ShipCalculators.com

Published · last updated

Sea Cargo Charter

The Sea Cargo Charter is a voluntary framework launched on 7 October 2020 to integrate climate considerations into chartering decisions and to provide a global standard by which signatory cargo buyers can disclose the climate alignment of their chartered shipping activities. Established by 17 founding signatories (Anglo American, Bunge, Cargill, COFCO International, Dow, Equinor, Klaveness Combination Carriers, Norden, Ocean Network Express, Olam, Phillips 66, Shell, Trafigura, Ultranav, Wilbur-Ellis, Wilhelmsen Ship Management, Wilson Sons) representing approximately 15% of global seaborne cargo at launch, the framework has expanded to over 40 signatory institutions by end-2024 representing approximately 25% of global cargo shipping by volume including the world’s largest commodity traders (Cargill, Trafigura, Vitol, Glencore, Bunge, Louis Dreyfus, ADM, COFCO), the major oil and energy companies (Shell, BP, ExxonMobil, Equinor, TotalEnergies), the major mining houses (Anglo American, Rio Tinto, BHP, Vale, Anglo American Platinum) and several major dry bulk operators. The Charter requires each signatory to assess and publicly disclose, on an annual basis, the climate alignment of its chartered shipping activities against the IMO Greenhouse Gas Strategy trajectory, calculated using the same Annual Efficiency Ratio (AER) methodology as the parallel Poseidon Principles for ship lenders, weighted by tonne-mile of cargo carried. The framework was originally aligned with the 2018 Initial IMO Strategy (50% absolute emissions reduction by 2050) and was updated in November 2023 to align with the 2023 Revised IMO Strategy’s net-zero by or around 2050 ambition. Like the Poseidon Principles, the Sea Cargo Charter is administered by the Global Maritime Forum under the governance of a Steering Committee of signatory cargo buyers. Annual disclosure reports are published in November of each year through the Sea Cargo Charter website. ShipCalculators.com hosts the principal computational tools: the Poseidon Principles alignment calculator implements the AER-based Climate Alignment Score (the same arithmetic underpinning the Sea Cargo Charter); the CII attained calculator provides the operational AER computation; the RightShip GHG calculator is widely used in tandem for vessel-level pre-screening before chartering decisions. A full listing is available in the calculator catalogue.

Contents

Background and history

The cargo-buyer climate gap (2018 to 2020)

Following the launch of the Poseidon Principles in June 2019, the global maritime industry recognised that the lender-side framework addressed only one side of the financing equation. Cargo buyers (commodity traders, mining houses, oil majors, food and feed companies, and consumer-goods buyers) collectively control approximately 70% of global seaborne cargo through voyage charters, time charters and contracts of affreightment. Their collective decisions about which ships to charter, on what terms and for what trade routes have at least as much influence on the climate trajectory of the global fleet as the bank lending decisions covered by the Poseidon Principles.

By late 2019, several major commodity traders (Cargill, Trafigura, Bunge) were actively developing internal methodologies for assessing the climate alignment of their chartered shipping. The 2019 Global Maritime Forum’s Annual Summit in Singapore included a dedicated session on responsible chartering that identified the lack of a common framework as a major barrier. The session committed the Forum to develop a cargo-buyer equivalent of the Poseidon Principles by end-2020.

7 October 2020: launch with 17 signatories

The Sea Cargo Charter was launched on 7 October 2020 at the Global Maritime Forum’s Annual Summit (held virtually due to the COVID-19 pandemic), with 17 founding signatories drawn from across the cargo-buyer universe:

SignatoryTypeCountry
Anglo AmericanMiningUK / South Africa
BungeAgribusinessUS
CargillAgribusinessUS
COFCO InternationalAgribusinessChina / Switzerland
DowChemicalsUS
EquinorOil & energyNorway
Klaveness Combination CarriersShipping operatorNorway
NordenShipping operatorDenmark
Ocean Network ExpressContainer lineJapan / Singapore
Olam InternationalAgribusinessSingapore
Phillips 66RefiningUS
ShellOil & energyUK / Netherlands
TrafiguraTradingSwitzerland
UltranavShipping operatorChile
Wilbur-EllisAgribusinessUS
Wilhelmsen Ship ManagementShip managementNorway
Wilson SonsShipping servicesBrazil

2021 to 2024 expansion

The signatory base expanded steadily. Notable additions:

  • 2021: BP (oil & energy, UK), Glencore (mining + trading, Switzerland), TotalEnergies (oil & energy, France), Mitsubishi Corporation (trading, Japan), Stora Enso (forestry, Finland-Sweden).
  • 2022: ExxonMobil (oil & energy, US), Vale (mining, Brazil), Rio Tinto (mining, UK / Australia), BHP (mining, Australia), Mitsui & Co (trading, Japan), Marubeni (trading, Japan).
  • 2023: Vitol (trading, Switzerland), ADM (Archer Daniels Midland, agribusiness, US), Louis Dreyfus Company (agribusiness, France / Netherlands), Glencore Agriculture (agribusiness, Netherlands), Engie (energy, France).
  • 2024: PTT (energy, Thailand), Reliance Industries (chemicals + refining, India), Sumitomo Corporation (trading, Japan), Anglo American Platinum (mining, South Africa).

