№ 6/2023 (116), NOVEMBER/DECEMBER
ISSN 1733-6732
bimonthly-daily companion
Journal
Baltic Transport
S U S TA I N A B I L I T Y
How to make hydrogen an easy-to-adapt and close-at-hand marine fuel MARITIME
The whys and hows of making wind propulsion efficient and safe MARITIME
What happens now. The end of the Consortia Block Exemption Regulation LEGAL
How to borrow & lend. Good neighbour agreements OFFICIAL MEDIA PARTNER OF:
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Dear Readers,
W
ell, folks, this rounds up another year! Who knows what the next one will bring? Making much of shipping part of the European Union Emissions Trading System and good riddance to the Consortia Block Exemption Regulation (CBER), of course! We already reported on the former in 2023. This winter edition also features reads on that very topic: one about what action can be taken to manage risk and reduce costs, while the other brings forth leveraging artificial intelligence to optimise emissions and reduce carbon credit spending. Regarding CBER, experts from MDS Transmodal present three distinct scenarios of what may happen, all against the background of the container shipping supply & demand (continually engaged in tail chasing). As for the rest of the story, I’m delighted that long-lasting friends of our publication supported us with an article on a grassroots ferry project that connected part of our bonny Baltic Sea after 144 years. Thanks, Dagmar and Bengt! Cyber security is a prevailing topic, and we are fortunate to have Thetius, CyberOwl, and HFW going into the details of how maritime cyber risk management matures (as the risks also increase). The other read from the Legal column sees TT Club dissecting the challenges associated with good neighbour agreements (spoiler alert: good, because they’re written contracts). Naturally, the issue is also full of future (green & digital) stuff happening in and around the region. As such, there was no other way than to make the Venture forth column double the size, given the ongoing developments. DNV contributed with two A Sunny Winter Path by Fritz Müller-Landeck, photo: Artvee reads: one on shipboard carbon capture & nuclear propulsion, the other about accelerating the fuel transition in the Nordics via the Nordic Roadmap project. On that note, a read from Hexagon Purus Maritime digs into how to make hydrogen an easy-to-adapt and close-athand marine fuel. Another class, ABS, provided key takeaways round-up from their latest Low Carbon Outlook. The Sustainability section also houses a summary of the Voyaging Toward a Greener Future report produced by the Global Centre for Maritime Decarbonisation and Boston Consulting Group, which, in turn, analyses their Global Maritime Decarbonisation Survey. A recurring theme of just-in-time port arrivals also made it aboard, alongside hard data from PortXchange on the concrete financial and emission reduction savings that could be reaped should shipping take digital advice. Yet another class, Bureau Veritas, checks which way the wind blows for wind propulsion (on newbuilds and retrofits) – and how it impacts various other parts of a vessel. The 6/23 issue has a very special Transport miscellany section. First, we congratulate the Finnish Ports Association on its 100 th birthday, appreciating how the country’s seaports have supported us throughout the years. Kiitos! The entry on Fjärdvägen is a throwback to my September visit to the lovely Naantali. The vessel will be 52 years old in 2024. Oh boy, did she do some peculiar gigs in her past! The third record takes us to Mars (by truck), while the last is about how one can help by putting a (port) jigsaw puzzle together. I wish you a beautiful year-end and an even more fantastic start to the coming one! Meanwhile, have nothing but the best read! Przemysław Myszka
EDITORIAL Baltic Transport Journal Publisher
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№ 6/2023 (116), NOVEMBER/DECEMBER
ISSN 1733-6732
bimonthly-daily companion
Journal
Baltic Transport
S U S TA I N A B I L I T Y
How to make hydrogen an easy-to-adapt and close-at-hand marine fuel MARITIME
The whys and hows of making wind propulsion efficient and safe MARITIME
What happens now. The end of the Consortia Block Exemption Regulation LEGAL
How to borrow & lend. Good neighbour agreements OFFICIAL MEDIA PARTNER OF:
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6/2023 | Baltic Transport Journal | 3
EUROPE GREAT LAKES SERVICE
Liner service between Europe and the Great Lakes Container service between Antwerp and Valleyfield, Cleveland and Duluth Liner owned equipment door-to-door service More info: www.spliethoff.com or greatlakes@ spliethoff.com
CONTAINERS
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PROJECT CARGO
CONTENTS
3
REGULAR COLUMNS
3 Editorial 8 BTJ calendar of events 9 Safety news by TT Club 12 Market SMS 12 What’s new? 15 What’s in the Cabinet 16 Venture forth 18 Chart of the issue: Top 10 environmental priorities of the port sector over the years (1996, 2013, 2023) 66 Transport miscellany 68 Who is who
20
LEGAL
20 How to borrow & lend – Good neighbour agreements – the risk implications by Mike Yarwood 22 Shifting tides, rising ransoms, and critical decisions – Progress on maritime cyber risk management maturity by Tom Walters and Daniel Ng
24
MARITIME
24 What happens now – The end of the Consortia Block Exemption Regulation by Mike Garratt and Antonella Teodoro 28 Under the right conditions – Can onboard carbon capture and nuclear get ships to net zero? by Eirik Ovrum 32 EU what? – A simple guide to the EU ETS, its impacts, and what action one can take to manage risk and reduce costs by Jacob Clausen 34 Steering through the EU ETS – Leveraging AI to optimize emissions and reduce carbon credit spending by Aleksandar-Saša Milaković and Kristofer Maanum 36 Untapped potential – for all – Will maritime operations cut emissions just in time? by Alexa Ivy 38 Grassroots ferrying – The passenger-bicycle ferry between Denmark and Germany wants to go green by Dagmar Trepins and Bengt van Beuningen 40 Sure as the wind blows – The whys and hows of making wind propulsion efficient and safe by Aude Leblanc 6/2023 | Baltic Transport Journal | 5
Moves a lot. Changes everything. With a maximum lifting capacity of 1,600 tons, our travelling cargo crane TCC 78000 will drive your heavy-duty projects to success. www.liebherr.com
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CONTENTS
60
NEWSLETTER BPO
60 Plans for 2024 and climate strategies discussed in Stockholm by Monika Rogo 61 Climate News by BPO by Monika Rogo
42
SUSTAINABILITY
42 The (new) default option – Accelerating the fuel transition in the Nordics by Eirill Bachmann Mehammer 44 Preparing for revolution – How to make hydrogen an easy-to-adapt and close-at-hand marine fuel by Robert Haugen 46 Beyond the horizon – Robust value chains are critical to decarbonization and the energy transition by Panos Koutsourakis 50 Straight from the ship’s mouth – Key takeaways from the Global Maritime Decarbonisation Survey and Voyaging Toward a Greener Future report by Ewa Kochańska
62
TECHNOLOGY
62 Navigating new waters – Ethical AI in terminal operations by Jörg Herbers and Eva Savelsberg 64 Floating on air – How all vessels can cut their emissions thanks to air lubrication by Alistair Mackenzie 6/2023 | Baltic Transport Journal | 7
BTJ CALENDAR OF EVENTS Transport Week 2024, 12-13/03/24, PL/Gdynia, transportweek.eu The next edition of the Transport Week conference will be held on 12-13 March 2024 in Gdynia, Poland. Expert speakers and a fantastic audience will once again tackle topics that shape the current face of the transport sector, from geopolitics, through market analysis to infrastructure development.
Scandinavian Maritime Fair, 14-15/05/24, DK/Copenhagen, www.scandinavianmaritimefair.com Scandinavian Maritime Fair recognizes the need of bringing together the Scandinavian maritime community. The aim is to unify and leave a lasting imprint on the world. Whether designers, manufacturers, suppliers, operators, shipowners, or service providers – both onshore and offshore – this is where industry leaders, young innovative companies and decision makers meet.
TOC Europe 2024, 11-13/06/24, NL / Rotterdam, tocevents-europe.com With an unrivalled 40+ year heritage, TOC Europe is the place to learn from and network underneath one roof with the world’s leading port decision-makers, policy experts, solution-providers, and more, enabling you to both supercharge your strategies and make your port operation visions a reality. Whether your focus is on adapting to the unpredictable economic climate or simply embracing the exciting new technologies revolutionising the sector, join us on the road back towards growth at the essential container supply chain event.
it’s out!
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8 | Baltic Transport Journal | 6/2023
WORKING TOWARDS SAFER PRACTICES
TT Club is the leading provider of mutual insurance and related risk managment services to the international transport and logistics industry. Its core mission is to make the industry safer and more secure. To find out more visit ttclub.com
SAFETY NEWS BY
TT CLUB INTRODUCES RISK BYTES
Photo: TT Club
The international freight transport and cargo handling insurer released the first of a series of advice documents designed to provide a snapshot of the risks associated with day-to-day operating dangers that may not be recognised or, if they are, not sufficiently covered by the relevant insurance policies. Risk Bytes are aimed at simplifying complex risk issues by providing easily digestible information and guidance. The first publication tackles good neighbour agreements, outlining provisions that should be made in a formalised written contract, clarifying where the risk and liability rests during the operation of any shared asset and allowing thorough due diligence to be carried out before the agreement is signed. While TT Club applauds equipment-sharing agreements as an efficient use of resources, the organisation also flags potential liability issues if appropriate insurance coverage is not in place. “Sharing infrequently used equipment gives greater flexibility in operations and has significant cost savings. Usually reciprocal arrangements, they are not always formally outlined in well-defined contracts,” TT Club noted in a press release. Mike Yarwood, the insurer’s Managing Director, Loss Prevention, underlined in this regard, “In such circumstances, the casual nature of the arrangement, though often workable and agreeable to both parties, can lead to potential risks where liability and responsibility in the unfortunate event of an incident or breakdown may not be clear.” He furthered, “[The primary risk is] in the event of the equipment or machine being lost or damaged during the period of the loan leading to financial exposure for the owner. In addition, this might severely impact business operations and cancel out any benefit gained from the arrangement, and severely damage years of a good working relationship with the neighbour.” Yarwood additionally underscored that through Risk Bytes on good neighbour agreements, TT Club is also “[…] offering advice on adequate staff training, health and safety provision and include a readily recognised case study of a typical asset sharing operation.”
THE CTU CODE – SURVEYED The Polytechnic University of Turin carried out a study into the Code of Practice for Packing of Cargo Transport Units (CTU Code; jointly published by the International Maritime Organisation, the International Labour Organization, and the United Nations Economic Commission for Europe) and its application by shippers and forwarders. According to the research, the benefits of adhering to the CTU Code include improved safety, reputation, and supply chain coordination; decreased cargo damage, environmental impact, and operational inefficiencies; those using the CTU Code incurred no extra costs in employees, contractors, or vehicles; any increase in loading and waiting times were typically offset by CTU Code-related efficiencies overall; annual costs and penalties reduced from €670k pre-implementation of the Code to €13k post-implementation; and extra costs as a percentage of revenue reduced from 37% to 10%. Authors of the study also underlined that the “[…] use of the CTU Code provides an increase in safety with
a drastic reduction of loading accidents and damage to goods, as well as important benefits in terms of costs, improved efficiency, corporate image and reduced environmental impact.” Commenting on the results, Richard Steele, CEO of the International Cargo Handling Coordination Association, said, “As far as we are aware, this is the first example of publicly available empirical evidence about the use of the CTU Code made by forwarders, shippers and others responsible for safe packing. Notwithstanding the regional focus of this particular survey, we believe the results to be genuinely encouraging. They show that good operational management, efficiency and safety are partners, not opposites.” The Cargo Integrity Group, gathering seven industry bodies dedicated to container safety, published a Quick Guide to the CTU Code to facilitate a greater understanding and broader use of a lengthy and complex document. The Guide includes an editable and saveable checklist of actions and responsibilities for the guidance of those packing cargo in containers.
THE WSC WHALE CHART
Photo: Canva
The World Shipping Council (WSC) launched a navigational aid called the WSC Whale Chart, the first worldwide mapping of all mandatory and voluntary governmental measures to reduce harm to whales from ships. “With the WSC Whale Chart, seafarers will, for the first time, have a comprehensive global resource offering critical navigational coordinates and concise graphics to identify routing measures and areas subject to static speed restrictions designed to protect whales and other cetaceans. We hope that by compiling this unique navigational aid, keeping it updated and making it available for free to all navigators, we can help reduce ship strikes and safeguard endangered whale populations across the globe,” highlighted John Butler, President & CEO of the WSC. 6/2023 | Baltic Transport Journal | 9
For more Market Statistics Made Simple please visit: www.baltictransportjournal.com
Tallink & Silja Line:
The Port of Riga: 79,624 cruise
The company’s ferries also transported 667,909 private vehicles (+3.8% year-on-year) as well as 247,792 trucks & trailers (-21% yoy).
On the cargo front, the Latvian seaport took care of 15.69 million tonnes, down 17.7% on the JanuaryOctober 2022 result. Dry bulk, Riga’s leading trade, totalled 8.51mt (-25.9% year-on-year), followed by 6.42mt of general cargo (+1.3% yoy) and 757.7kt of liquids (-39.2% yoy). The port’s container traffic amounted to 376,138 TEUs (-2.2% yoy). Tonnage-wise, containerised freight advanced by 7.4% yoy to 4.16mt.
4,366,679 passengers carried in I-IX 2023 (+4.8% yoy)
passengers welcomed in I-X 2023 (+5.1% yoy)
Tallink & Silja Line’s passenger & cargo traffic in January-September 2023 Trade lane Estonia-Finland Finland-Sweden Estonia-Sweden Total
Q1 2023 627,209 311,596 110,972 1,049,777
Estonia-Finland Finland-Sweden Estonia-Sweden Total
142,465 9,828 5,346 157,639
Estonia-Finland Estonia-Sweden Finland-Sweden Total
63,821 14,203 8,708 86,732
Passengers Q2 2023 Q3 2023 921,353 1,076,675 449,886 539,121 169,842 160,025 1,541,081 1,775,821 Passenger cars 205,283 223,335 23,598 39,189 7,875 10,990 236,756 273,514 Ro-ro cargo units 61,261 55,601 13,402 11,382 10,696 8,718 85,359 75,701
I-IX 2023 2,625,237 1,300,603 440,839 4,366,679
I-IX yoy +9.9% -8.8% +25.8% +4.8%
571,083 72,615 24,211 667,909
+10.9% -29.5% -5.6% +3.8%
180,683 38,987 28,122 247,792
-19.3% +4.7% -46.4% -21.0%
Photo: Port of Riga
DFDS:
Viking Line: 3,818,810 passengers
The company’s ferries also transported 948 thousand private vehicles, up 3.5% on the January-September 2022 result. At the same time, the shipping line’s fleet filled 28.9 million lane metres with wheeled cargo (some 1.6m ro-ro freight units, counting 18 metres per truck/trailer), down 9.9% year-on-year. DFDS’ trade lane Channel totalled almost 12m lm (-16.1% yoy), followed by North Sea (which includes the Oslo-Frederikshavn-Copenhagen and Amsterdam-Newcastle services) – 10.5m lm (-2.5% yoy), Mediterranean – 4.0m lm (-3% yoy), and Baltic Sea – 2.4m lm (-16.3% yoy).
The company’s fleet also transported 93,565 trucks & trailers, 7% more than in January-September 2022.
3.64 million passengers served in I-IX 2023 (+22.4% yoy) carried in I-IX 2023 (+2.5% yoy)
Photo: DFDS
The Port of Helsinki:
7.09 million passengers served in I-IX 2023 (+15% yoy) Ferry traffic amounted to 6.93m travellers (+15.4% year-on-year), while cruise totalled 162.8k (+1.7% yoy). At the same time, the Finnish capital port took care of 10.38 million tonnes (-9.1% yoy), of which international cargo traffic totted up to 10.1mt (-11% yoy) and cabotage – 284kt (+257% yoy). Of the total, unitised freight accounted for 8.7mt (-9.4% yoy), dry bulk – 1.01mt (-0.9% yoy), and breakbulk – 570.3kt (-18.8% yoy). A total of 486,844 (-8.1% yoy) trucks & trailers went through Helsinki’s quays, plus 335,808 TEUs (-8% yoy). 10 | Baltic Transport Journal | 6/2023
Finnlines: 560 thousand passengers carried in I-IX 2023 (+8.9% yoy)
The company’s fleet also transported 531k ro-ro cargo units (-7.2% year-on-year), 121k vehicles (+22.2% yoy), and 1,027kt of non-unitised freight (-5.3% yoy). Commenting on the result, Tom Pippingsköld, Finnlines’ President and CEO, said, “The geopolitical situation continues to be uncertain and the global, as well as the Euro area, demand is sluggish, which means that within EU we have either negative growth or no growth at all.” He furthered, “While the negative development in Finland’s exports and imports have resulted in lower cargo volumes for Finnlines and reduced our result, the upward trend in passenger volumes has been very good. Despite the reduced cargo volumes, Finnlines was able to retain its market share.”
HHLA’s sea container terminals: 4.45 million TEUs handled in I-IX 2023 (-8.5% yoy)
The company’s facilities in the Port of Hamburg took care of 4,286 thousand twenty-foot containers (-6.9% year-on-year), while the ones in Odesa, Tallinn and Trieste – the remaining 169k TEUs (-36% yoy). HHLA’s intermodal division carried 1,222k TEUs (-3.4% yoy), including 1,037k by rail (-1.6% yoy) and 185k by road (-12.3% yoy).
MARKET SMS The Port of Klaipėda: 24.03 million tonnes The Port of Gothenburg: handled in I-IX 2023 (-12.2% yoy)
677 thousand TEUs handled in I-IX 2023 (+3.4% yoy)
At the same time, reports Statistics Lithuania, more passengers went through the Lithuanian seaport’s quays: 287.8 thousand (+10.6% year-on-year), including 42.2k cruise travellers (+0.5% yoy). The Port of Klaipėda took care of 799,889 TEUs (+4.4% yoy) over 2023’s first three quarters. A total of 151,830 ro-ro cargo units (-10.1% yoy) were handled in that period, too.
The Swedish seaport’s January-September 2023 container rail traffic totalled 350k TEUs, a 9.1% year-on-year drop. “The international container market paints a clear picture of the situation in a slowing economy. The fact that the Port of Gothenburg is growing in this context is almost unique. Like other ports, we are experiencing a reduced import demand, but here, we see a continued high demand in the Swedish export industry that continues to deliver worldwide,” explained Claes Sundmark, Vice President of Sales and Marketing at the Gothenburg Port Authority. He also highlighted, “One explanation [of the high-to-higher levels of containerised forest product exports] is the transfer to the Port of Gothenburg from other ports, but the Swedish forestry industry has also strengthened its position in the global market with more applications and increased demand, especially since the Russian forest is practically absent from the world market.” At the same time, the Port of Gothenburg handled 401k ro-ro cargo units (-5.9% yoy) and 191k new vehicles (+15.1% yoy). Whereas less liquid bulk flew via the seaport’s jetties (-14.6% yoy to 14 million tonnes), more dry and break-bulk was taken care of (+14.8% yoy to 326kt). Gothenburg’s passenger traffic advanced by 6.8% yoy to 1,235k ferry & cruise travellers.
Photo: Port of Klaipėda
The Port of Tallinn: 6.15 million international ferry & cruise passengers served in I-IX 2023 (+15.2% yoy) Ferry traffic with Helsinki totalled 5,404 thousand (+16.6% year-on-year), followed by to & from Stockholm – 412k (+25.1% yoy) and between Muuga and Vuosaari – 133k (+3.1% yoy). Cruise traffic amounted to 165k travellers (-2.9% yoy). There were also 33k passengers (-56.4% yoy) classified as ‘others.’ At the same time, the Port of Tallinn’s domestic ferry subsidiary, TS Laevad (which serves the Saaremaa and Hiiumaa lines), carried 1,955k passengers (+5.6% yoy) and 902k vehicles (+3.5% yoy). Cargo-wise, the Estonian port took care of 9.53 million tonnes (-31.3% yoy) from January to September 2023, including 4.91mt of wheeled cargo (-6.2% yoy), 1.57mt of dry bulk (-28.2% yoy), 1.4mt of containerised freight (-14.8% yoy; 162,555 TEUs, -21.5% yoy), 1.3mt of liquid bulk (-70% yoy), 328kt of break-bulk (-31.3% yoy), and 24kt of non-marine (+35.2% yoy). Advertisement
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Tanker cold ironing in Gävle On 16 November 2023, Terntank’s Tern Fors drew electricity from the shore, marking a new milestone for the development of onshore power supply (OPS) in seaports (as apart from Gävle, only the Port of Long Beach at BP Terminal’s Pier T offers OPS, 8.0MW at 6.6kV, for tankers). The tanker was connected for over three hours, consuming 1,424kWh, and it used the electricity to run its unloading equipment (the vessel is equipped with battery packs, ensuring no blackout will occur if the OPS connection is lost). To enable safe cold ironing,
the containerised OPS unit on the quay was overpressurised with air so that no gases could enter it, while the connecting room on board the tanker was filled with nitrogen to keep the oxygen level below 5% to prevent any sparks from leading to explosion. Terntank and the Port of Gävle already ‘plugged in’ Tern Fors in February 2023 but with no electricity transfer. Gävle also partakes in the Green Cable project, led by the Port of Gothenburg, which is tasked with devising a global standard for tanker cold ironing in hazardous environments.
Kustkajen > Kustkajen 2.0 Kokkola’s new STS The Port of Gothenburg has contracted Peab to reconstruct the Energy Port’s quay in question. The project will involve geotechnical improvements, new foundations, demolition and reconstruction of the 300-meter quay and, in some parts, a new process layout and equipment. During the reconstruction, ships will still be able to call, and ongoing operations will continue (albeit to a more limited extent). The feasibility study and preliminary planning will begin in Q4 2023. Construction works will commence in Q1 2026 and continue until Q1 2031.
The Finnish seaport has received a gantry for handling containers to be deployed at Silverstone Port. The ship-to-shore (STS) crane has been purchased from the BCT Baltic Container Terminal Gdynia for an undisclosed sum. The new equipment will help the Port of Kokkola handle more containers and in a faster manner (8,802 TEUs went through its quays over January-September 2023, +13.2% yearon-year, according to statistics from the Finnish Ports Association). “We have had loyal container transport customers since 2009 from, Photo: Port of Kokkola among other things, the KIP [Kokkola Industrial Park] area, industry in central Finland and the retail trade. There is now a sharp increase in container traffic in the Port of Kokkola, and we have received strong feedback and several requests from customers to increase our container handling capacity. At the same time, the size of container ships is increasing all the time, which the 17-container-row crane suits perfectly. This crane investment is our answer to our customers’ needs, and it also improves our service to our partners,” commented Torbjörn Witting, the Port of Kokkola’s Managing Director.
Davie takes over Helsinki Shipyard The Canadian shipbuilder finalised the acquisition of the assets of the Finnish shipbuilding yard, up till now owned by a Cypriot company, in turn, controlled by Russians. While the details of the purchase are confidential, the transaction was made possible by a combination of Davie’s own funds and €77 million of financing from the Québec government consisting of an equity investment of €30m and a loan of €47m. The Canadian and Finnish shipyards will be separate legal and operating entities, with the business headquartered in Québec. The takeover talks began in December 2022. In March 2023, Davie exercised an exclusive option to purchase the assets of Helsinki Shipyard. That was followed in April
by signing a business purchase agreement, and on 4 July, Davie secured a new 50-year land lease from the City of Helsinki. The 1865-launched shipyard in Helsinki has delivered over 500 vessels, including, from the start of the 20th century, icebreakers (it’s counted that around 60% of the icebreakers in operation were constructed in Helsinki). Works at Helsinki Shipyard effectively came to a halt following Russia’s war of aggression as the company mainly catered to the Russian market. Its latest order was what otherwise would be the largest icebreaker built in Finland, a vessel for Norilsk Nickel. The Finnish cabinet didn’t authorise the ship’s handover (the delivery was scheduled ahead of the 2025 icebreaking season).
