A candid look at what the Carbon Intensity Indicator really means for your chartering operations
Let me be blunt: if you're still treating the Carbon Intensity Indicator as "someone else's problem," you're setting yourself up for some unpleasant surprises. I've been watching this space closely since the IMO regulations kicked in, and what I'm seeing in the market tells a very different story than the one many charterers are telling themselves.
Three weeks ago, I had a charterer call me in a panic. They'd just discovered that a vessel they'd been considering—one that looked perfect on paper—had a D rating. Their cargo owner had specifically requested only A or B-rated ships. The deal fell through, and they scrambled to find alternatives in a tight market.
This isn't an isolated incident anymore. It's becoming the norm.
The Carbon Intensity Indicator isn't some distant regulatory hurdle. It's here, it's being used by vetting platforms like RightShip, and it's already influencing commercial decisions. Ships get rated A through E based on their annual carbon efficiency (essentially grams of CO₂ per cargo capacity per nautical mile), and that letter grade is starting to matter as much as the vessel's commercial specs.
The regulatory timeline tells only part of the story. Yes, the CII framework entered force in 2022, and we've been seeing ratings roll out since 2023. But the market pressure? That's accelerating faster than most people anticipated.
I'm seeing cargo owners—particularly the larger ones with sustainability mandates—starting to specify CII requirements in their tender documents. Insurance companies are asking questions about fleet ratings. Banks are factoring environmental performance into their risk assessments. The commercial implications are spreading beyond simple compliance.
The math itself isn't complicated. Take a ship that emitted 20,000 tonnes of CO₂ last year with a carrying capacity of 60,000 dwt and sailed 50,000 nautical miles. That works out to about 6.67 gCO₂/dwt-nm. Whether that gets you an A, B, C, D, or E depends on the ship type and size, but the calculation is straightforward enough.
What's not straightforward is managing the commercial fallout from poor ratings.
Here's what keeps me up at night: charterers have significant influence over a ship's CII performance, but limited control. You make decisions about routing, speed, port selection, and cargo loading that directly impact emissions. Yet traditionally, the responsibility for environmental compliance has been viewed as an owner issue.
That division of responsibility is breaking down fast.
BIMCO recognized this reality and developed specific CII clauses for charterparties, but adoption has been slower than it should be. These clauses help allocate responsibilities and ensure data sharing, but they're only useful if both parties actually use them.
The bigger issue is strategic. Do you want to be reactive—scrambling to understand CII implications when deals start falling through—or proactive, building this into your vessel selection and operational planning now?
If I were running a chartering operation today, here's what I'd be doing differently:
Start with your RFP process. Every vessel inquiry should include current CII rating and recent Annual Efficiency Ratio data. This isn't about being difficult; it's about understanding what you're potentially chartering. If owners can't or won't provide this information, that tells you something important about their preparedness.
Update your contract templates. The BIMCO CII Operations Clause exists for a reason. Use it, or develop equivalent language that clearly allocates responsibilities for CII-related decisions during the charter period. Vague responsibility allocation will come back to haunt you when ratings matter for commercial decisions.
Factor ratings into your vessel selection. All else being equal, A and B-rated vessels are becoming more commercially attractive. If you're choosing a C, D, or E-rated ship, you should have a clear operational or commercial justification—and ideally a plan for how to improve performance during your charter.
Think operationally. Speed optimization, efficient voyage planning, and port time management all impact CII performance. These aren't just cost management tools anymore; they're environmental performance tools with commercial implications.
Here's what I think many in our industry don't want to acknowledge: the market is moving faster than the regulations. We're already seeing commercial differentiation based on environmental performance, and it's accelerating.
The charterers who are getting ahead of this curve—demanding transparency, incorporating CII considerations into their commercial decisions, actively managing operational efficiency—are positioning themselves better for a market where environmental performance matters as much as traditional commercial metrics.
The ones who aren't? They're going to find themselves increasingly constrained in their vessel choices, facing higher costs, and explaining to cargo owners why their sustainability metrics don't stack up.
The IMO review process means we'll likely see tighter CII requirements over time. Market pressure from cargo owners, insurers, and financiers is only going to increase. Digital platforms are making CII data more transparent and accessible.
None of this is going away. The question isn't whether environmental performance will matter for commercial shipping decisions—it's how quickly the market will move and whether you'll be ready for it.
My advice? Stop thinking about CII as a compliance issue and start treating it as a commercial reality. The charterers who figure this out first are going to have significant advantages in the emerging market.
And that market is coming faster than most people think.
Have questions about CII implications for your operations? The regulatory landscape is complex and evolving quickly. Getting expert guidance on both the technical requirements and commercial implications can save significant time and avoid costly mistakes.