Fossil Fuels & Shipping: - CBS

Fossil Fuels & Shipping: The Techno-economic Challenge

22/09/2013

Martin Stopford, 23 Sept 2013 1

CLARKSON RESEARCH SERVICES LTD

Maersk Seminar Copenhagen23rd September 2013

Fossil Fuels& Shipping:The Techno-EconomicChallenge

Martin StopfordPresident,

Clarkson Research


1. The sea transport model2. The cost of energy3. Energy costs and ship design4. Factor input balance5. Lessons for the future

can

Let’s look atthe BIGpicture


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THE SEA TRANSPORT MODEL

Section 1

The Pommern, last of Gustav Ericson’s sailing fleet (1947)


The Sea Transport Model

CARGO ATORIGIN

CARGO ATDESTINATIONTRANSPORT

(value added)

ENERGY

HARDWARE

Factor Inputs

2.size

3.speed

1.technology

4. logistics

variables output

TRANSPORT


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Size & Speed Since 1833


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Sea Trade – Before Fossil Fuels

Sea Trade in 1840 was 20Mt


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9.9bill tonnes of

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Fossil fuelmade thispossible


Shipping – Before Fossil Fuels

• Until 1840Ships Weresmall, slow &unreliable

• 2-300 tonswas normalfor a ship

• Cargohandling waspainfully slow

Source: Biblioteque Nationale, Paris, Photo M. Cabaud

Even with a crane ittook four men to

handle this bundle


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AGAMEMNON (1) was built in 1865 by Scott and Co. at Greenock with atonnage of 2280grt. a length of 309ft 6in, a beam of 38ft 10in, 945 HPengine and a service speed of 10 knots.

The first cargo liner 1865

1865 First Cargo Liner 2280 GRT

Sails


Sealand McLean’s SL-7s

• End of the cheap oil era

• 9 ordered

• Built 1973

• 120,000 HP

• 33 knots

• 2192 TEU

• 600 TPD

• Twin screw


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Shipping - Today

11,000 TEU containership with 82 MW engine capable of 25.5 knots and 170,974 GT

(about 156,000 dwt)


Engine - Today(weighs 2,300 tonnes, almost Agamemnon’s cargo capacity)

• This engine generates109,000 HP

• It does the work of 3about million men

• A town the size ofGreater Manchesterneeded to house them

• They would eat 9billion calories a day!

Amazing Power


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The Evolution of Speed & FuelConsumption 1855-2006

Source: Maritime Economics (2009), Chapter 1, Table 1.3

It’s gettingharder to saveenergy withtechnology


THE COST OF ENERGY

Section 2 Dammam No. 7, the first commercial oil wellin Saudi Arabia, stuck oil on March 4, 1938


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The Oil Price

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$pe

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$ money of the day

For 100 years cheap oil encourages bigger, faster ships


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100120140160180200220240

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1993 forecast 1994 forecast




2008 forecast 2010 "Current Policies"

Source: BP energy review & IEA

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No Success in Predicting Oil Prices

2010


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ENERGY COSTS AND SHIPDESIGN

Section 3


Fuel Consumption 60,000 dwt Bulkers

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Consumption 65-75

Consumption 65-75

Year of Build

Fuel consumption TPD at 14.5 knots


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Consumption 65-75 Consumption 76-88

Year of Build

Fuel Consumption 60,000 dwt BulkersFuel consumption TPD at 14.5 knots


Fuel Consumption 60,000 dwt Bulkers

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Consumption 89-2000

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Fuel consumption TPD at 14.5 knots

New Japanese60k dwt supramax

28 m bpd


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Comparison of 60,000 dwt Bulkers 1967-2013COMPARISON OF 60,000 DWT BULK CARRIERS

