The Rise of a Sustainability Leader: Maersk’s Journey to the Triple-E

maersk line triple-e containership
Maersk Line’s first Triple-E class containership with a fresh coat of paint at the DSME shipyard in Okpo , South Korea. Image Maersk Line

At four-hundred metres long, 59 metres wide and 73 metres high, the Triple-E series of containerships will be the world’s largest, and one of the most efficient, vessels in operation. With exclusive insight offered from Maersk itself, and days to go before the launch, Fathom assesses Maersk’s sustainability culture and the impact it has, and will continue to have, on the global shipping industry at large.

The Good Bad Old Days

Denmark, A.P. Moller Maersk’s (Maersk’s) home country, like the rest of Scandinavia is well known for its forward-thinking, innovative approach and commitment to sustainability.

It is perhaps partly for that reason that in 2008 Maersk had to defend its environmental record after figures following revelations that the shipping and oil exploration activities of Maersk emitted as much CO2 as the whole of Denmark.

At the time, lobby group Greenpeace drove home the message that “even if a large portion of the Maersk fleet isn’t formally domiciled in Denmark, it is in the end Maersk’s – and Denmark’s – responsibility to limit CO2 emissions.”

Of course, the media seized on to the factlet and in the resulting furore, Denmark’s Liberal Democratic Party (Venstre) called for an international agreement to limit emissions from ships, stating: “It would be unreasonable if Denmark alone was to carry this burden. Maersk ships sail all around the world, so this is a problem that should be addressed with an international agreement.”

The 50 Million Tonne Diet Challenge

No one likes to be the industry’s hot potato and it wasn’t long before Maersk responded to the challenge.

Vice President of A.P. Moller Maersk, Knud Pontoppidan pointed out at the time that if Maersk were based in the US, “it would be a relatively small number as that nation’s emissions are so high.” Denmark, and by extension Maersk, were being punished because the base line was comparatively low.

After all, ’emissions equivalent to Ohio’ doesn’t have the same ring to it.

But despite the possibility that at least some of the pressure Maersk came under was more about the media and NGO frenzy rather than cold, hard numbers (shipping is by far the most efficient mode of transport even at its most inefficient), Maersk was determined to improve.

“We are facing a huge environmental challenge,” acknowledged Nils Smedegaard Andersen, CEO of A.P. Moller Maersk.

At the time, Maersk’s fleet of 1000, along with North Sea oil activities, released 40-50 million tonnes of carbon dioxide (CO2) per annum.

Looking back on that time in an exclusive interview with Fathom shipping, Jacob Sterling, Head of Environment and Sustainability for Maersk Line, reflected: “I think that we have always been a good corporate citizen but maybe not in a very systematic manner. And we came to realise that if we did not tell our stakeholders about what we do, then we would not get the full benefit.”

Following those reports back in 2008, Maersk certainly put its money where its mouth was.

Going Green: Dollars and Emissions

A year later, Maersk released its first sustainability report in 2009 and then in 2010 introduced the concept of slow-steaming.

The New York Times reported that by halving Maersk’s speed (operating as slow as 12 knots) fuel consumption could be reduced by 30% with the attendant emissions following suit – a win-win for both the balance sheet and the environment.

“The previous focus has been on ‘What will it cost?’ and ‘Get it to me as fast as possible,’” Soren Stig Nielsen, Maersk’s director of environmental sustainability, told The New York Times.

“But now there is a third dimension,” he said. “What’s the CO2 footprint?”

The practice of slow-steaming has since been adopted across the industry worldwide. The move marked a paradigm shift in the industry away from viewing eco-efficiency measures as profit reducing, and towards viewing them as profit safeguards.

“There is a very strong link between reducing CO2 emissions and becoming more profitable as a company. That coupled with increasing customer demand for transparency and good performance on sustainability issues makes a strong case for taking sustainability very seriously,” Sterling told Fathom.

At the end of 2010, Maersk line became the first shipping company to independently verify its carbon emissions vessel by vessel. The advantage of the decision was that customers were then able to track the vessel and company’s environmental data along with other KPIs.

Being a good environmental steward is important to Starbucks Coffee Company, said John Bauer in 2011, director of global transportation for Starbucks.

His comments are an example of how client paradigm attitudes had shifted from ‘right away’ to ‘the right way.’ “Our global logistics providers can aid us in lowering the carbon footprint of our supply chain by improving their CO2 emission data. Quantified measurement and verification is a step in the right direction.

Reducing our CO2 footprint is a top priority for us and also our customers who depend on us in their supply chain, and a growing number of consumers who inform their decisions with this information, Stig Nielsen, former of Sustainability for Maersk Line, has said in the past.

A few months after introducing independent verification, in February 2011, Maersk announced the Triple-E as its strategy to continue to lower its carbon footprint.

