to follow. Many seaborne trade volumes are likely to continue growing, but cargo volumes for large vessels transporting raw materials and fossil fuels over long distances are set to peak within the next 10 years.

That’s the conclusion of the analysts at Danish Ship Finance whose latest report also points out that the transition towards a green economy can be cast in positive terms – the source of fresh returns for owners and their financiers – as well as carrying risks.

On the upside, an increase in returns on invested capital in the short to medium term could see more investment going into new fuel commitments and new vessels. This reflects the rise of green corridors (port-to-port commitments where new alternative fuels are available under contract). However DSF also thinks in an industry traditionally marked by fragmented ownership, the risk of hard-to-scale solutions limited to a few players is also considerable.

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