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The Asian Journal of Shipping and Logistics 33(4) (2017) 249-258 Contents lists available at ScienceDirect The Asian Journal of Shipping and Logistics Journal homepage: www.elsevier.com/locate/ajsl An Analysis of Port Service Quality and Customer Satisfaction * Gi Tae YEO a , Vinh V. THAI b , Sae Yeon ROH c a Professor, Incheon National University, Korea, E-mail:[email protected] (First Author) b Senior Lecturer, RMIT University, Australia, E-mail:[email protected] (Corresponding Author) c Research Fellow, Nanyang Technological University, Singapore, E-mail:[email protected] A R T I C L E I N F O Article history: Received 00 September 2000 Received in revised form 00 November 2000 Accepted 00 December 2000 Keywords: Port Service Quality Customer Satisfaction Container Port Korea A B S T R A C T The purpose of this study is to define green shipping and eco- friendly vessels and identifies the regulations and current market situation regarding eco-friendly vessels in major countries such as Europe, United States, Japan, China and South Korea within the framework of shipping companies, shipyards, ports, and policies. This conceptual study defines and analyzes the current market situation of green shipping based on the previous literatures as well as the cases of each stakeholder in major countries. Copyright © 2017 The Korean Association of Shipping and Logistics, Inc. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). 1. Introduction Because of the world economic downturn since 2008, worldwide cargo and trade volumes have * This work was supported by GNTECH Grant 2016. 2092-5212/© 2017 The Korean Association of Shipping and Logistics, Inc. Production and hosting by Elsevier B.V. Peer review under responsibility of the Korean Association of Shipping and Logistics, Inc.

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Page 1: Article · Web viewThe purpose of this study is to define green shipping and eco-friendly vessels and identifies the regulations and current market situation regarding eco-friendly

The Asian Journal of Shipping and Logistics 33(4) (2017) 249-258

Contents lists available at ScienceDirect

The Asian Journal of Shipping and LogisticsJournal homepage: www.elsevier.com/locate/ajsl

An Analysis of Port Service Quality and Customer Satisfaction *

Gi Tae YEOa , Vinh V. THAIb, Sae Yeon ROHc

a Professor, Incheon National University, Korea, E-mail:[email protected] (First Author)b Senior Lecturer, RMIT University, Australia, E-mail:[email protected] (Corresponding Author)c Research Fellow, Nanyang Technological University, Singapore, E-mail:[email protected]

A R T I C L E I N F O

Article history:Received 00 September 2000Received in revised form 00 November 2000Accepted 00 December 2000

Keywords:Port Service QualityCustomer SatisfactionContainer PortKorea

A B S T R A C T

The purpose of this study is to define green shipping and eco-friendly vessels and identifies the regulations and current market situation regarding eco-friendly vessels in major countries such as Europe, United States, Japan, China and South Korea within the framework of shipping companies, shipyards, ports, and policies. This conceptual study defines and analyzes the current market situation of green shipping based on the previous literatures as well as the cases of each stakeholder in major countries.

Copyright © 2017 The Korean Association of Shipping and Logistics, Inc. Production and hosting by Elsevier B.V. T h i s i s a n o p e n a c c e s s a r t i c l e u n d e r t h e C C B Y - N C - N D l i c e n s e (http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction

Because of the world economic downturn since 2008, worldwide cargo and trade volumes have decreased. The supply–demand imbalance in the shipping market following the decline in cargo volume has led to a decline in long-term freight rates. However, despite the long-term supply–demand imbalance, newbuilding orders have increased. In particular, large-scale ship orders have benefited from economies of scale in the wake of the shipping downturn, although special purpose ship orders have added to oversupply. In this context, the substitution of environmentally friendly, high efficiency vessels for older ships is the main cause of

oversupply.First, the environmental regulations of the International Maritime

Organization (IMO) are gradually expanding. In addition, the IMO approved internal guidelines for GHG regulation at the 59th General Assembly of the Marine Environment Protection Committee (MEPC) in 2009 and revised Marine Pollution (MARPOL) Annex VI in order to reduce carbon dioxide (CO2) emissions from ships by 2030 at MEPC’s 62nd General Meeting in July 2012 (Kim, S., 2015).

* This work was supported by GNTECH Grant 2016.

