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CONTENTS

14

Nordics Pioneer Ship Design Green Guidance Gains Ground In Industry

17

News Round Up

2

Who’s Doing What?

6

Breaking Boundaries

7

Feature Focus

• Adapting Engines For New Operating Profiles • Nordics Pioneer Ship Design Revolution • Green Guidance Gains Ground In Industry

Blue Skies

• Working At The Forefront Of Global Maritime R&D In Singapore

SINGAPORE GLOBAL R&D HUB

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43

Ship Efficiency Showcase Fuels & Emissions

• Advancing Fuel Emulsions • The Shrinking Size Of Technology • The Shipping Industry’s Response To The 2015 ECA Regs

Propulsion

• Partnering For Propeller Innovation • STREAMLINE For Efficiency • Seawater: The Free Eal For Propeller Shafts?

Strategies

• Is Your Continuous Emissions Monitoring System Compliant? • The EU MRV Regs: When, Where, Who, What And Why • CEMS – Monitoring & Reporting Saviour?

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Electronics & Software • Octopus-Onboard For Green Dolphins • Driving Operational Change With DataDriven Analytics • The Automatic Ship

Ship Design 8 14 17

11

19

21 22 23

25 25 27

28 29 31

• Norway Pioneers OSV Design Innovation • First LNG-Powered OSV Enters Service • Tricks Of The Bunker Trade • Ship & Bunker: The Bunker Price Analysis

Industry Event Insight

33 35 37

39 40 43 44

• Smart Operations 2015 - Miami • The Ship Efficiency Awards 2015

45 47

The Social Scene

49

The Last Word

• The Rise of the Third Umpire

Efficient Shipping Finance - The Supplement

50

• 8 Things You Need To Ask About Financing Efficiency • News Round-Up • Flying The Flag For A More Efficient Fleet • Early Adopters Gaining Most From LNG Paradigm Shift • Reduced Bunker Bills Open Significant New Opportunity For Eco Efficiency Technology • The Economics Of Flag Registry • Cash Management Is Crucial

53 55 56 57 58 61 61


EXAMINING HOW TO MAKE THE MARITIME AND OFFSHORE PROCUREMENT PROCESS SMARTER.

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marine | energy | environment


EDITOR’S LETTER

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

As I crossed the T’s and dotted the I’s on this issue, I gathered the team in the Fathom Maritime Intelligence office to reflect on the changes that have occurred in the industry since we launched the inaugural issue of this magazine in March 2014.

T Editor-in-Chief: Catherine Austin E: catherine@fathomshipping.com Publications Editor: Isabelle Rojon E: isabelle@fathomshipping.com Publications Assistant: Fiona Macdonald E: Fiona@fathomshipping.com

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Advertising Sales: Patricia Hubbard E: Patricia@fathomshipping.com Artwork and Design: Ben Watkins E: design@fathomshipping.com Expert Contributors: Martyn Lasek, Managing Director, Ship and Bunker E: editor@shipandbunker.com

Published by:

his time last year, talk revolved around the impact that the January 1 2015 drop in fuel oil sulphur content limits within Emission Control Areas would have on shipping operations and indeed the wider industry. The Polar Code was being put through its paces at the IMO, to be eventually adopted in November 2014 and ship owners were concerned about the impending entry into force of the Ballast Water Management Convention. As I write this, just 2.14% more of the world merchant shipping tonnage is required to tip it over the edge and into force with all indications that this will finally happen this year. Fuel prices buzzed around the $600 per metric tonne mark this time last year and industry dwellers had no idea that the price of oil would drop so significantly later in the year. So talk of clean technology investment was pungent in the air and all hands were on deck to reduce the numero uno impact on the bottom line – the fuel bill. Reminiscing on this past year has reminded me of the wealth of ship efficiency-related topics and environmental issues that we have reported on through this magazine. The first issue was released into the industry with a focus on big data, electronics and software. Issue #02 examined the efficient beating heart of the industry, marine fuels, machinery and all factors related. The issue that followed was of special value to us all at Fathom as it was the magazine issue that accompanied Fathom’s annual Ship Efficiency: The Event. Therefore, this magazine issue covered all manner of topics and technologies, reflective of the agenda of this important annual event. Finally, the issue previous to this one, Issue #04 was a celebratory issue that reflected on the many technological innovations that impacted on the industry in 2014. It was also the first issue of Ship Efficiency: The Insight to host an exclusive Fathom supplement. In this issue, we focus on everything engine, emissions and efficiency-based. We shine the spotlight on the innovations coming from our Nordic neighbours and dip our toes into the offshore sector. This issue also plays host to a special supplement dedicated to financing ship efficiency. I believe that for innovation in finance, the time is now. Whilst the oil price slump has provided some temporary relief, in order to ensure the long-term viability of shipping operations (and sustain operations in the face of future fuel price hikes), ship owners and operators must ensure that they understand what they can do to secure finance for clean technology investment and also make their finances and operations work harder, smarter and more effectively.

fathom

marine | energy | environment

27 Sheet Street, Windsor, SL4 1BN, UK. Tel: +44 (0)1753 853791 Email: info@fathomshipping.com Twitter: @fathomshipping Website: www.fathommaritimeintelligence.com

Catherine Austin Editor-in-Chief

©2015 Fathom Eco-Efficiency Consultants Limited. All rights reserved. No part of this magazine can be reproduced, or transmitted by any means, electronic, mechanical, photocopying, recording or otherwise without the written consent of Fathom Eco-Efficiency Consultants Limited. Applications for written permission should be sent to the editor-in-chief via editor@fathomshipping.com. Any views or opinions expressed do not necessarily represent the views of Fathom Eco-Efficiency Consultants Limited or its affiliates. Whilst every effort has been made to ensure the accuracy and quality of the information contained in this publication at the time of going to press, Fathom Eco-Efficiency Consultants Limited assume no responsibility as to any inaccuracies that occur or their consequences and to the extent of the law, shall not be liable for any errors or omissions or any loss, damage or expenses incurred by reliance on information or any statement contained in this publication.

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NEWS ROUND UP

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

NEWS ROUND UP FUEL SAFETY ISSUES AS ECA REGS BITE Ship operators have a range of options when sailing in and out of Emission Control Areas (ECA) on either side of the Atlantic, but many have chosen so far to go for relatively cheap and simple fuel change-overs from heavy fuel oil to lowsulphur distillates. Unconfirmed reports suggest, however, that the process is far less simple than many believe.   A number of main engine breakdowns are understood to have occurred in both Northern Europe and North America since January 1. So far, however, no-one is admitting anything and statistics are impossible to obtain.   DNV GL, which recently launched a Fuel Change-Over Calculator to help ship operators in the process of switching fuels, has highlighted a number of potential hazards. One of the biggest risks, according to the class society, is

the temperature difference between fuels which can result in “thermal shock” to fuel injection equipment.   Thermal expansion or contraction can result in components sticking, the society warns, whilst the different calorific values of fuels can lead to pump failures and leaks. Meanwhile, during the changeover process, as different fuels are mixed together, incompatibility can cause heavy sludge which then clogs filters.   “In some cases, this may cut off the fuel supply to the injection equipment completely and cause the engine to shut down,” the class society warns.   Besides the ECAs in Europe and the US, ship operators may face new ECAs in other regions in due course. Known to be under consideration are ECAs in Australia, Hong Kong/Guangdong, Japan, the Bosporus and the Mexican Gulf.

HONG KONG LOW-SULPHUR RULES TO ENTER INTO FORCE ON JULY 1, 2015 The Hong Kong government has confirmed that new sulphur regulations will enter into force on July 1, 2015.   Once implemented, the rules will impose a 0.5 percent cap on sulphur content in marine fuel for ocean-going vessels berthed in Hong Kong.   Ships found in violation face a maximum fine of HKD $200,000 ($25,700) and six months in prison, while ships who fail to keep proper records also face a maximum fine of HKD $50,000 ($6,400) and three months in jail.   The rules are still subject to council approval.

AIR LUBRICATION TECH SEA TRIAL CONFIRMS SIGNIFICANT EFFICIENCY SAVINGS Silverstream Technologies and Shell have announced the success of a sea trial that tested the application of the Silverstream® air lubrication system on the 40,000 DWT product tanker MT Amalienborg.  The MT Amalienborg is chartered by Shell and owned by leading Danish shipping company Dannebrog Rederi.   The Silverstream® System produces a thin layer of micro bubbles that create a single ‘air carpet’ for the full flat of bottom of the ship. This reduces the frictional resistance between the water and hull and improves the ship’s operational efficiency, reducing fuel consumption and associated emissions.   Following Harbour Acceptance Tests and under the direct super vision of Lloyd’s Register’s Ship Performance

Group, a series of 52 single runs under ballast load conditions (6.9m draught) were conducted in the Kattegat Sea under ideal environmental conditions. A subsequent laden condition trial conducted on a constant heading due to operational restrictions (10.6m draught) was completed six months later. The trials procedure for both trials was specified by Lloyd’s Register and conducted in line with Lloyds Register, STA and ITTC recommendations and in accordance with acceptable trial control criteria pertaining to weather, water depth, rudder control, system steady state criteria and hydrostatics.   A BMT SMARTACCESS and SMARTVESSEL performance monitoring system was fitted to the ship to record data from the trials.

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It will continue to monitor the technology’s performance over the next 12 months during normal shipping operations.   The Lloyd’s Register Ship Performance Group independently verified the sea trials and conducted a full analysis of the trials data.   The trials showed net average energy efficiency savings of 4.3% and 3.8% for the ship in ballast and laden conditions respectively.   Based on the trials, both Silverstream and Shell believe that a fully optimised system has the potential to deliver more than 5% efficiency savings on an ongoing basis when deployed on a full-bodied ship with a large flat bottom.

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NEWS ROUND UP

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

LR METHODOLOGY MAKES SCRUBBER USE MORE FUEL EFFICIENT

NEW GENERATION BALLAST WATER TREATMENT SYSTEM

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A new generation ballast water treatment system has been developed by Servowatch Systems in cooperation with UK-based Cathelco.   The advanced system integrates alarm, monitoring, and a process control system for the combination filtration and UV ballast water treatment system . This is a key component required to achieve IMO approval and US Coast Guard AMS acceptance. The ballast water treatment system filters and UV chambers are analysed constantly to ensure the cleaning cycles can be initiated with all data automatically logged in compliance with IMO requirements. The tank number, time

and date of event, mode of operation, flow rate, temperature, power to UV lamps, UV transmission and calculated UV dose are all recorded to ensure compliance.   The Cathelco ballast water treatment system is available with capacities from 34m 3 /h to 2400m 3 /h with each unit featuring a UV chamber with only two lamps to save space. In addition the unit can function in both seawater and fresh water operation.   The system received IMO Type Approval and Alternate Management Systems (AMS) acceptance from the US Coast Guard in May and November 2014, respectively.

Lloyd’s Register (LR) has developed calculation methodologies for scrubber washwater acidity compliance that allow ship owners to save fuel.   International Maritime Organization (IMO) guidelines state that scrubber washwater from “wet scrubber” systems must not exceed a certain level of acidity (pH 6.5), in order to prevent environmental damage.   Shippers are thus required to bring pH levels to 6.5 by diluting washwater and conducting “plume verification” to check the levels before discharging washwater into the sea.   For many shippers this has meant pumping seawater around the ship in a process that consumes fuel, since although “external dilution” is allowed, measuring compliance has hitherto been difficult.   LR says its methodology, developed in conjunction with scrubber manufacturers such as Alfa Laval, offers ship owners a calculation-based way of monitoring external dilution, avoiding the need for fuel-dependent onboard dilution. LR has approved pH calculations for 26 ships so far, with a further 70 approvals pending.

OPTIMARIN AND GOLTENS TIE KNOT Amid clear signs that the long-awaited Ballast Water Convention could finally be ratified this year, giving ship operators just 12 months to arrange for system installations at the next intermediate or special survey, a new alliance has been set up to assist owners in preparing for the regulations.   The recent tie-up between Norway’s Optimarin – a leading ballast water manufacturer with systems onboard some 210 ships with another 100 units on order – and marine engineering firm Goltens, offers ship operators a chance to make the best use of time before the rules enter force. The non-exclusive tie-up will provide scope for operators to have 3D laser scanning, modelling, prefabrication and ultimately installation services carried out by Goltens which has already worked closely with Optimarin on the installation of more than 50 systems.   Optimarin CEO Tore Andersen believes ratification of the Convention is within “touching distance”, resulting in a surge in demand for compliant systems and

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consultancy advice on space, suitability and installation. He says that the tie-up with Goltens now provides customers with a new level of reassurance ahead of ratification. This could come at any time now. Nations representing 32.86% of global tonnage have already signed up; only 35% is needed and one significant signature could mean the Convention goes live. Jurrien Baretta, Business Development Manager at Goltens, comments, “Together, we can ensure that customers get the solutions that are tailor-made for individual vessel requirements, within the best possible time and cost parameters.” She reveals that the new alliance has already proved instrumental in securing a multi-ship contract with a Japanese container line.   Many are concerned that few ship operators are suitably prepared. The dash for systems, they suggest, will put pressure on system and component manufacturers, as well as ship repair capacity and installation engineers.


NEWS ROUND UP

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

NEW NON-TOXIC ANTI-FOULING SHOWS PROMISING RESULTS DUAL-FUEL METHANOL PROPULSION RETROFIT A new non-toxic coating that uses maintenance costs. The occurrence of nanotechnology is currently under biofouling on the ship hull results in an FOR STENA FERRY development for application on ships for biofouling prevention.   This unique non-toxic coating is being developed through the application of nanotechnology, which enables matter to be manipulated at the smallest scale and has the potential for creation of new materials. The coating has been extensively tested using fishing nets as a test surface to grow nanostructures. These metal oxide nanostructures have shown to absorb sunlight, preventing the accumulation of biofouling species as they act like a shield to highly reactive oxygen and hydroxyl radicals in the vicinity of the coated surfaces. This process is known as photocatalysis. The shield prevents the biofouling species accumulating and hence the impacts associated with the problem.   Test results have thus far demonstrated positive reductions in biofouling occurrence.   Reducing biofouling is essential to maximising ship efficiency and reducing

increased roughness which in turn leads to an increase in hydrodynamic drag and subsequently an increase in fuel consumption as the ship moves through the water. The ship can slow by as much as a few knots, proving detrimental to ships on stringent time restraints. When occurring in pipes or conduits, biofouling can destroy the protective coatings, which are used to prevent corrosion, and may even increase the corrosion of the unprotected metal itself. According to Eniram, inadequate hull and propeller performance can reduce efficiency of the entire world’s fleet by 15-20%. These problems result in additional costs to the ship owner through hull cleaning, propeller polishing, paint removal and repainting and associated environmental compliance measures.   This project is being carried out through a partnership between Almouj Marina at The Wave, Muscat in Oman and researchers from Sultan Qaboos University (SQU).

GE MARINE ENGINE RECEIVES TIER IIII EPA CERTIFICATION

WÄRTSILÄ RECEIVE EIGHT TANKER ORDER FOR BALLAST TREATMENT SYSTEM

GE Marine’s 12V250 marine diesel engine has received US EPA Tier IIII Certification.   The engine met the emission requirements due to its use of Selective Catalytic Reduction (SCR) technology.   The SCR technology requires no ureabased after-treatment and provides substantial operational benefits for the workboat marketplace. A study carried out by Jensen Maritime, commissioned by GE showed that the urea-free solution takes up only 25% of the engine room space and weighs 25% of competitor solutions requiring after-treatment. In addition, the solution does not require extra onboard equipment or storage which is necessary for urea - based after - treatments for dockside support infrastructure and processing.   GE are working toward Tier IIII and IMO Tier III Certification for additional models and families of its marine engines. The L250 and 6 and 8-cylinder marine diesel engine model and the 16-cylinder V250 model, also utilising non-SCR technology, are being worked on by GE Marine to achieve these certifications for more than 70% emission reduction without urea based after - treatment.

Wärtsilä has received an order to supply eight new 33,000 DWT chemical tankers with their Aquarius UV ballast water management system.   The Aquarius UV ballast water management system comprises a two stage process involving filtration and UV irradiation. Currently there are three distinct modules available with capacities ranging from 50m3 to 1,000m/h.   The chemical tankers due to receive

The 240-metre-long, 1,500-ropax ship Stena Germanica will be the world’s first ever methanol-powered sea vessel.   The new fuel arrangement on the Stena Germanica, which is owned and operated by the Swedish ferry operator Stena Line, will combine methanol as its primary fuel with marine gas fuel (MGO) as a backup power source. SOx emissions are expected to be cut by 99%, NOx; by 60%, particulates by 95% and CO2 by 25%.   The ship will be converted over a 45-day period from 28 January 2015 at Poland’s Remontowa shipyard. Approval and classification will be by surveying teams from Lloyd’s Register.   Preliminar y tests on a methanolmodified Wärtsilä engine 6ZAL40S similar to the Germanica’s were overseen in Trieste by five LR teams from the Copenhagen, Trieste, Gotheburg, Venice and Southampton offices.

the ballast water management system, currently under construction in Asia, will be equipped with two Wärtsilä Aquarius UV systems, in a partnership approach with the shipyard.   In addition, Wärtsilä announced in December 2014 that they are to supply six ballast water management systems to bulk carriers in construction at the Namura and Onomichi shipyards in Japan.

‘VESSELS FOR THE FUTURE INITIATIVE’ HOSTS AMBITIOUS EMISSION TARGETS   A r e s e a r ch i n i t i a t i ve , b a cke d by classification society DNV GL and over fifty other organisations, has ambitious emission t argets in sight for 2050 including: 80% reduction in CO2 and 100% reduction in SOx and NOx emissions, and a reduction in risk by a factor of 10.   The initiative, called ‘Vessels For The Future’, was initially launched in November 2014, but it was at European Shipping Week in March that Dr Pierre Sames, DNV GL spoke further about the initiative.   The project focuses on three key areas for the maritime transport cluster: safe and efficient waterborne transport and competitiveness of the maritime sector in Europe. The strategy behind the initiative aims to improve shipping’s safety record, sustainability and global competitiveness under the increasing pressure maritime

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and inland waterways are facing.   In addition, Vessels for the Future will address the societal challenges associated with moving toward sustainable transport. Using cutting-edge design and innovative manufacturing and production to develop energy efficient and safe vessels, the initiative expects to drive employment and strengthen industrial and global c o m p e t i t i ve n e s s o f t h e E u r o p e a n economy.   The project will focus on five maritime technologies that the partners say are “vital to unlocking greater efficiencies and improving environmental performance.” These are new materials and processes, fuels and propulsion systems, information and communication technology (including e-maritime), energy management and novel vessel design concepts, and hull water interaction.

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WHO’S DOING WHAT

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

WHO’S DOING WHAT PACIFIC BASIN ADOPTS DNV GL’S SHIPMANAGER

TIMES NAVIGATION CHOOSE ECOCHLOR BALLAST WATER TREATMENT SYSTEM

Pacific Basin will implement DNV GL’s ShipManager fleet management system on its owned fleet within the next two years.   Pacific Basin will be using six integrated S h i p M a n a g e r m o d u l e s : Te ch n i c a l , Procurement, Project, Crewing, QHSE and Analyzer. The modules will support Pacific Basin in generating dynamic OPEX (operational expenditure) reports and in monitoring KPIs. ShipManager Analyzer provides exceptional decision-making support, as it extracts data from all of the ShipManager modules for data mining and analysis.   The implementation of the ShipManager system in Pacific Basin will simplify and optimise their ship management, allowing extensive fleet-wide data collection, integration and analysis.

