Archives for category: Regulation

This week’s Analysis outlines recent trends in the shipping markets, in a summary taken from our upcoming Shipping Review & Outlook. From the varying market cycle positions, to economic headwinds, “manageable” supply growth, changing financial landscape, growing focus on environmental regulation and ‘green’ technology, and impacts of IMO 2020, there is plenty to review!

For the full version of this article, please go to Shipping Intelligence Network.


Providing newbuilding market data has always been a strong focus for Clarksons Research but in recent years there has been a growing need to better understand activity in the ship repair and refurbishment sector. In this week’s Analysis we discuss the reasons behind this interest and present some highlights from a new intelligence flow of ship repair activity now available on our World Fleet Register.

For the full version of this article, please go to Shipping Intelligence Network.


On 15th September 2008, the collapse of Lehman Brothers crystallised the financial crisis and the onset of the worst economic downturn for a century. To a shipping industry used to extreme cycles but transitioning to recession with rapid trade collapse and a huge newbuilding orderbook the initial shock was severe and the “hangover” prolonged. This week’s Analysis compares the situation almost ten years to the day.

For the full version of this article, please go to Shipping Intelligence Network.


After reporting on a range of gloomy statistics in 2016, has shipping been able to pick itself up from ‘rock bottom’? Strong trade volumes, a record S&P market and improving bulker and containership markets have all provided some welcome relief. But challenges in the tanker, gas and offshore markets continue while uncertainty around environmental regulation builds. As ever, it’s been an interesting year!

For the full version of this article, please go to Shipping Intelligence Network.

Historically, the fuel of choice for the vast majority of large cargo ships has been heavy fuel oil. But in 2020, sulphur oxide emissions will be capped to 0.5% by IMO convention, ruling out current standard grades of HFO. Both fuel consumers in the shipping industry and producers in the refining industry have now had a little time to consider the potential options to deal with the imminent regulatory change…

For the full version of this article, please go to Shipping Intelligence Network.

The introduction of new environmental regulations is leading the shipping industry to look for ways of reducing its emissions of harmful gases. This week we focus on two separate but related issues: the way in which vessels are powered, and the type of fuel that they use. New technologies are being adopted, with certain ship types leading the way…

Electric Therapy

The majority (96%) of active merchant vessels are powered by mechanical systems in which a form of fuel oil powers a main engine (usually a 2 or 4-stroke diesel) which is connected to the propeller. Most other vessels are “diesel-electric”, in which the power generated by the (4-stroke) main engine(s) is converted to electricity before being transferred to propeller(s) or thruster(s) via electric motors.

By optimising the loading of the engines, diesel-electric systems can lower fuel consumption and emissions. These systems are well established in sectors such as offshore, tugs and passenger, where manoeuvrability, variation in power demand and engine noise are important considerations. For larger cargo vessels, where demand for power is generally higher and more consistent, conventional mechanical systems remain more efficient and cost-effective. Our Graph of the Week shows that against a backdrop of reduced contracting in the larger cargo sectors, electrically-driven ships have assumed a greater share of the newbuilding market, accounting for 22% of reported newbuilding contracts so far this year.

Battery Charged

The next step for electric power may be more widespread adoption of batteries in main propulsion systems. There are 22 vessels in service and 14 on order that use batteries, mostly alongside either conventional diesel or dual-fuel generating sets. As well as reducing emissions when using battery power, these can enhance efficiency by optimising engine loads and transferring surplus power to or from the batteries as required. For smaller ferries intended for short routes, all-electric propulsion systems are feasible.

Gas Treatment

LNG has been identified as a cleaner fuel capable of reducing vessel emissions in line with new regulations. Clarksons Research’s World Fleet Register currently identifies 542 merchant ships in the fleet and on order capable of using LNG fuel. 351 of these are LNG carriers, which can use cargo boil-off to fuel a choice of turbine, dual-fuel diesel electric or dual-fuel 2-stroke main engines. In other sectors LNG fuel has taken longer to gain market share, but there are signs that where ship designs and the supply of bunkers allow, it is becoming more popular. Out of the 130 contracts recorded so far in 2017, 21 are for vessels capable of using LNG fuel. These include 4 Aframax tankers, the largest vessels other than LNG carriers to adopt dual-fuel 2-stroke engines.

More efficient power systems and cleaner fuels are two examples of how the shipping industry is responding to the challenges set by new environmental regulations. Alongside other developments in vessel design and operating practices, shipping is steering towards a more efficient and cleaner future. Have a nice day!

SIW1266:Graph of the Week

‘VWGate’ has raised a flag for managers and technicians in the transport business. ‘Efficiency’ used to be left to the market, but the intrepid twins, consumer health and climate change, have changed all that. Shipping boasted of being the most ‘efficient’ transport mode, but the twins took a look at what was coming out of the funnel and the rest is history (as is anyone not paying attention to emission regulations).

Performing Bare

The shipping industry has been squeezing diesel technology for fifty years and faces similar problems to the VW engine designers. The technical cupboard appears fairly empty, so the opportunities for improving performance look slim. The challenge is to find another way to measure and improve performance.

Declining Productivity

The starting point is operational performance and a surprising ‘big picture’ statistic is that tanker performance in terms of tonne-miles/dwt has fallen 25% in the last decade and is 44% lower today than in 1974 (see graph). This is partly due to the shipping cycle, but a more important reason may be the change in the way oil transport is organized.

In 1974 the system appeared to be super-efficient. ‘Productivity’ of 42,000 ton-miles/dwt was over 75% of the ‘theoretical maximum’ (estimated at about 55,000 tonne-miles/dwt). Until 1973 freight was generally about half the CIF cost of oil and transport was closely managed by the oil majors who controlled most of the fleet. But in the 1980s things changed. Oil cost over $30/bbl and freight was no longer of strategic importance for oil majors. Furthermore, more oil was shipped by traders with no interest in logistics; freight was just a cost (later they discovered that by owning ships they could ‘double dip’ on their cargoes). Progressively the oil majors drew back from managing logistics and took ships from the spot market, a strategic decision which the ‘Exxon Valdez’ incident in 1989 reinforced.

Inefficient Market Hypothesis

The ‘efficiency’ of tanker transport (in terms of cargo-miles per unit of vessel capacity) never recovered from the dis-engagement of the oil majors. Productivity slumped to 25,000 tonne-miles/dwt in the 1980s recession and only increased to 31,000 tonne-miles/dwt when the market recovered in 1997. At the peak of the ‘super-boom’ in 2004 the fleet operated at only 33,000 tonne-miles/dwt. Today it is back down to 24,000 tonne-miles/dwt. As owners celebrate booming rates, the intrepid twins must be wondering what the industry is up to. Tankers are delivering almost half as much oil transportation (on a tonne-mile/dwt basis) as they were 40 years ago (with the spot market more concerned with managing ‘productivity’ in the context of the earnings environment).

Back To The Future

Not many other industries could say that they have halved ‘efficiency’ and lived to tell the tale. Of course you could just bury the figures and carry on as usual (which seems to have been VW’s strategy). Or you could start thinking about what to do about it. Is 1970s-style logistics a lost art? Freight may not be a big deal for cargo interests, but meeting regulatory targets should be. Have a nice day.