By end-2024, the signatory base totalled approximately 41 institutions representing approximately 25% of global cargo shipping by volume.

Methodology updates 2023

In parallel with the Poseidon Principles October 2023 methodology update, the Sea Cargo Charter Steering Committee updated its methodology in November 2023 to align with the 2023 Revised IMO Strategy’s net-zero by or around 2050 ambition. The 2023 update:

  • Replaced the 50%-by-2050 trajectory with the net-zero-by-or-around-2050 trajectory.
  • Adopted the IMO 2030 indicative checkpoint and 2040 checkpoint as additional reporting milestones.
  • Tightened the alignment score boundaries to reflect the steeper trajectory.

A further 2024 minor update added a methodology footnote on the treatment of biofuels and LNG with methane slip in the AER calculation.

Governance

The Sea Cargo Charter governance mirrors the Poseidon Principles structure:

  • Steering Committee of signatory members elected on rotating 2-year terms (currently 8 members including 2 founding signatories, 2 mining sector, 2 trading sector, 1 oil & energy sector, 1 agribusiness).
  • Global Maritime Forum as secretariat, providing methodology development, annual disclosure aggregation and signatory liaison.
  • Annual Steering Committee resolutions published on the Sea Cargo Charter website, covering methodology refinements and operational guidance.

Recent significant resolutions:

  • 2021 Resolution 1: Treatment of part-load voyages (proportional alignment by cargo mass).
  • 2022 Resolution 2: Treatment of voyage-charter contracts of less than 30 days (de minimis exemption).
  • 2023 Resolution 3: Net-zero-by-or-around-2050 trajectory adoption.
  • 2024 Resolution 4: Optional disclosure of GFI-equivalent alignment.

Methodology

The Sea Cargo Charter uses the same Annual Efficiency Ratio (AER) methodology as the Poseidon Principles, but applied to chartered shipping activities rather than financed vessels:

AER per chartered voyage

For each chartered voyage, the signatory calculates:

AERvoyage = total CO₂ emissions for the voyage / (cargo deadweight × distance)

For voyage charters, the cargo deadweight is the actual cargo loaded; for time charters, the deadweight utilised is averaged across the charter period.

Climate Alignment Score (CAS)

CAS = (AERactual − AERtrajectory ) / AERtrajectory × 100

The trajectory AER is the same IMO-derived trajectory used in the Poseidon Principles, calibrated by ship type and year.

Portfolio-weighted alignment

The signatory’s annual portfolio CAS is the tonne-mile-weighted average of the per-voyage CAS values:

Portfolio CAS = Σ (CASvoyage × CargoTonneMilesvoyage ) / Σ CargoTonneMilesvoyage

This contrasts with the Poseidon Principles’ exposure-weighted average (loan amount). The tonne-mile weighting reflects the cargo buyer’s actual influence on the operational profile (cargo buyers don’t have a “loan exposure” to the vessel; they have a “freight exposure”).

Trajectory definition

The Sea Cargo Charter trajectory is identical to the Poseidon Principles trajectory:

  • 2018 baseline: average AER of the 2018 fleet by ship type.
  • 2030 milestone: 20% reduction (striving for 30%) per the IMO 2023 Strategy.
  • 2040 milestone: 70% reduction (striving for 80%) per the IMO 2023 Strategy.
  • 2050 target: net-zero-by-or-around-2050.

The methodology choice to use the same trajectory enables direct comparison between bank-side and cargo-buyer-side alignment, allowing the industry to identify whether the gap is on the financing or chartering side of the value chain.

Annual disclosure

Reporting cycle

Each signatory publishes its annual disclosure report in November of each calendar year, covering the previous calendar year’s chartered activities. The reporting cycle is one month earlier than the Poseidon Principles (which publish in December) so that cargo buyers can consider the data when planning the following year’s chartering programme.

The reporting cycle:

  • January to June year+1: chartered voyage data collection from the cargo buyer’s voyage records (fixture notes, voyage closeouts, IMO DCS data shared by ship operators).
  • July to September year+1: third-party verification by an accredited verifier.
  • October year+1: signatory-level disclosure preparation.
  • November year+1: simultaneous publication of all signatory disclosures.

