Concern over trade wars impacts shipping confidence

Confidence in the shipping industry has fallen marginally over the past three months, largely as a result of ongoing concern over trade wars and increased regulation, according to the latest Shipping Confidence Survey from leading shipping adviser and accountant BDO.

The average confidence level in the three months to May 2019 was 6.1 out of a possible maximum of 10.0. This is slightly down on the figure of 6.2 recorded in February 2019.

Confidence was up in Asia, from 5.8 to 6.0, and in North America, from 5.6 to 6.4. In Europe, meanwhile, there was a drop in overall confidence levels from 6.3 to 6.1.

The chartering sector continues to be the most volatile in terms of respondent confidence, with ratings varying between 4.7 and 7.7 during the past two years. This time, the confidence level was up to 6.2 from 6.0 three months ago. The ratings for owners and managers, meanwhile, were unchanged at 6.3 and 5.8 respectively, while the rating for brokers was down from 5.9 to 5.7.

The survey was launched in May 2008 with an overall rating for all respondents of 6.8 out of 10.0.

According to the BDO quarterly survey, the likelihood of respondents making a major investment or significant development over the coming year was up from 5.3 to 5.4 out of 10.0. Owners’ confidence in this regard was up from 5.4 to 6.3, while the rating for charterers was 5.6 compared to the survey high of 7.3 recorded last time. The confidence of managers and brokers in this category was also down, from 5.6 to 4.8 and from 4.9 to 3.9 respectively. Expectations were up in Asia, from 5.2 to 5.5, and in Europe, from 5.3 to 5.4.

The number of respondents who expected finance costs to increase over the coming year was unchanged at 48%. The figures for owners and brokers were down, but up in the case of charterers and managers.

Demand trends were cited by 26% of respondents as the factor most likely to influence performance over the next 12 months. Competition (19%) and finance costs (13%) featured in second and third place respectively in this context.

The number of respondents expecting higher freight rates over the next 12 months in the tanker market was up by 4 percentage points on the previous survey to 55%, with charterers (75%) leading the way. In the dry bulk sector, expectations of rate increases were down overall from 52% to 48%, with charterers the only category recording an increase in expectation levels. The numbers expecting higher container ship rates, meanwhile, rose by 9 percentage points to 35%. Net rate sentiment was positive in all three tonnage categories and noticeably improved on the last quarter for container ships.

When asked to estimate the level they expected the Baltic Dry Index (BDI) to reach in 12 months’ time, 50% of respondents (compared to 36 % 12 months ago) anticipated a figure of between 1000 and 1499, while 22% (42% last time) put the likely level at between 1500 and 1999. “One could be more bullish about the BDI if there was less global tension around,” said one respondent.

Richard Greiner, Partner, Shipping & Transport at BDO, says, “A small dip in confidence is not surprising given the recent volatility generated by the US-China trade wars, the heightened tension in the Arabian Gulf, the failure to conclude Brexit negotiations, and general political instability in many parts of the world. Markets love volatility, but it can have an adverse effect on confidence.

“Trade wars certainly formed the over-arching theme for this quarter, but they are not the only recurring topic. The cost and technical implications of complying with existing and incipient regulation was referenced on a number of occasions, typified by the respondent who noted that the high level of regulation “makes it extremely difficult to make a profit”.

“Despite the challenges the industry is facing, there are a number of positive indicators. New technology is making shipping more attractive to investors, and will moreover act as a trigger to accelerate the pace and extent of recycling. Higher freight rates should logically follow, and those who hold their nerve will ultimately benefit.”

The BDO (formerly Moore Stephens LLP) Shipping & Transport team has extensive experience delivering accountancy, tax and advisory services to the sector worldwide.

BDO delivers key information and insights to the shipping community, including the annual OpCost report, the quarterly Shipping Confidence Survey and a host of thought leadership on topical issues, such as regulatory developments and market conditions.

https://www.bdo.co.uk/en-gb/industries/shipping-and-transport


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Shipping confidence continues to edge upwards

Shipping confidence reached its highest rating in the past three years in the three months to end-August 2017, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.

