Total cost of ownership in shipping: a framework for sustainability

Abstract

Abstract Purpose Shipping is pivotal for global commerce, yet its externalities are not yet fully set into context, especially with reference to environmental impact. Shipping is a practise developed from the dawn of history. Its manifestation requires the introduction of relevant supporting industries as well, such as port, cargo, and logistics operations. The holistic shipping system has been growing with its main parameter pertaining to accounting cost minimisation. Yet, the shipping ecosystem has been able to exacerbate environmental, social, and health costs that in the end may prove that shipping, in the way that it is conducted, may not be as profitable as it may seem. Method This paper introduces a framework for the total cost of ownership in shipping, which includes a holistic approach as to the true costs associated with shipping practises. Through a structured literature review the relevant costs are identified and assessed, providing a complete framework as to the actual cost of shipping. Findings Shipping may appear to be profitable in some cases, but the bulk of its profit is based on practises that incur a plethora of costs that are externalised. This paper provides a clearer understanding of the total cost of shipping and the subsequent need of a paradigm shift, so that shipping may be able to portray its potential with reference to societal and environmental benefits. Conclusion Through frameworks such as the one presented in this work, activities and practises may be assessed as to their true impact and footprint and claim sustainability through a solid prism of holistic analysis and true profit for humanity, rather than focusing on accounting cost and turning a blind eye at other social, environmental, and health costs.