Volkswagen launches world’s largest low-emissions LNG car transport ship

Volkswagen isn’t just trying to reduce emissions in its cars.

The automaker has launched the first of two LNG-powered overseas cargo ships that will replace two of the nine heavy oil-burning ships it currently uses on routes between Europe and North America.

(VW)

The China-made Siem Confucius left Emden, Germany, on Tuesday with 4,800 cars onboard bound for Veracruz, Mexico. According to the automaker, which is still trying to clean up its image in the wake of the “dieselgate” scandal, the 200-meter-long ship reduces carbon dioxide emissions by 25 percent, nitrogen oxide by 30 percent, soot by 60 percent and Sulphur oxides by 100 percent compared to the conventional ships. It is the largest vehicle transporter of its size.

VW Group’s “goTozero” program is targeted at reaching carbon neutrality across the company by 2050 and reducing the lifetime greenhouse gas emissions of the production and operation of its vehicles by 30 percent compared to 2015 levels.

According to VW, the ships cruise at 16.5 knots (~19 mph) in eco mode and can also run on egas or biogas if necessary. The company currently schedules approximately 7,700 shipments annually around the world and will continue to update its fleet.

Shipping is Waiting for the Global Economy to Bounce Back

 Hellenic Shipping News 27/06/2020

The recession currently underway globally is bound to have a negative impact on demand for ships. However, the scale of the recovery will also be key for the shipping industry, as some countries will bounce back quicker than others. Which ones will manage to do this, could be key for shipping. “The World Bank estimates that the global economy will fall by 5.2% this year, underlining that the Covid-19 pandemic has had rapid and massive consequences despite the implementation of unprecedented programs to support local economies”, Intermodal said in its latest weekly report.

Source: Intermodal

According to Intermodal’s SnP Broker, Mr. Zisis Stylianos, “in its report on the Global Economic Outlook the World Bank points out that in the developed economies the decline will be in the order of 7%, while in emerging ones 2.5%. This is the deepest recession the planet has known since World War II, and 70 to 100 million people may find themselves below the poverty line. This revised forecast shows that the damage to the global economy will be worse than estimated in April by the International Monetary Fund that estimated a global contraction of 3% for 2020. China has announced it will not set a growth target for 2020, as the country will focus on stabilizing employment and ensuring the living standards of its citizens”.

The shipbroker added that “while addressing the 13th National People’s Congress, China’s Prime Minister, Li Keqiang, said the decision not to set a development goal was related to the uncertainty caused by the Covid-19 pandemic. According to the report shared at the conference, China will focus on maintaining security in the financial sector, foreign trade, foreign investment and domestic investment. The report also listed six areas the world’s second-largest economy should focus on, namely; job security, basic living needs, the functioning of market bodies, food and energy safety, stable industrial and supply chains and the normal functioning of first-level functions”.

Source: Intermodal

Stylianos also noted that “in the oil sector, the U.S. government is seeking to put an end to oil exports, Venezuela’s main source of revenue, in order to weaken President Nicolas Maduro government. It may even extend its sanctions to a dozen more tankers. So many oil companies are reviewing their plans to charter tankers found in Venezuela over the past twelve months. According to Reuters, Chinese oil companies may soon cease chartering any tanker that arrived in Venezuela during the last year. The aim is to avoid blacklisting if the US decides to impose sanctions on more ships that engage in commercial activities with Caracas”.

“As far as the dry bulk sector is concerned, we are witnessing a very impressive increase in the BDI index in the past two weeks, with the strong momentum pushing the index above the 1500 points barrier. It is worth noting that on June 1st the BDI closed at 520 points and the Capesize index at 82 points with average daily earnings for the big bulkers at $ 3,648/day. Within 15 days both the BDI and BCI increased by more 139% 2,893% respectively, while the average daily fare of Capes went up by 448.9%. Based on the positive market sentiment and the momentum that is inspiring it, the recovery of the ground lost in the past months appears to be even closer now”, Intermodal’s analyst concluded.