Ecochlor Inc. has announced that Times Navigation has chosen to install eight Ecochlor ballast water treatment systems (BWTS).   A fleet of eight new CROWN63 (63,500 DWT) ultra-max bulk carriers to be constructed at SINOPACIFIC Shipbuilding

BORE PURCHASES CR OCEAN ENGINEERING SCRUBBER FOR RORO Finnish shipping company Bore has purchased a scrubber system from US firm CR Ocean Engineering for its rollon/roll-off (RoRo) boxship M/V Seagard. The scrubber system will be fitted in the coming months.   The M/V Seagard is a 1999-built, 7,226 DWT ship.

“K” LINE TO EXPAND USE OF CLASSNK-NAPA GREEN SOFTWARE “K” Line (Kawasaki Kisen Kaisha Ltd) have announced they are to install the ClassNKNAPA GREEN eco-efficiency software on three more ships.   Th e i n s t a l l a t i o n o f t h e d y n a m i c performance model comes following trails on an 8,600 TEU ship in 2014. The system provides high accuracy fuel consumption data to enhance performance understanding and to optimise ship operation.   The installations will take place in June 2015.

Group will help to drive Ecochlor ’s sustainability and ensure ship compliance with US and international regulations.   The BWTS meet Times Navigation’s requirements for fully-automatic operation and low power consumption.

MARORKA WINS UASC ENERGY MANAGEMENT CONTRACT Marorka has secured a contract with United Arab Shipping Company (UASC) to deliver ship performance monitoring solutions.   The ship performance monitoring

solutions will help UASC to optimise ship performance and subsequently seek to reduce the fuel consumption and carbon emissions of their fleet.

VROON RORO FITTED WITH PROPELLER BOSS CAP FIN TECH Vroon’s car carrier Le Mans Express, was fitted with a Propeller Boss Cap Fin (PBCF) and monitoring equipment from ABB to ensure maximum propeller efficiency and monitoring for enhanced fuel performance.   A fuel efficiency programme has also

been developed to include the fitting of all M-type car carriers with a PBCF to save fuel by up to 5%. Vroon’s S-type car carriers have already been fitted with stator fins to increase propulsion efficiency.

MSC SELECTS JOTUN’S FUEL-SAVING HULL COATINGS Jotun Marine Coatings announced that Mediterranean Shipping Company (MSC) will apply Jotun’s Hull Performance Solutions (HPS) on a number of new and existing ships.   With almost 500 ships, MSC has one of the world’s largest container ship fleets. To help the company reduce bunkering fuel costs and associated CO2 emissions, MSC undertook a programme to improve fuel efficiency in 2011. During this period, they worked in close cooperation with Jotun to evaluate hull performance and launch

a pilot programme to test the impact of anti-fouling on speed loss. Jotun’s SeaQuantum X200 was applied to the 8,772 TEU container ship MSC Adelaide, delivered from the Sungdong Yard in Korea in 2013.   MSC has agreed to utilise HPS on 12 ships – including the world largest container ship MSC Oscar, a 19,224 TEU container ship built by Daewoo Shipbuilding & Marine Engineering (DSME) yard, delivered in January 2015.

CMA CGM’S NEWEST BOX SHIP IS EQUIPPED FOR ECO-EFFICIENCY CMA CGM’s newest box ship, the CMA CGM Rhone is equipped with a ballast water treatment system, a twisted leading edge rudder with bulb, an electronically controlled long stroke engine and a

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bulbous bow for better hydrodynamics at speeds between 16 to 18 knots.   The Malta-flagged, 9,365 TEU capacity box ship, is the seventh in a series of 28 ships.

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BREAKING BOUNDARIES

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

BREAKING BOUNDARIES Breaking Boundaries gives an insight into the work of an influential individual in the industry. For this issue of the magazine, Fathom turned the interviewer into the interviewee when we caught up with the ‘seafarer turned maritime media icon’ Craig Eason. Eason previously held the position of Technical Editor at Lloyd’s List before taking up the role of Deputy Editor and is well known for reporting on environmental and technology issues.

HOW ARE YOU ADVANCING INFORMATION ABOUT EFFICIENCY AND ENVIRONMENTAL ISSUES ACROSS THE INDUSTRY?

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I have developed and driven a number of industry surveys that focus on efficiency and environmental issues, the latest being the Lloyd’s List Sulphur Survey. The results of this latest survey will be published in April. This year’s survey builds upon the Sulphur Survey that I conducted in 2014, but whereas the 2014 survey examined what the industry was looking at before January 2015 arrived, this 2015 survey focusses on the key issues post 1 January 2015. Also, through this survey I want to take a broad look at the impact of legislation, interest in LNG and the level of enforcement in emission control areas, amongst other things. Another big question for me is – are people thinking about 2020?   I also ran a project a while back called ‘Maximising Ship Efficiency’ which in fact is more commonly known as ‘Pimp my Ship’. The core element of this project was to reach out to technology providers to get accurate technology cost quotes for actual ships based on two specific example ships - a 7-year old suezmax tanker and a 5-year old medium-range product tanker. I took the fuel saving claims provided by the technology manufacturers and halved them. I then calculated the length of payback based on those values, coupled with information about the average conditions and value of such vessels and ship particulars.   As the ships that I chose were so specific, I knew what the fuel consumption and the fuel bill was, and thus could accurately calculate the return on

It is an extra voice to add flavour and context to what is going on with efficiency technologies, topics and issues in the industry.

WHAT DRIVES YOU TO REPORT ON EFFICIENCY OR ENVIRONMENTAL ISSUES?

Real change is what matters to me. I want to report on how a technology or a development in the market will make a real change, not just the promise of change.

WHAT IS YOUR APPROACH TO REPORTING? investment for each technology retrofit.   The project itself was slightly tonguein-cheek, but I believe it yielded really good insight. It really did look at what technologies were on the market and what was being claimed.   Also, throughout its development, the ‘Pimp my Ship’ project really raised the question of benchmarking for me and where these fuel savings claims are coming from. Fuel saving claims can be ambiguous but all routes lead back to how technology providers prove what they are promising. That is also why I am interested in the work around the hull and propeller performance measurement standard.   For the past year, I have been writing a Lloyd’s List blog called Aronnax. The benefit of this particular blog for me is that it is more of a mouthpiece of mine, meaning that I can write about things that I have a specific interest in.

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My approach is very simple. I try to deliver a voice that is challenging and my approach is definitely one of being positively critical.   It is important for me to be able to question technology companies and demand that they be more robust in their arguments to ensure that I get the full picture of what they actually offer. I effectively put up a wall so that technology companies are forced to put up a robust argument and I do this regardless of whether I personally like a technology or not. It’s not that I am denying the benefits that the technology may offer, but I need to ensure that what I report is independent and trusted.   I believe that if a technology company can put up a strong argument for their solution then it is my duty to delve deeper and report on my findings with an objective view. Rather than just publish or report from what a pre-fabricated statement or press release tells me.   I’d like to think that I provide impartial and direct content that people will be able to cut through and trust.


FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

Adapting Engines For New Operating Profiles By Paul Bartlett The recent sharp fall in bunker prices may have taken some of the momentum out of the drive for greater engine efficiency but the issue still lies close to the top of most ship operators’ agendas. After all, fuel prices are only one catalyst in the quest for efficiency; emissions are also a top priority and depend directly on how well engines perform.   Much has been made recently of new so-called eco-ships with smaller engines, lower revs and larger propellers. They are designed with less power to sustain lower speeds, and reduced emissions are an added bonus. Despite cheap bunkers, analysts do not believe that ship speeds will increase markedly in today’s market. Shipping capacity exceeds demand in most sectors, and operating ships at lower speeds absorbs a significant volume of the potential tonnage surplus.   Few existing engines, therefore, operate on the profile for which they were designed and there is much that can be done to make their operation more efficient. Companies specialising in this field include not only the engine-makers themselves, but also marine engineering firms such as ABB, Alfa Laval, Becker Marine Systems, Blue Ocean Solutions, Greensteam, Imtech Marine and HBM.   There is no shortage of consultancy advice either. In addition to private consulting firms, all of the major class societies have a clear focus on raising ships’ propulsive efficiency. ClassNK, for example, recently demonstrated its commitment to the cause by acquiring NAPA, a maritime software house. And, following a successful trial onboard a K-Line containership, its eco-efficiency and operational optimisation system

Despite cheap bunkers, analysts do not believe that ship speeds will increase markedly in today’s market. ClassNK-NAPA GREEN is to be installed on three more ships in the K-Line fleet.   Until recently, one of the challenges has been the accurate measurement of ship performance, and specifically fuel consumption. Traditionally based on noon reports, which are themselves subjective and prone to manipulation by chief engineers who wish to conserve a little spare fuel for a rainy day, precise fuel consumption figures have been hard to obtain.   Now, though, a range of companies offer fuel sensors and torque meters to track precise consumption, and shipping’s relatively new ability to handle “big data” means that consumption figures, together with many other variables, can be available ashore in real time. For the first time, this enables accurate calculation of payback periods for retrofitted systems and components.   Hoppe Marine’s Maihak Shaft Power Meter uses a vibrating string sensor which, the company claims, is accurate and reliable, long-term stable and calibrated like a caliper gauge. Meanwhile, its Torque Power Meter is based on strain gauge sensors and requires less space.

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FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

Few existing engines, therefore, operate on the profile for which they were designed and there is much that can be done to make their operation more efficient.

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  Kongsberg’s MetaPower system measures revs, torque and power transferred from the main engine to the propeller. Comparison of power output and fuel consumption, the company says, provides valuable information to avoid over-stressing an engine. Other companies offering torque meters include Kyma, Tecnoveritas and Trelleborg.   MAN Primeserv, the service arm of Copenhagen-headquartered MAN Diesel & Turbo, offers a variety of retrofit packages designed to raise engine efficiency and reduce emissions. The engine firm also has a finance scheme whereby retrofits can be financed out of savings in fuel bills. Measures offered by MAN range from fundamental changes to the profile of main engines themselves, to the installation of relatively small components to improve performance.   If ships are to operate consistently at lower speeds as appears likely today, MAN says that it may be beneficial to consider steps to improve combustion efficiency at low loads. Charge air heating, for example, is a relatively simple genset upgrade which offers significant benefits. These include fewer deposits in the combustion chamber, less contamination of luboil, reduced risk of sticking valves and longer spells between overhauls.   At the other end of the scale, de-rating the main engine and propeller is a more major exercise. This reduces fuel consumption by improving the match between operational speed and optimisation speed. MAN suggests that de-rating is potentially an attractive option for ship operators who can afford to lose 1015% of speed at specific maximum continuous rating (SMCR). The process should include replacing the original propeller with a new one with optimised diameter for operation at the new lower speed.   Such a major retrofit may have made sense when bunker

ISSUE 05. 2015

prices peaked, but the potential gains now are much lower and the payback period longer. However, MAN offers various relatively cheap options designed to cut fuel consumption. Turbocharger cut-out, for example, improves low-load operation and increases engine flexibility.   The company’s slide fuel valve improves combustion, saves fuel and produces less smoke. And its EcoCam is a hydraulically regulated variable exhaust timing mechanism which enables engines to run at lower loads and use less fuel. When deactivated, engines can run at full load. Meanwhile, upgrade of Alpha Lubricators to incorporate Adaptive Cylinder Oil Control prevents over-lubrication of cylinders by adjusting the feed rate in line with engine power output.   Many owners have hired class societies and specialist firms to carry out energy audits onboard their ships. Such an approach views the ship as a complete system – with energy requirements down from the main engine down to the last light bulb. ABB, for example, which offers its own ship performance monitoring system through its EMMA advisory suite, undertakes life-cycle audits designed to generate the most cost-effective retrofit strategy for its clients.   The company also undertakes to manage every phase of a retrofit project. It will undertake engineering and design work, for example; it will manufacture new components or recondition existing ones; and it will take responsibility for installing, commissioning and crew training. ABB is also pioneering research and development in an exciting range of new technologies under development for global shipping tomorrow.   These include zero-emission battery-driven ferries for use on dedicated routes, the use of electricity during port calls to ensure no emissions, and its Onboard DC Grid, a complete marine power and propulsion system. This is based on variable-speed engine operation where optimal efficiency can be assured over a wide range of load conditions. In fact, says ABB, the engine can be optimised at loads as low as 5%, making the system well-suited to ships which have varying operational modes, such as offshore support vessels. Such ships can achieve fuel savings of up to 20%, the company claims.

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BLUE SKIES

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

Working At The Forefront Of Global Maritime R&D In Singapore ClassNK’s new Global Research and Innovation Center in Singapore is its first research centre outside Japan. The opening of the centerein February coincided with a new Memorandum of Understanding with the Maritime and Port Authority of Singapore to carry out joint R&D projects focused on enhancing ship safety and environmental sustainability.

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Strategically located at the crossroads of East and West trade lanes, Singapore is one of the busiest ports in the world for commercial shipping and maritime services, as well as being South East Asia’s leading transhipment port for container traffic. In 2014, Singapore’s container throughput reached a record 33.9 million TEU, with the port also remaining the world’s top bunkering port. The country’s position as a global maritime hub has seen it play an increasingly important role in maritime R&D activities.   As the driving force behind Singapore’s port and maritime development, the Maritime and Port Authority of Singapore’s (MPA) mission is to attract a core group of ship owners, operators and maritime service providers to raise Singapore’s profile as a premier global hub port and International Maritime Center (“IMC”), as well as to advance and safeguard Singapore’s strategic maritime interests.    ClassNK is one such organisation operating in Singapore, and has been providing classification services in the country since 1967. ClassNK’s role in Singapore greatly expanded over these years, and new focus was given to its regional R&D activities in 2011, when a Memorandum of Understanding (MOU) was signed together with Nanyang Technological University (NTU). Since then ClassNK has collaborated with the Energy Research Institute @NTU (ERI@N) in many projects related to the maritime industry.   The opening of the Global Research and Innovation Center (GRIC) represents a milestone in the continuing expansion of ClassNK’s R&D activities not only in Singapore, but internationally. GRIC provides the industry with the infrastructure to develop innovative solutions, and acts as a bridging point for ClassNK, the city-state’s Institutes of Higher Learning (IHL), international research institutes, and world-renowned shipping companies. Singapore’s position as a global maritime hub will help make GRIC and its projects accessible to organisations around the world.   From the outset, GRIC will play a pivotal role in advancing a new joint research project launched in December 2014 to develop an exhaust gas cleaning system (EGCS) to control SOx emissions from ships outside emission control areas (ECAs). ClassNK will work together with Nippon Yusen Kabushiki Kaisha (NYK Line), the Monohakobi Technology Institute (MTI), NTU, SembCorp Marine Technology Pte Ltd, and a leading EGCS manufacturer to simplify EGCS operations, reduce costs and unit sizes, and minimise CO2 emissions for installation across a range of ship types.

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Also publicly announced is an upcoming pilot scale d e m o n s t r a t i o n p r o j e c t t o d eve l o p a Z e r o - E m i s s i o n Desulphurisation process for Maritime applications (ZEDSMart). Building on these opening projects, GRIC will quickly expand its scope of maritime research and its primary work-plan includes: safety projects related to ship structural integrity and fatigue, data analytics to assist in real-time anomaly detection of machinery, real-time monitoring of emissions and condition-based monitoring of structures for ship and machinery operations, and applied research in alternative fuel engine technologies. GRIC’s mandate also includes tackling challenges faced by the maritime industry such as onboard noise and vibration.   GRIC will engage in a feasibility study in the southern waters of Singapore for the possibility of developing a marine renewable energy test site. In addition to tidal energy generation related R&D topics, this test site will be a platform for energy storage and shore power supply R&D that in turn will benefit the maritime industry and our harbours. Ideas for a network of battery charging stations to support a future generation of hybrid electric harbors and workboats are already being considered as part of the shore supply research.   A number of centres and consortia have also looked into renewable marine energy testing facilities, but GRIC’s new feasibility study envisages the world’s first testing facility for renewable marine energy technologies in high temperature tropical waters.   “Given the enormous potential of the ocean as a source of energy and the ever-increasing demand for cleaner energy to mitigate climate change, there is a growing need from the industry for high-quality technical services that can support the practical development of new renewable energy technologies”, comments Hirofumi Takano, Operating Officer and General Manager of the Renewable Energy Department.   Running from February 2015, the 18-month study will assess the feasibility of establishing a 1/5 to 1/10 scale testing facility in the waters off the coast of Singapore, including surveys of tidal forces, as well as environmental and operational viability assessments. This work will be carried out by a consortium led by ClassNK and ERI@N, with support from other leading research institutes and consultants including the European Marine Energy Centre (EMEC).   “GRIC represents the next step in ClassNK’s global research efforts”, says Yasushi Nakamura, Representative Director and Executive Vice President. “GRIC provides much-needed infrastructure for maritime and offshore projects, and its location in Singapore also ensures that it is accessible to potential research partners around the globe. Projects are already underway to enhance ship safety and environmental sustainability with joint research partners. With the establishment of GRIC, the industry can expect to see even more innovative solutions from ClassNK and our international partners in the future.”

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FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

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FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

NORDICS PIONEER SHIP DESIGN REVOLUTION

Fuel prices and emissions regulations are the two most important drivers behind a revolution in ship and machinery design which is transforming what is now the world’s largest-ever commercial fleet. Following decades in which ship design barely changed at all – larger ships were simply scaled up versions of earlier smaller ones – naval architects, model basins, CFD experts, engine designers and many shipbuilders are pioneering huge advances in ship design and marine engineering.   Whilst many initiatives have been taken by the world’s leading shipbuilding nations, notably South Korea and Japan, and cheap natural gas available in the US as a fuel is proving a catalyst for Jones Act vessels including offshore support vessels and ferries, the Nordic countries have been instrumental in developing technologies to cut fuel consumption and reduce emissions.   Norway, in particular, stands out. The Government’s cleverly structured NOx Fund, which supports the development of emissions-reducing technologies, has underpinned a range of projects which otherwise might not have proven viable.   There, and throughout the Nordic region, there is a rare collaborative approach to marine innovation. Owners and operators are more open to new concepts and embrace new technologies with enthusiasm. They are, to some extent, an exception in an industry not renowned for its commitment to research and development spending, or its attitude to disruptive change and fundamental advances in technology.

Exponential Rise In Computer Power

One of the tools which has empowered naval architects in recent years is advances in computer processing capabilities. Naval architecture is sometimes described as a quasiscience – certain aspects of ship design have traditionally been accepted because they worked, rather than because they had been scientifically proven. For this reason, ship designers in the past were hesitant to change design criteria which had been shown to work in a model basin, and subsequently in practice.   Now, though, advances in computational fluid dynamics (CFD) have transformed the design process. Naval architects have hugely powerful computer tools to analyse a range of varying and interacting criteria and thereby achieve design optimisation for ships’ particular operating profiles. Huge strides have been made, therefore, in the design of ships’ hulls themselves, hull appendages, propeller design, bow and stern lines and, of course, the range of technologies onboard ships which all contribute to overall energy usage and emissions profiles.   This new capability has proved itself not only in the design of new ships, but also in moves to modify and retrofit existing tonnage. Although shipping still has many sceptics who question the validity of retrofit technologies, there are real-life examples of substantial fuel and emissions savings on existing ships. Engine designer MAN Diesel & Turbo, on the supplier side, and A.P. Møller-Maersk, both Danish firms, have both been able to demonstrate significant efficiency improvements arising from new retrofit technologies.