2092-5212/© 2017 The Korean Association of Shipping and Logistics, Inc. Production and hosting by Elsevier B.V.Peer review under responsibility of the Korean Association of Shipping and Logistics, Inc.

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2 A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies

Currently, eco-friendly vessels are green vessels that meet the IMO Conventions, which came into force in accordance with regulations published by the IMO. Despite the fact that commercialization is yet limited, the introduction of eco-friendly vessels is necessary in order to meet the environmental regulations of international ports and ports in developed countries as well as to handle the replacement of bunker oil, which involves high uncertainty and represents the largest portion of operating costs in the shipping industry (Yang, 2012).

Thus, the purpose of this study is to define current eco-friendly vessels against this background and analyze the need for such vessels, their limitations, and their problems.

Fragmentation has resulted in an explosive expansion in the trade of P/C due to the expansion of back-and-forth transactions in vertically fragmented cross-border production processes (Amighini, 2012).Thus, Kierzkowsk (2011) notes that vertical product differentiation, intra-industry trade and fragmentation of production leading to international outsourcing are important features of the existing global automotive sector. Empirical studies on automotive trade have concentrated on these features.1

2. Literature Review

2.1. Definitions of Green Shipping and Eco-Friendly Vessels

Green shipping refers to the use of resources and energy to transport people and goods by ship and specifically concerns the reduction in such resources and energy in order to preserve the global environment from GHGs and environmental pollutants generated by ships. From the operational point of view, green shipping must comply with the environment-related operating conditions regulated by the IMO. These conditions are described by conventions such as MARPOL 73/78, the Convention on Oil Pollution Preparedness, Response, and Co-operation regarding Hazardous and Noxious Substances (OPRC-HNS), the Anti-fouling Systems (AFS) Convention, the Ballast Water Management (BWM) Convention, and the Ship Recycling Convention. They are also discussed in the IMO’s GHG studies. The overall purpose is to manage and monitor all harmful substances (marine pollutants and air pollutants) emitted from ships (Im et al., 2005).

Previous research regarding green shipping mostly focused on finding the antecedents of green shipping or the links with performance. The major studies conducted recently are as follows.

Lun et al. (2015) suggested the concept of Greening and Performance Relativity (GPR) and used an input-output analytic approach to investigate how greening operations are related to firm performance in shipping operations. According to the survey data form the shipping industry in Hong Kong, the results show that there is a positive association between greening and firm performance in shipping operations.

Yang (2017) presented a study which utilized a conceptual framework with institutional theory as its base to empirically evaluate the impact of institutional pressures, internal green practices, and external green collaborations on green performance. Yang (2017) suggests the coercive, normative and mimetic pressures as the key institutional pressures and green shipping practices and green operations as the internal green

practices, green collaboration with supplier, green collaboration with partner, and green collaboration with customer as the external green collaborations. According to the SEM, the results show that institutional pressures have positive effects on internal green practices; internal green practices positively influence external green collaborations; internal green practices and external green collaborations positively influence green performance but institutional pressure is not positively associated with external green collaborations.

Fig. 1. Trend of China (Unit: US$ million)

Source: Authors’ drawing using China statistical yearbook 1996-2011

2.2. Key Regulations Related to Green Shipping

2.2.1. IMO RegulationsMARPOL 73/78 is an environmental convention to prevent marine

water quality pollution and marine air pollution that may occur because of ships. The convention has been continuously revised since its adoption in 1978. Annex VI contains the Convention on the Prevention of Pollution by Air Pollutants, which limits the emission of sulfur oxides (SOx), nitrogen oxides (NOx), and volatile organic compounds (VOCs) (IMO, 2016).

MARPOL 73/78’s regulatory phases are as follows. Step 1: In accordance with MARPOL 73/78, new building regulations concerning NOx were applied to vessels equipped with diesel engines of 130 kW or more from July 1, 2010. Step 2: Secondary regulations, which started in 2011, aimed to cut NOx emissions by a further 15% to 20%. Step 3: Tertiary regulations, which began in 2016, are designed to cut 80% of the current emissions in the ECA region.

MBMs started at the IMO’s 59th MEPC meeting in 2009. They are an aspect of the various types of such measure proposed by numerous countries and maritime-related international organizations for implementation in 2017. Discussions about the selection of options are being undertaken within the IMO.

