Policy Bulletin 010: Shipping Freight Costs and UK Inflation Dynamics

Shipping is fundamental for the UK economy, transporting c.85% by weight of the country’s international freight trade. Using an econometric model, we show that shipping freight costs are statistically significantly associated with the level and volatility of UK inflation. Scenario simulations, however, indicate that these inflationary effects are predominantly transitory, with impacts decaying over time even under high shipping cost increases. For instance, even a doubling of container freight costs raises inflation by ~0.2% above baseline over a 2-year horizon, declining to 0.03% after a decade.

 

It is found that:

  • Increases in shipping freight rates may contribute to UK inflation, both its level and its volatility.
  • Inflation effects are highly dependent on the magnitude of freight rate increases.
  • Degree of increase varies by shipping type; most from containers, then refined oil products, followed by dry bulk, and finally unrefined oil carriers.
  • Contribution varies in the short (<1 yr), medium (2-5 yrs), and long term (7-10 yrs):
    • Greatest effects on inflation levels and volatility in the short term.
    • Effects significantly decay over time, both inflation levels and volatility, negligible in the long term.

 

Policy Recommendations:

  • Monetary policymakers should explicitly monitor shipping-related cost pressures as a source of short-term inflation uncertainty.
  • Contribution to inflation from increased shipping costs varies by segment – highest is from container ships; attention needed for different vessel types.
  • Potential inflationary effects from shipping decarbonisation measures are highly unlikely to persist over the medium to long term.
  • There can be other, much more extreme shocks to the sector (e.g. due to geopolitical turbulence) that can lead to persistently higher levels of inflation.

 

This Bulletin is based on the publication: Kyriakou, I., Ghahramanpour, S., Marchese, M. & Moutzouris, I. (2026). Shipping Freight Costs and U.K. Inflation Dynamics. Commodity Insights Digest, Summer 2026. https://www.bayes-cid.com/pdf/issues/2026-summer/publications/CID-Summer-2026_Kyriakou-etal-072826.pdf

Recommended citation:

Kyriakou, I., Ghahramanpour, S., Marchese, M., Moutzouris, I., Copeland, C. L. (2026). Shipping Freight Costs and UK Inflation Dynamics. UK National Clean Maritime Research Hub. https://doi.org/10.5281/zenodo.20268869

 

To download the full policy bulletin, please click the download button above.

To read other bulletins, please see: Resources – UK National Clean Maritime Research Hub

Documented Decarbonisation Practices in Major UK Ports: A Comparative Multiple-Case Analysis

“Abstract

Background/Objectives: UK ports are central to maritime decarbonisation, but comparable evidence on implementation remains limited. This study examines documented practices at 16 major UK ports represented by 17 analytical cases. Methods: A documentary multiple-case design classified 408 case indicator assessments across six dimensions and 24 indicators. Five ordered categories described documented implementation maturity, and results were compared using category frequencies and distributions. Results: Solar generation, efficient infrastructure, equipment electrification, rail connectivity, and industry partnerships were more extensively documented. Wind, hydrogen, green corridors, and just-in-time operations were largely absent from the public record or at planning and pilot stages. Patterns also varied by port type and ownership. Conclusions: The study identifies transferable implementation patterns while distinguishing documented activity from verified emissions effectiveness. Greater disclosure, coordinated infrastructure planning, and sustained cross-sector partnerships are needed to support wider implementation.”

 

Eshtehadi, R., Xie, Y. and Song, D.-P. (2026). Documented decarbonisation practices in major UK ports: A comparative multiple-case analysis. Logistics, [online] 10(9), p.197. doi:10.3390/logistics10090197.

The full article is accessible via:

https://doi.org/10.3390/logistics10090197

For related publications please see Resources – UK National Clean Maritime Research Hub

Clean Maritime Assembly 2026 – Highlights and Headlines Presentations (Day 2)

Session 1: Enabling the Clean Maritime Transition

Chair: Dr Janie Ling-Chin, Durham University

 

Session 2: Risk & Asset Management
Chair: Dr Ioannis Moutzouris, City St. George’s University of London

 

Session 3: Decarbonisation in Practice
Chair: Dr Claire Copeland, Durham University

 

Please note that some slides may have been amended or removed to protect confidential information.

We thank all our speakers for being part of the Clean Maritime Assembly 2026, and hope to see you again next year!

