Vessel redirects – in the name of profit rather than the planet
The Cape of Good Hope dilemma
Increased transparency could be the only way for shipping to become more environmentally friendly.
The Carbon War Room, an environmental think-tank, has been set up by a group of entrepreneurs with the founding principle that the market would ultimately force shipping companies to reduce emissions.
However, it would appear that belief is under threat after the organisation completed a major study in conjunction with University College London, which discovered that more-efficient ships have failed to command higher charter fees since the financial crisis began in 2008, driving away incentive for owners to order them.
Galen Hon, Carbon War Room shipping operations manager, told The Loadstar at last week’s SMM show in Hamburg: “Ships with efficient technology are not valued properly – the charterers are saving tonnes of money using these vessels, but none of it is going back to the owners, which shows that the market is incredibly broken.
The study, Revealed Preferences for Energy Efficiency in the Shipping Markets, discovered that one of the problems governing the industry and the lack of progress in adopting more efficient vessels was a lack of transparency.
“What we have found is that there is a huge amount of risk aversion and a big knowledge gap – there is a lot of education that needs to be done and there’s not enough data in the marketplace,” he said, which had meant that finance for more efficient vessels was harder to raise.
“Even if there was enough data, and we can work with banks, there are still doubts about the payback period of the new technology. As an industry, there is a problem with a short payback mentality. A few years ago, owners typically wanted a payback period of two-to-three years, since then it has been moving in the wrong direction,” he said.
One shipowner told the research team that it needed a payback period of just six months,
“The only shipping company I know that has a sensible time frame in mind is Stena Line, which will accept a payback period of six-to-eight years, because it has a long-term vision, essential to its long-term future,” he said, implying that the companies had become more risk-averse.
However, Orestis Schinas, a professor at Hamburg School of Business Administration’s maritime and logistics department, didn’t agree. He said: “Shipowners are pro-risk people because it is the only way they make money, but they are technology-averse.
“They also invest their own money, typically around 20-30% of the value of a vessel, so they need to hedge that risk, which they do so by fixing long-term charters.”
He argued that one way for companies developing greener shipping solutions to entice more orders would be to develop finance solutions themselves,
“Manufacturing leasing solutions are certainly part of the future, and newbuilds will have two accounts – one for the hull and one for machinery – and a leasing scheme that might support innovative machinery would come from European manufacturers, while a leasing scheme for the hull would come from the Asian shipyards,” he said.
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