Nikos Roussanoglou, Hellenic Shipping News Worldwide

Threat to global shipping as crews remain stranded

The global shipping industry is warning of a potential risk to international trade given that nearly 400,000 shipping crew are stranded at sea or at home due to travel restrictions, reports the Financial Times.

“Maritime transport is the engine of globalisation. Around 80 per cent of world trade by volume is carried on vessels that range from container ships to fuel tankers and dry bulk carriers, according to the United Nations Conference on Trade and Development,” notes the report.

“However, the smooth operation of the freight trade is being hindered by travel restrictions. These bar crew from disembarking to return to their home country, or from travelling to a port where their ship is waiting for a crew change. Many seafarers are also struggling to obtain entry or exit visas, while the suspension of commercial flights increases the difficulties in moving crew around. Those affected make up more than a fifth of the 1.8m seafarers who crew the world’s 96,000 commercial vessels,” it adds.

HMM launches world’s biggest box ship – but its first voyage may be the last

(photo 3)

By Gavin van Marle 23/04/2020

As South Korean shipping line HMM today formally launched the world’s largest containership, the country’s government outlined an enormous financial package to prop up its maritime industries.

According to a report in The South Korea Herald, the ministry for oceans and fisheries has set aside SKw1.25trn (US$1bn) to help shipping lines, shipyards and other maritime players.

Minister Moon Seong-hyeok said: “The shipping firms are expected to suffer more serious damage after the second quarter, considering the time lapse between the global economic turmoil and the decline in their performances.”

The Herald additionally reports that the Korea Development Bank and state-owned Korea Ocean Business Corporation will also spend SKw470bn to repay HMM’s maturing debts.

The fresh injection of cash coincides with the launch of the 24,000 teu HMM Algeciras at the DSME shipyard in Okpo in a ceremony attended by President Moon Jae-in.

“It is very meaningful that HMM takes delivery of the most technologically advanced containership in this difficult time. I would like to celebrate it and hope that HMM continues to secure a competitive advantage as a Korean national flagship carrier,” he said.

The vessel is set to be phased into The Alliance’s FE4 Asia-North Europe service, currently operated by 12 14,500 teu Hapag-Lloyd vessels.

However, its first sailing could also be its last, at least for a while, as the demand slump in North Europe for containerised goods, due to the outbreak of the coronavirus pandemic, has led The Alliance partners to merge the FE4 and FE2 strings. FE2 is currently operated by 12 18,800-21,200 teu vessels from Hapag-Lloyd and ONE, according to eeSea data.

In terms of current capacity allocation on the FE2, eeSea estimates that Hapag-Lloyd takes 40% of slots, ONE 36%, Yang Ming 15% and HMM 9%.

However, the South Korean carrier is set to add significant capacity to the alliance over the next year, with an order dated September 2018 for 20 vessels from three shipyards – DSME, Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI).

DSME and SHI are building build seven and five 24,000 teu box ships, respectively, scheduled for delivery through to September, while HHI is building eight 16,000 teu vessels to be delivered from the second quarter of next year.

Is global political action needed to help shipping go green?

Our planet is facing its greatest challenge, and it’s not coronavirus. Asbjørn Halsebakke, Product Manager, Yaskawa Environmental Energy / The Switch, ponders how greater political action could help the maritime industry meet its most ambitious environmental goals.

Why hasn’t the climate crisis elicited the same urgent response from global governments as the corona pandemic? When confronted with the terrible threat of viral spread, national leaders from Boris Johnson to Narendra Modi, and from Donald Trump to Xi Jingping, have rapidly introduced emergency measures, the like of which we’ve never before imagined, let alone experienced. Huge swathes of the economy have been shut down, public behavior and interaction have been transformed, literally overnight.