 

Further presentations from CMA 2026 are available to view in our Resources Library, for ease of navigation, posts can also be accessed using the links in the table below

Day 1 Day 2
Keynote speakers
‘Highlights and Headlines’

  • Technology & Innovation
  • AI, Digitalisation & Data
  • Skills & Workforce Development
‘Highlights and Headlines’

  • Enabling the Clean Maritime Transition
  • Risk & Asset Management
  • Decarbonisation in Practice
‘Academic Insights’

  • Economics, Technology & Systems Perspectives
  • Engineering Future Vessels: Safety, Efficiency & Innovation
  • Advancing Marine Propulsion
‘Academic Insights’

  • Integrated Maritime Power Systems
  • The Clean Energy Transition
  • Smarter Shipping: Ports, Scheduling & WAP
‘Beyond the Horizon’

  • DNV Spadeadam: Advancing the Maritime Energy Transition Through Large-Scale Testing
  • Fuels & Geopolitics

Clean Maritime Assembly 2026 – Academic Insights Presentations (Day 2)

 

Session 1: Integrated Maritime Power Systems
Chair: Dr Sumit Roy, Coventry University

Session 2: The Clean Energy Transition
Chair: Dr Alessandro Giampieri, Durham University

Session 3: Smarter Shipping: Ports, Scheduling & Wind-Assisted Propulsion
Chair: Dr Huashan Bao, Durham University

Please note that some slides may have been amended or removed to protect confidential information.

We thank all our speakers for being part of the Clean Maritime Assembly 2026, and hope to see you again next year!

Further presentations from CMA 2026 are available to view in our Resources Library, for ease of navigation, posts can also be accessed using the links in the table below

Day 1 Day 2
Keynote speakers
‘Highlights and Headlines’

  • Technology & Innovation
  • AI, Digitalisation & Data
  • Skills & Workforce Development
‘Highlights and Headlines’

  • Enabling the Clean Maritime Transition
  • Risk & Asset Management
  • Decarbonisation in Practice
‘Academic Insights’

  • Economics, Technology & Systems Perspectives
  • Engineering Future Vessels: Safety, Efficiency & Innovation
  • Advancing Marine Propulsion
‘Academic Insights’

  • Integrated Maritime Power Systems
  • The Clean Energy Transition
  • Smarter Shipping: Ports, Scheduling & WAP
‘Beyond the Horizon’

  • DNV Spadeadam: Advancing the Maritime Energy Transition Through Large-Scale Testing
  • Fuels & Geopolitics

Incentive distortions in FuelEU Maritime: Reforming the GHG intensity penalty structure

“Abstract

The FuelEU Maritime Regulation introduces a greenhouse gas (GHG) intensity standard for maritime transport, enforced through financial penalties for non-compliance. While intended to promote cost-effective decarbonization, this paper demonstrates that the current formulation creates a declining penalty per unit of non-compliance as emissions increase, weakening marginal abatement incentives for higher-emitting vessels and encouraging strategic behaviour. For a heterogeneous fleet with a fixed aggregate non-compliance balance, the total penalty depends on how non-compliance is distributed across vessels: it is maximized when GHG intensities are equalised and minimized at a boundary solution with at most one vessel taking an interior value between the target and baseline intensities. This feature introduces distortions that are inconsistent with efficient and equitable policy outcomes. To address these issues, we propose a reformed penalty structure and provide analytical results supported by numerical examples. The revised design restores constant marginal incentives, improves fairness and transparency, and eliminates strategic distortions in compliance markets. The results highlight the importance of functional form in policy design for maritime decarbonization.”

 

Song, D. (2026). Incentive distortions in FuelEU maritime: Reforming the GHG intensity penalty structure. Transport Policy, 187, p.104333. doi:10.1016/j.tranpol.2026.104333.

The full article is accessible via:

https://doi.org/10.1016/j.tranpol.2026.104333

For related publications please see Resources – UK National Clean Maritime Research Hub

Carbon Intensity Indicator (CII): Exploring the potential for an at port metric

This policy briefing explores the feasibility of improving the International Maritime Organization’s Carbon Intensity Indicator through developing a separate at port metric. It suggests that determining an appropriate at port metric would need to reflect the wide range of activities and conditions experienced by different vessel types and in different locations. This could be mainly achieved through consideration of an appropriate “useful work” definition.

Highlights:

  •  The cargo-carrying capacity and distance travelled used in CII do not reflect vessels’ at port activities
  •  Contracts between shipowners, operators, and charterers may not support CII rating improvements
  •  At port CII metric potentially valuable but limited by practical complexities
  •  Develop at sea CII metric first and further research how the at port part could work
  •  A review of the “useful work” definition should be undertaken for the various at port activities by vessel type
  •  As low(er) carbon fuels are adopted, other emissions – such as methane and nitrous oxide – and on a whole life cycle (“well-to-wake”) basis should be included in CII

 

Suggested citation:

Shi, Y., Copeland, C. L., & Moutzouris, I. (2026). Carbon Intensity Indicator (CII): Exploring the potential for an at port metric. Zenodo. https://doi.org/10.5281/zenodo.20056634

The influence of port proximity on air pollution and public health in the world’s cities