The average confidence level expressed by respondents to the survey was up slightly from the 6.1 out of 10.0 recorded in the previous survey in May 2017 to a three-year high of 6.2. The improved rating was attributable mainly to increased confidence on the part of owners, up from 6.1 to 6.5. Confidence levels on the part of brokers, meanwhile, fell from 6.4 to 6.3, while managers and charterers recorded more substantial drops – from 6.2 to 5.8 and from 6.4 to 4.7 respectively, the lowest levels in both cases since May 2016. The survey was launched in May 2008 with an overall confidence rating of 6.8.

Confidence levels were significantly up in Asia from 5.6 to 6.4, their highest level since May 2014. Confidence was also up in Europe, from 6.2 to 6.3, but down in North America, from 6.4 to 5.8.

Despite familiar concerns about excess tonnage capacity in many trades and continuing uncertainty over Brexit, several respondents saw reasons for optimism over the coming 12 months, not least as a result of what one described as “some green shoots of a relatively broad-based rebound in economic activity.” This helped maintain, at a three-year high, expectations of major investments being made over the next 12 months. Concern, however, persisted over political instability, the incipient cost of increased legislation, and the probable entry into the market of low-cost newbuildings.

One respondent said: “The future of the maritime industry will certainly be interesting, but will it also be enjoyable?”

The likelihood of respondents making a major investment or significant development over the next 12 months was unchanged from the previous survey at 5.4 out of a maximum possible score of 10.0. This represents the highest level achieved since August 2014, and this despite a slight fall this time (from 5.9 to 5.8) in the expectations of owners, and a much larger one (from 6.3 to 4.0) by charterers. The expectations of respondents in Asia were up, from 5.1 to 5.9, but down in Europe, from 5.4 to 5.2.

As was the case in the May 2017 survey, 50% of respondents expected finance costs to increase over the coming year. Owners’ expectations were unchanged at 48%, but both managers and charterers (where the figures were up from 57% to 62% and from 57% to 67%, respectively) were anticipating dearer finance. Brokers were alone among the main categories of respondent in recording a fall (from 63% to 42%) in the numbers expecting finance costs to go down.

Demand trends, cited by 27% of respondents, continued to be the factor expected to influence performance most significantly over the next 12 months, followed by competition (17%) and tonnage supply (15%), the latter displacing finance costs in third place. One respondent said: “Confidence is impaired by the inexperience of investment houses resulting in over-liquidity in the market, which feels that it has to spend just for the sake of it – a ‘greed-eats-brain’ mentality.”

The number of respondents expecting higher rates over the next 12 months in the tanker market was up on the previous survey, from 32% to 45%, while there was a 2% fall, to 14%, in those anticipating lower tanker rates. Meanwhile, although there was a two percentage-point fall, to 56%, in the numbers anticipating higher rates in the dry bulk sector, this was still the second-highest figure in three-and-a-half years. In the container ship sector, the numbers expecting higher rates dropped by six percentage points to 40%, while there was a five percent increase, to 17%, in those anticipating lower container ship rates.

Net sentiment was positive in all the main tonnage categories, and up in the tanker market from +16 in May 2017 to +31 this time. There were meanwhile small declines in net sentiment in the dry bulk and container ship trades, from +50 to +49 and from +34 to +23 respectively.

In a stand-alone question, respondents were asked to rank in order of priority what they considered to be the most significant new sources of finance for shipping over the next 12 months. Bank finance emerged as the first choice of 27% of respondents, followed by private equity (18%). Lease finance (14%) featured in third place, one percentage point ahead of shareholder funds. One respondent said: “Banks are being a lot tougher with owners, and it is good to see the demise of the CV and KG systems which generally did little to help the long-term viability of the industry.” Another observed: “For good owners, there is still capital available. But the worry is for the second and third-rung owners.”