The world today is unrecognizable from just a few short weeks ago. There is much to lament about those changes, but also something to applaud in the speed and impact of international response. National leaders, politicians, businesses and consumers have listened to experts, understood the threat and moved to mitigate it in every way possible. Unthinkable policies have been passed without question, with enormous aid packages agreed on, while financial and trade concerns are simply sidelined as we collectively embrace survival mode.

It is, from a detached viewpoint, extraordinarily impressive.

An existential crisis

Let me stress now – I am not downplaying the danger of Covid-19 and have huge sympathy for everyone impacted, in any way, by this crisis.

But it does beg the question, why can’t governments and the international community respond to the issue of climate change with a similar level of commitment? This is the world’s number one emergency – an existential crisis for humanity, threatening our very survival. And it’s not just about the long-term sustainability of society…the impacts now, today, are there for all to see.

For example, The World Health Organization estimates that seven million people die every year due to air pollution. Seven million. The same body reports that between 2030 and 2050 an additional 250,000 deaths will occur each year as a direct result of further global warming, relating to factors such as heat stress and malnutrition. And that’s before we get on to rising sea levels, wildfires, extreme weather and, well, the list goes on.

Our world is dying. And we’re the ones killing it.

And what is the response from those in power?

Compare it, if you can even visualize it, in relation to the current health crisis.

It’s clear, surely, that something needs to be done.

Support our industry!

As the chief engine for global trade and the enabler that allows us to access the resources and wealth of our ocean space, shipping has a key role to play. We need to change our industry if we are to help change the world.

Work is underway. The IMO has set the ambitious, yet crucial, target of reducing GHG emissions by 50% (compared to 2008 levels) by 2050, with the overall aim of eliminating them entirely. This is to be applauded, but it also needs to be supported.

When I speak to shipowners, I usually find them eager to introduce green technology, help reduce emissions and work towards a more sustainable industry. But, quite frankly, they cannot make this transition alone. They need help.

Shipping is a tough and notoriously capital-intensive market. Retrofitting environmentally friendly solutions may not be the first priority when you’re either struggling to stay afloat or edge ahead of the competition in a cut-throat market. At the same time, newbuilding yards generally won’t fit the best environmental solution for a vessel unless the customer presses them – they’ll fit the one that delivers the greatest margin. And who can blame them?

So, the industry requires clear, strategic and impactful assistance to meet its lofty goals. It needs governments and regulators to step in and deliver the policy and instruments that will facilitate the green shift now…because this is a matter that will not wait.

Enabling change

What those measures should be are open to debate. Taxes on vessels with poor environmental performance would encourage the uptake of better solutions, while the income from those taxes could be used to support the development and installation of new technology. Stricter regulations would require compliance, but perhaps the financial burden could be shifted to government – in the same way as they are providing aid right now – with green grants, or access to funding that is reliant on meeting stringent environmental criteria.

Research into green synthetic fuels – a vaccine against pollution – could be fast-tracked and centrally supported, while technology that is already available and proven today, such as batteries and hybrid systems, could be encouraged for immediate efficiency and emissions gains on today’s world fleet.

Newbuilds with future-proof technology, capable of utilizing any fuel source, such as The Switch DC-Hub, could be incentivized for owners, ensuring that they have the capability to meet all future regulations and fuel mixes, for long-term compliance and efficient sailing.

These are relatively modest measures that could translate into huge environmental benefits – for our industry, society and the planet. We just need to get started.

Call to action

The environmental crisis is more abstract than its corona sibling, so it’s harder to imagine the direct individual consequences for each and every one of us. Unfortunately, we may not be able to do that until it’s too late – until we’ve passed the point where our actions can achieve meaningful change.

Despite this short-term crisis, we have to try to not lose sight of our long-term future. And to even have one, we need action from our industry, with the strong support of governments and regulators across the world. That will be the deal breaker.

We can do this if we work together. And, if the corona pandemic has proven anything, it’s shown we are certainly capable of doing that, achieving extraordinary things in remarkably tight timescales.