Focusing On Hull Lines

Elsewhere in this issue you can read about design innovation amongst offshore support vessel designers located in Norway’s west-coast offshore cluster, but Nordic ship designers have been active in design improvement and optimisation across a range of shipping sectors.

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FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

LADEVINDSKIP

15

It is no surprise, for example, that Finland’s Deltamarin caught the attention of Chinese investors in 2012, partly because one of its focus areas is bulk carrier design, a ship type that is fundamental to provide the raw materials necessary for the country’s manufacturing processes.   AVIC International Maritime Holdings Ltd, a part of Avic Group and a Fortune 500 company listed on the Singapore stock exchange with more than 300 subsidiaries around the world, bought the majority of Deltamarin’s shares late in 2012. The Turku-based company maintains its Finnish set-up, brand and management structure, and now has an established track record across many ship and offshore floater types. The purpose of the AVIC deal was to provide new capital for the ship design firm and open up growth opportunities in the marine and offshore energy markets.   Although this diversification is taking place successfully, it was Deltamarin’s radical approach to bulk carrier design which first brought the company to notice. Improvements have kept on coming and last September, the company announced its B.Delta37 Mark II handysize bulker design offering a potential extra 7% in fuel savings, over and above the original B.Delta37 design, first launched in 2008 and with at last 120 vessels either built or under construction. The latest vessel design already satisfies EEDI Phase 3 (2025) and can operate on liquid natural gas (LNG), or heavy fuel oil with a scrubber.   Deltamarin has also established a strong track record across many other ship types including container ships, cruise vessels, pure car and truck carriers, and tankers. The company has recently been contracted by Arctech Helsinki Shipyard, 100% Russian-owned since December, to work on design of the first LNG-powered icebreakers for the Finnish Transport Safety Agency Trafi.   It is also working on basic engineering for conversion of the shuttle tanker Navion Norvegia into the Libra FPSO at Jurong Shipyard in Singapore. The $696m conversion is for an Odebrecht Oil and Gas/Teekay Offshore joint venture and the unit will work for Petrobras in ultra-deep water off the Brazilian coast.

Designing For Northern Waters

Meanwhile, also in Finland, Aker Arctic continues to carry out research, development and design services for companies undertaking projects in the world’s northern seas. The company has recently designed two Polar-class heavy-deck carriers for the transport of modules for a new LNG facility in Yamal. The two module carriers will deliver components for the gas plant all year round, probably for up to four years. They will face exceptional ice conditions prevailing for part of each year in the Gulf of Ob and the Sea of Okhotsk.   Aker Arctic has also completed the concept design for new

ice-breaking standby vessels destined to work for the operator of Sakhalin 2, Sakhalin Energy Investment Company Ltd. Sovcomflot has ordered three vessels in a $380m contract. The ships are now under construction at the Arctech Helsinki Shipyard and are due for delivery between September 2016 and March 2017.

New Move To Harness Wind Power

However, a far more radical concept in hull re-design is currently under development by Norwegian ship design specialists at Lade AS. Their idea is to turn the hull of an entire ship into a gigantic sail-like profile which, they say, could see the gas-powered Vindskip cutting fuel consumption by 60% and emissions by 80%.   Terje Lade, a speed sailor, is the man behind the project but once again, powerful computers are making the concept possible. Software is being developed by a German firm, the Fraunhofer Center for Maritime Logistics and Services, and will calculate the optimal course and angle to the wind to make the best use of prevailing winds and weather.

Enirams Speed Wide So far, a reference pure car and truck carrier (PCTC) is being used to compare performance figures. In light condition, the PCTC is down by the stern because of the weight of her engine. Substantial volumes of ballast are required in forward spaces, therefore. Typically, up to 5,000 tonnes of ballast are needed to ship 6,000 cars on the vessel which has a displacement of 37,000 tons, installed power of 17,000 kW and a speed of just over 19 knots.   However, a smaller Rolls-Royce designed LNG propulsion unit of 9,000 kW will give the Vindskip an equivalent speed. She will have a displacement of 27,000 tons and will probably have a requirement for less than 500 tonnes of ballast. In a specific 23-day voyage comparison between Japan and Chile, Lade has calculated the fuel and emissions saving of the Vindskip compared with the reference ship which is assumed to burn heavy fuel oil with sulphur content of 3.5%. Over the course of the voyage, the Vindskip would save 670 tonnes of fuel, 2,200 tonnes of CO2, 61 tonnes of NOx and 34 tonnes of

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FEATURE FOCUS

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sulphur emissions. Furthermore, by burning gas, there would be no black carbon or particulate emissions.

Ship Operators Observe LNG Developments

Despite dramatically lower bunker prices recently, the good combustion performance and emissions profile of LNG is likely to ensure that advocates of gas as a fuel continue to add number and gain ground. Once again, Norway has been in the forefront of the drive for LNG powered ships and DNV GL estimates that there are now more than 130 gas-powered ships either in operation or being built.

ISSUE 05. 2015

into force and energy prices are bound to resume their upward trend within a short period. A further escalation of troubled Middle East politics could mean a rebound in oil prices any time, they suggest.   Service vessels are also well-suited to LNG propulsion. Two 75-tonne bollard pull tugs, the Bokn and Borkoy, have now been in service for more than a year at one of the world’s largest LPG terminals at Kårstø in Norway. Built at Sanmar Shipyard just outside Istanbul to DNV GL class, the two vessels chartered by Norwegian state energy firm Statoil are deployed in the escort, manoeuvring and berthing of LPG carriers and tankers of up to 120,000 DWT which call at the terminal day and night, 365 days a year.   Separately, Drydocks World Dubai and Wärtsilä are cooperating in the design and construction of a prototype dual-fuel service tug for the repair yard’s own use. Now under construction at the shipyard and due for delivery late this year, the first tug is being classed by UAE class society Tasneef and could become the first in a series of six such vessels, subject to post-delivery performance.

Measuring The Gains

These include two gas-only ropax ferries, powered by RollsRoyce Marine Bergen engines, operating between Norway and Denmark which are bunkered at both ends of their route. The MS Stavangerfjord, built in 2013, and her sistership, MS Bergenfjord, 2014, can carry 1,500 passengers and 600 cars. Meanwhile, a range of offshore support vessel operators have opted for LNG propulsion and the Bit Viking, a tanker operating on the Norwegian coast for Statoil, was converted to gas power in 2013.   Deep-sea operators are watching LNG propulsion developments closely. However, two key developments recently suggest that the switch to gas, at least for some ocean-going vessels, is merely a matter of time. The first gas-ready container ships contracted by liner major UASC have now been delivered. Altogether, the company has 17 gas-ready vessels under construction, including 11 units of capacity 15,000 TEU, and six of 18,800 TEU.

In such a fuel-intensive business, it is extraordinary that ship operators have failed to instigate more rigorous performancemonitoring systems, relying instead on “noon reports” relayed ashore by seafarers, often on a subjective basis. As one equipment manufacturer commented last year: “Monitoring vessel performance on the basis of noon reports is like bookkeeping with a paper and pencil.”   Now, though, shipping’s ability to handle big data has brought a new era in which shipboard sensors can track a broad range of shipboard performance-oriented criteria.

16

“Rasheeda” – Qatar Arrival Imminent

Meanwhile, in a ground-breaking project, the skid-mounted LNG units for conversion of the Q-Max LNG tanker Rasheeda into a dual-fuel vessel capable of burning heavy fuel oil or LNG have been delivered to conversion yard Nakilat-Keppel Offshore & Marine (N-KOM) in Qatar. The pilot project, undertaken jointly by Nakilat, Qatargas and Rasgas, and engine supplier MAN Diesel & Turbo, has seen detailed preparations underway since the deal was signed in January last year.   The 266,000 m3 Rasheeda is due to arrive at N-KOM in April. The vessel will become the first LNG carrier to operate on a converted MAN ME-GI engine and could provide a blueprint for a significant number of similar engine conversions. Of course, falling bunker prices have taken some of the appeal out of projects like these, but observers point out that emissions regulations are steadily tightening and both global shipping companies themselves, and their shareholders, are increasingly watchful of emissions performance.   Moreover, they point out, ships have operating lives of at least 20 years. Over that time, new emission regulations will come

Finland’s Eniram has already stamped its mark in the cruiseship operation and is targeting other commercial shipping sectors. Iceland’s Marorka recently announced a contract with UASC to provide performance monitoring systems on both new and existing ships. Finland’s NAPA was acquired by ClassNK last year as a valuable addition to the class society’s drive to raise ship operating efficiency for its clients. And multinational ABB, through its Amarcon subsidiary, offers ship performance monitoring through both its Emma and Octopus systems.

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FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

GREEN GUIDANCE

GAINS GROUND IN INDUSTRY

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The shipping industry, increasingly under the influence of growing societal and commercial pressure, must take the impact of shipping operations on human health and the environment into account.   The industry is playing witness to the scope of ‘environmental impact’ widening far beyond the management of oil spills and effluents into the realms of invasive species transfer, garbage, gaseous emissions, grey and black water discharges and underwater noise. Expressing that the environmental profile of commercial shipping operations has increased vehemently worldwide would certainly not be a fabricated statement.   Shipping companies must juggle not only ensuring environmental compliance but also ‘acting on environmental impacts’ by demonstrating their actions and reactions through a myriad of paper trails, logbooks and checklists. Then, to add to the mix, they must also address growing stakeholder demands for transparency, environmental awareness and corporate social responsibility.   Such stakeholder demands hark not only from customers who own the cargo being transported, but also the charterers, the financial institutions and even the insurers. It seems like more and more of the shipping stakeholder network is lighting up with demands for action and transparency around the impact of shipping operations on the environment and seeking environment and ship/fleet efficiency commitments when making contract decisions with shipping companies.   However, ensuring compliance with legislation, keeping up with the latest regulatory changes and reducing the environmental impact of shipping operations can be an arduous task. For example, regulations have been passed before the equipment necessary to comply was available (cue ballast water management), making compliance challenging, to say the least. Given the challenges involved in meeting regulatory requirements, moving beyond compliance may be even more demanding for some, let alone establishing a full system for environmental and efficiency management.   Some shipping companies are already well versed in juggling such balls and are taking large strides towards developing solid strategies that incorporate environmental issues and corporate social responsibility within their operations. These companies can reap a great number of benefits from their organised approach towards environmental management, including reduced operating costs, gaining a competitive advantage in attracting new customers and improved brand reputation and public image.   Yet it seems like structured systems and strategies around ensuring and demonstrating environmental compliance is confined to the largest ship owners and operators. Smaller ones often lack the time or resources for developing and implementing such systems and are left scrambling.   Smaller or mid-size shipping companies lack the economy of size and resources are stretched. They may not have the time to sort through the overwhelming quantity of information available and not have the luxury of supporting technical teams, analysts and even communications managers. Instead, these companies need to rely on outsourcing the development of strategies and programmes for demonstrating compliance, environmental stewardship and maximum efficiency of fleets, incurring additional costs.   It certainly does not help that those environmental management systems currently available to the shipping industry are neither clear nor easy to follow and have mostly not been tailored for application across shipping operations.   Therefore, who could be surprised if many shipping companies consider the establishment of environmental management systems an insurmountable challenge?   “Owners often struggle to understand the meaning of the rules and how they can best meet them while retaining a strong business platform,” according to Jeppe Skovbakke Juhl, Senior Marine Technical Officer, BIMCO.

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  Mr Juhl described how BIMCO had seen increased demand from smaller ship owners who are increasingly fearful that port state control requirements will lead to their vessels being detained more often. For owners with small fleets, a detention can have serious negative financial implications.   The industry needs a resource that caters for shipping companies of any size and at any stage.   In response to this demand, BIMCO recently released a new, multi-part guidance resource to support ship owners and operators in improving their environmental performance and the efficiency of their ships.   This resource, ‘The Guide to Maritime Environmental & Efficiency Management’, was developed by BIMCO in partnership with maritime efficiency specialists Fathom, and supported by ClassNK. It provides the structured approach and all resources required to facilitate the development of a custom environmental and efficiency management system and assist ship owners and operators in demonstrating their efforts.   “If owners can document they have done everything properly, then they are better covered if there is an operational twist”, said Mr Juhl.   John Denholm President of BIMCO, recommends the Guide as an excellent tool for the industry, “I recommend this Guide to ship owners and operators as an excellent tool to facilitate the efficient management of ships, with steps to tackle the great and complex environmental challenges they face on a daily basis. It can also assist companies in minimising the risk of global non-compliance issues, which can be very costly and inconvenient for owners and operators.”   The Guide to Maritime Environmental & Efficiency Management consists of three distinct resources. The first provides a modular framework for setting up an environmental

ISSUE 05. 2015

and efficiency management system. The second is a comprehensive technical and regulatory handbook inclusive of all international and regional regulations that govern the environmental impact of shipping operations and the third part is an extensive library of templates in the form of logbooks, forms and data collection tools that ship owners can use for establishing their own management processes. Claude Dumais, Vice-President, Technical Operations and Environment, CSL Group, commented:   “CSL assisted in the development of this Guide by sharing our technical expertise and experience in improving the environmental performance of our shipping operations. We believe the knowledge and insights contained in the Guide’s pages will contribute to improving environmental management and fleet efficiency around the world.” Catherine Austin, Executive Director, Fathom commented: “This is the first publication to address the lack of a single resource covering both comprehensive information on environmental and efficiency management and to provide a framework for shipping companies to develop their own tailored system.” This Guidance resource was in development over a period of 18 months, building on the expertise of BIMCO and their Marine Technical Committee, ClassNK, chair of the ISO 14001 committee Dr. Anne-Marie Warris and the CSL Group, leading provider of marine dry bulk cargo handling and delivery services and the world’s largest owner and operator of self-unloading vessels.   This green guidance was truly developed with the industry, for the industry.

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FUELS & EMISSIONS

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ADVANCING

FUEL EMULSIONS

21

Ship owners and operators impacted by the new 0.1% sulphur restrictions within Emission Control Areas (ECAs) in Northern Europe and North America have had to rethink not only their fuel procurement strategies, but also adjust to new operational, technical and financial challenges associated with being complicit with the International Maritime Organization (IMO) MARPOL Annex VI regulations.   While the impact of necessary changes made to ensure compliance continue to be observed, the industry has no time to rest on its laurels.   In European Union waters from 2020, stringent 0.5% sulphur limits will be implemented, while the industry currently also has to comply with Tier I and II NOx regulations.   More legislation is bound to be enacted for particulate matter (PM) emissions, especially smaller particles below PM2.5. Further down the line, restrictions on black carbon could be introduced.   Although the shipping industry has made huge strides in lowering its emissions, beyond the halls of the IMO, the shipping industry perhaps unfairly stands out as a ‘villain to be taken to task’.   Take sulphur emissions as an example; ships in international waters beyond ECAs have to comply with a cap of 3,500 ppm. Whilst, for automobiles in the EU, there is a much lower sulphur cap of 15 ppm.   However, action is certainly brewing in the industry. At the last IMO Marine Environment Protection Committee (MEPC) meeting, Russia successfully lobbied the IMO to extend the NOx regulation deadline on the basis that the technology required to reduce NOx to compliant levels has not been sufficiently developed.   Additionally the IMO, at subcommittee level, has approved a definition of black carbon that will now be proposed to the MEPC at the group’s 68th meeting in May 2015, with the aim of developing ways of measuring black carbon to support data collection and potentially reduce emissions.   While the continued efforts of ship builders, engine manufacturers, classification societies and manufactures to assess and attempt to resolve the challenges of fitting compliant equipment in ships should be applauded, SulNOx believes the solution to NOx compliance and significant wider reductions in many other negative environmental impacts caused by all types of hydrocarbon fuels, for both combustion and burning, lies in the use of multi-fuel/water emulsions.   Shipowners and operators will be aware that fuel/water emulsions are not a new concept having been on the radar within the industry for over 100 years. However, it is a technology that has suffered notable reputation issues due to an inability to provide economy, efficiency and most importantly, fuel stability (i.e. no separation of the fuel and water).   However, extensive research and testing conducted by SulNOx provides compelling evidence of a solution to these previously unresolved issues. SulNOx have been testing SulNOxEco™ Fuels since October 2012 and have found the technology to be entirely stable i.e. no stratification and able to maintain a stable shelf life for more than two years.   For the shipping industry - where SulNOx has operated a commercial vessel using its SulNOxEco™ Fuels since April 2014 - this means significant reductions in NOx and particulate matter, including carbon monoxide, carbon dioxide and particulate matter.   SulNOxEco™ solutions are a readily available technology that requires no upfront investment other than an initial license fee, which covers the cost and installation of the hardware required. There is no further cost to the ship owner or operator’s bottom-line financials as SulNOx recoups the ongoing costs of emulsification from a share in the fuel savings generated by its technology, which can be a significant percentage, depending upon factors including ship type, speed and age.

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FUELS & EMISSIONS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

The Shrinking Size Of Technology While marine scrubber technology is not yet considered to be a mature technology, it has certainly progressed past the point of being considered as a ‘new’ technology in the industry.   The players within the marine scrubber sphere are rather established and well known and it has been some time since a novel concept has been introduced to this market.   Recently, Japanese company Fuji Electric stepped into the industry with their novel concept – the world’s smallest wet scrubber.   Fuji Electric, not traditionally known for their maritime mechanical solutions, have also coupled the world’s smallest wet scrubber with both a laser gas analyser and a ‘dust collector’. And although a new player within the marine exhaust gas cleaning sphere, given the outstanding reputation of Japanese engineering, their innovations are certainly something to take notice of.   Takashi Inui, Engineering Manager at Fuji Electric, explained the secret to this scrubber’s success to Fathom in an interview. According to Mr Inui, the secret ingredient of this scrubber is Fuji Electric’s innovative ‘cyclone’ technology.   He told Fathom that “with our cyclone technology, we can achieve faster saturation of the water with the gas. Cyclone desulphurisation has been used for land-based exhaust gas cleaning already, but this is the first marine application.”   It may at first seem ambitious for a company not traditionally associated with the marine industry to develop a scrubber, but Mr Inui explained, “after decades of working to optimise energy use and minimise environmental impact on land, where standards have been strict for a long time, the product line extends our goal to the oceans, to meet a new frontier of environmental regulation.”   Fuji Electric have been working with gas analysers since the 1950s and the ‘dust collector’ is in fact an electrostatic precipitator and therefore very much in their ‘electric comfort zone’. This is still in development but should be able to remove high concentrations of particulate matter and could be combined with the wet scrubber for improved performance.   Fuji Electric claim that it is their cyclone technology that allows the scrubber to typically occupy less than half the volume of competitors’ systems.   As an example, Mr Inui explained that for a ship with a 10MW engine, the system would be just seven meters tall and two meters in diameter.