In 2012, the previous year’s efforts were recognised in an award from the Danish Accountants’ Association (DAA) for their 2011 Sustainability Report, for being open and honest even when coping with difficult issues such as the supply chain challenges, corruption and safety problems.

Eight Years Early

Maersk’s concerted effort to implement a structured and target-orientated sustainability plan has culminated in 2013 with a landmark achievement. In January, it was announced that their goal to reduce CO2 emissions by 25% from 2007 levels by 2020 had been achieved“ eight years early.

In May this year, the company was awarded the Sustainable Development the IMO’s contribution beyond Rio+20 award. In his acceptance speech, Sterling once again raised the now familiar theme of interconnectedness between sustainability and profitability:

Sustainability is becoming an integral part of the way we do shipping and how we have to do shipping in order to be successful. We need to be energy efficient not only to reduce CO2, but also to save costs and thereby improve profitability. We need to be a responsible global citizen not only because it is the right thing to do, but also because it helps us foresee and mitigate risks to the business.

It is with that mind-set that Maersk is now introducing the highly anticipated Triple-E to the industry.

Introducing the Triple-E

Maersk Mc-Kinney Moller is the world’s largest commercial vessel in operation: At 400 metres in length and weighing in at 52,859 tonnes, the vessel is 70 metres longer and five times heavier than the Eiffel Tower.

The CO2 output of the Triple-E vessels clocks in at about 50% compared to the industry average, or 20% less compared to the Emma Maersk. In addition, the vessel’s capacity is 16% greater than the Emma Maersk, representing 2,500 additional containers.

The vessel is to be a gentle giant and will be optimised for super slow-steaming, with a top speed of 23 knots and an optimum speed of 20 knots.

The ‘twin-skeg’ propulsion system will consist of two propellers at 9.8 metres in diameter with 4 blades each, and an ultra-long-stroke engine. The total power is approximately 30,000 kW per engine.

The hull is more of a U-shape than traditional container ships to offer extra capacity.

Maersk Line has ordered a total of 20 of these vessels, which will be phased in gradually over the next couple of years on the existing route between Asia and Northern Europe.

The key to the vessel’s efficiency claims is that it can transport a huge number of containers at a time: it has a capacity of 18,000 TEU, which results in less CO2 per container.

However, CEO Soren Skou previously told Lloyd’s List that the vessel will operate only at a capacity of 14,300 TEU (the same as the E-class ships) for the next six months.

Jacob Sterling explained to Fathom, When the ships operating under capacity it won’t be as efficient as if it was on full capacity. They will still be great ships in the first six months, but we will of course only see their full potential when we start to load them to their full capacity.

There has in addition been some speculation that the Triple-E will contribute to global over-tonnage. Sterling clarified: “No it won’t. The Triple E was designed to provide cost efficiency, not to increase our capacity. We are adjusting our capacity on Asia-Europe to market demands.

Conclusion

Whilst 2009 saw Maersk release its first sustainability report, it also saw a drop in profits that year.

Whether this was a result of the difficult global economic conditions starting to bite or a combination of other factors, Maersk has proven today that eco-efficiency really does pay.

In a new 2012 Sustainability Progress Update released in March, Maersk reported that improvements in fuel efficiency meant that 2012 bunker costs were USD $1.6 billion lower than they would have been otherwise. In essence, fuel efficiency is what made the difference between profit and loss for Maersk that year.

Since 2007, Maersk Line has seen a 25% reduction in CO2 per container, and since 2010, the group has achieved an 8% improvement in CO2 efficiency. “We are proud of the energy efficiency improvements we have gained in a relatively short period of time and the role we have played in putting much more focus on energy efficiency in the industry overall, e.g. through working with charter vessel suppliers and ship yards, and by sharing our experiences on how to operate vessels at low speeds as the norm (slow-steaming),” Sterling explained to Fathom.

However, despite Maersk’s market leader status in recent years, it is not going to rest on its laurels, anything but!

When we asked how Maersk will continue to build upon its culture of sustainability moving forwards, Sterling commented: “Our core values are the foundation and those are of course closely linked to company culture. So when we only buy sustainable container floors or when we recycle our ships responsibly it is not because of the great business case. It is because it is the right thing to do. Secondly, we believe that investing in quality pays off in the long run. So we invest in good ships and we make sure that we operate them in the best way possible.

CEO Soren Skou, Maersk Liner Business is clear about what the next steps will be for the company:”Our CO2 performance has never been better, but we still see significant potential for further improvements as our new and more efficient Triple-E ships enter into service in 2013 and 2014. Based on our performance over the past 5 years, we feel confident setting a new target for 2020: a 40% reduction of CO2 emissions per container – kilometre, using 2007 as our baseline.

And this being Maersk, they probably will (and do it early, too).

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