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Preparing for 2020: Q&A with shipping industry experts

Nov 12, 2018 11:57 AM

A VPO Global panel examines the challenges surrounding low-sulfur fuel

Courtesy VPO Global

The following is text of a news release from VPO Global:

(COPENHAGEN) — VPO Global recently hosted a panel discussion on preparing for and transitioning into 2020. Led by Niels Bjorn Mortensen, private consultant, master mariner and naval architect, the panel discussed what should be done now to ensure a smooth transition in 2020 and how to overcome present challenges. In this week’s spotlight, VPO looks at some of the questions put to the panel and what they had to say.

What are the first steps to ensuring a smooth transition into 2020?

Sundeep Shaw, fleet superIntendent, Maersk Line

“We must look at where fuel is available. Particularly 0.5 percent fuel. You need to look at where your fuel will be and how you will procure it. That would be a good starting point. Secondly, you need to look at what kind of ships you are operating and what kind of engines you have on board, and you need to start preparing here. If you are changing fuels over then you might have issues with compatibility. Start looking now at the propulsion of your vessel. Unless you are already prepared with scrubbers.”

Daniel White, CEO, Signol

“From a behavioral perspective, it is so easy if you do it right. We’re seeing ROIs from the aviation center between 750 and 4,000 percent in one year. We achieved a cost-measured carbon reduction from our first piece of published research of $250 per tonne of CO2. My advice is well applied behavior solutions are very easy first steps to take.

"Ninety-five percent of decisions we make are in our unconscious mind and are controlled by emotions and by our environment. Training is important but so is the way in which it is presented. Training incentives given to crews and the way information is presented to them in a personalized way is sometimes more important.”

Alvin Forster, deputy director (loss prevention), North P&I Club

“A big problem is uncertainty. There are several methods for 2020 compliance but all have uncertainties. We know very little about the new fuels and products out there. The suppliers haven’t given much information either. In terms of scrubbers, there is uncertainty as to which ports are going to start banning open-loop discharges. A lot of this is a gamble on the future fuel price. Market analytics such as Drewy and Platts are estimating a $400 difference per tonne between HFO and low sulfur fuel, but we don’t know how long this will last for. Those that opt for scrubbers could save a lot of money and have a very short payback. But this is essentially a gamble, an educated guess at best. People really should have started thinking about it a long time ago. In 2019, people will have to commit to compliance, whichever way they chose. They must think about dry dock, charter parties, vessel services. There is a lot of planning going in to 2020 but it needs to happen now. There’s also a lot of information on the technical side but more needs to be done on the planning side now. What are the consequences of which type of compliance method? Think now.”

Marcus Ejdersten, director of strategic marketing, MacGregor

“You need to prepare yourself, now. Look at what you can do and how you can prepare. Not just in terms of the technical department but ensuring that you are planning and can prepare and looking at what a specific vessel can afford. Which option is worth the investment, based on the carrying capacity? You have to ask what you want to accomplish.

"What you need to do is assess the possibility to upgrade your vessel. This has to go hand in hand with installing technologies to reduce emissions and improve efficiencies. There is great potential to improve efficiency but let’s put the cargo at the center.

"There are a lot of good technologies in this industry but what we typically see is that the vessels are underperforming. There is a huge potential to improve, to deliver the same cargo capacity in fewer number of vessels on certain trade routes, which in turn will cut emissions.”

How do you change the business case for 2020?

Nick Merrick, business consultant, VTAS

“It is about the behavior aspect. Everyone will say they are unique but from the different water sectors and aviation I have worked with, all with say they are unique and you know what, they are not. Number of issues we see are significant that are very similar. Top-down behaviors and drivers of businesses were true and proper, but the person operating at the base had a completely different set of priorities.”

Noel Tomlinson, business consultant, VTAS

“There is a lot surrounding the business case. Which options, which fuels, and further to that, looking into 2050 and ahead. It all comes down to benefit, ROI and change in business. We need confidence to make that decision. There are a number of mechanisms that come into this, but data is one of them. Another is having the ability to model that and inform that business case to make that decision.”

Is LNG an option for 2020?

Sundeep Shaw, fleet superIntendent, Maersk Line

“(Liquefied natural gas) is a lot more challenging for current vessels. At the moment, no. We can look at the option for newbuildings, but not really for a conversion.”

Alvin Forster, deputy director (loss prevention), North P&I Club

“We did LNG research a few years ago, expecting more shipowners to go for it in 2020, but it was found to be a lot more work than expected. Technically, it’s very different ball game. The crew training is different, there are very different risks, infrastructural concerns, and availability. There’s a possibility it will grow in the future, but we have seen very little as it for a popular choice in 2020.”

Noel Tomlinson, business consultant, VTAS

“There is not long until 2020 now and so we are seeing more interim solutions. LNG is a longer-term solution. From our experience speaking to vessel operators, we will see dual fuel and LNG as an option further down the road. There is a lot to take into consideration with LNG, not just looking forward to the immediate future, but long-term issues such as behavior and operational changes and commercial changes that will be needed going forward for long-term sustainable solutions.”

What will happen if there is compliant but not compatible fuel available?

Alvin Forster, deputy director (loss prevention), North P&I Club

“At the moment, the industry is getting ready for new fuels. There is a lot of complexity. Charters will want to wait till last minute, whereas shipowners will want to do it in good time. Making that transition into new fuels needs to be made safe, but it is a new experience. Shipowners and charterers will have disputes in 2019 for sure.

"Compatibility is a difficult one. Crew on board will have to do more testing. The risk is real. We have been speaking with fuel experts and they have shared their concerns around this too, so there is no magic answer.”

How do we change the behavior for optimal performance in 2020?

Daniel White, CEO, Signol

“We’ve been working with captains in aviation and the decisions they are making are worth thousands and thousands of dollars every single day, and this could be a simple matter of making a switch on an engine. Shipping could be even bigger.

"The first thing is that there are huge amounts of data and if that data is used correctly and fed back in the correct way, to the right individuals, we are providing the right information to the right people at the right time, so they can make the right decisions. That is not as easy as it sounds. But we need to change both the information and the frame of information, and the incentives that go with it.

"The second thing is how we value the change of data. A common thing I’ve heard today is that you can’t improve what you’re not measuring, and I think it’s important to note what you are measuring. Is it behavior, and what is behavior? It’s not what we say we’re doing but what we actually do and it’s really important to understand the individual. How we’re evaluating behaviors and how we’re changing behaviors are critical values to bring out, and these things comes from the data that we have access to.”

Sundeep Shaw, fleet superIntendent, Maersk Line

“At Maersk, everybody gets a KPI (key performance indicator) now. The ship, the staff, the engineer, everybody. And what we look at is how the vessel is performing during the duration they are on the ship. How do they use weather to their advantage for example. We use it to sum up, to make an assessment that gives evaluation of how he has been optimizing fuel consumption for optimal engine performance. We track all this and address crew who might need more education or training on how to use solutions or software or those who are underperforming.

“We are particularly looking at the training in regards to fuel switching. With a mixture of fuel blends, we will focus on how we can do the changeover. We still don’t know how it will turn out.”

The presentations from VPO Copenhagen 2018 and further information on events in 2019 can be accessed via this link.

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