Houston—French container shipping firm CMA CGM will launch the first LNG-powered ships on trans-Pacific trade lanes from Asia to the US West Coast by the end of this year as more US companies seek to reduce their carbon footprint from logistics, CEO Rodolphe Saade said Feb. 25.
The first of six 15,000 twenty-foot equivalent unit ships powered by LNG will be delivered in October 2021 and deployed on the company's Pear River Express line from China to the Port of Los Angeles, Saade said in a keynote discussion at the virtual TPM conference.The move comes as US companies are increasingly being pressured to reduce carbon emissions from their supply lines, while IMO 2020 guidelines required shipowners to use higher cost 0.1% sulfur bunker fuel in US coastal waters from the start of 2020. LNG propulsion nearly eliminates sulfur emissions and reduces carbon emissions by around 20% compared to bunker fuel.
CMA CGM already operates five 23,000 TEU ultra-large LNG-powered ships on Asia-Europe trade lanes with another four on the way. The company expects to have a fleet of 26 LNG-powered ships by the end of 2022.
Saade highlighted that while further innovations in ship propulsion fuels such as methanol or hydrogen could be even more environmentally friendly than fossil-fuel derived LNG, CMA CGM sees the technology as the best option available to deploy in the near term.
"What is important is what we are doing now to protect the environment," Saade said. "Maybe LNG is not the technology of the future. Maybe there will technologies that are far better than LNG. Today, what is import is not so much to criticize LNG but to take action."
He added that by deploying LNG-powered ships to the US West Coast, CMA CGM was responding to the same concerns about carbon emissions from American companies that they had heard from European shippers.
In another session at the TPM conference, Adam Hall, vice president for transportation at French cosmetics company L'Oréal, said sustainability was becoming a key component of their shipping strategy alongside cost and reliability.
"We're creating a CO2 budget alongside our transportation budget," Hall said. "We need to move away from those carriers that aren't going to get on board with sustainability as a part of their mission."
RELIABILITY ALSO A MAJOR CONCERNBut reliability of container shipping services has become even more of a concern for shippers in the past year. Like most major carriers, CMA CGM initially canceled many sailings in the absence of demand that initially followed the coronavirus outbreak, but Saade said the company is seeking to avoid such cancellations going forward.
"It is true that we have been able to learn from our past mistakes and that is why we are adapting to a market that is changing," Saade said. "Blank sailings are not a solution. We have been forced to do so during this exceptional period, during COVID, but this should not be used because what is most important as a shipping line is to offer a good service."
But Saade added that providing a reliable service in a difficult time where US West Coast imports from Asia are at record levels will require higher container rates.
"We are going through exceptional times. Volumes from Asia, and especially China, to various destinations are extremely high, and we are doing our best to find equipment," Saade said. "All this comes at a price. Service cannot be free of charge, service has a price. We as a shipping line are investing heavily."
Platts Container Index was assessed at $4,226.32/FEU on Feb. 25, an increase of more than 300% from the same date one year ago.