Richard Greiner, Moore Stephens Partner, Shipping & Transports, says: “Another three months, and another rise in confidence in the shipping industry, albeit a small one. Confidence has been increasing steadily over the past 15 months, and industry players are more confident of making a major investment over the coming year than they have been at any time in the past three years. Moreover, net sentiment in all three main tonnage categories is positive, having almost doubled in the tanker sector over the past quarter.

“This welcome boost in confidence comes at a difficult time for the industry, beset by overtonnaging in many trades, the current and impending cost of regulatory compliance, and more widely by geo-political pressures. Clearly, shipping still has a lot to offer existing and new investors alike, both traditional and external.

“To some extent, success in the shipping industry is a question of being in the right place at the right time. But there is a lot of skill, knowledge and experience involved, too. It is good to see that confidence is still on the increase. They do say that it’s the hope that kills you but, in truth, the lack of it is likely to be far more damaging.”

To download a copy of the survey report please visit the Moore Stephens website:
https://www.moorestephens.co.uk/news-views/september-2017/shipping-confidence-continues-to-edge-upwards

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and transport & logistics adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 626 offices of independent member firms in 108 countries, employing 27,997 people and generating revenues in 2016 of $2.7 billion. www.moorestephens.co.uk


For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com

Moore Stephens reports small decline in shipping confidence

Overall confidence levels in the shipping industry fell in the three months to November 2015, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.

The average confidence level expressed by respondents in the markets in which they operate was 5.6 on a scale of 1 (low) to 10 (high). This compares to the 5.9 recorded in August 2015. The survey was launched in May 2008 with a confidence rating of 6.8.

All main categories of respondent recorded a fall in confidence this time, most notably charterers (down from 6.5 to 5.5). The confidence of managers was down from 6.4 to 5.8, that of brokers from 5.2 to 4.6, and that of owners from 5.8 to 5.7. Geographically, confidence was up in Asia, from 5.8 to 6.0, but down in Europe from 5.9 to 5.4, and in North America from 6.3 to 5.7.

Many respondents expressed continuing concern about overtonnaging and excess shipbuilding capacity. One observed, “The over-ordering of ships by investment funds, together with the huge shipbuilding capacity created by China, are not conducive to an orderly market, with the result that shipping investments remain very risky.” Another noted, “As a result of excess shipbuilding capacity and the low cost of finance, shipping markets have been suffering from over-supply for years. We can only hope for strong growth in demand to improve the situation.” The cost of regulatory compliance, meanwhile, was referenced by a number of respondents, with one commenting, “Environmental regulations will continue to drive costs and uncertainty.”

Looking ahead, one respondent said, “2016 and 2017 are going to be tough,” while another remarked, “Unless and until the global economy starts to improve, things are unlikely to change significantly.” Elsewhere, however, it was noted, “Major economies are stabilising and improving, so global trade will respond, which will lead to an improvement in the shipping markets.” In similar vein, another respondent said, “Shipping will always be a major part of world business, and will retain its importance as a result of recent political developments.”

A number of respondents commented on the effect of current low oil prices, with one emphasising, “The precipitous fall in oil prices has poured cold water over LNG-fuelled ship design. While the application of LNG makes sense from an environmental point of view, the additional capital expenditure is not justified unless oil prices go up to previous levels.”

The likelihood of respondents making a major investment or significant development over the next 12 months was down on the previous survey, on a scale of 1 to 10, from 5.3 to 5.2. Charterers, managers and brokers were less confident in this regard than they were three months ago, but the confidence of owners was up, from 5.5 to 5.7. One respondent said, “The sooner funds that have no clue how shipping is run leave the market, the better. Shipping should be run by shipowners and not fund managers.” Elsewhere it was noted, “A lot of shipowners are like investors in the stock market. Even though common sense tells them they may be making a bad investment, they would rather take the risk than miss out on a possible upturn in the market.” Yet another respondent said, “Smart owners wait until rates are low and buy used ships at low prices.”