Port of Hirtshals’ new tugboat Having arrived in early autumn, with its crew undergoing training exercises, Sibba began assisting the ferry traffic served by the Danish seaport at the beginning of November 2023. “The new tugboat was chosen precisely because it can operate in the sometimes intense wind conditions in Hirtshals. In addition, we are enhancing safety for existing and future customers, partly because the new tugboat has a bollard pull, which is the number of tonnes a tugboat can pull in a standstill, of over 30 tonnes, which is more than twice as much as the old one,” highlighted Robert Hansen, Master Mariner and Fleet Manager at Port of Hirtshals. The port’s former tugboat, built in 1979, was handed over to her new Danish owner on 1 December 2023. “Tybring is of good size and is therefore relevant for many different purposes, and we have received quite a few inquiries from serious buyers. We are very pleased that a purchase agreement has now been reached, which means that the tugboat will have a new lease on life,” commented Hansen. The 18.7 by 9.2 metres, azimuth stern drive-type Sibba was built in 2019 by Sanmar Shipyards from Türkiye. The construction of the tugboat was based on Robert Allan’s RAscal 1800 design. The ship has 12 | Baltic Transport Journal | 6/2023
Photo: Port of Hirtshals
two Caterpillar C32 main engines, each producing 970kW at 1,800 revolutions/minute to achieve a bollard pull of 32t and a speed ahead of 12 knots.
WHAT’S NEW? Spirit of Tasmania IV – launched & named
FKAB-designed tankers – ordered
The first of two brand-new ferries for the Tasmanian TT-Line Company got its name at Rauma Marine Constructions (RMC). The 212 by 21 m ro-pax, which will offer room for 1,800 passengers and 3,700 lane metres for wheeled cargo, will serve the Geelong-Devonport service once delivered. After the launch, the work shifted from hull construction to equipment assembly and interior work. The focus will be on finishing plumbing and electrics as well as interior design for the hotel area. Furthermore, the work around the vessel’s engine room and car deck will continue. The equipment assembly phase will continue with the implementation of various systems, culminating in sea trials conducted before the handing out of the vessel. The progress on Spirit of Tasmania IV means that RMC’s construction pool got freed up for constructing the hull of her sister ship, Spirit of Tasmania V. The construction of the two ferries for TT-Line Company, the biggest individual foreign sale between Australia and Finland, has created around 3,500 person-years worth of employment at RMC in 2021-24. Next in the shipyard’s order book are the four corvettes for the Finnish Navy, with the construction of the first starting on 30 October 2023. The project will be finished by 2029, and its direct impact on employment in Finland is approximately 3,600 person-years.
First, with the help of its Chinese chapter, the Swedish Uddevalla-based ship design company will provide the basic and detailed designs for the 41,000 dwt oil products and chemical carriers. The 199 by 32.2 m FKAB T67s will be IMO Tier III-compliant ships with optimised hull lines, including the patented F-bow to save energy and reduce CO2 emissions. The 1B ice-class tankers will also feature battery packs and onshore power supply connectors. The propulsion system will consist of one mediumspeed engine coupled to a controllable pitch propeller and a (‘take me home’) shaft generator. During discharging in a port, the main engine will be used as a generator by a remotely operated hydraulic clutch that disconnects the propeller shaft from the gear. Next, Stolt Tankers ordered FKAB-designed parcel tankers. The company has contracted Wuhu Shipyard to build six 38k dwt vessels for delivery in 2026-28, with an option for six more. The medium-range tankers were designed by FKAB Marine Design to maximise fuel efficiency, including the F-bow, as well as overall hull form optimisation. They will also have connectors to draw power from the shore at berth. While the ships will initially sail on low-sulphur marine fuel, they will also be methanol- and batteryready. The newbuilds will offer 30 stainless steel cargo tank segregations.
ORLEN’s two new LNG carriers – named Two brand-new vessels for carrying liquefied natural gas (LNG), Saint Barbara and Ignacy Łukasiewicz, have joined the fleet of the Polish state-owned energy company. The carriers, each capable of transporting 70kt of LNG, joined their sister ships, Lech Kaczyński and Grażyna Gęsicka, by year-end, serving long-term as well as spot contracts. Knutsen Shipping operates them under a long-term charter. Once completed, ORLEN’s fleet will consist of eight such carriers. The naming ceremony took place at the Hyundai Samho Heavy Industries shipyard in the South Korean Mokpo. “The new gas carriers have been christened with meaningful names: Saint Barbara pays homage to the patron saint of miners, oil and gas workers, while Ignacy Łukasiewicz honours the pioneering figure in the world oil industry, an illustrious inventor, industrialist, and advocate for Poland’s independence,” highlighted ORLEN in a press release. The share of ORLEN’s seaborne LNG imports rose from 24% (3.94b m3) in 2021 to 43% (6.04b m3) last year. With increasing overall imports of LNG onto the European market – 34.3b m3 in H1 2021, 54.6b m3 in H1 2022, and 61.3b m3 over this year’s first half, according to the company’s data – the carrying capacity has been stretched, pushing freight rates up. As such, ORLEN decided to invest in a fleet of its own. The company imports its volumes through the LNG terminal in the Port of Świnoujście, which mostly receives the shipments (254 deliveries, 20mt, by 19 October 2023) from Qatar (127 deliveries) and the US (106), plus Norway (13), Nigeria (3), Trinidad and Tobago (3), Egypt (1), and Equatorial Guinea (1). Since May 2022, ORLEN has also been using the floating LNG terminal in Klaipėda. By late October 2023, ten shipments of 655kt were unloaded there, sent back to Poland by pipeline or put on the gas market of the Baltic States.
OT Port Świnoujście to increase its grain handling capacity The daughter company of OT Logistics, taking care of various dry bulk goods in the Port of Świnoujście, contracted Pol Invest Projects to deliver a technological line and ship-loading equipment. The PLN40m turnkey investment (around €9.1m) will see OT Port Świnoujście’s agro terminal located on the Chemists Quay connected to the company’s road- & rail-linked warehouse by the new machinery. As a result, the company’s yearly grain handling capacity will surpass two million tonnes. The upgrade is scheduled for completion in H2 2025.
Photos: FKAB Marine Design
Langh Ship’s Lovisa – delivered The Finnish shipping line’s first in a series of three 7,800 dwt multipurpose vessels was handed over by the Chinese Wuhu Shipyard and will soon serve Outokumpu’s traffic between Tornio and Terneuzen. The 1A ice-class vessel features dual-fuel engines for sailing on marine gas oil or liquefied natural gas (or its bio version). Lovisa is also equipped with Langh Tech’s ballast water management system. The trio will transport finished and semi-finished steel products for further processing. On the backhaul, the vessels will carry steel scrap (the primary raw material of Outokumpu’s stainless steel). The ships are capable of transporting containers. 6/2023 | Baltic Transport Journal | 13
WHAT’S NEW? Xamk and Ekami choose Wärtsilä The Finnish tech corporation will deliver an advanced simulator for a new maritime training centre in Kotka. The simulator will feature the latest versions of Wärtsilä’s Navi-Trainer professional and Techsim simulation software, as well as the latest Navi Sailor and NACOS Platinum bridge systems. These include multi-pilot workstations for an electronic chart display and information system, radar, and conning applications. The training centre will have two large and three medium-sized full-mission navigational bridges with 360-degree visualisation, including digital chart tables, as well as a separate bridge wing console operated in virtual reality. For technical training, the centre will have two engine room simulators implemented with two fully loaded control rooms. The simulators come with touchscreen technology, making it easy to swap between engine room models. In addition to the various system features, there will be several instructor and debriefing rooms capable of working with any part of the simulator. There will also be a dedicated command centre for vessel traffic service, oil spill response, search & rescue, terminal cargo office, and more training applications. The equipment is scheduled for delivery in August 2024. The simulator will be
installed in the new campus of the South-Eastern Finland University of Applied Sciences (Xamk) in Kotka, where also part of the maritime training of the Joint Authority of Education of Kotka-Hamina Region (Ekami) will take place in the future. “This new learning environment provides students with a unique opportunity to develop their practical skills and prepare for demanding maritime tasks. We are fortunate to have Wärtsilä’s highly advanced simulator technology as the basis for this training. Many critical operations cannot be safely practised on an actual vessel, so in addition to acquiring technical skills, a versatile and realistically functioning simulation environment will significantly enhance the safety of vessels,” Olli-Pekka Brunila, Director of Education, Xamk, underscored. Hannu Mäntymaa, Vice President for Voyage Services, Wärtsilä, and Managing Director of Wärtsilä Finland, also highlighted, “This new maritime training centre from Xamk and Ekami will play an integral role in unlocking [decarbonisation] synergies […]. After all, if organisations are going to benefit from future fuel engines, for example, crews must be highly competent, operate with the highest levels of safety and have access to continuous training programmes.”
CTP-MAG warehouse-office deal The logistics & freight forwarding company Morska Agencja Gdynia (MAG) has leased 21k m2 of space from CTP at its CTPark Gdańsk Port for ten years. The 20.7k m2 of warehousing capacity (floor strength of 7.0t/m2) will see MAG integrating its existing warehouse spaces into one, while
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the 300 m2 office will house the company’s new HQ. The lease commences at the beginning of March 2024. The 21.3 ha, 117k m2-big CTPark Gdańsk Port is located near the Baltic Hub. The entire complex, of which 47% is already pre-leased, will be operational by the middle of next year.
WHAT’S IN THE CABINET World Bank’s PCS report – published
Better customs-port co-op
During this year’s World Ports Conference of the International Association of Ports and Harbors (IAPH), th e Wo r l d Bank released Port Community Systems – Lessons from Global Experience, a stepby-step guide to port co m m u n i t y s y s te m (PCS) implementation. Following 24 months of effort from 88 contributors, the publication describes how PCSes have improved port operations around the world in both high- and low-adoption rate regions. It provides insights for policymakers, port authorities, and logistics providers on how to enhance PCS adoption and leverage its benefits. The study also identifies where the gaps are in adoption by examining PCS implementation in over 897 ports. The publication also examines the financial, governance, and legal aspects of PCS deployment, as well as change management and the human aspect in implementing such systems. Additionally, Port Community Systems – Lessons from Global Experience points to the best ways of enabling seamless data exchange between a PCS and the Maritime Single Window and Trade Single Window systems. Commenting on the report’s release, Patrick Verhoeven, IAPH’s Managing Director, said, “By integrating a PCS into the existing digital port infrastructure, port stakeholders can achieve more efficient and secure communication, enhance cargo visibility, and reduce the time and costs associated with manual paper-based processes, especially vessel time at berth. Additionally, a PCS can help governments streamline customs and border procedures and contribute to national trade facilitation programmes. Achieving these proven benefits by using lessons from global experience is the aim of this publication, whether you are a small island developing state or industrialised country.”
The World Customs Organization, with the help of the International Association of Ports and Harbors (IAPH), published Guidelines on Cooperation between Customs and Port Authorities. The publication details how both parties can work together better to improve the speed and predictability of trade flows while ensuring the security and integrity of the global supply chains. The publication includes a variety of best practices covering advanced, emerging and developing countries, with specific attention being paid to small island states to review their journey in the field of cooperation to accelerate digitalisation and sustainability. The Guidelines saw the light of day at IAPH’s 2023 World Ports Conference, and the organisation’s Managing Director, Patrick Verhoeven, underscored, “By adopting a common agenda with a solid, sustainable governance structure in place to exchange ‘single truth’ data, ports and customs authorities can ensure supply chain security, thus improving trade facilitation in their respective countries.”
Diversity@Sea pilot vessel initiative – launched After identifying 15 key pain points for women at sea earlier this year, Members of the All Aboard Alliance announced they would meet a series of minimum requirements on board one pilot ship within their fleets (with the first six scheduled to set sail no later than 1 November 2023). These include having a minimum of four women on board, supplying appropriate conditions for menstrual needs, providing 24/7 Wi-Fi for crew members, and ensuring that all seaborne staff have access to inclusive personal protective equipment. The pilot measures will explore different approaches to improving work-life balance for everyone at sea in maritime shipping as well as how to make life at sea more inclusive and attractive for men and women alike. The Global Maritime Forum, in partnership with the independent maritime data analytics firm PsiFyi, will gather and assess data from crew members on board the vessels to track the progress of the participating companies towards the stated goals of the pilot (comparative analysis with nonparticipating vessels will offer insights into the effectiveness of these measures).
EU moves a step closer towards cleaner trucking The block’s Member States agreed on tighter CO2 emission targets for heavy-duty vehicles, according to which new trucks sold in the EU will have to emit 45%, 65% and 90% less by, respectively, 2030, 2035 and 2040 (vs 2019 levels). The proposed law was submitted to the European Parliament, with voices already stating that anything less than a complete cut by 2040 will still have CO2-emitting lorries on EU roads in mid-century. 6/2023 | Baltic Transport Journal | 15
VENTURE FORTH KALUNDBORG TO LOWER THE CARBON FOOTPRINT OF ITS CONTAINER OPERATIONS • The Danish seaport will electrify all cranes in its deep-water (15 metres draft) container handling facility, operated by APM Terminals, within several months. The gantry fleet consists of three Konecranes Gottwald mobile harbour cranes, two capable of lifting 100 tonnes and the third – 150t. Meanwhile, APM Terminals Kalundborg has committed to using hydrotreated vegetable oil as fuel, which is said to reduce CO2 emissions
by up to 90%. The announcement was made on the occasion of Laura Maersk, Maersk’s first methanol-run feeder, calling to Kalundborg. “With the measures we are taking, we can offer a green gateway to the Zealand market,” underlined Mikael Gutman, CEO of APM Terminals Nordics. The 50k-TEU/year-capacity Kalundborg joins Gothenburg and Los Angeles, the two other sites in the APM Terminals family that use biofuel. •
HHLA CTA’S AGV FLEET IS NOW ENTIRELY GREEN • The company bid farewell to the last diesel automated guided vehicle (AGV), meaning that its 95-strong AGV fleet is all but battery-powered now and running on green electricity. As a result, the container handling from ship to storage is fully electrified at Container Terminal Altenwerder (CTA). According to HHLA, exchanging diesel for battery AGVs will help avoid the consumption of around three million litres of fossil fuel per year, sparing the environment some 8.0kt/y of CO2 emissions. In August 2023, CTA again received TÜV NORD climate-neutral company certification. The 14 container gantry cranes for seaborne handling, the 52 portal cranes in the container block storage facility, and the four rail gantries are already powered by green electricity. The use of
battery-powered tractor units is currently being tested at CTA with the intention of completely electrifying the terminal’s tractor fleet. “We will also continue to invest in the electrification of the equipment of the other HHLA terminals in order to achieve climate-neutral operations across the Group by 2040,” Oliver Dux, Director of Technology at HHLA, underlined. The last processes at CTA that still result in CO2 emissions are offset with compensation certificates (supporting projects certified according to the Gold Standard of Voluntary Emission Reductions). The conversion of the CTA AGV fleet was supported by Hamburg’s Ministry for Environment, Climate, Energy and Agriculture using funds from the European Regional Development Fund. •
SCANDLINES’ FUTURA – LAUNCHED • The brand-new all-electric ferry was launched at the Turkish Cemre Shipyard, after which tugboats took her to the outfitting quay. The 147.4 by 25.4 m double-ended ro-pax will serve the Puttgarden-Rødby crossing as of 2024, offering room for 140 passengers and 1,200 lane metres for vehicles and wheeled cargo. The €80m investment will feature a 10MWh battery system. “With Futura, we make it possible to travel without any direct emissions, as the ferry runs entirely on electricity. At the same time, we have a sharp focus on making the
entire journey [45-60 minutes] worth the time – so we have also worked to make the experience on board even better,” said Carsten Nørland Scandlines’ CEO. He furthered, “We believe in a future for ferries. We invest in a multi-million euro electric ferry because we have a responsibility to the world around us and because we are convinced that there is a need for journeys that don’t just take place behind the wheel on the motorway. This applies to freight drivers, families on holiday and those who just want to go border shopping.” •
MALMÖ PROPOSED AS A CCS NODE • The CNetSS project, led by Växjö Energi, has chosen the main alternative for interim storage of carbon dioxide before transport to the final depot: Copenhagen Malmö Port’s Norra Hamnen. The CNetSS project, which the Swedish Energy Agency awarded SEK2.5m (€220k), gathers ten actors who work on establishing a transport, liquefaction and storage infrastructure in Southern Sweden, with the potential to capture two million tonnes of CO2 per year. Works
in 2023 centred on a feasibility study in which various alternatives for carbon dioxide storage were analysed. Since mid-2022, Växjö Energi has been testing new CCS technology developed by the University of Lund’s Faculty of Engineering, which is said to require noticeably less energy than previous solutions. The new method will capture biogenic carbon, resulting in negative emissions. Växjö Energi intends to capture some 200kt in the near future. •
TECH PARTNERSHIP TO GET DOZENS OF CMPS ONTO THE MARKET BY END-DECADE • Liquid Wind, Alfa Laval, Carbon Clean, Siemens Energy, and Topsoe have strengthened their co-op to design ready-to-build core e-methanol plants (CMP). The partners will focus on reducing the time, cost, and risk of developing CMPs to get ten additional e-methanol facilities in the Nordics by 2027 and a total of 80 standardised, 100kt/year capacity e-methanol units by 2030 (estimated to reduce CO2 emissions by 14mt/y). FlagshigONE, the first CMP developed by Liquid Wind, was purchased by the Danish energy company Ørsted, which is building the 50kt/y facility in the Swedish Örnsköldsvik (scheduled to come online in 2025). Liquid Wind’s FlagshipTWO and FlagshipTHREE, both 100kt/y, will be erected in Sundsvall and Umeå, respectively. The former can start producing e-methanol in late 2025/early 16 | Baltic Transport Journal | 6/2023
2026, while the latter possibly in 2026. The projects target the shipping business as the primary client for their (fuel) product. “The sharp rise of CO2 emissions within the maritime sector (to 5% in 2022) is a stark reminder of the urgency of our collective mission. Inspired by Liquid Wind’s visionary approach and united by the pioneering spirit of the project’s leaders, we stand poised to demonstrate that, when harnessed, the technology available today can propel a swift transition to a more sustainable maritime future,” stressed Sundus Cordelia Ramli, Chief Commercial Officer P-to-X at Topsoe. Aniruddha Sharma, Chair and CEO of Carbon Clean, noted, “Our continued partnership with Liquid Wind demonstrates the role carbon capture must play in decarbonising hard-to-abate sectors, such as shipping.” •
VENTURE FORTH COPENHAGEN’S CONTAINER TERMINAL TO GO GREENER WITH HVO • Copenhagen Malmö Port (CMP) began switching its fossil fuel machinery to run on hydrotreated vegetable oil (HVO100) in November 2023. The facility’s newer terminal tractors, rear loaders, and industrial trucks will be the first to phase in HVO100. The move will avoid consuming 60 thousand litres of diesel per year, reducing CMP’s footprint in Denmark by some 130t of CO2e/y. The new battery-hybrid straddle carriers CMP ordered in April 2023 will also tank HVO100. The terminal’s ship-to-shore gantries and other work vehicles run on green electricity. In 2025, the container terminal in Copenhagen will move to Ydre Nordhavn, and CMP expects that all fossil fuels will be phased out at all facilities by that time. In Malmö, phasing in HVO100 reduced emissions by approximately 840t CO2e/y. CMP intends to make its operations CO2-neutral
and climate-positive by 2025 and 2040, respectively (in accordance with the Science Based Targets initiative). The Danish-Swedish port authority cut its scope 1 and 2 greenhouse gas emissions by 57% in 2020-22, thus avoiding the release of 1,231t of CO2e. “The green transition of CMP’s operations is not something we are only planning for in the future – it is already happening now, and the phasing in of HVO100 at the container terminal in Copenhagen is a very important and natural step in our efforts to be one of the world’s most sustainable ports,” highlighted Povl Dolleris Røjkjær Ungar, CMP’s COO. He also underlined, “The phase-in of HVO100 follows the replacement of CMP’s machinery and means that CMP can also support our customers’ demand for fossil-free and CO2-neutral transport chains.” •
TYPE APPROVAL FOR THE WORLD’S FIRST DUAL-FUEL HYDROGEN ENGINE • After awarding its approval in principle in September 2020, Lloyd’s Register now type-approved BeHydro’s engine. According to its designers, the up to 2.7MW-capacity unit has the potential to reduce
CO2 emissions by as much as 85%. The innovation is aimed at both shoreside operations and shipping use. BeHydro intends to develop larger-capacity hydrogen engines in the future. •
ENOVA BACKS VIASEA’S HYDROGEN SHIP INVESTMENT • The Norwegian ministerial agency, tasked with speeding the lowemission transition, has allocated NOK171.8m (about €14.4m) for constructing two container carriers to run on (green) hydrogen. Initial bunkering is planned to take place in Norway; once hydrogen becomes available in other locations served by Viasea Shipping, the Norwegian shipping line intends to sail on hydrogen only. On the onset, a mix of
hydrogen and diesel will be used, resulting in a 75% lower footprint vs a diesel vessel, according to Viasea Shipping. Additionally, the carriers will be equipped with rotor sails. The Norwegian Ship Design Company has been tasked with providing the ship concept. The design will be based on the modified Powered by Nature blueprint (an 88 m long, 5,500 dwt self-discharging bulker created for Egil Ulvan Rederi). •
VENTSPILS-PURPLEGREEN ENERGY C HYDROGEN CO-OP • The Latvian seaport and the Riga-based company will conduct research into setting up a green hydrogen factory in Ventspils. The agreement also includes granting PurpleGreen Energy C building
rights on a ten-hectare plot for erecting the facility. The parties say the factory also has the potential to produce products using green hydrogen as feedstock. •
GOTHENBURG’S SECOND E-VEHICLE CHARGING STATION • The Swedish seaport and Göteborg Energi, with the support of the Swedish Energy Agency, set up four charging spots with up to 350kW capacity. “On the land side, a faster sustainable transition of truck traffic is a crucial factor. From the port’s perspective, we need to ensure that the infrastructure meets the needs and ideally stays ahead. The charging station at Port Entry fits very well into that puzzle,” Viktor Allgurén, Head of Innovations at the Gothenburg Port Authority, said. He continued, “The fact that we now have two
separate public charging stations in the port is significant in itself [the other being Circle K’s at Vädermotet]. It provides redundancy in the infrastructure while, in the long run, it can keep prices down for those who charge.” Allgurén also underlined, “We have seen a rapid increase in the number of electric trucks in the port, which is incredibly exciting to see. Concrete incentives and a rapidly introduced charging infrastructure in the port have definitely contributed to this development.” •
WÄRTSILÄ ADDS AMMONIA TO ITS 25-ENGINE PLATFORM • The Finnish tech company has introduced the marine sector’s first commercially available 4-stroke engine-based solution for ammonia fuel. In addition to the engine, the full solution includes the AmmoniaPac fuel gas supply system, the Wärtsilä Ammonia Release Mitigation System (WARMS), and the Wärtsilä NOX Reducer (NOR). The company also provides dedicated training and 24/7 global support. According to the manufacturer, Wärtsilä 25 ammonia can reduce greenhouse gas emissions by more than 70% compared to a diesel
solution of the same size. Earlier in November 2023, a letter of intent for the Wärtsilä 25-ammonia engine solution was signed between Wärtsilä and Viridis Bulk Carriers (a JV between Amon Maritime, Mosvolds Rederi, and Navigare Logistics). The signing of a commercial contract is expected in early 2024, making the shipowner the first to use Wärtsilä’s ammonia engines (Viridis Bulk Carriers intends to become the world’s first zero-emission shipping company, offering to that end carbonfree transportation with a series of ammonia-powered newbuilds). • 6/2023 | Baltic Transport Journal | 17
CHART OF THE ISSUE
TOP 10 ENVIRONMENTAL PRIORITIES OF THE PORT SECTOR OVER THE YEARS (1996, 2013, 2023)
1996
2013
2023
Port development (water related)
Air quality
Climate change
Water quality
Garbage /port waste
Air quality
Dredging disposal
Energy consumption
Energy efficiency
Dredging operations
Noise
Noise
Dust
Ship waste
Water quality
Port development (land related)
Relationship with local community
Ship waste
Contaminated land
Dredging operations
Relationship with local community
Habitat loss/degradation
Dust
Port development (land related)
Traffic volume
Port development (land related)
Garbage /port waste
Industrial effluent
Water quality
Port development (water related) Source: ESPO Environmental Report 2023. EcoPortsinSights 2023
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Good neighbour agreements – the risk implications
How to borrow & lend by Mike Yarwood, Managing Director, Loss Prevention, TT Club TT Club, as a leading international freight transport and cargo handling insurer, recognises equipmentsharing agreements as an efficient use of resources but flags potential liability issues if appropriate insurance cover is not in place. The first in our new advice document series, Risk Bytes, provides guidance on how to be on good terms with your neighbour. The following piece outlines the key considerations.
