Project Title

Analyzing the Impacts of Slow Steaming for Distant Economies 

Project Year

2018   

Project Number

TPT 03 2018A 

Project Session

Session 2   

Project Type

Standard 

Project Status

Project in Implementation   
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Project No.

TPT 03 2018A 

Project Title

Analyzing the Impacts of Slow Steaming for Distant Economies 

Project Status

Project in Implementation 

Publication (if any)

 

Fund Account

APEC Support Fund 

Sub-fund

ASF: Energy Efficiency 

Project Year

2018 

Project Session

Session 2 

APEC Funding

80,000 

Co-funding Amount

Total Project Value

80,000 

Sponsoring Forum

Transportation Working Group (TPTWG) 

Topics

Transportation 

Committee

SOM Steering Committee on Economic and Technical Cooperation (SCE) 

Other Fora Involved

 

Other Non-APEC Stakeholders Involved

 

Proposing Economy(ies)

Chile 

Co-Sponsoring Economies

Canada; China; Korea; Mexico; New Zealand; Papua New Guinea; Peru; Chinese Taipei 

Expected Start Date

01/11/2018 

Expected Completion Date

30/06/2019 

Project Proponent Name 1

Carmen Garcia A 

Job Title 1

Advisor for International Affairs 

Organization 1

Ministry of Finance 

Postal Address 1

Teatinos 120, 11th Floor, Santiago, Chile 

Telephone 1

(56-2) 28282356 

Fax 1

Not Applicable 

Email 1

cgarcia@hacienda.gov.cl 

Project Proponent Name 2

Not Applicable 

Job Title 2

Not Applicable 

Organization 2

Not Applicable 

Postal Address 2

Not Applicable 

Telephone 2

Not Applicable 

Fax 2

Not Applicable 

Email 2

Not Applicable 

Declaration

Carmen Garcia A 

Project Summary

Greenhouse gas emissions (GHG) from international transport are among those with the fastest growing rate. The International Maritime Organization (IMO) has adopted an initial strategy for the reduction of GHG from international shipping. Among the short-term measures to be considered in this strategy is the analysis of a reduction/optimization on vessel speeds, a practice known as slow steaming. For an economy that is located far from their main export markets, the impacts of such measure are not well studied. This project intends to conduct a study for the evaluation of trade and environmental impacts for distant economies as well as determine which would be the best way for implementing it. The outcomes of the study will be shared with other APEC economies, enhancing and sharing knowledge on the topic, and then submitted as a case study to IMO for further discussion and consideration on the implementation of possible new regulations.

Relevance

Relevance – Region: In April 2018, the International Marine Organization (IMO) adopted an initial strategy on the reduction of greenhouse gas (GHG) emissions from ships, aiming to reduce GHG emissions from international shipping and phase them out as soon as possible in this century. The initial strategy comprises a list of candidate measures of short-, mid- and long-term that need to be discussed and prioritized. One of the candidates for short-term measures (i.e. measures that could be finalized and agreed between 2018 and 2023) is to consider and analyze the use of speed optimization and speed reduction, also known as “slow steaming”. 

Given the vital contribution of international shipping to international trade and the development of a sustainable global economy, candidate measures should be analysed with great scrutiny. In the particular case of speed reduction, further analysis is needed in order to address the impacts for economies that are located far away from their main export markets, particularly developing economies. Questions such as should the measure be based on maximum or average speeds, the potential for reduction of GHG emissions, reduction of cargo transported by year, total fuel consumption, the impact for exporters of perishable goods, and cargo inventory costs should be addressed. 

This study will help understand more deeply the consequences that a reduction on vessel’s speed could have for  economies who face long distance trips for their exports. It has been noted that the vast majority of the literature on slow steaming is focused on the economic and operational effects for the carrier, not addressing the problem from the point of view of the trade of an economy. Hence the need to improve knowledge and discussion on this matter so there can be better information to face the challenges of climate change. 

