Information Technology Reference
In-Depth Information
Annual profit of a ship is not only influenced by CO
2
allowances auction rate, but
also by the shipping market. Generally, the shipping market has a great impact on the
profit of a ship, which might influence the implementation of this scheme. This article
studies the acceptability of this trading scheme from the perspective of profit.
In the international shipping market, loading factor and freight rate are key influen-
tial factors of ship profit, which fluctuates with market. However, in most cases, the
loading factor denotes the situation of the shipping market better than the freight rate
since modifications of the freight rate are aroused by fluctuation of the loading factor.
Hence, this paper tries to find out how the marine emissions trading scheme influ-
ences ship profit when the loading factor is different and to discuss its acceptability.
As this article has calculated the annual profit of the case ship when its loading fac-
tor is 85%, in the subsequent context, we continue to study its annual profit based on
other four loading factors as comparison. Like for the 85% loading factor, the ship has
the most profitable speeds in each of the other four loading factors studied, no matter
what the auction rate is.
Table 6.
Profitability of different loading factors under the Marine Emissions Trading Scheme
Loading factor
95%
90%
85%
80%
75%
Speed reduc-
tion rate
0%
5%
5%
5%
10%
Maximum
Annual prof-
it (USD)
8556193.8
5030691.8
1645159.0
-1740373.9
-5107001.2
Auction rate
0.2
0.2
0.2
0.2
0.2
Minimum
Annual prof-
it (USD)
7031789.0
3506287.0
120754.1
-3264778.7
-6631406.0
Auction rate 1 1 1
1
1
Table 6 shows obviously that with rising loading factor, ship operators prefer high-
er speeds to gain more profits, ignoring CO
2
emissions. As to the acceptability of this
scheme, loading factors from 85% to 95% finally result profits to the ship which
demonstrate it could be accepted in theory. Of course, from the profit perspective,
lower auction rates are more acceptable by ship operators. However, when shipping
market is declining, such as loading factor is 80% or even less, the scheme will cause
negative profits to the ship, which increases the difficulty of its implementation.
Therefore, in a depressing market, in order to increase the incentives of ship operators
to adopt this scheme, it can be implemented with revenue recycling or some policies.
6
Conclusions and Further Research
This paper proposes a potential marine emissions trading scheme with a focus on CO
2
emissions to research its influence on the annual profit and CO
2
emissions of a
containership when ship speed reduces correspondingly.
