Post on 28-May-2022
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SMARTER SOLUTIONS FOR BULKERS AND TANKERS
OPTIMISING TCE & FUTURE PROOFINGWARTSILA WEBINAR 9 JUNE 2020 15:00 CET / 09:00 EST
09/06/2020 [Presentation name / Author]1
© Wärtsilä 9.6.20202
WEBINAR PRACTICALITIES
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The webinar is 45 min + up to 15 min Q&A
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Kevin HumphreysGeneral Manager,
Merchant and Gas Carrier Segment,Wärtsilä Marine Business
Paradigm Shift
Johnny KackurGeneral Manager,
Merchant and Gas Carrier SegmentWärtsilä Marine Business
Optimised Power & Propulsion
Systems
John HatleyDirector, Market Shaping,
Merchant and Gas Carrier SegmentWärtsilä Marine Business
Business Case
Gavin LipsithHead of Content,
Wake Media
Moderator
YOUR PRESENTERS
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09/06/2020 4
GROWING UNCERTAINTY OVER CAPEX DECISIONS
Install EGR/SCR?Right system? Install or scrap?
Install scrubber or buy MGO/VLSFO?
Which fuel? When to build?
Sulphur BallastWater
NOx limits
IMO 2050
ACCELERATING CHANGE
Each decision can limit operational flexibility and useful lifeDirect impact on revenue generation and vessel value
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09/06/2020 5
EMERGING BUSINESS OPPORTUNITIES
Designed built and operated to be
competitive now and in the future
Increasing operational flexibility to
weather volatile markets
Greater transparency on vessel performance
for e.g., green financing,
charterer specifications
Data and Insight Flexibility Future Ready
ACCELERATING CHANGE
Greater scrutiny now than ever before. The opportunity to deliver starts with a shift in how a vessel is conceived
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FUTUREPROOF MERCHANT VESSEL INVESTMENTS
A PARADIGM SHIFT
Kevin Humphreys General Manager,Merchant and Gas Carrier Segment
9 June 2020 SMART SHIPPING | Kevin Humphreys6
© Wärtsilä© Wärtsilä INTERNALINTERNAL
WHY HAVE TRADITIONAL RELATIONSHIPS CHANGED
WHAT ARE THEY CHANGING TO
HOW CAN WE MAKE OUR VESSELS FUTURE READY
09/06/2020 [Presentation name / Author]7
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Why is the industry transforming?
* Identified in McKinsey Project Exploration study
Offshore
Cruise
Ferry
Gas Carrier
Containership
Fuel efficiency
0.2 BEUR
1.3 BEUR
0.3 BEUR
14.5 BEUR
0.5 BEUR
Time at Terminal
0.7 BEUR
-
1.0 BEUR
2.1 BEUR
-
20 BEUR waste not addressable by conventional product development*
Big data analytics
Intelligentvessels
Smartports
Disruptive forces
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Common language to deliver value
9 June 2020SMART SHIPPING | Kevin Humphreys
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Why change business model?
• GHG accountability
• Bank lending terms
• Investors demands
• IMO regulations
Bus
ines
s M
odel
TIME
Old Way
New Way
TODAY
DISRUPT OR BE DISRUPTED
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Technology and collaboration enabling future proofing of vessels and business returns
Past Present Future
Little to no collaboration
Some collaboration
Partner to deliver value
COLLABORATION TO DELIVER VALUE
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Business and financial case agreed between counterparties with value silos
independent of suppliers
Yard delivers design to technical specification and budget based on
makers list
9 June 202012
TRADITIONAL STRUCTURE OF NEW VESSEL ORDER
Yard
Suppliers on Makers List
Owner
Bank
Investors
Charterers
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FUTURE FOCUSED APPROACH TO NEW VESSEL ORDER
Yard contracted to deliver vessel with future value and return that benefits all
Collaboration between suppliers and yard to deliver vessel with reduced
suppliers and higher integration