Relevance – Eligibility: This project is in accordance with the Energy Efficiency and Low Carbon Measures sub-fund criteria as it will contribute with information for the achievement of APEC's aggregate energy intensity reduction goal of 45% by 2035 which was agreed at the APEC Leaders Meeting in Honolulu in 2011. It will also contribute to APEC’s goals for capacity building in attaining sustainable growth and equitable development in the Asia-Pacific region, providing insights on the effectiveness of slow steaming as a measure for reducing GHG emissions. 

Furthermore, as one of the aims of APEC Transportation Working Group (TPTWG) is to balance security, safety and environmental requirements with trade facilitation, and IMO decisions are highly likely to have an impact in these matters on all APEC economies, the project is thought to be a valuable contribution for the region. 

Relevance – Capacity Building: This project will help to assess the impacts of slow steaming on exporting economies that are far from their main markets in APEC regions. This is a key topic for the trade between regions within the Pacific rim, due to the long distance of their markets. As such, they could experience higher economics impacts given their geographical location, maritime routes, size and ship fleet to transport their products and type of export products. 

The reduction of speed in maritime transport as a measure for reducing GHG emissions has gained a lot of attention given its potential effect for reducing emissions in the short term. This study will help to reveal the necessary information that would help on the decision making, and in that case to make clear what are the most effective ways to implement it, or discard it. Developing economies will be actively consulted through TPTWG in the design and the content of the study to provide the most responsive and useful outputs for developing economy needs. In order to narrow the scope for a better management of data it is suggested to consult China; Peru; New Zealand and Chinese Taipei given their support to the project and their geographic location. It is also expected that the outcomes of this project will serve as technical support to other developing economies within the region. 

The project will contribute on the following APEC’s goals for capacity building:

·  to attain sustainable growth and equitable development in the Asia-Pacific region.

·  to reduce economic disparities among APEC economies.

It will also contribute to help Members to fully participate in the regional economy as well as on trade and investment liberalization and facilitation process.

Objectives

1) To have data on the impacts (economic and environmental) for economies that are located far away from their main export markets, taking into account the shippers point of view. On the economic side, an evaluation of changes in costs due to variations in stock levels, possible loss of market share, loss of useful life in perishable products, among others, is expected. On the environmental side, an assessment of the effects that the use of additional maritime fleet would have in order to maintain the level of cargo transported is considered a key aspect to evaluate, as well as possible changes to faster shipping methods by consumers (air), or in the case of perishable goods, the impact of an increase in fuel consumption due to longer cooling time. It should be also important to address the effects on emissions of changes in maritime regulations that had been already agreed, such as the change in the Sulphur limit for fuels.

2)  To share the outcomes of the study with all APEC economies and increase cooperation and knowledge on this topic. This will help understand if the slow steaming measure is cost effective and thus should be considered for the reduction of the energy intensity of economic output in APEC economies beyond the 25 percent aspirational goal.

3) To use the results of 1) and 2) as inputs for a case study to be submitted to the IMO, in order for them to take into consideration the impacts on APEC distant economies and contribute to a decision making that is well informed.

Alignment

Alignment - APEC:  The proposal fits within the Yokohama Leaders Declaration in 2010. One of the five growth attributes that each APEC economy should pursue is related with Sustainable Growth, more specifically, to enhance energy security and promote energy-efficiency and low carbon policies. 

APEC economies face significant challenges promoting growth but at the same time minimizing negative environmental impacts. The proposed initiative aims to provide a necessary diagnose of the wasteful consumption on international transport inside the pacific ring, thus encouraging economies to undertake energy-efficiency measures and ultimately, reduce the energy intensity of economic output in APEC economies beyond the 25 percent aspirational goal already agreed to by the APEC leaders in 2007. 

Alignment – Forum: The project is in accordance with the priorities of the APEC TPTWG, that seeks to foster a prosperous Asia-Pacific region connected by efficient, seamless, safe, secure, resilient, and environmentally responsible transportation systems. The project helps in the achievement of TPTWG objective that aims to encourage uptake and evaluation of technology development in the transportation sector through corresponding information exchange, and by complying with international standards to lead harmonious growth across the region. This is particularly relevant as this project intends enhance communication within APEC region to address common concerns relative to changes in regulations in marine transportation relative to climate change. 

