From new technological innovations to shifts in global trade patterns, the past year has seen a number of changes that have had a significant impact on the sector. In this year-in-review blog, we will take a look at some of the most notable topics in the maritime industry over the past year, highlighting the key themes and challenges that have shaped the industry in 2022.
1. The European Union - FuelEU maritime regulation
The FuelEU maritime regulation is a part of the EU’s Fit for 55 proposal to decarbonize the European economy, which aims to reduce the EU’s greenhouse gas emissions by at least 55% by 2030. FuelEU will oblige vessels above 5000 gross tonnes calling at European ports to reduce the greenhouse gas emissions over next years.
The regulation will affect 55% of all ships globally, accounting to 90% of CO2 emissions from the maritime sector. See the infographic below for more information.
2. Higher dry bulk prices
In 2020, dry bulk shipping costs and grain prices were already increasing and the Ukraine conflict has accelerated this trend. According to UNCTAD, in the timeframe from February to May 2022 the price of dry bulk transportation increased by around 60%.
Around 36 countries regularly import over 50% of their wheat from the Russian Federation and Ukraine. Global sea exports of grain are expected to decline by 3.8% this year while global shipments of fertilizer decline by 7%. Black Sea ports normally account for over 90% of Ukrainian overseas grain shipments, weekly port calls have dropped from 60 to almost zero in Ukraine due to the conflict.
The consequences will be reflected in the increase of consumer food prices and highly affect those countries with the lowest and the lower middle incomes. Globally the increase is projected at 3.7% level, where bulk dry freight rates and grain prices are contributing nearly evenly to the increase.
3. SIRE 2.0 is going to become operational in 2023
The Oil Companies International Marine Forum (OCIMF) has announced that its upcoming regime SIRE 2.0 (Ship Inspection Report Programme) will be launched in the maritime industry in a phased approach. The roll-out of SIRE 2.0 will happen over 4 stages to give enough time for comprehensive testing and implementation of the system. OCIMF will evaluate 'critical success factors' and will update on each phase of testing and implementation to ensure that every future user will be well-prepared for the transition. See the graph below for a phase overview.
4. Dramatic rise and fall of container freight rates
Container shipping rates had experienced the most turbulent times in 2022. The year started with historical highs due to increased demand for container shipping during the pandemic. Changes in consumer consumption and shopping behavior were triggered by lockdown measures, which led to increased demand for e-commerce and imported manufactured consumer goods, a large part of those are moved in shipping containers.
Gradually, the demand was met and lockdown measures were eased, which led to continuous decline in container freight rates. HSBC noted in October that spot rates for Shanghai Containerized Freight Index (SCFI) had fallen by 51% since the end of July - a decline of 7.5% per week. With this pace of week-on-week decline, the spot rates may hit the average spot rates of 2019 by the early 2023. However, HSBC forecasts to see the bottom in mid-2023 due to decreased demand forecast for container shipping.
The graph below shows the spot freight rate index for transporting a 40HQ container from China base port to Los Angeles.
5. Day of the Seafarer 2022
This year's theme was “Your Voyage - Then and Now”. Every seafarer’s journey in the profession is different, but many of the challenges and opportunities are common. This year’s Day of the Seafarer focus was on looking into the future of shipping and how seafarer’s voyages changed over time. For example, in the form of new technologies and more modern equipment, the increasing usage of alternative fuels and further responsibilities for a greener and more sustainable shipping.
Seafarers from all over the world were sharing their experiences of when they started their journey for the first time and how it looks now.
6. The Seafarers Happiness Index
The Seafarers Happiness Index had started with the record lows due pandemic lockdowns and Ukraine conflict. Many respondents were concerned about shore leave which was not possible to lockdown measures. The start of the conflict had put many ports in the Black Sea under blockage. Seafarers were uncertain about their life security and also about their jobs. But these concerns were addressed by governments and shipping companies, which have greatly increased the levels of satisfaction of seafarers.
Q1 2022 Happiness Index revealed the lowest levels of seafarer satisfaction for eight years, with the Index’s measure of overall happiness decreasing from 6.41 to 5.85 and levels decreasing across all categories. From COVID to the Ukraine conflict and contractual concerns, global issues have massively impacted seafarer welfare and morale.
Q2 2022 has revealed a rise in optimism with a significant increase in the overall rating of 7.21. Seafarers were moving more freely and there was a positive focus within the industry on finding solutions to many of the frustrations which have been aggravating seafarers for many years.
Q3 2022 seafarer happiness levels reached 7.3. The results of the survey showed that seafarers were much happier with their access to shore leave and more certain about crew changes, with both factors contributing to the overall increase in satisfaction. While there were still some restrictions in place in certain regions, the impact of COVID-19 on seafarers was largely waning.
7. Maritime Technology in Review
Thetius released the 2022 Maritime 150 list of the most innovative organizations in the industry. Thetius is the innovation agency for the global maritime industry and they researched startups, small businesses, corporates and not-for-profit companies that are developing innovative technologies for the maritime industry.
From over 2,700 organizations globally, Thetius selected the 150 most innovative organizations in four segments: startups and scaleups, small and medium businesses, corporate, nonprofit and government bodies. Based on a combination of data and technology advancement companies bring to the industry, Kaiko Systems and other 49 startups are selected as the top 50 most innovative maritime startups and scaleups.
8. Global Fleet in Review
In early 2022, the total fleet of seagoing merchant vessels amounted to 102,899 ships of 100 gross tons and above, which is equivalent to 2,199,107 thousand dwt of capacity. In the 12 months prior to January 2022, in dwt terms, the global commercial fleet grew by 2.95%. Over the same period, supported by robust global gas demand, the fleet of liquified-gas carriers continued to grow strongly and accounted for 8.15%. The average age of the global fleet was 21.9 years compared to 19.9 years in 2012.
9. Shipping Safety in Review
Annual shipping losses (54) have declined by 57% over the past decade since 2012 (127).
However, the number of reported shipping casualties or incidents increased. The British Isles reported the highest number of incidents (668 out of 3,000 shipping incidents).
Machinery damage/failure is the top cause (1,311). Fire/explosion (178) is the third top cause after collision (222), with the number of fires increasing by almost 10% annually. 28 years is the average age of a total loss vessel over the past decade.
As machinery damage is the top reason, regular inspections of the ship and its equipment are needed to minimize incident risks. Leveraging technology and digitization can increase the effectiveness of inspection. In Kaiko Systems’ experience, mobile-based inspection increases the confidence in inspection data and allows findings to be identified right away, which reduces incident risks.
10. Maritime People in Review
Lloyd's List released the 13th edition of the top 100 rankings of influence and power within the shipping industry. This year's editorial was focused on the long-term transition of decarbonization. In 2022, the EU has overtaken the IMO as the most influential force in the industry by taking tangible action in addressing climate change. Therefore, the European Commission representatives moved to the top 1 place in Lloyd’s List ranking.