Business and financial case agreed Vessel need and profile agreed Upfront Technology Integration
Future wealth gain solutionsReduced environmental impact
Fuel flexibility & efficiencyIncreased future reseal value
Owner
Bank
Investors
Charterers
Collaborate with Technology Suppliers
Yard
Technology suppliers support
yard and integration
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DESIGN VS. NEED
Actual vessel operation
Historically Vessel Design Didn’t Meet Your Most Profitable Operating Profile
% of Total
SPEEDSPEED
% of Total
Operational Profile 2007-2008
Vessel design intent
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TYPICAL VESSEL OPEX BREAKDOWN AS PERCENTAGE OF COST
SMART SHIPPING | Kevin Humphreys9 June 202015
Crew52%
Stores8%
Spares8%
Fees & Service7%
Insurance6%
Management Fees5%
Repairs4%
Lubes4%
Transportation3%
SQE, Environmental, Vetting3%
Owners Account
Gross Charter Paid63%
Broker Commission 2%
Bunkers17%
Canal Tolls10%
Discharge Port4%
Stevedoring2%
Pilots, Tugs1%
Bunkering Port1%
Loading Port1%
Charterer Account
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WÄRTSILÄ INTEGRATED CONCEPT
9 June 202016
New Paradigm of Merchant Vessel
Investment
New Engine Room Concept:• Highly efficient 4-Stroke• PTO Generators• Reduced CAPEX• Low weight for increased cargo• CPP
Efficiency & Emissions: • Wartsila 16V31DF• Reduced VOC Emissions• SOx & NOx Control• Efficient slow steaming
Optimized Sailing• Fleet Operations Systems• 24/7 Remote monitoring and troubleshooting• Revenue maximizing platforms
Poseidon Principles audit compliance
Drastically reduced emissions
Reduced integration cost
Redundancy for safety and reduced offhire
Higher asset resale value
Counterparty risk reduction
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POLL
9 June 202017
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BUSINESS CASE:
NEWCASTLEMAX
ENHANCED INVESTMENT & ENVIRONMENTAL RETURNS
John Hatley Director Market Shaping
9 June 2020 SMART SHIPPING | Kevin Humphreys18
© Wärtsilä 9.6.2020 [Presentation name / Author]19
BUSINESS CASE
DEFENDERConventional Propeller
CHALLENGER Energo Flow
208K DWT NEWCASTLE BULK CARRIER
© Wärtsilä20[Presentation name / Author]09/06/2020
Capital Costs Vessel Operating Costs
Voyage Expenses Cargo Costs
Debt: Principal & InterestEquity Returns & DividendsDepreciationProceeds from sale or scrappingInvestment Administration
Crew & Officer WagesProvisions, General & AdministrativeSpares, Stores, Lubes, WaterRepairs & MaintenanceInsurance, Hull, P&I, PollutionTechnical Management FeesCommunication Expenses
Port & Terminal ChargesCanal TollsPilotage, Tugs, Line handlersRisk Bad Weather DelaysRisk Port Congestion Delays
Cargo LoadingCargo DischargeStevedoring
FUELCOST
Vessel Owner Pays Cargo Charterer Pays & Bareboat Charter Rate
Vessel Owner Pays Cargo Charterer Pays & Time Charter Rate
Cargo Charterer Pays & Cargo Freight
Vessel Owner Pays
Bareboat Charter
Time Charter
Voyage Charter or Spot Voyage
Liner Service
Vessel Owner Pays
CHARTER TYPES AND COST RESPONSIBILITIES
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BUSINESS NEEDSBALANCING STAKEHOLDER REQUIREMENTS
• Equity Return• TCE Rate• Ship Utilization• Asset Resale Value• Reduce CO2 & emissions
• Charter Rate• Safe & Reliable transport• Lower fuel cost burden• Reduce CO2 & emissions
Traditional Investment ReturnsAnnual SavingsPaybackNet Present Value Wealth GainAsset Resale Value
Monetize Environmental BenefitsCO2 reductionCorporate Sustainability Goals
• Debt Rate• Risk Reduction• Asset Residual Value• Poseidon Principles:
Green Credentials across Loan Portfolio
Investment Profiles
OWNER
CHARTERERBANK
Charterer Owner Bank
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SAVINGS AND 8% WACC ON CAPITAL:
Charterer>Savings - Min $55K to $111K with CO2 credit>5 Year NPV Savings $228K to $465K & CO2 reduced 7,085 tons
