IBIA Annual Convention Hamburg 2014 04 November 2014, Hamburg Dr Hermann J. Klein, CEO E.R. Schiffahrt Opening keynote: Setting the scene the shipowners and shipmanagers point of view
Change of shipping in challenging markets 2
Ship speeds in 2007 Ship speeds today vs. The ship speed is significant lower than 7 years ago! 3
Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2008» Weighted mean speed 23 kn / weighted mean consumption 196 mt/day 4
Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2010» Weighted mean speed 20 kn / weighted mean consumption 143 mt/day 5
Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2012» Weighted mean speed 19 kn / weighted mean consumption 127 mt/day Vessel designed and optimized for 6
Operational challenge» Enabling and optimizing vessels for different operation profiles Fuel Consumption [mt/d] 250 200 150 100 50 0 38 42 46 50 54 0.0% 0.0% 0.8% consumption propulsion [mt/d] time-based share of speeds [%] 58 62 67 2.5% 2.5% 1.7% 3.3% 3.3% 71 76 81 3.3% 2.5% 1.7% 15.0% 86 91 4.2% 96 0.0% 102 2.5% 107 113 119 125 5.8% 5.8% 5.0% 7.5% 131 137 144 9.2% 6.7% Speed profile in 2014 8.3% 150 157 163 170 0.8% 1.7% 0.0% 177 184 192 Speed profile in 2008 199 207 214 222 25% 238 230 20% 15% 10% 5% 0.8% 0.0% 0.8% 0.0% 0.8% 0.0% 0.0% 0.0% 0.0% 0.8% 0% 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Max. speed design point Percentage trading speeds Vessel speed kn (STW) 7
Quality & Compliance Costs / Prices Emissions 8
The challenge of efficiency» Increased fuel-efficiency of vessels and main propulsion systems Identification of consumption components Consumption Total saving Design Reasons Operational Reasons Non-optimized machinery design Non-optimized hull design Reasons related to charterers (e.g. scheduling, waiting times at terminals etc.) Reasons related to owner (e.g. voyage execution, trim, maintenance) Source: APL every drop counts 9
Liners demand for optimised vessels New bulb» The new bulbous bow design reduce the form related resistance and optimise the wave resistance for the new operation profile.» The second benefit of the new bulbous bow installation is a reduced total resistance of the vessel which enable additional optimization and saving potential in way of the propeller design. 10
Market search for best rated vessels 11
The relevance of total costs US$/day 30.000 9.000 charter rate bunker fuel costs» 10% fuel consumption reduction equals to 30% of the charter rate 12
Future proofing to meet upcoming challenges: 1) Regulatory 2) Operational 3) Efficiency 13
1) Regulatory Challenges» Limitation of Sulphur Scrubber technology Substitution HFO» Limitation of Nox New engines Modification kits Substitution HFO» Monitoring of CO 2 Limitation of CO 2 Reduction of CO 2 Substitution HFO 14
Sox Reduction Solutions (LNG & Exhaust Gas Cleaning Systems) Sox Reduction Solutions LNG* Exhaust Gas Cleaning * No reference System available Pilot Project only Wet Scrubber Systems Dry Scrubber Systems* * No approved System available on the market Open Loop Closed Loop Hybrid 15
Low sulphur regulations and the impact on fuel costs 16
Possible development of fuel costs A CO 2 -emission trading may start in 2013. Associated costs are based on IPCC reports. In 2020, SO x -limits for fuel globally apply. Diesel quality fuels demand a premium, estimated to be 50% of HFO price Price for HFO will continue to increase in the long run (2.5% per year assumed) Source: DNV GL research. The analysis excludes inflation effects. 17
Marine Fuels LLSHFO MDO MGO LNG ULSHFO» On board handling of different fuel types 18
The future of shipping Yesterday Today Tomorrow Arriving Arriving in time and reliable Perfect remote controlled shipping at lowest costs 19
HFO and LNG Price Projections (2010 2035) US$/t Low HFO Reference HFO High HFO 1,400 1,200 1,000 HFO 800 600 400 200 0 Source: DNV GL Shipping 2020 2010 2015 2020 2025 2030 2035 US$/t 1,400 1,200 1,000 800 600 400 200 0 LNG 2010 2015 2020 2025 2030 2035» Gross heat of combustion for one kg of natural gas is abt. 49 MJ ( 13,5 kwh) and for one kg of HFO abt. 41,5 MJ ( 11,0).» Price per calorific value: LNG is abt. 8% less than HFO and abt. 40% less than MGO. 20
LNG as a solution? 21
Potential of LNG» First vessels (ferries, offshore vessels) already in operation.» Tankers are announced. Container vessels under development. Source: MAN 22
HFO and LNG price projections (2010 2035) Low HFO Reference HFO High HFO 1,400 1,200 1,000 HFO 1,400 1,200 1,000 LNG US$/t 800 600 US$/t 800 600 400 400 200 200 0 0 2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 Source: DNV Shipping 2020» Gross heat of combustion for one kg of natural gas is abt. 49 MJ ( 13,5 kwh) and for one kg of HFO abt. 41,5 MJ ( 11,0)» Price per calorific value: LNG is abt. 8% less than HFO and abt. 40% less than MGO 23
LNG-Aspects» Price difference per calorific value» Difference in emissions» LNG-Availability and infrastructure» Price surplus for new ships / conversions» Tank space and influence on cargo space» Operational aspects: refueling 24
Clean shipping in Hamburg (Fuel Cell and Hydrogen) 25
3D printers might change the shipping industry and reduce fuel consumption 26
The challenge for marine propulsion & auxiliary machinery Lower costs Source: DNV GL Group 27
Thank you 28