The project also supports TPTWG aim of collaboration with other international organizations (e.g. ICAO, ILO, or IMO) for the complying with corresponding safety/security/environmental sustainability/facilitation international standards. 

The project also fits with APEC Energy Working Group (EWG) aims of lowering the carbon intensity of energy supply and use.

TILF/ASF Justification

Not Applicable.

Beneficiaries and Outputs

Outputs: This initiative will result in a research paper that will analyze economic and environmental impacts of slow steaming as an alternative for reducing GHG emissions in maritime transportation. The focus will be particularly on economies that are located far from their main export markets and is expected to help in the analysis of possible measures to address climate change concerns. 

A preliminary outline of the study considers three main blocks as described below: 

·  First part: Literature review on the impacts of slow steaming from the point of view of the shipper or from a logistics point of view. 

·  Second part: Analysis of the impacts that a speed reduction could have for economies located far from their main export markets and therefore have to face long-distance trips. This will be done considering specific routes to de defined alongside TPTWG. The main questions that should be answered with this analysis are: i) Do economies located closer to their destination ports have more possibilities to face the problem of longer travel times? (for instance, changing their routes, modifying the transportation mode, etc.). This analysis would allow to argue if the measure has disproportionate effects for remote economies; ii) What are the associated costs that an economy away from its main export markets would face? For example, an increase in stock levels, possible loss of market share, loss of useful life in perishable products, among others. 

·  Third part: Environmental impact. The reduction of GHG emissions associated with a decline in the speed of a particular vessel seems to be sufficiently studied, as it is directly proportional to fuel consumption of the vessel. Taking this into account, this study should address different effects from a logistics point of view, such as the impact on emissions that the use of additional maritime fleet would have in order to maintain the level of cargo transported, possible changes to faster shipping methods by consumers (air), or in the case of perishable goods, the impact of an increase in fuel consumption due to longer cooling time. Changes in maritime transport regulations that could have an impact on GHG emissions, such as the change in the Sulphur limit for fuels, should also be studied. 

Progress reports on the study are intended to be shared with TPTWG and EWG so they can be discussed at group meetings. Once the study is completed it will be published on APEC’s website and sent via e-mail to members of TPTWG and EWG. A video conference call for APEC members will be also part of the scope of services, in order to disseminate the outcomes of the study. 

The study is expected to be completed in May-June 2019. A workshop on the matters analyzed in this study is also intended to be developed in 2019 in order to share its findings (subject to funding availability). 

Outcomes: The project seeks to provide better information for the discussion of alternatives to be implemented on maritime transport regulation regarding reduction of GHG emissions, and also help to identify barriers (e.g. lack mechanism to monitor the implementation of this measure, high transport costs, lack of sufficient port/transport infrastructure) that could create punitive spill-overs at each stage of the value-chain. As such, it will help the region and particularly TPTWG in the understanding of the implications of slow steaming as an alternative for the reduction of GHG and therefore contribute to their priority of fostering environmentally responsible transportation systems. 

It is also expected to be used for the discussion and prioritization of candidate short-term measures of IMO’s strategy, in particular when assessing the impact on States that the measure of speed optimization/reduction could have. Possible short-term measures of IMO’s strategy are those that could be finalized and agreed by the MEPC between 2018 and 2023, with dates of entry into force defined for each measure individually. Other short-term measures on the list include further improvement of the existing energy efficiency framework, establishment of an existing fleet improvement program, consider and analyze measures to address emissions of methane and further enhance measures to address emissions of Volatile Organic Compounds, encourage the development and update of national action plans, among others. Impacts on States of a certain measure should be assessed and taken into account as appropriate before adoption of the measure, so this project intends to be a valuable input at that stage. APEC economies will be affected by the decisions taken by IMO, therefore it is highly important to provide relevant information on the impacts for the region so they are taken into account. 