The biggest challenges require the greatest responses, and there is no bigger threat than climate change. It’s time for those in power to respond. The world demands it.
Source: Yaskawa

Neptune Pacific Line Acquires Pacific Direct Line

in International Shipping News 14/03/2020

Friday, Neptune Pacific Line (Neptune) announced it has acquired Pacific Direct Line (PDL) from PDL’s parent holding company, Pacific International Lines (PIL). The combined business will seamlessly link transport, warehousing, depots and customs clearance services and fully integrate customers’ supply chains across 18 South Pacific markets.

The acquisition of PDL will strengthen Neptune’s Melanesian and Polynesian network, provide a link to Micronesia and the French territories, and enhance connectivity to global markets via strategic hubs in New Zealand and Fiji.

“This purchase supports our long-term vision of creating the strongest and best regional network of shipping and logistics services in the Pacific Islands,” said Rolf Rasmussen, Managing Director of Neptune. “By acquiring PDL, we can further develop our mainline shipping network to provide fixed-day services and increase the utilization of our combined fleet, enabling us to continue to offer competitive freight rates. PDL’s extensive logistics network will allow us to support our customers across their entire supply chain needs.”

“Our group strives to optimise our resources and to review our overall business approach for new business opportunities,” said Teo Siong Seng, Executive Chairman and Managing Director of PIL. “The divestment of PDL is part of our strategic move that enables PIL to focus its resources on growing in the key liner markets that it operates in Asia, the Middle East, Africa and South America. We will continue to improve our liner services between Asia and Oceania including the South Pacific Islands.”

PDL currently operates throughout the South Pacific region and specialises in providing liner shipping services from New Zealand and Australia to the South Pacific Islands. With the acquisition of PDL, Neptune will now have a specialized fleet of nine vessels dedicated to South Pacific Island trades and a team of more than 800, most of whom are based in supply chain services in the region.

“Pacific Direct Line was founded to support the socio-economic development of the Pacific Islands by providing reliable, consistent shipping and logistics services,” said Oliver Ravel, CEO of PDL. “Today, with the support of PIL, PDL has grown to become a market leader in the South Pacific. By selling the business to our regional partner, we can ensure that this legacy will live on and that our customers will continue to be supported by a local service provider that understands the needs of the region.”
Source: Neptune Pacific Line (Neptune)

How decarbonizing shipping could unlock a global energy transition

Climate change requires urgent action in all sectors of the economy – including maritime shipping, which carries close to 80% of global trade and accounts for 2-3% of global greenhouse gas emissions (GHG) annually. This is comparable with the emissions of large economies such as Germany and Japan. As global trade flows increase to serve a growing and more prosperous world population, emissions from shipping could grow between 50% and 250% by 2050 if no action is taken.

Shipping is not included in the Paris Agreement. However, to curb emissions, member states of the International Maritime Organization (IMO), a specialized agency of the United Nations responsible for regulating shipping, adopted an initial GHG strategy in April 2018. The strategy prescribes that GHG emissions from international shipping must peak as soon as possible and that the industry must reduce its total annual GHG emissions by at least 50% of 2008 levels by 2050, with a strong emphasis on zero emissions. This will ultimately align emissions from shipping with the Paris Agreement.

Shipping’s moon-shot ambition

At the UN Climate Action Summit in New York in September 2019, the Getting to Zero Coalition – a partnership between the Global Maritime Forum, the Friends of Ocean Action and the World Economic Forum – was launched with the moon-shot ambition of having commercially viable zero-emission vessels operating along deep-sea trade routes by 2030. This would put the industry on track to meet the target set by the IMO. Merchant ships have an average lifespan of 20 years or more, which means that ships entering the world fleet around 2030 can be expected to still be in operation in 2050. Similarly, infrastructure associated with fuel supply chains can have an economic lifespan of up to 50 years, and reconfiguration to new fuels can be a lengthy process. Consequently, if shipping is to halve its emissions by 2050, there is a need for zero-emission vessels to enter the global fleet by 2030 – only 10 years from now – as well as for a clear path to providing the large amounts of zero-emission fuels needed to allow for rapid uptake over the following decades.