T
he benefits of good neighbour agreements are well recognised and utilised by cargo handling operators and others in the supply chain to successful effect. Sharing infrequently used equipment gives greater flexibility in operations and can cut costs significantly. These arrangements are, however, not always formally outlined in well-defined contracts. Hello neighbour, can I borrow your st(u/a)ff? So, what are good neighbour agreements? Why do they exist? And what are the risks of not formalising the arrangement with an exchange of contracts? A good neighbour agreement describes a situation where operators with a close working relationship arrange to borrow or lend equipment, vehicles and staff for a certain period. They are beneficial to both the borrower and the lender. They are usually reciprocal arrangements, with both parties having something the other may need at one time or another. For the borrower, the benefits can mean avoiding buying equipment that 20 | Baltic Transport Journal | 6/2023
is only used infrequently; it also avoids hiring additional staff for short periods and results in potentially not insignificant cost savings. The lender gets greater use from its assets and receives additional revenues. At the same time, for all interested, it means working with an entity they know well and may create other reciprocal opportunities on an ongoing basis. However, an arrangement of a casual nature, though often workable and agreeable to both parties, can lead to potential risks where liability and responsibility in the unfortunate event of an accident or breakdown may not be clear. The owners are financially exposed when the equipment or machine gets lost or damaged during the loan period. In addition, this might severely impact business operations, cancel out any benefit gained from the arrangement, and severely damage years of a good working relationship with the neighbour. Clarity in writing Our primary advice covers the provisions that should be made in a formalised written contract, clarifying where the risk
and liability rest during the operation of any shared asset and providing the opportunity for thorough due diligence to be carried out before the agreement is signed. When involved in a good neighbour arrangement, you must be aware that when your neighbour takes possession of your property – or the other way around – several legal relationships can arise under English law (the details of other nations’ legislation may differ and should be checked). But the following liabilities should always be considered whatever the legal jurisdiction. You may have a verbal contract between you, with expressed or implied terms of which you are not aware. You might have a duty of care to your neighbour to exercise reasonable care and skill. You may have created a ‘bailment,’ where you (the ‘bailor’) grant exclusive possession of your equipment to your neighbour (the ‘bailee’). You might instead have a licence, where you (the ‘licensor’) grant non-exclusive possession of your equipment to your neighbour (the ‘licensee’). Each of these relationships can give rise to different legal duties and obligations, shifting the legal burden of proof in cases of dispute.
LEGAL
Photo: Canva
The ifs Before entering a good neighbour arrangement, it would be wise to put your agreement in writing. Without it, there could be any number of issues. For example, under a bailment, there is, in effect, a temporary transfer of property rights from you to your neighbour. In other words, your neighbour is entitled to the exclusive use of your equipment during the bailment period. This means that if your operational needs suddenly change, you will not be entitled to get your equipment back until the bailment has come to an end. If your neighbour damages your equipment, you may not recover sufficient compensation to repair or replace it in the absence of a specific contractual provision. If your equipment is defective, and your neighbour’s or someone else’s property is damaged, or an individual is injured – even though it is not your fault – you could get caught up in legal proceedings and have to make contributions for the losses suffered by someone else. If your equipment is not defective but is damaged or causes damage or injury while in your neighbour’s possession – but with neither of you being at fault – there could be a dispute as to which of you is liable. Your manufacturer’s warranty could
become void, either by giving your equipment to your neighbour or because your neighbour breached the warranty conditions by not being aware of them, resulting in loss or damage. A written contract helps you define what your equipment is being used for, how long, and your respective rights, duties, obligations, liabilities and insurance needs. It would help if you also undertook due diligence checks prior to entering an agreement. Among others, you ought to be satisfied that your neighbour’s employees have sufficient training to use your equipment; ensuring adequate training will mitigate the risk of damage to the equipment as well as reduce the chance of accidents involving it. If you do not have adequate insurance coverage, or your insurer is unaware of the agreement, your loss might not be covered. This might severely impact your business operations and finances, once more potentially cancelling any benefit gained from the good neighbour agreement. While a formal written agreement defining the precise conditions of your loan may mitigate the risks, you must advise your insurer of such arrangements. In doing so, you are protecting your business by ensuring that any
liabilities are covered, whether they arise under a written contract or not. Of course, TT Club recommends checks on financial stability and whether sufficient and appropriate insurance cover is in place. But we also offer advice on adequate staff training and health and safety provisions. Moreover, our Risk Bytes: Good Neighbour Agreements includes a readily recognised case study of a typical assetsharing operation. At risk In summary, as a lender in a good neighbour agreement, it is vital to conduct thorough due diligence to know who will be using your equipment and how it will be used, remembering that any equipment warranty may be affected. As a borrower, you must consider whether you can meet your contractual obligations if you damage the loaned equipment. In either position, it is your responsibility to notify your insurer of any good neighbour agreements to lend or borrow equipment or staff. You must declare all equipment to your insurer to be covered under your policy, including new property acquired during an account year and equipment borrowed for temporary use. It is at risk of not being covered if it is not declared.
TT Club specialises in the insurance of intermodal operators, non-vessel owning common carriers, freight forwarders, logistics operators, marine terminals, stevedores, port authorities and ship operators. The company also deals with claims, underwriting, risk management as well as actively works on increasing safety through the transport & logistics field. Please visit www.ttclub.com for more info. 6/2023 | Baltic Transport Journal | 21
Progress on maritime cyber risk management maturity
Shifting tides, rising ransoms, and critical decisions by Tom Walters, Partner, HFW, and Daniel Ng, CEO, CyberOwl While the shipping industry is maturing and digitalisation is increasing, so too is the level of threat. The cost of cyber attacks is overwhelmingly on the rise. Recent research by Thetius, in collaboration with CyberOwl and HFW, indicates that within the last 18 months, the average cost of cyber attacks has risen by a frightening 200%. The volume of ransom demands has increased 357% since 2022, and the average price paid for ransom is now 3.2 million US dollars. On average, cyber breaches cost organisations $550k over the last three years.
A
longside the financial risks, the danger of reputational damage cannot be ignored. In some cases, the latter may be a larger concern for industry players than the former due to its duration, the lack of any ‘quick fix,’ and the difficulties in reversing the damage once done. Social media enables news to spread like wildfire, damaging an organisation’s reputation instantly before damage control has had a chance to take place, and can affect a company’s ability to trade with key customers. Earlier research by Thetius in 2021 and early 2022 explored the status of the maritime threat landscape and identified a huge disconnect between the perceived and actual readiness to respond to a cyber attack. Awareness around cyber security has since increased, with 80% of survey respondents in 2023 claiming to understand the necessary actions to take during a cyber security incident. This understanding also links to a clear increase in investment in cyber protection tools in 2023 compared with the preceding year (33% of shipping companies spent less than $100k on cyber security management, compared with 54% in 2022). However, cybercriminals often remain one step ahead. Difficult, very specific, cross-functional, uncertain In their latest report, Thetius, CyberOwl, and HFW consider in detail the outcomes from their newest cyber security research, drawing from opinions and experiences of more than 150 maritime industry stakeholders, alongside academic research and industry publications. The findings demonstrate that cyber security continues to be a serious and complex challenge for the maritime industry today. 22 | Baltic Transport Journal | 6/2023
Advanced satellite communications such as low earth orbit (LEO) networks are being trialled by shipping giants to improve connectivity at sea. Yet, these innovations also widen the opportunities for cybercriminals to infiltrate back-door vulnerabilities. Shipping is an exciting but relatively easy target for cyber hackers looking for a quick thrill with the potential for big ransom payments. As a result of the significant financial and reputational risks, it is no longer sufficient for maritime organisations to budget for only basic cyber protection systems. Difficult decisions need to be made by management, alongside internal cross-functional cohesion and upskilling of maritime professionals. Employees are often expected to operate complex technology in a likewise complicated and focus-demanding environment without always having the training and tools to understand and navigate the additional security risks that come with it. The report examines vulnerabilities across three tiers of business management: risk, IT, and fleet technical and safety, establishing that it is essential for these teams to consider, understand, and manage cyber security threats in a very specific way. To that end, skills need to be improved and blended across all departments by way of a cross-functional crisis team evaluating and mitigating cyber threats more effectively. Research shows, however, that in most cases, IT isn’t yet considered a critical part of the cross-functional team. Another vulnerability and challenge highlighted in the report is the uncertainty around cyber insurance: 42% of the survey respondents were unclear about what is covered by their organisation’s cyber risk policy. Furthermore, 25% thought their organisation did not have a cyber risk insurance policy, while 37% stated that their insurance
policy did not cover claims made following a cyber breach. Cover applications may be rejected because the cyber security management system in place is not sufficiently sophisticated to meet eligibility criteria. Maritime London suggests that 92% of estimated costs arising from a cyber attack are uninsured. At the same time, research from the Law Society of England and Wales found that 72% of companies across all industries have not purchased cyber insurance and that the process of buying it has become harder, with more paperwork involved and underwriters showing greater aversion to risk. Insurance is a major concern that must be addressed, but it will require collaboration and communication across the industry. Regulations to safeguard against future security risks In 2021, the International Maritime Organization adopted new cyber security provisions into the International Safety Management Code for merchant shipping. These provisions embedded more specific cyber risk management requirements into the ship safety management system, formalising deliberate cyber risk management practices into the operation of compliant merchant vessels. The new regulations were met with mixed reactions, albeit with a general acknowledgement of the emerging cyber threat and recognition of the need for guidance. Prior to the new regulations, earlier attempts to set down basic cyber security standards were undertaken by various industry sub-sectors, including the Oil Companies International Marine Forum. More recently, a number of major industry associations produced The Guidelines on Cyber Security onboard ships, intended to assist stakeholders in developing a proper
LEGAL
Photo: Canva
cyber risk management strategy following relevant regulations and best practices aboard, focusing on work processes, equipment, training, incident response, and recovery management. The International Association for Classification Societies (IACS) also produced IACS Rec 166 (Corr.1 2020): Recommendation on Cyber Resilience, which sets out non-mandatory advice for technical requirements for stakeholders to reference and apply to assist with the delivery of cyber resilient ships. However, while these publications specified a need to address cyber security, they leave it up to the operator to determine the most appropriate minimum course of action. IACS has recently announced additional unified requirements to align classification societies on their general policies on cyber risk management, and these will apply to all newly launched vessels from 2024.
via cross-functional cohesion, which allows teams to better evaluate cyber threats and move beyond basic compliance. The parties thus recommend, for starters, understanding how responsibilities are evolving for crucial roles due to increased connectivity, digitalisation, and consequential cyber risks. This is critical. There are increasing pressures and demands on people who require the right skills to operate advanced and complex technologies, plus the proper risk-reducing cyber security knowledge. Blending skills across all departments via cross-functional teams will be invaluable. Second, make deliberate and holistic decisions on investments in cyber risk management. This requires a coherent security programme led by an authority that understands the risks and longer-term consequences of decisions. Developing capabilities in-house vs leveraging the expertise and scale of outsourced providers needs to be
considered carefully, as does the choice of bundling vs disaggregating cyber security from other functions. Third, budget for additional cyber risks when considering the installation of advanced satellite communication systems such as LEO: 43% of survey respondents confirmed their organisation plans to roll out LEO within the next 12 months, and nearly half agreed that it would increase cyber risks. Greater cyber protection will be required but at an additional financial cost. Lastly, secure the right relationships with OEMs, who are held to account by technical teams for upgraded digital vessel technologies and need to develop software to standards the industry understands to avoid unnecessary confusion. However, it’s essential to acknowledge that an effective cybersecurity strategy comes from both one-off actions and continuous security maintenance.
Recommendations However, alongside unified and mandatory technical requirements, the shipping industry needs a significant refocus on people to minimise the risk emanating from lack of talent or human failure (estimated to be responsible for over 50% of all significant cyber risks by 2025). The Thetius-CyberOwl-HFW report concludes that, ultimately, understanding the level of risk across critical roles needs work. Roles are changing, and there are increasing pressures and demands on people. Blending skills across all departments can provide a more effective strategy for cyber risk management. This can be done
Thetius is the innovation agency for the global maritime industry. To make innovation work, you need unique insight, the ability to execute, and the right people engaged. Thetius exists to connect people, support the execution of new ideas, and create unique insight through our research and data sets. Visit thetius.com for more details. We help asset operators in the maritime and critical national infrastructure sectors obtain visibility of systems on their remote assets, actively manage the cyber risks and gain assurance of cyber compliance. Head to cyberowl.io to learn more. Whether we are solving complex issues within the construction, aviation or shipping industries, or providing advice across insurance, commodities and energy, we are specialist lawyers here to add value to our clients. We think about the commercial solution first – and then underpin our advice with a solid foundation of legal expertise. Go to hfw.com to discover more. 6/2023 | Baltic Transport Journal | 23
The end of the Consortia Block Exemption Regulation
What happens now by Mike Garratt, Managing Director, and Antonella Teodoro, Senior Transport Consultant, MDS Transmodal Someone falling into a deep coma four years ago in December 2019 and re-awakening today might be forgiven for believing that little had changed in the world of deep-sea containers. Container Trade Statistics reported a 4.7% growth in global loaded TEU. The Shanghai Containerized Freight Index was marginally higher. Maersk’s Q3 EBITDA was still around 14% of turnover. Mean ship size was up by 11%. How misleading those initial observations would have been!
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ver those intervening four years, which incorporated a global pandemic, an initial fall off in traffic had been followed by demand exceeding supply to such an extent that the mean freight revenues had nearly trebled by Q3 2022. Consequently, the lines made enormous profits that were (in part) used to extend vertical integration into port terminals and increasingly into door-to-door logistics. However, having won their case four years before, the lines had just lost the argument to retain the anti-trust legislation provided by the Consortium Block Exemption Regulation (CEBR). The UK Competition and Markets Authority has similarly decided that the country will not establish its own CEBR. And there’s the signed & sealed inclusion of much of the shipping industry in the European Union Emissions Trading System (EU ETS), effectively raising energy costs to the lines by 40% for ships sailing between EU ports (but not if sailing between other ports – an invitation to develop ingenious routing if ever there was!). The age-old supply-demand (different tune) dance In so far as demand is concerned, the trade statistics which feed our World Cargo Database suggest that while the European market has been depressed in 2023, 24 | Baltic Transport Journal | 6/2023
the global pattern of 3% per annum growth is re-establishing itself; exports from the Far East are now growing, including to Europe. We estimate that at its peak, the very high freight rates that drove as much as 7% of cargo normally containerised to alternative maritime, air, or overland modes – but this level of diversion has now been halved. Figure 1 indexes the changes in scheduled deployed capacity, fleet capacity, demand, and mean revenue per TEU over the last few years (with Q1 2019 as the baseline). A supply shortage in late 2020 accelerated rates that peaked over a year later when fleet capacity was already creating a capacity surplus. Demand fell back, and only now is returning to the levels of three years ago. The impact of the coronavirus pandemic and the management of fleet capacity led to the curious feature of utilisation levels (demand/supply) falling as the number of ports the lines called at relative to ‘scheduled expectations’ also fell, a significant slump in service quality that is only recovering in the second half of 2023. Our forecasts for all deep-sea containerised trades over the next five years reflect the gradual pick-up in demand being experienced as 2023 comes to an end (most marked on the Pacific). However, this level of growth appears unlikely to match the additional capacity that has recently and is currently being
built. The lines offered less deployed capacity during COVID-19, which drove rates up. Ironically, as ship queues and capacity challenges in the ports have been resolved, the lines have more ships on order than demand may justify over the next three years. Table 1 describes our current estimates for fleet supply (including newbuilds and scrappage) and the capacity required to address a yearly 3% growth in demand (assuming ships continue to operate at current speeds in existing strings). If the way vessels are deployed remains the same, then we estimate excess fleet capacity to be around 4.5% in 2026 (1.4m/30.8m TEU of fleet capacity) compared with today. In practice, the lines will be able to absorb some surplus fleet capacity through further speed reductions to re-optimise given the impact of the EU ETS, increasing the proportion of the fleet deployed on ‘multi-regional’ services (e.g., Europe-Gulf-Far East), more lines operating services independently, and through adding ports to rotations to reduce feeder costs (and potentially game-play the EU ETS to minimise nautical miles between ports in the European Economic Area). Scrappage may also accelerate. An important question is the overall impact that the end of CEBR will have. MDS Transmodal’s role in this debate was to provide the European Commission
MARITIME Fig. 1. Scheduled deployed capacity, fleet capacity, estimated maritime loaded TEU & unit revenue for deep-sea routes 600
120
500
110
400
100
300
90
200
80
100
70
0
Scheduled deployed capacity
Fleet capacity
Estimated maritime loaded TEU
Average unit revenue (CTS)
2023 Q3
2023 Q2
2023 Q1
2022 Q4
2022 Q3
2022 Q2
2022 Q1
2021 Q4
2021 Q3
2021 Q2
2021 Q1
2020 Q4
2020 Q3
2020 Q2
2020 Q1
2019 Q4
2019 Q3
2019 Q2
2019 Q1
130
Source for all figs. and Tab. 1: MDS Transmodal
Fig. 2. Utilisation vs port calls – global 120 115 110 105 100 95 90 85 80 75
Utilisation level
Port calls (%calls achieved)
Fig. 3. Deep-sea containerised trade in 2018, 2023, and 2028 (million unit-tonnes) 1,400
1,200
1,000
800
600
400
200
0 2018
2023
2028
Australasia & Oceania
Europe & Med
Far East
Gulf & ISC
Latin America
North America
Sub Saharan Africa
2023 Q3
2023 Q2
2023 Q1
2022 Q4
2022 Q3
2022 Q2
2022 Q1
2021 Q4
2021 Q3
2021 Q2
2021 Q1
2020 Q4
2020 Q3
2020 Q2
2020 Q1
2019 Q4
2019 Q3
2019 Q2
2019 Q1
70
(COM) with statistical analyses on fleet deployment and market shares. Crackdown? The lines lost the argument to retain CEBR because COM decided that providing the liner business with anti-trust privileges that exceeded those available to other sectors did not pass the five tests (of effectiveness, efficiency, relevance, coherence, and EU-added value) it set and, crucially, did not protect shippers (i.e., consumers) when a crisis occurred. While a number of European trade associations collaborated to also argue against CBER because of the high levels of vertical integration taking place, the most dramatic statement against the lines probably came from another jurisdiction. President Biden’s March 2022 State of the Union speech included this passage: “See what’s happening with ocean carriers moving goods in and out of America. During the pandemic, about half a dozen or less foreign-owned companies raised prices by as much as 1,000 % and made record profits. Tonight, I’m announcing a crackdown on those companies overcharging American businesses and consumers.” So, will this legal change make a difference? The degree to which the World Shipping Council campaigned to retain CEBR suggests that it will make a difference. Then again, it may be that the major lines were already adapting to a decision they had anticipated. The 2M Alliance will complete its break-up in 2025. The very largest carriers are likely to operate their global networks on a stand-alone basis or with support from the smaller players; there may even be a further consolidation because the nine leading lines cannot each sustain global networks alone. While for smaller markets, lines may be able to make a case that market shares above 20% are in the wider interest, this will not be the instance for the larger markets. The impact may extend beyond the lines themselves. Page 32 of the COM staff working paper discussed the relationship between CEBR and the container terminals that the leading lines also control, implying that CEBR also protected the relationship between lines and these terminals, and its end could raise questions about the rights of equal-term access. Such uncertainties may be compounded where different regulators (on a trade route) have differing rules; some (e.g., Singapore) allow up to a 50% market share for a given consortium. To raise awareness and to question Rather than make a firm prediction, we put forward three potential outcomes. 6/2023 | Baltic Transport Journal | 25
MARITIME
Photo: Canva
Tab. 1. Fleet capacity, newbuilds, and assumed scrappage in TEU (fully cellular) in 2018, 2023-2026
1
Year
Scrappage (=> 25 years)
Newbuilds
2018 20231 2024 2025 2026
1,077,367 341,417 469,690
3,012,345 1,597,740 1,150,446
Capacity - scrappage + newbuilds 21,900,616 26,938,222 28,873,200 30,129,523 30,810,279
3% growth in demand
Capacity difference
27,746,369 28,578,760 29,436,123
1,126,831 1,550,763 1,374,156
Existing fleet as of Q4 2023 and outstanding newbuilds due for delivery in 2023
Firstly, one that does not favour the lines and to which an excess supply weakens their position. The uncertainty that may apply to the relationship between terminals and lines post-ending of CEBR may play to the advantage of the non-liner major stevedores, who did not have the leverage to make super profits during COVID. These stevedores seek to develop a closer relationship with shippers, which will improve their ability to provide value-added services and onward transport services (directly or by sub-contract). This is already happening; stevedores own companies feedering containers (DP World – Unifeeder, Peel Ports – BG Freight Line, Abu Dhabi ports – Safeen Feeders, etc.), and ports contract for space with railroad operators. At the same time, port-centric distribution hubs secure cargo to an individual port. The lines themselves come under increasing pressure to offer the most cost-efficient services, leading to further consolidation of liner services. Non-vessel operating common carriers expand their portcentric distribution centres and, likewise, their capacity purchasing from the lines. Quite clearly, this may not be attractive to some of the shipping lines. The ability to make profits by charging an economic rent to pass through a port will pass to the ports 26 | Baltic Transport Journal | 6/2023
themselves. The step taken at Jebel Ali is worth noting, where DP World announced that cargo owners, not the lines, will pay terminal handling charges. The second scenario favours the lines. If market shares do not exceed 20%, an individual shipping line will continue to vertically integrate (including with terminals, inland transport services, and door-to-door logistics). In an environment where scale economies are crucial, any share less than 20% could, therefore, be uncompetitive, and a very small number of look-alike global vertically integrated operators emerge. Ports whose terminals are not included in such networks may find it challenging to remain in the market. Individual lines (and two of the existing ones already reach this scale) are supported by a range of sub-contractors (feeders, third-party logistics, etc.) who are effectively rate takers; the advantage will lie with the lines. The relatively broad definitions of markets may be such that within these, sub-markets remain oligopolistic.
