The ships that move most of the world’s goods run on some of its dirtiest fuel. That long-standing arrangement is now being renegotiated, vessel by vessel and port by port, as shipping lines order engines built for methanol, ammonia and other lower-carbon fuels. The transition is real, but it is not cheap, and the bill is already appearing in freight rates that importers, exporters and ultimately shoppers have to pay.
Shipping carries the overwhelming majority of world trade by volume, yet it has been slow to clean up because fuel is its largest cost and margins are thin. Coverage at Reuters of new vessel orders shows a clear pattern emerging: the largest carriers are committing to dual-fuel ships that can burn conventional fuel oil today and a greener alternative when supply allows. Readers of our business and trade coverage will recognise the hedge — an expensive one, made because nobody can yet say which fuel wins.
Why Green Fuel Costs More
Green methanol, the current front-runner, is typically made from captured carbon and green hydrogen, or from biomass. Both routes are energy-intensive, and supply is a fraction of what a global fleet would need. Ammonia promises zero carbon at the point of use but is toxic, demanding new safety systems, trained crews and redesigned ports. Liquefied natural gas cuts some emissions, yet methane leakage during production and transport can erode much of the benefit, a concern environmental researchers continue to raise.
The arithmetic follows from scarcity. When a fuel costs several times more than fuel oil per unit of energy, and the ships that can burn it also cost more to build, freight cannot stay at old prices unless someone absorbs the difference. At present, according to industry analysts, customers with climate commitments are paying green premiums on selected routes, while on the wider market the cost is spread thinly across ordinary cargo. Our blog analysis of transport and trade suggests that unevenness will persist while fuel supply remains a patchwork of regional projects.
Ports, Rules and a Two-Speed Fleet
Fuel is only half the problem. A methanol-ready ship is useless in a port with no methanol to sell, so investment in storage, bunkering barges and safety rules has to arrive in step with the fleet. A small group of major hubs is moving first, creating green corridors between paired ports where ships can refuel at both ends. Outside those corridors, older vessels will keep burning conventional fuel for years, producing a two-speed industry in which the newest ships advertise low emissions while the long tail of the fleet changes slowly.
Regulation is tightening the timeline. European rules now price shipping emissions and require progressive cuts in the carbon intensity of marine fuels, while global talks at the International Maritime Organization continue over a worldwide framework. Reporting by The Guardian on those negotiations highlights the tension between wealthy states pushing faster targets and developing economies worried about higher trade costs for distant exporters — a legitimate concern when freight is a large share of the final price of food and fuel imports.
What Importers Should Expect
For businesses that depend on shipping, the practical advice from logistics specialists is unglamorous: expect fuel surcharges to become more visible and more variable, build longer lead times into supply chains, and treat route choice as an emissions decision as well as a price decision. Some manufacturers are already responding by sourcing closer to their customers, not because ocean freight has become unaffordable, but because its price has become harder to predict.
The transition will not be reversed. Too many ships are on order, too many ports are investing and the regulatory direction is set. But the pace will be set less by naval engineering than by fuel chemistry and finance: how quickly green methanol and ammonia can be made at scale, at a price that does not quietly tax every traded good. Until then, the green switch and rising freight costs are not two stories. They are the same story, told from opposite ends of a container ship.