Shippers Must Reduce Costs, Boost Efficiency

By Jim Rhodes and Frank Soccoli

So what’s keeping ship operators awake at night these days?  Plenty, it seems. Sluggish recovery from a lingering worldwide recession, unsustainable debt loads, endemic overcapacity in most shipping trades, punishing freight rates, rising costs of fuel and regulatory compliance and a lingering sense that ships are not running as efficiently as they could.  The last two topics – reducing fuel costs while complying with emission regulations and improving ship operating efficiency – will take center stage at SHIPPINGInsight 2014, scheduled for Sept. 30 – Oct. 2 in Stamford, Conn. 

Fuel: Search for Alternatives
Let’s start with the biggest headache – the inexorable rise in costs of fuel and compliance with new regulatory requirements. Fuel currently accounts for more than half of daily ship operating costs. That percentage will likely rise as the more stringent Emission Control Area (ECA) requirements for low-sulfur content come into force. Since Aug. 1, 2012, ships sailing within 200 nm of the U.S. coast have been required to burn fuel with a sulfur content of not more than one percent. While it is expected that supplies of compliant distillates will be more readily available when the more stringent 0.1 percent sulfur content requirement comes into effect Jan. 1, 2015, costs of fueling ships and complying with emission regulations will surely continue to rise.
It’s hardly surprising that shipowners and shipmanagers are looking hard at ways to reduce fuel costs. A relatively minor improvement of just one or two percentage points can produce substantial savings on the bottom line. One option is switching over from diesel and distillate fuels to liquefied natural gas (LNG), which burns much cleaner and meets all current and projected ECA emission requirements. The movement to LNG is gaining momentum. There are currently more than $3 billion worth of LNG-powered ships on order in North American shipyards, according to a report recently released by the American Bureau of Shipping (ABS). 
While LNG has its cheerleaders, there are plenty of skeptics, who point to the lack of infrastructure for delivering, storing and bunkering with LNG on a wide scale. So far, most of the LNG initiatives are for vessels such as ferries and offshore supply vessels operating out of fixed bases where bunkering infrastructure can be more easily implemented. It doesn’t help that guidelines and regulations for LNG bunkering have not been issued by federal, state or local authorities, leading to confusion in the marketplace. Critics also note that LNG requires more storage space on ships, which means shorter times between bunkering and/or diminished cargo capacity, and that the capital costs of retrofitting an existing ship for LNG propulsion must be weighed against the high cost of installing scrubbers to meet the emission requirements. Costs of scrubber systems are moving downward and may provide an attractive alternative to LNG switchover, especially on existing ships. 
To be sure, there are other alternative fuels besides LNG being proposed and tested. They include emulsified fuels (mix of petroleum fuels and water), which are said to burn cleaner and more efficiently, and methane-based fuels such as dimethyl ether (DME) which can be burned in existing diesel engines.  DME has been gaining traction increasingly in the transportation industry, and most major U.S. long-haul truck builders have active DME development programs in place.
Given the timeliness of the topic, SHIPPINGInsight 2014 will include a full-day Marine LNG Symposium immediately preceding the two-day Fleet Optimization Conference, with an impressive lineup of speakers, moderators and panelists who will look at all aspects of the subject. The symposium will be kicked off by keynote speaker Edward Scott, COO of Excelerate Energy.

Efficiency: Better Data and More of It
One of the major inhibiting factors in achieving greater efficiencies in ship operations is the paucity of data flowing from ship to shore. How, for instance, can you improve fuel efficiency in real-time unless you can measure, record and analyze key performance indicators (KPIs) from the ship’s onboard systems and sensors, and make adjustments as needed?
In other industrial sectors, “big data” has become a key element in managing and controlling assets.  Increasingly, smart devices are “talking” with other smart devices, exchanging data without human intervention. The marketplace for machine-to-machine (M2M) connectivity is one of the fastest growing sectors in the world today. It’s sometimes referred to as the “Internet of Things” (IOT) or as “telematics” (from the automatic transfer of telemetry from a remote device). Driven by demand for connectivity, the M2M sector is growing at an astonishing pace. Cisco, a market leader in M2M, predicts there will be 25 billion devices connected to the Internet in 2015 and 50 billion by 2020. The net value of the M2M market will be an estimated $14.4 trillion.
A primary driver of rapid growth in M2M is the abundant availability of high-bandwidth wireless connections. Therein lies the rub when it comes to ships, which spend their time far beyond the range of terrestrial high-speed wireless networks. The problem is the limited communication bandwidth available on maritime satellite channels – not to mention the extremely high costs of satellite airtime. 
Happily, the next generation of satellites being placed into orbit by companies like Inmarsat, Iridium and ORBCOMM will be capable of much higher data rates, making it possible for smart devices to exchange more data at faster speeds – although at what cost remains to be seen.
In the last five years we have seen a significant rise in new starts-ups entering the maritime space offering automated ship to shore solutions combined with sophisticated data analytics to improve ship performance levels.  We expect to see more in coming months.
If this subject interests you, we’re happy to tell you there will be a special focus on smart systems and ship-shore data connectivity at the SHIPPINGInsight 2014 Fleet Optimization Conference in October. Panel sessions will look at designing and building efficient ships, fuel and propulsion management, ship performance and optimization, human capital management and fleet intelligence and optimization. For full conference details and to register to attend, visit:

Executive Insights
ShippingINSIGHT is a conference that attracts an “A-List” of shipping and maritime executives to Stamford, Conn. There is a Keynote Speakers for each day of the conference, including: Edward Scott, COO, Excelerate Energy; Admiral James Watson, President, ABS-Americas – Fleet Optimization; and Michael Wilson, President, Laurin Maritime (Americas).