Beneficiaries: In Chile, the direct project participants will be those from the Trade Policy and Sustainable Development Department (TPSD) of the Ministry of Finance, in coordination with the Department of Energy, Trade and Sustainable Development (ETSD) of the Ministry of Foreign Affairs, and the Maritime, Fluvial and Lacustrine Department of the Ministry of Transportation and Communications. 

The TPSD Department is in charge of advising the Minister of Finance on the design and implementation of measures on tariff and regulatory matters that stimulate international economic integration and guarantee sustainable growth. It is also responsible for representing Chile’ position at APEC Economic Committee and Finance Ministers’ Process. The ETSD department has also a very important role in this project, as it leads the negotiations of the MEPC Committee. Members of the bunker fuels working group for marine transportation, integrated by representatives of the Ministry of Foreign Affairs, Ministry of Finance, Ministry of Transportation and Communications, Ministry of the Environment, Ministry of Energy, Marine Authority, Shipping industry, among others, will also be invited to participate on the discussion of the outcomes of the study. 

It should be noted that participants from TPSD Department and bunker fuels working group have extensive experience in government affairs related to trade, the environment, climate change, energy and transport. This group expects to benefit from this experience when interacting with the consultant that will conduct the study. 

Apart from Chile, other direct users will be participants from APEC member economies, specially TPTWG and its Maritime Expert Group (MEG), policymakers from Ministries of Commerce, Transport, Energy and Environment, as well as research and international institutions among APEC member economies. Results from this paper are also intended to be considered on the discussion for the IMO Strategy for the reduction of GHG emissions, so it would be particularly useful for all delegations participating on MEPC meetings.

A workshop on the matters analyzed in this study is also intended to be developed in 2019 in order to share its findings, although it will be subject to funding availability.

Dissemination

Digital copies of the completed research paper (or study) will be sent via e-mail to all APEC members (TPTWG and EWG), published on APEC’s website and distributed to IMO-MEPC. 

Digital copies will also be shared internally with the members of the working group for bunker fuels-maritime transport. In order to strengthening the dissemination of the findings of the study, a video conference call for APEC members will be requested to the Consultant as part of the deliverables.

There is no intention to sell any copies of the outcome of this project.

Gender

Although we believe the project itself (i.e., the development of a study) should not disadvantage women, we do acknowledge that the shipping sector is strongly male dominated. According to the 2017 Review of Maritime Transport by the United Nations Conference on Trade and Development, at sea, 1 percent of seafarers are women. Onshore, women hold 55 per cent of global maritime junior-level positions, compared with 9 per cent of executive-level positions. We think we can contribute to the reduction of this disparity by involving more women in the planning of this project, so the project will be coordinated in Chile within a work group that is gender balanced. This will help women to gain experience and knowledge in a theme that has been traditionally men led, promoting thus their incorporation.

The selection of consultants will also be organized in an unbiased environment irrespective of gender.

Work Plan

Date

Activities

Deliverables

Oct-Nov 2018

Setting-up draft of the study framework

Draft study framework

Nov-Dec 2018

Setting-up Request for Proposal for the study and evaluation criteria.

Request for Proposal approved by The Secretariat

Dec 2018- Feb 2019

Open tender process, revision of RFP and final selection of the consultant.

Work Agreement

TBD

In-between meetings/calls with contractor

Progress reports/Interim report

July 2019

Delivery of final report and sharing with APEC TPTWG and EWG for endorsement.

Final report

After Group endorsement

Submission to IMO-MEPC

Case study

2 months from

project end date

Drafting, endorsement and submission of the Completion Report and all supporting documents to the Secretariat

6 to 12 months after project end date

Participation in the Long Term Evaluation of APEC Projects conducted by the Secretariat

The setting up of the draft study framework will be developed in coordination with the bunker fuels-maritime transport working group, as well as corresponding representatives from co-sponsor economies, in order to address the topic thoroughly. At least three different scenarios related to speed of vessels are intended to be incorporated in order to include the analysis of APEC economies whose main export markets are located far away. This will likely be based on different sea routes that are representative for the region.  Key variables that should be studied are type of vessel used, distance travelled, type of product and cargo quantity, and GHG emissions. For this, cooperation from other APEC members will be crucial for the collection of data needed in the analysis, in specific, the determination of which routes to use in the analysis. 

