Why the global shipping industry is fighting to clean up its law Ship’s crew

By William Ralston (Bloomberg) —

Singapore-based BW LPG approaches its business differently than many shipowners. If, during the ship’s passage, it turns out that there is no free berth upon arrival at the port, the ship simply slows down so that it appears when there is space.

Not having to wait days or weeks saves fuel and avoids emissions—because these huge ships can’t just lie at anchor. According to BW vice president and operations manager Prodyut Banerjee, the strategy was equivalent to more than 500 tons of unburned fuel last year.

Known as “virtual arrival,” this method of smarter shipping has been around for a while. But as the climate crisis accelerates and fossil-fuel dependent sectors like airlines and shipping struggle to reduce their carbon footprint, their popularity – as well as other greener strategies – is rising.

International cargo and container shipping is responsible for 3% of the world’s greenhouse gas emissions – approximately one billion tons of carbon dioxide per year, equivalent to all of Japan’s emissions. Despite this, the industry has made little progress towards decarbonization, a fact regularly attributed to the difficulty in finding alternative ways to power large ships.

The International Maritime Organization (IMO), the body responsible for regulating shipping, has set itself ambitious goals, aiming to cut emissions by at least half by 2050 (using 2008 as a baseline). But as trade swells, maritime volumes are forecast triple by then. In fact, the IMO admits that emissions could be as high as 30% higher by 2050 if nothing is done. “To reduce emissions,” said Grant Hunter of the Baltic and International Maritime Council, the world’s largest international shipping association, “we need to rethink the way we do our business.”

But in many ways, the industry is trying to rethink everything but its biggest, dirtiest problem of all.

Traditionally, when a ship owner is chartered to transport cargo, the contract requires the ship to arrive at its destination as quickly as possible, regardless of port traffic. The customer even agrees to compensate the shipowner for waiting at the anchorage, known as demurrage.

Given the incentive, shipowners have traditionally rushed across oceans, burning more fuel at higher speeds, only to wait to reach their destination. According to a 2020 report, tankers and bulk carriers spend waiting up to 10% of their time to enter a port. While waiting, they use more fuel – but make more money.

Although this practice of “sail fast, then wait” is inherently wasteful, attempts to end it have failed in part because of the complexity of achieving contractual terms that satisfy all parties (and, of course, the incentive to win).

A seemingly similar strategy is “just-in-time” or JIT arrival. Rather than a contract between a shipowner and a charterer, ports coordinate their resources with all incoming vessels to ensure they optimize arrival speed when an available berth becomes available.

High fuel costs have made virtual and JIT arrivals more palatable for the shipping industry. But what’s really driving her appeal is a regulation the IMO has been enforcing since January, the Carbon Intensity Indicator, which requires shipowners to improve their ships’ carbon emissions.

“These operational measures are relatively simple and can be implemented today without large investments in technology and infrastructure,” said Minlee Hoe, a technical analyst at IMO. “Even small optimizations on a large scale can lead to large emissions savings.”

A Report 2022 Conclusion Container ships can reduce fuel burn and CO2 emissions by 14% per voyage by optimizing speed in this way. studies recommend that by eliminating waiting times at anchorage, global emissions from shipping can be reduced by around 20%.

But it is doubtful that virtual and JIT arrivals can be implemented at scale. With virtual arrivals, the problem is the number of parties involved in each ship, where each must agree to a contract that allows the ship to slow down, BW’s Banerjee said. In 2022, the company implemented virtual arrival on just seven out of hundreds of completed trips.

“It’s not a systemic solution; it’s a once-in-a-lifetime solution for a once-in-a-lifetime voyage,” said Haris Zografakis, a London solicitor at Stephenson Harwood LLP who specializes in maritime law, of Virtual Arrivals. ,

Remains JIT arrivals where the problem is the ports. It is difficult to coordinate customs, tugs, pilots, trains and stevedores, who all work independently of one another. For this reason, JIT was only implemented in a few places.

One of these is Newcastle, Australia, where a bespoke ship arrival system is available is said require incoming ships to contact the port 14 days before expected arrival. Port authorities, in consultation with terminal operators, then advise them to change speed in order to arrive when a berth is available. Two-thirds of ships arriving in Newcastle no longer need to anchor at all. And for those who do, the average anchor time has dropped from 11 to three days.