Owner>Returns - TCE boost $82K to $139K with CO2 credit>5 Year Wealth Gain $12K to $249K with CO2 Payback 3.9 to 2.3 years with CO2 >5th Year Resale value + $0.9 to $1.5 million with CO2
TEC gains from split fuel savings = Asset higher value & faster resale
Bank>Annual CO2 reduction 1,417 tons>Loan risk lowered Year 5 - Asset Residual cushion up $0.9 to $1.5 million
LADEN 11 KNOTS, BALLAST 12.5 KNOTSCHALLENGER OUTCOME IN ECO MARKET
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LADEN 12.5 KNOTS, BALLAST 14.2 KNOTS
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SAVINGS AND 8% WACC ON CAPITAL:
Charterer>Savings - Min $82K to $167K with CO2 credit>5 Year NPV Savings $343K to $700K & CO2 reduced 10,655 tons
Owner>Returns - TCE boost $123K to $208K with CO2 credit>5 Year Wealth Gain $185K to $541K with CO2 Payback 2.6 to 1.6 years with CO2 >5th Year Resale value + $1.4 to $2.3 million with CO2
TCE gains from shared fuel savings = Asset higher value & faster resale
Bank>Annual CO2 reduction 2,131 tons >Loan risk lowered Year 5 – Asset Residual cushion up $1.4 to $2.3 million
CHALLENGER OUTCOME IN STRONG MARKET
© Wärtsilä 9.6.2020 [Presentation name / Author]24
ACTIONS PRESERVING INVESTMENT RETURNS
Tornado plot illustrates the key attributes and impact magnitude on Net Present ValueReveals Key Management Focus & Actions to Mitigate Risk = preserve wealth gains
Wake Savings, $159.0
Wake Savings, ($713.3)
HFO Burn, $334.4
HFO Burn, ($813)
Price HFO, $728.0
Price HFO, ($728.0)
Assessed Co2, $906.8
Assessed Co2, ($906.8)
($1,500) ($1,000) ($500) $0 $500 $1,000 $1,500
Pessimistic Realistic Optimistic
NPV Thou $
Min
or I
mpa
ct
M
ajor
Im
pact
Tornado Plot: NPV Wake Field
Pessimistic Realistic OptimisticNPV Thou $
CHALLENGER CASE: MANAGEMENT FOCUS
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TRUSTED EARLY COLLABORATOR ENHANCES RETURNS
Paradigm ShiftOriginatorThomas Kuhn 1962
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POLL
9 June 202026
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POWER AND PROPULSION
MAKING IT WORK FOR YOU
Johnny KackurGeneral Manager,Merchant and Gas Carrier Segment
9 June 202027
© Wärtsilä© Wärtsilä INTERNAL 9.6.202028
POWER AND PROPULSION
PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS
© Wärtsilä 08/04/202029
SMARTER PROPULSION
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SMARTER POWER AND PROPULSION
PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS
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9.6.202031
CASE AFRAMAX TANKER
SMARTER PROPULSION MACHINERY
• Standard specification: 2-S + FPP• Service speed Td: 14.5 kn• CMCR: 13.450 kW• NCR: 9100 kW
WHAT KIND OF IMPROVEMENTS ARE POSSIBLE FOR BULKERS AND TANKERS?
Optimization Point: Hull lines, Main Engine & FPP
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SLOW-STEAMING IS HERE TO STAYSMARTER PROPULSION MACHINERY
Source: Clarksons April 2020
• 11,5 kn Td: 4700 kW• ME load: 35% (CMCR 13.450 kW)
• 11,5 kn Tb: 3700 kW• ME load: 28%
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
8 9 10 11 12 13 14 15
kW
kn
Aframax speed power curves incl 15% SM, laden & ballast
Td
Tb
Meaning propulsion powers are almost 50% lower!
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OVER-POWERED WITH FPP... OR, SMART-POWERED...Smart Propulsion – EcoControl Flexibility with CPP
Automatic optimization of engine rpm and propeller pitch:• Less installed power (higher ME loads/efficiencies)• No Light Running Margin (increased propeller efficiency)
Current standard today:Static propulsion with FPP
Designed to avoid main engine from over-loading: • Over-powered (low ME loads/efficiencies)• Light Running Margin (lowers propeller efficiency)
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CASE FOR SMALLER MAIN ENGINES?