  Although it is well known that scrubber technology can require high capital investment, Fuji Electric are certain that they are making a strong offering to the market. Mr Inui explained that they are ‘very confident’ that clients would not find competitor systems that provide a better return on investment.   For this scrubber, according to cost curves provided by Fuji Electric, it would appear that a three-year return on investment can be achieved based on approximately 7,500 hours in an emission control area. This is a cost curve based on a US $250 price differential between residual fuel oil and distillates.   Fuji Electric have been working with some impressive partners on the development of this system, all of whom come with their own strong reputations in the shipping industry. Imabari Shipbuilding, Daihatsu Diesel, and ClassNK have been working on the development of the technology as part of the ClassNK Joint R&D for Industry Program, and trials are currently being held on a ship.   This is a company that is not looking to make a quick yen. Mr Inui said that he expects orders to pick up “from 2017 onwards,” and they have their sights set on ships built in Japan and operating in Europe. Watch this (small) space!

www.fathommaritimeintelligence.com

22


FUELS & EMISSIONS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

The Shipping Industry's

Response To The 2015 ECA Regs By Swati Pathak, MEC Intelligence

Choosing the right investment towards compliance with 0.10% sulphur emissions in select emission control areas with effect from 1 January 2015 led to many debates in the past year.   The problem was two pronged; firstly, the multiple options to comply with such as low sulphur marine gas oil (LSMGO), low sulphur fuel oil blends, heavy fuel oil (HFO) with scrubber, liquefied natural gas (LNG), methanol, biofuels etc and secondly, the need to balance long-term and short-term considerations of availability, risk, cost and payback of investment.   With the January 1, 2015 deadline now expired, a review of the announcements made by a total of 70 companies - top 10 companies across seven categories* - in the European Union emission control area gives a good sense on what has been happening in terms of adoption of new technologies, especially in the last six months. Collectively, these 70 companies own a fleet of ~5,000 ships. Note: * The categories assessed are: container (deep sea and short sea treated as separate), passenger, ro-ro, general cargo, bulk carriers and tankers.

The Results

23

55 out of 70 assessed companies have disclosed their compliance strategies publically. Limited information was available for bulk ships and tankers. Results show that passenger and ro-ro categories have decisively moved towards scrubber technology with 75% of assessed companies voting in favour of the technology. LNG offers promises for the future, however, reach has been limited to coastal/inland shipping. The majority seem to be moving towards marine gas oil (MGO). Growth prospects for other alternatives seem limited at the moment.   Scrubber technology has been adopted by 17 out of 70 companies assessed. Top investors in scrubber technology are Brittany ferries (~$500m), Carnival Corporation ($400m for 70 vessels), DFDS (more than $150m) and Royal Caribbean Cruise (15 vessels) using technologies from Alfa Laval, Wärtsilä, Belco Marine and Yara Marine (formerly Green Tech Marine).   The global oil price drop seems to be impacting the scrubber adoption negatively, the orders nearly doubled for the six month period of April 2014 to September 2014, while in the last four months growth has been ~19%. The ships counted that have opted for scrubber technology stands at 160 as of 31 January 2015 as compared to 135 in September 2014. The single largest order was from Royal Caribbean Cruise in December 2014 for retrofitting 13 of its ships.   LNG as compliance fuel is being considered by 20% of the companies studied in the passenger category. Top investors in LNG-fuel technology are Universal Marine, BC Ferries and Fjord Line.   A 13% rise has been recorded in LNG-propelled ship orders in the last four months. As of 31 January 2015, the confirmed order book for LNG propelled vessels stood at 78 as against 69 in September 2014. The key contributor to the order book was the container ship category with 125% growth and 10 orders over the period.   Concerns regarding availability of bunkering infrastructure and the global oil price drop (~50% since September 2014) are the key inhibitors to LNG fuel and associated technology. There was an important order cancellation in October 2014 from Brittany Ferries for four ships; three retrofits and one newbuild.   Various other alternative fuels are also being discussed. ExxonMobil’s low S fuel oil blend HDME50 is being used by ship owners in the Amsterdam, Rotterdam, Antwerp (ARA) region. Lukoil and Cespa have also come up with low sulphur fuel blends.

Stena Line has considered methanol for its cruise Stena Germanica scheduled in 2015.   Biofuels, ethanol, fuel cells as marine fuel are also being studied. Though the growth prospects seem limited for the above alternates on account of availability, safety and compatibility related risks.   LSMGO has been the fuel of compliance for the vast majority especially the containers, bulkers and tankers. Key investors are Maersk Line, MSC, Eimskip, Tallink and Hurtigruten. The reasons adding to the attractiveness of the fuel include prior knowledge regarding the fuel, minimal investment on ship infrastructure, well established bunker supply chain and favourable oil prices.   In the wake of oil price uncertainty, we might expect the slowed down activity to continue in terms of adoption of other technologies such as scrubbers and LNG. However, when the global 0.5% sulphur limit gets enforced in 2020 or 2025, there would not only be the fuel price concern but the supply sufficiency of global refineries to cater to the increased low sulphur fuel demand. The ship owners would keep on exploring the right compliance strategies tailor-made to match their requirements.

About MEC Intelligence

MEC Intelligence is a global strategic and market growth process support company that provides knowledge and insights in the maritime, energy, and cleantech industries. www.mecintelligence.com

www.fathommaritimeintelligence.com


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PROPULSION

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

PARTNERING

FOR PROPELLER INNOVATION Van Der Velden Marine Systems’ R&D department is a busy place, continuing along its path of advancing maritime manoeuvring and propulsion efficiency.   As a daughter company of the Damen Group, Van der Velden Marine Systems has a cooperative approach to R&D, resulting in fruitful synergies and the sharing of expertise with other maritime experts. Fostering relationships with other propulsion specialists is a core strategy for Van Der Velden. It is this strategy that led to the development of their Energy Saving Package (ESPAC™) system with German propeller manufacturer Mecklenburger Metallguss (MMG).   The ESPAC™ system is a whole package that consists of a fixed-pitch propeller with an asymmetric leading edge rudder featuring a propulsion bulb and adapted hubcaps. The combination of these minimises fuel consumption, cavitation, vibration and maintenance.   “We are currently building a 97m2 ESPAC™ system for a series of three 18,000 TEU vessels being built for CMA CGM at the CSSC-affiliated Shanghai Waigaoqiao Shipyard in

China,”says Edwin van Buren, Director R&D at Van der Velden Marine Systems.   “These are the largest rudders we have ever built and by putting them together with 10-metre MMG propellers, the whole package will minimise fuel consumption, cavitation, vibration and maintenance,” he continued.   Van Der Velden recently revealed three partnership-driven innovations aimed at improving propulsion efficiency. The Barke Optimised Steering System (BOSS™) that provides direct feedback to the helmsman about forces acting on the rudder is one such innovation. The other recent innovation is Van der Velden’s retractable FLEX tunnel system. This system improves manoeuvrability, speed and overall fuel efficiency by approximately 10%. With an optimised hull design, the retractable tunnel system, developed in close collaboration with the German Development Centre for Ship Technology and Transport Systems (DST), ensures optimal water flow in both loaded and empty conditions and all water depths of inland rivers and canals.

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STREAMLINE FOR EFFICIENCY

With heightened focus on fuel efficiency, the need for radically new propulsion concepts that can deliver a step change in efficiency is very apparent in the industry. Yet for many years, there has been little real change in conventional screw propeller propulsion. In fact this type of propulsion has witnessed only a marginal rate of improvement during the last 50 years.   The EU-funded research project STREAMLINE – which is short for ‘Strategic Research For Innovative Marine Propulsion Concepts’ - set out with the aim to change the perceived stagnation of propulsion innovation.   Over a four-year period, 22 partners from 8 countries, including leading universities, research organisations and industrial partners, came together to study alternative propulsion and hull hydrodynamics.   Project partners focused on three promising technologies: large area propellers (LAPs), distributed propulsion for inland watercraft and an innovative propulsion ‘pod’ that spins fins to propel a ship. Prior research has shown that, in theory, each of these systems could improve fuel efficiency. But the question is if these theoretical findings can materialise in real life.

www.fathommaritimeintelligence.com


PROPULSION

FATHOM MARITIME INTELLIGENCE

To model real-world scenarios, academics and maritime institutes developed advanced computer simulation tools. Using a technique known as computational fluid dynamics (CFD), these models can show how water flows over and around propellers and propulsion systems.   “The CFD modelling developed in this project produces high levels of accuracy and detail. They are now used across Europe on a daily basis by partners to design, optimise and validate mainstream and novel propulsion systems,” explained Paul Greaves, Head of Marine Research and Technology at STREAMLINE project leader Rolls-Royce. “This will drive widespread advances in ship and propeller designs alongside the specific work on propulsion systems in this project.”   Project partners have used the advanced computer simulations to demonstrate that the distributed propulsion system has the potential to boost ship efficiency. The same could be proven for a concept of biomechanical fins: the ‘Walvisstaart pod’ (WSP) is a novel propulsion concept for inland waterways that mimics the motion of a whale’s tail (walvisstaart means whale tail in Dutch) to generate thrust with up to 30% improved efficiency over a conventional arrangement. Over the duration of STREAMLINE, the design of the WSP was improved and simplified and design details finalised. Further research and development will now help to explore the costs and real-life applications for both the distributed propulsion system and the WSP.   However, the project found that LAPs show the most nearterm promise. It investigated the positioning of a single large diameter propeller behind the stern of the ship in the crest of the stern wave. Positioning the propeller so far aft behind the transom reduces high pressure pulses and vibration, but increases the risk of thrust loss due to ventilation in heavy seas. Three different hull types were investigated – an 8,000DWT tanker, a medium-size tanker, and a twin-skeg Ro-Ro. The small tanker hull showed the greatest gain potential and was taken through a full system CFD optimisation. Simulations were conducted at Chalmers University in Gothenburg, at both modelscale and full size.

ISSUE 05. 2015

  “As we had hoped, these tests validated our theoretical predictions for the concept,” said Göran Grunditz, Manager of the Rolls-Royce Hydrodynamic Research Centre. “With these concept tests, we have really pushed the boundaries of our understanding.”   The tank tests showed that ships with LAPs would use up to 20% less fuel than today, depending on the ship type, size and operating profile. Improved hull hydrodynamics and the optimisation of interactions between the propeller and hull could increase ship efficiency by as much as 25%. This would mark a huge leap forward in maritime technology as previous advances in the propeller alone have only achieved around one percent improvement every decade.     These impressive improvements could be achieved within a decade, Greaves suggested. “The EU-funded project has created real impetus to speed up development times. It has been imperative in bringing all the crucial players in this field together to create the powerful software tools that we needed to investigate alternative technologies and designs.”   Project partners are now ready to develop a prototype LAP system and test it on a commercial ship. “Although we need to prove that our propeller design is cost effective, we hope that its 15% efficiency improvement will outweigh any higher costs,” explains Greaves. “If the propeller enters commercial production, its dramatic fuel savings may make it the industry standard for many vessels within the decade.”   Overall, the results of STREAMLINE could help to substantially reduce fuel consumption and greenhouse gas emissions on a variety of applications by promoting the use of novel innovative solutions. On the other hand, they could also affect current fleet efficiency by providing smaller efficiency improvements on a much larger scale, through optimising current propulsion systems without dramatic configuration changes to the ships, enabled by the development of advanced CFD methods. While it remains to be seen how the project results will be utilised and taken up by the industry, the project certainly contributed to ensuring that the European maritime industry stays at the forefront of predictive and optimisation methods.

www.fathommaritimeintelligence.com

26


PROPULSION

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

SEAWATER: THE FREE EAL FOR PROPELLER SHAFTS?

27

Bearings at the stern tube and the strut of the ship, used to support the propeller shaft, are generally either water-lubricated or oil-lubricated. Only fifty year ago, most large ship propeller shaft bearings were water lubricated. However, the choice of specific bearing lubrication type changed over time and commercial ship owners then shifted to oil-lubrication because it allowed shafting to stay in service longer without being removed.   Still, in today’s industry the tightening of environmental regulations is catalysing water-lubricated propeller shaft bearings to become a popular alternative to oillubricated bearings for commercial ships.   Since the revised US 2013 Vessel General Permit (VGP) came into force in December 2013 ship operators have had to get to grips with using environmentally acceptable lubricants (EALS), also known as biodegradable oils. Through the US 2013 VGP, the US Environmental Protection Agency is enforcing regulations that stipulate that all ships over 24m in length operating in US waters must switch over to EALs in all oil-to-sea interfaces before their next drydocking.   Re c e n t l y, Th o r d o n Be a r i n g s I n c questioned the commercial viability of EALs in oil-based stern tube seals and bearings versus seawater-lubricated bearings, based upon research findings that revealed that EALs – vegetable oils, synthetic esters and polyalkylene glycols – are over seven times more expensive than the mineral oils typically used in oil-lubricated propeller shaft bearing systems.   Of course, the switch to EALs comes with an associated cost. A point which Thordon Bearings, a manufacturer of seawater lubricated bearings for the global marine industry, has leveraged and sought to ease through their technology, a technology that utilises a free, natural resource as a lubricant for propeller shafts.   Using seawater as a lubricant for propeller shafts involves taking seawater from the sea, pumping it through the

bearings, and returning it back to the sea. This results in reduced service maintenance costs, the elimination of storage, sampling, and the disposal of oils. Using seawater as a lubricant, rather than biodegradable oils, not only eliminates the risk of oil discharges, but also eliminates the need for an aft seal. All US EPA VGP requirements are met and helping to ensure future compliance with any zero discharge legislation.   Thordon Bearings seawater-lubricated COMPAC propeller shaft system was given a royal ‘seal’ of approval in March with the Queen officially christening P&O Cruise’s new flagship Britannia in a naming ceremony in Southampton, UK.   The 3,647 passenger vessel, the largest cruiseship built by Fincantieri’s Monfalcone shipyard for the British market, features a bevy of environmentally-friendly solutions, including Thordon Bearings’ COMPAC system to safeguard the marine environment against operational oil spills. Mandy Edwards, Commercial Director, Thordon Bearings, said: “It has been a privilege to be involved in this project. The delivery of Britannia – the largest cruise ship built for the UK market – marks a significant milestone in British maritime history with a name synonymous with Britain’s long relationship with the sea. Britannia will rule the waves.”   “Prior to 1950, seawater was used as the lubricant for all vessels with lignum vitae used as the bearing material to support the shaft, while stuffing boxes acted as the seal to prevent seawater from entering the engine room. Whilst the technology has evolved considerably since those days, we are pleased that P&O Cruises has remained with tradition. The old ways are still the best,” said Edwards.   Last year, Viking Cruises also opted for seawater-lubricated propeller shaft bearings for the 47,800GT cruise ship, ‘Viking Star’. The Viking Star has a Thordon Compac tapered key bearing design with a shaft size of 464mm (18.268 in). This means that no complicated aft seal is required.   This ship is the first of three for Viking’s new Viking Ocean Cruises brand and all are equipped with Thordon Compac bearings.   “We chose Thordon Compac for all our newbuildings because of the long experience of these seawater-lubricated bearings which present no risk of oil pollution,” says Richard Goodwin, Vice President-Engineering at Viking Ocean Cruises. “With the elimination of aft seal maintenance and no oil required, we are expecting considerable cost savings over the life of the vessels.”   Thordon Bearings have also been conducting extensive research into operational costs of using mineral oil, approved EALs or seawater in a propeller shaft bearing system. Thordon’s Bearing’s recently published comparative research revealed that EALs are over seven times more expensive than the mineral oils typically used in oillubricated propeller shaft bearing systems. Craig Carter, Thordon Bearings’ Director of Marketing and Customer Service, asks the question, “what is the point in shipowners investing in costly bio-lubricants when seawater is widely available and 100% free? It’s akin to paying for the very air we breathe.” “When you take into account that between 130 million to 240 million litres of operational oil lubricant is leaked into the oceans each year and needs to be replaced, the cost to the ship owner is simply staggering – and this is without adding any monetary penalties incurred by way of environmental fines.”   Carter concludes, “Seawater is the ultimate EAL.”

www.fathommaritimeintelligence.com


STRATEGIES

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

Is Your Continuous Emissions Monitoring System Compliant? The use of onboard testing systems capable of delivering accurate continuous emissions data to determine actual levels of exhaust emissions is on the rise. The industry is turning to automated systems that minimise time, money and people power to ensure compliance. This upsurge emerges as increasingly strict international and regional regulations around the monitoring, reporting and verification of gaseous emissions come into force across the industry. Demonstrating compliance will assume ever greater importance and with this, monitoring, reporting and verification are growing ‘hot topics’ within the shipping industry right now.

THE BENEFITS

  There are certainly many benefits that ship owners can reap through continuous emissions monitoring. For a start, the installation of such equipment and software reduces man-hours and cuts the inaccuracy of human error when collating the sample data. Additionally, ship operators are currently basing their monitoring on paper fuel receipts, which are highly unreliable and prone to error. These fuel receipts have to be validated by third parties, which is costly and time consuming. Data produced via monitoring systems on the other hand does not require verifying.

THE MONITORING MARVEL

  Much of today’s samples from exhaust gases are physically extracted for analysis. Continuous emissions monitoring of exhaust gases from ship engines and boilers has been, until recently, an expensive and often unreliable process.   Historically, most continuous emissions monitoring systems (CEMS) have been unable to accurately measure the exhaust gas in-situ in the stack using simple electronic techniques such as laser and UV lenses as they are prone to obfuscation from carbon deposits. Also, regulations may require specific methodologies for extraction and calibration. CEMS must be built to regulation specifications or the data it produces will not be accepted by regulating agencies. Harsh Marine Conditions Type Approval from any of the Classification Societies is not a measure of MARPOL Annex VI Regulation 14 compliance and cannot be used as such.   Compliance is only achieved by adhering to the following basic requirements found in Resolution MEPC.184(59) and the NOx Technical Code, Appendix 3: • • • • • • •

Extractive sampling of the exhaust stream. Heated filter to prevent solid particles from entering the sample stream. Heated sample lines to maintain high exhaust gas temperature during transport, preventing the formation of deposits and plugging. Sample conditioning which cools and removes moisture content from the sample, preventing sulphuric acid damage to the analyser. Non-dispersive infrared (NDIR) analyser to measure CO2 and SO2. Calculation of the CO 2 / SO 2 ratio per Resolution MEPC.184(59) at a frequency of at least 0.0035 Hz. Regular analyser calibration via span gas to ensure accuracy of results.

In some cases regulating agencies make allowance for the use of alternative continuous emissions monitoring methods. However, such methods are only compliant if accompanied by express written approval.  