The number of respondents who expected finance costs to increase over the next 12 months was down by one percentage point on last time, to 47 %. The number of owners anticipating dearer finance fell by 18 percentage points to 35 %, but the number of charterers of like mind rose to 67 %, from 50 % previously. One respondent said, “We need a more realistic approach from those banks which are helping to keep zombie companies afloat.”

Demand trends, competition and port congestion featured as the top three factors cited by respondents as those likely to influence performance most significantly over the coming 12 months. The numbers were down by four percentage points (to 21 %) for competition, which was pushed into second place by demand trends, where there was a one percentage point increase, to 24 %, in the figures. Port congestion, up 15 percentage points to a new survey high of 17 %, featured in third place, followed by finance costs, in respect of which there was a four percentage point drop to 14 %. Regulation (up five percentage points to 9 %) featured in fifth place, followed by operating costs (down five percentage points to 6 %). Fuel costs featured as a significant factor for just 4 % of respondents, compared to a survey high of 16 % in May 2011.

One respondent said, “Excessive regulation makes control of costs even more difficult. Furthermore, what is the point of creating rules when international authorities cannot agree how to apply them, such as in the case of ballast water management?”

There was a fall in the number of respondents anticipating higher freight rates in the tanker, dry bulk and container ship sectors compared to the figures for August 2015. The net sentiment was nevertheless positive (+7) in the tanker market and in the dry bulk sector (+16), although negative (-5) for container ships.

One respondent said, “Many tanker owners are guided more by hope than by economics. When statistics indicate a tonnage shortage in two years’ time, they order ships now in the hope that freight rates will be higher once the ships have been built. But if other owners do the same, overcapacity will result in low rates and a fall in vessel values – a lose-lose situation.”

Elsewhere, it was noted, “Overall confidence in the state of the dry bulk market is currently very low, and any hope of the start of a recovery is at least 12 months away.” In the container ship sector, meanwhile,
one respondent commented, “Many owners of container ships seem to order new tonnage whether it makes economic sense or not, just to maintain market share.”

Moore Stephens shipping partner Richard Greiner says, “The inherent volatility of the shipping industry is part of its appeal to investors, for whom there is seldom any reward without risk. But confidence historically fluctuates more in a volatile market than in a stable one, and shipping is nothing but volatile at the moment. The small drop in industry confidence levels over the three months to end-November is therefore not a great surprise.

“Global unrest in general, and in particular the crisis involving Syria, does nothing to help confidence in industries such as shipping, which operate across international borders. Neither does the migrant crisis in Europe, which has escalated significantly in recent months, nor the Paris bombings. Shipping must expect to suffer the downside of such incidents just as, in better times, it can expect to benefit from positive geopolitical changes.

“Informed awareness and the ability to react in a timely manner are the best defence against external influences on the industry. But what of those other inhibitors of shipping confidence, which might be said to be of the industry’s own making? Firstly, there is the over-arching problem of excess tonnage. There are too many ships to carry the available cargoes. Doubts also persist about the level of newbuilding orders at a time when the market does not look to be in a good position to sustain them.

“Only increased ship recycling and rationalisation of business plans can effectively address these issues, and the need to take a proactive approach is borne out by the current state of the markets. The tanker market is producing comparatively good earnings at the moment, but its fortunes are too closely linked to the price of oil for anybody to accurately predict how long this will last. Expectations of improved rates over the next 12 months in the three main tonnage categories covered by the survey are down. In the case of the dry bulk sector, such expectations are at their lowest since August 2012, while in the container ship market one has to go back to October 2008 to find a lower figure. Indeed, our respondents recorded an overall negative sentiment in respect of the container ship market.

