‘Eco’ claims in new ship designs are hard to substantiate, but the attractiveness of promised ship efficiency gains make them difficult to completely ignore. However, a shift in ship building dynamics – where the operator has taken back control of the design process – is giving new hope in designs that look set to stand the test of time. But the jury is still out on who will ultimately benefit from enhanced efficiency.
A healthy degree of scepticism over ‘eco’ claims will stand ship owners in good stead, according to Lloyd’s Register’s marine director Tom Boardley. Speaking at this year’s Cass Business School biennial meeting, the LR expert warned that a “subtle change” in the way ships are designed and built should not be dismissed.
“We are entering a renaissance, albeit a short-lived one, of better ships being built with a more sustainable lifetime for them,” he said, adding that everything at the moment revolves around high fuel prices. “What we’ve been finding is that more and more shipowners are studying the operational profiles of their ships and designing ships to meet that operational profile.”
But he questioned whether this ‘renaissance’ should be described as the building of the next generation of ships. “We’re turning the design clock back, but it’s not that we’re going back to old designs; we’re going back to the old way of designing the ship. The old standard – old because it is pre-Lehman 2008 – is that you bought what the shipbuilders wanted to build because it was the cheapest. Was it that economical? That wasn’t the main parameter; it was that they could be built quickly. Then shipbuilders came up with their own version of eco ships, which was a pretty good attempt and did stimulate some business.
“Now we are seeing quite traditional ship owners working with us and shipbuilders to come up with exactly the ship that they want. These ships will, I think, stand the test of time. They are optimised to trade over 25 years in the markets that the shipowners have chosen.”
Fellow speaker Sadan Kaptanoglu, owner of Kaptanoglu Shipping and vice president of BIMCO, agreed that the emphasis for ship design has shifted.
“The new normal is all about efficiency: cargo efficiency, fuel efficiency, slow steaming, logistics efficiency and I could go on,” she said. “But efficient shipping is about so much more than efficient designs. It does not mean that your business becomes more efficient just because you buy eco ships. Efficient operation is about getting the most out of an asset. These days it is all about optimising your operations.”
If you were to describe this as an industry in crisis you’d be doing a lot of other industries a disservice who really are in crisis. Shipping has pockets of crisis but it also has pockets of great hope and optimism for the future.
This shift comes at a cost, however, with concerns that given the unwillingness of the industry to accept new technology, crews are less and less able to deal with the technology they have to handle.
The panellists also agreed that it is difficult to ascertain whether new eco ships actually command a premium and if so, who takes advantage of that premium.
“Often it is difficult to figure out where the advantage lies. There’s no doubt that some of the older ships are finding it difficult to find employment at almost any price because of the fuel penalty that they carry,” pointed out Mr Boardley.
Clarksons Research Services’ president Dr Martin Stopford asked: “Do you put a lot of money into fancy technology that in five years time won’t be necessary? A new Japanese supramax consumes about 28m tpd in fuel which is about 15% more efficient that older ships, but it’s not as much when you look at what the eco-cars are saving. This is one of the least exploited parts of the industry.” Part of the drive to greater efficiency can be attributed to the relentless onward march of environmental regulations. Here, an increased technical element to regulations has raised concerns.
Dr Stopford pointed out that in the last few years the tone of regulations has moved much more into the technical area. “After decades where shipowners have been able to do well without any technical capability, that is changing and suddenly investors are coming to terms with the regulatory side.
Mr Boardley added that sometimes regulatory pressures are forcing operators down a route that in some circumstances could compromise safe operations. “That’s something we have to watch,” he said. “But this is often seen as a reason to try and roll back the regulatory measures that are coming in. I think most of us realise that that isn’t going to happen.
“We’re at a sensitive stage at the moment where we are close to implementation of regulation but I don’t think there is a great deal of confidence that the equipment that is being purchased to comply with regulations is as good and as well tried as it should be.”
Ms Kaptanoglu described this regulatory ‘new normal’ as “not static”. “We are entering a decade of regulatory changes. We have to consider all these game-changers; we will see the commercial viability of new ships based on the fuel choices made. We need to prepare ourselves by making ships available to burn the least expensive fuel at any given time. If I speak with optimism, overcapacity in the market may not be the biggest challenge.” Mr Boardley was more upbeat in his summary of the industry, stating: “If you were to describe this as an industry in crisis you’d be doing a lot of other industries a disservice who really are in crisis. Shipping has pockets of crisis but it also has pockets of great hope and optimism for the future.”