Current standard New generation main engines with CPP
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INCREASED MAIN ENGINE EFFICIENCIES AT PART LOADSWÄRTSILÄ 31DF ENGINE
NEXT GENERATION PROPULSION MACHINERY
6800
7000
7200
7400
7600
7800
8000
8200
2000 3000 4000 5000 6000 7000 8000 9000 10000
kJ/k
Wh
kW
Low-pressure DF Engine energy consumptions, 5% tolerances, without engine built-on pumps
7X62DF 5X72 W31DF
4-7%
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IMPROVED PERFORMANCE WITH 2-STAGE TURBOCHARGING TECHNOLOGY
2-STAGE TURBOCHARGERS MAKES THE DIFFERENCE
Low pressure
turbochargerHigh
pressure
turbocharger
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© Wärtsilä© Wärtsilä INTERNAL 9.6.202037
SMARTER SOLUTIONS FOR BULKERS AND TANKERS
PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS
© Wärtsilä9.6.202038
AUX GENSETS AND USE OF SHAFT GENERATORS
• Why are shaft generators seldom used?• Slow-speed generators are expensive• Slows-speed generators require a longer
shaftline, meaning that the engine room length migth have to be longer (loss of cargo space)
• Smart shaft generators• Very cost effective compared to slow-speed
generators• More efficient than slow-speed generators• Can also be used in port, less aux gensets required• Shore power & hybrid easily integrated
AUX GENSETS
© Wärtsilä© Wärtsilä INTERNAL 9.6.202039
SMARTER SOLUTIONS FOR BULKERS AND TANKERS
PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS
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TYPICAL OPERATING PROFILE
9 June 202040 © Wärtsilä
50%Sailing
40%Waiting
10%Port
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SMART OPERATIONS
Firewall / Router
Firewall / Router
Informationflow
Remote Control RoomFleet operation Centre
Local display
Data Collection Unit
Artificial Intelligence
Wartsila Remote Expertise Centre
Real Time:• Expert guidance and advise• Technical support• Remote tuning
© Wärtsilä© Wärtsilä INTERNAL 9.6.202042
SMARTER SOLUTIONS FOR BULKERS AND TANKERS
PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS
ALTERNATIVE FUELS
© Wärtsilä 9.6.202043
DECARBONIZING SHIPPING 1ST STEP: LNG
2ND STEP: ALTERNATIVE FUELSVerified: 2015 Indicative: 2020, Verified*: 2025Verified: 2003 Indicative: 2020, Verified*: 2022
* timing depends on the market demand
Ammonia
We have already technologies that are
capable of using Ammonia.
The needed combustion concepts to maximise engine
performance and related safety technologies are
currently being investigated
Methanol
Methanol technology development has been done and conversion capabilities
are proven.
Next, we will industrialise this technology on the
relevant portfolio engines according to market needs.
Bio- or Synthetic methane
Contains about 99% methane and can readily be
used in liquid form with equipment made for LNG.
Hydrogen
Our gas engines are already able to blend LNG with up to
20% hydrogen, and combustion concepts have made for 100% hydrogen.
Our future efforts will be directed towards maximising
engine performance.
CH4 MeOH NH3 H2
Diesel and Otto
combustion cycles
Liquid and gaseous
fuels
Three separate
fuel-injection systems
DF
The dual-fuel engine gives the best fuel-flexible choice for the future
THE COMBUSTION ENGINE: A TRUE OMNIVORE
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POLL
9 June 202044
© Wärtsilä 09/06/2020 [Presentation name / Author]45
• A paradigm shift is needed to build viable vessels fit for future challenges
• Technology selection and integration at early stages is key to maximise vessel efficiency, earning potential and useful life
• Future-proof vessels require technology providers as early-stage collaborators
• Lifecycle partnerships, capturing both traditional returns & environmental benefits; safeguard all stakeholder financial interests
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Q&ACHALLENGE THE TEAM
9 June 202046
Kevin HumphreysGeneral Manager,
Merchant and Gas Carrier Segment,Wärtsilä Marine Business
Paradigm Shift
Johnny KackurGeneral Manager,
Merchant and Gas Carrier SegmentWärtsilä Marine Business
Optimised Propulsion and
Systems
John HatleyDirector, Market Shaping,
Merchant and Gas Carrier SegmentWärtsilä Marine Business
Business Case
© Wärtsilä
THANK YOU
9 June 202047