2.2.2. Changes in IMO RegulationsOver time, environment-related operating conditions, regulations

identified by the IMO, and the accepted directions of related players have changed. The major changes from Annex I to Annex VI in MARPOL 73/78 are as follows. First, the scope of application has expanded and standards have been strengthened. In this regard, the direction of pollution reduction has been changed from marine pollution caused by oil and harmful substances generated by ships during operations and berthing to pollution that is harmful to the human body and caused by air pollutants (SOx, NOx, etc.).

1In this paper, automotive trade refers to both trade in automobiles and trade in auto parts and components (P/C). Also, trade in automobiles is referred to as auto trade and trade in auto parts

and components are referred to as auto P/C.

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A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies 3

3. Methodology

3.1. Conceptual Framework and Measures

The world's shipbuilding and shipping industry is working to develop environmentally friendly shipbuilding technologies with the cooperation of various related organizations.

In Japan, research and development (R&D) of energy saving and carbon emissions reduction for ships is very active. In April 2013, the Japanese shipbuilding industry established the Maritime Innovation Japan Corporation (MIJAC), a collaborative research platform specializing in the R&D of shipping technology. The Oshima Shipyard, Shin-Kurushima Dock, Tsuneishi Shipyard, Sano-Yosu Shipyard, Nihon Yusen, and NK are investors in MIJAC. The research mainly concerns ships’ design, drying technology, ships’ operational technology, the technology involved in reducing harmful materials such as carbon dioxide that are emitted from ships, and the technology behind the utilization of marine energy. MIJAC has the advantage of being able to understand customers' needs directly by conducting joint research with customers such as shippers, shipping companies, shipbuilders, classification societies, and marine equipment manufacturers. MIJAC can also respond quickly to changes in global market trends and circumstances. Examples of the direct results of such R&D follow.

A ship built at the Oshima Shipyard not only has the air lubrication system but also has a new bow design to minimize the resistance generated by the water. Moreover, the pin is placed in front of the propeller and a special device is installed in the propeller’s boss cap. Technology also converts the main engine’s output to propulsion. An important aspect of this example is that Japan is actively encouraging collaboration with the shipbuilding industry; hence, Japan is researching eco-friendly vessels and secure related markets.

Kawasaki Heavy Industries was the first company in the world to develop a system to reduce pollutants, such as CO2 and NOx from diesel engines in ships (Kim, S., 2015).

3.1.1. Major Shipyards in China China is also striving to develop environmentally friendly ship-related

technologies by cooperating with various related organizations. For example, on June 26, 2015 in Beijing, a research project on the “Core Technology for Round-Trip LNG Vessels,” one of the 863 plans initiated by Hudong-Zhonghua Shipbuilding, was finally agreed with support from the Ministry of Science and Technology's high-tech center and various experts. Currently, China is spurring the development of eco-friendly ship technology centered on active LNG.

3.1.2. Major Shipyards in Europe Several European countries are working together on eco-friendly ships.

Moreover, under the leadership of the Dutch Damen Group, 46 European shipbuilders, equipment manufacturers, and research institutes from 13 countries have officially launched a joint research project to develop eco-friendly shipping technologies. This project, called “LeanShips” (low energy and near to zero emissions ships), is an energy-saving and eco-friendly technological collaboration that is working toward effectiveness and reliability. The aim is to reduce ships’ fuel consumption by up to 25%; CO2 emissions by at least 25%; and SOx, NOx, and particulate matter (PM) emissions to zero. The LeanShips project is one of the marine

research initiatives of Horizon 2020, a European research and innovation framework program that is being undertaken by the European Union from 2014 to 2020. EUR 17 million in R&D funding has been made available by the European Commission, with initial meetings beginning in June 2015, followed by full-scale activities.

3.1.3. Major Shipyards in the U.S. One of the representative examples of eco-friendly ships in the U.S. is

the Navy's Ship Service Fuel Cell (SSFC) project. The project has been implemented by the Navy under the auspices of the Office of Naval Research (ONR) to reduce the fuel budget and develop eco-friendly power generation systems aimed at increasing combat power. SSFC uses a 2.5 kW molten carbonate fuel cell (MCFC) as the main power source for ships. The Maritime Administration (MARAD) has reviewed the application of the fuel cell to the 434 TEU feeder, a diesel/electric propulsion ship. The Water Transit Authority (WTA) has also considered it for use on a high-speed ferry (Kim, S. 2015).

