The emissions playbook

The multipurpose shipping sector, on the whole, appears resilient with carriers reporting that cargo supply is currently stable. Despite geopolitical upheaval, the indicators are still positive.

However, with the average age of the multipurpose fleet in excess of 15 years, environmental regulations are starting to bite. The Corporate Sustainability Reporting Directive, EU ETS, CII, EEXI and the upcoming FuelEU Maritime are certainly having, and will continue to have, a significant impact on the business. The regulations are forcing operators to optimise operations with their existing tonnage and are facilitating the case for fleet renewal.

The EU ETS, which was introduced on January 1, 2024, means that ships travelling between EU ports now have to hand over EU Allowances (EUA) for 100 percent of their emissions. Ships arriving at an EU port from beyond the bloc must pay for 50 percent of their emissions. While not the first emissions trading system of its kind worldwide (and certainly not the last), it was a step change on Europe’s decarbonisation journey. What proved surprising to the industry was that on shipping’s introduction to the EU ETS, the cost of carbon allowances fell quite significantly.

 

Much like the EU ETS, the CII and EEXI performance measures will ratchet up in intensity as the years progress. Reducing the carbon intensity of ships has been a priority for the sector – although there are some unfortunate realities to face with CII, which gives a vessel a performance score from A-E. A key problem within the existing guidelines is that they do not take into consideration the cargo actually being carried on a voyage. When this is done, the emissions profile of a given voyage changes completely. This circle still doesn’t really feel like it has been squared.

FuelEU Maritime has the potential to have the most significant impact of the suite of regulations introduced in the past two years. FEM’s aim is to increase the share of renewable and low-carbon fuels in the fuel mix of international maritime transport in the EU.

While FEM regulations come into effect on January 1, 2025, the actual first default compliance date was August 31, 2024, and FEM monitoring plans were being submitted to verifiers at that time. It sets well-to-wake greenhouse gas (GHG) emission intensity requirements on energy used on ships over 5,000 gross tonnes trading in the EU. For voyages travelling to/from the EU, half the energy usage is covered in the scope. For intra-EU and EEA voyages, the scope is 100 percent of the energy used.

FEM covers not only CO2 but also methane, with the intensity increasing in five-year increments. For 2025, the EU has set a 2 percent reduction requirement from a defined baseline, tightening to an 80 percent reduction in 2050. FEM is not about how much fuel is burned, but rather about what is burned, while considering the GHG production footprint for any given fuel.

“This means that traditional energy efficiency measures do not really help with compliance, though they do alleviate the economic impact of the actions necessary to attain compliance. At its core, the FEM is designed to shift maritime fuel consumption away from conventional fossil fuels towards increasingly green alternatives,” said Eirik Nyhus, DNV’s director – environment for maritime. BIMCO hopes to provide contractual clarity to those within the sector with its FuelEU Maritime Clause for Time Charter Parties 2024, which was published at the start of December.

Optimised activities and achieving efficiency gains wherever possible seems to have been the overarching priority for the ageing multipurpose and heavy lift fleet. Nevertheless, many have now embarked on fleet renewal programmes – despite sky-high prices at the yards and questions around the availability of future fuels.

AAL Shipping’s first Super B-class newbuilding, AAL Limassol, was successfully launched at the CSSC Huangpu Wenchong Shipyard in Guangzhou, China at the very every end of 2023, with three more units entering service though the course of 2024. The pioneering vessels include dual-fuel engines, an extendable eco-deck, large box-shape holds, plus three heavy lift cranes (two combinable up to 700 tonnes) that can expedite loading and discharging operations.

Another pioneering vessel is set to enter service imminently. SAL Heavy Lift’s first Orca-class was scheduled for delivery at the end of 2024. It placed the newbuild order, in conjunction with Jumbo, at China’s Wuhu Shipyard in July 2022 (four newbuilds plus two options, one of which has been exercised); the 14,600 dwt, 149.9 m-long dual-fuel ships feature two 800-tonne electric cranes. The first two vessels are lined up for projects with Siemens Gamesa.

At a service speed of 15 knots, the vessels will consume significantly less than 20 tonnes of fuel oil per day – similar to smaller-sized, geared multipurpose vessels. Alternatively, the vessels will be able to trade at a slower, more efficient speed of 10 knots at 6 tonnes, while still being able to reach a maximum speed of 18.5 knots for urgent deliveries. The vessels are capable of running on methanol for carbon-neutral operations. Moreover, a superyacht builder was engaged to consult on the ships’ interior and common areas. “We worked with their design team on how to create living quarters and common areas that are more appealing than what you would get out of a standard shipyard,” said Christian Hoffmann, director, group strategy and marketing of SAL Heavy Lift/Harren & Partner Group.

BBC Chartering’s fleet renewal programme continued with the delivery of its Lakermax series, with the fifth newbuild BBC Santiago passing sea trials in November 2024. The vessels have been welcomed by the market; pairs of Liebherr LS-250 cranes capable of lifting up to 500 tonnes in tandem are supplemented by 26,000 cu m of space under deck, and a 2,800 sq m unobstructed weather deck. The vessel is also certified to sail open hatch. Briese Chartering’s OTECO 9000 series deliveries continued too. Eco Treasure, the fourth vessel series, was delivered in November 2024. The 9,000 dwt vessel is part of a 10 ship order with China’s Dayang Offshore.