Outcomes may not be so extreme, and much may depend upon the legal interpretation of the new regulatory environment. The World Shipping Council may have a point that change will generate legal uncertainty (but that’s in the nature of change). Thirdly, a possible course of events in which nation-states and regulators take a more proactive approach. Given the problems shippers faced during the pandemic, the decision to terminate CEBR despite the position that the lines have taken, and the vast challenges faced to decarbonise the industry, global bodies may choose to examine whether the current industry structure serves the public interest to promote trade. Such an examination may consider that regular and reliable liner shipping services should be seen as a global trading utility, providing a minimum level of connectivity, frequency and reliability (including to emerging economies). In these circumstances, it could be that lines will find themselves being obliged to offer minimum levels of service to individual nation-states to be authorised to operate at ports in their countries. We do not suggest which, if any, of these ‘travel directions’ might be followed. However, one of the effects of the industry’s reaction to the pandemic has been to raise awareness of the vulnerability of world trade to investment and operational decision-making by a relatively small number of companies and to question the level of resilience the industry offers.
MDS Transmodal is a transport economics consultancy. Founded in 1983, we have a simple mission: to provide impartial and independent advice on a range of transport issues. We strive to de-mystify the transport sector with objective analysis brought to real-world issues. Our work is informed by the development and maintenance of detailed data sets, coupled with econometric modelling and statistical analysis. Visit mdst.co.uk to learn more.
Can onboard carbon capture and nuclear get ships to net zero?
Under the right conditions by Eirik Ovrum, Principal Consultant in Maritime Environmental Technology, DNV Uncertainties over the future supply and cost of carbon-neutral fuels are compelling reasons for shipowners, ports, and other stakeholders to consider all technology options for reaching net zero. DNV’s latest Maritime Forecast to 2050 includes case studies on whether onboard carbon capture and nuclear propulsion could be significant options.
I
n this decisive decade for shipping decarbonization, no stone should be left unturned in securing the future we need and want. Our research indicates conditions under which carbon capture and nuclear could help bridge the gap between short-term measures and the massive effort needed beyond 2030 to achieve 2040 and 2050 targets in the new International Maritime Organization (IMO) and forthcoming EU emission regulations. The studies add fresh insight to assist maritime stakeholders who now have to make costly investment decisions on ship design and operations as well as on what fuels to produce, distribute and bunker. The research has two goals. One is to establish if using these technologies is realistic 28 | Baltic Transport Journal | 6/2023
operationally. The second is to compare their lifetime costs with fuel strategies most often discussed in the industry, such as fuel oil, liquefied natural gas (LNG), methanol and ammonia, each blending in carbon-neutral fuels (bio-/e-marine gas oil, bio-/e-LNG, bio-/e-methanol, blue/eammonia) to comply with greenhouse gas (GHG) emission reduction targets. Results for various scenarios DNV’s techno-economic evaluation involves two case studies using the company’s tried and tested FuelPath model for a large, modern deep-sea ship, a 15,000 TEUs container carrier sailing between the Far East and Western Europe. Inputs that can be varied in the model include ship specifications and use, the new-build’s GHG
emission targets, and design options such as converters and fuel systems. Maritime Forecast to 2050 also describes the technical, operational and economic assumptions involved in the case studies. In essence, the model assesses the economic performance of available design options relative to fuel over a vessel’s lifetime. The outputs include the total cost of ownership and the cost of fuel strategies under different fuel-price scenarios. Annual expenses include yearly payments on capital expenditure (CAPEX), fuel costs, carbon prices, and operating expenditure (OPEX). Based on real-world data and experience, the research first benchmarks the cost of the fuel strategies reflecting energy converter and fuel-system design options open to the case-study vessel over its lifetime.
MARITIME Fig. 1. The DNV FuelPath model
Source for all figs.: DNV Maritime Forecast to 2050 (2023)
Fig. 2. The benchmark span of annual costs and net present value for the case-study ship (15,000 TEUs container carrier) with fuel strategies using fuel oil, LNG, ammonia, methanol, and all four with carbon-neutral blend-in for compliance
More specifically, DNV draws on its datadriven estimates of annual maximum and minimum fuel prices over 2030-60 to create benchmark spans of yearly costs and net present value for the case-study ship for various fuel strategies. It uses these spans to evaluate the feasibility of onboard carbon capture and nuclear propulsion. Onboard carbon capture case study model Assumptions for this study are described extensively in the Maritime Forecast to 2050. Briefly, though, the ship runs on heavy fuel oil (HFO), has a carbon dioxide (CO2) capture unit and storage tanks, and is fitted with a scrubber for sulphur oxides and exhaust pre-treatment. The study models annual costs under two onboard CO2 capture and storage (CCS) scenarios, low- and high-cost, to compensate for economic uncertainties such as CAPEX and OPEX. It focuses on two parameters it assesses as impacting
the economics of onboard CO2 capture the most. One is the ‘fuel penalty,’ the extra energy used for operating the capture unit. The other is the ‘CO2 deposit cost,’ which is the sum of the captured carbon transport and storage costs. For the annual cost range, the lowCCS (cost) scenario is seen to perform well against the other fuel strategies (Fig. 3). The Forecast attributes this partly to the HFO price in the scenarios and partly to fuel penalty and CO2 deposit costs compared with the cost of buying a larger share of carbon-neutral fuels. The high-CCS (cost) scenario performs around the middle of the studied fuel strategies. For net present value, this case is close to the mean for the fuel strategies by mid-century, while the low-CCS (cost) case outperforms three-quarters of them. Our research suggests there can be an economic case for onboard CCS if the capture technologies have low fuel penalties and the CCS industry can offer low CO2 storage costs in our model.
Nuclear propulsion case study model Assumptions for this are fully described in the Maritime Forecast to 2050. One is that the reactor and related systems and services are leased. This is because CAPEX for nuclear propulsion is uncertain but thought likely to be up to twice the cost of the ship itself. As with the carbon capture study, high-nuclear and low-nuclear cost scenarios are used to mitigate uncertainty over reactor costs for merchant vessels (the Forecast discusses cost drivers). Figure 4 shows the estimated annual costs (CAPEX, OPEX, fuel cost, carbon cost) and net present values for nuclear propulsion compared with the benchmark fuel strategies (fuel oil, LNG, methanol and ammonia) during ship decarbonization. The annual costs of nuclear appear to be more or less stable compared with the benchmark cost range that increases from 2030 to decarbonization in 2050. This, the Forecast concludes, indicates that nuclear propulsion will be increasingly 6/2023 | Baltic Transport Journal | 29
MARITIME Fig. 3. Range of case-study annual costs (left) and net present value (right) for low- and high-cost scenarios for onboard carbon capture and storage compared with the benchmark
Fig. 4. Range of case study annual costs (left) and net present value (right) for low- and high-cost scenarios for ship nuclear propulsion compared to the benchmark
competitive as GHG limits are tightened. The takeaway is that there can be an economic case for nuclear propulsion, if reactors are developed, that can reach the lower range of cost levels described here. Key takeaways DNV’s conclusions support the prospect that onboard CO 2 capture and nuclear propulsion could mitigate competition for sustainable biomass and renewable electricity – all under the right conditions. Onboard CO2 capture could release maritime from competing for carbon-neutral fuels. Nuclear propulsion is itself carbon-neutral and less exposed 30 | Baltic Transport Journal | 6/2023
to price swings and supply issues than carbon-neutral fuels. The report acknowledges that carbon capture would need onboard facilities to remove exhaust CO2 , onshore processing of captured CO2 , temporary storage and off loading facilities, and infrastructure such as pipelines and permanent storage. Obstacles to nuclear include international
regulations, public perception, and technology costs. Both technologies face barriers for sure. But our studies suggest they could, in the right circumstances, be economical and valuable additions to the flexible toolbox maritime needs to meet mid- and long-term decarbonization targets amid anticipated competition for carbon-neutral fuels.
DNV is the world’s leading classification society and a recognized advisor for the maritime industry. We enhance safety, quality, energy efficiency and environmental performance of the global shipping industry – across all vessel types and offshore structures. We invest heavily in research and development to find solutions, together with the industry, that address strategic, operational, or regulatory challenges. Visit dnv.com/maritime for more information.
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A simple guide to the EU ETS, its impacts, and what action one can take to manage risk and reduce costs
EU what? by Jacob Clausen, Performance Director, NAVTOR The European Union Emissions Trading System (EU ETS) for shipping landed with a colossal splash on 16 May this year, when it was officially adopted and finalised. But it won’t be until 1 January 2024 that the industry feels the actual ripple effects. So, is it time for owners and operators to batten down the hatches, or will adequate foresight and planning ensure these ripples don’t turn into tsunamis? What is it? Firstly, it’s important to recognise that the EU ETS isn’t ‘new.’ The measure, which is seen as a key enabler in the body’s drive to become carbon neutral by mid-century (with a 50% reduction in greenhouse gas, GHG, emissions by 2030), was introduced in 2005 and already covers thousands of installations, such as power stations and chemical
plants, in addition to airlines. In this sense, it’s tried and tested. Essentially, it works as a market-driven system that creates financial incentives for businesses, in this case shipping, to reduce emissions and transition to more sustainable practices. It does so by requiring a ‘shipping company’ – the owner, manager, or bareboat charterer – to buy emission allowances, each
covering one tonne of CO2-equivalent emitted from 2024 (the scheme will be expanded in 2026 to include methane and nitrous oxide emissions). As such, it introduces the concept of carbon pricing for maritime operations to and from EU ports – obliging companies to pay for their emissions and thus encouraging them to reduce carbon footprints.
How does it work? The ETS is based on a cap-and-trade principle, limiting the total amount of GHG emissions in the system, ensuring companies can’t just ‘buy themselves out of trouble’ by paying for ever-increasing pollution. Over time, the cap will be reduced, with the cost of allowances rising. The ‘trade’ element refers to the fact that allowances can be bought via official auctions or through spot, futures and options, with trading on exchanges such 32 | Baltic Transport Journal | 6/2023
as Intercontinental Exchange, European Energy Exchange, and Nasdaq. In this respect, companies can optimise their costs by buying (and potentially selling) at opportune times. The need for allowances is worked out according to reports as per the EU Monitoring, Reporting and Verification Regulation, presented to the EU by March (the following year) with the correct number of allowances then required to be submitted
by the end of September. Be warned: a failure to do so will incur heavy financial penalties (€100/t of CO2e, corrected for inflation, while names of the penalised companies will also be disclosed to the public)! In a bid to ease the implementation of what many see as a ‘watershed’ regulation (others may use less charitable language), the EU will only require allowances for 40% of verified emissions in 2024, rising to 70% in 2025 and 100% in 2026-onwards.
MARITIME
Photo: Canva
What can you do? Firstly, get solid foundations in place. An advanced f leet and vessel monitoring and management solution will allow you to ‘know thy ship’ inside-out, automating the collection of critical data and giving you (literally) priceless insights into realtime operations. This will allow you to constantly monitor, troubleshoot and optimise performance,
empowering decision-making that delivers both environmental and business benefits. This could potentially slash the need for allowances on single ships while being transformational across fleets. Such systems should also cover your reporting needs. This delivers efficiencies in automating tasks and reducing human error, at the same time ensuring that the
data provides an accurate picture of performance to regulators. With this in mind, validation is critical. Here at NAVTOR, we’d recommend a dual validation process with your specialist software of choice backed up by human validation from subject matter experts. It pays to be thorough when any deviations from compliance come at such a cost.
How can you minimise risk and financial exposure? When you have optimal foundations in place, you can look at building the best strategy for your business. Establishing an overview of your forecasted allowances for the year ahead will allow you to understand your potential exposure, from which – perhaps in consultation with experts – you can define a sourcing strategy that allows
you to optimise costs (buying and selling at the right time, across the proper channels). Alternative fuels are also a vital consideration, with the cost of allowances potentially making biofuels, which on the face of it are more expensive, much better value for money (due to lower carbon factors). And remember, your monitoring and
management solution will allow you to regularly update your emissions profile, potentially helping you reduce your need for allowances. Finally, it makes sound financial sense for owners to maximise the time their vessels spend under time charter, allowing them to pass the cost of allowances on to the charterer. On that note...
How can owners redeem allowance costs from charterers? It is not vessel ownership that matters when paying for allowances, but rather which party provides and pays for fuel. Owners, therefore, need to ensure they deliver reliable, validated vessel emission data to charterers promptly (BIMCO proposes a clause whereby owners provide this info within the first seven days of each
month, covering the previous month’s allowance requirement). But, to do that, we return to the need for a robust, reliable, real-time monitoring and management system. This will create true transparency, hence trust, regarding ongoing emission data, monitoring progress (issuing statements
under voyages and time charters), and ensuring allowances are transferred per requirements. There should be no room for argument with a system that, although complex at first glance, is based on pure, hard data. That is, of course, as long as you have high-quality data in the first place!
Smooth sailing into 2024 – and beyond Although the industry may not universally applaud the introduction of regulations that potentially incur significant costs, it really does pay to see the bigger picture here. The most crucial factor is, naturally, that we need to take action to reduce emissions and mitigate climate change. In this respect, any tool that incentivises businesses to do
so is a step in the right direction. However, we shouldn’t lose sight of the commercial opportunity here, too. With careful monitoring, management and informed decision-making, compliance can come with an advantage rather than a cost – paving the way for reduced fuel expenditure, more efficient energy use,
and a strong business instead of a purely environmental case to transition to more sustainable practices. Time will tell how effective the EU ETS proves to be. But with the right, informed strategy in place, it needn’t be something to be feared but rather welcomed – by shipping industry stakeholders as well as the rest of society.
Our e-Navigation and Performance experts don’t follow development, they steer it. NAVTOR is dedicated to being at the vanguard of the industry – working with partners throughout the globe to pinpoint the areas where e-Navigation can deliver the greatest benefits, then finding the solutions to unlock them. Sail to navtor.com to discover more. 6/2023 | Baltic Transport Journal | 33
Leveraging AI to optimize emissions and reduce carbon credit spending
Steering through the EU ETS by Aleksandar-Saša Milaković, Staff Engineer, and Kristofer Maanum, Senior Product Manager, Bearing AI The European Union Emissions Trading System (EU ETS), which has been in effect since 2005, will extend its scope to the maritime shipping industry starting in 2024, presenting unprecedented operational and financial challenges within the European Economic Area (EEA). By mandating every vessel of and above gross tonnage of 5,000 to purchase carbon offset credits proportional to their carbon emissions, the EU ETS is set to significantly increase costs for all voyages to, from, and within EEA ports.
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owever, amidst these challenges lies an opportunity for maritime shipping companies to gain a competitive edge. This can be achieved by leveraging artificial intelligence (AI) to efficiently predict and optimize vessel emissions – a datadriven approach that could significantly curb unnecessary EU ETS expenses. By harnessing precise AI-powered emission forecasts, shipping stakeholders can make informed decisions that balance operational efficiency, financial management, and environmental responsibility. Charting anew The EU ETS is the world’s first and largest carbon market, aimed at combating climate change through cost-effective emission reduction. The shippingincluded EU ETS will cover greenhouse gas (GHG) from GT 5,000 ≥ ships arriving into, within, and departing from EEA ports, regardless of the flag they fly. EU ETS will apply to 50% of emissions from voyages to or from a port in an EEA member state that starts or ends outside of the EEA (allowing the third country to decide on appropriate action for the remaining share of emissions) and 100% of 34 | Baltic Transport Journal | 6/2023
emissions that occur between two ports in EEA member states and within ports in EEA member states. Initially, the EU ETS will only cover carbon dioxide (CO2) emissions and, from 2026, methane and nitrous oxide. According to the European Commission, to ensure a smooth transition, shipping companies only have to surrender allowances for a portion of their emissions during an initial phase-in period: 40% and 70% reported in 2024 and 2025, respectively, up to all later on. Uncertainty managed strategically Purchasing carbon credits under the EU ETS will necessitate a new strategic approach to operations for maritime vessel owners and operators. These will be traded on the EU’s carbon market, where the price will be determined by supply and demand dynamics. Operators must keep a close eye on market fluctuations to optimize their purchasing decisions. A higher demand for credits will raise prices, potentially increasing operational costs for shipowners not proactively managing their emissions. To purchase these credits, operators must participate in auctions conducted by the European Energy Exchange or trade on secondary markets. The auctions will occur
throughout the year, allowing operators to purchase additional credits as needed. Operators must develop robust strategies to predict their emissions accurately and secure sufficient credits without overspending. This process will require not just an understanding of the carbon market but also a keen insight into their vessel operations, achievable with the aid of AI-powered emission prediction systems. Operators are required to track and report their emissions per the EU Monitoring, Reporting and Verification Regulation – but now they’ll be charged for what they emit. Therefore, the maritime shipping industry is tasked with determining how to accurately predict their emissions to ensure they’re making strategic financial and operational decisions (so as to not get a fine of €100/t of CO2-equivalent, corrected for inflation, and their names disclosed to the public, among others). The financial implications are equally significant. For instance, a cargo vessel sailing within the EEA from 2025 and beyond that emits 15,000 tonnes of CO2 and faces a carbon price of €83 per tonne would have to bear an added cost of €1,245,000 annually. For a shipping company operating ten such vessels, this would amount to an additional
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expense of €12.5m/year. If these vessels could reduce their emissions by a mere 10%, one would sail, so to say, EU ETS-free. On the flip side, the unforeseen costs can be significant if companies underpredict their annual carbon spending. Fundamentally, the EU ETS will change how maritime companies budget and plan for their operations. Companies will need to forecast their emissions and the associated costs accurately. They will also need to account for the potential volatility in the price of carbon credits, which can f luctuate based on market ups & downs. This introduces a degree of uncertainty that organizations will need to manage strategically. Compliance & commerce Complying with the EU ETS is mandatory for all relevant entities. However, deriving competitive advantages hinges on the astute navigation of its frameworks. For instance, shipping companies investing in AI technologies to optimize efficiency will have more competitive services. Using AI to predict their EU ETS obligation more precisely will result in better profit margins and more competitive quotations. Together, this provides a sharper competitive edge with significant financial impact. Taking into account different factors (such as weather conditions, vessel speed, cargo load, fuel type, and more), AI-driven models are able to generate prediction estimates that can be used to proactively adjust the ship’s speed or route to keep emissions within allowance limits and avoid costly
penalties. This approach not only helps reduce costs associated with compliance but also helps ensure that vessels are operating at optimal efficiency and with reduced environmental impact. Contract negotiations could also benefit from AI’s predictive capabilities. Better emission forecasts provide more accurate cost estimates, which can be used in contractual discussions. For example, a shipping company could use its AI-driven emission forecasts to negotiate fuel surcharge adjustments in its contracts, making them more competitive by offering more certainty and less risk to customers. The EU ETS marks a turning point for the maritime industry. It necessitates precise emission forecasting and strategic planning to navigate the associated costs effectively. However, it also opens the door to innovative approaches, leading to strategic advantages and improved sustainability. AI stands at the forefront of these approaches. With its predictive capabilities and optimization solutions, AI can transform the industry’s approach to emissions, offering significant cost savings, competitive advantages, and a path to more sustainable operations. We at Bearing want to get AI innovation on board the maritime shipping industry.
Our advanced AI platform powers accurate emission predictions and operational optimizations to help shipowners and operators navigate the new regulatory landscape. With Bearing AI, leading maritime companies will mitigate some of the financial impacts of the EU ETS and position themselves at the forefront of sustainable shipping practices. As the industry evolves, adopting such intelligent solutions will be vital to remaining competitive and achieving long-term sustainability goals. Green shipping: environmentally & economically Artificial intelligence’s predictive and optimization capabilities are potent tools to help companies weather the regulatory storm and thrive in the face of change. Organizations are already leveraging this by optimizing their decision-making under the International Maritime Organization’s recently implemented Carbon Intensity Index with Bearing AI emission management solutions. By harnessing AI’s potential, maritime companies can comply with the EU ETS effectively and, at the same time, take significant strides toward more sustainable operations.
Bearing is at the forefront of bringing AI to maritime shipping. This is a trillion dollar industry that moves 90% of the goods we interact with on a daily basis, but has traditionally lagged far behind other industries in adopting new technologies. At Bearing, we’re changing that. We’re building AI-enabled products that solve the shipping industry’s biggest pain points and we already have some of the world’s biggest shippers as our partners. Go to bearing.ai to learn more. 6/2023 | Baltic Transport Journal | 35
Will maritime operations cut emissions just in time?
Untapped potential – for all by Alexa Ivy In the vast expanse of the maritime industry, where operational complexities and environmental imperatives collide, the need for optimisation and collaboration has never been greater. It is vital that the sector adapts to the changing world and stops serving ships on a first-come-first-served basis. A recently launched PortXchange white paper, Untapped Potential of Just-In-Time Port Arrivals, uncovers the challenges plaguing the industry and unveils a transformative strategy for ports and shipping companies.
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n it, research demonstrates that the implementation of just-in-time (JIT) port arrivals has the potential to make a dramatic impact on emissions if adopted by the entire global fleet. An extensive seven-month investigation project that analysed 323 vessels in ten seaports (Los Angeles, Mobile, Miami, New York, Moín, Buenos Aires, Gothenburg, Valencia, Vado Ligure, and Tanger Med) revealed a potential saving of approximately 24,000 tonnes of CO2 and over six million US dollars in fuel costs, promising a minimum fuel cost saving of $1,000 (based on a bunker price of $815 per metric tonne). Port call data was acquired from analysis of vessel speed profiles 48 hours before port arrival through PortXchange Synchronizer. Emissions and fuel consumption were calculated for each vessel, employing the TNO model developed by the Netherlands Organisation for Applied Scientific Research, with calculations offering a comparative landscape between actual operations and an optimised JIT scenario. The quantitative implications outlined in the research are not just statistics; they are a snapshot of the global fleet’s potential and a call to action for the maritime industry to move from prospect to actualisation. The carbon credit equation In light of including much of shipping in the European Union Emissions Trading System (EU ETS), the carbon cost of carrying goods by sea cannot be seen in isolation from the broader financial implications. The white paper’s analysis expands the conversation from CO2 emissions and 36 | Baltic Transport Journal | 6/2023
fuel consumption to the critical metric of carbon credits, offering a nuanced understanding of the economic impact of JIT implementation within European voyages. The study concentrated on analysing the potential emission reduction through the implementation of JIT port arrivals for vessels sailing from different EU ports to Valencia, Vado Ligure, and Gothenburg. It identified a significant potential for CO2 savings of 885t, 359t, and 692t, respectively. With the prevailing carbon credit price at €87.87 during the study, these reductions translate to approximately €170k in potential savings on carbon credits for all vessels. Maersk, which dominated 37 of the 71 analysed port calls, provides another illustrative example. The company had the potential to curtail its CO2 emissions by 1,141t and bunker fuel by 358t. Had JIT port arrivals been applied during these port calls, the possible savings could have soared to €99,539 in carbon credits (i.e., for 2026 and beyond when the EU ETS will cover all of the shipping emissions vs 40% of 2024’s and 60% of 2025’s) and €231,784 in fuel costs, totalling €331,323 – or roughly €8,955 per port call. As such, there’s an escalating financial imperative to reduce carbon emissions, offering tangible savings for companies. In a specific instance, a vessel travelling from Genoa to Valencia received an updated planned time of arrival at the pilot boarding place 27 hours before reaching the port. Despite receiving a speed adjustment based on the new arrival time, the vessel maintained its initial speed, resulting in unnecessary fuel consumption and emissions – equivalent to 15.86t of fuel and 50.11t of CO2.