Neste, a producer of sustainable aviation fuel, also uses JIT at its Porvoo refinery in southern Finland. It helps that Neste controls the ships, the cargo and the terminal – but it also works because the berth information is shared between everyone involved.

“There is a huge savings potential,” said René Taudal Poulsen, professor of international shipping and trade at Copenhagen Business School in Denmark. “But it’s a lot more complex than the airline industry, where you have one control tower that basically orchestrates the entire operation.”

The International Taskforce Port Call Optimization, an association of shipping companies, has been working since 2014 to standardize the exchange of nautical, administrative and operational data between ship and shore. In September, the Maritime and Port Authority of Singapore signed a memorandum of understanding with Voyager Worldwide, a leading provider of maritime navigation and vessel management technology, to develop its own system.

“We are currently working on the exchange of information between the port operator and the ships in order to be able to predict their arrival times more accurately. That’s the very first step,” said Kent Lee, Voyager’s Chief Executive Officer. “Then it’s about having the entire supporting infrastructure and supply chain ecosystem behind you when ships arrive in port.”

Some industry watchers aren’t optimistic that any of this will curtail emissions. “Just-in-time docking would be fantastic,” said maritime attorney Zografakis. “But it hasn’t happened in decades, and it’s not going to happen on a large scale for decades to come.”

Zografakis is collaborating with NAPA, a Helsinki-based digital maritime technology provider, to develop a Blue Visby Solution. Blue Visby dispenses with the complicated ballet of moving ships from anchorage to berth. Instead, it focuses on the voyage itself, predicting how quickly ships will turn around in a given port and when berths will be available. Based on this information, it optimizes ship arrival schedules accordingly.

Given 150,000 trips for bulk carriers in 2019 (the last ‘normal’ year before the pandemic), Blue Visby concluded that around 87% of them could have been slowed down. If all of these voyages had used Blue Visby’s technology, there would have been a 16% reduction in carbon emissions – slightly less than if they had achieved perfect JIT arrivals. The makers of Blue Visby claim otherwise has the potential reduce the carbon footprint of global bulk shipping by more than 60 million tonnes of CO2 per year, which is larger than Norway’s total emissions.

But it’s still a drop in the bucket when it comes to the industry’s overall emissions. That is why some companies are trying to make seagoing vessels themselves more fuel-efficient.

Some install energy-saving devices such as hull liners that reduce drag. Others build rotor sails – large cylinders that harness the power of the wind to propel ships. Danish company Norsepower claims its rotor sails can reduce ship emissions up to 20% throughout their life.

“With our technology alone, it is possible to reduce emissions from global shipping by about 80 megatons annually,” said CEO Tuomas Riski, “that’s about 8% of the total emissions from global shipping.” Meanwhile, Silverstream Technologies claims its air lubrication system 7 % of a ship’s fuel consumption. The technology, installed on 28 ships worldwide, coats a ship’s bottom with tiny air bubbles to reduce friction.

While all of these ideas could lead to emission reductions, the inescapable truth – as with air travel – is that nothing major will happen until fossil fuels are replaced as a means of propulsion.

Industry is beginning to explore various green alternatives, including methanol, hydrogen and ammonia, but they are difficult to scale. Ships that run on these fuels are more expensive because they require advanced engines and huge fuel tanks. Green fuels have a lower energy density than heavy fuel oil and consequently more volume is required to produce the same power.

As part of a broader plan to have net-zero greenhouse gas emissions by 2040, according to Danish shipping giant AP Moller-Maersk has ordered 19 ships are to run on CO2-neutral methanol. CMA CGM, a French operator, has ordered 12, as well as COSCO Shipping, the Chinese container shipping company. But again less than 50 ships out almost 55,000 container ships worldwide is a very small start.

“We use a lot of fuel in our fleet, but the amounts of these green fuels are very small,” said Morten Bo Christiansen, Head of Energy Transition at Maersk. “We have to build infrastructure and then we have to reduce costs.”

Tristan Smith, associate professor of energy and transport at University College London, said that in order to decarbonise shipping, “we need to work on fuel substitutions alongside operational efficiencies.” For that to happen, tougher regulatory intervention is needed.

“If the industry is properly regulated,” Smith said, “it’s really going to get the value chain talking to each other more seriously.”

© 2023 Bloomberg LP

Related Articles

Back to top button

Subscribe To Our Newsletter

Don't miss new updates on your email