It is extremely important to ensure the CEMS used to prove compliance with MARPOL Annex VI Regulation 14 is built to regulation specifications, or else the data it produces will not be accepted and compliance will not be recognised.   The newer, more state-of-the-art systems are blowing away the time consuming and inaccurate method with the implementation of in-situ monitoring which can provide continuous, realtime data measurements of the gases produced in the exhaust system. These systems are said to be accurate to a few parts per million [ppm] with gas species-specific ranges from 10 to more than 2,000 ppm, depending on what requires measuring.   GreenLink Systems LLC, is a company that offers a plethora of emissions monitoring technologies. They introduced the world’s first commercial Emissions Testing Unit (ETU) that can perform ISO 8178 emissions in-use testing onboard a ship. This unit is specifically designed to undertake approval and verification tests in order to validate the accuracy of installed CEMS equipment or undertake proving trials for R&D or Type Approval. GreenLink Systems also supply equipment for continuous emissions monitoring.   However, this ETU is like no other, GreenLink Systems has reduced a room-sized set of laboratory equipment into a compact ETU that can be placed inside a ship. Although this system is effectively a reduced sized laboratory, it does not need a laboratory technician to operate. The ETU can perform analyser calibrations since it is programmed to run in an automatic calibration mode. It can be operated by a crew member after initial set up.   It is also mobile and can be moved about onboard and between ships if required due to the technology being encased in a special enclosure. The mobile ETU contains a portable sample probe, heated sample line, additional cooling, advanced sample cooling as well as power and grounding designed specifically for field conditions on board an ocean going vessel.   This st ate of the art unit can measure eight different gaseous emissions, including Hydrocarbons (HC), Nitrogen oxide, (NOx), Nitric Oxide (NO), Nitrogen dioxide (NO2), Oxygen (O2), Carbon dioxide (CO2), Carbon Monoxide (CO) and Sulphur dioxide (SO2).   The ETU is integrated into a GPS-enabled onboard server for data logging and uploading to a secure web-based repository. The emissions data collected can be sent to the GreenLink System servers for permanent storage and online analysis and alerts.

www.fathommaritimeintelligence.com

28


FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

THE EU MRV REGS:

WHEN, WHERE, WHO, WHAT AND WHY By Isabelle Rojon, Fathom Maritime Intelligence

29

In late 2014, the Council of the European Union (EU) reached a political agreement on a regulation that sets out new EU-wide rules for monitoring, reporting and verification (MRV) of carbon dioxide (CO2) emissions from maritime transport.   This regulation is now very near to adoption. In fact, the final formal adoption of the regulation will follow the legal linguists’ verification of the agreed text this spring. Once formally adopted, the MRV regulation will enter into force on 1 July 2015.

What Is The EU MRV?

Even though there are estimates for the amount of CO2 emissions that are attributable to maritime transport in EU waters, the exact amount is currently unknown. Thus, one of the fundamental purposes of the EU MRV regulation is to provide reliable data on the CO2 emissions produced by ships. This accurate data will then make it possible to analyse emissions and performance trends for various ship types – a prerequisite for the introduction of any further energy efficiency measures or CO2 reduction measures.   The EU MRV regulation is only the first step of a larger EU strategy to reduce CO2 emissions from maritime transport. The two consecutive steps will be to establish an agreed global energy efficiency standard as part of the regulation and to identify whether the efficiency standards are achieving the EU’s desired CO2 emissions reductions and what else should be done.   According to the European Commission (EC), the EU MRV is also a contribution to the international negotiations on the establishment of a global monitoring, reporting and verification system which are taking place at the International Maritime Organization. In the event that an international agreement on monitoring, reporting and verification of CO2 emissions from shipping is reached, the EC will have to review the scheme to align it with that international agreement.

To Whom Does The MRV Regulation Apply?

The EU MRV regulation will apply to all ships above 5,000 gross tonnage regardless of their flags (with a few exceptions). CO2 emissions and energy efficiency will need to be monitored for: • all intra-EU Union voyages; • all incoming voyages from the last non-EU port to the first EU port of call; • all outgoing voyages from an EU port to the next non-EU port of call. Emissions from ships within ports will also need to be monitored, reported and verified. This is intended to encourage the use of available shore-based emissionreduction technologies.   The regulation exempts warships, naval auxiliaries, fish catching or processing ships, wooden ships of a primitive build, ships not propelled by mechanical means and government ships used for non-commercial purposes.

www.fathommaritimeintelligence.com


STRATEGIES

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

‘M’ Is For Monitoring

Under the EU MRV, data will have to be monitored both on a per-voyage and yearly basis for all voyages conducted into, out of and between EU ports. Again, the regulation provides for an exception: ships that undertake more than 300 voyages within the reporting period or if all their voyages during the reporting period either start or end at a port under the jurisdiction of a Member State do not have to monitor this information on a per-voyage basis, but only on a yearly basis. The different requirements for per-voyage and yearly monitoring are outlined in the table below. Per-Voyage Monitoring

Yearly Monitoring

Port of departure and port of arrival including the Aggregated CO 2 emissions from all voyages date and hour of departure and arrival between, departed from and to ports under a Member State’s jurisdiction CO2 emissions which occurred within ports under a Member State’s jurisdiction at berth Amount and emission factor for each type of fuel Amount and emission factor for each type of fuel consumed in total consumed in total CO2 emitted

Total CO2 emitted

Distance travelled

Total distance travelled

Time spent at sea

Total time spent at sea and at berth Average energy efficiency

Data on amounts of cargo carried, and transport Data on amounts of cargo carried, and transport work work

The monitoring of CO2 will include emission sources onboard such as main engines, auxiliary engines, gas turbines, boilers and inert gas generators but the precise scope of these sources still needs to be specified. CO2 emissions will either be calculated by multiplying the actual fuel consumption data of the ship and the appropriate emission factor for the fuel type used, or by direct emissions monitoring.   For monitoring fuel consumption, companies (‘DOC holders’) may select one out of four options. These four options are bunker fuel delivery notes, bunker fuel tank monitoring, flow meters for applicable combustion processes or direct emission measurements. The regulation also permits the use of a combination of these methods if it improves the accuracy of the CO2 emission data for a given combustion source.   The choice between these four options is intended to allow owners and operators to make use of any existing systems they already have in place without the need to invest in new equipment.

‘R’ Is For Reporting

Ship owners and operators to whom the EU MRV regulation applies must adhere to a timetable of reporting requirements. According to this timetable, ship owners or operators must: •

By 31 August 2017, submit to an accredited verifier a monitoring plan indicating the methods chosen to monitor and report emissions.

From 1 January 2018, monitor activity and emissions data for each ship on a per-voyage and annual basis.

From 2019, by 30 April each year, submit a verified annual emissions report to the European Commission and the relevant flag State.

From 30 June 2019 onwards, carry onboard a document of compliance issued by an accredited verifier. It is not only the ship owners and operators that are under reporting obligations: the EC has committed itself to publishing an annual report on emissions from maritime transport to inform the public and to allow for an assessment of the emissions and the energy efficiency of maritime transport per size, type of ships, activity, amongst other factors.The EC will also have to assess the maritime sector's overall impact on the global climate biennially, including through non-CO2-related emissions or effects.

‘V’ Is For Verification

The key verification requirement in the EU MRV regulation is that both the monitoring plan and emission report have to be independently verified by an accredited third-party verifier. This third-party verifier may include classification societies.   If the ship meets the requirements in the MRV regulation and monitoring has been conducted according to the monitoring plan, the verifier will issue a document of compliance.

The Devil Is In The Detail

Authority has been delegated to the EC to provide additional information, guidance and supporting requirements in relation to several articles of the regulation. This means that a number of details are still outstanding and we shall await how these may look like.   Leading environmental expert Dr Anne-Marie Warris, who has been involved with Monitoring, Reporting and Verification issues since 2000, commented: “It is challenging that the EU has chosen to take this step, but positive that they have limited it to MRV. The regulation may look simple, but the devil is in the minor details and there are many areas where that minor detail has yet to emerge.”

www.fathommaritimeintelligence.com

30


FEATURE FOCUS

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

CEMS - Monitoring & Reporting Saviour? By Chris Daw, Managing Director, Parker Kittiwake Procal

31

“It is one thing to lay down regulations; it is quite another thing to enforce them,” so says the Danish Maritime Authority (DMA). This sentiment is currently echoed throughout much of the industry, and applies not only to MARPOL Annex VI, which dictates a sulphur limit of 0.10% within emission control areas (ECAs), but also the European Union’s (EU) monitoring, reporting and verification (MRV) system that will apply to all ships over 5,000 gross tonnes from 2018. MRV will require vessels to report fuel consumption, CO 2 emissions and transport work for voyages entering EU ports. In both cases, the majority seems keen on adopting a harmonised approach. However identifying the most effective method to monitor compliance is still inhibited by confusion around the technology available to achieve this.   Universal contention remains around monitoring and recording of compliance; an efficient enforcement strategy on an international level is still to be defined. Currently bunker delivery notes (BDN) showing the sulphur levels in fuel taken onboard are used to evaluate SO2 levels. These could also be used to monitor C O 2 , N O x a n d p a r t i c u l a t e m a tt e r. However, this approach is far from fit for purpose, especially when many relatively inexpensive technologies are readily available on the marketplace to provide a monitoring solution.   The Clean Shipping Coalition (CSC) has suggested to the International Maritime Organisation (IMO) that continuous monitoring technologies that monitor emissions directly during the entire journey should be installed on all ships. In its submission to the IMO last year, the CSC said BDNs leave too much room for uncertainty.   The pitfalls of the BDN approach are echoed by members of the recently established Trident Alliance, which is working hard with national and European authorities and NGOs to define how e ffe c t i ve e n fo r c e m e n t o f s u l p h u r regulations can be achieved on the high seas.   The marine industry is already familiar with continuous emissions monitoring systems (CEMS). It is the most popular

method of verifying the performance of scrubbers according to IMO guidelines.   CEMS has the ability to monitor gases from the combustion of residual and distillate fuels such as SO2, CO2 and NOx. By transmitting this information ashore combined with identity, position and port calls obtained from the AIS (Automatic Identification System), PSC can easily confirm compliance in port, in ECAs and in international waters.   As those involved in this debate increase their knowledge of the capability of CEMS, growing numbers are voicing their support of this technology as a viable solution. CEMS that continuously monitor emissions in the stack – ‘in-situ’ – are most effective and do not require, often expensive and difficult to maintain extractive sampling. In-situ monitoring provides a continuous, real time monitoring of the content of exhaust gases, with data provided instantaneously on a screen that can be installed in the engine room and on the bridge.   An instrument such as Parker Kittiwake’s Procal 2000 can monitor up to six exhaust gases and a typical system could monitor up to six emission points to monitor gases such as SO2, CO2 and NOx. The analysers are connected to a data acquisition system, which displays data logs and retransmits the monitored concentrations and SO2 and CO2 ratio – in accordance with IMO regulations – without any manual intervention. This, linked with the low

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maintenance requirements, makes it an ideal marine monitoring system. Moreover, by adding a flow device to the exhaust and sending the signal to the CEMS, the emissions in mass units - for example kg/h - can be displayed and logged, enabling fuel burn to be monitored as required by the planned MRV regulations.   When it comes to environment al compliance – no matter how efficient and effective – the cost is understandably the first question asked. However this should not present a stumbling block for CEMS. The Procal analyser system, for example, costs approximately £25,000. The United States has stated that it will enforce strict ECA compliance and could enforce penalties of $25,000 a day. Although there may be significant variances in Europe (the Netherlands is considering a six-figure sum or detentions), this still makes any investment in CEMS equipment relatively inexpensive. Widespread uptake would also reduce overall costs.   As increasingly stringent global regulations continue to evolve, the reduction of SO2, CO2 and NOx emissions will challenge growing numbers of stakeholders across the shipping industry the world over. Continuous emissions monitoring technology has the ability simplify reporting while at the same time enabling a level playing field when it comes to compliance. Those looking for a harmonised, viable and cost effective approach need look no further.


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ELECTRONICS & SOFTWARE

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

OCTOPUS-ONBOARD FOR GREEN DOLPHINS

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Pioneer Marine’s newbuild Green Dolphin Eco vessels will play host to the OCTOPUS-Onboard fuel monitoring system to support the crew’s decision-making.

Singapore-based Pioneer Marine has selected the OCTOPUSOnboard fuel monitoring systems from Amarcon, an ABB company, for twelve Handysize bulk carriers currently under construction at the YangZhou GuoYu shipyard in China.   The Pioneer newbuildings are Green Dolphin Eco vessels designed by Shanghai Merchant Ship Design & Research Institute (SDARI) to have reduced fuel consumption and to meet current and future expected air and water emissions regulations. The ships will be delivered to Pioneer Marine in 2015 and 2016.   Amarcon’s Octopus-Onboard fuel monitoring system consists of Coriolis flow meters, a Torductor torque measurement system and a software solution that can analyse all data collected.   Octopus-Onboard also offers wave measurements, weather forecasts and navigation data such as speed, course, RPM and the voyage plan, as well as ship characteristics, loading conditions and motion sensor measurements.   By sending the sensor-measured data to the software, the Octopus-Onboard system makes important fuel consumption indicators available to the ship crew and the onshore operations department. The system supports the crew in decision-making and enables them to optimise the fuel efficiency of the ship. The data collected from the sensors can also be analysed later using the Octopus-Online portal. “Safety of our people and protection of the environment are our top priorities. The Octopus-Onboard advisory system compliments the Green Dolphin newbuild design and introduces a new dimension to ensuring optimal fuel efficiency. Accurate

advice based on the sensor-measured information enables the crew to operate the vessel in the most fuel efficient manner, thus reducing our carbon footprint,” says Pankaj Khanna, President and CEO of Pioneer Marine.   “Fuel consumption is the highest operational expenditure for each and every vessel of the global fleet, and one of the biggest environmental concerns. Our Octopus-Onboard system helps ship operators to efficiently optimise the fuel consumption of their fleet while they also reduce their emissions,” says Heikki Soljama, Managing Director for ABB’s Marine and Ports business.

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GImplement OFF change: ON & YEXHIBITION G O C , I E MARITIME AND H N N T N working for continuous I & I P E E P TION A IN S I R P E T R I D B E HIB I R L R H G F I H improvement practices.ON O S O U PO C A EX EAN FOR OGFFSH & HIPB GY, V C N O S E E R N O A , , C E N O & • CEchange upI and maintain ensuring Othe PING NFEREN 5. XFollow DING OFHIRUSSIA E EN HYchange: IBIT & L P RCONFERENCES P H I O A S U T H R E ORE CO A benefitsNcontinue RS FS OR OG to materialise. H V HIPB O & P S E F S , F A N N , Y CE TIO NG, RG , OF or a focused Y• ING NCE I I O E H P E G P B I & N P P R N When analysing a fleet’s performance in general P I I I H D XH FE RA TS area of O N ILlowest RE E bringing Uthe R SH operations, performers to at least B CON VA E POR NOG O H P E & CO , F A I S & Y N E F H E N N G F C • S C O the level of average performers is often both the fastest and I O R O , O N Y Y IBIT ENE APH ING, most PINGaction. 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Driving Operational Change With DataDriven Analytics

5 1 0 2 A V E N


ELECTRONICS & SOFTWARE

FATHOM MARITIME INTELLIGENCE

EXAMPLE 1: FLEET SPEED PROFILE PERFORMANCE

Here we have two ships from a study we carried out with one of our customers. Each dot on the graph represents one leg that has been operated by the vessel and how much extra energy was used because of the speed profile and engine combinations. Both ships operated on comparable schedules under similar conditions.

ISSUE 05. 2015

customer was able to bring down the levels of HFO closer to the company’s policy; showcasing how bringing this highlevel of sophisticated data analytics can help to improve overall operations when these problems become visible.

Problem identified: By using specific data-gathering processes via our Eniram Platform on both vessels, we were able to determine that Vessel A had a tendency to sprint in the beginning of the leg, then loiter at the end, which naturally leads to lower overall speed profile performance. Result: By identifying the vessel differences, we were able to help the customer reduce the total fuel consumption of Vessel A by approximately 1% of the total fuel consumption. The visibility of the effects of the speed profile enabled the shipping company to take improvement actions on vessels where it was most needed. Observation/recommendation: Further analysis can be used to find the real causes behind those differences. Planning improvement action, executing on that action and consistently following up is the only way to ensure a successful outcome.

EXAMPLE 3: ACTIVE ROUTE MANAGEMENT

Routing is a very traditional problem and also very complex with many factors affecting it such as weather, shallows, distance to the shore, currents and ECA zones.   When analyzing routing, quite often the most effective way to improve this within the fleet is to compare where the vessels are having the most problems and then create best practices for those legs which seem to be problematic.   In this case, the difference between the best and worst routes is over 12% of the total fuel consumption (a rare case). According to our advanced analytics studies, the overall average potential improvement of actively managing routes of a fleet is typically around 3% of the total fuel consumption.

EXAMPLE 2: BUNKERING MANAGEMENT CASE STUDY

Our customer needed to find out if some of the vessels in their fleet were holding too much Heavy Fuel Oil (HFO) on board. Problem identified: Again using the Eniram Platform, we performed several analyses on tank levels on these ships and found that despite consistent bunkering patterns in the same port and no major bunker price differences, many vessels were indeed holding an overage of HFO. Result: We helped the customer eliminate the extra 1,000 tons of HFO on each vessel; the difference of over 1,000 tons of HFO onboard between the minimum levels means increased draft, and that there is an extra half a million USD tied in working capital on the vessel, which costs in total circa $100k each year per vessel depending on the type of vessels and company’s internal cost of capital. Observation/recommendation: Simply by using our in-depth reporting analysis, and performing follow-ups on tank levels through a regular report that aggregates data on the amount of fuel onboard, the company could easily track fuel levels. Our

Without data gathering, analyses and constant reporting, it can be very difficult to find the case and effect from complex onboard systems. Eniram offers our customers these powerful tools to get at the most minute of details and unravel the mystery, bring better transparency, efficiency and operational performance to a single vessel or an entire fleet.

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ELECTRONICS & SOFTWARE

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

THE SHIP Automation on ships is amassing importance in the industry as the workforce operating the world’s commercial ships becomes more costly, more connected and more global. Access to technology and connectivity is increasing and automation has become tremendously important to the shipping industry.

37

The market is driving ship owners to streamline their operations and become more efficient not just in terms of the fuel efficiency of their ship, but the efficiency of the operation and management of the ship.   When streamlining costs and tackling the improvement of bottom line, the finger immediately points to the fuel bill. Next in line for cost shaving is crew expenditures. Efficiency through reducing the number of staff onboard and switching to the use of automatic control and monitoring systems that allow for unattended operation of machinery spaces is not a thing for the future. It is here and readily available for the industry to grasp. However, installing such systems can be expensive. Ship owners can gradually recoup their investment with more efficient operation and fewer onboard crew.   Progressively, operational functions are ticking along without human input. Networks of sensors are enabling the use of software systems that automatically regulate and control all manner of functions including temperatures, pressure, flow control, position of the ship, speed, torque, machinery and equipment status, amongst a variety of other functions. The automatic ship is one that plays host to a modern automation and control system made up of such sensors and networks within a fully integrated system covering many aspects of the ship operation. Mikael Mäkinen, President – Marine at Rolls Royce recently described how the smart use of “big data” is driving increasing automation in shipping today. He believes

that over the next ten to twenty years, ‘ship intelligence’ is going to be the driving force that will determine the future of the industry, the type of ships at sea, and the competence levels required from tomorrow’s seafarers.   Mäkinen pointed out that ‘ship intelligence’ offers the potential to fill the gap that is already opening up between increasingly complex ships and the growing shortage of competent crews. Greater ship automation in the future would change the role of ships’ crews who would become operational supervisors, ensuring the smooth-running of automated systems including navigation, station-keeping, operational real-time optimisation, component health monitoring and automated reporting.   Nonetheless, greater shipboard automation will take time and require some significant integration of different systems. According to Oskar Levander, VP of Innovation, Engineering & Technology at Rolls-Royce, these systems will not develop overnight. “It will be a step-by-step approach.”   “We are using many tools to measure, analyse, provide decision support and to automatically control different functions and services onboard,” he pointed out, “but they are not designed to work together, so the benefits one system can get from using the ‘intelligence’ from the others is not being utilised.”   This is changing, however. Automation is being widely adopted and more complex systems are being integrated with smarter user interfaces.

