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Compliance decisions of bulker shipping companies under various emission reduction policies

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  • Fan, Lixian
  • Yin, Jingbo

Abstract

Global pressure to reduce air pollutants has positioned the bulk shipping segment—which accounts for nearly half of global seaborne trade—as a strategic focus for decarbonization. This study investigates the choice between retrofitting existing vessels and investing in new-build fuel technologies by analyzing 12,436 bulk carriers from the Clarksons World Fleet Register. Using a Nested Logit model, we capture distinct substitution patterns between retrofittable and non-retrofittable compliance options, providing novel fleet-level evidence on how shipping companies respond to evolving emission policies. The empirical results support a hierarchical decision-making process between retrofits and new-build technologies. We model simultaneous adoption decisions across six major compliance options: scrubbers, LNG systems, alternative fuels, hybrid propulsion, Eco-design enhancements (Eco), and energy-saving technologies (EST). Key findings reveal that vessel characteristics, market conditions, and fuel prices significantly influence compliance strategies. Specifically, larger vessels and those constructed in European or American shipyards exhibit a greater propensity for retrofitting, whereas high Baltic Dry Index values discourage retrofits due to competitive expansion incentives. Bunker prices strongly stimulate the adoption of scrubbers, Eco-designs, and EST, but have limited effect on hybrid systems and alternative fuels such as LNG, which are primarily constrained by infrastructural and technological barriers. Evidence also indicates strategic interdependence: rivals' capacity expansion reduces individual companies’ incentives for retrofit investments. Our findings suggest that companies prioritize cost-effective retrofits in high fuel-price environments, while adoption of alternative fuels remains reliant targeted policy support. We conclude that effective decarbonization requires differentiated strategies: promoting mature, cost-efficient technologies in the near term, while accelerating infrastructure development and incentives for alternative fuels to facilitate long-term transition. These insights offer valuable guidance for both shipping companies and policymakers in promoting sustainable shipping.

Suggested Citation

  • Fan, Lixian & Yin, Jingbo, 2025. "Compliance decisions of bulker shipping companies under various emission reduction policies," Transport Policy, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:trapol:v:174:y:2025:i:c:s0967070x25003713
    DOI: 10.1016/j.tranpol.2025.103828
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    References listed on IDEAS

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