Shipping is considered a hard-to-abate sector, and the decarbonization of shipping and its energy value chains can only be achieved through close collaboration and deliberate collective action between the maritime, energy, infrastructure and finance sectors, with support from government and international organizations. Since its launch in September, the Getting to Zero Coalition has grown to unite more than 100 public and private sector stakeholders.

The $1 trillion question

A new study by UMAS and the Energy Transitions Commission for the Getting to Zero Coalition spells out the scale of the challenge. According to their analysis, the cumulative investment needed between 2030 and 2050 to halve shipping’s emissions amounts to approximately $1-$1.4 trillion, or an average of $50-$70 billion annually for 20 years. This should be seen in the context of global investments in energy, which in 2018 amounted to $1.85 trillion.

If shipping was to fully decarbonize by 2050, this would require further investments of some $400 billion over 20 years, bringing the total to $1.4-$1.9 trillion.

Full decarbonization could cost $1.9 trillion
Image: Getting to Zero Coalition

Need for land-based investments outweighs the rest

The analysis also sheds light on where investments need to take place. These can be broken down into two main areas: ship-related investments, which include engines, on-board storage and ship-based energy-efficiency technologies; and land-based investments, which include investments in the production of low-carbon fuels, and the land-based storage and bunkering infrastructure needed for their supply.

The biggest share of investments is needed in the land-based infrastructure and production facilities for low-carbon fuels, which make up around 87% of the total.

Only 13 % of the investments needed are related to the ships themselves. These investments include the machinery and onboard storage required for a ship to run on low-carbon fuels both in new-builds and, in some cases, for retrofits. Ship-related investments also include investments in improving energy efficiency, which are estimated to grow due to the higher cost of low-carbon fuels compared to traditional marine fuels.

What’s the World Economic Forum doing about the transition to clean energy?

A trillion-dollar market opportunity

While the exact numbers on total bunker fuel consumption for shipping are not readily available, they are estimated to be around 250-300 million tons of fuel consumed annually. This means that shipping’s decarbonization has the scale to be a catalyst for the broader energy transition, unlocking the market for zero-emission fuels – a shift that represents a trillion-dollar market opportunity.

In order for companies and governments to make the investments required to accelerate the shift to zero-carbon fuels for shipping and other hard-to-abate sectors, we need to bring together the full range of the upstream and downstream fuel value chains to create a deeper understanding of the production and supply of the zero-carbon fuels that will pave the way for shipping’s decarbonization.

We invite stakeholders who share this ambition to join us in our mission to serve global trade in a sustainable manner.
Source: World Economic Forum

Shipping’s Big Bang Sends Two Global Industries Spinning

Two weeks ago, the vast majority of the world’s ships were forced to change the fuel they use. Some big winners — and potential losers — are starting to emerge from what was a historic switch for the world’s oil refining and maritime industries.

Regulations began on Jan. 1 forcing vessels to sharply reduce emissions of sulfur oxides from burning so-called bunker fuel. If successful, the rules could turn out to be the single-biggest, globally mandated improvement to air quality ever. The pollutant is blamed for worsening human health conditions like cardiovascular disease and asthma, and causing acid rain.

But the cost of the new fuel has skyrocketed to the point where it recently surpassed diesel and gasoline in Singapore, Asia’s oil-trading hub. The dynamic adds to the cost of transporting goods and raw materials — a potential impediment to global supply chains since fuel represents the maritime industry’s single-biggest expense.

