As global pressure to reduce carbon emissions grows, automakers face complex choices about reducing emissions in their supply chains.
Although the shift to clean energy has clear environmental benefits, it comes with additional costs that directly affect product prices, according to a report published by Bloomberg.
Recently, Norwegian company Hugio Autoliners announced the launch of a new car transport ship that is the largest and most environmentally friendly to date.
The ship is part of a broader plan to build 12 new ships at a total cost of $1.2 billion, according to Bloomberg, all built in China in collaboration with Industry China Mercantile Heavy. The goal is to reduce emissions by using advanced technologies including liquefied natural gas, biofuels and low-sulfur oils.
The Norwegian company plans to use ammonia as fuel in future ships by 2027, but the cost of this fuel remains high and its supplies are limited, Bloomberg confirmed.
Impact of alternative fuel costs
Bloomberg says that the increasing costs of using alternative fuels represent a major challenge, as it is estimated that equipping new ships with clean fuel options increases the cost of building each ship by between 5% and 10%.
However, Hugio believes it can pass these additional costs on to customers, noting that the additional cost to customers will be minimal, not exceeding 1% of the price of any car.
High demand and future legislation
As regulatory pressure to reduce emissions continues, Hogeo expects demand for environmentally friendly ships to increase, with CEO Andreas Enger saying demand for such ships will increase as environmental regulations tighten.
For her part, Mirjam Peters, the company’s head of customer sustainability, told the agency that the increase in inquiries about reducing emissions in the supply chain reflects a growing awareness among customers, even if emissions from transportation are not currently the biggest concern for the automotive industry.
Future challenges for the industry
Bloomberg estimates that despite the positive developments, there are still many challenges facing the shipping industry, especially with trade tensions between China, the United States and Europe that may affect equipment exports.
These tensions are mainly based on economic and political competition between global powers, making the future of the industry uncertain.
According to data obtained by the agency, the shipping industry is responsible for 3% of global emissions. To achieve ambitious emissions reduction targets, companies operating in this sector must reduce their emissions by 20% by 2030 and 70% by 2040, with the goal of reaching zero emissions by 2050.
Profits despite challenges
Despite the challenges, global shipping companies saw their profits jump significantly in the second quarter of 2024, nearly doubling to more than $10 billion.
The increase reflects an increase in shipping volumes and higher freight rates following Red Sea diversions. The data suggests that the shipping industry, despite environmental and regulatory challenges, remains a cornerstone of the global economy, and that innovation in this area will remain a vital part of the industry’s future, the agency said.
Ultimately, the need to balance cost, innovation and emissions reduction remains an ongoing challenge for companies, requiring significant investments in clean energy technologies to achieve environmental goals without compromising economic performance.
