- Economic Conditions Influence Efficiency but Show Limited Impact.
- Operational Efficiency Unaffected by Fuel Prices, Model Findings Show.
- Real-World Practices Undermine Efficiency Gains.
T&E hired CE Delft to examine how fuel prices have affected the technical and operational efficiency of ships for the past thirty years. It was established that there exists an impact of fuel price on the design efficiency of the ship, while it’s still unclear if fuel prices affect the operation efficiency, which calls for policy focusing on emission reduction, reports Safety4sea.
Design Efficiency
The analysis found that, although the response varies by type of ship, higher fuel prices encourage shipping companies to order more energy-efficient ships. Container ships are the most responsive followed by tankers, while the sensitivity of bulk carriers to fuel prices is negligible. However, the effect on ship design is not instant; it takes 4 to 8 years for more efficient vessels to enter the fleet.
Energy Efficiency Design Index
In addition to price, better economic conditions, implied by higher charter rates, tend to lead to the development of more efficient ships. The application of the IMO’s Energy Efficiency Design Index (EEDI) has, however likely mitigated the influence exerted by fuel prices in terms of ship design efficiency, because of mandatory versus market-driven compliance requirements.
Looking forward, the study projects that vessels entering service in 2031 will be about 4% more efficient than those introduced in 2023, again due to measures like the EU’s green shipping package (EU ETS and FuelEU). Since, however, new vessels only make up a small portion of the global fleet, this translates to just a 0.03% improvement in the overall technical energy efficiency of ships visiting EU ports, with minimal impact on total emissions.
Operational Efficiency
There was no direct association found between increased fuel prices and higher operational efficiency in this study. Sometimes, it appears to be inversely associated because high fuel prices correlate with high vessel speeds in certain data sets. Due to the fit of these models, such results are inconclusive. Unmeasured variables like types of contracts or weather might explain these differences.
Charter Rates
Economic conditions also have its share. Lower charter rates reflected weaker market conditions and a higher vessel speed, while higher ones corresponded to slower speed. Similarly, when charter rates were higher for tankers and bulk carriers, the speeds were also increased. However, these outcomes are based on models less reliable.
Real-world practices would further complicate this. For instance, some container shipping companies have reportedly overcharged customers for the pricing liabilities of emissions without necessarily improving operational efficiency, pointing out the complexity between costs and behaviour.
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Source: Safety4sea
