Ninety percent of world trade is transported by sea. This translates to over 5,000 massive container vessels transiting the vast, salty sea lanes annually. Maersk Line, a business unit of Maersk, is the largest provider of these shipping services world-wide. Shipping companies such as Maersk are intimately linked to climate change in two major ways. The first way is through CO2 emission: ships burn fuel for power and contribute CO2 and other emissions to the atmosphere. The great news is that Maersk is taking large steps to reduce its carbon footprint significantly. In fact, a Maersk container ship is one of the most carbon emission efficient methods of transportation, producing only 3 G/ton-km (compared to 485 G/ton-km for an airplane and 80 G/ton-km for a truck). Furthermore, Maersk has pledged to continue striving for significant CO2 reductions in the future through robust sustainability plans. The second way climate change affects Maersk is through the associated environmental changes, such as the increase in frequency of severe weather, that Maersk must endure to remain competitive. These challenges present a significant threat to Maersk’s operations and must not be ignored.
While the reduction of CO2 equivalent emissions is vital to the sustainability of our planet, the climate changes that come with greenhouse gas effects is, at this point, inevitable. Specifically, according to scientific and economic journals, increasing arctic temperatures and rising sea levels are “virtually certain”; increased weather intensity is “likely.” Shipping companies are particularly exposed to these effects given their global port distribution, 72 ports and terminals in 69 countries on five continents, and their ability and proclivity to move vast distances around the globe. These effects will have multiple implications on the operating model of Maersk.
The most obvious implication is the physical risk of the ship and its cargo associated with traversing the high seas in extreme weather. The greater the frequency, the higher the probability of damage to ships or cargo. This equates to higher costs for Maersk. At a strategic level, Maersk will have to make capital investments to insure against such events. For example, it may prove beneficial for Maersk to invest in state-of-the-art weather systems that provide real-time, global weather coverage with associated severity estimates in order to assess the riskiness of a given shipping route that Maersk intends to execute. Secondly, the increase in frequency of major natural disasters will significantly impact the logistics of Maersk. When a natural disaster hits a port, it could potentially cause so much damage that the port becomes inoperable. For example, Hurricane Katrina caused over $250 million dollars of damage to the Port of Gulfport and the in port ships and cargo. Port closures or damages could have rippling negative effects in the global supply network because the movement of ships, which move the massive supplies of basic economic staples such as oil and food,
would be curtailed. Maersk will have to be equipped to deal with these crises more frequently. Finally, rising sea levels could potentially cause more frequent port flooding and threaten the existence of the current infrastructure. Although Maersk does not own port logistics, the costs associated with having to deal with these complications (e.g. delays, loading inefficiencies, etc.) will be a substantial.
Finally, in my opinion, the most thought-provoking effect climate change will have on the shipping industry comes in the form of changing economic trade landscape and shifting shipping lanes. As climates change around the globe, the local suitability of food production will substantially shift from equatorial climates to higher and lower longitudinal climates. Since food is a major product transported by Maersk, this could vastly alter their economic trade channels. Furthermore, looking far into the future, as polar ice caps melt, new arctic shipping lane openings may become available that could potentially significantly reduce the distance needed to travel between continents, again further altering the economic trade channels. According to the US Navy’s Arctic strategy, the Arctic’s Northern Sea Route could be ice free for a couple of months per year as early as 2030. Thinking long-term, Maersk needs to have a pulse on the changing shipping lane landscape. In order to continue to be the leading container ship company, it needs to be where the activity is, it needs to know where the activity will go on a macro scale, and it needs to capitalize on opportunities for innovative shipping lane changes associated with climate change.
Maersk is uniquely incentivized to be a leader in CO2 emission reduction because the negative effects associated with climate change directly impact its operations in the long term. Given Maersk’s exposure to the environment, I think it is vital that Maersk continue to demonstrate emission reduction excellence and invest in ways that will prepare for the changing landscape that climate change is inevitably bringing.
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 Maersk, “Transport & Trade,” http://www.maersk.com/en/industries/transport, accessed November 2, 2016.
 Marine Industry Profile, Capital IQ, a division of Standard & Poor’s.
 Maersk, “Sustainability Report 2015” (pdf file), downloaded from Maersk website, http://www.maersk.com/en/the-maersk-group/sustainability, accessed on November 3, 2016.
 Maersk Line, “Sustainability and Climate Change Mitigation in Maersk Line” (pdf file), downloaded from an institutional investor website, https://www.joep.dk/Om-os/Aktuelt/2016/Klimadebat-med-mange-vinkler, accessed November 3, 2016.
 Mark J. Koetse, Piet Reitveld, “The Impact of Climate Change and Weather on Transport: An Overview of Empirical Findings,” Transportation Research Part D 14, no. 3 (2009): 207.
 Ibid., p. 206-207.
 Maersk, “Vessels, Rigs, Platforms, and Terminals,” http://www.maersk.com/en/hardware, accessed November 4, 2016.
 Colin Gannon, “Climate Change and the Maritime Industry,” http://427mt.com/2015/05/climate-change-maritime-industry, accessed November 2, 2016.
 Mark J. Koetse, Piet Reitveld, “The Impact of Climate Change and Weather on Transport: An Overview of Empirical Findings,” Transportation Research Part D 14, no. 3 (2009): 210.
 Paul Brown, “Arctic’s melting ice shrinks shipping routes,” http://climatenewsnetwork.net/arctics-melting-ice-shrinks-shipping-routes, accessed November 2, 2016.
 United States Navy, “The United States Navy Arctic Road Map for 2014-2030” (pdf file), downloaded from Navy Website, http://greenfleet.dodlive.mil/files, accessed November 3, 2016.