Category Archives: Strategy

New UCL report claims $850bn of LNG-capable tonnage risks being stranded by 2030

UCL Energy Institute is a very influential research group. The UCL part is University College London. Their investigation of LNG-fueled vessels indicates that these ships are not on the best path to reduce carbon emissions. Thus, many of them being built now will need to be scrapped early.

A news piece written by the institute indicates as much as $850 billion of shipping may have to be scrapped.

The study could be quite influential. Shipowners have recently been investing in LNG-powered ships to produce reduced emissions now, especially since methane emissions are not being measured as they should. LNG ships emit methane, a worse greenhouse gas than CO2, through slip from the engine and the fuel handling operations. Most ships have not put in place advanced methane recovery systems.

The ships involved are dual-fuel ships that burn both oil and LNG, as well as single-fuel LNG powered ships.

The scientific evidence seems to indicate that LNG power may actually be worse than Low Sulphur Heavy Fuel Oil (LSHFO) when all the lifecycle emissions are analyzed. So the ultimate economic effect of the now LNG builds may turn out to be quite a waste of money.

The full report from the UCL Institute can be read here.

Sam ChambersSeptember 21, 2022

New UCL report claims $850bn of LNG-capable tonnage risks being stranded by 2030 – Splash247

Liners get a preview of alternative fuel costs

A new technical and commercial comparison of alternative fuels for ocean carriers compares expected bunker costs for different size and differently equipped ships. Alphaliner, a consultancy for ocean carriers, has reviewed that comparison.

Alphaliner’s review shows the ship owner and operator what they can expect in economy over the next few years. The results indicate that as the new regulations for CO2 emissions kick in, fuel costs will become a much larger percentage of total ship operating costs, perhaps double, or even more.

For instance, the graph they publish shows fuel costs for differently equipped Megamax-24 (MGX-24) ships. A megamax-24 ship is typically 400 meters long and 61 meters wide, with a depth of about 33.2 meters. It should carry around 23,500 twenty-foot equivalent (TEU) containers (Alphaliner newsletter).

The graph compares use of fossil fuels, bio fuels, and power-to-fuel (PtX) fuels (read about them). The PtX fuels convert renewable sources such as wind, sun, hydro, and geothermal, to fuel products such as hydrogen, ammonia, or products containing carbon, such as syn-crude. If carbon is used in the PtX process it should be from non-fossil sources or unavoidable industrial carbon emissions capture and reuse.

Source: Splash247 article.

Even bio-fuels cost a lot more than conventional fuels when all the upstream supply chain emissions are considered, for these very large ships.

The graph seems to imply that scrubbers are still a very important technology in the fight to clear the air. And LNG has a role to play, though it might be temporary. At their best, the PtX technologies such as electric-powered ships are comparable to or better than bio-fueled vessels.

There’s clearly a long way to go for ocean shipping to go where it needs to in the race to clean up global emissions.

However, some of these non-fossil technologies will adapt over the next few years, and costs will come down. It’s hard to do much more with the fossil fuel technology.

The argument Alphaliner makes is that soon fixed costs will be a smaller part of the total cost of a large ship than fuel operating costs. As these proportions change, emphasis will come more on building ships with desirable emissions control power systems, since the availability and price of fuel will be driving overall costs.

That’s an interesting point. We will see the extent to which it influences the next generation or two of ship orders.

Sam Chambers July 27, 2022

Liners get a preview of alternative fuel costs – Splash247

Freightos’ shareholders unveiled: does transparency really matter?

It turns out that major shareholders of Freightos are also large logistics companies— FedEx, Qatar Airways, and IAG Cargo. Thre are others, such as Singapore Exchange, who participated in Freightos’s Series C round of financing. There has been a policy of keeping major shareholders hidden.

Is this bad? Not necessarily, but there could be conflicts of interest. Some customers won’t care, but others might if their interests are not being addressed.

Freightos operates an online international freight marketplace [Wikipedia]. It also sells multimodal freight, and booking automation for carriers and freight forwarders. The Wikipedia article does a good job of explaining what they do and what acquisitions they have made. They’re a freight broker and carrier, with a software platform, though they started out as a software company.

Complicated ownership structures are not uncommon in business. Whether they influence how they do business in the small is a different question. At present we don’t hear of any customer issues.

Partners’ business relations should always include checking on whether ownership affects the partner’s way of doing business with you.

By Alex Lennane 27/05/2022

Freightos’ shareholders unveiled: does transparency really matter? – The Loadstar