3.2. Research Hypotheses

Unlike the situation in Korea, companies that are developing eco-friendly ships around the world are actual users of such ships. These companies include MAERSK, Nippon Yusen Kabushiki Kaisha (NYK), and Mitsui O.S.K. Lines (MOL). These large-scale shipping companies such as MAERSK (whose ships are equipped with environment-friendly paints and waste-heat recovery equipment), NYK (which has designed the Super Eco Ship 2030 concept ship), and MOL (which has launched the ISHIN Smart Ship Project) are developing eco-friendly vessels alongside consortiums that comprise governments, shipyards, and institutes, with their own R&D organizations at the center. In Europe, shipping companies are participating in the development and commercialization of marine fuel cells with projects such as Zero Emissions Ships (Zemships), Fellowship, the Validation of Renewable Methanol-Based Auxiliary Power Systems for Commercial Vessels (METHAPU), and e4ships.

H1: Resources-related PSQ positively influences customer satisfaction. H2: Outcomes-related PSQ positively influences customer satisfaction. H3: Process-related PSQ positively influences customer satisfaction.H4: Management-related PSQ positively influences customer satisfaction. H5: Image- and social responsibility-related PSQ positively influences

customer satisfaction.

3.2.1. The Maersk Group Maersk’s environmental business strategy is as follows. In 2008, the

company approved and promoted a company-wide eco-friendly policy called "co-efficiency." “Co-efficiency” encourages technological innovation in order to increase energy efficiency, reduce emissions, and lower operating costs. Through its performance indicator monitoring system, Maersk is able to optimize ships’ navigation and minimize fuel use. These achievements include the reduction of fuel consumption through reduced-speed operations, exhaust heat reuse systems, continuous hull cleaning, minimum ballast navigation, and optimized sailing plans. In order to reduce SOx emissions, Maersk is using low sulfur fuel that meets the IMO standard (0.1% m/m of fuel sulfur content). Moreover, if a vessel is in dock, the auxiliary engine is used to reduce SOx emissions. In addition to the foregoing design- and operation-related initiatives, Maersk uses Alternative Maritime Power (AMP) to provide a ship with the

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4 A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies

necessary power from the land and is pursuing the Green Port Policy. The latter uses natural gas to generate electrical energy for running onshore equipment.

Maersk is hedging against eco-friendly shipping by playing a leading role in introducing ship designs and equipment that increase operational efficiency and decrease environmentally harmful substances. In addition, Maersk has established shipping management plans and standards to respond to the IMO Conventions, such as the ballast water treaty and the recycling agreement, in advance. Further, the company has reduced the emission of toxic substances and increased energy efficiency through low-speed operations. In response to green shipments, Maersk will be subject to benchmarking by other shipping companies and will influence the development and operation of ship-related green technologies. Because of Maersk’s shipbuilding orders and the actions of other shipping lines that are benchmarking the company, it is expected that Maersk will influence maritime transactions such as the difficulty in the chartering and trading of ships that do not meet green shipping conditions.

3.2.2. The COSCO Group The COSCO (China) Group, a leader in the shipping industry in China,

is launching an “Ultra Slow Steaming” campaign. “Ultra Slow Steaming” means that a vessel’s speed is very low and less than its normal speed. Normally a container vessel operates at approximately 20 knots. Through slow steaming, the COSCO Group can save 180,000 tons of fuel oil per year and reduce CO2 emissions that are equivalent to 540,000 tons.

The COSCO Group has partnered with Solar Sailor, an Australian Environmental Protection and Navigation Science and Technology Corporation, to install a solar sail in one bulk carrier and one oil tanker in order to promote this maritime environment-friendly ideology. The sail can automatically adjust its angle to match wind direction and sunlight. A ship can then proceed in accordance with the wind, thereby saving 20% to 40% of fuel. Moreover, the sail can provide 5% of the electricity required for shipboard facilities.

