Capital Link's 4th Annual Invest in International Shipping Forum The Added Value of Classification to Financial Institutions & Owners in Today's Capital Markets Dr Hermann J. Klein, Member of Executive Board of GL
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Containerships Total Exposure Type TEUs Approx Value Million USD Average TEU value, cargo USD 80,000 Average TEU value, cont. USD 5,000 TOTAL VALUE EXPOSED Feeder 900 2,000 25 35 m$ 72 160 m$ 4.5 10 m$ 100 200 m$ Sub Panamax 2,800 45 m$ 224 m$ 14 m$ 300 m$ Panamax 5,000 65 m$ 400 m$ 25 m$ 500 m$ Post Panamax 7,500 90 m$ 600 m$ 37.5 m$ 750 m$ Suezmax 10,000 120 m$ 800 m$ 50 m$ 970 m$ Mega Carrier 14,000 160 m$ 1,040 m$ 65 m$ 1,300 m$ Excluding: Oil pollution Personal Injury / Death Delay / Loss of Use Bad Will. No. 4
Classification the stakeholders safety net Cargo underwriters Marine insurance companies National maritime authorities Charterers Shipowners Banks Shipyards Subcontractors No. 5
What are the objectives of class? safety operational reliability environmentally friendly fit for purpose p efficiency optimized maintenance profitability! No. 6
How long should it last? No. 7
25 years lifetime No. 8
Approved Classificational Rules Plan Approval Yard Surveys Rules Adoption Continuous Improvement Set of Plans Annual Surveys Research No. 9
Life cycle surveys Ships in service : Periodic inspections Newbuildings: Plan approval Construction supervision Material & Components Classification and ship safety annual intermediate renewal 0 5 10 15 20 25 Years No. 10
Influence on maintenance Qualification and motivation of crew Maintenance Strategy Trading-area Maintenance friendly construction 5 10 15 20 25 30 No. 11
Regulatory Pressure No. 12
Energy efficiency of shipping Crude oil tanker CO2 emissions related to transport work Source: Presentation MARINTEK, GHG WG1, Juni 2008, Oslo No. 13
Noise NO x, SO x, CO 2 CFC, HCFC VOCs (Tanker) Noise Oel Separator Waste water Waste Antifouling Ballast Water No. 14
Timeline: environmental regulations NO x, Tier III, ECA 0.1% S, SECA Ballast water * Ship Recycling * CO 2 market measures * CO 2 technical measures * 3.5% S, global NO x Tier I, global NO x Tier II, global Fuel tank protection 1% S, SECA 0.1% S, EU ports review 0.5% S, global 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *) estimated entry into force No. 15
Market Forces No. 16
Fuel Oil Prices Heavy fuel oil price [USD per metric ton] 720 224% 525 235% 345 293 84 96 106 96 68 93 138 117 134 153 155 234 187 440 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1-7/08 Max. 2008 25/12/ 08* Mar 10 * Rotterdam No. 17
Fuel prices will go up USD / ton 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2008 2010 Anticipated IFO 380 effective MDO premium fuel costs CO2 for surcharge shipping a look into the future 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) 2012 2014 2016 2018 2020 2022 2024 2026 2028 No. 18 2030 2032 2034 2036 Source: GL research. The analysis excludes inflation effects.
Technical Options No. 19
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Ship efficiency investment economics better economics better designs better efficiency better designs better production current designs safety level Higher safety operating costs No. 21
Efficiency influencing parameters Auxiliary Engines, PG, P Distribution Wind Position Routing Reefers, Cargo Hold Ventilation Wave Height Speed Total Resistance Propeller (Pitch, RPM, fou ling...) Engine Performance Water Depth Ballast Draft / Trim Current Hull condition No. 22
The Connecticut Maritime Association Shipping 2010 March 22, 2010 Lines s (incl. bulb bous b bow) Optimization of a container carrier i No. 23
Do you want to save 127m US-Dollars? No. 24
Lines optimization DoE selected Pareto-Frontiers Each single red cross represents a full hull design and analysis approx. 16.000 in total RT / RT Ba aseline [%] @ 24 kn, 14 m/14 m 127,000,000 72,000,000 29,500,000 / Baseline [%] @ 14 m/14 m V/V Baseline No. 25
Smart alternatives make a difference Existing Design Concept A Concept B tdw 133,000/165,300 166,000/197,000 168,000/197,000 TEU 14,000 14,200 15,000 B 51.20 m 51.20 m 53.90 m C B 0.73 0.85 0.81 P B 72.2 MW 22.8 MW 22.8 MW V (85% MCR) 24.0 kn 16.7 kn 16.7 kn Lightship 53,000 t <51,000 t 53,000 t Other parameters (length, Td/Ts, ) fixed No. 26
Background Concept A Reduction of main engine The hold is cut out and the same length is inserted in front of engine room Approximate gain: 198 TEU (in-hold) No. 27
Background Concept B Widening by one row (gain abt. 794 TEU) Reduction of Main Engine The hold is cut out and the same length is inserted in front of engine room Approximate gain: 198 TEU (in-hold) Total gain incl. Cb-increase: abt. 1,000 TEU No. 28
Superior performance Optimization i i of propeller and rudder Optimization of hull and stern form Optimization of scantlings and ballast water Optimization auxiliaries, energy management system Proposal for operational optimization Trim Assistant / monitoring system No. 29
Overview comparison Existing Design Design slow Concept A Concept B TEU 14,000 14,000 14,200 15,000 DWT (Td) 133,000 133,000 166,000 168,000 Designspeed (85% MCR) 24.0 kn 16.7 kn 16.7 kn 16.7 kn Miles/day 576 400 400 400 Cost/day 141,250 86,690 69,500 69,900 No. 30
Comparison of designs and speeds Effects "New concepts" vs. existing design Reduced cost Bunker main engine Operating costs (lubes, spares, ) Capital costs (depr., financing) Auxiliary energy Increased capacity (TEU, dwt) per ship Lower speeds: Additional ships needed Cost rate to integrate all economically relevant factors Daily operating costs/(dwt Etmal) No. 31
Comparison of TEU-cost rate TEU-cost rate*, US$ Existing Design 17.52 Existing design at 16.7 kn Concept A 12.21 15.45-34% Reduced daily operating costs Increased SFOC Lower speed Smaller engine, used at design speed Reduced investment Increased capacity Concept B 11.63 Significantly increased TEU capacity Slightly increased investment * Total operating costs/(teu Etmal) 1,000 No. 32
What can be done, fast? No. 33
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17.0 16.0 knots oper rational speed, 15.0 14.0 13.0 12.0 11.0 10.0 300 400 500 600 700 800 900 1000 bunker cost, $ No. 35
110% Economics of selected container vessels 100% same earnings 90% 80% 70% 60% Cost index 30% less Earning index costs Panamax Panamax (max) Baby Post- BPP plus panamax 8 vessels 8 vessels 8 vessels 10 vessels No. 36
110% Economics of selected container vessels 100% same earnings 90% 80% 70% 60% Cost index Earning index Panamax Panamax Baby Post- BPP plus BPP ++ (max) panamax 8 vessels 8 vessels 8 vessels 10 vessels 10 vessels 35% less costs No. 37
energy efficient ships: Reduced environmental impact lower costs strong competitiveness No. 38
Thank you No. 39