Longer sailing distances due to diversions in the Red Sea have seen a massive increase in emissions globally in 2024. For example, on the Far East to Mediterranean frontal, emissions per tonne of cargo (as measured by Xeneta Carbon Emissions Index) was up 60.1% in Q3 this year compared to 12 months ago.

The International Maritime Organization (IMO) continues to push the industry towards the targets it agreed in 2023 to reduce carbon emissions 40% by 2030, 70% by 2040 and net zero by around 2050. The measures include reducing the GHG intensity of ship fuel and a global levy on GHG emissions. The IMO has set a deadline for regulation on both these points to be defined and adopted by the Autumn of 2025, though they will only come into force in 2027.

The global levy on GHG emissions would lower the price difference between cheaper fossil fuels and greener alternatives.

EU ETS surcharges

As shipping’s inclusion in the scheme ramps up in 2025, carriers will have to buy allowances for 70% of emissions covered by the scheme on sailings to/from/within Europe, up from 40% in 2024 - so shippers should expect to see this reflected in higher EU ETS surcharges.

The price for EU allowancces (EUA) stands at USD 72.2 per allowance, almost the same as it was at the start of the year. Each allowance covers 1 tonne of CO2 emissions.

Impact of Red Sea on surcharges

From the Far East to Europe – a trade heavily impacted by the Red Sea conflict - the average EU ETS surcharge on long term rates has increased by around 25% compared to the start of the year, up to USD 60 per FEU into North Europe and USD 49 into the Mediterranean.

An even bigger increase can be found on the backhaul from the Mediterranean to the Far East, up by 75% to USD 35 per FEU.

In contrast, the Transatlantic trades from North Europe to the US East Coast and South American East Coast – which are not operationally impacted by the Red Sea conflict – have seen average surcharges on long term rates fall by around 11% to USD 58 per FEU and USD 46 respectively.

Keeping an eye on the EUAs price development will provide some insight into how the surcharges will develop. For shippers on Red Sea impacted trades, any large-scale return should also lower EU ETS surcharges, as well as lower fuel surcharges more generally.

New fleet has split approach to fuel capability

Almost three quarters of the capacity scheduled to be delivered in 2025 has some form of alternative fuel capability, or is built in such a way that that a conversion to alternative fuel can be done relatively easily.

43% of the capacity scheduled to be delivered (830 300 TEU) will be able to sail on LNG. This is considerably more than the 513 000 TEU entering the fleet with no additional alternative fuel options. Methanol capable ships also make up a considerable share of new capacity at 373 000 TEU.

Only two of the top 10 carriers will not have any new ships with some form of alternative fuel. These are Evergreen and OOCL.

Otherwise, carriers are broadly split in 2025 between those whose ships will be methanol capable - including COSCO, HMM and Maersk - and those whose new ships will be able to sail on LNG - including Hapag-Lloyd and MSC.

It’s important to note that while these ships will be able to sail on an alternative fuel type, they will also be able to use traditional bunker fuels.

Xeneta data allows shippers to benchmark carriers CO2 performance across the world’s major trades, meaning they can factor emissions as well as cost and reliability in their procurement strategy.