IMO fuel surpasses gasoline and diesel

“The cost of world trade is rising when the bunker costs go up,” said Peter Sand, chief shipping analyst at BIMCO, a trade group for many of the world’s vessel operators. Even if the hike will be largely invisible to end consumers, it’s important to owners, some of whom may end up in financial difficulty if fuel prices stay high, he said.

IMO 2020, as the rule is known, is a global sulfur cap on marine fuel of 0.5%, down from 3.5% in most parts of the world. The Jan. 1 start date was set back in October 2016.

The price surge points to significant support for those refineries that make the new product. Likewise, some shipowners are making fortunes because they invested in kit allowing them to burn the old sulfur-rich variety, which is several hundred dollars a ton cheaper.

Ship Shape

Before the rules took effect, some shipowners plowed billions of dollars into exhaust-gas cleaning systems that prevent the sulfur from being released into the air. The equipment allows their vessels to keep using the old fuel without breaking the rules.

Those who invested appear to be gleaning a competitive advantage because the discount for the old fuel is so big.

Supertankers hauling 2 million barrels earned about $20,000 a day more so far this year if they were fitted with scrubbers, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. That’s about $7 million a year in savings if the current market were to continue.

Scrubber investments could pay off in less than a year, according to Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd.

Rates for the oil tankers are very high by historical standards, meaning even those without are doing well.

However, where it may become more of an issue is in freight markets that are weak. For example, giant iron-ore carrying Capesizes bulkers built in 2010 earned about $4,000 a day so far this year. That’s not enough to even cover operating costs including crewing and repairs. The same carriers fitted with scrubbers earned about $10,000 a day more than that. Not great, but a level they can survive at.

If the current market doesn’t improve, those lower earnings might eventually discourage some ship operators from transporting cargoes, something that would help the owners of vessels that do have scrubbers.

Sand, from BIMCO, says that there could even be loan defaults if the price of compliant fuel doesn’t drop.

Refineries Diverge

For oil refiners, IMO 2020 has transformed marine fuel from essentially a waste material sold at a discount to crude into one of the industry’s most valuable products. What’s widely now seen as the dominant new propellant — very low-sulfur fuel oil, or VLSFO — is about twice the price of the old material in Singapore and Rotterdam. A similar trend is playing out for marine gasoil, the other main clean-fuel shippers can use to comply with IMO 2020.

The main new fuel’s high price is in some ways hard to explain. In theory, it shouldn’t be more expensive than products like gasoline and diesel because it’s easier to make.

Today’s sky-high prices are the result of both the refining and shipping sectors wanting the other to invest in making it, said Alan Gelder, vice president for refining and chemicals, at Wood Mackenzie Ltd., an energy consultant.

There have also been fuel availability issues at some ports around the world, as well as a shortage of barges to deliver, according to Melissa Williams, a marine fuel sales and marketing manager at Royal Dutch Shell Plc.

Standard Club, a marine and energy insurer, said Tuesday that it’s been notified of concerns about a lack of compliant fuel at some ports, without identifying which ones.

“The impact on refiners isn’t the same across the board,” said Mark Williams, principal refining analyst at Wood Mackenzie. Refiners in the U.S. Gulf coast which can process high-sulfur fuel oil — the old propellant that has become much cheaper since the switch — are doing very well, he said. But any refiners that lack upgrading equipment and process sulfur-rich crudes will be feeling squeezed.

More broadly, refiners are having to rethink their whole approach to fuel production as other margins are pulled around by the IMO 2020 effect. Low-sulfur feedstocks like vacuum gasoil and straight-run fuel oil that, among other things, can be used to make the new product, have shot up in value relative to crude. If large volumes get diverted to the maritime market, more traditional outputs like gasoline, that can also be made from them, could tighten.

The diesel market, meanwhile, has largely shrugged off the IMO 2020 boost many were expecting. Warm weather across the globe is partly to blame, along with recent downward revisions to oil demand growth forecasts, said Steve Sawyer, director of refining at FGE. The result is VLSFO rising above diesel in Singapore, a “bizarre” pricing dynamic, he said.