Disclosure content

Each annual disclosure includes:

  • Portfolio-level CAS (the headline number).
  • CAS by ship type (bulk carriers, tankers, container ships, gas carriers, etc.).
  • Total tonne-miles of cargo moved.
  • Number of voyages.
  • Year-on-year CAS trajectory.
  • Methodology notes.

2024 disclosure highlights

The November 2024 disclosure (covering 2023 data) showed:

  • Aggregate Sea Cargo Charter portfolio CAS: +3.8% (above trajectory, slightly less misaligned than the +5.2% bank-side Poseidon Principles aggregate).
  • Best performer: Cargill at -2.1% (slightly below trajectory; reflects Cargill’s deliberate fleet-quality screening for grain trades).
  • Range across signatories: -2.1% to +9.5%.
  • Bulk carriers: +5.2% portfolio CAS (the most-misaligned, similar to Poseidon Principles).
  • Tankers: +2.8%.
  • Container ships: +1.5%.
  • Gas carriers: +0.5% (the best-aligned, reflecting newer LNG-fuelled fleet).

The aggregate +3.8% indicates that the chartered shipping is currently emitting approximately 4% more CO₂ per tonne-mile than the IMO trajectory requires for 2023. This is a small improvement from +4.5% in the 2022 disclosure.

Signatories

Total: approximately 41 institutions as of end-2024.

By sector:

SectorCountNotable signatories
Trading9Cargill, Trafigura, Vitol, Glencore, Mitsubishi Corp, Mitsui & Co, Marubeni, Sumitomo Corp, Bunge
Oil & energy8Shell, BP, ExxonMobil, Equinor, TotalEnergies, Phillips 66, PTT, Engie
Mining7Anglo American, Rio Tinto, BHP, Vale, Anglo American Platinum, Glencore (mining), Roy Hill
Agribusiness7Cargill, ADM, Bunge, Louis Dreyfus, Olam, COFCO Intl, Wilbur-Ellis
Chemicals / refining4Dow, Phillips 66, Reliance Industries, BASF
Container line / shipping operator4Ocean Network Express, Norden, Klaveness, Wilhelmsen
Forestry / pulp1Stora Enso

Notable absentees

Several major cargo-buying organisations have not signed (as of end-2024):

  • Vitol’s competitor Mercuria: large trading house, not yet signed.
  • Walmart, IKEA, Nike, Apple: major retail and consumer-goods importers that move significant container freight but have not signed (typically operate through 3PLs that hide direct chartering exposure).
  • Coca-Cola, Procter & Gamble, Unilever: major FMCG shippers, similarly hidden behind 3PLs.
  • Russian state-owned producers (Rosneft, Gazprom): outside Western financial system.

The Steering Committee has identified expansion into the FMCG / retail importer segment as a priority for 2025 to 2027.

Poseidon Principles (the lender-side parallel)

The Sea Cargo Charter and the Poseidon Principles are deliberately complementary:

DimensionSea Cargo CharterPoseidon Principles
SignatoriesCargo buyers / charterersShip finance lenders
What they discloseClimate alignment of chartered activitiesClimate alignment of loan portfolio
WeightingTonne-mile of cargoLoan exposure (USD)
AER methodologySameSame
TrajectorySame (IMO 2023)Same (IMO 2023)
Annual disclosureNovemberDecember
SecretariatGlobal Maritime ForumGlobal Maritime Forum
Members (2024)~41 institutions~32 banks

A ship financed by a Poseidon Principles bank and chartered by a Sea Cargo Charter signatory will appear in both disclosure frameworks, with the bank reporting its loan exposure and the charterer reporting its tonne-mile cargo. This double-counting at the framework level is intentional: each side discloses its own influence.

RightShip GHG (the operational-screening tool)

The RightShip GHG Rating is the commercial vessel-screening service used by cargo buyers and brokers in pre-fixture vessel selection. The RightShip rating is methodologically similar to the AER but is per-vessel and continuous (updated on each new IMO DCS submission). Sea Cargo Charter signatories typically use the RightShip rating in their fixture decisions; the resulting chartering pattern is then reported under the Sea Cargo Charter framework.

The combination is widely cited:

  • RightShip = vessel-level screening at the charter-fixture stage.
  • Sea Cargo Charter = portfolio-level disclosure of the resulting chartering pattern.
  • Poseidon Principles = portfolio-level disclosure of the bank-side financing.

