Tradewinds – Maersk efficiency savings of $78m beat $40m target

(Written by Julian Bray)

20 March 2013 - Many owners and operators are now seeing a culture and skills to ensure ships’ fuel efficiency is embedded in operations

Maersk Line made fuel-efficiency savings worldwide of $78m in 2012, nearly double its own $40m target, as its four-year drive to eliminate waste gathered momentum.

Denmark’s world-leading container operator outstripped its own expectations due to fine-tuning operational and technical strategies such as slow steaming, aided by staff absorbing the line’s emerging fuel-efficient culture.

“Crews and operations teams really understand the concept now, so the new culture is part of it,” said Chris Errington, director, engineering maritime technical services at Maersk’s US operation in Norfolk, Virginia.

Maersk’s US arm contributed $16.7m to the total saving last year. It has been tasked to save $10m this year from a worldwide total of $80m, says Errington, who has oversight of energy efficiency for Maersk globally.

Maersk has been among the leaders in driving fuel-efficiency measures in its fleet since it launched a programme in 2009, initially in response to the immediate crunch of the severe container-market recession.

Other sectors are now seeing a culture and skills to ensure ships’ fuel efficiency being embedded in operations, says Graham Westgarth, chairman of tanker owners’ association Intertanko.

“For example, when I was at Teekay we found that adding hub-caps to the ends of propellers generated a 4% saving, so we retrofitted the whole fleet. Payback was less than a year,” added Westgarth.

He joined Peter Livanos’s GasLog in Monaco in January this year as executive vice-president, operations and strategy. “In 10 years’ time we will look back and say there was a quantum change then,” he said.

Errington and Westgarth were speaking at a seminar on energy efficiency organised by the American Bureau of Shipping (ABS) at the Connecticut Maritime Association (CMA)’s Shipping 2013 conference in Stamford.

Kirsi Tikka, president ABS Europe, said shipowners and operators face three key pressures when dealing with improving vessel energy management: the impact of overcapacity in the freight market; new regulations; and increased fuel costs.

“The really big key to success will be in the existing fleet. There is an unprecedented focus on energy efficiency,” she said. “But as many believe they are already efficient, they may find it hard to improve.”

Slow steaming has now become the norm across much of the industry in response to both high fuel costs and to absorb some capacity.

Westgarth, whose tenure at Intertanko is due to end in November, admits that when freight markets strengthen from their current low levels, owners will once again accelerate vessels.

“When the good times come back charterers will pressure us for maximum speed. But we will not go back to where we were before,” he added.

Owners will continue to face pressure to make sure their operations are as fuel efficient as possible. “There is a realisation now that the cost of fuel is the biggest cost.”

That applies both to existing ships or new vessels with more efficient engines, better hull forms and other technologies.

“New ships are 10% to 15% more efficient,” he added “Existing ships — even if they speed up — will be more efficient.”

Errington believes slow streaming will remain in the container-shipping market for the foreseeable future, however.

“It is going to stay. It will continue for the next five to 10 years due to volumes of trade and numbers of vessels,” he said.

Errington adds that owners have no choice but to be energy efficient. “I doubt that any owner cannot afford to,” he said. Maersk has found the most efficient routing is not to rely simply on a lower speed, but to focus on a constant power output, aided by techniques such as weather routing.

While main-engine fuel consumption is the main factor in fuel efficiency, other more humble aspects are significant, such as hull paint, Errington says.

Maersk has so far drydocked six vessels early in their five-year survey programme just to apply new low-friction paint “as we can see payback almost immediately”. Errington added: “I would never have believed it was so important.”

Improved energy efficiency and high-environmental performance will help shipping attract educated young staff, as well as save cash, argues Westgarth.

“Young people today are much more aware of environmental issues than people of my generation.

“We find they ask questions about what we are doing [as owners]. Of course, it depends on your approach, but potentially energy efficiency is a very good tool for recruiting young people.”