A recent American Bureau of Shipping (ABS) webinar attempted to address these issues and what lies ahead.
In the presentation, with the subtitle “What’s on the Horizon for Tankers”, ABS’s Vassilios Kroustallis, Europe Regional Business Development Vice President went through a detailed comparison of regulatory timelines and the various alternative fuels under consideration, but, importantly, made the point that the rapid pace of a broader technologies’ advancement is part of the answer.
As examples, he emphasized that data analytics, and smart decision-making/optimisation, will be vital; each tanker will need a “carbon benchmarking capability” and, to remain competitive, every tanker fleet will need “advanced fleet efficiency monitoring”.
Beyond new efficiency-improving design features likely for tankers, such as coatings, rudders and propellers, superstructure, and aerodynamics, other trends highlighted by Kroustallis included possible wind propulsion, battery and solar power assists to conventional generator kit. Where the presentation really excelled was its success in putting the technologies into the context of the regulatory environment- with its numerous uncertainties- particularly surrounding the IMO’s Carbon Intensity Index (CII) and its MEPC 2026.
When considering the spectrum of new fuels, ABS is not endorsing one fuel over another, stating clearly that “There is no clear winner yet for the fuel that will dominate shipping”. However, he but did note “an increase in the orderbook for gas-fueled tankers…with the majority of these being LNG-fueled “, along with a mention of an inchoate trend where alternative fuels are transported as cargo such as methanol and LPG.
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Bimco Chief Shipping Analyst Peter Sand, in the second part of the webinar, gave a presentation looking at the state of the tanker freight markets coming out of the Covid crisis, and beyond.
He pointed to economic improvement in 2021 - 5.5% overall growth versus 2020 negative 3.5% - and to a shift in economic activity towards “Developing” economies, which paralleled his later discussion on the importance of tanker trades from the “west” to the “east”, particularly Chinese and Korean imports of US crude oil- a trade with substantial ton-miles and Russian oil going into China.
In spite of the ongoing economic pickup, the low orderbook, and the pickup in tanker demolition – “the highest levels since the time of the 2010 World Cup”, he said: “our expectation for 2021 is loss-making freight rates on average…except for seasonal upticks…as overall global oil demand is not likely to recover until late 2022”.
He is looking for some strength later in this year, on the back of increasing oil demand in the Far East and also a recovery in India, presently seeing reduced demand with its ongoing Covid crisis.
For the tanker markets, he said: “The volume of Chinese imports…has been a dominant factor in previous years…and will remain so in the coming years.” Geopolitical considerations such as the OPEC + alliance, Venezuela - Iran illicit trades will also loom large, in his view.
Tying his presentation back to the themes elucidated by ABS, Sand asserted that: “How climate change issues are dealt with will be decisive for the longer-term future of the tanker market”.
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