Meanwhile in March, dship Carriers signed contracts for four D500 multipurpose vessels, with delivery slated for 2025. The 15,000 dwt vessels will boast a significant reduction in fuel consumption, according to dship, aligning with environmental sustainability goals. They also feature an enlarged cargo hold and deck capacity to cater to the shipping company’s evolving client needs.

COSCO Shipping Specialized Carriers is reported to be adding than 80 vessels to its fleet over the next two years, according to China Daily. The orders, some of which have been announced already, include 24 car carriers and 20 pulp carriers, as well as a number of heavy lift ships. They will expand COSCO Shipping Specialized Carriers’ fleet capacity to over 10 million dwt by 2026.

The majority of the company’s new vessel orders have been placed with domestic shipbuilders, including Xiamen Shipbuilding Industry based in Fujian province and Jiangsu province-based Chengxi Shipyard (Yangzhou). COSCO Shipping Specialized Carriers owns more than 140 vessels, including multipurpose and heavy lift vessels as well as semi-submersible vessels.

The Netherlands-headquartered Breadbox Shipping Lines is renewing its fleet and has placed orders for newbuild tonnage. Earlier in 2024, Breadbox sold its fully owned 1991-built, 3,200 dwt vessel Xerus. Two vessels under long-term time charter, Falcon (1991-built, 4,100 dwt) and Hyrax (built 1986, 4,500 dwt), were redelivered to their owners.

Breadbox has strengthened its strategic partnership with Turkish shipowner Aykop, integrating much of Aykop’s X-fleet into its own. These vessels, built between 2006 and 2012, will replace vessels that have aged out. Breadbox and Aykop will jointly construct four 3,800 dwt coasters at a Chinese shipyard, with deliveries commencing in late 2025. These will be Tier III compliant, carry an EU green passport, and will be built under RINA classification.

Also saying goodbye to old tonnage was BigLIft Shipping, which retired the iconic Happy Buccaneer heavy transport vessel after 40 years of service. Its parent company, Spliethoff Group, also reited the Super Servant 4 in December, a 43 year-old veteran of the high seas.

2024 was a busy one for the Spliethoff Group as a whole. CY Shipping and BigLift Shipping confirmed they would add two more heavy transport vessels (HTV) to their joint fleet, bringing the number of open deck carriers in their roster to six. In September, Spliethoff also acquired a majority stake in shortsea operator Forestwave (which itself had acquired Symphony Shipping and its fleet of multipurpose Ecobox vessels in 2023). The latest deal sees the number of vessels commercially operated by Spliethoff pass 140.

Shortly after that announcement, Spliethoff confirmed an order with Wuhu Shipyard in China for a series of eight multipurpose vessels, plus an option for two additional ships. These Finnish/Swedish 1A ice-classed, 28,600 dwt ships will be largest vessels in the Spliethoff fleet. They will be prepared for the use of future fuels.

Chipolbrok is bolstering its multipurpose capacity as well. In November it confirmed that it had ordered two more newbuild multipurpose ships, scheduled to enter service in 2025 and 2026. The vessels will have similar specifications to the six delivered in the company’s latest newbuilding programme (approx. 62,000 dwt, 300-tonne lift capacity).

Finland’s Meriaura signed contracts during April with Dutch shipyard Royal Bodewes for two EcoTrader cargo ships that will be delivered in January and December 2026, respectively. Like the carrier’s EcoCoaster vessels (Eeva VG and Mirva VG delivered in 2016), the new EcoTraders can be operated with biofuel made from recycled raw material produced by Meriaura’s subsidiary VG-Ecofuel.

“Our two newly ordered vessels mark the beginning of a newbuilding programme through which Meriaura aims to achieve carbon neutrality significantly faster than the IMO target. Our goal is to systematically renew our fleet with a series of newbuildings. The use of bio-oil combined with compensation enables us to achieve our ambitious target,” said Jussi Mälkiä, founder of Meriaura and chairman of the board of directors.

The newbuilds are desperately needed, according to multipurpose shipping analyst Drewry, which believes that market dynamics and a lack of newbuild orders will result in an unavoidable, significant increase in time charter rates.

The analyst said in July that, ultimately, the improving demand outlook will incentivise further real-life newbuilding orders. “Even if we see an uptick in newbuild ordering in the next two years, it is unlikely those additional ships would get delivered before 2027, leading to a tight market in 2026/27, especially in the project carrier segment,” Peter Malloy, senior analyst – multipurpose shipping, pointed out.

This situation will lead to climbing utilisation and time charter rates, according to the analyst’s modelling. He added that with slot availability showing later and later delivery dates, slippage, and the normal time taken to build a vessel, Drewry must adjust its modelling each quarter and fore-estimate time charter rates as it becomes unlikely that vessels will be delivered by the time they are needed.

“While other sectors competing for general cargo (such as dry bulk, cellular container ships, car carriers) will likely alleviate the expected supply crunch of multipurpose vessels, a significant increase in time charter rates seems unavoidable at this point,” he warned.

Still, a warning about powering vessels with green fuels was sounded by fleet performance solutions provider Oceanly, which believes that an over-zealous push to adopt alternative fuels could lead to increased global emissions. “While alternative fuels are part of the future, current infrastructure and energy availability isn’t enough to support a full transition. Relying too heavily on green hydrogen, could strain global renewable energy resources given that only a fraction of today’s hydrogen production is classified as green,” said Frederik Lerche-Tornoe, vice president general manager at Oceanly, who called for an immediate focusing on improving energy efficiency as a more achievable path to reducing emissions now.