Potential Impact of IMO Mid-term Measures Pacific Island Country Case Studies Final Results (July 2024)

Achieving the ambitions laid out in the IMO’s revised strategy on the decarbonisation of international shipping could substantially negatively impact states across the Pacific. To get a better understanding of the impacts that can be expected, six Pacific Small Island Developing States, namely Kiribati, Marshall Islands, Nauru, Solomon Islands, Tuvalu, and Vanuatu, commissioned research by University College London and the Micronesian Center for Maritime Transport to provide in-depth granular data on these countries’ imports/exports and the vessel fleets used to facilitate them.

The resulting report uses a consistent methodology across each case study country, comprising both a general characterisation of each country’s macroeconomic context and international maritime activity, as well as some quantification of what midterm measure impacts may look like ‘on the ground’ for the commodities studied. The analysis has found that there is significant divergence in the scale and type of international shipping activity associated with each country. Vessels associated with the fisheries industry dominate the activity profiles of Kiribati, Marshall Islands and Tuvalu, whereas bulk carriers facilitating the trade in natural resources dominate that of Solomon Islands. The largest energy demands are associated with cruise vessels in Vanuatu and oil tankers in Nauru.

Commodities are expected to see positive increases in the costs of maritime transport paid and results suggest a wide range of impacts can be expected depending on the commodity flow studied. Projected impacts range between 0.1%-36.9% of total costs paid per 20-ft container and 1.2%-6.8% of total costs paid per tonne of bulk across 2030-50, with impacts on lower-valued commodities (including food and disaster-relevant goods) greater than those of higher value.

Moreover, contextual factors within the Pacific (e.g. increased voyage distances, remoteness, end-of-line effects, trade imbalances, lack of market size and a lack of competition between shipping service providers) combine to ensure that any increase in final price paid for maritime transport by consumers tends to exceed the basic marginal cost increase. The results shown here are therefore likely to be lower-bound estimates of impact. There was consensus across multiple shipping agencies interviewed in 2024 that very-little cost impact as a result of the midterm measures would be absorbed by shipping agencies, with virtually all passed-on directly to customers. There is also very little capacity for modal shift of the commodity flows analysed to air freight services. Results were found to be consistent with those of the official Task 4 methodology of the IMO’s Comprehensive Impact Assessment (2024).

Cite as:

Stewart, J, Smith, T, Sefeti, A, Schutz, A, Sahib,M, Bordahandy, P-J, Nuttall, P., Potential Impact of IMO Mid-term Measures: Pacific Island Country Case Studies: Final Results (July 2024), London and Majuro: UCL/MCST, 2024.

Download the full report here.