“Abstract

Port cities are critical economic hubs but also major hotspots of environmental emissions. To quantify the associations among port proximity, pollution, and health burdens, we partitioned global land areas into 372,178 grid cells and calculated distances from 4436 port terminals to each grid cell for the period 2000–2022. We examine how port proximity relates to pollution indicators, how these patterns differ between port and non-port areas and across national income groups, and how they vary with urbanization and the composition of energy imports. The results show that areas in proximity to ports exhibit higher levels of greenhouse gases (CO2 and CH4) and harmful gaseous pollutants (SO2, NOx, and CO), as well as particulate pollution indicators such as PM2.5. The strongest port related pollution gradient is concentrated within approximately 56 km of ports. The pollution burden near ports is more pronounced in low and middle income countries. Linking gridded pollution indicators with health estimates based on the Global Burden of Disease database suggests that port proximity strengthens the association between gaseous pollutants, such as CO2, NOx, and SO2, and cause specific chronic disease mortality burdens, particularly respiratory and cardiovascular outcomes, while the association involving PM2.5 is more spatially pervasive and varies less with port proximity. These findings support differentiated mitigation strategies to reduce pollution and advance cleaner and low-carbon port-city development.”

 

Zhang, S., Ducruet, C., Wang, L. and Song, D. (2026). The influence of port proximity on air pollution and public health in the world’s cities. Cities, [online] 175(0264–2751). doi:https://doi.org/10.1016/j.cities.2026.107032.

The full article is accessible via:

https://doi.org/10.1016/j.cities.2026.107032

For related publications please see Resources – UK National Clean Maritime Research Hub

The paradox of stringent environmental policies: The feedback between regulatory uncertainty and green technology adoption in competitive shipping

“Purpose

Carriers face complex green strategic decisions, which are further complicated by regulatory uncertainty, particularly when enforcement intensity is influenced by endogenous factors such as industry-wide technology adoption. This study aimed to understand the impact of the feedback between regulatory uncertainty and green strategies in the shipping market.

Design/methodology/approach

This article develops a two-period game-theoretic model to examine how dual regulatory uncertainty (occurrence uncertainty and stringency uncertainty) – modulated by feedback from carriers’ green strategies – affects equilibrium results in a competitive freight market. Carriers choose between operational and technical compliance pathways and simultaneously set freight prices. The model captures the dynamic interplay between regulatory expectations, adoption behavior and market competition.

Findings

This study derives conditions under which stringent regulation can paradoxically reduce carriers’ incentives for early green investment. Additionally, the results show that regulatory uncertainty can lead to asymmetric profitability outcomes among competing carriers, thereby accelerating market concentration.

Originality/value

The framework contributes to the literature by endogenizing regulatory evolution within a strategic decision-making model, offering generalizable insights into policy-induced market distortions and strategic underinvestment. The findings have implications for the design of adaptive environmental regulations in freight transport systems.”

 

Zheng, W., Song, D.-P., Jiang, Z.-Z. and An, S.-M. (2026). The paradox of stringent environmental policies: The feedback between regulatory uncertainty and green technology adoption in competitive shipping. Asia pacific journal of Marketing and logistics, pp.1–16. doi:10.1108/apjml-09-2025-1854.

The full article is accessible via:

https://doi.org/10.1108/APJML-09-2025-1854

For related publications please see Resources – UK National Clean Maritime Research Hub

Carbon Efficiency and Asset Pricing in Dry Bulk Shipping: Capesize and Panamax Bulkers

A new white paper from Veson Nautical and Bayes Business School explores how IMO indicators are shaping vessel values in the bulk market. Using several years of data, the study highlights how efficiency performance, regulatory pressure, and market conditions interact to influence asset pricing across Capesize and Panamax vessels.

This resource will be particularly valuable for stakeholders seeking to understand how decarbonisation pressures are translating into real market outcomes.

 

The full white paper is available through this link: Carbon Efficiency and Asset Pricing in Dry Bulk Shipping – Veson Nautical

FuelEU Maritime: Proposed Modification for the Non-Compliance Penalty Calculation

The European Union (EU) has implemented a tougher than IMO emission intensity indicator requirement for shipping. Under the FuelEU Maritime regulations a penalty applies where vessels are non-compliant to set greenhouse gas emission limits. In this Policy Briefing we outline why the penalty calculation is problematic – that it introduces distortions and undermines regulation objectives.

This policy briefing argues that:

  • The current formula calculates a penalty that is weaker for higher emitters, causes unequal treatment for fleets with the same level of non-compliance balance, and complicates the pooling mechanism.
  • Proposed modification would be to replace the Actual GHG Intensity with the Target GHG Intensity in the penalty payment calculation.
  • For the UK Government, in the expected fuel standard consultation and implementation, we recommend that such distorting effects are avoided rather than harmonising with the EU.

 

Suggested citation:

Song, D., & Copeland, C. L. (2026). FuelEU Maritime: Proposed Modification for the Non-Compliance Penalty Calculation. UK National Clean Maritime Research Hub. https://doi.org/10.5281/zenodo.20141945