3.2.3. The NYK Line The NYK Line, a large shipping company in Japan, is designing the

NYK Super Eco Ship, which could be the ultimate model for eco-friendly vessels, with the goal of introducing the ship into service in 2030. This initiative has spurred the development of related technologies. The ship is a new concept vessel using a fuel cell as the main power source. The fuel cell supplies 40 MW of energy; further, a solar panel and sail produce 1–2 MW and 1–3 MW respectively. According to NYK, 69% of GHG emissions can be reduced compared with the same class of standard vessel if all the technology is completed as designed.

NYK has been conducting pilot tests of air lubrication systems using a module carrier (a special ship that carries heavy items such as factory plant) of the NYK-Hinode Line, Ltd. in cooperation with Mitsubishi Heavy Industries Co., Ltd.

3.3. Eco-Friendly Vessels in Major Ports

3.3.1. The U.S. The U.S. Environmental Protection Agency (EPA) is implementing an

eco-friendly port policy called “Clean Port USA.” It is also introducing the SmartWay Transport Partnership Program to streamline port logistics and reduce GHG emissions. Further, the EPA has revised the Clean Air Act based on the Marine Vessel Emission Act of 2007 and specified the

use of low-sulfur oil with a content of less than 1,000 ppm as the main engine and auxiliary engine fuel for ships entering more than 90% of U.S. ports.

Participating vessels in the policy receive a donation discount. At first, a ship's deceleration measures within a port will be extended to within 20 to 40 nautical miles. In addition, the AMP facility that supplies electricity from the land to a ship when it is at a berth is constructed to simultaneously suppress the emission of the exhaust gas that is generated when the ship is operational. Table 1 summarizes California’s policy for low-sulfur fuel regulation.

Table 1

California low-sulfur fuel regulation policyApplication date Application criteria

January 2007 Must use marine gas oil or low-sulfur fuel less than 5%January 2010 Must use marine gas oil or low-sulfur fuel less than 1%

3.3.2. The Netherlands The Netherlands is implementing a policy to reduce CO2 emissions by

30% by 2020 compared with the 1990 level. The Netherlands intends to reduce its CO2 emissions by more than the requirement of the European Union (EU). The reduction target for the EU is 20% lower than the 1990 levels by 2020.

In addition, the Green Award Foundation has been established to implement the Green Award system (see Table 2). This system gives benefits such as port cost discounts to certified shipowners.

Table 2

Green award incentivesCountry Institution Incentive

The Netherlands

Port of Amsterdam 6% reduction in port fees for tankers and cargo ships

Port of Rotterdam

Port fee discount of 6% for tankers

Port of DordrechtMoerdijk Port AuthorityZeeland Seaports (Vlissingen and Terneuzen)

3.3.3. JapanThe Japanese government has established a group of specialists and

created a port environmental policy that develops the existing port environmental policy and takes account of climate change. The policy was implemented on November 22, 2007 by the Ministry of Land, Infrastructure, and Transport in accordance with article 14, paragraph 1, item 1 of the relevant Act, the "Establishment of Port Policies for Climate Change due to Global Warming." The specialist group consists of experts from academia and industry. The group has held regular meetings since 2007.

3.3.4. China In its twelfth five-year development plan, the Chinese government

established a national policy regarding resource saving, environmental protection, and climate change. In accordance with this national policy, the Transportation Bureau has introduced relevant policies and systems.

Shenzhen port was due to have converted all of its port trailers from diesel to LNG by 2015. Moreover, all rubber-tired gantry (RTG) cranes were due to change from diesel use to power use. In addition, the government has been working to establish an emissions control area in the

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A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies 5

Pearl River Delta (PRD) region and has established a low-sulfur fuel subsidy policy. As a result, from January to June 2014, 75% of the fuel cost difference was paid as a subsidy for vessels using low-sulfur fuel.

3.4. Major Countries’ Eco-Friendly Vessel Policies

3.4.1. Policies in the EU In October 2009, the European Commission proposed that GHG

emissions in the shipping industry should be reduced by 20% by 2020 compared with the 2005 levels. In recent years, the EU has been actively participating in GHG measures that include the introduction of carbon taxes for consumers and businesses that use polluting products and technologies.