ShippingINSIGHT 2014 Highlights

September 30 - October 2, 2014   •   Stamford, Connecticut   •
Marine LNG Symposium
Tuesday, September 30
Keynote Speaker: Edward Scott, COO, Excelerate Energy

Panel Session 1:
Navigating the Regulatory Environment
• The latest legal framework that governs environmental regulations
• Understanding the U.S. Coast Guard rules and regulations that impact the shipping industry
• Learn how regulations are evolving and understand their impact on management decisions
Angus Campbell, Managing Director, Bernhard Schulte Shipmanagement (UK)
Ravi Singh, Technical Director, Northern Fund Management America

Panel Session 2: LNG Bunkering
• The latest challenges and advancements with LNG bunkering operations
• Learn about the different methodologies and technical aspects of LNG bunkering
• The industry experience with LNG and how results have impacted management decision making
Johan Sperling, Vice President, Jensen Maritime/Crowley
Capt. Mark Lane, SVP – Operations, Excelerate Energy

Panel Session 3: LNG Infrastructure
• The latest plans and timelines for shoreside terminals
• How LNG suppliers will address evolving requirements
• The LNG price outlook
• The risk and safety considerations of LNG
Chris Charter, Operations, Navig8
Angus Campbell, Managing Director, Bernhard Schulte Shipmanagement (UK)

Panel Session 4: Designing for LNG
• The designing considerations and implications when employing LNG as a fuel
• How engine designs have evolved to leverage the advantages of LNG
• The latest in LNG-based ship design driving cost reduction and efficiency
William Nugent, VP Technical Service Group, OSG Ship Management
Capt. Karen Davis, Marine Assurance, ConocoPhillips
Robert Hall, Vice President Fleet Operations, Seabulk Tankers

Panel Session 5: LNG Industry Leaders Roundtable
Sponsored by Pace Global, A Siemens Business
• Join an interactive roundtable with a group of distinguished industry leaders to ask questions and debate the latest LNG topics driving efficient ship operations
• Learn about the latest case studies in this evolving technology
• Improve your understanding of the challenges ahead and available solutions

Roundtable Chairman:
Joseph Keefe, Editor, Maritime Professional

Mahinde Abeynaike, Managing Director, Bomin Linde LNG
Aziz Bamik, General Manager, GTT North America
Holt Bradshaw, Executive Director, Pace Global, A Siemens Business
Angus Campbell, Managing Director, Bernhard Schulte Shipmanagement (UK)
Margaret Doyle, Director, Maritime Simulation Institute
John Hatley, Vice President, Wärtsilä
Jonathan Webster, Vice President, Rolls-Royce

6:00 PM — 7:30 PM    Networking Reception sponsored by utiliVisor, Registration & Exhibits
Fleet Optimization Conference Agenda:
Wednesday, October 1
Keynote Speaker:
Michael Wilson, President, Laurin Maritime (Americas)

Panel Session 1: Designing & Building Efficient Ships
• The latest designs influencing ship performance
• Technology innovation addressed in the new market reality
• Obtain a shipyard perspective on building an efficient ship
William Nugent, VP Technical Service Group, OSG Ship Mgt
John Nichols, Director Head of Operations Supramax, Clipper Bulk (US)
Johan Sperling, Vice President, Jensen/Crowley Maritime

Panel Session 2: Fuel & Propulsion Management
• The latest challenges and advancements with the new generation of efficient engines
• The latest innovation in wireless fuel sensor technology employed to improve efficiency
Robert Bullen, Fleet Manager, U.S.D. Flag Operations, Maersk Line Limited
Angus Campbell, Managing Director, Bernhard Schulte Shipmanagement (UK)
Mike Elbers, Technical Manager, Apex Bulk Carriers
Judy Gladson, Director Technical Division, Military Sealift Command

Panel Session 3: Ship Performance & Optimization
• The latest in hull performance solutions that drive efficiency and reduce costs
• Employing power management for efficiency
Capt. Harold Boyer, Director Operations, Heidmar
Anders Aasen, AVP Global Technical Services, RCCL
Mark Remijan, Operations Manager, APL Maritime
Rajnish Bahel, General Manager, Eagle Shipping

Panel Session 4: Human Capital Management
• Learn how to employ the latest in simulation training to improve crew efficiency
• Recruiting methodologies you can employ to meet your crew staffing needs
Joseph McKeown, Technical Director, V Ships (US)
Erny Otterspoor, VP & Technical Director, Roymar Ship Management
Robin van Wyngaarden, Operations Manager, Ultrabulk
Thomas Monteiro, Director, Marketing & Business Development, Bernhard Schulte Shipmanagement

6:00 PM — 8:00 PM    Networking Reception sponsored by Faststream Recruitment Group & Exhibits
Thursday, October 2
Keynote Speaker: Admiral James Watson, President, ABS-Americas – Fleet Optimization
Guest Speaker: Richard Greiner, Partner, Moore Stephens – Ship Operating Costs: Trends & Outlook

Panel Session 5: Fleet Intelligence & Optimization
• How to use fleet intelligence data to drive ship efficiency
• The latest in remote monitoring technology to improve ship operations
Fred Finger, VP & GM, American Roll On Roll Off Carrier
Amit Datta, Commercial Ops Manager, Gemini Tankers
Philip Bannerman, Wilhelmsen Ship Management
Capt. Mark Jackson, Vice President of Technical Operations, Carnival Cruise Lines

Panel Session 6: Ship Telematics Roundtable
Sponsored by ClassNK
The telematics (machine-to-machine connectivity) industry is growing exponentially. The maritime sector is gaining traction with new and innovative solutions that are impacting the bottom line.

(As published in the August 2014 edition of Maritime Reporter & Engineering News -


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