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SHIP DESIGN

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

NORWAY PIONEERS

OSV DESIGN INNOVATION Few sectors of shipping have demonstrated more creative thinking and design innovation than the offshore support vessel (OSV) arena, particularly in Norway where offshore operations are routinely undertaken amid some of the harshest marine conditions on the planet. 39

Partly because of tradition – Norwegians have a rich fishing heritage in remote and challenging waters – and partly because of decades of North Sea energy activity, design innovation has flourished and with it, a proliferation of firms specialising in various aspects of OSV design. To some extent, there has been a knock-on effect in other offshore-oriented locations, particularly those in which north European operators are active, including Brazil, Singapore and China. Shipbuilders in these locations have benefited from Nor wegian innovation. Often, ship or offshore equipment designs are sold from companies like Ulstein, Rolls-Royce Marine and Vard (ex STX) and built under license

in cheaper locations, or in regions where strict local content rules apply.   N o r we g i a n c o n s t ru c t i o n i s s t i l l considered the premium product, however, and it is Nor wegian firms which are pioneering the latest developments design in ship design and efficiency. Specifically, in a region referred to as “the west coast” – around Aalesund – there is a highly successful cluster of innovative offshore design and engineering firms working closely with Aalesund shipbuilders Kleven Verft and Ulstein Verft, with Havyard and Vard Langsten nearby.   They have a ready market. Some of the world’s most advanced offshore operators are also clustered around Aalesund. They include companies such as Bourbon Offshore Nor way, Farstad Shipping, Havila Shipping, Island Offshore, Olympic Shipping, Rem Maritime, Remoy Shipping and Solstad Offshore. Between them, these companies operate some of the most sophisticated offshore vessels in the world.   Recent trends in ship design are clear to see. So-called “easy oil” has mostly gone, leaving smaller deposits of hydrocarbon resources lying in deeper waters further from shore and usually in more hostile environments.   More sophisticated exploration and production rigs and larger and more powerful support craft are needed.

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Ship design parameters such as size, endurance, transit speed, dynamic positioning capability, engine power, m a ch i n e r y a n d d e ck a u t o m a t i o n , seakeeping, and quality of life onboard have all come under the spotlight.   Whilst design innovation focuses on all aspects of ship design and onboard systems, the Nor wegians have been instrumental in developing a new approach to hull design, specifically bows and sterns. Family-run shipbuilder Ulstein, for example, announced its first wind service vessel contracts in January which will incorporate the company’s new X-stern.   Germany’s Bernhard Schulte has ordered two service operation vessels (SOVs) of Ulstein’s SX175 design which has been developed by the builder’s own design department, Ulstein Design and Solutions. Detailed arrangements and vessel equipment have been finalised in cooperation with Windea Offshore GmbH, Schulte’s offshore wind affiliate.   The SX175, intended specifically for the wind service sector, incorporates the first “X-stern”, enabling the vessel to operate either with bow or stern facing oncoming wind, waves and current, thereby increasing the operational window. The ships will also incorporate Ulstein’s distinctive “X-bow”, first launched in 2005 and which broke through 100 orders in January of this year.


SHIP DESIGN

FATHOM MARITIME INTELLIGENCE

  Ulstein’s innovative hull design was soon followed by Rolls-Royce Marine (RRM) which introduced its own wavepiercing bow technology. This has been incorporated on a range of vessels including the Eidsvaag Pioner, a fish food carrier fuelled by natural gas and based on RRM’s Environship design. The vessel has a Promas propulsion and manoeuvring system and a hybrid shaft generator for added operational flexibility.   Meanwhile Astilleros Gondan is building a third RRM platform supply vessel for Simon Møkster Shipping. The

ISSUE 05. 2015

wave-piercing UT776WP vessel has been developed specifically for Arctic operation and may well have Winterization Cold Class Notation. She will also be capable of fire-fighting and oil spill recovery.   Specialist OSV builders within the STX Group, now taken over by Vard, have also researched and developed lowresistance bow technology incorporated in a recent delivery from Vard Søviknes. The construction support vessel Normand Vision, one of the largest and most sophisticated of its type, was delivered to Solstad Offshore last year.

  The DP2 vessel is designed for subsea, umbilical, riser and flowlines (SURF) operations and has remotely operated vehicles and offshore cranes which can operate to depths of 3,000 metres. She is currently using her 1,800-tonne carousel on her sternmost deck to install an umbilical in 2,000 metres of water for the Delta House project in the Gulf of Mexico. Since her delivery last year, the vessel has worked for Statoil and Norske Shell on the installation of various flowlines and umbilicals on the Norwegian Continental Shelf.

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First LNG-Powered OSV Enters Service There is already broad acceptance within the shipping industry that liquefied natural gas is a viable and attractive alternative option as a marine fuel. At a time when environmental legislation is having an unprecedented impact on shipping and conventional diesel fuel prices are fluctuating, the move towards LNG fuel is rapidly accelerating. LNG is clearly no longer merely a ‘niche’ fuel relevant to just a small segment of the maritime sector. In fact, as the supply infrastructure develops, it is not difficult to foresee that within a very few years it will be a more common fuel choice for all types of ships. Across the industry, the uptake of LNG as a marine fuel is spreading and vessels are being designed to facilitate

LNG fuel storage and use. Ship retrofits are also under consideration, however to a much lesser extent compared to newbuild designs. The design aspects of factoring in the use of LNG fuel is a key factor that ship owners must consider. But reports of pioneering LNG-fuelled offshore support vessels (OSVs) are starting to emerge in an industry where the OSV sector is

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renowned for its innovation around ship design and technology adoption.   For OSV owners, LNG fuel is an attractive option and this particular sector has been cited as a major user of LNG, with several ferries and OSVs operating in Europe switching from heavy fuel oil to LNG in a bid to comply with emission limits, particularly enforced in Emission Control


SHIP DESIGN

41

FATHOM MARITIME INTELLIGENCE

Areas. Some of the more notable market participants include Gazpromneft Marine Bunker, Bomin Linde LNG GmbH & Co. KG, Gasnor, Skangass as well as Harvey Gulf International Marine (Harvey Gulf).     This February, Harvey Gulf announced that they have achieved the first ABS Classification Certificate and the first USCG Certificate of Inspection for an OSV powered by LNG. The vessel will meet the stringent requirements of the ABS “ENVIRO+, Green Passport” notation, making them the most environmentally friendly OSVs in the Gulf of Mexico. This marks a great step forward for LNG use by the OSV sector.   The Harvey Energy is an OSV which is to be put into service in the Gulf of Mexico under long-term charter to oil major Shell. Last week the vessel performed the first truck-to-vessel transfer of LNG fuel and is currently the only LNG powered OSV in the region. However, that particular vessel won’t wear the crown for long as Harvey Gulf plan to put two further LNG powered OSVs onto the water in the next couple of years.   Based on the Vard Marine 1 311 design, the Harvey Energy occupies 302 feet in length and is fuelled by Wärtsilä’s LNGPac™ system with three Wärtsilä dualfuel engines providing 7.5MW of power. The Harvey Energy is not only capable of running on 99% LNG fuel, but also retains the capacity to continually operate for approximately seven days before refuelling is required. In addition to using LNG as a fuel, the OSV will also use high efficient Gadinia 40 as its engine oil.   The Wärtsilä LNGPac™ was introduced to the market in 2010 and comprises a complete system for LNG fuel handling including bunkering station, the LNG tank and tank connection space including process equipment, the heating media skid and the control and monitoring system. Wärtsilä’s innovative Gas Valve Unit (GVU) fits between the LNG storage system and dual-fuel (DF) engine and is used to ensure the safe and reliable feed of gas to the engines and safe disconnect (should that be necessary). New designs enable GVUs to be placed inside the engine room and even further developments allow the functional components of the GVUs to be installed inside the tank connection space.   The design of the innovative vessel was initially based on the International Maritime Organization’s (IMO) criteria applicable to gas-fuelled vessels, as at the time of design US regulations were not yet in place. A proposal by Harvey Gulf and Vard Marine was sent to the USCG to help the federal agency establish an equivalent level of safety which is comparable to the required level for traditional OSVs. Once accepted by the USCG, a design

ISSUE 05. 2015

base letter was established to outline the required equivalent level of safety. Since 2012 a regulatory framework for US flagged LNG-fuelled vessels has been established which is applicable to gasfuelled vessels. It is entitled “Equivalency Determination – Design Criteria for Natural Gas Fuel Systems”.   The design of any vessel for LNG fuel use requires additional structural considerations for fuel tank storage and often faces difficulties associated with space limitations, double-walled stainless steel piping, and cryogenic materials. To increase the flexibility in construction and operation of the vessel, while maintaining levels of safet y and environment al protection, projects can choose to enrol in the USGC Alternative Compliance Program (ACP) – a voluntary alternate process for U.S. vessels to obtain a Coast Guard Certificate of Inspection (COI) by complying with the standards (including all IMO applicable regulations) of an authorised class society. The enrolment of this project in the USCG ACP has assisted to reduce the regulatory burden through elimination of duplicative regulations and inspections. However, because the requirements for gas-fuelled ships are not published in the USCG regulations and because the IMO International Code of Safety for Ships Using Gases or Other Low Flashpoint Fuels (IGF Code) is still under development, the USCG has retained all plan review and inspection responsibilities for LNG fuel gas systems and equipment.   In accordance with these guidelines and the ABS, requirements for gas-fuelled vessels ABS and the USCG collaborated

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with the ship owner, designer and equipment manufacturer to produce a vessel which addresses the safety and technical challenges associated with design.   “Shell is delighted to be the customer of this innovative vessel,” commented John Hollowell, Executive Vice President, Deep Water, Shell Upstream Americas. “It is a pleasure to partner with Harvey Gulf on this pioneering project. Shell’s investment underlines our confidence in LNG becoming a bigger part of the global fuel mix.”   Christian Buelow, General Manager Downstream LNG Americas, added, “I’m pleased to see this firstof-its-kind vessel operating in North America. Shell continues to look in to the commercial opportunity of supplying LNG fuel to customers in the region – both marine and road transport customers.”   The use of LNG fuel is not a new phenomenon within this sector, in fact LNG fuel technology was previously developed and implemented 11 years ago by Wärtsilä for use on a platform supply vessel (PSV) working for Statoil in the North Sea. Although there are some concerns regarding infrastructure and availability of LNG, those adopting LNG at the earliest opportunity will be at a competitive advantage as they will have a greater chance of meeting emission regulations and will achieve a higher level of efficiency.


Operating in Emission Control Areas The Guide

FULLY REVISED EDITION FOR 2015 This essential Guide delivers impartial, expert guidance and practical information on all aspects of operating within Emission Control Areas.

The Guide

The comprehensive Guide provides insight and guidance to: » Emission Control Areas rules and regulations. » Options for compliance. » Considerations when switching to low sulphur fuels and distillates. » The practicalities & technical considerations of fuel switching.

The Manual

The durable, hard-cover onboard Manual gives crews the tools they need to ensure compliance, including: » All ECA area co-ordinates. » Fuel oil changeover procedures. » Considerations when switching to low sulphur fuels. » Taking the MARPOL Sample.

PURCHASE THIS PUBLICATION NOW VIA www.fathomshipping.com/theguides


SHIP & BUNKER

FATHOM MARITIME INTELLIGENCE

Tricks of the

ISSUE 05. 2015

Bunker Trade In each issue of Ship Efficiency: The Insight, The Bunker Detectives, in association with Ship & Bunker (shipandbunker.com), will share insight and advice around bunkering best practices to make sure bunker buyers get the bunkers they pay for. Keep your eyes peeled for vital information that could help slim your bunker fuel bill! The Bunker Detectives, a division of AVA Marine, are a dedicated team who primarily help ship charterers’ & bunker brokers deal with bunker quantity disputes (which do not fall under P&I cover for charterers’), and also offer an exclusive service to ship charterers’ dealing with ‘Bad’ Bunker dispute claims, such as the supply of contaminated or off-specification bunkers.

Singapore Cappuccino Bunker Incident Report 43

C

appuccino effect remains still one of the most common and widely used malpractices in the bunkering industry to-date. Despite lots of articles and loss prevention bulletins being issued by various P&I Clubs, we are still seeing a lot of vessel’s falling victim to this ill-practice. This report comes from a Cappuccino Bunker incident that was discovered last month by the Bunker Detectives in Singapore.

The Incident

During a routine stem survey last month in Singapore for one of our clients, a malpractice involving Cappuccino Bunkers was detected and immediate steps taken to mitigate any losses. The fuel grade being delivered was MFO 380 cSt, with the delivery taking place at Singapore Anchorage. On October 17, 2014 approximately 6 hours into bunkering, bubbles/froth were detected on the sounding tape. The bunkering operation was immediately suspended and the vessel and barge remained idle for about 9 hours awaiting the suspected froth/bubbles (entrained air) to settle down. Once the matter was resolved to the satisfaction of the Chief Engineer, measurement of the actual quantity received onboard was noted and the same reflected in the ullage report. Had this malpractice not being detected the client would have suffered an approximate monetary loss of US$36,000 and perhaps even more if the full nominated quantity of bunkers would have been delivered. The name of the supplier, client, vessel, and barge were of all noted but they have been intentionally withheld in this incident report. Bunker Detective clients have already been contacted regarding this matter, but non-clients wishing to discuss the matter further can contact the Bunker Detectives at surveys@bunkerdetective.com for more information.

Evidence of froth bubbles on sounding tape

Approximately 10 hours later - clear reflection with no entertained air

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SHIP & BUNKER

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

Singapore Bunker Price History Dec 14 - Mar 15

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With bunker price indications for over 150 of the world’s top bunkering ports, in addition to daily news and exclusive features, Ship & Bunker is the world’s leading free-to-access website focused on marine fuel.

There is no registration process, or username and password to remember. Simply visit shipandbunker.com for immediate access to the critical business information you need, fast.

www.fathommaritimeintelligence.com


INDUSTRY EVENT INSIGHT FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

EVENT REVIEW: Smart Operations 2015 -

Miami Inmarsat, the leading provider of global mobile satellite communications services, staged their ‘Smart Operations’ seminar in Miami in February.   The seminar played host to an array of maritime leaders spanning the shipping, port, satcoms and software development fields and focussed on new capabilities now available to maritime and the issues preventing the widespread adoption of existing, new and emerging technologies to increase operational efficiency.

The Changing Face Of Operations

The Smart Operations: Miami seminar was officially opened by Joe Cox, President, Chamber of Shipping of America who asked the audience not to look to the past but to think about what the future holds for the maritime industry.   Cox made the point about how much operations had already moved on in the time he had been working within the industry, stating that you would now be prosecuted for some practices that had been standard whilst he was at sea.

Opening Up The Possibilities

Hosted by

Event Series Partner

Event Sponsor

Providing insight from the ship operator perspective, Vino Kumar Fleet & Operations Director, CMA CGM gave an uncompromising overview of the challenges that operators face.   Kumar addressed a fundamental problem to the implementation of new technologies; the lack of organisation and resources in many operating areas. Speaking specifically about the Central and South American regions, he spoke eloquently about the realities of a lack of infrastructure, poor technical equipment and facilities and a less than adequate plan for addressing poor security in many operating areas.   Kumar concluded that problems in modern times are more often than not due to the human factor. He strongly believes that the industry has access to the technology capability to improve the operations’ supply chain, however whether or not the humans use the tools effectively (or indeed know how to use them) is the block.   This message was echoed by Jan Erik Hårvei, Managing Director, Tero Marine. Hårvei provoked discussions around how, as an industry, we can use the information collected to optimise operations. How do we use the information to turn it into profit?   Tero Marine definitely know what they are talking about when they broadcast this message. They have over 30 years’ experience in providing fleet management services to the maritime industry offering software-based systems for planned maintenance, procurement, crew management and quality & environment.   Hårvei explained that the information itself, when fed into a framework of good operations and sound decisions, can then be used to turn it in to profit.

Simplifying Process Flow

Another example of the real-world application of data for improved processes was given by Shelia Davis, Marine Product Lead, LLC (ILS) who showed delegates how concepts from other industries can be applied successfully to the maritime industry with relatively simple customisation.   ILS offer a cloud-based, spare part acquisition service and have built a custom portal for maritime that allows ship operators to view their suppliers’ real-time inventory and request proposals through one standardised format. This streamlines a process that currently can be complex, time intensive and inefficient.   The imperative importance of a streamlined, smooth flow of process through the supply chain was again reinforced by Henry Nel, Regional Business Development Manager for Shore Based Systems Transas USA who talked delegates through how their Port Management Information System (PMIS) is bringing together, into one place, communication with all stakeholders involved in a successful, swift port call from the ship, through to the pilot, through to those unloading. According to Nel, PMIS allows everyone to know exactly what is required from them and at what time.

Supporting Organisation

Media Sponsor

Media Partner SHIP EFFICIENCY

CHAMBER OF SHIPPING OF AMERICA

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INSIGHT

THE

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Conference host Inmarsat spearheaded the presentations with Ronald Spithout, Presdient Inmarsat Maritime talking about Inmarsat’s revolutionary 5th generation of satellites which will start coming online this year.  Spithout told delegates that with the changes in communication capability arriving in the next six months, it will now be possible for any service providers (maritime or not) that wish to interact with the maritime industry to be able to do so. The goal of the new generation of satellites is to provide a high capacity, high speed communication network that can facilitate automated data gathering and real-time decision making. There was even a brief discussion of how this new wave of communication technology may start paving the way for drone ships as early as 2020.   Also, due to changes in the way that bandwidth can be split, it will be possible for solution providers themselves to pay for the bandwidth to deliver their service. This opens up accessibility and allows the maritime industry to start utilising digital-based services in the routine manner we do onshore.   Following Spithout’s technology-empowering presentation, the Port of Everglades’ project manager Dr. Natacha Yacinthe addressed the port’s vision of the integrated ship and port operation for efficiency which opened up the debate to how all stakeholders need to work together to improve operationsa theme which was returned to many times throughout the seminar.   It is clear that open communication channels throughout the supply can reap benefits for all, for example better cargo tracking, faster turnaround times and increased throughput.

It’s Humans, Not Technology That Are The Problem

Organised by


INDUSTRY EVENT INSIGHT FATHOM MARITIME INTELLIGENCE Technology Empowering Or Undermining?

It is at forums such at these that, through the convergence of different industry stakeholders and their experience and viewpoints, it becomes clear how far the capabilities of the industry have moved forward and allow education for those on how they can apply this within their own operations as many others successfully are.   A key question put forward by part of the ship operator audience was directed at whether or not technology is a good thing or whether it undermines the skills and autonomy for our seafarers.

ISSUE 05. 2015

  This point was taken seriously by all in the room. The overwhelming conclusion, however, was that it did not, but rather technology actually empowers them. As Jan Erik Hårvei Tero marine affirmed “technology itself is neither good nor bad but can allow humans to work faster, safer and more effectively and thus contributing significantly to the success of a business and the work of its employees.”   The overall message from this seminar was that the maritime industry is no different to any other money-making enterprise; all businesses must understand and embrace the opportunities that technology brings to make their particular enterprise as efficient and convenient as possible.

