Opening keynote:

Setting the scene – the shipowners and shipmanagers point of view

IBIA Annual Convention Hamburg 2014 – 04 November 2014, Hamburg Dr Hermann J. Klein, CEO E.R. Schiffahrt

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Change of shipping in challenging markets

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Ship speeds in 2007 Ship speeds today

vs.

The ship speed is significant lower than 7 years ago!

Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2008

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» Weighted mean speed 23 kn / weighted mean consumption 196 mt/day

» Weighted mean speed 20 kn / weighted mean consumption 143 mt/day

Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2010

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» Weighted mean speed 19 kn / weighted mean consumption 127 mt/day

Consumption (Propulsion) [mt/d] 8,500 TEU vessel in 2012

6Vessel designed and optimized for

Operational challenge

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38 42 46 50 54 58 62 67 71 76 81 86 91 96 102 107 113 119 125 131 137 144 150157

163170

177184

192199

207214

222230

238

0.0% 0.0%0.8%

2.5% 2.5%1.7%

3.3% 3.3%

1.7%2.5%

3.3%

15.0%

4.2%

0.0%

2.5%

5.8% 5.8%5.0%

7.5%

9.2%

6.7%

8.3%

0.8%1.7%0.0%

0.8%0.0%

0.8%0.0%

0.8%0.0% 0.0% 0.0% 0.0%

0.8%0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Perc

enta

getr

adin

gsp

eeds

Fuel

Con

sum

ptio

n[m

t/d]

consumption propulsion [mt/d]time-based share of speeds [%]

Speed profilein 2008

Speed profile in 2014

Vessel speed kn (STW)

Max. sp

eed d

esign

poin

t» Enabling and optimizing vessels for different operation profiles

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Costs / Prices Emissions

Quality & Compliance

» Increased fuel-efficiency of vessels and main propulsion systems Identification of consumption components

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Consumption

Design Reasons

Non-optimized machinery design Non-optimized hull design

Operational Reasons

Reasons related to charterers (e.g. scheduling, waiting times at

terminals etc.)

Reasons related to owner (e.g. voyage

execution, trim, maintenance)

Total saving

every drop countsSource: APL

The challenge of efficiency

Liners demand for optimised vessels

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New bulb

» The new bulbous bow design reduce the form related resistance and optimise the wave resistance for the new operation profile.

» The second benefit of the new bulbous bow installation is a reduced total resistance of the vessel which enable additional optimization and saving potential in way of the propeller design.

Market search for best rated vessels

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The relevance of total costs

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» 10% fuel consumption reduction equals to 30% of the charter rate

charter rate bunker costs

US$/day

9.000

30.000

fuel

Future proofing to meet upcomingchallenges:

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1) Regulatory

2) Operational

3) Efficiency

1) Regulatory Challenges

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» Limitation of Sulphur− Scrubber technology− Substitution HFO

» Limitation of Nox− New engines− Modification kits− Substitution HFO

» Monitoring of CO2

− Limitation of CO2

− Reduction of CO2

− Substitution HFO

Sox Reduction Solutions (LNG & Exhaust Gas Cleaning Systems)

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Sox Reduction Solutions

LNG* Exhaust Gas Cleaning

Wet Scrubber Systems Dry Scrubber Systems*

Closed Loop HybridOpen Loop

*No reference Systemavailable – Pilot Project only

*No approved System availableon the market

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Low sulphur regulations and the impact on fuel costs

Possible development of fuel costs

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A CO2-emission trading may start in 2013. Associated costs are based on IPCC reports.

In 2020, SOx-limits for fuel globally apply.Diesel quality fuels demand a premium,

estimated to be 50% of HFO price

Price for HFO will continue to increase in the long run (2.5% per year assumed)

Source: DNV GL research. The analysis excludes inflation effects.

Marine Fuels

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MDO MGO LNGLLSHFOULSHFO

» On board handling of different fuel types

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Yesterday Today Tomorrow

The future of shipping

Arriving Arriving in time and reliable

Perfect remote controlledshipping at lowest costs

HFO and LNG Price Projections (2010 – 2035)

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» Gross heat of combustion for one kg of natural gas is abt. 49 MJ (≈ 13,5 kWh) and for one kg of HFO abt. 41,5 MJ (≈ 11,0).

» Price per calorific value: LNG is abt. 8% less than HFO and abt. 40% less than MGO.

HFO

0

200

400

600

800

1,000

1,200

1,400

2010 2015 2020 2025 2030 2035

US

$/t

Low HFO Reference HFO High HFO

LNG

0

200

400

600

800

1,000

1,200

1,400

2010 2015 2020 2025 2030 2035

US

$/t

Source: DNV GL Shipping 2020

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LNG as a solution?

Potential of LNG

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» First vessels (ferries, offshore vessels) already in operation. » Tankers are announced. Container vessels under development.

Source: MAN

HFO and LNG price projections (2010 – 2035)

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» Gross heat of combustion for one kg of natural gas is abt. 49 MJ (≈ 13,5 kWh) and forone kg of HFO abt. 41,5 MJ (≈ 11,0)

» Price per calorific value: LNG is abt. 8% less than HFO and abt. 40% less than MGO

0

200

400

600

800

1,000

1,200

1,400

2010 2015 2020 2025 2030 2035

US

$/t

Low HFO Reference HFO High HFO

0

200

400

600

800

1,000

1,200

1,400

2010 2015 2020 2025 2030 2035

US

$/t

Source: DNV Shipping 2020

LNGHFO

LNG-Aspects

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» Price difference per calorific value

» Difference in emissions

» LNG-Availability and infrastructure

» Price surplus for new ships / conversions

» Tank space and influence on cargo space

» Operational aspects: refueling

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Clean shipping in Hamburg (Fuel Cell and Hydrogen)

3D printers might change the shipping industry and reduce fuel consumption

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The challenge for marine propulsion & auxiliary machinery

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Lower costs

Source: DNV GL Group

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Thank you