Future-Proofing Boxships: Attumaly’s Retrofit Strategy

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Retrofit Strategy for Container Ships

In recent webinar, Attumaly pointed out that the largest dual-fuel boxships of around 24,000 teu have a price tag today of around $260m and the decision on which alternative fuel has to be made right now. Over the last three years, dual-fuel orders have spiralled and about 65% of container capacity under construction will be dual-fuel upon delivery.

A prudent strategy, on the other hand, could be to order a ‘dual-fuel ready’ 24,000 teu vessel today – costing around $235m, with a view to choosing a dual-fuel retrofit – LNG or methanol, say – at a time when the future fuel availability landscape is clearer.

Retrofit Benefits

Attumaly also pointed out that since prices for new boxships are at an all-time high, there are several ways in which owners could potentially save tens of millions of dollars by adopting a well-structured retrofit strategy. He gave this example:

A new single-fuel 15,000 teu vessel today costs about $170m. However, a similar ship ordered in 2016, 2017, 2018 would have cost about 40% less. Even using conservative numbers, the cost of an engine retrofit aboard such a vessel today – around $35m for LNG and $25m for methanol – would still save $30-40m compared with a newbuilding, about 25% of the cost of a new ship.

There would be a range of other operational benefits too. Dual-fuel vessels earn premium rates as major shippers such as Amazon and IKEA, for example, seek to decarbonise their supply chains. Meanwhile, as carbon pricing presents shipowners with a new operational overhead – particularly in, to, or from Europe – new fuels of lower greenhouse gas intensity will become increasingly attractive.

Considerations

MAN has completed 23 projects, with one in progress, for container lines including BW LPG, CMA CGM, Cosco, Hapag-Lloyd, Matson, Maersk, MSC and Nakilat. All of the projects so far and all of the engine retrofit yards are in China. However, there is no reason why shipyards in Europe or elsewhere, for example, could not provide engine retrofit services with MAN as an engineering, procurement, construction, management partner, he said.

Retrofit economics work best for larger vessels, Attumaly said, of 7,000 teu and above. The webinar analysis was based on container ships of more than 3,000 teu.

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Source: SeaTrade Maritime