MSC Emissions: Understanding MSC’s Emissions Reduction Strategy

Since January, the European maritime sector has been subject to the European Union’s emissions trading system, known as EU ETS. This regulatory scheme calls for the European maritime sector to be climate-neutral by 2050. 

The maritime sector will comply with the EU ETS in stages. Ocean carriers will start paying for a percentage of their emissions starting in 2025, and that percentage will increase annually through 2027, as Searoutes explained in recent blog posts. 

Shippers should expect the major ocean carriers, such as MSC, to pass down compliance costs to them in the form of emissions surcharges. But shippers need not feel powerless in this situation; API tools such as the ones offered by Searoutes, can empower shippers with the visibility into seeing the amount of carbon emissions emitted during transport. 

Indeed, these insights can serve dual purposes: they can not only equip shippers as they work with the ocean carriers to comply with the EU ETS, but they can also help shippers meet their own company’s sustainability goals.

MSC Emissions: The World’s Largest Carrier Gets Serious about Mitigation

Mediterranean Shipping Company, popularly known as MSC, is the world’s largest container shipping line. The Geneva, Switzerland-headquartered company has more than 300 trade routes and calls at about 520 ports, with an estimated capacity of over 2.5 million twenty-foot equivalent units (TEUs).

The carrier has pledged to achieve net zero emissions by 2050, which means that the amount of emissions it expects to release into the earth’s atmosphere will equal the amount of emissions it plans to reduce.

Complying with the EU ETS is one way that MSC expects to reach its 2050 goal. Other ways will include working with industry partners to develop, test, and use low-carbon fuels, developing strategies to make operations more efficient, and engaging with supply chain partners to reduce Scope 3 emissions, according to a 2022 sustainability report. Scope 3 emissions are emissions that involve a company’s activities but the activities aren’t controlled by the company.

The carrier also said last October that it is also looking into retrofitting existing vessels and pursuing opportunities to actively manage fleet performance and voyage optimization. 

MSC says it has developed its sustainability goals to align with the Ten Principles of the United Nations Global Compact and the UN Guiding Principles on Business and Human Rights. The compact encourages corporations to proactively tackle issues surrounding the environment, labor, and human rights.

MSC and EU ETS: What Shippers Need to Know

Like other major ocean carriers involved in the European maritime sector, MSC must comply with the EU ETS. This means that MSC vessels, like other cargo and passenger ships with a gross tonnage of 5,000 metric tons or more operating between two EU ports or to and from an EU port, must comply with staggered emissions reductions between now and 2027. 

MSC warned its customers in December 2023 to anticipate an increase in operating costs as MSC complies with the regulatory scheme. This surcharge will apply to spot and long-term contracts, as well as to existing and new contracts, and customers should brace for these surcharges to increase over time as the cost of compliance grows for the next three years, MSC said in October 2023. 

Surcharges “will be reviewed monthly based on a benchmark public index for EUA prices. Each trade, comprising a number of MSC services, will have its own charging structure for inbound and outbound as well as roundtrip cargo,” MSC said last October.

The carrier also said that the emissions surcharge could fluctuate depending on the volatility of the carbon allowances traded into the EU ETS, but it has emphasized that “we believe it is important to be fully transparent about the additional costs related to decarbonization to ensure their impact can be properly managed throughout the supply chain.”

Shippers will need to stay on top of these potentially fluctuating surcharges so that they can safeguard their bottom line.

Building Effective Supply Chain Emissions Monitoring with Searoutes

Shippers should anticipate increased costs in 2024 as the ocean carriers comply with the EU ETS. The European maritime sector has been under this regulatory scheme since January. 

However, ocean carriers will not start paying for their emissions until 2025. Furthermore, the staggered approach for regulatory compliance means that carriers and shippers may not feel the full effect of the EU ETS right away, as Searoutes previously explained. There are also concerns that carriers might overcharge shippers as the carriers seek to fall in line with the EU ETS, according to a March Lloyd’s List article.

Given these uncertainties, shippers need to have visibility into the emissions of their supply chains so that they can have fruitful discussions with carriers about ensuring fair costs. Using the API tools that Searoutes offers, as well as understanding how carriers like MSC might calculate the emissions surcharges, can provide shippers with leverage during these discussions.

The API tools we mention below can assure shippers that they are pursuing cost-effective and sustainable shipping options.

Integrated Data Analytics

Our APIs utilize advanced data analytics to provide comprehensive insights into emissions profiles and trends. Shippers can assess their emissions output and use those insights when talking with carriers like MSC.

Searoutes’ tools analyze both historical data and real-time monitoring to derive emissions patterns and trends. For instance, our CO2 API tool, which allows shippers to search for optimal routes, uses algorithms that analyze historical AIS data on carbon emissions. 

Our Vessel API tool provides an in-depth view of a specific vessel’s emission profile and other factors, such as its last known position, speed, and current draft. Vessel API also uses algorithms to calculate factors such as an estimated time of arrival for the next port of call.

Streamlined Emissions Tracking Tools

The CO2 and Vessel API tools we mentioned above provide accurate monitoring and measurement of emissions across shipping routes.

These insights are incredibly important as shippers negotiate compliance costs with carriers during tender season or at other times. These insights can also help shippers assess their environmental impact along the supply chain and see where there might be areas for improvement. 

Having visibility into a company’s supply chain emissions can also be an asset when partners and customers seek to work with or buy from companies that are actively monitoring their emissions output.

Data-Driven Route Optimization

Carriers like MSC will calculate their emissions surcharges by factoring in conditions such as transit times, fuel consumption along particular routes, and emissions emitted along various routes. 

Our Routing API tool gives shippers options, informing them which routes might best serve their needs. The API leverages route optimization algorithms that minimize fuel consumption and emissions while optimizing operational efficiency. It considers a vessel’s characteristics, weather conditions, and port congestion so that shippers can know which routes to pursue and why. 

All these tools — the CO2 API, the Vessel API, and the Routing API — can provide confidence to shippers as they work with carriers on meeting the EU ETS and strive to meet their companies’ sustainability goals.

MSC Seeks to Lower Carbon Emissions — And So Are You

MSC is committed to reducing emissions, and the carrier has many eco-friendly initiatives that will benefit not only the company but also its shipping customers. As MSC tackles emissions reductions and calculates compliance costs, shippers have an opportunity to be active participants. They can use the insights gained from Searoutes’ APIs to have fruitful and valuable discussions about how both parties can meet the broader goal of reducing supply chain emissions. 

Searoutes has the tools to help you monitor emissions effectively through our integrated data analytics, streamlined tracking tools, and data-driven optimization. Contact us today to learn how we can help you not only to protect your costs but also to ensure adherence to your company’s sustainability targets.