Had the JIT recommendation been heeded, a saving of approximately $12,925 in fuel costs would have been realised. Under the surface The crux of the PortXchange white paper lies in demonstrating the transformative power of JIT port arrivals and how their PortXchange Synchronizer technology can facilitate this operational shift by redefining the dynamics of vessel management at ports, consequently making substantial contributions to emission reduction. The researchers’ exploration of pressing industry trends makes the synthesis of complex technological solutions and market dynamics into an actionable strategy evident. The executive decision-making focus highlights that JIT port arrivals are not just a theoretical ideal but a practical pathway for C-level executives to master the evolving complexities of global shipping. The challenges facing the adoption of JIT port arrivals are not brushed aside; instead, they are dissected to underscore the urgency for collaborative action. Operational impediments, such as low visibility into terminal planning, communication gaps among port call participants, and data standardisation issues, are acknowledged as hurdles that demand industry-wide consensus. It is a rallying call for stakeholders to pivot towards data standardisation, eliminate silos, and embrace integrated solutions. The white paper also doesn’t shy away from the complexities of the global supply chain and the persistent congestion plaguing ports. Instead, it positions these challenges as opportunities for a multidimensional
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Photos: PortXchange
approach that combines technological advancements with stakeholder cooperation. JIT port arrivals, from a theoretical ideal, become a tangible, actionable strategy through this collaborative perspective. Port lens: bringing global emission targets into view The reality is that ports aren’t just logistic endpoints but the beating heart of global trade and a barometer of how world trade is fairing. These bustling sea-rail-road intersections are the ideal aggregates of critical data on emissions. Rather than pointing fingers at each other, maritime stakeholders would do well to place ports at the epicentre of emission data gathering to propel environmental change. Changing the role of ports from ‘transitional areas’ to ‘emission hubs’ central to CO2 reductions means tracking and analysing carbon footprints in and around the port so decision-makers can develop an actionable decarbonisation strategy. The white paper underscores the role of ports in achieving this, demonstrating how PortXchange EmissionInsider acts as a strategic partner on the journey to bring global emission targets into view. By harnessing the power of data, the maritime industry opens fresh avenues for cutting emissions and discovering new revenue streams, such as green energy solutions and sustainable shipping practices. The digital solution’s ability to measure vessel emissions
within port boundaries is not just a technical feature; it’s a tool for ports to develop actionable decarbonisation strategies. The pain points of ports, from the lack of frequent visibility into vessel emissions to the timeconsuming manual creation of inventories, find relief in EmissionInsider. It is not just about reducing emissions; it’s about providing ports with the means to swiftly make informed, data-driven decisions as needs change over the coming years. Although initially perceived as distinct in purpose, PortXchange Synchronizer and EmissionInsider are like two players reinforcing each others’ perks. The former aids in ensuring JIT arrivals, while the latter provides a visual representation of the environmental impact of optimised operations. The result is improved efficiency and sustainability – they represent the tangible outcomes of a strategic partnership that goes beyond the functionalities of individual solutions. The future beckons The white paper is not just an exposition of findings; it’s a call to embrace change. As the maritime industry stands at a crossroads, the roadmap laid out in the document is a guide for transformation.
The challenges outlined are not roadblocks but opportunities for innovation. The case studies, like the Genoa to Valencia (single $13k-saving!) voyage, serve as vivid illustrations of the consequences of not heeding JIT recommendations. In conclusion, PortXchange’s latest research is a comprehensive narrative. But it’s not the end; it’s the beginning of a journey towards a sustainable maritime future and one available to all (not only those with shoulders powerful enough to make a full zero-emission fuel switch). The call to action is clear – embrace sustainability, optimise operations, and steer towards a future where efficiency meets environmental responsibility. The journey is challenging, but the destination is a maritime industry that stands as a beacon for the future. In this scenario, PortXchange Synchronizer and EmissionInsider are not just aids but guiding lights in the transformative seas of change. The imperative is evident: it’s an appeal to embrace change and navigate the waters ahead with resilience and innovation. PortXchange Synchronizer and EmissionInsider aren’t just solutions but partners in shaping a new era of maritime excellence.
PortXchange strives towards a future where port calls are more predictable, efficient, and sustainable. Using digitalisation and collaborative data sharing through their PortXchange Synchronizer, they stand out as a beacon guiding the way forward and making the vision a reality. Navigate to port-xchange.com to discover more. 6/2023 | Baltic Transport Journal | 37
The passenger-bicycle ferry between Denmark and Germany wants to go green
Grassroots ferrying by Dagmar Trepins and Bengt van Beuningen, Nordic LOG PR Kontor Denmark has been a policy frontrunner in reducing greenhouse gas emissions, planning to slash its footprint by 70% (vs 1990 levels) by this decade’s end towards carbon neutrality in 2050. Among many other initiatives, the state has provided over €37 million in support of 14 new electric car ferry projects to that end (as diesel-driven ferries contribute up to one-fifth to the total CO2 emissions of small Danish municipalities). Consequently, several local authorities and ferrying companies showed interest in receiving up to 25% cost coverage for building new or green-retrofitting existing ferries. But there is also movement at the grassroots, including a seasonal bicycle ferry that has been connecting Denmark and Germany across the Flensburg Firth/Fjord (Baltic’s westernmost inlet) since 2019.
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ut before that idea materialised, Gerhard Jacobsen, Chairman and Head of the Friends of the Bicycle Ferry Association (Cykelfærgen’s Venner) and his supporters underwent an extensive evaluation. Only with great effort and dedication could the decision-makers of the responsible authorities of the two countries gradually be convinced of the courageous idea. Plans and concepts were repeatedly discussed and refined with local public agendas and tourism partners on both sides of the Fjord. A ship approved for ferry operation was sought and, to great joy, ultimately chartered. It took until 28 June 2019 for the service to kick off, operated by Rødsand, offering room for 12 people and 12 bicycles. It was a historic day: the last ferry connection across the Flensburg Firth (HolnisBrunsnæs) was discontinued in 1875. Then, 144 years later, the one-month test run went very successfully, with 1,600 tickets booked immediately via an online portal. Fast forward to the present time, and it can be said unabashedly that the concept grew its roots, having been received positively on both sides of the crossing. For tourists, the Fjord is a unique cultural and natural space that can be wonderfully discovered 38 | Baltic Transport Journal | 6/2023
by water, with or without a bicycle (dogs are welcomed, too!), as there is an attractive network of cycling and hiking paths on both ends of the Flensburg Firth. The service is up & running in the spring & summer according to a fixed timetable. The 2023 season beat the previous one, in which 6,000 tickets were sold. The great demand and growing interest led to the addition of a second ferry, Thjalfe (also 12/12 capacity), in June 2023. For the 2024 season, Rødsand will connect Egernsund with Flensburg via Sønderhav with three departures in both directions every Friday and Saturday between 28 June and 31 August. Thjalfe will sail from Egernsund via Brunsnæs to Langballigau and back – also offering three weekend round trips on 18 May-23 June and then all days of the week from 28 June to 8 September. Friend-ship for a greener future To travel between Denmark and Germany in a climate-friendly way, the Association is cooperating with the Centre for Maritime Studies at Flensburg University of Applied Sciences in Germany. As part of his bachelor’s thesis in the ship operation technology course, Jonathan Lehmbecker evaluated the possibilities of
converting the drive of Thjalfe. As a result of his investigations and calculations, a parallel hybrid was identified as the most promising technical drive solution for the 40-year-old vessel, with Thjalfe’s two propellers driven by additional electric motors. “The generation of the electrical energy required for the electric motors is then the decisive factor for the sustainability of the ship’s propulsion,” says Lehmbecker. This approach is a promising start, according to Dipl. Ing. Rasmus Brandt, who, on the university’s behalf, provides scientific support to the project. He explains, “Particularly for the owners of small ships, the selection and design of environmentally compatible propulsion systems is a challenge, as the infrastructure or personnel required for the work is often lacking in the shipping company. This is where the expertise of the university, with its strong maritime research background and excellently trained graduates, comes into play. This combination and the strong regional connection of both institutions are the reason for the success of our cooperation.” The focus is now on the design of the parallel hybrid drive. Jacobsen also underlines that the sound working relationship with the Flensburg University of Applied Sciences is crucial
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for greening Thjalfe. “Until now, ferries have traditionally been operated with diesel. We would very much like to use a more climate-friendly solution.” The ship’s owner, Captain Palle Heinrich, agrees yet cautions, “We are fundamentally open to converting to a parallel hybrid drive. Of course, financing is also important.” Given the substantial conversion cost, neither the Association nor the shipowner can afford the investment. As such, securing subsidies and sponsor support will be indispensable for the project to move on. We would like to take this opportunity to invite everybody to hop on the ferries and discover what the Danish and German sides of the Flensburg Firth have to offer (including “the legendary ox islands,” entices Destination Sønderjylland). We have a hunch you’ll become a friend of the Friends in less than it takes to cross the Fjord! 6/2023 | Baltic Transport Journal | 39
The whys and hows of making wind propulsion efficient and safe
Sure as the wind blows by Aude Leblanc, Technology Leader – Sustainable Shipping, Bureau Veritas Marine & Offshore A contemporary challenge, the drive to decarbonise shipping, has resurfaced a century-old idea: using wind to propel ships. From wings to sails and kites, we see a new generation of wind propulsion technologies emerge at an impressive pace. But to successfully incorporate those hyper-modern systems on board, we need a holistic approach that addresses their impacts on the vessel’s stability, structural integrity, and manoeuvrability.
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e are seeing a boom in the development of cutting-edge wind propulsion systems, with fixed & tiltable Flettner rotors, kites, suction sails, and rigid & soft wing sails all making global headlines in the past few years. The new age of sail has thus begun. This renewed enthusiasm for wind is powered by the need to curb greenhouse gas emissions from seaborne transportation. The International Maritime Organization has adopted a net-zero target for the middle of the century as part of its Revised Strategy that calls for emission reductions of “20%, striving for 30%” by 2030. In addition, the IMO’s Carbon Intensity Indicator and the European Union’s Emissions Trading System are increasing pressure on shipping to reduce its environmental footprint in the short term. In addition to turning to low- and zerocarbon fuels, many owners are contemplating wind propulsion, considered a strong contender for achieving significant emission reductions. As a result, technology adoption is progressing at speed. Today, about 30 large vessels of different types are equipped with wind propulsion systems, and the number of installations is set to surpass 50 in 2024, according to the International Windship Association. About 30,000 merchant ships are projected to use wind propulsion by mid-century. 40 | Baltic Transport Journal | 6/2023
Holistic approach But making these installations a reality comes with a series of design challenges. For naval architects and engineers, enabling a ship to harness wind power is far more complex than simply adding new equipment on board. Equipping a ship with a wind propulsion system inevitably impacts a wide range of design and operational aspects, from weight and structural strength to stability and manoeuvrability. Furthermore, each wind propulsion solution is designed for a specific set of conditions and limitations, dependent on the technology chosen as well as the characteristics of the ship itself and the routes where it is operated. These projects require a holistic approach, addressing the safety risks associated with wind propulsion systems, the management of operations in various environments, as well as the broader impact of the set-up on the ship’s structure and weight and how it will interact with other onboard systems. This is a prerequisite to seizing the enormous potential of wind propulsion to help decarbonise shipping while ensuring safety at all times. Safe innovation framework A critical technical consideration for any wind propulsion installation is ship stability. The heel induced by wind propulsion systems, as well as the impact of the
additional weight on the vessel’s load lines and tonnage, must be assessed thoroughly. This is essential because a ship’s stability profile may limit the conditions in which the wind propulsion system can be used, also varying relative to the ship’s type and unique characteristics. For instance, tankers and bulkers generally have sufficient stability margins; then again, using wind can be trickier for ferries, which tend to have a smaller stability reserve. Another challenge for installing wind systems is ensuring that any structure placed at the front of the ship won’t restrict visibility to comply with current regulations. This is generally easier to achieve for newbuilds, which offer the option of installing the bridge at the front. However, this doesn’t mean that retrofitted wind propulsion systems can’t be an interesting option for shipowners. The first step is to determine the number of systems that can be installed on the vessel whilst meeting visibility and stability requirements and to pinpoint the optimal locations to maximise deck space and ensure the best performance. The next step is to consider the integration of the system’s foundations with the ship’s hull, which may require structural modifications to reinforce the hull, including changes to the ship’s anchor and chains, stabilising elements, and steering and manoeuvrability equipment.
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Photos: Bureau Veritas
Photo: Zéphyr et Borée/Tom Van Oossanen
It is important to note that regulatory bodies, including IMO, have yet to produce industry-wide regulations and incorporate wind in relevant existing legislation. As specific criteria have not yet been developed for commercial vessels, compliance is assessed on a case-by-case basis. This is where classification rules, such as Bureau Veritas’ Rule Note for Wind Propulsion Systems (NR 206), play a critical role. As the key classification framework for wind-assisted propulsion, the NR 206 details requirements to ensure the safety of those systems on board, providing a framework for safe innovation. This is essential to support developers of wind propulsion technologies while giving shipowners confidence in these innovative solutions. From concept to reality A recent example of wind propulsion installation is Canopée, a freighter built to transport satellite launcher components from Europe to French Guyana. Jointly chartered by Zéphyr et Borée and Jifmar Offshore Services, the 120-meter ship has been equipped with four automated articulated vertical wing sails – each covering 363 m 2 and supported by a 30-meter mast. It is one of the first 21st -century merchant ships designed explicitly for wind propulsion and was also the first time that BV’s NR 206 was applied to a real-life newbuild vessel.
As the classification society responsible for Canopée, we supported the owner and shipyard through all steps of integrating the wind propulsion solution on the ship. In line with our Rule Note, we validated the vessel’s stability and the structural integration of the system on the ship’s hull. All key aspects (including stability, visibility, and structure) were addressed during the vessel’s design, leading to the landmark installation in August 2023. The success of the project demonstrates the importance of adopting an all-round approach when installing wind propulsion. BV is also involved in retrofit projects, including the upcoming installation of Bound4Blue suction sails on the ro-ro vessel Ville de Bordeaux, owned by the French shipowner Louis Dreyfus Armateurs. In addition to validating stability, BV’s role is to validate all the modifications that need to be made to the ship before the installation, including structural deck reinforcement and anchoring and mooring equipment. We will also verify the electrical balance
of the vessel, among others, the energy needed for the system’s automation and the electric supply required by the suction sails themselves. Going forward, as more wind propulsion systems are developed, a key area of focus will be to support sea trials, which are essential to ensure that these technologies operate as intended and safely – and performantly. Another priority will be to build knowledge across the maritime sector. Cross-industr y collaborations are already underway to share best practices and develop methods for transparent performance prediction. For example, the NORVENT project aims to carry out an inventory of the needs and approaches used to measure the performance of wind propulsion systems for ships, an essential step to harmonise assessment methods and give strong credibility to those results. This will help owners determine which technology will suit their fleets and operations and consider all design and operational aspects to harness the power of the wind successfully and safely.
Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the Group has 80,000 employees located in more than 1,600 offices and laboratories around the globe. Bureau Veritas helps its clients improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility. Visit marine-offshore.bureauveritas.com to discover more. 6/2023 | Baltic Transport Journal | 41
Accelerating the fuel transition in the Nordics
The (new) default option by Eirill Bachmann Mehammer, Senior Consultant Environment Advisory Maritime, DNV The Nordic Roadmap project, coordinated by DNV and funded by the Nordic Council of Ministers, is a collaboration that brings together key stakeholders from across the maritime value chain in the Nordic region. This project aims to reduce key barriers and establish a common guide for implementing the maritime fuel transition across the whole of Nordics. The project’s pilot studies of green shipping corridors will be critical in supporting the ultimate goal of achieving zero-emission shipping by 2050.
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he maritime industry faces a pressing need to address its environmental impact and transition towards more sustainable fuels. The International Maritime Organization (IMO) has recently set more ambitious decarbonization targets for international shipping, including achieving net-zero emissions by mid-century. Furthermore, the Nordic countries have committed to accelerating the transition, among others, by signing the Declaration on Zero Emission Shipping by 2050 and the Clydebank Declaration for Green Shipping Corridors during the 2021 United Nations Climate Change Conference in Glasgow. These commitments are the background for establishing the Nordic Fuel Transition Roadmap, a strategic document that seeks to position the Nordics as the world’s most sustainable and integrated maritime region by 2030. Building on the accomplishments DNV has played a pivotal role in the initial phase of the fuel transition, having coordinated the Norwegian Green Shipping Programme (GSP) since 2015. The GSP’s success is exemplified by realising several zero-emission routes in Norway (now known as green shipping 42 | Baltic Transport Journal | 6/2023
corridors), such as Yara Birkeland and ASKO’s electrified ‘sea drones’ in the Oslofjord. Additionally, DNV has been involved in electrifying the ferry network in Norway, where more than 70 batteryelectric ships are now operating. Building on the GSP’s accomplishments, DNV manages the Nordic Roadmap project, which has already delivered ten technical reports where green shipping corridors and safety and regulatory aspects of future fuels have been an essential focus. The publications have been produced in collaboration with contributing partners from the Chalmers University of Technology, the IVL Swedish Environmental Research Institute, MAN Energy Solutions, Menon Economics, and Litehauz. The project also draws on the input and experience of around 50 supporting partners. The remainder of the project period focuses on strengthening the Nordic collaboration platform, finalising the Nordic Fuel Transition Roadmap, and carrying out green shipping corridor pilot studies. No way forward without collaboration & safety Achieving challenging decarbonization goals requires cooperation from a range of stakeholders, and the Nordic collaboration
platform has been established to facilitate knowledge-sharing and create cross-value chain dialogue, helping to build green business cases. Numerous authorities, shipowners, ports, energy suppliers, research organizations, banks and manufacturers are already part of the collaboration platform, and the project aims to bring more partners on board. Ultimately, engagement across the value chain will enhance the success of both the Nordic Fuel Transition Roadmap and the pilot studies. Safety is also a prerequisite for the successful and timely introduction of zeroemission fuels. The Nordic Roadmap project has assessed the safety aspects of ammonia, hydrogen and methanol as marine fuels, examining their unique properties and consequences for safety and operability. Draft proposals have already been prepared to accelerate the ongoing IMO guideline development process for the safe use of ammonia. Developing international regulations by IMO is key to enabling the safe implementation of zero-emission fuels and making the approval process more efficient. Apart from the obvious risks to persons directly involved, any accident around new ship fuels would severely setback the industry’s confidence in these alternatives.
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Photo: Canva
First-mover region Once relevant partners are engaged and key technical and safety aspects addressed, the Nordic Roadmap project aims to create a strategic document – the Nordic Fuel Transition Roadmap – which will chart the way forward and propose specific goals and actions for the decarbonization of shipping in the Nordics. This strategic action plan will draw on technical knowledge, practical experience from pilot studies, and inputs from governments and industry partners to set a course towards the primary goal of zero-emission Nordic shipping by 2050. The document will highlight actions that must be taken to overcome the main barriers and make the Nordics a first-mover region for the decarbonization of shipping. Meanwhile, the Nordic Roadmap project has identified three major obstacles hindering the transition to zero-emission fuels. First, there is the lack of demand for green transport and the high cost of future fuels; second, the low fuel availability and lack of bunkering infrastructure; and third, the technical immaturity and lack of specific safety regulations. Green shipping corridors can overcome these barriers by creating a demand for a particular fuel, securing offtake commitments, and encouraging supply-side investment and relevant infrastructure development. This is a classic ‘chicken and egg’ problem for the demand and supply of
zero-emission fuels. A lack of offtake commitments hinders investment in alternative fuels, while a shortage of fuels creates higher pricing and discourages buyers. Green shipping corridors can help to solve this for a specific route by getting partners to sit around the same table and discuss the business case. Moreover, critical for realising green shipping corridors will be finding ways to share risks and close the significant cost gap between zero-emission and conventional fuels. Governments and other public authorities can play a crucial role here. Designing financial support for narrowing the spread is essential in making the transition financially viable for first movers. Therefore, the public sector’s involvement can be instrumental in the uptake of new zero-emission technologies in shipping. Regional spark that ignites a global transition The Nordic Roadmap project has identified 81 potential green shipping corridors and shortlisted six promising routes in the Nordics. In the next step, three pilot studies focusing on hydrogen,
ammonia and methanol will be carried out to establish partnerships, assess the techno-economic feasibility of potential green shipping corridors, and identify critical bottlenecks. Success in these pilot studies can lead to the realization of several green shipping corridors, eventually creating an environment where these fuels and the vessels that use them are the default option, with fossil fuels being a thing of the past. The knowledge base generated by the Nordic Roadmap project is freely available and intended to aid the development of green shipping corridors worldwide. The project is also considering potential corridors going out of the Nordic region, for example, to North-Western Europe and other parts of the Baltic. These green shipping corridors are hoped to kick-start the fuel transition and further scale to green shipping networks or areas and, hopefully, a global uptake of zero-emission fuels. The 2020s have been deemed the decisive decade for shipping to achieve decarbonization ambitions, and the Nordic Roadmap project is helping the maritime industry to map the best course.
DNV is the world’s leading classification society and a recognized advisor for the maritime industry. We enhance safety, quality, energy efficiency and environmental performance of the global shipping industry – across all vessel types and offshore structures. We invest heavily in research and development to find solutions, together with the industry, that address strategic, operational, or regulatory challenges. Visit dnv.com/maritime for more information. 6/2023 | Baltic Transport Journal | 43
How to make hydrogen an easy-to-adapt and close-at-hand marine fuel
Preparing for revolution by Robert Haugen, Managing Director, Hexagon Purus Maritime The global shipping industry, responsible for approximately 3% of total greenhouse gas (GHG) emissions, faces a crucial turning point. Clean fuels must be adopted at scale to achieve the International Maritime Organization’s net-zero GHG target by the middle of the century. To that end, zero or nearzero GHG emission technologies, fuels and/or energy sources must represent at least 5% (striving for 10%) of the energy used by international shipping by 2030.