“This paints a rather austere picture for the immediate future of the industry, which is also facing the burgeoning challenge of funding regulatory compliance with the imminent entry into force of the Ballast Water Management convention. But it is by no means all bad news. Operating costs fell in both 2013 and 2014, which is evidence of the application of a measure of control which shipping has not been accustomed to seeing in recent years. Meanwhile, 50 % of those shipowners who responded to our confidence survey rated at 7 out of 10 or higher the prospect of making a major investment over the next 12 months. Owners were also much more confident than they were three months ago that ship finance was going to be cheaper over the coming 12 months.

“Well-informed owners and investors are not in the habit of throwing money away on lost causes. Shipping remains a good business to be in, its continued existence assured by its singular capabilities. The outlook remains volatile, but exciting.”

The Moore Stephens Shipping Confidence Survey includes responses from key players worldwide in the international shipping industry to a targeted, web-based survey by the Moore Stephens Shipping Industry Group. Responses were received from owners, charterers, brokers, advisers, managers and others. Editors can apply for a copy of the survey by emailing chris@merlinco.com

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 626 offices of independent member firms in 103 countries, employing 26,290 people and generating revenues in 2014 of $2.7 billion. www.moorestephens.co.uk

For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com

Focus on cash control impacts ship operating costs

International accountant and shipping consultant Moore Stephens says total annual operating costs in the shipping industry fell by an average 1.8 per cent in 2012. This compares with the 2.1 per cent average rise in costs recorded for the previous year. There was a significant reduction in costs across all categories and it was clear that ship owners had been focusing on managing costs and conserving cash in 2012.

The findings are set out in OpCost 2013, Moore Stephens’ unique ship operating costs benchmarking tool, which reveals that total operating costs for the three main tonnage sectors covered – bulkers, tankers and container ships – were all down in 2012, the financial year covered by the survey. The bulker index was down by 7 points, or 3.9 per cent, on a year-on-year basis, while the tanker index fell by 5 points, or 3.0 per cent. The container ship index was meanwhile down by 3 index points, or 1.8 per cent. The corresponding figures in last year’s OpCost report showed 3-point increases in both the bulker and tanker indices, and a 5-point increase in the container ship index.

There was a 0.2 per cent overall average fall in 2012 crew costs compared to the 2011 figure. (By way of comparison, the 2008 report revealed a 21 per cent increase in this category.) Tankers overall experienced a fall in crew costs of 2.3 per cent on average, compared to the 2.2 per cent increase recorded in OpCost 2012. Within the tanker sector, Aframaxes reported an overall fall of 5.2 per cent in crew costs, while for operators of Suezmaxes and product tankers the reductions were 4.0 per cent and 3.8 per cent respectively. The only tanker categories to show significant increases in crew costs were 3,000-8,000 cbm LPG carriers and Panamax tankers, where such costs were up by 5.2 per cent and 2.8 per cent respectively.

For bulkers, meanwhile, the overall average fall in crew costs was 0.5 per cent, compared to a 2.8 per cent increase the previous year. The operators of Panamax bulkers paid 3.7 per cent less than in 2011. Handysize bulkers and those in the 10,000-20,000 dwt range, meanwhile, each experienced crew cost reductions of 4.8 per cent. For container ships, the reduced spend on crew averaged 1.0 per cent (as opposed to a 3.4 per cent increase in 2011), although operators of reefer tonnage did pay 3.7 per cent more than in the previous year.

For repairs and maintenance, there was an overall fall in costs of 1.9 per cent, compared to the 1.1 per cent increase recorded for 2011. The only categories of tonnage to show a significant increase here were dry cargo ships of 25,000 dwt and above (5.0 per cent) and 70,000-85,000 cbm LPG carriers (3.2 per cent). The overall fall in repairs and maintenance costs for the bulker sector averaged out at 4.6 per cent, for the tanker sector it was 2.9 per cent, and for container ships it was 2.0 per cent.

