The container ship sector has traditionally been focused on ultra-large tonnage, but with the 2020 sulphur cap just around the corner, attention is now turning to making vessels as environmentally friendly as possible
The outlook for the ultra-large container ship (ULCS) orderbook has softened since last year, as carriers try to rationalise supply with demand; nevertheless, there remain some vessel orders that will have a large impact in the near future.
Eight 23,000 TEU newbuilds belonging to MSC are due to be delivered this year – the largest box ships ever ordered – with the last three to be phased in in 2020.
In October last year, Hyundai Merchant Marine (HMM) signed contracts for 20 eco-friendly box ships. Daewoo Shipbuilding & Marine Engineering will build seven 23,000-TEU vessels, to be delivered in Q2 2020, while Samsung Heavy Industries will build five 23,000-TEU vessels, also to be delivered in Q2 2020. Finally, Hyundai Heavy Industries will build eight 15,000-TEU ships, slated for delivery in Q2 2021. However, HMM’s order for the 23,000-TEU ships was the only ULCS order recorded between April-September 2018.
The 2020 low sulphur directive is dominating both the global orderbook and the container ship market, as operators increasingly turn to alternative fuels and scrubbers to meet requirements, in both the newbuild and retrofit sectors.
Perhaps the most innovative ships on the orderbook are CMA CGM’s order for nine 22,500-TEU box ships (seven to be delivered in 2020 and two in 2021), which will be the first ULCSs to be powered by dual-fuel LNG and will pave the way for other box ship operators to follow.
CMA CGM is taking a crucial role in enabling the use of LNG by container ship operators and off the back of it an industry collaboration has been launched that will help increase the uptake of LNG in the box ship industry. Based on their experience thus far in working to deliver engines, fuel cargo tank and fuel gas handling systems (notably for CMA CGM's mammoth late-2017 order for nine ultra-large, LNG-fuelled container ships) WinGD, GTT and Wärtsilä are offering their combined services to shipowners and operators looking at LNG-power as a propulsion alternative.
“Very commonly, using LNG involves a complex system with several suppliers and this leads to problems with interfaces”
GTT LNG gas fuel vice president Julien Bec explained: “The idea was to collaborate with WinGD and Wärtsilä in order to propose a common package. It is a non-exclusive co-operation but by working together on common projects, it is just a small step to propose an integrated package between the three of us. Very commonly, using LNG involves a complex system with several suppliers involved and this leads to problems with interfaces - each package independently works correctly but when they are together you may have some problems and the idea is to avoid it. So, when a shipyard or owner asks us to deliver a system, it is as if it is asking just one company.”
GTT is designing the LNG tanks on the CMA CGM newbuilds, Wärtsilä the auxiliary engines and the fuel gas handling system and WinGD the main engines.
Highlighting the importance of the CMA CGM newbuilds to the co-operation agreement between the three companies, Mr Bec said: “We have a reference through the CMA CGM ships, we are implementing the solution and so other owners know that this solution exists. Our co-operation will reduce the financial risk because the main troubles that can happen that can lengthen planning will be stopped by this.”
Talking about CMA CGM’s requirements, Mr Bec said: “CMA CGM wants to make one round trip, with one point of bunkering in northern Europe and the big point is to install a tank of 18,600 m3 of LNG with minimum cargo loss.”
GTT is fitting the tank below the accommodation in the aft part of the ship and so only a limited number of containers will be lost. Furthermore, developments have been made with bunkering – MOL is building a bunker vessel of 18,600 m3 to be chartered by Total, which will be the largest bunker vessel globally.
LNG feeder boost
CMA CGM is not just paving the way with its mega newbuilds – its subsidiary company Containerships (which CMA CGM acquired last year) took delivery of its first LNG-fuelled vessel, the 1,400-TEU Containerships Nord, in December 2018.
Built at Wenchong Shipyard in China, the vessel is the first of four LNG-fuelled newbuilds ordered by Containerships, all with the same capacity. The remaining three are due to be delivered in the first half of 2019, and there is an option for two more.
Containerships has received its first LNG dual fuelled vessel, Containerships Nord
Containerships Nord stemmed from a decision by Containerships’ chief executive Kari-Pekka Laaksonen in 2013 to develop a sea-to-land strategy that will also involve LNG-fuelled trucks.
Containerships plans to invest in the trucks in a virtuous environmental circle. “The project has required high levels of expertise and constant development,” said Mr Laaksonen in a statement. “Success requires excellent co-operation between the involved parties.”
Containerships’ vessels will be the first box ships to use LNG in European ports. Its key partner to supply and bunker LNG is Shell and its bunkering location will be the Port of Rotterdam. This will help boost the LNG bunkering infrastructure needed to enable other box ship operators to turn to LNG.