BIMCO Sea Cargo Charter Clause (2024)

In November 2024, BIMCO published a Sea Cargo Charter Clause for Voyage and Time Charters that operationalises Sea Cargo Charter alignment in commercial contracts. The clause provides:

  • Charterer’s right to specify acceptable AER ranges for the chartered vessel.
  • Owner’s right to substitute vessels (if the proposed substitute is at or below the agreed AER threshold).
  • Cost allocation for additional measures (slow steaming, weather routing) needed to achieve the AER target.
  • Penalty mechanism if the owner provides a vessel that exceeds the agreed AER threshold.

The clause has been adopted in approximately 15% of new voyage charters since November 2024, with adoption rising steadily.

Critical assessment

Effectiveness

The Sea Cargo Charter has been credited with several impacts:

  • Tightening of vessel-selection criteria by signatory cargo buyers: most signatories now apply RightShip GHG rating thresholds (typically minimum C or B) to their chartering decisions.
  • Discouraging older / less efficient vessels from being chartered by signatories: vessels rated D or E on RightShip see significantly reduced commercial uptake from signatory cargo buyers.
  • Premium for higher-rated vessels: vessels rated A or B on RightShip typically attract approximately 5 to 10% premium freight rates from signatory cargo buyers.

Limitations

Common criticisms:

  • Voluntary: only 25% market coverage; the other 75% of cargo (smaller traders, retail importers via 3PLs, government cargoes) is not covered.
  • Tonne-mile-weighted: long-distance commodity trades (e.g. Brazilian iron ore to China) generate disproportionate tonne-mile weighting compared with shorter-haul trades, potentially distorting the portfolio score.
  • Doesn’t address fuel switching: the AER metric is tonne-mile-based and doesn’t directly reward switching to lower-WtW-intensity fuels (the GFI standard does, and the 2024 update added optional GFI reporting).
  • 3PL blindspot: cargo buyers using third-party logistics providers (3PLs) often have limited visibility into the actual vessels used; the 3PL aggregates the cargo and the cargo buyer’s chartering footprint becomes opaque.

Future direction

The Steering Committee’s 2024 to 2025 work programme covers:

  • Methodology integration with the IMO Net-Zero Framework GFI standard.
  • Expansion into FMCG and retail importer segments (currently 3PL-mediated).
  • Possible mandatory disclosure mechanism (linked to ESG reporting requirements in some jurisdictions).
  • Treatment of methane slip from LNG dual-fuel vessels under the AER methodology.

Future outlook

Through 2030:

  • 2025: 2024 reporting year disclosure published in November; expected aggregate portfolio CAS continuing to improve.
  • 2026 to 2027: methodology integration with IMO Net-Zero Framework GFI; expansion into FMCG / retail importer segments.
  • 2028 to 2030: review against the IMO 2030 indicative checkpoint; possible methodology revision.

By 2030 the Sea Cargo Charter is expected to have grown to 50%+ market coverage and to function as the de facto cargo-buyer-side equivalent of the Poseidon Principles, with the two frameworks together covering the great majority of global maritime trade by volume and finance value.

See also

References

  1. Sea Cargo Charter. The Sea Cargo Charter: A Global Framework for Responsible Chartering. 7 October 2020; methodology updated 2021, 2022, 2023, 2024.
  2. Sea Cargo Charter. 2024 Annual Disclosure Report (covering 2023 data). November 2024.
  3. Sea Cargo Charter. Methodology Update: Net-Zero by or around 2050 Trajectory. November 2023.
  4. Global Maritime Forum. Annual Summit Reports 2020 to 2024.
  5. Poseidon Principles. Methodology Document and Annual Disclosure Reports. June 2019 to 2024.
  6. BIMCO. BIMCO Sea Cargo Charter Clause for Voyage and Time Charters. November 2024.
  7. RightShip Pty Ltd. RightShip GHG Rating Methodology v.4. Melbourne / Athens, 2023.
  8. IMO MEPC. Resolution MEPC.304(72) - Initial IMO Strategy on Reduction of GHG Emissions from Ships. IMO, 13 April 2018.
  9. IMO MEPC. Resolution MEPC.377(80) - 2023 IMO Strategy on Reduction of GHG Emissions from Ships. IMO, 7 July 2023.
  10. ICCT. Cargo Buyer Climate Frameworks: A Review. International Council on Clean Transportation, Washington, 2024.
  11. UNCTAD. Review of Maritime Transport 2024. United Nations Conference on Trade and Development, Geneva, 2024.

Further reading

  • Sea Cargo Charter. Annual Disclosure Reports 2021 to 2024. https://www.seacargocharter.org
  • Global Maritime Forum. Annual Summit Reports 2019 to 2024.
  • DNV. Maritime Forecast to 2050. DNV, Oslo, 2025 edition.
  • Lloyd’s Register. Climate-Aligned Chartering: A Cargo Buyer’s Guide. Lloyd’s Register Marine, London, 2024.