Expenditure on stores was down this time by 2.1 per cent overall, having risen by 2.7 per cent in OpCost 2012. The biggest fall in such costs was the 7.7 per cent recorded by bulk carriers in the 10,000-20,000 dwt range. For bulk carriers overall, stores costs fell by an average of 4.5 per cent, while in the tanker and container ship sectors the overall reductions in costs were 2.9 per cent and 1.4 per cent respectively. The most significant increases in stores expenditure was recorded by the operators of 40,000-50,000 dwt chemical tankers (4.5 per cent).

The biggest overall drop in operating costs was the 6.2 per cent recorded in respect of insurance. Only RoRos (5.1 per cent), LPG carriers of between 70,000 and 85,000 cbm (3.0 per cent) and very large container ships (1.4 per cent) actually spent more on insurance in 2012 than in 2011. Reefer operators actually spent 16.4 per cent less, but it was the bulker sector which recorded the biggest reduction in terms of its overall payments to underwriters, averaging out across all tonnage sizes at 8.9 per cent, compared to 7.0 per cent for tankers.

Moore Stephens partner Richard Greiner says: “There is a lot of ‘red ink’ in costs, which actually translates into ‘black ink’ in the bottom line for owners. Significantly, 2012 recorded a year-on-year reduction in operating costs, only the second time this has occurred since OpCost was launched.

“It is no coincidence that, during the operating period covered by OpCost 2013, confidence levels in the shipping industry dropped to their lowest point in the past five years, according to the Moore Stephens Shipping Confidence Survey. So it is unsurprising to find that expenditure declined. The industry generally was under extreme pressure during an extended global economic downturn, and attending to items of manageable cost control was an imperative at a time when revenues were declining.

“That said, however, the 6.2 per cent overall fall in insurance costs across all tonnage types is something of a surprise, given the repeated warnings issued by hull underwriters of the dangers of pitching rates too low. It is perhaps simply the case that declining vessel values are being reflected in declining premium costs.

“The fall in operating costs recorded in OpCost 2013 is good news for owners and operators. So, too, is the fact that the global economic outlook is starting to look brighter. But any optimism should be tempered with caution. Foreseeable – if not entirely quantifiable – costs, not least those related to regulatory compliance, have the potential to make a large hole in the industry’s cashflow over the coming year. So a mix of optimism, forward planning, and ongoing risk management would seem to be a good recipe for the future.”

Bone fide journalists can request an electronic copy of OpCost 2013 by emailing chris@merlinco.com

OpCost, the Moore Stephens vessel operating cost benchmarking report, is now in its 13th year of publication. The 2013 edition is available for the first time online, providing increased reporting functionality for users, wherever they may be. Running cost information is obtained on a confidential basis from clients of Moore Stephens, and from other shipowners and ship managers who submit data for inclusion. OpCost is widely used for benchmarking running costs, the preparation and ongoing monitoring of business plans and in forensic accounting. Copies of the OpCost 2013 report are available free to owners who submit their data for inclusion, or can be purchased by contacting Richard Greiner at Moore Stephens.

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 624 offices of independent member firms in over 100 countries, employing 21,224 people and generating revenues in 2012 of $2.3 billion. www.moorestephens.co.uk


For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com

Bureau Veritas launches Elastic Shaft Alignment notation

LEADING international classification society Bureau Veritas has introduced a new set of requirements for shaft alignment on high powered ships. The ESA notation will help ensure the integrity of the structure and shaft bearings on very large vessels such as ultra-large container ships and the next generation of very large LNG carriers.

Jean-Francois Segretain, deputy technical director, Bureau Veritas, says, “As ships grow in size and we seek more fuel economies we are now seeing vessels with shafts handling over 20MW of power driving large diameter propellers of over 30 tonnes weight. Critical attention has to be paid at the design stage to analysing the elastic shaft alignment and ensuring that the bearings and structure match the shaft response, especially when the vessel is turning. If this is not done, huge forces will either lead to bearing failure or excessive vibration. We have been called in to help solve incidences of both on new ships. This new ESA notation sets out standards of how the shaft must be analysed and the criteria the whole shaft, bearings, and aft structure must meet to avoid such problems.”