To learn more about the Smart Operations 2015 event series, please visit: www.fathomshippingevents.com

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INDUSTRY EVENT INSIGHT FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

THE SHIP EFFICIENCY AWARDS 2015 Are You An Industry Mover And Shaker? By James Barth, Fathom Maritime Intelligence

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Tumbling freight rates, fluctuating oil prices and increasing regulation has made 2014-2015 a tumultuous period for the industry.   Despite the multitude of economic and regulatory hurdles, companies continue to invest in tonnage in anticipation of increased demand – the record for the largest boxship has changed a few times since the introduction of the first Maersk Triple-E in July 2013, with the latest record holder being the MSC Oscar with a capacity of 19,224 TEU.   This era of newbuilds, megaships, fuel bills, economic woes and regulation has catalysed the need for pioneering technologies and practices that can streamline procedures, reduce operational costs and minimise environmental impacts.   However, with a flood of clean technologies and operational streamlining services out in the market, it is hard to navigate through the options available to the fleet of today and tomorrow and ascertain who the real movers and shakers are when it comes to ground-breaking and fundamental technologies and initiatives that the industry should be grasping with both hands.   The Ship Efficiency Awards aim to recognise and celebrate the organisations and individuals within the maritime sector that are excelling in efficient operations, implementing

Nominations for this year’s awards are now open and can be submitted across the following categories: • • • • • •

The Energy Efficiency Solution Award. The Environmental Technology Award. The Sustainable Ship Operator of the Year. The Initiative of the Year. The One to Watch. Outstanding Contribution to Ship Efficiency.

The nominations period will close on 7 June 2015, when the judges will meet to deliberate and decide the winners of each category.

fresh thinking, offering proven efficiency benefits and driving technological innovation.   We want to know who the ship efficiency movers and shakers are in 2015. We need you!   Last year our winners were universally recognised for being companies that are catalysing change within the industry in the realm of improving ship efficiency. Winners that had their name in lights and stood proudly on the awards podium included software providers Eniram, purveyor of advanced low friction hull coatings Hempel, sustainable ship operator Maersk Line, partners in clean ferry operations Corvus & Scandlines and pioneers of the 100% renewable energy ship B9 Shipping.   The awards also celebrate individuals that go above and beyond to break boundaries within the industry. The 2014 recipient Dr. Anne-Marie Warris, was recognised for her achievements which include 25 years of advancing sustainability and climate change issues, driving the Sustainable Shipping Initiative, chairing the International Organisation for Standardisation’s sub-committee responsible for environmental management systems and numerous other voluntary roles – all of which are elected appointments.

This year’s judging panel will include: • • • •

Lars Robert Pedersen – Deputy Secretary General & COO, BIMCO Roger Strevens – VP, Global Head of Environment, Wallenius Wilhelmsen Logistics Oskar Levander – VP Innovation, Engineering & Technology, Rolls-Royce Dr. Tristan Smith – Lecturer, University College London

Nomination forms, information on regulations and the scoring process, can be downloaded from the Ship Efficiency Awards page on www.fathomshippingevents.com. The shortlist of finalists will be announced on 19 August 2015 and the eventual winners of each category will be announced at the awards ceremony, held on the afternoon of day two of Ship Efficiency: The Event on 9 September 2015 at London’s Queen Elizabeth Conference Cente.

DON’T DELAY - NOMINATE TODAY! CLOSING DATE 7 JUNE 2015 www.fathommaritimeintelligence.com


SHIP EFFICIENCY

AWARDS

9th September, London

NOMINATIONS NOW OPEN

2015

CELEBRATING TECHNOLOGICAL INNOVATION, ENERGY EFFICIENCY AND EXCELLENCE IN OPERATIONS IN THE MARITIME INDUSTRY

Hosted by

Award Sponsors

Organised by

fathom

marine | energy | environment

Supporting Organisations

NOMINATIONS CLOSING DATE: 7TH JULY 2015 FOR MORE INFORMATION VISIT WWW.FATHOMSHIPPINGEVENTS.COM


SOCIAL SCENE

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

SOCIAL SCENE Fathom @fathomshipping - We spot a new publication in the distance....keep your eyes peeled for more info! #EnvironmentalManagement #Maritime Will Nichols @WillN_BG - Liberia making waves with greener shipping plan $53m of discounts for ships fitting energy efficiency improvements

Katharine Palmer @KP_LR - Join @LR_Marine for the 2nd @fathomshipping #Shipefficiency Awards. Nominations Open.

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Diane Gilpin @digilpin - The @fathomshipping One to Watch Award being passed on to Alliance members @LR_Marine to the brilliant @DimitrisA_LR

BLUE @BLUECOMMS - “There is no Planet B”- Jose Maria Figueres of @carbonwarroom speaks to Panama’s maritime community. @shipefficiency ShippingEfficiency @shipefficiency - Geneva talks: global emissions cap for shipping sector now possible by 2020 @UNFCCC @cwarroom @ShipandBunker

Ship & Bunker @ShipandBunker - BIMCO Launches Guide To Maritime Environmental & Efficiency Management #BunkerFuel #Shipping ICFR @Cruise_Ferry - .@DNVGL launches Green Coastal Shipping programme to help improve green credentials of Norway’s maritime industry DNV GL @DNVGL - See @CTech_News’s report on our #VesselsForTheFuture initiative @dnvgl_maritime #ESW2015 #safety #sustainability Patrick Verhoeven @PVerhoevenECSA - John C Lyras Paralos/ICS : “We have to get rid of distrust between regulators and industry” #ESW2015 @ESW2015 Nor-Shipping@NorShipping - 9 of the 10 most environment friendly vessels are Norwegian shipowners’ as per Environmental Ship Index (Norwegian) ics-shipping @shippingics - PRESS RELEASE - Shipping Should be Prepared for Global Sulphur Cap in 2020, Says ICS http://bit.ly/1zCgeAR www.fathommaritimeintelligence.com


THE LAST WORD

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

THE LAST WORD The Rise of the

‘Third Umpire’ BY MELVIN MATTHEWS, DIRECTOR MARITIME, ENIRAM

To understand the significance of a third umpire in the shipping industry one must first understand what brought about the advent of the third umpire in games such as cricket, tennis, rugby, soccer, etc. In the game of cricket there usually were two umpires on the field who make decisions on the game as it progresses. Whatever decision the two umpires made was final and usually unchallenged even if they were considered controversial by the players or spectators. This however changed with the appearance of video cameras and television, i.e. advanced technology, which at the time made it possible to replay the game instantly on a screen, especially when a decision needed to be made.   A third umpire now sitting outside the field with access to television monitors could easily review the game, if required in slow motion, at various angles, and give a much more accurate decision especially when umpires on the field were unsure or made the incorrect decision. The third umpire in cricket was first officially introduced in 1992 and his decision is now considered final.   Classification societies have played a major role in shaping the shipping industry and they have for decades played an incredible role of setting and maintaining the standards at the highest level. The classification societies are so deeply ingrained in the DNA of the industry that for every ship they set technical rules, confirm that designs and calculations meet these rules, survey ships and structures during the process of construction and commissioning, and periodically survey vessels to ensure that they continue to meet the rules until the end of their life. Simply put, without class certification the vessel cannot be deployed for business.   Although there has always been competition bet ween classification societies, as a group they have enjoyed the unchallenged respect of ship owners. The reason for this is – for solutions to problems, answers to questions, advice

and for almost everything else, the first place the ship owner turned to, is class. As a result the classification societies developed not only excellent classification and certification services but also in many cases extensive consultancy expertise. They developed a reputation of being objective and logical, with a glowing aura of being fair, unbiased and impartial. With authorisation to inspect ships, oil rigs, etc. and issue certificates on behalf of the state under whose flag the vessels are registered they evolved to be in many ways the undisputed ‘guardians of the industry’.   Lately however classification societies have realised that it is increasingly lucrative to have other revenue streams besides their core area of ship classification and certification. This has meant subtly promoting their consultancy business and developing advisory business streams in areas such as energy efficiency, fuel saving, operational optimisation, new ship design, etc.   Now this brings us to the earlier question as to how the third umpire is relevant in the shipping Industry. In the game of cricket the third umpire monitors the game just as closely as the two other umpires on the field. The advantage the third umpire has is the access to tools that make the decisions more accurate and therefore less controversial.   With classification societies appearing to be chasing other business streams for revenue, ship owners no longer seem to have the confidence and devotion they once had. They are now looking at alternate sources to find answers to their questions, solutions to their problems and general advice.   The latest technology has given much smaller companies the capability to offer these services in their own specialist areas. These companies have developed tools specifically to help ship owners who are either sceptical of the advice offered by classification societies or find their extended services controversial. There is

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now an increasing trend and in fact several cases of ship owners opting for such boutique companies over well-established classification societies for the services and assistance they seek.   For instance, companies that specialise in performance management are increasingly approached by ship owners as first choice to measure or monitor performance which in the past would have almost automatically fallen into the lap of classification societies. Niche companies with their more accurate tools and capabilities are now called upon to play the role of the third umpire in the industr y. Such companies are now frequently contracted for projects such as measuring the impact of energy saving devices retrofitted, paints applied or modifications made. In most instances they partake as independent entities between a ship owner and supplier with their findings being accepted as accurate and impartial. What is quite striking is ship owners have not limited themselves there, they now have also started engaging white shoe consultancy firms from outside the shipping industry, virtually unheard of earlier.   Unfortunately does this mean that classification societies after enjoying nearly a century of reverence and loyalty are slowly being relegated to play second fiddle, just as the two umpires who despite new technology are still required to be on the cricket field. In their core area of classification and certification their reputation for being technically objective and logical will probably continue, however no matter how deep we bury our heads in the sand, to the ship owner what clearly appears to be fading is the earlier unquestioned aura of being fair, unbiased and impartial.   Can the rise of the third umpire in shipping then be considered as perhaps the industry’s own subtle way of ‘policeing’ the so called guardians of the shipping industry?

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• •Regulatory •Regulatory Regulatory Developments Developments Developments (IMO, (IMO, (IMO, EU, EU, EU, USA) USA) USA) • •New •New New Fuels Fuels Fuels • •Energy •Energy Energy Efficiency Efficiency Efficiency • •Ballast •Ballast Ballast Water Water Water Management Management Management • •Air •Air Air Emissions, Emissions, Emissions, Fuel Fuel Fuel Options Options Options &&Alternatives &Alternatives Alternatives • •Green •Green Green Shipping Shipping Shipping Best Best Best Practices Practices Practices • •Sustainable •Sustainable Sustainable Shipping Shipping Shipping

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Efficient Shipping Finance Special Supplement Efficient Shipping Finance Supplement • • • • •

8 Things You Need To Ask About Financing Efficiency News Round-Up Flying The Flag For A More Efficienct Fleet Early Adopters Gaining Most From LNG Paradigm Shift Reduced Bunker Bills Open Significant New Opportunity For Eco Efficiency Technology • The Economics Of Flag Registry • Cash Management Is Crucial

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FINANCE SUPPLEMENT

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

8 Things You Need to Ask About Financing Efficiency If finance within the shipping industry is viewed as the propeller that drives operations forward, then efficiency could be compared to a ship’s architecture that gives it its competitive edge. Efficiency measured in this way is relatively straightforward - if only getting ‘the competitive edge’ in industry was this simple. Just as the relationship and interaction between the propeller and vessel shape is complex and incredibly intertwined, so is the relationship between finance and investment in efficiency and never more so than under the current economic circumstances in which the industry resides.

1

Clarksons, the world’s leading provider of integrated shipping services, estimates that the amount of investment needed to modify the current world fleet to remain competitive and efficient going forward (not just within shipping but against other transport industries) stands at about $1.4 trillion between the years 2014-2023.

How Much Investment Is Needed As An Industry?

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Whilst the debate on eco-ships is ongoing, it would seem a divide is already here.   ‘Eco-ships’ and ‘non Eco-ships’ is basically a quick way of differentiating between ‘efficient’ and ‘less-efficient’ ships defined by current fleet ranking standards. The potential difference in timecharter-rates are fast becoming a major focus. Poten & Parkers in looking at this market outlines the emergence of a ‘two-tier’ market with ‘eco-ships’ gaining higher charter rates. Competition through a two-tier market can be used to your advantage if you put yourself ahead of the efficiency curve.

3

Should I Make Future Investment Decisions Based on Future Operational Plans? Yes!

2

Will Eco-Ships Achieve Higher Charter Rates?

Look at the installation of scrubbers as an example....   With the tightening of sulphur limits on the horizon from 1 January 2015 within Emission Control Areas (ECAs), there would appear to be a good business case for ships that spend a significant portion of time in ECAs to retrofit and take advantage of the much lower fuel costs of heavy fuel oil as opposed to marine gas oil.   DFDS, a company at the forefront of scrubber installations, raised the point in a recent presentation, “don’t underestimate the importance of having your own money because you’ll find it very difficult to find financing for scrubbers. It does not really add to the value of a ship and financing institutions tend to like some kind of collateral, however, your ship value will not increase.”

From a financier’s viewpoint, the more efficient an operation becomes, the better this will reflect on the ship owner’s credit profile which will in turn facilitate releases of capital for future projects.   Also, for ship owners, retrofitting a ship is an investment. For banks however, the cost of ‘retrofitting’ does not always translate in terms of ‘value’ to the ship and this creates risk. It is well known in the current climate that banks are very risk averse, not least because post-recession regulations such as the Basel Convention drive this.

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4

Should I Consider the Financier’s Perspective?


FINANCE SUPPLEMENT

5

Can I Consider Novel Investment Pathways?

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

The current economic situation dictates that traditional financing routes for efficiency investments are difficult to secure. With the arrival of private equity alongside a wealth of private alternative investors, private public structures, third party structures, even self-financing models … (the list goes on), the deciding factor will be how industry can capitalise on the benefits and essentially the opportunities now present. To unlock the capital required for fuel efficient improvements, what is known as ‘alternative finance structures’ are both on the rise and gaining attraction alongside traditional bank finance.   Look to public/private partnerships for financing routes. The European Commission’s TEN-T project is a great example of this type of financing with a budget of €26 billion to put towards air, rail, road, maritime and inland waterways with a focus on sustainability. Teaming up with a ‘public’ government party can act as a bridge to greater efficiency and efficient financing through improving the credit profile of the ship owner, making access to credit easier in the future. These sorts of governmentled funds are advantageous for first-time borrowers without a ‘credit profile’ recognised within the industry and can act as a bridge to secure credit. Alternatively, they could be very good for ship owners whose credit profile suffered in the recession.   A number of initiatives that promote investment in ship efficiency and provide support and resources for the industry to act have transpired only over the last few years. For example, the Carbon War Room’s Self-Financing Fuel Saving Mechanism and the Sustainable Shipping Initiative’s Save As You Sail model.

When thinking about how to finance a technology solution investment, go to the technology manufacturer to discuss financing options as a starting point. A number of technology manufacturers are offering extremely competitive and innovative financing mechanisms to enable owners to invest in their solutions but not have to put up the CAPEX immediately to get the technology onto the ship and start generating fuel savings.   The list of third party finance models for retrofits is growing, we know of examples within the hull coating industry and also some engine manufacturers that are offering third party finance options to their customers. For these third party finance options, the pathways for payback typically take the form of third party investors finance the technology installation and receive payback through a percentage of the fuel savings.   One example of such third party financing support can be found at the Man Diesel & Turbo camp. This forward-thinking engine manufacturer recently installed fuel-saving engines and technologies onto 30 ships through working with lenders and banks to assist the loan process.

7

What is the Return On Investment Profile of the Technology or Solution?

6

Can the Technology Companies Provide Finance Options?

Whether driven by regulation or technological advances, it is often advantageous to retrofit new technologies over the long lifecycle of a ship, however, the cost of this can run from the tens of thousands right through to the millions. For some ship owners, retrofitting and seeing a quick payback is rapidly becoming a means of pure survival.   For example, Euronav, the Belgium-based oil tanker owner and operator approach retrofitting from the angle of having experienced $27 million net loses. In a recent press release Euronav highlighted “a ship with an electric heavy fuel heater can switch off its boiler when slow steaming or drifting and this can save 5-6 tons per day ($3,000 to $3,600) which is as much as the savings claimed for new ships (so called eco) over old ships in reduced sailing consumption. Yet, this retrofit costs no more than US$30,000 and can be installed by the ship’s crew, with a payback period of less than 10 days waiting time.”

Shipping is perceived by some as high risk, mainly as it is dependent on market highs and lows transnationally whilst facilitating 90% of the world’s trade. Like the economy, a ship owner’s credit profile can slump which is problematic in a tight industry where reputation is key. Efficient financing (by this we mean finding the right finance structure for the right investment) will not only make both operations and finance more efficient but have the added benefit of improving the ship owner’s credit profile which may be decisive in unlocking future capital.

www.fathommaritimeintelligence.com

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Will Financing Efficiency Improve My Credit Profile?

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FINANCE SUPPLEMENT

FATHOM MARITIME INTELLIGENCE

ISSUE 05. 2015

NEWS ROUND UP DREWRY: ECA COST IMPACT IS “VIRTUALLY ZERO”

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Extra costs which were widely expected to occur with the introduction of tougher Emission Control Area (ECA) sulphur regulations on 1 January, 2015 have so far failed to materialise due to the current low cost of bunkers, with Drewry saying in its 2015 week 7 Container Insight Weekly that the fiscal impact has been “virtually zero.”   It had been thought that additional lowsulphur surcharges would be necessary to help companies offset the cost of switching to more expensive lower sulphur fuel. However, according to Drewry data, Bunker Adjustment Factors (BAF) began declining in the last few months of 2014 and have continued to decline in January 2015, a drop that has in effect led to no extra costs.   It was also noted that underlying bunker prices fell by 44% between July and December last year in areas outside of ECAs. Drewry added that because BAF charges typically lag behind bunker price changes, it is expected that BAFs will continue to fall in the near future.

GERMAN BANK TO PROVIDE DFDS WITH €50M FUNDING FOR SCRUBBERS Denmark-based DFDS Seaways has received €50 million ($56.7 million) in funding from Germany’s KfW IPEX-Bank to install scrubbers aboard 20 ferries. Last year, DFDS also announced that the European Union would be providing funds to help the company install scrubbers aboard five freighters.

TERRAGON ENVIRONMENTAL TECHNOLOGIES INC. ANNOUNCES STRATEGIC PARTNERSHIP WITH GREEN MARINE CAPITAL Terragon Environmental Technologies has announced that they have entered into a strategic partnership with Green Marine Capital (GMC). Terragon’s first commercially available product, the patented Micro Auto Gasification System (“MAGS”) is currently the only small-scale gasification based waste-to-resource management system that is commercially viable.   GMC will summon its wealth of experience to help Terragon customise

its products and commercialise them within the marine industry. Furthermore, the GMC investment, which forms part of the strategic partnership, will provide Terragon with the necessary capital to expand its commercial efforts, not only in the marine sector, but globally. GMC will draw on the deep-rooted heritage of its partners to help Terragon better marinise their innovative technologies, expand business development and assist in market penetration.