The draft study framework agreed will be part of the Request for Proposal as the “Scope of Services”. Qualifications of the bidder will include a level of English fit for publication that require no further copy-editing by the APEC Secretariat. 

Progress reports will be shared with TPTWG and EWG in order to be discussed in their group meetings. 

Once the study is completed digital copies will be sent via e-mail to members of TPTWG and EWG. The study will also be published on APEC’s website. 

A workshop on the matters analyzed in this study is also intended to be developed in 2019 in order to share its findings (subject to funding availability).

Risks

Given the nature of this project, the main risk will be a poor execution of the study or, in an extreme case, the non-delivery of it. For the mitigation of such risks, Scope of services will be carefully developed, considering the participation of different stakeholders in order to address the problem from its different angles and conclude with a high-standard study. Poor execution could also come from a lack of information from other economies, so collaboration between parties will be key for the success of the project. For diminishing this risk, contact with relevant counterparties is going to start early, clarifying the expected collaboration and timelines. Timing will also be an important factor, as for allowing its discussion at the IMO level the study needs to be finished within a certain timeframe For this, efforts will be made to make the necessary progress ahead of APEC’s decision on the approval of funding, meaning that communication with TPTWG, preparation of a draft framework for the study, revision of APEC guidelines for projects, among others, will be carried out ahead of the decision for funding. 

The selection of the contractor who will conduct the study will also be done taking in consideration a great level of knowledge if maritime transportation and logistics, demonstrated experience in similar consultancy services, writing and English skills, among others that will be specified in the RFP.

Monitoring and Evaluation

Objectives will be achieved if the outcomes of the study are considered a valuable contribution for the discussion within APEC members. 

The main indicators that will contribute to measure the achievement of the objectives are the following: i) Progress on the study are discussed at TPTWG meetings; ii) Outcomes of the study allow to answer if the measure has disproportionate effects for remote economies; iii) Outcomes of the study provide information that allows to have a better understanding of the environmental impacts of slow steaming; iv) Number of APEC economies that were involved and contributed in the process; v) The sending of the study to IMO-MEPC and its later discussion, given that decisions made by said organization are highly likely to have an impact in all APEC economies. Thus, this will help to foster well informed decision making. 

For indicators ii) and iii), feedback will be asked to TPTWG and EWG, emphasizing on whether they consider the study as a valuable input for work of the group. For indicator iv) the aspirational goal is that at least 50% of co-sponsor economies make comments or suggestions in the development of the project. 

To ensure the project is on track, RFP will stablish that the contractor must meet either physically or through videoconference with the group in charge (Ministry of Finance, Ministry of Foreign Affairs and Ministry of Transportation) on a monthly basis (or every month and a half) in order to present progress and discuss any issue that could arise.  In terms of a final evaluation, the final report can serve this purpose, as it will also include the initial expected outcomes, based on the preliminary literature review, in comparison with the actual results.

Linkages

The Scope of services section of the RFP will be shared with co-sponsor economies (representatives of the TPTWG and EWG) for comments and suggestions.

After the project is completed, the study will be shared inside the APEC TPTWG and EWG, as well as IMO-MEPC.

Although there are studies that analyze slow steaming-related topics, few or none have their focus on the impacts for distant economies, and they are mainly based on cost reduction for carriers. Hence, this study aims to complement the knowledge that has been developed around this matter.

Given the nature of the study, intended to provide better information on impacts of slow steaming for distant economies, APEC fits perfectly given the geographical location of a great number of its members. The aims of the APEC TPTWG are also much in line with the subject in analysis.

Sustainability

Main conclusions, as well as the complete report will be shared with all APEC economies through its publication on APEC’s website and a survey will be conducted among APEC TPTWG and EWG participants to assess the impact of the study. A video conference call for APEC members held by the contractor will also be scheduled once the study is completed, in order to discuss the main outcomes. 