Bureau Veritas has unrivalled experience with shaft alignment studies dating back to the first ULCCs built in the 1970s. It is continually updating its expertise in this area and has developed special software for shaft analysis.

The Elastic Shaft Alignment (ESA) notation will apply to vessels with shafts in excess of 750 mm diameter, or smaller shafts handling over 20 MW of power, propellers over 30 tonnes or using synthetic bearings. The notation requires full analysis of the criteria covering hull flexibility with respect to loading conditions, bearing material stiffness, shaft speed and oil film behaviour.

Says Segretain, “We will make this notation obligatory for ships meeting these conditions in our class, and will also make it available as a voluntary notation for smaller vessels and vessels not in BV class. Getting the shaft/structure right is critical for modern designs and we have the deepest expertise in this area available anywhere. This notation helps to codify that and guide yards with new designs.”

For a graphic to illustrate shaft alignment e mail john@merlinco.com

Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has 59,000 employees in around 1,330 offices and laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.

www.bureauveritas.com for corporate information                              www.veristar.com for marine information

 For more information:    

Philippe Boisson
+33 1 55 24 71 98
philippe.boisson@bureauveritas.com

 

 

Bureau Veritas approves LNG-powered Ultra-Large Containership

Leading international classification society Bureau Veritas has given approval in principle for the basic design of a 14,000 teu containership to be powered by LNG. The design was developed in a joint industry project between Korea’s Daewoo Shipbuilding & Marine Engineering, liner major CMA-CGM and Bureau Veritas.

Says Jean-Francois Segretain, deputy technical director, Bureau Veritas, “The market will determine when these ships can be ordered and built, but this is a real milestone as for the first time we have a fully worked and approved design for a main line ultra-large containership running on LNG. After an in depth HAZID analysis we can say with confidence that there are no technical or safety barriers to introducing LNG as a fuel for long-haul large containerships. Major operational savings are deliverable, combined with very much lower air emissions. And the key feature of this design is that the vessel can also run on HFO if required, increasing flexibility in the period before LNG bunkering is widely available.”

The 14,000 teu vessel will be powered by an ME-GI (MAN Electronic – Gas Injection) 2-stroke dual fuel engine made by MAN Diesel. This delivers the highest efficiency among existing propulsion systems and works by simultaneous dual burning of HFO and LNG. In minimum fuel and maximum gas mode around 10 per cent of the fuel is oil, providing overall CO2 emission reductions in the order of 23 per cent and SOX reductions of 92 per cent.

The basic design is for a 365.5 m loa vessel with a design draft of 14 m and a design speed of 24 knots. In the dual fuel configuration a 22,490 cu m LNG prismatic tank would be installed under the forward accommodation, and there would be a bunker tank for heavy fuel oil aft of 4,430 cu m capacity. The LNG tank would be a Daewoo patent ACT-IB Aluminium Cargo Tank – IMO type B independent LNG tank with PUF(Poly-Urethane Foam) panel type insulation.

The main engine would be rated at MCR 72,285 kW and the vessel would have a range of 25,000 miles if fully bunkered.

Explains Segretain. “Compared to the same ship with a conventional fuel power plant there will be extra capital cost for the engine and for the LNG tank and gas handling system, and there is a loss of cargo space equivalent to 438 teu to make room for the gas tank and equipment. But the extra capital cost and the loss of earnings on a theoretical full ship are more than offset by the fuel economies and lower emissions of this design.”

For a graphic of the design e mail john@merlinco.com or download from http://bit.ly/pYqIVs


Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has close to 50,000 employees in 930 offices and 330 laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performances by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.

www.bureauveritas.com for corporate information www.veristar.com for marine information


For more information:
Jean-Francois Segretain
Bureau Veritas
+33 (1) 55 24 72 00
jean-francois.segretain@bureauveritas.com

Philippe Boisson
Bureau Veritas
+33 1 55 24 71 98
philippe.boisson@bureauveritas.com