First, the EU’s policies that directly reduce emissions from ships are enforcing sulfur dioxide emission regulations and encouraging the use of land power equipment. In this regard, the EU has decided to enforce regulations about the sulfur content in fuel oil used in ships through EU Directive/2005/33/EC. This regulation has been applied since January 1, 2010. In accordance with the regulation, fuel oil exchange procedures and equipment operation manuals should be provided on a vessel. Further, the use of fuel oil with a sulfur content of less than 0.1% m/m and the training of crew members regarding fuel oil change times and the application of EU fuel oil regulations should be recorded in the log book. The equipment to be regulated for fuel oil use is all a vessel’s engines and boilers that operate while at its berth.

Second, since 1975, European modal transport policies have encouraged modal shifts from road transport to rail, inland water, and coastal transport. At the time, it was predicted that the current situation would lead to a rapid increase in the proportion of road transport in Europe. In order to overcome this crisis, the Pilot Action for Combined Transport (PACT) was introduced. The EU, which failed to deliver the expected results from PACT, then introduced a new modal shift policy, the Marco Polo program, based on the lessons learned,. The Marco Polo program was designed to be systematic and future-oriented compared with the PACT program. The European Parliament introduced Commission Regulation 1382/2003 (Regulation (EC) No. 1382/2003 on July 22, 2003 and endorsed financial support for the Marco Polo program in order to improve the environmental efficiency of the freight transport system.

3.4.2. Policies in the U.S. The U.S. is relatively passive in its participation in global eco-friendly

shipping policies compared with the EU and Japan; however, it is active in its own internal problems. This can be seen by the addition of the North American coast to the ECA in Annex VI of the MARPOL Annex I mandatory double-hull requirement. In addition, U.S. green shipping policy is regulated and enforced more by local governments than by federal government regulations, especially by western governments around the state of California.

The EPA also changed the diesel fuel program to allow the production and sale of diesel containing more than 1,000 ppm of sulfur for use in category 3 marine engines. Thus, in the event that ship operators fail to achieve emission reductions, most U.S. marine waters will have regulated the production and sale of marine engines (Im et al., 2005).

3.4.3. Policies in Japan Japan has noted the modal shift that transforms road transport into

coastal transport because of its geographical characteristic as an island

nation. To this end, Japan intends to promote the construction of modal shift vessels and implement policies such as infrastructure maintenance, regulatory maintenance, and subsidy payments.

The port sector is also implementing policies to reduce GHG emissions and that facilitate the transformation of the logistics system centered on ports. The main policy is to improve the infrastructure first; for example, by improving the roads near the port in order to prevent traffic congestion around the gate, which increases GHG emissions around the terminal, and to facilitate the easy use of ports by IT systems such as the EDI. Moreover, ports are introducing land-based power supplies called idling stops. In 2006, the Port of Tokyo checked the connection’s location, the shape and handling of the connection cable, and the response in case of an emergency.

3.4.4. Policies in China China's shipbuilding industry is the fourth largest in the world. The

shipping sector in China is taking various measures to reduce GHG emissions effectively and reduce a certain amount of other emissions. Specifically, China has conducted in-depth research on relevant international agreements, rules, and regimes; it has then established relevant laws and regulations in a timely manner.

The Chinese government submitted a National Plan for Response to Climate Change and called for energy saving and the reduction of GHG emissions. Through this plan, China is promoting the development of a “resource-saving, environment-friendly” transportation industry. Further, the plan reduced the average energy consumption reduction targets for maritime shipping vessels in 2010 and 2020 by 11% and 20% respectively, compared with the 2005 level. Thus, the restructuring of the transportation mode is restricting the operation of vessels with high unit energy consumption and severe environmental pollution.

4. Eco-Friendly Vessels in Korea: Shipping Companies, Shipyards, Ports, and Policies

4.1. Eco-Friendly Vessels in Korean Shipyards

In Korea, the development of eco-friendly ships mostly centers on shipyards. For example, Daewoo Shipbuilding & Marine Engineering (DSME) has been accelerating orders for LNG-powered vessels since 2014. It has also been studying shipping technology with the MAN Diesel Company and Hyundai Heavy Industries. LNG-powered vessels were introduced commercially in 2013 after collaboration with MAN Diesel, whereby the latter developed the vessels’ engines and DSME developed the LNG fuel supply system. DSME filed 200 patents related to this LNG fuel supply system at home and abroad (127 in Korea and 73 overseas) and completed the registration of 44 (40 domestic and four overseas) patents. Further, 38 patents related to the propulsion requirements system (PRS) were filed at home and abroad (22 in Korea and 16 overseas) and five cases were registered in Korea (Kim, S., 2015).

