- Ship owners facing looming deadlines to use less-polluting fuels have slashed the number of new vessels on order as they don’t know which alternative to switch to.
- Ammonia, hydrogen, biofuels and electrification are some of the many contenders to power the world’s future merchant fleet.
- But most are only in the trial stage and won’t be scalable for at least a decade.
- With the life of a commercial ship averaging around 20 years, opting for a technology that doesn’t take off could be very costly.
A recent news article published in Bloomberg Quint reveals that ship orders slump 50% with owners unsure which green fuel to use.
Owners running short of time
But owners are running out of time to make the choice.
In 2018 the International Maritime Organization set a target to cut shipping’s greenhouse-gas emissions in half by 2050 from 2008 levels.
The deadline prompted some ship owners to hold off on new orders until it became clearer which new fuels would be the best option — a decline that has turned into a slump with the subsequent global trade disputes and the pandemic.
“When owners are considering newbuildings, they’re very confused,” DNV GL’s Chryssakis said. Future fuels won’t be available at scale until at least 2030 and, while all solutions need to be explored, the industry can’t afford to wait, he said.
Orders fall too low
Orders fell almost 10% in 2019 and then more than 50% in 2020 to the lowest in at least two decades, IHS Markit data show.
If activity doesn’t pick up, that could lead to a dearth of vessels and a spike in freight rates in a few years.
Ship owners unsure of the fuel to use
“People aren’t ordering ships because we don’t know what to fuel them with,” said Morten Aarup, head of market research at Danish vessel owner D/S Norden A/S. “Engineers, ship designers need to come together” urgently to find the best solution, he said in a recent panel discussion on shipping trends.
Ship owners may be in trouble
Ship owners who fail to switch to new, cleaner vessels could find themselves at a competitive disadvantage as more customers demand environmentally-friendly transport.
About 12.3% of vessels on order have alternative-fuel propulsion, compared with just 0.6% of the current global fleet, according to data from Drewry Maritime Services.
IMO rules
The IMO also introduced rules at the start of 2020 that banned marine fuel containing more than 0.5% sulfur for ships not fitted with pollution-reducing scrubbers.
Will LNG be the alternative solution?
Using LNG would cut greenhouse gas emissions for shipping companies by almost 20% compared with fuel oil, said Christos Chryssakis, business development manager at DNV GL, a maritime advisory and verification provider.
Danish company and its view point
A.P. Moller-Maersk, the world’s biggest container line, takes a different view. “There is no time for so-called transitional fuels,” said Chief Technical Officer Palle Laursen.
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Source: Bloomberg Quint