V
arious clean fuels – including ammonia, methanol, bio- and synthetic fuels, hydrogen, and battery electric technology – present viable options, each with unique advantages and challenges. High-energy clean fuels (such as ammonia, methanol, or synthetic) are essential for long-distance shipping. Challenges persist, with toxicity, handling and storage issues for ammonia, and availability and infrastructure for other options. Battery electric technology is suitable for short-sea shipping and waterway operations, where vessels (e.g., ferries, inland or coastal cargo, supply and service, fish farming) have predictable routes and frequent access to charging infrastructure (including the night recharging option). Due to their low energy density, batteries are unsuitable for longrange voyages: one would need a battery pack the size of a 20-foot container to carry a megawatt-hour in energy storage. Then again, the same container full of compressed hydrogen would produce 7.5MWh. Hydrogen as a fuel offers exciting decarbonization potential for the maritime segment in the long term because the storage volume is so significant. The addressable market for compressed hydrogen on board vessels is expected to approach around €430m by 2030 (a March 2021 study by the Global Maritime Forum highlighted hydrogen’s prominence, with nearly half of initiatives aimed at achieving zero emissions in global maritime shipping focusing on hydrogen as a low-carbon fuel source). The sweet spot for hydrogen is where batteries alone aren’t suitable. Hydrogen fuel cells present a clean and efficient alternative to traditional diesel 44 | Baltic Transport Journal | 6/2023
engines. The first hydrogen-fuelled ferry, Hydra, operating in Norway, showcases the viability of hydrogen in maritime transport, emphasizing the importance of public and private collaboration. How the magic happens Hydrogen fuel cells generate electricity through an electrochemical reaction between hydrogen and oxygen. The electricity produced can then power the vessel’s propulsion system, lights, and other electrical components. A few key elements are needed to incorporate hydrogen fuel cells on a ship. Firstly, a storage system, typically highpressure tanks or cryogenic storage. Secondly, a fuel cell stack – which is where the magic happens! – that contains multiple individual fuel cells that convert the stored hydrogen into electricity. Finally, to ensure a smooth operation, a power management system is needed to regulate the flow of electricity between the fuel cells and the vessel electrical systems, optimizing energy usage and ensuring a steady power supply. Hydrogen fuel cells produce electricity with only water and heat as byproducts. Every kilogram of hydrogen fuel produces about nine kilograms of water at 50-60°C. This warm water can be utilized, e.g., on a passenger ship as a heat-up in the ventilation system, increasing the overall efficiency of the setup. Educating for the future Ship designs are evolving to incorporate hydrogen storage tanks and fuel cell systems to facilitate the integration of hydrogen as a marine fuel. Material compatibility, safety
measures, and adaptations to meet safety and operational requirements are pivotal for making hydrogen a viable and efficient fuel source in the maritime industry. Also, overcoming barriers to widespread adoption necessitates international regulatory standards, maritime safety codes, financial incentives, standardized technologies, and training programs for the next generation of mariners. Hexagon Purus Maritime is playing its part here, with an order for a hydrogen fuel storage system incorporating type 4 hydrogen cylinders to Hvide Sande Shipyard in Denmark. Hexagon Purus Maritime’s hydrogen fuel storage system will be used on board Skulebas, a training ship owned by Vestland County in Norway and operated by a technical college in Maaløy to educate the country’s future seafarers. While some shipowners express concerns about retrofitting to hydrogen, the process can be relatively straightforward during major inspections, occurring every five years. Even partial adoption of zero-emission modes, making it possible, e.g., to turn off auxiliary engines in port waters, aligns with evolving seaport emission targets and noise pollution concerns. Hydrogen goes north Collaborative efforts among governments, industry stakeholders, and regulatory bodies are essential to create a supportive framework for hydrogen integration. Despite challenges, positive developments are emerging, with national strategies from countries like France, Germany, and Norway outlining the use of hydrogen for maritime mobility. EU initiatives, such as REpowerEU and the Alternative
SUSTAINABILITY
Photos: Hexagon Purus Maritime
Fuel Infrastructure Regulation, coupled with substantial investments in the hydrogen sector, underscore the commitment to a cleaner maritime future. Norway, where Hexagon Purus Maritime is headquartered, is supporting several new green hydrogen projects for maritime use, such as the Hellesylt Hydrogen Hub project in Geirangerfjord (a UNESCO World Heritage fjord with a zero-emission requirement from 2026). In Norway, there are many ships sailing predefined cargo routes continually up the country’s coast, such as boats transporting consumables for aquaculture or vessels serving oil & gas platforms. These are the ideal test cast for hydrogen as a marine fuel. As such, Hexagon Purus Maritime will deliver a hydrogen fuel storage system with type 4 hydrogen cylinders to Moen Marin, the world’s largest supplier of working boats to the aquaculture industry. The system will be used for fuel storage aboard a zero-emission working ship in Norway. Already a development partner in Moen Marin’s Pilot-E zero-emission work boat program, Hexagon Purus Maritime will continue working on the development and testing, with final system delivery scheduled for 2024.
The Netherlands is also establishing several hydrogen-fuelled inland shipping projects. Condor H2 brings more than 40 partners together to enable emission-free inland and near-shore shipping using an innovative system of hydrogen ‘tanktainers.’ The project is part of RH2INE (short for Rhine Hydrogen Integration Network of Excellence), a cooperation between ports, regional governments, and other players active across the Rhine corridor. BalticSeaH2, another project worthy of spotlighting, intends to create the largest cross-border hydrogen valley in Europe, focusing in the first place on connecting Finland and Estonia to foster energy selfsufficiency and minimize industrial carbon emissions. Results from the so-called main valley will be replicated in other project regions (the consortium counts 40 partners from the Baltic Sea). Hexagon Purus, at the forefront of this evolving ecosystem, emphasizes a holistic
approach to zero-emission maritime solutions. The company’s early involvement in initiatives and commitment to showcasing hydrogen’s potential, position it as a key player in the anticipated growth of the hydrogen maritime sector post-2030. The promise As the shipping sector prepares to utilize hydrogen as a fuel and ports, together with bunkering companies, prepare to cater to that demand, supply becomes crucial. Hexagon Purus, aligning its maritime and distribution businesses, plays a vital role in providing comprehensive solutions, including onboard fuel storage systems and distribution modules for quick fuelling. With a collaborative effort, evolving technologies, and strategic initiatives, a hydrogen revolution can be realized, promising a cleaner, greener, and more efficient future for maritime transport.
Hexagon Purus is at the forefront of developing innovative hydrogen storage solutions with lightweight composite tanks that are ideal for maritime applications. With our systems solutions for distribution and onboard hydrogen fuel systems, we can together with partners cover major parts of the maritime hydrogen value chain. Go to hexagonpurus.com/markets/maritime to learn more. 6/2023 | Baltic Transport Journal | 45
Robust value chains are critical to decarbonization and the energy transition
Beyond the horizon by Panos Koutsourakis, VP, Global Sustainability, ABS The maritime industry is heading towards a technological revolution driven by decarbonization. Powered by improved collaboration and propelled by developments in clean energy, digitalization and applied research, this future will offer greater sustainability and much higher efficiency. The latest update to the Low Carbon Outlook sees ABS explore how broad efforts to reduce emissions can help navigate towards a net zero shipping industry.
T
he rev ised Internationa l Maritime Organization (IMO) Greenhouse Gas (GHG) Strategy (IMO GHG Strategy) indicates a time of transition for the marine industry, with a focus on sustainability and efficiency. Rather than simply adapting to the green energy transition, the maritime sector also actively influences it.
The shipping, ports and logistics businesses are propelling the global shift towards sustainable energy solutions by transporting its critical elements: carbon, ammonia and hydrogen. These and other issues are examined in detail in the newest release of our Low Carbon Outlook, this time going under the title Beyond the Horizon: View of the Emerging Energy Value Chains – which focuses on the
impact of decarbonization in a global context and examines the solutions by sector. Heads up: challenges! The transition to greener technologies will require substantial investment. New safety measures will need to evolve, especially when considering the characteristics of the alternative fuels being currently
Fig. Fuel mix (heavy fuel equivalent)1
Oil Based
LNG
LPG
Methanol
Ammonia/Hydrogen
Oil Based 2022
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
Ship types included: oil & chemical tankers, dry bulk carriers, container ships, LPG, LNG, car carriers, general cargo, ro-ro, ro-pax, and cruise ships typesOutlook. included: oil and chemical dry bulk carriers, containerships, LPG, LNG, car carriers, general Source: ABS’*Ship Low Carbon Beyond the Horizon: Viewtankers, of the Emerging Energy Value Chains (2023) 1
cargo, ro/ro, ro/pax, and cruse ships. 46 | Baltic Transport Journal | 6/2023
2050
SUSTAINABILITY considered by the marine industry. For example, ammonia, one of the alternative fuels under scrutiny nowadays, has unique handling and storage requirements. One of the critical components of the global decarbonization challenge is the evolution of the energy industry, which will support the creation of an alternative, low-carbon fuel supply chain. The Outlook comprehensively analyses the current energy sector and highlights the upcoming challenges and possibilities. Not unsurprisingly, we find the global energy market at a crossroads. With energy consumption rising to meet greater consumer demand and a pressing need to simultaneously reduce carbon footprints, a definitive shift toward renewable and low-carbon energy sources is required. ABS carried out extensive research in support of the updated publication to evaluate the potential effects of using alternative, low-carbon fuels in the shipping industry. Based on this extensive research and the most current information from Q3 2023, we looked at different scenarios up to 2050 and their effect on the forecasted fuel mix. Another layer of complexity in the equation is the current geopolitical events that will likely impact the future fuel mix.
Whereas these have had a distortive impact on mature energy markets, their ability to impact a transitioning energy market is disproportionally smaller.
In the following years, IMO has developed and put into effect a number of new regulatory measures by working with other bodies that set regulations. These policies aimed to reduce GHG emissions from maritime activities while promoting the development of advanced fuels and technologies that could further reduce the sector’s footprint. The 2023 IMO GHG Strategy reaffirmed IMO’s commitment to accelerating the reduction of GHG emissions from maritime operations and established the ambitious net-zero goal by or around 2050. As revised at the IMO’s 80th meeting of the Marine Environment Protection Committee, this strategy will lead to significant changes in the maritime industry. Vessels will need to switch from traditional fuels to greener alternatives, which might involve engine upgrades and the development of new fueling infrastructure. Improved energy efficiency measures, such as better hull designs and operational changes like optimized routing, will be essential. Additionally, vessels may need to be equipped with real-time emission monitoring and reporting systems (and in the EU, they certainly will have to do so in order to find themselves within the block’s Emission
The regulatory backdrop The 2016 Paris Climate Agreement was a historic point in global environmental policy. With nearly 200 nations ratifying it, almost all of the world has collectively pledged to address the growing risk of climate change by reducing anthropogenic GHG emissions. The Agreement established a specific target: limit the rise in world average temperatures to below +2°C above pre-industrial levels, with an aspirational goal of +1.5°C. The ways to achieve this goal, however, were open to interpretation and change. The International Maritime Organization took an important step in this direction in 2018 when it introduced the IMO GHG Strategy. It reaffirmed the maritime industry’s commitment to significantly lowering its carbon footprint during the 21st century. This step not only indicated increased regulatory ambition but also emphasized the need to improve the efficiency of global transport services, which are essential for modern commerce and trade.
Overview of the
Carbon Value Chain
Direct Air Capture 2 CO
C Ca arb pt on ure
COAll In d So2 Emi ustr urc ssi ies es ons Co m Liq pre ue ssi fac on tio an n d
O2 LC
CO 2
So ur ce s
O2 LC S tor ag e n o i t c e j In
CO an 2 C d ap St tu or re ag e
O2 LC
LC O
2
LC O
2
Sto rag e
CS OC on
b th ar em) wi rd C yst ip boa re S Sh (OnCaptu
Yield Boosting
O2 LC
Heat Transfer Fluid Other
Tr an sp or t
CO2 CO2
Sto rag e
Building Materials
Solvent
D US IREC AG T E
Fuel and Chemicals
IN DI RE CT
ea n bs tio Su stra e qu Se
Inj ec tio n
St o Utrag iliz e a at nd io n
l Oi d ce ry n ha ve En eco R
6/2023 | Baltic Transport Journal | 47
SUSTAINABILITY supportive role in the majority of decarbonization projects. For example, onboard carbon capture, while still in its early stages of development, has the potential to transform the way the maritime industry manages carbon emissions. The carbon value chain – which includes core elements like the capture, utilization, storage and transportation of (liquefied) carbon dioxide – is an integrated step for carbon emissions management, from source to potential utilization or sequestration. The maritime industry can support carbon capture activities worldwide by providing safe and efficient transportation, thereby assisting in efforts to reach a carbon-neutral future. Ships built to transport liquid carbon as cargo are emerging as an essential link in the carbon value chain. These vessels help to ensure that liquid carbon is transported safely and efficiently from capture sites to utilization (e.g., in e-methanol as marine fuel production) or storage facilities. Understanding and improving the carbon value chain will become increasingly vital as the global economy steps up its efforts to combat climate change. The maritime industry, which accounts for a substantial portion of international
Trading System), which will require crew training for effective implementation and compliance. Older ships may also see challenges with retrofitting, thus potentially putting them at a commercial disadvantage. However, new, more efficient and compliant ships might see an increase in market value. Emission reduction The transportation of carbon, ammonia, and hydrogen as cargo highlights the maritime industry’s significance in bridging the gaps between production, storage and consumption in the global energy landscape. As the maritime sector looks ahead and dives deeper into the complexities of these three value chains, it becomes clear that shipping is more than a spectator in the global green energy revolution. Instead, it serves as a critical facilitator and enabler. While intriguing, the research into alternative fuels and their development in volumes required by the shipping industry presents its own set of obstacles in terms of supply, cost, infrastructure and safety. Concurrently, energy efficiency technologies (EETs) provide a practical and realistic pathway to improve ship operational efficiency and thus reduce carbon footprint. As a result, EETs are expected to play a broadly
trade, will be at the centre of making this value chain a reality. New fuels Investments in liquefied natural (bio)gas, ammonia and methanol dual-fuel vessels continue to grow quickly, prompting industry discussion and debate around which alternative fuels can be produced and provided at the necessary scale and affordable prices. For the latest Low Carbon Outlook, ABS re-examined the supply and demand data for alternative fuels and updated the future fuel mix to reflect the latest market information. In addition, the study looked at how the recent adoption of the revised IMO decarbonization strategy and the 2050 net-zero targets affect the projected future fuel mix. By combining the derived ship demand with a forecast for a changing fuel mix in deep-sea shipping, the scenarios for worldwide energy consumption are translated into global fuel consumption by ship type. With the updated findings, ABS sees that by the year 2050, demand for fossil fuels has the potential to be marginally lower than what was estimated in the previous edition of the Low Carbon Outlook, once again underlining the need for carbon capture technologies.
Overview of the
Ammonia Value Chain (N Foss atu il ral Fue Ga l s)
AI R
CO
2
l ue as) lF ssi al G Fo atur (N
Air
Se Un para tio it n
So lar
Ele ctr oly sis
AM BL MO UE NI A
H2
Ca rb on Ca pt ure
N2
Am mo nia Ca rri mo er n
W ind
r we Po ic ctr Ele
ne tha Me ing am form Ste Re
H2
Am
ia
WA TE R
3 NH
H2 AM GRE MO EN NI A
Ca
er
NH
NH
3
mo
NH
3
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Co Fir al-A ed mm Bo on ile ia r
NH Fu el Ce ll
3
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nia mo age AmStor Am
en og e dr ag Hy Stor
NH trial Us
3
Ge Po ne we rat r ion
48 | Baltic Transport Journal | 6/2023
rri
A Cr mm ac on kin ia g
Ga Amm s T on urb ia ine
Ag ric ult ure
Ma rin eF ue ls
Fe rti liz er
es
al tri ion us rat Indfrige Re
or urs rec lP ca i em Ch
SUSTAINABILITY Overview of the
Hydrogen Value Chain
Fe Ener ed gy sto & ck
GY ER N W ind E
So lar
CK TO S ED Co al FE Na tur al
Oi l
Ga s
il /O NG Ste am
Re for mi ng
al Co ss/ ma o i B
O
2
sis oly Am ctr Ele mo nia Pro du cti on
H2
Me tha no lP rod uc tio 2 n
t hif sS Ga
& ure pt Ca on b r Ca
e rag Sto
CH3OH
Green H2 Methon
Blue H2 Hy
dr
al
Ca
rri
mo
nia
Ca
CH
er
3
rri
og
3
NH
OH
3
3
en
Ca
rri
er
M Sto etha rag nol e
H
Hy Sto dro rag gen e
nia mo Am
H
2
Co ge ne rat ion
l no tha Me
A Stommo rag nia e
NH
er
CH
2
en og dr Hy
Tra ns po rta tio n
NH3
CO
Am
2
ter Wa
Hy Pa dro ck ge ing n
2
N
2
on Sy ati nG fic as Gasi +C O
2
2
Gr ee nH Blu 2 eH
Bio ma ss
Sy nG as +C O
H
r we Po
H
Ge oth erm al
ProHydr du oge cti n on
Un Hyd r p Sto ack oge rag ing n e &
En dUs ers
He ati ng
Ge Po ne we rat r ion
OH Mo bil ity
Tra ns po rta tio n
Ind us try
With solid potential as a green fuel, ammonia represents a twofold opportunity for the maritime industry. While it can be used as an alternative bunker fuel, it must also be transported as cargo. As countries and industries investigate ammonia-based energy solutions, the maritime industry is at the forefront, ensuring regional supply. Ammonia will play a major role in the wider energy matrix because of its ability to store and transmit energy effectively, as well as its carbon-free emissions. As the world deals with energy storage and transportation challenges, ammonia’s position as an energy carrier has become increasingly important, providing a sustainable answer to some of our biggest energy challenges. The importance of the ammonia value chain in the global green transition cannot be overstated. As the world works to reduce its carbon impact, ammonia stands out as a potentially viable fuel option and critical cargo. Commonly referred to as a long-term fuel option, hydrogen will continue to grow as a key component in the worldwide endeavour to build a sustainable energy landscape. Its importance in the transportation industry, as a commodity and likewise a potential (marine) fuel, will increase in step with mounting energy
transition pressures and tightening emission limits. The maritime industry’s acceptance of hydrogen represents a bold step towards a more sustainable future. More than tackling its own carbon impact, shipping’s embrace of the hydrogen value chain positions it as a vital actor in the global green energy revolution. Transportation of hydrogen, particularly its green version derived from renewable sources, is critical to creating a worldwide hydrogen economy. With its huge network and experience, the maritime industry is primed to be a cornerstone of this initiative. The future As the maritime industry – and shipping in particular – navigates the challenges of the energy transformation, investing in cutting-edge solutions that can significantly lower the carbon footprint of its operations will be critical. This involves adopting alternative fuels, EETs and novel solutions such as onboard carbon capture systems.
This transition to greener technologies will require significant investment and will incur initial expenses that change the dynamic of shipping’s commercial relationships. But in the long term, shipping operations will benefit not just from lower emissions but also from reduced fuel use and simplified regulatory compliance. Considering the characteristics of the alternative fuels being investigated by the maritime industry, it is also clear that safety procedures and protocols, as well as seafarer training, will also need to evolve. Despite the challenges, the maritime industry remains dedicated to decarbonization and supporting the broader energy transition. The investments already being made in energy efficiency technologies, new fuels and smarter operational strategies – as well as evaluations of carbon capture and other new technologies – illustrate the direction of travel. With the support of research, analysis and data produced by classification societies such as ABS, shipping’s journey towards net zero will continue.
Founded in 1862, ABS is a global leader in providing classification services for marine and offshore assets. Our mission is to serve the public interest as well as the needs of our members and clients by promoting the security of life and property and preserving the natural environment. ABS’ commitment to safety, reliability and efficiency is ever-present. Visit ww2.eagle.org to learn more. 6/2023 | Baltic Transport Journal | 49
Key takeaways from the Global Maritime Decarbonisation Survey and Voyaging Toward a Greener Future report
Straight from the ship’s mouth by Ewa Kochańska The Global Centre for Maritime Decarbonisation and Boston Consulting Group conducted the Global Maritime Decarbonisation Survey earlier this year to reveal trends and the current state of decarbonisation in the maritime sector. The findings underline that while ambitions are high, investments are steadily increasing, and decarbonisation is a top priority for most stakeholders, the progress could be more consistent, and the greening efforts need a more holistic approach across the board. The report offers a clearer understanding of the industry’s decarbonising progress and helps in designing targeted interventions for more effective emission reduction.
T
he survey included 128 shipowners and operators who collectively run 14,000 merchant vessels and generate around 500 billion US dollars in yearly revenue. The GCMD and BCG report Voyaging Toward a Greener Future analyses the survey results, offering policymakers and industry players guidance in developing targeted interventions to accelerate maritime decarbonisation. The proposed strategy involves collaborative efforts, innovative financing, awareness-building, infrastructure development, and cost-sharing mechanisms to drive widespread adoption of decarbonisation solutions. Inescapable reality – the uphill road to net zero The shipping industry is one of the main pillars of the world economy, accommodating 90% of global trade by transporting 11 billion tonnes of goods annually – 1.5t per person worldwide. Nonetheless, shipping is also responsible for around 3% of global greenhouse gas emissions. Recognising that negative environmental impact, the International Maritime Organization (IMO) has set 50 | Baltic Transport Journal | 6/2023
ambitious decarbonisation targets for the sector, aiming for net-zero emissions by 2050. Subsequently, IMO has introduced initiatives such as the Energy Efficient Existing Ship Index and Carbon Intensity Indicator. At the same time, the European Union targets the uptake of renewable fuels of non-biological origin via its FuelEU Maritime Regulation, and it will have included much of shipping (vessels ≥ 5,000 of gross tonnage) in its Emissions Trading System by 2024. However, the complexity of the shipping industry in terms of geography, company & f leet size, investment capabilities, and more, poses challenges, requiring a concerted effort to overcome obstacles. The report says that shipowners and operators need a broad-ranging strategy covering critical elements (including a strategic plan, operational & technological efficiency, fuel transition, and shipboard carbon capture, SBCC) to reduce sector-wide carbon emissions. Undoubtedly, the maritime industry is at a crucial stage in addressing carbon emissions, with a significant number of shipowners recognising the imperative to reduce their footprint. Most (73%)
consider achieving net-zero operations a strategic priority, and 77% have established specific decarbonisation goals (with 54% aiming for net zero). Additionally, 87% of respondents have personnel dedicated to green initiatives, 55% have specialised sustainability teams, 27% have developed clear decarbonisation roadmaps, and on average, companies invest 2% of their revenues in green initiatives. Yes, but… Despite the good intentions, the increased awareness of environmental responsibility does not necessarily translate into adopting decarbonisation measures. Operational efficiency levers that cause minimal disruptions, such as weather routing and slow steaming, have high adoption; on the flip side, measures requiring collaboration, like cold ironing and just-in-time operations, see the opposite result. In the area of technological efficiency, established options like advanced hull coatings and engine improvements are widely adopted. In contrast, the industry does not embrace emerging technologies like super-light ships, wind propulsion, and air lubrication.
SUSTAINABILITY Exhibit 1 – Six critical elements needed to decarbonize shipping
Strategy & roadmap
Operational efficiency levers
Technological s efficiency levers
Zero- or low-carbon fuelss
Shipboard carbon capture
Enablers
(e.g., green investments, talent, internal carbon prices, digitalization)
Exhibit 2 - Strong industry participation with good representation across segments Exhibit 2 – Strong industry participation with good representation across segments Primary vessel type2
Fleet size2
Revenue1
Geography (HQ location3)
% of respondents
> 1B
30%
500M to 1B
18%
100 to 500M
20%
> 100
50 to 100
20 to 50 10 to 100M
24%
< 10M
10%
< 20
>$500 Billion
Cumulative revenue
26%
26%
24%
25%
Other vessel types4
22%
Mixed fleets5
12%
Container
12%
Bulk carrier
13%
Bulk carrier & tanker
14%
Tanker
America
10%
Middle East
10%
Asia Pacific
36%
Europe
45%
27%
>14,000
Cumulative vessels
N=123, 2 N=125, 3 N=128 Other vessel types include fleets with a majority of vessels that are not containers, bulk carriers and tankers, e.g., ferries, cruises, Ro-Ro 5 Mixed fleets comprise a mix of containers, bulk carriers and tankers 1 4
6/2023 | Baltic Transport Journal | 51
SUSTAINABILITY likely remain so, while usage of drop-in fuels – like biofuels – is hindered by high cost and insufficient availability; extensive commercial implementation of SBCC is anticipated in the next five to ten years, dependent on comprehensive solutions for effective CO2 capture and storage. The survey has found that at this time, only 27% of maritime stakeholders possess a decarbonisation roadmap,
Efficiency measures can help reduce emissions in the short term, but achieving net zero requires a shift away from high-carbon fuels or the implementation of SBCC. Despite optimism about future fuels, such as methanol and ammonia, widespread adoption faces challenges such as limited supply and lack of proper infrastructure. Transitioning to green fuels has already been slow and will most
and just 17% have implemented internal carbon pricing. These figures could very well change; 60% of respondents say they are developing decarbonisation roadmaps, and 62% may employ internal carbon pricing. Furthermore, about 75% of respondents express intentions to boost investments in green initiatives in the next five years and about 25% plan to increase such spending by over 30%.