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4.2. Eco-Friendly Vessels in Korean Shipping Companies

Hyundai Merchant Marine has built a “GHG inventory,” a comprehensive GHG management system, which systematically manages all indirect sources such as electricity use as well as GHGs generated from ships, terminals, and buildings. In addition, the “Supply Chain Carbon Calculator” and “Ship Energy Efficiency Index” have been developed to systematically manage the energy used by a ship.

Hanjin Shipping has introduced a carbon emission calculator that can calculate the amount of CO2 generated by each container transportation section. The company has also introduced “Eco Steaming” and “Route Optimization,” which set a vessel's shipping speed at an economical level. This program is currently being tested. Further, a green management team has been newly established in order to respond positively to the minimization of carbon emissions.

4.3. Eco-Friendly Vessels in Korean Ports

In 2008, the Korean government announced the “Low Carbon Green Growth” policy and declared that the Ministry of Land, Transport, and Maritime Affairs would make all ports in Korea green ports with low carbon green growth. The Ministry has established a Basic Plan for Sustainable Transportation Logistics Development (2011–2020), based on article 7 of the Sustainable Transportation Logistics Development Act and article 53 of the Low Carbon Green Growth Basic Act, and with a CO2

reduction target of 8.6 million tons. In 2012, the government introduced the 2020 Logistics GHG Reduction Implementation Plan (2012–2020) and set the total CO2 reduction target in the logistics sector at 11.92 million tons, an increase of 3.32 million tons from the prior target (8.6 million tons).

According to the status of eco-friendly vessels in Korea, we can conclude that a large part of development is undertaken by shipyards in Korea. However, elsewhere, such development is mainly undertaken by shipping companies, which are the real users. In other words, taking into account the characteristics of shipping overseas, Korean shipyards (e.g., STX, DSME, and Samsung Heavy Industries) are in the process of developing eco-friendly vessels. The reasons are the technical limitations of shipping companies, the lack of R&D funding, and the lack of financial support from the government and private organizations (Kim, 2013).

4.4. Korea’s Eco-Friendly Vessel Policies

Because South Korea is a party to the IMO Conventions, amendments to MARPOL 73/78 must be accepted in national law. The Marine Environment Management Act provides for comprehensive and systematic management of the marine environment, including the coast, and is one of the domestic Acts that accepts the content of the international convention on MARPOL 73/78. The content of this Act includes a mix of other characteristics such as marine environmental assessment, a comprehensive plan for managing the marine environment, marine environment improvement charges, marine waste unrelated to ships, marine pollution from ships, and air pollution prevention.

In particular, when the MBM becomes part of the GHG Convention, carbon trading experts, experts who calculate carbon emissions, experts who charge fines such as carbon taxes, and experts who decide when a ship can enter or leave are needed. If the MBM is comprehensive in the future, experts in the carbon trading system markets of Europe and Singapore will be needed. Currently, there are no institutions and potential

plans in Korea to foster such experts (Im et al., 2005).

5. Problems and Suggestions for Korea’s Eco-Friendly Strategy

5.1. Problems

There are six major problems in preparing for green shipping in Korea. First, shipping companies and shipyards approach the subject of green shipping in their own ways. Thus, a significant difference exists in the level of perception and actions, depending on the size of the shipping companies and shipyards. Second, budgets are constrained and costs are increased because of the lack of consortiums. In particular, there is a lack of development and purchasing of green vessels among shipping companies and shipyards. This failure of commercialization is due to the development of green ship equipment centered on shipyards, which exclude shipping companies. Further, the cost of developing and purchasing a green ship is increasing because of a lack of collaboration and an information-sharing system among related companies. For example, the frequency of amendments to the International Conventions on shipping is high and the content of the IMO regulations related to shipping in the Marine Environment Management Act is mixed; consequently, the acceptance of new regulations and amendments of domestic law are slow processes (Park, 2016; Yang, 2012).