Depending on Chile’s funding availability, a future workshop will also be planned in order to socialize the outcomes of the study, share experiences and discuss implementation alternatives. After the project is completed, the study is intended to be submitted to IMO for the discussion on short-term candidate measures for the GHG emission reduction strategy, therefore future regulations adopted by the organization will also be a very important outcome as this will affect APEC economies, given that they will be subject to said regulations. This will be done through the Department of Energy, Trade and Sustainable Development of Chilean Ministry of Foreign Affairs, who leads the MEPC negotiations.

Project Overseers

This project will be led by the Trade Policy and Sustainable Development Department of the Ministry of Finance. Contractor name is yet to be defined. Details of PO and main contact points are the following: 

Ms. Carmen García (PO). Advisor for Trade Policy and Sustainable Development.
Tel: +56 2 28282356
E-mail: crgarcia@hacienda.gov.cl

Ms. García serves as an Advisor for Trade Policy and Sustainable Development Division in the Ministry of Finance of Chile. Her main responsibilities in this position are related with the analysis of environmental and climate change policies to be implemented in the country. Ms. García holds a Bachelor of Science degree in Industrial Engineering from the Pontificia Universidad Católica de Chile (PUC) and a Diploma in Climate Change and Low Carbon Development from Universidad de Chile. She is currently pursuing a Master's degree in Energy Engineering at PUC. 

Ms. Lorena Palomo, Advisor for Trade Policy and Sustainable Development.
Tel: +56 2 28282176.  E-mail: lpalomo@hacienda.gov.cl 

Ms. Palomo serves as a Senior Economic Adviser for Trade Policy and Sustainable Development Division in the Ministry of Finance of Chile. She is responsible for monitoring environmental chapters in trade negotiations. She also acts as Alternate Board member of the Board of the Green Climate Fund (GCF), representing Latina America and Caribbean region.  Ms. Palomo received her undergraduate degree in Business Administration and her Master degree in Financial Economics from Pontificia Universidad Católica de Chile, where she graduated with honors. She entered the Andrés Bello Diplomatic Academy in 1997, and graduated in 1998.

Cost Efficiency

Not Applicable.

Drawdown Timetable

Not Applicable.

Direct Labour

An external contractor will be hired for making the study. A total of 880 hours (5 months) are estimated for the work agreement.

Waivers

Not Applicable.

Are there any supporting document attached?

No 
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Version HistoryVersion History

Project No.

Project Title

Project Status

Publication (if any)

Fund Account

Sub-fund

Project Year

Project Session

APEC Funding

Co-funding Amount

Total Project Value

Sponsoring Forum

Topics

Committee

Other Fora Involved

Other Non-APEC Stakeholders Involved

Proposing Economy(ies)

Co-Sponsoring Economies

Expected Start Date

Expected Completion Date

Project Proponent Name 1

Job Title 1

Organization 1

Postal Address 1

Telephone 1

Fax 1

Email 1

Project Proponent Name 2

Job Title 2

Organization 2

Postal Address 2

Telephone 2

Fax 2

Email 2

Declaration

Project Summary

Relevance

Objectives

Alignment

TILF/ASF Justification

Beneficiaries and Outputs

Dissemination

Gender

Work Plan

Risks

Monitoring and Evaluation

Linkages

Sustainability

Project Overseers

Cost Efficiency

Drawdown Timetable

Direct Labour

Waivers

Are there any supporting document attached?

hdFldAdmin

Project Number

Previous Fora

Secretariat Comments

Reprogramming Notes

Consolidated QAF

Endorsement By Fora

PD Sign Off

Batch

Forum Priority

Committee Ranking Category

Committee Priority

PDM Priority

Priority Within Funding Category

Monitoring Report Received

Completion Report Received

PMU Field 1

PMU Field 2

PMU Field 3

On Behalf Of

Proposal Status

Originating Sub-Forum

Approval Status
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