EU FUNDS HYBRID FERRY CONVERSIONS Two ferries will be converted to hybrid ships with the help of €2.3 million ($2.5 million) funding from the European Union (EU).   The RoPax ferries connect Rødby, Denmark and Puttgarden, Germany and will be converted to use a hybrid propulsion system partly driven by electricity, reducing the ships’ overall reliance on bunkers.   When converted, it is expected that the ferries’ reduced bunker consumption will lead to a 15% reduction in overall carbon dioxide emissions.   The conversions are also said to be set to reduce the ferries’ SOx emissions by 99% and particulate matter by 88%.   It is understood that the project was

selected for funding through the European Commission’s (EC) TEN-T transport infrastructure initiative.   The project will be implemented by Scandlines’ German and Danish subsidiaries and will be overseen by the EC’s Innovation and Networks Executive Agency (INEA).   It is due to be completed by the end of this year.   In January, European ferry operator Stena Line announced it was about to begin the conversion of its Stena Germanica to run on methanol bunkers in a trial that could lead to more such conversions.

€17M HORIZON 2020 FUNDING FOR E-FERRY PROJECT CONFIRMED An application for an E-Ferry project demonstration has been confirmed by the EU Horizon 2020 administration.   The project will now proceed contract negotiation and to the state of grant agreement preparation. The partners now have 3 months to negotiate the final contracts with the EU Horizon 2020 administration.   The €17 million application will allow the consortium behind the project to proceed with the design and new building of a prototype electric ferry with the majority

of investments to be funded by Horizon 2020.   The consortium of industry experts that have catalysed this project include the Municipality of Aero, Søby, Shipyard, Siemes, Tuco Marine, Jens Kristense, Consulting Naval Architects, DNV GL, Interferry, Danish Maritime Authority, Hellenic Institute of Transport and the Danish Institute of Fire and Security Technology.   The E-ferr y will sail from Søby to Fynshav and Søby to Fåborg in 2017, with

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final design details and new building to take place in the last year. The E-ferry has been designed to operate in harsher weather conditions, reducing the travel time by 25% compared to the present ferry.   The final contracts with the EU Horizon 2020 administration will be negotiated with the partners in the next three months with the remaining partners to affiliate as associates in the prototype demonstration project.


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ISSUE 05. 2015

FLYING THE FLAG FOR A MORE EFFICIENT FLEET

The Carbon War Room discusses why flag States are taking a leading role in incentivising fuel efficiency retrofits and innovative finance models. Carbon War Room’s (CWR) Operation Shipping Efficiency is working hard to stimulate and accelerate investment in and installation of energy efficiency technologies on ships in the existing fleet.   In order to create a catalyst for that investment, CWR has worked hard to deliver transparent and usable data on ship efficiency to the wider market and to develop financing models that clear the way for technologies that deliver real cost savings and reductions in carbon emissions to be installed on existing ships. Partnerships with other organisations that share our goals and outlook towards achieving this have been essential in helping us develop ideas into business solutions.   UCL Energy Institute have been invaluable partners in working to develop the Self-Financing Fuel-Saving Mechanism – a finance model that means owners and operators can retrofit their ships with little or no capital expenditure up front. The innovation of this model is its focus on data, and the development of a new methodology by UCL that provides transparent information on the savings generated by retrofit technologies. This requires collecting a ship’s baseline performance statistics and incorporating those into the calculation of return rates alongside using measurement and verification techniques to assess the technologies’ efficiency gains.

Since July 2014, CWR’s partner EfficientShip Finance (ESF), which provides third-party capital, technical expertise and turnkey solutions for ship owners to retrofit their ships, has taken on the role of commercialising the Self-Financing Fuel Saving Mechanism. Most recently, ESF partnered with the Liberian Corporate Shipping Registry (LISCR), the world’s second largest flag state, which has committed to tax discounts of up to 50% for ships retrofitting efficiency technologies through

the Self-Financing Fuel Saving Mechanism. Under the agreement, each ship that retrofits with ESF under this model will be entitled to a 50% discount on annual tonnage tax in the first year and up to a 25% discount in the second and third years. The Liberian Registry represents 11% of the world’s oceangoing fleet and has more than 3,900 registered ships that will be eligible for tax breaks under this scheme meaning that it represents more than $53 million on the table for ship owners in addition to the fuel cost savings that efficiency retrofits offer - if every eligible ship took part.   The endorsement of the Self-Financing Fuel Saving Mechanism by the Liberian Ship Registry alone validates the applicability of the model and their will to drive greater efficiency within their fleet. CWR see Liberia’s example as an encouragement to other international groups to look at ways they can incentivise the retrofitting of the existing fleet to access the 25-75% in latent efficiencies that the International Maritime Organisation has estimated are available.   At a time when oil prices are the lowest the world has seen in years, this is an extremely important development for helping the industry keep its eyes on the long-term rather than, as some commentators suggest may happen, halting all interest in improving efficiency now that the cost of fuel oil has reduced.   CWR believes that now is not the time for complacency or short-termism. On the contrary, the fact that ship owners are seeing a reprieve from the tight margins and low profits of the last few years should be seen as an opportunity to invest and to take risks. It is important to acknowledge that the slump in prices is no doubt only a temporary factor but retrofitting provides a permanent solution to achieving lower fuel costs as well as contributing towards a more sustainable future for the industry. Indeed recent research undertaken by CWR suggests that a continued interest in efficiency is the prevailing view. A recent survey showed that 86% of owners and operators were in favour of efficiency improvement before the slump and their interest had not been affected by it. A further 9% said their interest in eco-efficiency had only been heightened. 2015 is set to be a fascinating year for the international shipping industry; a dramatic market shift seems to be taking place. Ecoefficient ships can now demand a premium price and are viewed by many industry institutions as lower-risk than their less-efficient counterparts – creating a distinct two-tier market. And as previous market barriers that have hindered retrofit progress crumble, others are beginning to develop. This year is a clear opportunity for the industry to set itself on a track for a sustainable low-carbon future.

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ISSUE 05. 2015

Early Adopters Gaining Most From LNG Paradigm Shift By Pace Ralli, co-founder, Clean Marine Energy

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Since 1 January, 2015 more stringent emissions regulations have been in full effect within the North American and Northern European Emission Control Areas (ECAs). Now that the long-anticipated deadline has passed, the question of whether enforcement will be tough enough to bring real change seems to have been answered. By the end of January several companies had already received significant fines for violating anti-pollution laws in California, for either switching to a cleaner fuel in an untimely manner, or failing to switch to a cleaner fuel within regulated waters altogether. These fines may indicate that regulatory bodies, at least in North America, are being successful in monitoring emissions and compliance is high. Tellingly, reports also suggest that compliance is high in Europe, although that sentiment should be qualified within the context of current low oil and bunker prices. Temporarily lower gas prices are also resulting in lower cost for Liquefied Natural Gas (LNG) as an alternative fuel. This is all very good news for the marine industry as a whole, and the environment.   Although widespread adoption of new technologies like scrubbers or alternative fuel systems still seems to be some way off, the number of retrofits or newbuildings with new technology is growing. Every week new pilot projects are announced, and new designs and orders are being booked. The likes of liner owner TOTE, Inc. (TOTE) and Crowley Maritime Corporation (Crowley) in the US, as well as Terntank and United European Car Carriers in Europe have placed orders for ‘LNG delivered’ ships. Clean Marine Energy’s (CME) primary goal is to help ship owners meet emissions compliance and facilitate the adaptation of these new technologies so that more can join the ranks of these industry innovators.   As with any major technology development in history, there are major hurdles to overcome as it relates to emissions compliance. Uncertainty around regulation, funding and installation of new equipment and, in the case of LNG, supply. CME helps ship owners address and overcome these issues while realising long-term value creation for their businesses.

Innovative Funding Solution

Supply And Delivery Of LNG Primarily due to the shale gas revolution in North America, LNG has emerged as the alternative fuel of choice on these shores for high horsepower applications. New dual fuel capable engines are being developed for power production, transportation, mining and heavy industry. In the maritime world, where fuel consumption is especially high and emissions standards are increasingly stringent, low-cost and cleaner-burning LNG is even more attractive. CME has partnered with WesPac Midstream, LLC (WesPac) to provide the first fully integrated marine LNG solution, including guaranteed supply and distribution. WesPac, founded in 1998, currently has several LNG projects in development in ports around North America.   In January, 2015 WesPac and Pivotal LNG, Inc. announced a long-term agreement with TOTE to provide LNG to fuel the two new dual fuel container ships expected to be delivered to TOTE by shipbuilder NASSCO in late 2015 and early 2016.   In February, 2015 WesPac/CME and TOTE announced they had signed an agreement with Conrad Industries, Inc. to build the first US-flagged LNG bunker barge. The vessel of approximately 2,200 cbm capacity will have a membrane containment system developed by Gaztransport and Technigaz (GTT) of France and will be capable of transferring LNG at a rate of 500 cbm per hour. This innovative design is not only the first LNG bunker barge to be built in North America, but the first to utilise the same membrane technology that has been featured in large LNG carriers for several decades. By using a bunker barge for LNG delivery, WesPac/CME is enabling ship owners to continue business as usual but enjoy significant savings and ensured compliance over the lifetime of their vessels.   In this new era for the maritime industry, emissions regulations will only become more stringent and ubiquitous. Though there are growing pains related to any paradigm shift, owners are beginning to embrace the new regime and increase their competitive edge at the same time. The early adaptors who are spearheading this innovation are set to gain the most.

CME’s Emissions Compliance Service Agreement (ECSA) is a model adapted from energy efficiency financing in real estate, put to work in the shipping sector. The ECSA absorbs the upfront capital expenses needed for a ship to be emissions compliant, in exchange for a portion of the savings that result. Effectively, fuel payers pay for low-cost LNG or heavy fuel oil (HFO) (in the case of scrubbers) plus a premium for a fixed period of time until the investment is recovered. The model is flexible and the contract can be tailor-made to fit each individual project. Once the term is up, the equipment ownership is passed on to the owner, who also then receives every part of the savings for the remainder of the ship’s life, increasing its asset value. While the ECSA funding solution will not be a fit for every ship owner, there is a portion of the wider marketplace that will find it valuable. In particular it enables ship owners to spend funds on other more accretive investments, such as fleet procurement.

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ISSUE 05. 2015

Reduced Bunker Bills Open Significant New Opportunity For Eco-Efficiency Technology Despite the recent drop in fuel prices, new environmental legislation and pressure from charterers to improve sustainability have placed significant onus on ship owners and operators to deliver more environmental and operational efficiencies. Indeed with profit and loss accounts improving thanks to lower bunker bills, there is now an important window during which the industry can invest in new technologies to reduce fuel costs and emissions even further.   Amid the changing industry landscape triggered by lower fuel prices, International, AkzoNobel’s Marine Coatings business, remains at the forefront of industry efforts to make ecoefficiency and clean technologies more accessible to the wider shipping industry. While hull coatings, including those offered by International, are the most widely used eco-efficiency technology in the shipping industry, uptake can be held back by the ongoing absence of transparent and highly accurate methodologies that measure fuel savings generated. Establishing Independent Mechanisms To Validate Fuel Savings   In order to tackle skepticism around the tangible returns generated by clean technologies, providers have sought validation of their fuel saving claims through independent monitoring systems, customer testimonials, class societies, and endorsement from industry and academic experts.   In 2014, International® took clean technology investment,

uptake and measurement to another level through the introduction of the first ever marine-based methodology for generating carbon credits.   The landmark methodology was developed in conjunction with the Gold Standard Foundation and is aimed at ship owners and operators converting to International’s range of premium eco-efficient foul release technology coatings, Intersleek® on all types of existing ships currently coated with biocidal antifoulings.   A baseline emission level is determined for the vessel prior to the application of Intersleek® with the same data source then used to determine the emission savings after the application of the technology. The carbon credits generated are directly related to reduced emissions as a result of the reduction in fuel consumption.   Using a ‘results-based finance’ approach, carbon credits are awarded annually, based on ship data that is collected, analysed and administered by International®; ship owners and operators do not have to invest any time, capital or resource in generating carbon credits.   The data is then submitted to the Gold Standard Foundation for validation. To ensure rigour and transparency, the fuel savings that are generated are verified by independent UN accredited auditors. Once the carbon credits are issued to International they are then handed over to the customer, who can generate revenue by selling the credits at the market price.

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Unparalleled depth of knowledge Moore Stephens LLP is widely acknowledged as the world’s leading shipping accountant and adviser. For more information please contact: Richard Greiner T +44 (0)20 7651 1430 E richard.greiner@moorestephens.com

www.moorestephens.co.uk/shipping

Michael Simms T +44 (0)20 7651 1184 E michael.simms@moorestephens.com

PRECISE. PROVEN. PERFORMANCE.

Moore Stephens LLP, 150 Aldersgate Street, London EC1A 4AB. T: +44 (0)20 7334 9191. An independent member firm of Moore Stephens International Limited. Moore Stephens LLP are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England & Wales. DPS27509 March 2015


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Besides selling them on the carbon market, carbon credits can also be passed on to important stakeholders to offset their emissions (e.g. cargo owners) or can be used to voluntarily offset other sources of CO2 emissions within an organisation. Another advantage is that the generation of carbon credits demonstrates sustainability leadership and can enhance the brand and reputation of ship owners and operators.   Since the official launch of the methodology in April 2014, more than 50 ship owners and operators around the world have welcomed and taken part in information seminars to better understand and disseminate the benefits of generating carbon credits.   Later this year the first carbon credits claims, worth a combined total of almost $500,000, are due to be awarded to two ship owners that enrolled 17 ships into the programme. Furthermore, based on the 100 eligible ships already converted from a biocidal antifouling to Intersleek® technology, there is an estimated $2.8 million worth of carbon credits potentially available to ship owners and operators.

ISSUE 05. 2015

With an activity of just over 50% determined using International’s Intertrac® ship analysis system, the annual carbon credit claim is expected to be between 2,500 and 3,000 the issuance of which, after auditing, will independently validate an annual fuel saving of between 750 and 1,000 tonnes.   “We are happy with the performance of our vessel since Intersleek ®1100SR was applied” commented Guillermo Alomar, Managing Fleet Director of Baleària. “We decided to use the new technology on our vessel Martin i Soler due to the fuel saving potential and the positive environmental image of using biocide-free technology on our passenger vessels in the Mediterranean Sea. The performance improvement was immediately apparent and analysis of the first year of sailing

Supporting Sustainability And Fleet Investment

Baleària (Baleària Eurolínias Marítimas S.A.) is one of the latest organisations to enrol in International’s carbon credits scheme. The leading Spanish ferry operator has signed its 24,760 DWT Ro-Ro passenger ferry Martin i Soler into the scheme after recognising the impact of Intersleek®1100SR on its bottom line.   Martin i Soler was converted from an existing silyl biocidal antifouling to Intersleek®1100SR during routine drydocking at Gibdock shipyard, Gibraltar, in November 2013. The ship’s performance was monitored over the next 12 months using noon reports and following analysis; a 12% improvement in fuel efficiency was recorded, which is equivalent to daily savings of five tonnes of fuel or $2,000 at today’s bunker prices.   This also translates into reductions in CO2 emissions of over 15 tonnes which, through the International Paint carbon credit methodology, can earn the ship 15 carbon credits per day.

data confirms a significant fuel saving of over 12%.”   “After seeing the benefit of reduced fuel consumption and carbon dioxide emissions ourselves, we decided that we would enrol the Martin i Soler into International’s carbon credit programme. We intend to use the carbon credits as evidence of Balearia’s commitments to reducing our impact on the environment and aid investment in our other vessels.” An Unpredicted Fuel Saving Opportunity   Although bunker prices have dropped, the case to invest in eco-efficiency technology including low friction hull coatings remains as compelling for ship owners now as it was when bunker prices reached record highs. When combined with innovative finance models such as the carbon credits methodology, eco-efficiency technology providers can offer not only an important tangible demonstration to ship owners of the rate of return on investment but also a means to turn energy efficiency into bottom line benefits. These benefits, in combination with the fuel savings generated by eco-efficiency technologies such as low friction hull coatings, as well as reduced bunker bills, will unlock previously unattainable savings and associated competitive advantage for ship owners and operators.

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ISSUE 05. 2015

The Economics of Flag Registry

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When it comes to the choice of flag for a ship, there are many, many choices. What ship owners are actually doing is registering a significant asset in the jurisdiction of a state, country or territory.   This should not be taken lightly and there are many factors to consider when making this choice, not least of which should be the political and economic stability of that country. Remember you are now going to come under their jurisdiction.   Another major consideration is the legal system and laws which apply and the worldwide reputation of that state as a properly regulated, quality jurisdiction.   But one of the foremost considerations is of course cost. What is it going to cost me?   Some flags of convenience can cost up to US$100,000 to register whilst other flags are cost-neutral flag administrations and registering the same ship can be just US$2,000.   The Isle of Man government operates its Ship Registry as a not-for-profit organisation, which has only to recover its costs and not generate direct revenues for the island. It is set up as a nucleus for other maritime activity in its private

sector organisation, and has been very successful in generating today’s maritime centre of excellence.   What does that mean for the ship owner? It means that the registry fees are very low in comparison to the world’s open registries. It offers a fixed fee and not the industry norm of dues based on tonnage. Whilst there are savings for all owners, for operators of large ships in particular there are considerable savings on registry fees in such a system.   There can also be other incentives offered by a flag administration that are worth taking into account. For example the Isle of Man looks to reward owners on performance and loyalty with incentives such as fleet discounts and has also recently introduced incentives for energy efficient ships. The Isle of Man ‘Green Ship Scheme’ give significant discounts on registration fees for ship owners with energy efficient ship designs which reduce fuel consumption and air pollution.   So don’t just raise a flag for convenience, raise a flag for better operation and improved economics!

Cash Management Is Crucial Shipping is a cash-driven business, and the combination of large, frequent and often short-notice receipts and payments does not sit well with private equity firms when considering cash management.   Over the last two decades, the industry has moved from one populated by ownermanaged businesses with cash payments authorised by owners, to a corporate one with companies growing and turning to external sources for equity funding.   Despite the private equity industry taking a keen interest in the shipping space, significant cultural and knowledge gaps are frequently only coming to light for both the investor and the shipping company once an investment has been made.   This is because due diligence processes are typically focused on the economics of the market, the individual track records of the management team and the ships

themselves from a technical specification and operational perspective. The actual day-to-day operation of what is effectively the middle and back offices of shipping companies is often scrutinised to a much lesser degree.   An understanding of the cash flows associated with running a shipping business is critical, receipts are often lumpy and irregular, payments inconsistent from month-to-month, widely spread in terms of size, frequent and payable on presentation of pro-forma invoices as opposed to final invoices. In addition, late settlement can cause ships to be delayed or even detained.   Due to the nature of the movement of cash, the industry is at a high risk of unauthorised and/or erroneous payments. It is essential for shipping companies to have robust and routinely audited systems in place to ensure that risks are managed

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appropriately.   Operating a ship is also an expensive business. Mechanical breakdowns occur on even the best maintained ships, causing significant cash flow challenges. In addition, the rising cost of complying with environmental regulations in the wake of new regulations governing exhaust gas emissions, and incipient legislation covering the installation of onboard ballast water management systems should not be under-estimated.   However, managing and controlling risk exposure is not simply a matter of compliance. In an industry where reputation has real commercial value, proper risk management adds value and enables businesses to protect s t a k e h o l d e r s’ i n t e r e s t s a n d g a i n competitive advantage


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Ship Efficiency: The Insight Issue #05  

Ship Efficiency: The Insight is dedicated to providing the most up-to-date news on ship efficiency and clean technology developments in the...

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