5.2. Suggestions

Considering the problems related to the preparation for green shipping in Korea, we suggest the following solutions. First, the unilateral burden of the shipping industry needs to be resolved. Unlike the shipbuilding industry, which is excited about expectations, the shipping industry tends to be burdened by new spending. The shipping industry is faced with the task of addressing the challenges of rising fuel costs and meeting environmental regulations despite a lack of improvement in the low rate of freight caused by global oversupply. Thus, the establishment of a shipping–shipbuilding collaborative network is required. Second, through this collaborative network, it is possible to plan information sharing and joint cost reduction for shipping and shipbuilding. It is also necessary to establish win-win plans by building an information system that can share information on the demand and supply of vessels in accordance with changes in the shipping market. Third, the shipbuilding industry should address the recession by investing in R&D in eco-friendly vessels. Korea's shipbuilding industry is experiencing difficulties because of a lack of global and domestic orders. In this context, the establishment of safety standards for the operation of LNG-powered vessels is required. Moreover, an institutional basis is needed. Thus, R&D needs to develop into R&PD (research and policy development) in order for companies to link R&D with policy rather than just develop and commercialize technology.

6. Conclusion

This study is the leading examples of shipyards, shipping companies, and governments to green shipping and eco-friendly vessels in major countries.

Practical implications are that this study will help to build strategies for Korea 's shipyards, shipping companies and government policy in that it

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A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies 7

compares the cases of these major countries and objects and identifies the green shipping problems in Korea and suggested the counteracts. More specific implications and utilization plans for each practitioner are as follows.

6.1 Implications for Shipping Companies and Utilization Plans

First, this paper presents important implications for domestic shipping companies in that they need to order eco-friendly vessels so as to secure cost competitiveness and respond to environmental regulations. In 2011, the eco-friendly ship era began when the Maersk Line ordered 20 vessels of 18,000 twenty-foot equivalent units (TEU) from DSME.

Second, the market dominance of Korean shipping companies must be increased by improving fuel efficiency through environment-friendly shipping operations. Over the past decade, global trade volume has more than doubled, and although the hub of freight volume is in Asia, the focus of the global shipping industry is concentrated on a small number of European shipping companies. This is because European shipping companies make bold investments in the future and take into account the strengthening of environmental regulations. At present, Korean shipping companies focus on quantitative scale. In addition, the average age of their ships is high. A higher average age of ships means less fuel efficiency. Korean shipbuilders' rapid investment in new vessels will greatly increase the currently reduced share of cargo demand.

6.2 Implications for Shipyards and Utilization Plans

R&D investment in eco-friendly ship technology should be expanded. In this regard, a partnership between shipping companies and shipyards to link eco-friendly ship ordering and technological development is recommended. This partnership would be an opportunity for domestic shipyards to address the price gap with China through eco-friendly ship technology. In the container ship market, even if the fuel efficiency gap is maintained at 2% to 3% of that of China, it is possible to recover the difference in shipping prices only through fuel-efficient technology. Eco-friendly ship technology will not only boost the shipbuilding industry, which is currently stagnant, it will also be the most important factor in deciding whether the industry survives beyond the current competitiveness among shipyards.

6.3 Implications for Government and Utilization Plans

First, in terms of shipping finance, the proportion of eco-friendly ship-related funds should be increased. Eco-friendly vessels are high-risk vessels with significant initial investment in technological development and initial commercialization.

Second, standards for environment-friendly shipping should be established. The domestic regulations and management standards for eco-friendly vessels are not yet adequate. Thus, legal standards should be established as the business related to eco-friendly vessels is promoted. In other words, laws and institutional standards for ships, equipment, and operations that do not have relevant regulations and management standards should be prepared for vessels built with environmentally friendly technology.

Third, experts in eco-friendly vessels should be trained. Currently, there is a shortage of people studying eco-friendly vessels. The government should select an organization capable of advancing knowledge about eco-friendly vessels and developing eco-friendly maritime expertise. The aim

should be to promote the development of business models that address the inspection and certification of eco-friendly vessels’ compliance with international standards.

Fourth, the government should support the technological development of equipment and parts for the implementation of eco-friendly shipping systems. Further, in order to implement such systems, related technological development should be undertaken continuously.

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