Looking forward, Sawyer expects VLSFO to remain at a premium to crude as long the crude oil price remains in a $60-70 a barrel range.

Gelder and Williams expect the VLSFO price to fall going forward, while the price of HSFO is set to rise by about 20% by the fourth quarter as more shippers fit scrubbers. The IMO transition period, meanwhile, is set to last for a couple more years, they said.

So the current price surge is just the start of a process. Refineries will need to decide if it’s worth spending the money on equipment to make new fuels, and shipping companies will have to consider buying more scrubbers.

“If you’re going to reduce the impact of these extra costs on the overall economy, there’s more investment needed,” Gelder said.

Smooth Sailing for Ships After Historic Fuel Switch

A major switch in maritime fuel aimed at reducing emissions from ships is proceeding smoothly, shipping executives say, with new blends available in most ports and operators reporting few problems adapting to the fuel.

The mandatory change began on Jan. 1, when some 60,000 oceangoing vessels were ordered by the International Maritime Organization, the United Nations’ marine regulator, to slash their sulfur emissions by more than 80%. It is the first in a series of environmental steps the maritime industry is due to take in the coming years that will alter operating costs and raise fundamental questions about how ships should be powered.

To comply with the 2016 Paris climate accord, members of the IMO have also agreed to cut greenhouse-gas emissions to half of their 2008 level by 2050. Ships now contribute up to 3% of the world’s global air pollution, a share comparable to that of a major country.

Shipping executives say the low-sulfur directive alone will add around $50 billion in new fuel costs over the next three to four years, and they say they plan to pass the expenses on to cargo customers.

Low-sulfur fuel in Singapore, one of the world’s biggest refueling hubs, was quoted this week at an average $670 a ton, 64% higher than the $409 a ton for the heavy oil, known in the maritime sector as bunker, that has long powered ships. Bunkering brokers said the price spread is at least 10% higher than shipowners originally expected, but the gap is expected to narrow over the next couple of months.

“It’s very expensive right now,” a senior broker in Singapore said. “Demand is high and many bunkering barges are still flushing the old fuel from their tanks, meaning not enough is out there and ships are held up longer to refuel.”

Fuel represents up to half of a ship’s operating expenses, and some operators will see their earnings take a hit this year as the cost is absorbed through supply chains.

“If shipping companies take on all the cost, they will collapse,” said Kitack Lim, secretary-general of the IMO, the global marine regulator that mandated the fuel switch. “But compared to the value of the cargo, price increases to consumers will be very small.”

The fears of some shipowners that there wouldn’t be enough low-sulfur fuel availability, or that it wouldn’t work well with maritime engines, so far appear to be unfounded.

“The switch went well and we haven’t experienced issues with performance or fuel availability,” said Ole Graa Jakobsen, head of fleet technology at Denmark’s A.P. Moller-Maersk A/S, the world’s largest operator of container ships by capacity. “We have lab-tested a broad range of fuel formulations to determine optimal blends for our vessels.”

Maersk’s French rival CMA CGM SA, which operates more than 500 container ships, said prices vary from port to port, with rates at big European gateways being cheaper.

“There is a wide spectrum of different blends, that may not all be available in some ports in Africa and South America” said Farid Trad, the group’s vice president for oil management. “There is high demand so fuel barges take more time now. The challenge is to get the entire supply chain to work together, from fuel suppliers to refueling barges to shipowners managing their fuel needs.”

Bunkering suppliers say new fuel supplies are short for smaller vessels doing coastal sailings on the east coast of India, the Philippine archipelago and Bangladesh.

“There was not enough preparation in India and new fuel supply is low, especially for small tankers and container ships in the east coast,” said Venkat Argawal, who runs three refueling barges at India’s Port of Chennai.

“Some are breaking the rules and run on heavy oil until supply is restored.”

