Decarbonization Implemented For Shipping Industry Increase Export- Import Costs by 2027

The transformation of marine ecosystems into measurable zero-emission fuels will have great implications for global trade in the coming decades.  This shift will lead to a more distributed energy supply with associated export opportunities for producers of zero-emission fuels, on the one hand, and a shift to more expensive fuels, which will affect trade costs.  This will increase global freight prices which will have a huge impact on different geographies, products and trade routes.  More than 80% by volume and 70% by value of the total volume of world trade is transported by ship.  Rising costs in maritime transport will affect all economies around the world.  This is because the cost of transporting goods affects other trade costs such as policy barriers, tariff systems, technical barriers to trade, contract enforcement, information, exchange rate fluctuations, local distribution, and regulatory costs.  An increase in trade costs is likely to affect the relative price of goods, which largely depends on the type and price of the goods.  This will also increase the price of the product.  Value-to-weight ratio at shipping as well as specific transportation requirements.  In general, when comparing products with a higher price per ton, products with a lower price per ton, such as agricultural products and industrial raw materials, are proportionally more affected by transportation.  As an example of cost, several reports show that shipping and insurance costs account for 5.1% of the value of imported manufactured goods.  While agricultural products accounted for 10.9% of consumption and industrial raw materials for 24.1%.  As a result, states that are economically more dependent on exports of agricultural products and raw materials have more incentive to change fuel consumption.  This zero-emission fuel transition has seen a global increase in transport costs to ensure that no country is left behind. 
                                     
The global shipping industry is looking to reduce carbon emissions in the coming years, possibly due to increased import and export costs due to decarbonisation measures from January 2027, a report by the Global Trade Research Institute (GTRI) has revealed.  GTRI said the 175-member International Maritime Organization (IMO) has launched its preparations to decarbonise the global shipping sector and achieve net-zero emissions by 2050 by July 7.  It has also set an interim target to reduce emissions by 20-30%.  Also "cleaner fuels must account for a minimum of 5% of total fuel consumption by 2030, and IMO will notify detailed arrangements. Although IMO's recommendations are not legally binding, countries are expected to achieve these targets.  Pushed for a $100 dollar tax, but China and several developing countries began to oppose the IMO recommendations.
GTRI founder Ajay Srivastava said India should be cautious against recommending such punitive tariffs.  According to this recommendation report, two directives are to be complied with.  Compliance with these two directives will increase the prices of export and import goods by about three to four percent, amounting to $600-800 billion annually in global trade.  More than 40% of the world's merchandise trade, valued at nearly twenty trillion US dollars, is carried by 6,400 cargo ships.  The shipping industry contributes about three percent of greenhouse gas emissions due to the use of bunker oil or fossil fuels in ships.  The report also states that from January 1, 2017, outbound and inbound shipping companies will start charging taxes.  Initially covering larger vessels of 5000 gross tonnage but will also cover smaller vessels after 2026.  While only carbon emissions will be tracked initially, the plan is to track all greenhouse emissions, including methane, nitrous oxide gases, from 2026 onwards.
By the end of the 1980s, the number of ships carrying Indian goods had declined from 40% to 8%. Today, about 90% of India's commercial goods are carried by foreign ships.  So as a result of this report, Indian businessmen have to pay more charges to foreign companies. The report also mentions that decarbonisation would require ships to switch from bunker fuel or fossil fuels to low-carbon fuels, such as liquefied natural gas, methanol and ammonia.

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