Charterers will Favour Cheap Fuel


A recent news report by mpropulsion, is about a service that is intended to give charterers an estimate of a vessel’s fuel consumption based on various parameters in comparison to similar ships in the analysis from Propulsion Dymanics official database.

It is based on a statistical approach, published in the Journal of Ocean Engineering and Science in April 2016. Which is the most-downloaded paper from that publication over the past 90 days, says, Paul Gunton.

What it takes to estimate?

Yet information about ships being offered for charter includes their fuel consumption as a standard piece of data so, on the face of it, this new service seems a little superfluous.

Although estimating fuel consumption is not new. What seems to be new is that Propulsion Dynamics – the company behind the scheme – is suggesting that its Inferred Fuel Performance service can use a particular ship’s specific information – such as its age, time out of dock, AIS-based service patterns and prior hull/propeller treatments – to deliver a finely-tuned appraisal of its fuel consumption.

Assures Closest prediction

I presume the boffins behind it believe this will be more accurate than the basic consumption data provided by a broker and that charterers actually need this greater detail. I hope that, in due course, we will hear from its customers with reports of how closely its predictions match their subsequent experience.

But the story reminds us all that – for most voyages – the party with the most interest in a ship’s fuel consumption is the charterer, not the owner.

Who invests, the owner or the charter?

Yet the party that invests in fuel-saving technology is the owner, not the charterer.

I’m not telling you anything you don’t know, of course, but there is no harm in underlining that point. Decades ago, I used to report in detail about the ship management sector and some managers put an argument to me that if they invested in systems and training that helped a client make more profit, why shouldn’t they get a percentage of it? It is not much of a stretch to frame the owner/charterer relationship in similar terms.

Charters think like owners

As the sulphur cap approaches, is that balance of interests changing? Charterers have an operational interest in knowing that the ships they use will not be delayed by non-compliant emissions, in which case they should take more of an interest, not only in the fuel going into their chartered ship’s engine but also the emissions coming out of its funnel.

Cost effective -scrubbers

Well, perhaps they will, but in my experience, charterers are focused almost exclusively on cost. That makes cheap fuel and scrubbers the more likely preference for chartered ships while owner-operated vessels will be the ones where LNG and other low-sulphur fuels will be used.

Where demand meets supply

Frontline’s decision to invest in a scrubber maker supports that analysis and its chief executive Robert Hvide Macleod said last week that this gave the company the ability to source a large volume of the exhaust gas cleaning systems at a good price.

What baffles me, however, is why many – perhaps most – members of Intertanko do not appear to echo this logic.

An hypothetical decision

Our sister publication Tanker Shipping & Trade reported in June that an audience poll at the organisation’s annual meeting revealed that 61% of those present would not install scrubbers on any ships in a hypothetical fleet set out in a conference survey.

Did you subscribe for our daily newsletter?

It’s Free! Click here to Subscribe!

Source: Marine Propulsion & Auxiliary Machinery


This site uses Akismet to reduce spam. Learn how your comment data is processed.