by Freedonia Focus Reports Team
October 8, 2024
The near- and long-term goals for reducing emissions are expected to generate strong investment in cleaner water transportation equipment.
Investors should expect freight firms to incur higher capital equipment costs over the long term as the marine shipping industry strives to make significant reductions in pollution. However, if marine port operators invest in more automation, higher efficiency levels may help the industry offset the high cost of reducing emissions.
In July 2023, the International Maritime Organization (IMO) – a specialized agency of the United Nations – updated targets to reach net-zero greenhouse gas (GHG) emissions from international shipping by around 2050. Interim goals include increasing use of alternative zero and near-zero GHG fuels by 2030. The near- and long-term goals for reducing emissions are expected to generate strong investment in cleaner water transportation equipment, including ships, tugboats, and automated, all-electric port handling equipment.
Potential measures to help achieve the emissions targets include reduced ship speed, stricter design efficiency requirements, levies and subsidies, the ongoing development and use of zero-emission fuels, eco-friendly design elements such as adding kites or steel and composite rigid sails to ships to improve fuel-efficiency, and the use of hybrid and electric ships. For example, in August 2023, steel and composite glass sails featuring wind assisted propulsion (WAP) technology were added to a bulk ocean carrier chartered by global food processor Cargill to improve fuel efficiency. In March 2024, Cargill reported 14% fuel savings during the six-month test period, which translated into average emissions reductions of 37% during optimal sailing conditions. Nevertheless, achieving net-zero emissions in the water freight shipping industry is expected to present serious challenges for long-distance transport such as ocean and coastal freight.
A key trend in the industry providing support activities for water transport is the start of a transition to electric and hybrid tugboats. Switching allows operators to improve their environmental profile and support their compliance with increasingly stringent emissions regulations, while also reducing their exposure to volatile fuel prices. In January 2024, Crowley accepted delivery of the eWolf (Master Boat Builders) electric tugboat for its operations at the Port of San Diego in California.
Finally, marine port automation is expected to register as a key industry trend in the future. US marine port workers briefly went on strike in October 2024 over pay and potential future automation that could reduce the number of jobs, seeking to obtain a contract the precludes automated robotic equipment in marine port cargo handling operations. The contract talks on automation and other issues are supposed to continue in January 2025. A long-term postponement of marine port automation could contribute to increased freight costs for products shipped by waterway, particularly for product from China that already face US tariffs. The ongoing nearshoring of manufacturing facilities from Asia to the US or nearby countries such as Mexico is expected to drive more freight traffic to rail, truck, and intermodal transportation, potentially reducing the power of marine port unions to extract concessions in the future. In addition, the higher expected capital costs of lower emission ships and tugboats will help drive the industry toward automated marine port equipment to realize efficiencies.
Learn More
To learn more about the opportunities in the US freight by waterway and support activities industries, and the significant potential investments in lower emission ships and tugboats, and marine cargo equipment, see Freight by Waterway: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group.
Freight by Waterway: United States forecasts to 2028 US freight by waterway revenues for employer and nonemployer firms in nominal and real (inflation-adjusted) US dollars. Total revenues in nominal and real terms are segmented by establishment type in terms of:
To illustrate historical trends, total revenues in nominal and real terms and the various segments are provided in annual series from 2013 to 2023.
Also forecast to 2028 are revenues for water transport support activities in nominal US dollars. Total revenues in nominal terms are segmented by establishment type in terms of:
To illustrate historical trends, total revenues in nominal terms and the various segments are provided in annual series from 2013 to 2023.
The scope of this report includes the revenues of for-hire water transport firms, as well as for-hire fleets that are dedicated to a particular client. Captive water transport services (i.e., businesses that maintain their own boats, ships, or barges to transport company goods or employees) are excluded.
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