Daily Management Review

People Willing To Pay Extra For Fighting Climate Change, Says Maersk Chief


People Willing To Pay Extra For Fighting Climate Change, Says Maersk Chief
There is a willingness among people to pay a little bit more for their goods if they know that the extra money will help in addressing climate change, said the chief of the biggest shipping firm of the world Maersk.
Shipping can be a big part of any product's carbon emissions - from footwear to medical equipment. About 2 per cent of the total carbon emission of the world is accounted for by the industry.
Hence if it were a country, it would be the sixth biggest polluter, above Germany.
The additional costs for greener energy for Maersk amount to billions of dollars but "for the individual consumer, for the individual product, it will be almost nothing", said the shipping company’s chief executive Soren Skou.
It "would in a container with sneakers from Vietnam, translate into something like six cents per pair of sneakers. So I don't think that it will really impact the consumption opportunities for consumers out there," said Skou.
"I'm absolutely sure that this is doable, from a consumer point of view," he said.
The shipping company has set "an ambition to decarbonize global logistics", Skou added.
Currently the company expends $4bn a year on fuel but will need to spend “maybe double that amount in order to become carbon free. That means a 20 per cent increase in the charges that the company charges from its own customers for it to cover the additional costs. 
The Covid-19 pandemic had caused a surge in shipping rates last year. the resulted in a 44 per cent growth in the profits of Maersk to more than $8.2bn and transporting goods by sea accounted for the vast majority of the profits.
The company is already investing parts of that profit to reduce carbon emissions.
The plans for launching the first carbon-neutral liner vessel of the world in 2023 – which will run on a methanol engine, were announced by the Danish company recently.
"The use of methanol certainly offers a longer-term pathway to decarbonised shipping but only in its renewable forms, which are currently in very short supply. Scaling up production and distribution will require huge capital investment and take many years," says Prof Alan McKinnon of Germany's Kuehne Logistics University.
A $5bn plan to fund zero-emission vessels is currently being worked upon by the shipping industry as a whole.
"Efforts to decarbonise logistics also need to be intensified across other parts of the logistics industry," said Prof McKinnon, one of the authors of a 2014 report by the Intergovernmental Panel on Climate Change (IPCC).
2020 although was "a really unique year, in the first two-thirds of the year, actually, global trade was down in volume terms," said Skou. The situation however rebounded with "quite a jump in the US", and Skou feels that government stimulus cheques "will drive even more consumer spending on goods." That is an important aspect because about 11 per cent of the global economy is accounted for by American consumer spending.
According to preliminary estimates, there was a drop of 1-2 per cent last year in global volumes for container shipping, said Simon Heaney of the maritime research firm Drewry. However, because "freight rates have skyrocketed the industry at large is set for a year of bumper profits".