Slow steaming, biofuels critical for emissions reduction, says Alpha Bulkers

Alpha Bulkers operations manager Nikolaos Nikolaou told Riviera dual-fuel vessels do not offer an attractive return on investment in today’s market. Furthermore, they add around 20-25% (depending on the vessel’s size) to the already high cost of newbuildings.

Given these challenging conditions, he believes the optimal strategy for shipping companies is to implement slow steaming and utilise biofuels in specific regions, such as Europe, to comply with regulations such as the EU ETS and FuelEU Maritime.

Alpha Bulkers, led by Greek shipping major Anna Angelicoussis, was one of the first companies in the industry to trial biofuels, achieving notable reductions in emissions. "Biofuels are the most viable alternative to improve energy efficiency” in terms of cost and immediate results, emphasised Mr Nikolaou.

He highlighted biofuels are currently 20-25% more expensive than conventional fuels, while adding the development of bunkering hubs in key global ports further enhances the fuel’s potential role in the energy mix.

Technology also plays a critical role in the decarbonisation process. Mr Nikolaou highlighted using weather-routeing systems to optimise fuel consumption and speed is becoming an essential tool for shipowners aiming to improve operational efficiency.

Turning to the International Maritime Organization (IMO) and its regulatory framework, Mr Nikolaou noted achieving consensus among all member states is difficult. He stressed the importance of considering the economic impact on consumers when evaluating any regulatory changes. Given the current climate of trade wars and geopolitical tensions, it is crucial to ensure no additional burdens are placed on consumers.

Tariffs to increase tonne-miles

Speaking of trade wars, our discussion with Mr Nikolaou also covered the sweeping tariffs announced by the US administration. He explained container vessels and car carriers would likely bear the most significant impact, with bulk carriers next in line.

Focusing on the dry bulk market, he noted during the previous trade war, the US lost around US$11Bn from its soya bean producers, as China bypassed American shipments in favour of imports from Brazil. This in turn resulted in an increase in tonne-miles, with Brazil requiring longer distances than the US East Coast.

Returning to current conditions, Mr Nikolaou believes a repeat of this phenomenon would help balance the dry bulk trade, as the increased tonne-miles would offset to some extent the impact of tariffs and retaliatory measures on overall trade.

Consumers will bear the brunt of port fees

Commenting on the proposed US port fees, Mr Nikolaou noted signs of an impact on the dry bulk charter market. While charterers initially are trying to avoid Chinese-built tonnage, when that isn’t possible, they negotiate with owners to absorb the additional cost within the charter contracts.

Mr Nikolaou explained this added cost borne by operators will ultimately be passed on to consumers, who are expected to face significant price increases if the measure is implemented.

Riviera has reported Chinese-built Supramax bulk carriers have struggled in some cases to secure period charter agreements for US-bound shipments, with the industry waiting for further clarity and an official decision on the proposed fees.

The biggest challenge for operators

Amid today’s complex shipping environment, shipowners must ensure vessels are run both efficiently and profitably, a task that, according to Mr Nikolaou, remains the greatest challenge for operations managers.

He emphasised operators need to closely monitor fuel consumption, taking into account fuel prices at bunkering hubs and the vessel’s performance, which is affected by weather conditions. The goal is to achieve the highest performance with a minimal environmental footprint. 

“Operators must aim to maximise the vessel’s carrying capacity without compromising energy efficiency or profitability” Mr Nikolaou concluded.