One of the IMO’s biggest challenges is that member states enforce the new fuel regulations. This week, China caught two ships that were allegedly using noncompliant fuel according to the Standard P&I Club, a major maritime insurer.

“We are monitoring the situation and to date, whilst there have been some reports of tight supply of compliant fuel oil in some markets, so far we have not received reports of any significant issues,” an IMO spokeswoman said.

Some vessel operators, especially tanker owners, have chosen to limit their sulfur emissions with exhaust systems called scrubbers that trap sulfur created by fuel-burning engines.

The systems cost several million dollars, but companies using them could benefit from big operating cost savings in the next few years over carriers that are spending more for new, more expensive low-sulfur fuel.
Source: Wall Street Journal

Massive R&D needed to decarbonize deep-sea shipping beyond 2050

The goal of the International Maritime Organization (IMO) to turn the oceangoing vessel industry emissions and carbon free beyond 2050 will require a technological replacement to the dominant fossil fuel-burning engines of the world’s maritime fleet, World Shipping Council President and CEO John Butler told U.S. lawmakers of the House Coast Guard and Maritime Transportation Subcommittee on Tuesday.

While emissions- and carbon-free technologies, such as battery and hydrogen power, are already in the development stages for short-sea and ferry vessel applications, their scale is nowhere near the level to power today’s large oceangoing vessels.

“We have to keep in mind that the scale is different for the transoceanic, larger international vessel sector than it is for the short-sea sector,” Butler said. “We can’t make the mistake that batteries work for ferries and we just need a bigger battery [for oceangoing ships].”

Maersk (OTCMKTS: AMKBY) is currently testing a 40-foot container-size battery on board one of its container ships, Lee Kindberg, the carrier’s North American head of environment and sustainability, told the House subcommittee.

Kindberg said the battery will not provide power for ship propulsion but will be tested for potential onboard power uses, such as shipboard lighting, electric pumps and refrigerated containers.

However, she said Maersk has committed to “net-zero carbon emissions” for its worldwide operations by 2050 and is currently retrofitting vessels with new technologies and testing “carbon-neutral” biofuels, such as those made from cooking oil and an ethanol made from the byproducts of agriculture, paper and wood products manufacturing.

“The transformation from low- to zero-carbon emissions is an energy transformation, not just a vessel modification,” Kindberg said. She added that it will require not only massive industry and government investments in new vessel propulsion systems development but also shoreside-support energy production and infrastructure.

In 2018, the IMO, a United Nations body of which the U.S. is a member, adopted a resolution that called for a 40% increase in overall fleet efficiency compared to 2008 by 2030 and then a 50% reduction in absolute greenhouse gas emissions by 2050, with emissions being reduced to zero or near zero within ocean shipping beyond the half-century mark.

Butler told the House subcommittee members that it is possible for the ocean shipping industry to achieve the IMO’s 2030 goal.

“A highly competitive liner shipping market, fuel price increases associated with the IMO 2020 marine fuel sulfur cap regulation and increasing societal and customer requirements to reduce emissions provide vessel operators with powerful incentives to make their operations as efficient as possible,” he said in his testimony.

However, to achieve the organization’s 2050 goal and beyond will require a substantial, globally funded and driven research and development effort, Butler said.

On Nov. 18, the World Shipping Council and seven other shipping organizations proposed that the 174-member IMO establish a $5 billion to $6 billion research and development effort over the next 10 to 12 years to identify fuels and related technologies to aggressively achieve the IMO’s decarbonization goals for the global ocean shipping industry. The International Maritime Research and Development Board (IMRB) would be funded by a mandatory contribution based on each ton of fuel burned, Butler said.

“Because oceangoing vessels are long-lived assets (20-25 years), we must move as quickly as possible to develop and deploy low-carbon and zero-carbon propulsion systems and fuels to avoid stranded assets and delays in implementing next-generation technologies,” he said.
Source: Freight Waves