Decarbonization targets
Sustainability teams
Decarbonization roadmap
Importance 56% 31% 13% of net zero
Decarbonization 56% 22% 13% targets
Sustainability 75% 22% teams
Decarbonization 50% 50% roadmap
15%56%58% 31%27% 13%
11% 32%56% 15% 17% 25% 22% 13%
55% 11% 75% 34%22%
25% 50%
19% 42% 58% 15%
11% 19% 19% 32% 23% 17%30% 25% 15%
42% 55%
14% 25%
% of respondents1
Importance of net zero
Frontrunners % of respondents1
Exhibit 4 – Frontrunners have set up dedicated sustainability teams and developed decarbonization roadmaps to realize their green agenda
Followers Frontrunners
Conservatives Followers
39% 27%
Have net zero and intermediate targets 19% 23% 30% 19% Have net zero targets
Critical / essential to our strategy 39% 19% 42% High priority
Conservatives
Medium / low priority
Have intermediate targets
Critical / essential to our strategy
Setting targets within Have net zero and the year intermediate targets
High priority
Do notnet have plans to Have zero targets set targets Have intermediate targets
N=128 Medium / low priority Note: Values less than 10% are not shown in this exhibit
1
N=128 Note: Values less than 10% are not shown in this exhibit
1
Setting targets within the year Do not have plans to set targets
37% 21% 34% 11%
64%50%11%
63% 64%
23% 11%
Have roadmap in place 14% 63% 23% Developing roadmap now
Have dedicated sustainability 42% 37% 21% Do not have sustainability teams but have individuals focused on specific initiatives Have dedicated sustainability Do not have sustainability teams Do not have sustainability teams but have individuals focused on specific initiatives
Do not have plans Have roadmap in to develop roadmap place Developing roadmap now Do not have plans to develop roadmap
Do not have sustainability teams
Exhibit 5 – Frontrunners are willing to invest more to decarbonize their fleets
Frontrunners
Max CAPEX for efficiency retrofits2
Payback period3
Premium willing to pay for fuels4
Internal carbon price5
(% of revenue)
($M per vessel)
(years)
(%)
(% of respondents)
Green 4% 1 investments
Max CAPEX for $7M retrofits2 efficiency
Payback 5.6 3yrs period
Premium willing 27% to pay for fuels4
Internal carbon 41% 44% 16% 5 price
(% of revenue)
($M per vessel)
(years)
(%)
(% of respondents)
2%
Followers Frontrunners
Conservatives Followers
Conservatives
1
Green investments1
4%
4
17% 27%
77% 6% 41% 44%
19% 17%
16% 6%
1%
$4M
4.8 yrs
19%
Have set an internal carbon price 56% 28% 16% Planning to set in the next 2-3 years
5
56% 77%
17% 16%
4.8 yrs 4.4 yrs
N=84, N=68, N=84, N=116, N=128 3
4.4 yrs 5.6 yrs
$4M $3M
N=84, 2 N=68, 3 N=84, 4 N=116, 5 N=128
2
$7M
1% 2%
52 | Baltic Transport Journal | 6/2023 1
$3M
28% 17%
Do not have plans to Have set an internal set an internal carbon carbon price price Planning to set in the next 2-3 years Do not have plans to set an internal carbon price
SUSTAINABILITY Pace makes the race The report put survey respondents into three groups – Frontrunners, Followers, and
Conservatives – based on adoption levels of the operational and technological measures – to account for the diversity of business
types and geography in the shipping sector. The first group exhibits the highest commitment to decarbonisation, allocating
Technological efficiency levers % of respondents1
Frontrunners
Advanced hull coating
84%
Propeller improvements
78%
Main engine improvements
75%
Reduced auxiliary power demand
69%
Hydrodynamic design
63%
Optimization of water flow around hull
63%
Waste heat recovery
59%
13% 16%
29%
34%
12%
94%
58%
19%
16%
19% 13%
Super light ships
19%
38%
35%
13%
13%
31%
Solar panels
16% 13% 13%
47%
Wind power
16%
56%
11%
64%
13%
13% 16%
22%
Adopted at scale / adopted and planning on scaling
10% 21% 10%
72%
Air lubrication
Conservatives
Followers
13%
12%
Planning to adopt in the next 3 years
15%
12% 10% 29%
40%
12%
15%
37%
33%
54%
16% 21%
14%
26%
30%
19% 14%
26%
14%
12% 12%
35%
37%
16%
33%
42%
12%
25%
28%
23%
23%
69%
21%
21%
14% 14%
25%
Adopted but not scaling
12% 28%
23%
65%
63%
23%
28%
40%
37%
53%
12%
23%
Do not have plans to adopt in the next 3 years
21%
26%
40%
37%
51%
30%
53%
30%
Not sure
N=128 Note: Values less than 10% are not shown in this exhibit
1
6/2023 | Baltic Transport Journal | 53
SUSTAINABILITY substantial resources to emission reduction and prioritising the path to net-zero operations. With clear targets and roadmaps, they are well-positioned to meet their goals, supported by dedicated sustainability teams and investment of 4% of total revenue in green initiatives. Frontrunners are willing to invest further in retrofitting vessels and green fuels, and 41% consider carbon pricing when making decisions. Their progress
faces challenges mainly relating to technological and supply-side issues. Followers acknowledge the importance of decarbonisation but prioritise solutions offering immediate value. With 73% considering net zero a priority, they have shorter investment horizons and allocate half of the revenues that Frontrunners do to green initiatives. Followers are willing to spend up to $3m/vessel for retrofits,
opting for mature and cost-effective solutions over emerging ones. Lastly, Conservatives recognise the need to reduce emissions but lag in adopting decarbonisation solutions. With 61% prioritising achieving net-zero emissions, 42% identifying a target, and only 14% coming up with specific roadmaps, they allocate fewer resources (1% of revenues) in this area, have limited implementation capabilities, and are
Exhibit 8 - Frontrunners and Followers face technology-related challenges;
Exhibit 8 – Frontrunners and Followers face challenges; Conservatives struggle Conservatives struggle with lack oftechnology-related awareness and capabilities with lack of awareness and capabilities
Exhib amon
Top challenges for adopting efficiency levers % of respondents that selected option as top challenge1
Frontrunners
Followers
Conservatives
% adopte
100
Available solutions insufficiently mature
37%
38%
Unclear & large performance variance
19%
22%
22%
19%
50
Poor business case
16%
Solutions incompatible with vessels
9%
Others
9%
14%
15%
5%
4%
0
Lack of awareness of available solutions
10%
26%
6%
1
Limited capabilities to implement solutions
1
19%
8%
Exhibit 9 - Need to build familiarity and capabilities to accelerate adoption among Conservatives
N=127
Exhibit 9 – Need to build familiarity and capabilities to accelerate adoption among Conservatives Frontrunners
Followers
Conservatives
% adopted1
% adopted1
% adopted1
100
100
100
50
50
50
0
50 % familiar1
100
0
50 % familiar1
Each green dot represents an established efficiency lever 1
N=128
54 | Baltic Transport Journal | 6/2023
100
0
50 % familiar1
Each red dot represents an emerging efficiency lever
100
N=128
SUSTAINABILITY unfamiliar with many existing solutions. to higher environmental expectations solutions for maritime decarbonisation. When comparing the three groups, from end customers. Then again, there The survey reveals operational methods a higher proportion of Frontrunners is is variability within each segment, e.g., are favoured due to lower costs and quicker present among shipowners and operators Conservatives can be found in the large implementation, while complex technowith larger f leets. Given the increased container segment and Frontrunners in logical levers face slower adoption. Factors attention from the industry and clients, small bulk carrier and tanker tonnage. influencing technology take-up include these companies have the motivation to cost, retrofitting ease, and advancement pursue environmentally friendly prac- Options not entirely on the table level. Cheaper and easier-to-integrate techtices. Furthermore, many container ship Shipowners and operators prioritise nologies, like improved hull coatings, are operatorsExhibit are Frontrunners, possiblydifferences due operationalin efficiency over technological morearchetypes prevalent, while with advanced measures 10 - Clear fuel outlook between
Exhibit 10 - Clear differences in fuel outlook archetypes with Frontrunners planning to adopt future fuels between as early as 2026
Exhibit 10 – Clear differences in fuel outlook between archetypes with Frontrunners planning to Frontrunners planning to adopt future fuels as early as 2026 adopt future fuels as early 2026 Long-term potential of as each fuel Long-term potential of each fuel Frontrunners
Followers
Conservatives
Frontrunners
Followers
Conservatives
% of respondents1 % of respondents1 13%
13%
13% 41%
13% 25%
41%
65%
Methanol
Ammonia
Biofuels
30%
21%
65%
59%
44%
30%
23% 21%
10%
59%
44%
Biofuels
10% 16%
25%
10%
11%
23%
16%
55%
55%
55%
55%
Biofuels
Methanol
11% 26% 26%
23%
16% 10%
23%
16% 23%
33%
26%
12% 12% 28% 28% 23%
23%
33%
26%
23%
51%
37%
36%
37%
51%
36%
37%
Ammonia
Biofuels
37%
Methanol
Ammonia
Methanol Ammonia High & very high potential
Biofuels Methanol Moderate potential
Ammonia Low potential
Biofuels Methanol Ammonia No potential / not sure
High & very high potential
Moderate potential
Low potential
No potential / not sure
N=128 Note: Values less than 10% are not shown in this exhibit 1 N=128 Note: Values less than 10% are not shown in this exhibit 1
Current and planned adoption of each fuel Current and planned adoption of each fuel Frontrunners
Followers
Conservatives
Frontrunners 1
Followers
Conservatives
% of respondents
% of respondents1 41% 41% 19% 19% 34%
26%
27%
26%
27%
40%
43%
29%
42%
43%
29% 12%
13% 19%
30% 30%
38% 38%
23% 12%
19%
23%
19%
35% 68%
35%
68%
28% 28%
13% 13%
10%
10% 43%
10% 63%
43%
33% 33% 13%
10%
63%
23%
13%
23% 25%
15% 13%
25%
Biofuels
13% Methanol
Ammonia
Biofuels
Methanol
Ammonia
13% Biofuels
Methanol
15% Ammonia
Biofuels 2024
Methanol 2026
Ammonia 2029
Biofuels 2025
Methanol 2030
Ammonia 2030
Biofuels 2028
Methanol 2030
Ammonia 2030
2024
2026
2029
2025
2030
2030
2028
2030
2030
Already adopted Already adopted
Have plans to adopt with clear timeline Have plans to adopt with clear timeline
N=124 Note: Values less than 10% are not shown in this exhibit 1 N=124 Note: Values less than 10% are not shown in this exhibit 1
40%
33%
42%
19%
34%
33%
Have plans to adopt but no timeline Have plans to adopt but no timeline
Do not have plans to adopt Do not have plans to adopt
Not sure Not sure
XXX: Median year of planned adoption XXX: Median year of planned adoption
6/2023 | Baltic Transport Journal | 55
SUSTAINABILITY Exhibit 11 – Supply availability and economic viability are the biggest challenges for future fuel adoption Top challenge for adopting future fuels (by 2030) % of respondents that selected option as top challenge1
Frontrunners
Limited bunkering infra or supply of fuels
38%
Not economically viable / limited incentives
13%
Significant CAPEX investment
13%
Tech readiness of engines
13%
Safety considerations
13%
Others
13%
1
Followers
Conservatives
15%
19%
35%
36%
13%
21%
21%
14%
13%
9%
2%
2%
N=128
Exhibit 12 - Near-term economics likely to be challenging for future Exhibit 12 – cost-sharing Near-term economics likely to be challenging for future fuels, cost-sharing and fuels, and cost-equalization mechanisms critical cost-equalization mechanisms critical
Perceived effectiveness of market-based measures in accelerating future fuel adoption
Price (2030) of future fuels versus LSFO and implicit carbon tax needed Ammonia LSFO
Green
Blue
Methanol Green
% of respondents1
Bio
9%
22% 41-64 Estimated price of fuel (2030) ($/GJ)
29-43
30%
7% 28%
22-40
22-36
53%
8-13
36%
49%
350-540
Carbon tax needed to equalize cost of future fuels & LSFO ($/tCO2e)
220-320
170-290
160-320
25%
25%
Frontrunners
Followers
16%
Conservatives
Not at all effective / slightly effective Moderately effective Effective Extremely effective
N=128 Note: Ammonia and Methanol prices may vary significantly; range is determined by electrolyzer CAPEX, electrolyzer efficiency, natural gas price, source of carbon capture (bio vs point source vs DAC), carbon capture cost, LCOE, geography and macroeconomic landscape Source: Maersk Mc-Kinney Moller Center, Yara Clean Ammonia, Methanol Institute, JP Morgan, IMO, BCG analysis
1
56 | Baltic Transport Journal | 6/2023
SUSTAINABILITY such as hydrodynamic design face challenges. Emerging technologies like wind propulsion and air lubrication have low adoption due to uncertainty about investment return, and others like super-light shipbuilding materials and solar panels are still being developed. Frontrunners are leading in both operational and technological efficiency, investing heavily in green initiatives and experimenting with nascent solutions. However, even they face challenges due to solution immaturity. Followers stay behind Frontrunners and invest less in green initiatives, preferring immediate and certain value. Increasing confidence, creative financing, and data-sharing initiatives would help address these challenges. Conservatives have lower adoption levels even for mature efficiency levers, lacking awareness, dedicated teams, and green investments. The report recommends increasing familiarity with efficiency measures, providing contextualised solutions, and implementing awareness-raising efforts to accelerate efficiency in the lagging group. Generally, there is a need for increased investment in technological development, technical pilots, and a holistic approach to address adoptionlimiting gaps in the entire sector. De-risking In terms of transitioning to zero- or low-carbon marine fuels, the report highlights methanol and ammonia. The former
is more accessible in terms of adoption (because of its ease of handling and only minor adjustments to existing processes required), while the latter, although potentially cheaper for zero-carbon emissions, poses challenges such as extreme temperature in storage, toxicity, and delayed availability of ammonia-ready engines. Methanol production, however, involves challenges related to the availability and cost of biogenic or captured CO2 . Upon surveying the three groups about switching to methanol, ammonia, or biofuels, Frontrunners show higher confidence in ammonia’s longterm potential, as they are familiar with the fuel and can manage its challenges; Followers are partial to biofuels, which they view as “de-risked” at this point; and regarding ammonia, both Followers and Conservatives show caution compared to biofuels and methanol. The main challenges in adopting future fuels include bunkering infrastructure and supply availability, with 38% of Frontrunners considering it the top obstacle. Followers and Conservatives, for their part, express concerns about the economic feasibility and incentives for green fuels. Additionally, the supply chain and port infrastructure for fuels like ammonia require immediate investment, and both ammonia and methanol have lower energy density than traditional bunker, reducing ship operating ranges. Survey results also show a preference for more frequent bunkering,
necessitating extensive infrastructure development. The report states that lowering premiums on green fuels is crucial for adoption, as estimates suggest green ammonia and methanol could cost significantly more than fossil fuels by 2030. Vessel age was named by nearly all survey respondents as a critical challenge for retrofitting, with older ships unlikely to adopt future fuels – that could mean over 60% of the f leet. Market-based measures, much higher carbon prices, and sharing costs among stakeholders are some solutions highlighted in the report. Consequently, drop-in fuels (not requiring engine modification), especially sustainably sourced biofuels, are popular among those surveyed. By 2030, 35% of biofuel production is expected to be from second- and third-generation feedstocks (i.e., those not from edible sources). Challenges to biofuel uptake include limited supply, high emissions from firstgeneration feedstocks, and competition with aviation for feedstocks. Therefore, collaboration among fuel providers and ports is particularly important for securing a biofuel supply. Economic viability is also a significant challenge for biofuels, but they are considered more cost-effective than alternatives like low-carbon methanol or ammonia. Additionally, biofuels’ environmental impact depends on factors such as the type of feedstock used (animal vs plant vs waste) and transportation distance; therefore, transparency in
Exhibit 15 - Shipboard carbon capture (SBCC) seen as an important solution by most, with Frontrunners to pilot by 2025 Exhibit 15 – Shipboard carbon capture (SBCC) seenlooking as an important solution by most, with Frontrunners looking to pilot by 2025
Frontrunners
Followers
Conservatives
Importance of SBCC in green transition
Inclusion of SBCC in decarbonization strategy
% of respondents1
% of respondents2
23%
20%
24%
39%
35%
40%
35%
3%
73%
39%
6%
37%
63%
26%
10%
40%
60%
Approach to SBCC adoption
27%
Extremely important
Part of overall strategy
Important
Not part of overall strategy
50% plan to start SBCC pilots as early as 2025
Only plan to adopt when commercially available (respondents estimate to be ~2030)
Slightly / moderately important Not at all important 1
N=124, 2 N=123
6/2023 | Baltic Transport Journal | 57
SUSTAINABILITY Exhibit 16 - External pressures likely needed to drive adoption of shipboard Exhibitcarbon 16 – External pressures likelyConservatives needed to drive adoption of shipboard carbon capture amongst capture amongst Conservatives
Top drivers for adopting shipboard carbon capture % of respondents that selected option as top driver1
Frontrunners
Solution performance
17%
Ease of retrofit
13%
Others
13%
Regulatory compliance
16%
12%
More Frontrunners view this as the biggest enabler (vs. Conservatives)
17%
5%
12%
12%
18%
10%
14%
7%
3%
17%
20%
20%
Availability of supporting infrastructure
1
Conservatives
27%
Solution cost
Adoption by peers in the market
Followers
10%
26%
14%
More Conservatives view this as the biggest enabler (vs. Frontrunners)
N=123
well-to-wake biofuel emissions is vital to provide a comprehensive understanding and enable informed decision-making in the industry. Catching the big carbon The survey also found that SBCC could be pivotal in decarbonising the shipping industry. Positioned as a transitional solution alongside fossil fuels, SBCC aims to prevent CO2 emissions and potentially result in a negative footprint, offering an additional income source through proper carbon pricing. Despite being in the early stages, SBCC is undergoing industry pilots, adapting land-based carbon capture technologies for maritime use with solvent-based technologies, particularly amines, showing promise. However, the effectiveness of amine-based systems on ships depends on factors such as exhaust cleanliness, waste heat availability, energy for liquefaction, and storage space for liquefied CO2. Exhaust cleanliness is crucial for operational costs, and vessels using alternative fuels may offer synergies for CO2 liquefaction. Yet, amine-based SBCC systems can increase costs because they need more heat. Furthermore, storing liquefied CO2 requires special tanks, raising SBCC installation and maintenance expenses. 58 | Baltic Transport Journal | 6/2023
Challenges also include reduced cargo space and the absence of guidelines for offloading captured CO2, necessitating port infrastructure development. Therefore, a comprehensive study on offloading liquefied CO2 from various vessels and a careful examination of existing policies is needed. Regarding adoption, Frontrunners plan to trial and adopt SBCC solutions relatively soon (piloting by 2025), while Followers and Conservatives plan adoption only when this technology is commercially available. Key adoption factors include solution performance, cost, and supporting infrastructure availability. For Conservatives, in particular, regulatory compliance and peer adoption are crucial drivers for overcoming hesitations about SBCC adoption. Five steps to future The report suggests a few key actions to decarbonise the maritime sector. First, it recommends conducting technical pilots and facilitating data sharing for more nascent levers. Frontrunners should collaborate with solution providers in technical pilots addressing the entire value chain, while industry-wide data sharing, especially from these trials, could offer invaluable insights. Second, there’s a need to create innovative financing mechanisms to de-risk
the adoption of less mature levers, such as ‘pay-as-you-save’ models, to shift upfront capital expenses to operational ones. Here again, collaboration among stakeholders will be crucial for tailored financing arrangements. Third, supporting Conservatives to raise awareness, contextualise levers, and build capabilities is underscored. Classification societies and industry bodies could be instrumental in providing awareness and proper interpretation of future solutions. Fourth, the report calls for building future fuel infrastructure and ensuring supply at ports to accommodate all groups (but mainly catering to Frontrunners who plan methanol and ammonia adoption by 2026 and 2029, respectively). Also, catalytic funding is critical for port infrastructure and greenfuel production installations. Lastly, the report suggests developing mechanisms to share and equalise costs of adoption across the ecosystem by addressing green premiums through carbon pricing and strategies like buyers clubs committing to higher prices for green fuels. Additionally, transparency regarding emissions per cargo unit could encourage customers to share decarbonisation costs.
Plans for 2024 and climate strategies discussed in Stockholm by Monika Rogo, Communications Department, BPO During a stationary session in the capital of Sweden, the Baltic Ports Organization’s (BPO) Board gathered on 28 November 2023. The topics discussed included the 2024 activity plan as well as climate port strategies and investments.
Photo: Ports of Stockholm
M
agda lena Bosson a nd Staffan Forsell, the Ports of Stockholm’s CEO and Chief Strategy and Development Officer, spoke about the Swedish capital as a leader in Europe’s climate transition and the role of its harbours in that process. Among the five EU missions with a deadline for implementation by 2030, the 100 climate-neutral and smart cities by 2030 one was particularly mentioned. Regarding the Board-approved BPO Work Plan 2024, the Organization will conduct, among others, several key events: a conference on offshore wind 60 | Baltic Transport Journal | 6/2023
energy during Transport Week in Gdynia, the Ports 4.0 Conference in Riga, the annual Baltic Ports Conference in Klaipėda, and the BPO Climate Conference in Tallinn. The Stockholm assembly also touched upon green energy, alternative fuels and climate issues, with a particular focus on onshore power supply (OPS) and its specific challenges, such as financing, lack of standardisation, and other barriers to wider uptake. The meeting saw an exchange of views on the situation in the ports, especially the impact of the recent economic and environmental aspects. The BPO Board also approved the budget for the following year.
Bogdan Ołdakowski, BPO’s Secretary General, said, “The Organization has very recently adopted the BPO Ystad Climate Declaration. Our activities will focus on climate strategies, investments and also challenges when meeting climate goals. During the meeting, we learned how the City of Stockholm and the port, being a part of the municipality, is aiming to achieve climate neutrality in 2030. We have also discussed investments in OPS installations in ports, which are obligatory for passenger and container vessels by 2030. The discussion proved that such investments are costly and complex issues involving many stakeholders in the port ecosystem.”
Climate News by BPO by Monika Rogo, Communications Department, BPO One of the most essential points of the Baltic Ports Organization’s (BPO) mission and upcoming plans is a strategic approach to climate issues. In September of 2023, the Organization signed the BPO Ystad Climate Declaration, expressing the willingness of the regional ports to combat climate change through best efforts to reduce greenhouse gas (GHG) emissions from port activities. The Declaration also underscores the need for cooperation with multiple stakeholders, within and beyond the maritime community, if tangible progress is to be achieved.
Photo: Canva
A
t the same time, the Signatories would like to emphasise the need for a practical and rational approach, combined with transparent dialogue between the transport industry and policymakers as key for making a carbon-neutral Europe a reality. The goals must be achievable, with clearly outlined targets, and the required financial and legislative support must be provided. As a follow-up, BPO has lately welcomed climate-related news in its communication, which addresses current environmental issues and pro-ecological activities across the Baltic Sea region. In dedicated newsletters, the following topics were covered thus far: Fit for 55 for ports and maritime transport, the State of the Baltic Sea 2023 report, and green corridors in the Baltic Sea.
