By: Eng. Mohamed Zaitoun, Founder & CEO of Zaitoun Green Shipping
Through centuries, the maritime industry has adapted change to successfully evolve and become the thriving force which it has established itself as today. Similar to when coal became the fuel for ships in the early 20th century, the first day of 2020 will be a historical moment in time, serving as another example of the global shipping sector’s evolution. However, there continues to be a lack of conversation regarding the industry’s hesitancy to embrace eco-efficient LNG vessels.
From a global standpoint, gas discovery, new builds of cruise and container vessels, and LNG bunkering is all on the rise. As it pertains to eco-efficient LNG vessels, conversations have increased in recent years but a significant knowledge gap still exists when it comes to ship owners and operators understanding the benefits. Many in the industry assume eco-efficient vessels are costly, resulting in less profitable margins or a lack thereof, and the inheritance of greater risk. This is not the case.
With shipping responsible for over 90% of the world’s trade, the protection of the marine environment is essential for long-term and sustainable business growth. As we progress, the existing business model will change and responsibility for fuel cost will spread beyond just ship owners and charterers. Ultimately, eco-efficient vessels are highly economical when considering continuous environmental updates that will extend past IMO2020.
While scrapping and scrubbers are viable options, they are both expensive incurred cost. LNG however, is less expensive than diesel by virtue of the lower commodity price of natural gas. Therefore, due to the cheaper prices of natural gas (compared to diesel and other crude oils), eco-efficient vessels present themselves as a more ideal choice. According to some estimates, the world’s oil reserves will last for another 50-odd years. Meanwhile, natural gas is available in abundance and reserves are projected to last much longer.
Additionally, the concept of eco-efficiency encourages technological innovation in order to optimize the use of energy, reduce emissions and lower operating costs. Unfortunately, throughout its existence, maritime has been perceived as ‘traditional’ by many. Comparable to the global shipping sector’s late adoption of digitalization, it would be advantageous for ship owners and operators to avoid a similar narrative. Regardless of industry, major companies who were early adopters of technology, were able to greatly enhance their businesses during this fourth industrial revolution. Similarly, adapting eco-efficient vessels would effectively serve as an industry advancing tool for all of maritime.
With more businesses moving towards sustainability and eco-friendly approaches, the use of eco-efficient vessels can significantly contribute to the preserving the environment and simultaneously enhancing a maritime entity’s reputation. Whether a company’s image is tarnished, or a business is well renowned, both can both greatly benefit by simply investing in eco-efficient vessels.
In the same way that an automobile breaks down over time and requires constant repairs, ship owners seeking to maximize a vessel’s lifecycle will likely suffer similar added incurred expenses. Though immediate investment into eco-efficient vessels may seem daunting at first glance, the long-term benefits far outweigh the short-term costs. In fact, the ROI is shorter and long-term benefits include greater profitability, minimized risk, and a balancing of short-term expenditure impact.
With much of the global fleet in the Middle East exceeding 20 years, the negative impact this has one the environment and detriment it can cause to one’s business is immeasurable. By accepting delayed gratification as a means, and not an end, ship owners should act now as this is the most convenient time in our industry’s history to start fresh and flourish more than ever before.