Tradewinds – The great ‘eco’ debate rages

(Written by Adam Corbett)

20 March 2013 - Investors in new tonnage insist they have the edge over existing ships with bold claims of improved fuel consumption. But has anything really changed? Adam Corbett reports from London

That is the question many are asking as the word “eco” is attached to almost every newbuilding order over the past two years.

The sceptics see the same old ships with fuel efficiency earned from slower speeds and de-rated engines that will literally not be able to keep pace with the demands of a recovering market. There are equivalent efficiencies that can also be squeezed out of the existing fleet, they claim.

Those that have taken the plunge say there are genuine fuel savings that justify investment, and that reducing consumption by seven tons of fuel a day will give them a massive cost advantage — enough to send less-efficient ships to an early grave.

The likes of John Fredriksen, Seaspan, Stena and d’Amico have not hesitated to jump on the eco bandwagon.

The lack of extensive in-service performance data for the eco-ships is not helping to resolve the argument but the answer may lie somewhere between the polarised positions.

Lloyd’s Register marine director Tom Boardley is hearing both sides from owners and suggests that while the so-called eco-ships do not represent a major revolution in ship design, and there is a certain amount of “salesmanship” from yards, there are also some genuine efficiency gains being made.

“The idea that there is a new generation of ships that is different from what has gone on before simply is not true, but there is no question there has been a leap in efficiency,” he said. “Yards used to develop ships that were quick and cheap to produce but now they are prepared to listen to what owners want.”

‘No major breakthrough’

Said Boardley: “It all depends on where you are, you may or may not believe in eco-ships, there has been no major breakthrough in technology but nowadays we can do any number of simulations instantly and look at hull forms and how they react. Engine and propulsion technology is also having an impact in terms of efficiency and the parameters of operating speed.”

New, more efficient products on the market like MAN Diesel’s Turbo Ultra G-type Long Stroke Engine have also been significant in helping to develop the propulsion and hull forms of a new generation of ships requiring less power.

In response to the orders famine, yards are no longer seeking to design and produce ships as efficiently as they can, but instead have been prepared to respond to owners’ demands to produce the most efficient ships they can.

Det Norske Veritas (DNV) Maritime Oil and Gas president Tor Svensen agrees that while technology is still in the development stage, commercial pressures and regulation on carbon-dioxide (CO2) emissions means that ships are inevitably becoming more and more fuel efficient.

“By 2030, I believe new ships will be producing half the carbon emissions of ships sailing today,” he predicted.

But despite the ongoing argument, eco-ships are still just a small fraction of the world fleet and it will be some time before a split in the market develops between eco and standard designs.

‘Two or three-tier market’

Arrow Shipbrokers’s Robert Clancy told the Marine Money conference in Hamburg recently that it is only a matter of time before this happens. “One thing I am sure of is that from 2018 2019 in dry bulk eco will be the norm, and at that point, if not sooner, you will have a two or three-tier market where non-fuel-efficient ships will be discounted heavily against fuel-efficient ships and the premium paid to early adaptors of fuel-efficient ships will have evaporated.”

But not all yard claims on consumption may be accurate, Clancy suggests. He says the most convincing figures come from “premium-rated shipyards”.

A regulatory move to encourage less greenhouse-gas emissions has already started with the mandatory introduction of the Energy Efficiency Design Index (EEDI) from this year, which in effect sets a minimum efficiency standard for newbuildings.

The initial standard is low, 10% better than the average of the existing fleet. But that starting point is largely irrelevant because owners are being forced to look at the 30% improvement that will be required by 2025 if they do not want their newbuildings to become obsolete during their trading life.

And with the price of fuel increasing it is the commercial pressure to improve efficiency that some argue is the real driving force behind the growth of eco-ships.

Germanischer Lloyd (GL)’s Stefan Deucker, managing director at GL’s FutureShip, said: “EEDI sets a good figure to benchmark to assess efficiency of new ships but for most owners the commercial drive is way more important.”