The impact of energy crisis on the maritime industry - drivers and consequences on freight market

Abstract

Russia has been the largest exporter of natural gas whereas Ukraine, is both the top producer and exporter of sunflower related products such as sunflower meal, oil, and seed. Owing to the Russian-Ukraine War, energy and food prices crisis takes the world by storm. The maritime industry utilities its fair share of oil, gas and energy and its rates fluctuate with demand. Freight markets which include Trade Route, Import and Export & Freight Rate (due to fuel cost increase and vessel decrease) were affected. Solution to how the industry can overcome the energy crisis was done via analytical approaches by using Analytic Hierarchy Process (AHP) and Weighting Method and also empirical approaches through interviews and surveys by maritime personnels. Results indicate that increasing freight rate will be a short term solution for companies to deal with the rising cost while long term resolution will be investing in renewable energy. Renewable energy also has a benefit on environmental impact. This shift will address both economic and environmental concerns, supporting international commitments such as the Paris Agreement's objectives to limit temperature increases and achieve significant reductions in greenhouse gas emissions.

Keywords: Freight Rate, Trade Route, Renewable Energy, Paris Agreement, Net Zero Emission