Shipping’s Latest Love Affair—Dry Bulk

Shipping is a dynamic industry that changes with the tides, rising and falling with the waves, constantly responding to the ever-changing needs of the world market. The dry bulk sector comprises 21% of the world’s merchant fleet delivering grains, concrete and other raw materials to market. Dry bulk transportation is on a meteoric rise as the global demand for these products reaches an all-time high.

The movement of bulk materials via ocean-going vessels has been around since the early Mesopotamians and Phoenicians but first appeared in the current form in 1852 with vessels designed with cargo holds for raw products. Over the course of history, the maritime industry has progressed from using wooden ships propelled by sail to steam (coal) ships to present-day’s steel or aluminum gargantuan ships using petroleum fuel engines. Today, compared to other sectors, dry bulk is projected for a 5.10% compound annual growth rate (CAGR) by 2027 according to a recent article “Dry Bulk Shipping Market Eyeing Phenomenal Growth,” via the Global Newswire while the tanker and container sectors lag behind at 2.0% and 4.3% respectively.

The public may not realize the impact of the dry bulk sector but those in the maritime industry recognize the importance of transporting dry bulk cargoes are a vital link in international trade.  Dry bulk sector leaders have a lot that they want people to know. Captain Anuj Chopra, CEO of ESGPlus, and board member of North American Marine Environment Protection Association (NAMEPA),  wants people to understand how environmental regulations are shaping the future of the sector, “shipping is a highly regulated sector with a lack of uniform adoption and requirements. The good actors are making a sincere effort to reduce their GHG (greenhouse gas) emissions and need to be recognized and rewarded for the good behavior and incurring of additional expenses.” Furthermore, he adds that industry-led organizations, like NAMEPA, “need to be supported in their efforts to create the Best Management Standards for the Maritime domain. The bad actors need to be held accountable so as to create a level playing field.”

The global social pressure for industry to take a proactive role in combating climate change is clear. Between alternative fuel options and stricter environmental regulations coming into play, there are opportunities for the dry bulk sector to lean forward, playing a vital role in promoting best practices.  Chopra added, “There is an opportunity of a lifetime for the early adopters to differentiate themselves from their competitors”. GHG emissions have been a persistent issue, to the point that the International Maritime Organization (IMO) has introduced new requirements to try and combat this plight. Using alternative fuels has been pushed for quite a while given that the maritime industry is estimated to be 2-3% of the world’s emission of greenhouse gases. Currently, under the 2020 IMO guidelines, the emissions levels for vessels the “rule limits the sulphur in the fuel oil used on board ships operating outside designated emission control areas to 0.50% m/m (mass by mass) – a significant reduction from the previous limit of 3.5%. Within specific designated emission control areas the limits were already stricter (0.10%).”

To further limit the environmental impact of such a large industrial sector, IMO 2030 is in the process of codifying its goals for greater carbon emission reduction. The strategy aims to: reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008); and that total annual GHG emissions from international shipping should be reduced by at least 50% by 2050.

These changes have companies looking at many avenues to achieve these goals, including alternative fuels. John Wobensmith said in a Genco Shipping and Trading (Genco) press release on the ammonia marine fuel joint study with 22 other companies on June 11, 2021, “Taking steps to decarbonize our essential industry is a critical objective for Genco, and we are pleased to have entered into this joint study together with various blue chip, multi-national companies throughout the maritime supply chain. While there remains quite a bit of work to be done, not only on the development of ammonia-fueled vessels but also on the build-out of bunkering infrastructure, this joint study is an important and much needed step for the industry.”

In the sector, there are many pitfalls and challenges to avoid issues such as greenwashing. The maritime industry in general isn’t the easiest industry to lessen its carbon footprint because alternative fuels have only come about in recent years. While efforts have been made to make things better environmentally, activism groups don’t think it is effective enough and that companies are participating in “greenwashing” which is a process of conveying the false idea that the company’s product, or ships, in this case, is better for the environment. This is similar to “pinkwashing” whereas companies claim to support a cause while still participating in negative actions or producing products contrary to the cause.

Dry bulk is a complex and rapidly evolving sector of the maritime industry. From engineering advancements to exploring new frontiers in alternative fuels, big changes are happening. Dry bulk helps guide our world because the sector transports food products and raw materials that are needed all over the world. The dry bulk sector’s importance ensures that it isn’t going anywhere anytime soon but with growing environmental concerns, the growth of the sector is intertwined between advancements like alternative fuels and economic growth. With growing concerns about pollutants such as GHGs, it is apparent that while there has been a vast improvement, the sector still requires a lot of change. The combination of the importance of the dry bulk sector and increased environmental responsibility gives the sector the ability to be a great model for environmental stewardship. The dry bulk sector is a part of the industry that is hard to overlook and is quickly on the rise.