1967 1966 1971 1983 1983 2006 2013

NAME Norseman Oiso Maru Llera Xin Guang Zhou Oshima NB

DWT 51,350 68,565 53,450 64,310 64,447 77,000 61,000

LOA 700 754 691 731 645

BEAM 96 117 105 104

SPEED 15.0 14.9 15.5 13.0 14.5 14.5 14.5

CONSUMPTION 44.0 48.7 47.0 24.0 37.4 35.0 28.0

ENGINE B&W Sulzer B&W B&W B&W B&W B&W

POWER (HP) 13,800 15,000 15,500 10,150 12,670 0

POWER (kW) 10,291 11,185 11,558 7,569 9,448 6,910

CONS (14.5 KTS) 39.7 44.9 38.5 33.3 37.4 35.0 28.0

CONS Kg/DWT 0.77 0.65 0.72 0.52 0.58 0.45 0.46


THE FACTOR INPUT BALANCE

Section 4


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Transport Cost: Coal Roberts Bank – N China

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1$/tonne coal

Low speed (11 knots) High speed (15 knots Column1


Transport Cost: Coal Roberts Bank – N ChinaDaily cost of ship and fuel for Panamax bulk carrier transporting coal


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Transport Cost: Coal Roberts Bank – N China


High speed Differential: Coal Roberts Bank – N China

Transport cost $1/tonne less at 15 knots

Transport costs$3/tonne more at 15

knots than at 11 knots


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LESSONS FOR THE FUTURESection 4

Photo: Bartlomrej Szumigaj


The Three Es'

1. Enhance: make existingproduct better (engine,coatings)

2. Evolve: develop newproducts within theexisting system (e.g.VLOC)

3. Enfold: Information is theunder-exploited technicalrevolution. It can finetune the system, not justthe ship


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1. Enhance77,000 Dwt Panamax Bulk Carrier

14.2metresdraft

Main engine

12,670 HP at 89rpm

Side rolling

hydraulic

hatch covers

7 cargo holds, each with capacity for 12-13,000 m3 or 10 -11,000 tons depending

on density of cargo being carried

Corrugated bulkhead

Water line

Double bottom used for water ballast

No 4 hold floodable for extra

water ballast in heavy weather

No 1 hold

12,600m3

No 2 hold

13,300m3No 3 hold

13,000 m3

No 4 hold

12,300 m3

floodable

No 5 hold

13,000 m3

No 6 hold

13,000 m3

No 7 hold

12,200 m3

Crane

Steering gearroom

Anchor

Prop shaft

Hatch

coaming

225 m LOA, 77,000 dwt

2. New propellertuned to revised

engine spec

1. De-rate enginefor improvedgrams/kWh

3. Cut out oneturbo charger &slide injectors

5. Tune Enginewith electroniccontrol system

7. Improved trimmanagement

4. Waste heatrecovery system

6. Improved lowload cylinderlubrication

8. Hull coatings,less ballast, airresistance etc.


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Numberof months

Clarksea Index earnings band $000/day

BOOMNORMALSLUMPtoday we are here, thelowest since 1990

Months since 1990 that Clarksea Indexfell in each earnings band shown below

fasterslower need flexi-speed?

The Shipping Market Needs FlexibilityIndex covers tankers, bulkers, LPG and containers

More Horsepower, More Profits faster


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2. Evolve

• Size and speed arethe two bigevolutionaryvariables

• Since 1997 theaverage ship in thefleet has increasedby 50%

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The evolution of size

• Containers showedthe biggest sizeincrease since1996, jumping 72%

• In the bulk areasthe average bulkcarrier was 52%bigger


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3. Enfold

• Use today’s informationrevolution to optimisefactor inputs in everydimension to changingtransport needs

• Coordinate transportsystems with globaleconomic needs

• All parties would need toparticipate (tricky!)


Conclusion?1. The global transport system is about converting energy

and hardware into transport.

2. 10 years ago fuel was cheap & ships were expensive.Today the opposite is true.

3. In response the industry is enhancing existing designs– the so-called "eco-ships". But this is frustrating taskbecause there is little new technology on the table. It'smainly a matter of trading off one design option foranother.

4. I've argued also that radically “tuning” size and speedare a more significant response. But this needssupport from other parts of the logistics chain.

5. Finally I have argued that further major adjustmentsshould come from adjusting the broader dynamics ofthe industry (like containerisation did in the 1960s).

6. The unexploited technical revolution is information,which can be used to fine tune the system, rather thanjust the ship.

7. This is perhaps the great opportunity lying ahead of us.But it's not easy.

Change isthe onlyconstant

can

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