The Fit for 55 package sets the EU’s policies in line with the commitment expressed in the European Green Deal to reduce its net GHG emissions by at least 55% by 2030 (vs 1990 levels) and to achieve climate neutrality by mid-century. The European Commission creates appropriate regulations for each primary economic sector to meet these goals. The newsletter collected the latest and most important legislation regarding maritime transport and ports: the FuelEU Maritime and Alternative Fuels Infrastructure Regulations and the EU Emission Trading System. At the end of October 2023, the Baltic Marine Environment Protection Commission (HELCOM) published The State of the Baltic Sea 2023 report, according to which the Baltic Sea is facing increasing challenges due to climate change and biodiversity loss. What is worrying is that little to no improvement in
the Baltic Sea environment occurred during the 2016-21 assessment period. Critical pressures on the Baltic Sea ecosystem include eutrophication, pollution from hazardous substances, land use and overfishing, and more. On the bright side, when implemented, countermeasures do work. Green shipping corridors link ports that support, among many, the transition to zeroemission fuels, one of the greatest promises to accelerate maritime decarbonisation. Three such initiatives were included in the latest newsletter: the Vaasa-Umeå, HelsinkiTallinn, and Vuosaari-Muuga crossings, plus the European Green Corridors Network (a co-lab between the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and the Baltic seaports of Gdynia, Rønne and Tallinn, with the support of those in Hamburg and Rotterdam).
BALTIC PORTS ORGANIZATION • Secretariat Office – Actia Forum Ltd. ul. Pułaskiego 8, 81-368 Gdynia, POLAND, ph.: +48 58 627 24 67, fax: +48 58 627 24 27, e-mail: bpo.office@actiaforum.pl, bpo.sg@actiaforum.pl, www.bpoports.com 6/2023 | Baltic Transport Journal | 61
Ethical AI in terminal operations
Navigating new waters by Dr. Jörg Herbers, CEO, and Dr.-Ing. habil. Eva Savelsberg, SVP Terminal and Distribution Center Logistics, INFORM In the rapidly evolving world of terminal operations, the integration of artificial intelligence (AI) is not just a futuristic concept but a present reality. AI’s transformative impact on the maritime sector is profound, reshaping the traditional paradigms of operations and setting new efficiency and innovation standards. However, this powerful technology also raises ethical questions to which INFORM has found its own answers.
A
t INFORM, we’re actively engaged in the evolving use of AI and optimization in maritime terminals. Our suite of solutions demonstrates our commitment to using AI to enhance teamwork and operational efficiency. Still, at the same time – in this era of rapid AI advancements – we see ethical considerations as paramount as well. In this article, we’ll dive deep into the current and future implications of AI in terminal operations. We’ll also explore the latest trends, real-world applications, and – crucially – the vital role of ethical AI in shaping a sustainable and efficient future for the maritime industry. As we step into 2024, we believe that next year and beyond, we will see several cross-industry developments and technological advances that can potentially change our lives. For one, we see a trend towards more natural user experiences in AI interactions, stepping away from traditional screencentric interfaces. This shift aims for AI’s seamless integration into daily operations, making complex software more accessible and intuitive. AI is becoming a core element across industries. We anticipate generative AI to emerge as a vital co-pilot in various platforms, enhancing functionality and user interaction. The future will be collaborative and assistive, integrating AI into mainstream products and optimizing processes. Of course, AI also continues to be a pivotal force in shaping maritime terminal operations. From facilitation to empowerment This revolution dates back to the early 1990s with the emergence of terminal operating systems (TOS), the initial step 62 | Baltic Transport Journal | 6/2023
towards digitizing terminal operations, focusing on process adherence, communication, and coordination. But as the industry evolved, so did the need for more advanced tools. The real game-changer has been the integration of an advanced intelligence layer behind the TOS, leveraging algorithmic-based decision-making. This leap from mere facilitation to empowerment is where the true essence of AI’s role in terminal operations lies. As an add-on to existing investments in IT and software infrastructure (including a TOS), AI-based optimization modules support and/or automate decision-making within a terminal to assist in reaching operational goals and excelling at moving containers profitably. AI applications are, to give a few examples of proven use cases, enhancing storage efficiency by optimizing container yard space utilization. This reduces the need for moving items repeatedly, ensuring peak performance in storage management. By minimizing travel and equipment interference and maximizing movement strategies like double-cycling, AI is significantly improving the productivity of crane operations in various modes of operation. It is also used to maximize the efficiency of all types of horizontal transport equipment, as AI-based decision-making reduces travel distances and lowers maintenance costs. There are also examples of artificial decision intelligence in rail applications, such as when AI tools are employed to plan outbound trainloads efficiently. These enhance slot utilization and align closely with business objectives, demonstrating AI’s proficiency in complex logistical planning. Naturally, optimized scheduling
can also help augment the productivity of rail cranes and yard vehicles. It offers realtime optimization, adapting dynamically to operational changes. Additionally, machine learning is being leveraged to improve data accuracy for decision-making processes, among others, for predicting container dwell times (i.e., the period the container is expected to be stored in the yard) and completion times for container handling tasks. This use of machine learning exemplifies how AI can boost the precision and efficiency of operations in terminal environments. As early as 2018, INFORM was conducting a machine learning assessment, which would later result in the implementation of a machine learning solution in 2020 at HHLA Container Terminal Burchardkai in the Port of Hamburg. This use case aimed to reduce container rehandling for import boxes at terminals. INFORM’s AI solution predicts the dwell time and the outbound mode of transport (e.g., rail, truck, vessel) – both of which are crucial criteria for selecting an optimized container storage location within the yard that avoids unnecessary rehandles. Guide to responsible AI Unfortunately, as AI’s capabilities advance, so does its potential for misuse, calling for heightened vigilance and a robust ethical framework to govern its applications. The proliferation of generative AI tools has, for example, inadvertently fueled a surge in phishing attacks, as evidenced by the dramatic rise in incidents following the availability of ChatGPT. Recent news about unauthorized deepfakes of well-known people in advertising
TECHNOLOGY that we, as solution providers, have already imposed on ourselves with our Responsible AI Guidelines published in September 2023. These set forth best practices, standards, and protocols, reflecting a comprehensive approach to AI that prioritizes societal needs and individual rights. Beneficial AI: INFORM’s approach to AI prioritizes societal and user benefits, actively mitigating risks such as bias and misinformation. This principle ensures that AI systems enrich operations while avoiding negative impacts. Human-centric AI: AI is designed to support human decision-making, not replace it. A human-centric approach emphasizes AI’s role as an enhancer of human capabilities, upholding human responsibility and judgement in critical operations. Aligned AI: AI solutions must be aligned with human and business values. We must strive for AI systems that are clear and comprehensible, providing a solid foundation for trustworthy operations. Privacy-preserving AI: adhering to the standards of the European Union’s General Data Protection Regulation and achieving ISO 27001 certifications, we prioritize data privacy and security. AI solutions must be designed to protect sensitive information, ensuring top-tier security. Reliable AI: consistency, quality, and transparency are the hallmarks of trustworthy AI applications, especially in vital sectors. Safe AI: safety is a critical aspect of AI algorithms. The development process must involve rigorous testing and validation to ensure that AI systems are secure and free from potential threats.
Photo: Canva
also illustrates the growing ethical concerns surrounding malicious AI utilization. Developments such as the recently passed EU AI Act, US President Biden’s Executive Order on AI, and the G7’s Hiroshima Process demonstrate the imminent implementation of regulatory frameworks. We believe these developments can be seen as positive if taken responsibly. Moreover, we assume responsible AI conduct is a precondition for adopting AI for successful use cases. Driven by our deep-rooted values and our over 50-year legacy in optimizing business processes through advanced technology like AI, we want to maximize
AI’s potential while minimizing its risks. We would therefore like to propose an approach for the responsible design, development, and application of AI systems
Shifting the paradigm – ethically Integrating AI in terminal operations is not just a technological advancement but a paradigm shift that redefines efficiency, innovation, and ethical responsibility in the maritime industry. As we look to the future, the industry must continue prioritizing ethical considerations, ensuring that AI remains a force for good, driving progress while safeguarding values and principles.
INFORM develops software to optimize business processes using artificial intelligence (AI) and advanced mathematics of operations research. The company, founded in 1969 and headquartered in Aachen, promotes sustainable value creation in various industries through optimized decision-making. Its solutions are tailored to specific industry requirements and help over 1,000 customers worldwide operate more resiliently and sustainably with greater success. INFORM’s systems serve a range of industries, including aviation, automotive, financial institutions, logistics, manufacturing, transportation, telecommunications, and wholesale. The company is committed to ethical AI practices, sustainable customer relations and is increasingly focusing on cloud-based solutions. Visit inform-software.com to learn more. 6/2023 | Baltic Transport Journal | 63
How all vessels can cut their emissions thanks to air lubrication
Floating on air by Alistair Mackenzie, Chief Commercial Officer, Silverstream Technologies The Silverstream® System is an air lubrication technology that harnesses fluid dynamics to reduce the frictional resistance between the hull and the water, cutting average net fuel consumption and greenhouse gas emissions by 5-10%. All shipping segments can take advantage of the system, which is effective in all sea states and suitable for retrofit installations and newly built vessels. Orders for our solution grew in 2023, with proven system performance and collaboration playing an important role. Looking ahead, we see data and digitalisation as key to the broad evolution of clean technology.
F
rom lower fuel costs to superior Poseidon Principles-aligned funding, many factors drive clean technology adoption. Evolving industry regulations – such as the European Union’s Emissions Trading System and its FuelEU Maritime Regulation, along with the International Maritime Organization’s (IMO) Carbon Intensity Indicator – are only set to become more impactful in 2024 and beyond. Long story short, they are all expected to improve the commercial rationale for adopting fuel efficiency measures at the vessel and fleet levels. At Silverstream, we have already seen an uptick in system orders in the past few years. As of December 2023, there are 183 vessels contracted to have the Silverstream® System installed across all shipping segments, with 54 in-service (our customers include, amongst other prominent industry names, Carnival, MSC, Maersk, Grimaldi, Shell, Vale, Knutsen, and ADNOC L&S). Of these, 33 are LNG carriers (LNGCs), including 13 that are already operational. Off the back of our growing order book, we were also featured in the 2023 edition of FT 1000, a ranking recognising the top 1,000 companies in Europe based on revenue growth between 2018 and 2021. Its latest instalment placed Silverstream as the 64 | Baltic Transport Journal | 6/2023
fourth fastest-growing company in Europe and the third in the UK. Flat bottoms, spiky gains The LNGC segment has been, in particular, putting its commercial weight behind clean technology and the Silverstream® System specifically. Most recently, in August 2023, we announced receiving ten orders for LNGC installations. Six of the undisclosed orders are for retrofit projects taking place between 2023 and 2025, and four are for newbuilds to be delivered in 2026-27. Meanwhile, in January 2023, we signed an agreement with the CSSC Jiangnan Shipyard Group to supply the Silverstream® System for six 175,000 m3 LNGCs, forming part of the newbuild LNGC programme being constructed for the Abu Dhabi National Oil Company. We also signed an agreement with China Merchants Energy Shipping in January 2023 to install the Silverstream® System on four 175k m 3 LNGCs built by the Dalian Shipbuilding Industry Company (DSIC). The installations will take place over two years, with work expected to be completed by the end of 2024 per DSIC’s building schedule. Our system is well-suited to the LNGC segment as these vessels have a large flat bottom that maximises our technology’s
friction-reducing capabilities. The system reduces average fuel consumption and emissions for LNGCs by 7-10% net, which typically equates to saving one megawatt of net power. The system can also help to reduce LNG boil-off and increase delivered cargo volume or cut fuel consumption and associated emissions, depending on the operator’s commercial and sustainability priorities. This is because air lubrication can enable vessels to travel at higher speeds for the same fuel consumption or cut bunker (hence emissions) without sacrificing speed. According to research based on recent Clarksons data, the global LNGC fleet will exceed 1,000 ships by 2026. So, while the sector’s investment in air lubrication has been positive, plenty of vessels will still require energy efficiency improvements if the shipping industry is to meet its emission reduction targets. Collaboration has also been vital to propelling the uptake of our clean technology in 2023. To rise to demand from the LNGC newbuild segment, for example, we have collaborated with many shipyards and placed particular focus on the Asia-Pacific region (APAC). In Europe, we recently signed a collaboration agreement with MAN Energy Solutions, whose twostroke engines are the preferred choice of propulsion for large oceangoing vessels,
TECHNOLOGY
Photo: Silverstream Technologies
for which our Silverstream® System is especially effective due to the size and shape of their hulls. With approximately half of the world’s commercial tonnage powered by MAN, the partnership will help further accelerate the adoption of our technology across the global fleet, spanning both newbuild installations and retrofits. Broadly, it will help pave the way for the cleaner, greener, and more efficient vessels needed to achieve IMO’s emission reduction targets. Through this collaboration, we are pursuing the mantra that the greenest fuel is the one you do not use. From nice- to must-have The shipping industry increasingly recognises that clean technologies can play a central role in decarbonisation today. However, we must also keep one eye on how they will evolve and iterate to meet the needs of tomorrow and stand up to the rigours of the entire lifespan of a vessel. Leading solutions have a proven record of emission-saving performance; it is critical to accurately calculate, measure, and report clean technologies’ efficiency level and decarbonisation impact. Access to more and better performance data is now allowing for more precision when calculating and verifying the impact of technology. Essentially, monitoring and measuring performance data, likewise system health, will be an integral component of not just our solution but all clean technologies in the near future. Clean tech manufacturers will also use data and digitalisation to raise both the floor and ceiling of fuel-saving potential. Like the intelligent systems within modern cars
that tune the vehicle’s engine as it drives, maritime clean technologies will learn and respond to their environment and operate in a way that ensures maximum efficiency. Because clean technologies are deeply integrated into a vessel, there is the potential for them to identify and unlock efficiencies that others may not even know existed. In other words, they become active and intelligent solutions to maximise the performance of a ship. We can harness data from our system, alongside multiple sensors around the vessel, to gain an in-depth understanding of air lubrication technology and identify factors that could influence the ship’s overall performance and allow us to tailor in-service support. The shipping industry’s increasing focus on data and the surge of digital solutions in recent years indicates a shift from viewing data as ‘nice to have’ to recognising it as a vital catalyst for driving industry transformation. Many shipowners and operators now acknowledge the significance of the digital journey and the potential of data. It is no longer a matter of whether the industry will embrace digitalisation and data, but rather, when and how rapidly it will do so – and whether one’s ready for it.
We are transitioning from an era where data was collected and stored passively, often leading to valuable insights being overlooked or forgotten, to a phase where data is being actively leveraged to inform business decisions and strategies. This actionable data has become a driving force behind both the industry’s digital transformation and its decarbonisation agenda. A lifecycle option The growing uptake of our air lubrication system and clean technology in 2023 makes commercial and environmental sense, and we expect increasingly impactful decarbonisation drivers to propel the uptake of efficiency solutions further in 2024. Collaboration across the clean technology value and supply chains, as well as work in critical segments such as LNGCs and regions such as APAC, have been instrumental in making an impact today. Meanwhile, looking ahead, a focus on the evolution of clean technology via data and digitalisation is pivotal to reinforcing that these solutions represent a lifecycle option designed to last a vessel’s lifespan.
The London-headquartered Silverstream Technologies is a market-leading maritime clean technology company specialising in hull air lubrication. Its Silverstream® System reduces frictional resistance between the water and the hull surface, reducing net fuel consumption and associated emissions by an average of 5-10%. The system is unique in that it is the only proven air lubrication technology that can be retrofitted in ten days or less, as well as being applicable to newbuilds. It lasts the lifetime of the ship, is complementary to and can be used in conjunction with other clean technologies, and a return on investment is typically between two and five years. Visit silverstream-tech.com for more information. 6/2023 | Baltic Transport Journal | 65
TRANSPORT MISCELLANY
Sailing here and there – for over half a century While partaking in the launch of Finnlines’ flagship ferry, Finnsirius, in mid-September 2023, we had a chance to see from one of the upper decks Lillgaard’s ro-ro Fjärdvägen calling to its berth at the Port of Naantali. The size difference between the two couldn’t be more striking (GT 6,040 vs 65,692)! However, that shouldn’t come as a surprise, as Fjärdvägen celebrated her 50th birthday in 2022. Born as Anu at the Norwegian Ankerløkken shipyard in 1972, she changed her name 12 times (including becoming Anu once more). The ship not only sailed in various parts of Northern Europe (additionally performing a gig in Canada) but also joined the Royal Fleet Auxiliary, serving as Sir Lamorak during the Falklands War. Fjärdvägen joined Lillgaard’s fleet in 1995. The merchant & military veteran still dutifully plies (on weekdays) between the Ålands Islands and the Finnish mainland (as the shipping line’s sole vessel), which earned her the ‘Sips Express’ nickname, as the ro-ro is frequently stuffed with trucks carrying Taffel’s crisps.
Photo: Wikimedia Commons
Centenary of the Finnish Ports Association It would be hard, if not simply impossible, to imagine Finland without its ports, sea- and inland. Not now (as evidenced by this year’s BTJ Trips to numerous Finnish seaports), not 100 years ago when Suomen Satamat, the Finnish Ports Association, was founded within the premises of the Helsinki Stock Exchange. Naturally, Finnish ports operated centuries before the Finns gained independence. That said, the rapid development of the port business in the late 19 th century, triggered by steam shipping and the laying of railways to & from the coast, prompted the entire industry towards greater cooperation. The Finnish
Photos: Finnish Ports Association
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Ports Association was first & foremost tasked with negotiating harbour pricing and tariffs all the way across to Finland’s EU membership. The Association also identified other critical tasks, including modernising outdated port legislation, financial relations between cities and the state, examining possibilities for work division among different ports, and municipalising port railways. Well into the 21st century, Suomen Satamat is a meeting point for public and private ports, discussing modern challenges, such as environmental regulations or digital advancements. Hyvää syntymäpäivää! Ja tietysti sisu!
TRANSPORT MISCELLANY
To Mars via Austria and Armenia The Austrian company Gebrüder Weiss (GW) has again been chosen as the logistics partner for the Mars Analog Mission carried out by the Austrian Space Forum (OeWF), with the 2024 edition hosted by the Armenia Aerospace Agency in the province of Ararat (selected for its geological and topographic similarity to the fourth rock from the Sun). Not only will experts from GW safely transport the sensitive equipment (technologies that “stretch the limits of what is feasible,” according to Gernot Grömer, OeWF’s Director) from Europe to Armenia (by truck) but also see its Maria Lanzendorf location near Vienna turned into a ‘dress
rehearsal,’ during which experiments, rovers, and spacesuits will all be put into operation and tested one last time before the mission that starts on 7 March 2024. A small field crew of six highly trained analog astronauts, including two women (of which one is the commander), will conduct experiments (via two high-fidelity spacesuit simulators, portable system, etc., with the backing of a mission support centre) preparing for future human and robotic Mars exploration missions (meanwhile, GW has been testing more terrestrial technology, a hydrogen-run truck). Fair (sun) winds and, um, following waves of space seas?
Photos: OeWF/Florian Voggeneder
Jigsaw – launched
Photo: Port of Gdynia
It appears that not only ships can set sail. The Port of Gdynia, the Gdynia-based Trefl (a family-owned jigsaw puzzle, board game, and toy manufacturing & distributing company) and its Trefl Foundation have created a 1,000-piece jigsaw puzzle to commemorate the seaport’s 100 th anniversary. The set was launched on 21 November 2023, with Hanna Uszyńska-Wenda, the grand-daughter of Tadeusz Wenda (the chief designer and engineer behind setting up a seaport in Gdynia after WWI), acting as the godmother. The jigsaw presents a graphic by Jan Rutka, which rounds up watershed moments in the Port of Gdynia’s history (and Blofeld stroking a cat, of course – if you know, you know). There is also a benevolent side to the venture, namely PLN5.0 from each sold set will go to the Bursztynowa Przystań (‘Amber Marina’ in Polish) child hospice in Gdynia (as such, the jigsaw is promoted by the ‘helping by putting together’ theme line). 6/2023 | Baltic Transport Journal | 67
WHO IS WHO MARIA HELLBJÖRN PR and Communications Manager at Stena Line
PIIA KARJALAINEN Finnish Ports Association’s CEO
Hellbjörn, a graduate of English Language & Literature as well as Journalism from the University of Gothenburg, will be responsible for the Swedish ferry line’s media contacts in Denmark, Germany and Sweden, likewise, the company’s communications on sustainability, a task she carried out at her most recent job with Brightnest. Hellbjörn worked at various media outlets in Sweden, including Swedish Radio and Expressen. She also led her own comms agency, Hellbjörn Schedwin.
Calling herself a transport policy geek, Karjalainen will start heading the organisation on 1 February 2024. Holding a Master’s in Economics from the University of Eastern Finland, she comes from the position of Senior Adviser at Finland Chamber of Commerce. In her rich career, Karjalainen worked, a.o., as Head of Maritime Affairs at Wärtsilä, Secretary General of MaaS Alliance, Ministerial and then Senior Advisor to the Finnish Ministry of Transport and Communications, and Policy Advisor at the European Parliament.
ANSSI MARTINMÄKI Port of Kokkola’s Commercial Manager
JENS MEIER IAPH’s President
Martinmäki, a Logistics Engineer, joined the Finnish seaport from Juhani Kähkönen (where he worked as a Project Engineer in the mechanical forest industry, carrying out transport development & planning tasks). Martinmäki is familiar with the port business in Kokkola, having worked for Rauanheimo’s unit there as Operational Manager in 2021-22. He joined the company as a foreman in stevedoring and forwarding in 2008, then performed the Rail Traffic Planner, Operational Production Planner, and Forwarding Manager duties.
The International Association of Ports and Harbors (IAPH) has elected the CEO of the Hamburg Port Authority to preside over its works for the next two years. A graduated computer scientist with more than 25 years of experience in the field of port, logistics, IT, and finance, Meier has also worked in board positions at Fiege Holding, tts Group, Systematics (later EDS), and Software Design & Management (part of the Ernst & Young Group).
BARTŁOMIEJ PASTWA Liburnia Poland’s Managing Director & Partner
STÉPHANE RAISON IAPH’s VP Europe
The newly established Polish office of the Croatian Liburnia Maritime Agency is headed by Bartłomiej Pastwa, most recently serving as COO and Board Member of the Port of Rijeka. A Master in Economics from the University of Gdańsk, Bartłomiej enjoys over a quarter of a century of experience in the logistics industry, having worked for, a.o., Morska Agencja Gdynia, Eastlift, and OT Logistics. He also co-founded BRP Global Consulting.
The CEO of HAROPA PORT, which governs Le Havre, Rouen and Paris, was elected Vice President for Europe of the International Association of Ports and Harbors (IAPH). Raison began his maritime & coastal sector career working for Les Sables d’Olonne as Head of the Maritime & Risks Department. He then joined the Port of Dunkirk in early 2009 as Director of Planning & Environment, re-joining in 2014-20 as Chair of the Executive Committee. In 2012-14, he led the reform of the Port of La Réunion. In November 2020, he was tasked with creating HAROPA PORT.
CAROLINE SÄFSTRÖM Port of Karlshamn’s CEO
JUHA YLITALO Head of Renewable Energy and Projects at ESL Shipping
After getting a new ‘job’ as Retired CEO, Mats Olsson, who led the Swedish seaport for almost 13 years, made way for Säfström, a Master in Environmental Engineering from Lund University and a Certified Project Manager (IPMA Level C). She comes from the post of Strategic Operations Manager and Head of the Project Management Office at Affärsverken Karlskrona. Säfström also worked as a Project Manager for NKT and ABB as well as an Environmental Engineer with Sweco Environment.
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The Finnish shipowner targets an increasing share of the renewable energy and project cargo market by appointing Ylitalo, a former Captain. He has played a central role in maritime logistics for the country’s first offshore wind farm in Tahkoluoto and, likewise, various other demanding project shipments. During his career, Ylitalo has worked with key players in maritime logistics, most recently Rauma Cata as Head of Sales and Engineering of project shipments.