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The eco-ship question, retrofits and a two-tiered market

The eco-ship question, retrofits and a two-tiered market
While there are still more questions than answers when discussing the eco-ship, the commercial incentive of significant fuel savings, workable finance solutions and increased regulation means it is inevitable shipowners will have to adopt a more sustainable approach.

Though the industry still puzzles over whether to invest in new eco-ships, retrofit, or do nothing, a two-tier system is on the horizon with non-fuel efficient vessels being discounted heavily against fuel efficient ships. This was a clear message to come out of the Greener Shipping Summit 2015, organised by Newsfront / Naftiliaki and held in Athens, last week.

"Shipowners should look to the future and start planning any measures they need to adopt to avoid falling foul of new regulations and to keep ahead of the competition,” veteran shipbroker Takis Christofides warned.

"Thanks to the use of innovative technologies and the implementation of smart efficiency measures, fuel consumption and emissions will be significantly reduced – lowering overall operating costs at the same time,” said the md of Carriers Chartering Corp.

Christofides, chairman of the Greek Shipping and Shipbroking Companies Association, recalled that when the idea of ‘green shipping' was introduced pressure groups and much of the public breathed a collective sigh of relief. It was also welcomed by many of the major players in the industry, even though economic difficulties being encountered by shipping made it hard to absorb the increased costs of low-sulphur fuel.

“As a result the various schemes are still struggling to achieve the anticipated scale of participation,” noted Christofides.

“Eco-ships currently make up a fraction of the world fleet and there is a division of opinion within the industry about whether to invest in new fuel efficient ship design, upgrade existing ships or simply do nothing. Some high profile companies have chosen to take a proactive approach, investing in new ships, as well as retrofitting fleet with performance enhancing measures such as anti-fouling coatings, replacing bulbous bows and improving ballast.

“Other owners are less keen to invest until the payback of the new technologies is proven, but this risks falling behind the competition and being unprepared for increasingly stringent emissions regulations,” he said.

He noted, that whilst it is acknowledged there are some technologies in the market that are as yet unproven, others are considered tried and tested.

But, said Christofides, “the biggest barrier to a sustainable shipping industry is financing the retrofitting environmentally sustainable technologies. This is particularly difficult in the context of time charters where the time required to pay back the initial investment in capital costs often takes longer than the charter period."

“What I see at the moment is that the ‘good guys’ pay for the cost of doing the right thing for the environment while some less scrupulous competitors actually get a cost advantage of burning more polluted -but cheaper- fuels,” said Christofides.