Containerships’ LNG vessels are deploying WinGD engines and TGE Marine LNG tanks. TGE Marine sales engineer and LNG technology specialist Max Liese explained that three Type C tanks are placed vertically, with the gas plant placed on top of these.
Mr Liese said “This is the arrangement that gives the highest volume efficiency. With Type C tanks volume efficiency is not always perfect, due to their roundish shape, and this was the best solution to be as volume-efficient as possible.”
Mr Liese noted that due to the surge in bunkering vessels, bunkering options had improved, which in turn has helped facilitate the use of LNG for container ships. The company has provided tanks and gas systems to three bunkering vessels and he said: “There are plenty of bunker vessels in the global orderbook so the chicken and egg discussion is almost over really; the issue of bunkering was a handbrake and this [has] almost [been] released, [allowing] owners and operators to go for LNG.”
“With Type C tanks volume efficiency is not always perfect, due to their roundish shape”
LNG can trace its routes in the container ship business back to 2015, when US container ship operator TOTE became the world’s first operator to run container ships on LNG.
The company’s two 233-m Marlin-class vessels, Isla Bella and Perla Del Caribe, were delivered at the end of 2015 and the beginning of 2016 respectively by US shipyard General Dynamics NASSCO. They now operate between Jacksonville, Florida, and San Juan, Puerto Rico.
TOTE is doing its part in encouraging other container ship operators to use LNG. Isla Bella celebrated its three-year anniversary in October 2018 and TOTE executive vice president Peter Keller said: “The ships have been operating extremely well, and continue to operate every day, which proves the point to the rest of the industry that [LNG] is safe to use, there have been no incidents and the ships run on schedule every week.”
The Clean Jacksonville barge, used by TOTE's vessels, is the first LNG barge in the US and will help boost the use of LNG
In Q4 last year, the vessels began to be bunkered by the first LNG bunkering barge in the US, Clean Jacksonville.
Mr Keller is hopeful the barge will also aid the take-up of LNG by container ship operators. “It has been made to support the marketplace, not just TOTE, and we intend to market our barge to other potential users.”
Mr Keller is chairman of multi-sector industry coalition SEA\LNG, of which TOTE is a member. It was created to accelerate LNG’s adoption as a marine fuel.
He said: “With the exception of cruise, most of the sectors are not performing terribly well, so there are not a lot of discretionary funds to build ships. The current newbuild order for container ships compared to years past is not strong. But as we get beyond 2020 and owners see the cost of compliant fuel, and want to but may not be able to pass on the costs, that is a concern. So education, fuel costs and investment are required to move as the market gets bigger, and the price typically becomes more competitive over time.”
He summed up: “If we take all those factors together, while we are not yet at a tipping point, as many have suggested, I do think we have a significant amount of initiative and that will continue to move forward.”
Booming scrubber market
Another reaction to the looming low sulphur directive is that the scrubber market is now booming.
A symbol of this is Maersk's announcement that it is adding exhaust gas cleaning systems, or scrubbers, to some of its ships to comply with IMO sulphur limits coming into effect in 2020.
The scrubber order comes just under a year after the container shipping giant said it was ruling out scrubbers as a 2020 compliance option.
DNV GL gathers global statistics for ships, confirming the number operating with scrubbers and those which have scrubbers on confirmed order. As of October 2018, there were 243 container ships with scrubbers in operation or on order.
CR Ocean Engineering (CROE) president and chief operating officer Nicholas Confuorto said: “The bigger possibilities are in container ships – until now they were saying they would not go to scrubbers. Now they are all looking at scrubbers and I think they have to do that because it makes so much economic sense.”
MSC was an early adopter of scrubbers on container ships and Mr Confuorto opined this “forced the hand of other container operators to also consider scrubbers in order to remain competitive. It is an issue of competitiveness rather than technology.”
Yara Marine Technologies also sees opportunities in the box ship scrubber market. Its chief sales and marketing officer Kai Latun said: “The container ship market has really picked up.”
He reiterated the importance of the expected high price of low sulphur fuels as driving the scrubber market. “If the price differential between the fuels is as large as every expert is saying, then practically any sized segment in the container sector will benefit from installing scrubbers and continuing to use HFO.”
He said predictions were that low sulphur fuel would cost up to US$400/500 a tonne. “The larger the vessel, the larger the fuel consumption; the really big vessels will use several hundred tonnes a day.”
Mr Latun added that any container ship vessels with engines ranging from just below 10 MW and upwards would “easily have a business case [for scrubbers]”, with payback times of 18 months or less.
Yara is delivering scrubbers to MSC’s 23,000-TEU ships, currently being built in South Korea.