The Impact of Energy Transition on Tanker Shipping: Navigating in Uncharted Waters: considerations for Business Models in International Tanker Shipping in the Light of Energy Transition from Fossil Fuels to Renewable and Alternative Energy Sources

Abstract

A structural change in the current fossil fuel-based energy production systems, that depend primarily on oil, natural gas and coal, is taking place. Owing to the climate action, these systems are shifting to an energy mix that relies more on renewable energy sources. This transition impacts not only the production and consumption, but also the transportation of fossil fuels, especially the carriers of oil and oil products, as one third of the total cargoes loaded on ships are loaded on tanker vessels. Oil is what they transport and also what they burn as fuel, like any other ship at sea. Inherently, this has multiple implications to the tanker fleet and the way business is done in the tanker shipping industry. The objective of this paper is to address how international tanker shipping companies could innovate their business models to overcome the challenges arising from the energy transition. A qualitative research was conducted, using an inductive approach and building on data from primary and secondary sources. A theoretical framework was developed based on the review of literature in the fields of business, strategy, management and innovation, to define the scope of relevant data and the approach to the analysis. International tanker shipping companies can innovate their business models through strengthening advantage and value creation by making synchronous and mutually reinforcing changes to the firm’s value proposition to customers and to its underlying operating model. To overcome challenges of the energy transition as a result of combating climate change, embedding sustainability objectives into their business models can assist tanker companies with creating, delivering, and capturing value for all their stakeholders, including not only the environment, but also the economies and society. The transition affects individual crude and product tanker companies, and the entire industry alike. The potential decline in oil demand, the stringent regulations to cut emissions, and oversupply of capacity may motivate the fragmented tanker market with many players to join forces and consolidate the market.