fathom shipping - growing technology sectors in maritime

Growing Technology Sectors in Maritime

January 14th, 2015

Alison Jarabo, Director – Fathom

• 90% of world goods carried by maritime industry.

• Over 60,000 merchant ships.

• Industry emits over 1billion tonnes of carbon a year-

more CO2 than Germany.

• Burns the ‘dirtiest’ fuel of all (high sulphur oxides,

nitrous oxide and particulate matter content upon

combustion).

• Fuel is highest operating cost.

www.fathomshipping.com

Headline Facts and Figures

Regulation

•Governed by

International Maritime

Organisation (IMO)

•170 member states


What Drives Technology Growth Areas?

Cost Saving

What?

•Remove pollutants

directly from the exhaust

gas stream.

•Enables burning of less

refined fuels.

•Established in land-

based industries but

relatively new for

maritime.


Why?

•Emission Control Areas (ECAs):

provision for control for SOx and

PM, or NOx emissions limits

•ECAs include Baltic Sea, North

Seas, North America ECA and US

Caribbean ECA.

•January 2015 sulphur limits 0.01%.

•Global sulphur cap 2020 0.5% *?

Exhaust Gas Cleaning ‘Scrubbers’

• Compliance either by fuel of 0.1%

sulphur content or an ‘equivalents’.

• Price differential currently sitting $220-250 per tonne

between HFO (<3.5%) and MGO (<0.01%).

• Savings can be up to $20,000 per day for large vessel.

• Systems costing in the range of $2-4 million.


Technology Opportunity

• 92 vessels in the world fleet fitted with ‘scrubber’

technology.

• 37 ships on order are due to have scrubbers installed.

• Majority are ro-ro and cruise/passenger vessels (50%)

and offshore units (18%)

• 75% of these vessels are younger than ten years old

• Scandinavian owners, mainly Norwegians, account for

50% of the scrubber equipped fleet whilst ‘Other’

European owners account for 41% of the orderbook in

numerical terms.


Current Statistics

• Reliability of technology.

• Time spent in emission control areas.

• Uncertainty over 2020 sulphur cap.

• Many systems available to market and some very

mature large players.

• Installation time and unit size.


Barriers to Uptake

What?

•Ballast water provides stability

and manoeuvrability to a ship

(can be millions of gallons).

•Usually discharged at different

port of call to where taken on.

•Can introduce invasive

species into areas.

•BWTS treat the water so that

the organisms are ‘dead’ or

‘inactive’.


Why?

•IMO adopted the International

Convention for the Control and

Management of Ship’s Ballast Water and

Sediments in 2004.

•Convention will enter into force 12

months after ratification by 30 States

representing 35% of world merchant

shipping tonnage.

•Current status: is that it has been ratified

by 43 Member States but these only

representing 32.54% share of world

merchant shipping tonnage

Ballast Water Treatment Systems

•Ratification expected imminently

(next year?).•Every vessel to be fitted with BWTS within maximum of

5 years of the ratification.

•System cost dependent on size but up to several million.



Compliance


Technology Benefits

• Lack of in-service history.

• Lack of clarity of parameters that will be acceptable.

• No financial incentive.

• Time period to implement.

• Shipyard capacity.

• Choosing a provider who will be in market for long term

(deep pockets required).


Barriers to Uptake

What?

•Software & measuring

instruments

•Variety of performance

measurement,

monitoring and

management


Why?

•Improving ship fuel

consumption.

•Reduced ship fuel costs.

•Transparency to shore based

operation

Ship Performance Management Systems

Ship performance depends on numerous factors

including:

•Weather & sea conditions.

•Technical efficiency of ship.

•Maintenance of a ship e.g. hull resistance from fouling.

•Speed.

•Operational factors e.g. trim and ballast conditions.

Range of sensors, power measurement, data collection

and analysis software and user system opportunities.



• Cost Saving!

• Even 1%-2% fuel consumption reduction

can represent substantial savings.

• Charter advantage.


Technology Benefits

Barriers to Uptake


• Very wide variety of systems and options

• Distrust in automated data collection and analysis

• Lack of installed infrastructure on ship

• Costs for installing required sensors and for purchasing software

• Possibly fear of confidential (competitive) data leak

• ROI

What?

•Reduce build-up of organic

growth on a ship hull.

•Most prevalent technology type

are biocidal paints.

•Types hull coatings include:

• Foul release

• Self-polishing surface

• Hard coatings

• Alternative (new) coatings


Why?

•10% speed reduction from fouling :

40% increase in fuel consumption to

compensate.

• 5000 TEU containership- 150 tonnes

p/day at US$300 p/t. 250 sailing days,

annual fuel bill US$11,250,000. Saving

of 7% (on fuel consumption increase) =

‘saving’ of US$787,500.

Hull Coatings

•‘Toxic’ hull coatings have risk of

further legislation.•Non-toxic good for company environmental profile.

•None are completely effective at foul prevention.

Active R&D Sector

•Microfibre foils: film of tiny fibres. Prevent microorganisms from

settling on hull via the density of the foil and the swaying motion of

individual fibres.

•Stimulated release coatings: use periodic stimulus e.g electric current

to change the shape of the hull surface and knock any attached

organisms off.



• Lack of a market-wide performance measuring

standard measure to allow for easy comparison

between products.

• Increased price of non biocide based paints and

possible need to re-coat more often.

• Split incentives under term charters.

• Patents that limit the flow of information between

manufacturers and also of performance information.

• Market dominated by few huge players with long

histories.


Barriers to Uptake

Market barriers and drivers are sometimes two sides of

the same coin.

• Sector excels in anticipating changes in regulation.

• Early R&D efforts as long process to develop and test

coatings.

• Good at adopting consistent and coherent regulation

globally.

• Performance guarantees.

It is a multi-billion dollar market and therefore tends to

swiftly barriers


The Good News

Back to the Future


Technology and innovations can abound but without end-users able to access the finance to

deploy then the market will fail.

Finance- The Final Frontier?


The Efficiency Trap:

•To become more efficient, ship owners & operators need to invest in the new technology/vessels.

•In order to invest need access to finance.

Without access to finance both new technologies AND shippingoperations sink!

Finance- The Final Frontier?



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Thank you for your attention.

fathom shipping - growing technology sectors in maritime

Business

sulphur content

world fleet

sulphur limits

scrubber technology

merchant ships

emission control areas

global sulphur cap

world goods