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Greening Shipping


AP Moller-Maersk, Maersk Group is Denmarks biggest comany. It ships goods around the world in the biggest container ships, it owns industrial operations in logistics and energy. They have their own oil wells and are in the process of buying more, amongst others from Shell. Shipping and oil have existed in symbiosis from the beginning, as the low cost of logistics increased the opportunities to arbitrate (make profit of price differences) around the world. Once the margin in price between a shoe made in China and one made in the US covers the cost of shipping from China to the US, shoes will be made only in China.

This seems normal economics, but it isn’t, because the price of bunker fuel is not fixed. It has no price. the price is set for the effect of it. This is because producing the fuel is not costly. The dirty fuels used in shipping comes out of wells, is moved around the world by trucks and ships that can almost burn it (so at a bit of loss) and can be moved into the fueltank of a big ship without money changing hands. In theory. In practice it is produced, made available on the market bought by Maersk and then used.

Of course Mearsk can easily get credit to buy the fuel if it needs to, credit being money printed on the spot to grab fuels from the market. Banks are smart to do this because Maersk turns a profit, meaning it grabs more credit from the clients than it needs from the banks. Thus it increases the demand for credit, it reduces the demand for resources and this is what makes the banks happy. Normally, if Maersk sources its fuel from other businesses, it may be that the two (like Maersk and Shell) have a cooperation meaning Shell gives a special price to Mearsk so it can ship. The secondary effects in the financial market and fuel demand around the world of shipping are huge. Ship a motorcycle to Uruguay and someone there needs fuel for it, someone there needs money to buy the fuel etc.

Maersk now owning and buying oil wells is an attempt of this company to disentangle itself from the world market, and become a bank in itself, a transportation bank. To achieve this it has to fully own wells, control the price of oil extraction, have a way to internally allocate the oil to its ships. Then, because the cost of its operation will be near zero, it can decide to ship goods or not. It gets a lot of control over what is shipped where. It can say to a chinese company : We wil take your goods over that of a more polluting company.Why? Because they don’t need to be payed for the service anymore, even if they are.

Of course there are losers in this move, one is Shell, who doesn’t see any cashflow and loses control over Maersk. Another is the fuel brokers, the financial intermediaries and banks that used to profit from supplying oil to Mearsk. The interesting thing is that these companies now no longer have an incentive to let Maersk use fossil fuels at all. How do these companies grab a piece of the international shipping cashflow if Maersk does not need anything significant (except ships) they can control and set the price of?

The answer may be in NH3, or ammonia. An alternative fuel, burning like diesel, and 100% green. Its not a water proof plan to recapture some of the Maersk cashflow, but its the best bet. For it to work the financial and energy players have to collude and lobby and bribe like they always have. This time to declare fossil bunker fuel illegal.

The idea is to make it so that Maersk can not use its oil. Nobody can use it for shipping. To make that possible an alternative has to be offered (because even though intl logisitcs was inflated to generate revenue for the same outsiders, it can serve that purpose with and without fossil fuels). This means wind generated NH3 farms have to pop up along the shipping routes. They can be off shore, ‘stranded’ as long as the ships can refuel there. They can run on NH3 without much changes. Emissions will be H20 an N2 and no NOx, because those exhaust can be neutralized on board.

If the lobby makes it so that the soot and polluting fuels Maersk now uses become illegal, and it makes it so it has the NH3 production resources in place to supply Mearsk, the company will not have the financial power to resist the switch, it will experience a ‘carbon bubble’. Shell has a lot it can do in this respect. The process needed is tried and tested. The offshore wind business is one they want to enter (or at least they claim they do, they are duplicious dicks and c$nts and have been for a century).

Once the need for NH3 grows in shipping, intermediaries can once again source and trade it, banks can invest in the sources, everyone can take a piece of the pie called Maersk operational turnover. And the planet will be healthier, fuel will be clean and cheap eventually (cause solar and wind don’t run out), and Maersk’s strategy will have triggered the change we so desperately need.

 

 

 

 

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