Rightship’s CEO Warwick Norman Discusses Efficient Shipping [INTERVIEW]

Ranking ships according to their efficiency is an interesting concept, one that is currently still being fine tuned.  Ship vetting specialists at Rightship have developed something called the Existing Vessel Design Index (EVDI) which provides ship operators and charterers a method of comparing existing vessels with tangible efficiency figures.

In a recent interview with Rightship’s CEO, Warwick Norman, he notes,

Our customers want to find the most efficient vessels.  Our large corporate customers have strong commitments to the environment, and the freight areas are also looking at how, within their own activities, they fit within those corporate requirements.  In response to this, we developed the EVDI which allows a customer to look at a particular vessel and find the best one within that particular size and type so that they can make the right decision around vetting and selection criteria.

RA: How much difference are you finding within a particular vessel class in regards to efficiency?

Quite significant.  As we went through the building process, one of the flaws we found is that it’s unfair to compare a 20,000 DWT vessel to a 200,000 DWT vessel.  The EEDI tries to do that, so we took that methodology to look at a particular vessel, and measure 200 similar vessels on either side of it, apply some standard mathematical and standard deviation approaches, in order to determine which is the most efficient vessel within that particular group.

When a charterer or shipping company is looking at a particular vessel, say a 150-155k DWT vessel, he’s not really interested in how efficient a 200k DWT vessel is going to be or a 120k DWT vessel, and so we have to design this tool so that it looks within a smaller pool of vessels and determines which vessel is the most efficient.

It also isn’t necessarily just about that one particular vessel either.  Over the course of a year, the customer might want to say, “we need to reduce our emissions per ton nautical mile by 5 or 10 percent.”  This tool then allows them to do that.  If the best vessel both commercially, and from a position point of view, is not as efficient, you’ll know what you need to do in order to meet specific efficiency targets the next time it comes to charter a particular vessel.

RA: What is the driver to set such targets?

It’s about how individual shipping companies respond to the issue of greenhouse gas emissions.  In Australia, we have a carbon tax coming into effect this July, and organizations are beginning to set targets for reductions.   The issue is how to set targets when you’re increasing your output.  We’ve mitigated this issue by setting the target based on CO2 per ton nautical mile.  Thus you can increase your tonnage as long as you’re doing that more and more efficiently for each ton added.

RA: I was talking with one of your colleagues and he mentioned that many of the older ships are more efficient than the new ones.  Can you explain this?

Part of the research we did was to go through some of the verification of the methodology.  One of the surprising parts was to discover that not all new ships were efficient due to the fact engine manufacturers have been able to build more powerful engines and shipowners have chosen to drive those ships faster than their designed speeds.  It comes down to the standard efficiency measurement of grams of CO2 per ton nautical mile.  Because there is not a time criteria in this equation, the faster a ship is driven, the greater the fuel burn rate, and thus the less efficient a vessel is per voyage.

This is not a general observation however, it really depends on the size of the vessel, as some vessels have become more efficient.  Traditionally a Capesize vessel would operate at 14 knots, but you see a lot of vessels in that range, and larger, operating at 15 to 15.5 knots.  That’s the penalty that you pay for that increased speed.

RA: Why are they increasing the speed?

That’s a good question.  The Chairman of INTERTANKO, Graham Westgarth was asking the same question.  Why is it 14 knots and not 13.5?  Why are containerships running around at 26 knots and not 22 knots?  The reality is, nobody really knows why that is, and so in a carbon-constrained world, that’s what people are going to start looking at.

Another interesting question is why are we building Capesize vessels in the 155k DWT range?  The reason is that these vessels had to be length and beam restricted to get into Dunkirk docks.  In fact, they used to be called Dunkirkmax, but the reality is that Dunkirk takes less than 1 percent of all iron ore trade in the world.  So why are we building fleets of vessels that are only going to do a tiny fraction of the service?  Essentially we build inefficient vessels for one particular place in the world.

I think the industry is starting to come to grips with some of these issues.

RA: Is Rightship involved in consulting to naval architecture firms?  Ships and their associated propulsion systems, are designed to be operated at a specific speeds.  Are the designers and shipowners on the same page?

Particularly in the liner trade, they used to talk about timetable speeds, but some of these shipping organizations are talking about the obvious issue, what came first, the time tables or the design speed of the vessels used on that trade.  This is the new paradigm that we’re in when it comes to designing vessels, and do we have to run at the speeds we’re running?

15 knots seems to be historically a benchmark speed.

We have a way to go yet, and it’s very early days for the maritime industry.  We agree with the Chamber of Shipping that the design index should not be applied to new vessels, which is why we’re going with this Existing Vessel Design Index, because we don’t necessarily believe that existing vessels need to meet those parameters.  The market will naturally take care of that, but others will see opportunities where if they have large bunker fuel costs, could we put a new bow on the vessel, could we improve the efficiency of that ship, and if I do that, does it make it more attractive to my charterers and customers.  It’s always going to be a cost/benefit analysis, but people talk about 20% efficiency gains via existing technologies, the maritime industry will be able to meet its global targets without necessarily having to do too much.

RA: Where do you see the Carbon War Room fitting into the shipping industry?

I think the Carbon War Room’s position is that they are looking for market solutions for these issues.  They are looking to attract innovators into this space and I think their position as an NGO is to stimulate debate, find these areas where they can add solutions into the market where there is market failure, and their view is that we’re wasting bunkers and that there must be some way to mitigate this.

Their view is that this “gigaton carbon problem” is achievable via existing technology.