The Case for Action explores the social, environmental and economic challenges the industry faces and how best to react to them.

Download the full Case for Action report and the Executive Summary.

Challenge 1 | Navigating a changing economic context

Continued growth of free trade and strong global governance cannot be guaranteed. A decline in global trade would lead to greater competition and magnify competitive advantages. Companies should be prepared for this and work with the IMO on progressive regulation to anticipate future challenges.

Challenge 2 | Increased scrutiny, high expectations

Shipping is likely to face increased scrutiny of its social and environmental performance, mirroring trends seen in other industries. Companies which can demonstrate a strong record on working conditions, fuel efficiency, prosecutions and similar factors are likely to be favoured bv customers and suppliers, including ports, financiers and insurers.

Challenge 3 | The future of energy and climate change

Volatile and rising oil prices will push up costs significantly while climate change is increasing pressure on shipping to reduce greenhouse gas emissions. Companies can gain competitive advantage by investing in energy efficiency and the transition to new fuels.

The Sustainable Shipping Initiative Case for Action explores the risks and opportunities around each of these three challenges. It also warns that companies which do nothing may face serious consequences. The US auto industry came close to collapse in 2008, partly by failing to adapt to rising oil prices, and was only saved by a $25 billion government bailout.

A summary of the megatrends

The Global Economy: Emerging Giants?

Developing nations are growing in influence and economic activity. New demands will alter patterns of trade, changing which goods are transported and where. Most people assume that the global economy and global trade will continue to grow. However, there are several reasons why trade might decline: the growth of ‘closed-loop economies’ where resources are reused; greater virtualisation of trade based on information technology (eg sales of CDs being displaced by downloads); and a critical resource crunch such as ‘peak oil’ leading to instability, protectionism and reduced demand for transporting goods.

Freedom vs level playing field: Ocean Governance

National and international management of the oceans has increased significantly in scope, rigour and complexity over the past 30 years. How it develops in future will be critical to the industry. A robust International Maritime Organization with rebalanced voting powers could create a level playing field for all. But weak global governance – overlain by an ever more complex patchwork of local regimes, industry codes of conduct and voluntary standards – could create confusion and inertia, perhaps even leading to a two-tier industry split between high and low performers.

No secrets: demand for transparency

Businesses throughout the supply chains outside the shipping industry are already setting stretching social and environmental targets to respond to demands for better performance. They are also having to navigate the fast-paced, transparent, internet-enabled world of social media. Technological advances make real-time monitoring feasible and affordable, even in the open oceans. Businesses will have opportunities to demonstrate leadership by giving customers, regulators and NGOs the opportunity to monitor their performance. This could lead to extremes of transparency by 2040.

Moving on from oil – the future of energy

The massive expansion in global trade of the past 20 years has been powered by easily available fossil fuels. Major oil institutions are now cautioning that the age of easy oil is over, predicting higher and more volatile pricing and a peak in oil production.2 This, combined with concerns over energy security and climate change, may drive major changes in fuel types and efficiency. Will shipping respond to this threat with a planned transition, a last-minute scramble, or a disorderly decline?

Demanding higher standards: sustainability regulation

Increasing pressure on global resources is likely to lead to demands for higher sustainability standards. Shipping regulation has focused on ‘traditional’ issues such as emissions of sulphur and nitrogen oxides and ballast water. Expect a new focus on workers’ rights and more sophisticated regulatory approaches such as those in China, which promote ‘closed-loop’ economies based on reuse and recycling.

Advancing technology – making it pay

New materials, alternative energy technologies and more fuel-efficient ship designs have the potential to deliver radical improvements in the sustainability of shipping. As noted above, technology also makes businesses, their customers and consumers more transparent and networked.

Adapting to a changing climate

Climate change is likely to increase the frequency and severity of storms, and has the potential to influence ocean currents. Ports and other coastal facilities could be threatened by sea-level rises over the next 30 years. The wider impacts of climate change on food production and flooding of major population centres could have huge implications for global trade and shipping. There is a compelling case to take action to prepare for the possible impacts of climate change, as well as to mitigate those impacts by reducing carbon emissions.

You can download the full Case for Action report and the Executive Summary here.

Keep in touch

If you want to find out more or get involved in the Initiative contact Sam Kimmins, +44 (0)20 7324 3675, ssi@forumforthefuture.org

To stay up to date with the latest SSI news follow us on twitter @sustshipping or send an email to ssi@forumforthefuture.org to be added to our mailing list