the logical illusion of eco ships - dr. coustas

8/13/2019 The Logical Illusion of Eco Ships - Dr. Coustas

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Presentation

September 2011

Boston, March 7, 2013

The Logical Illusion of ECO-ShipsMIT International Shipping Club


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A Bit of History

Eco-ships is an old story

New leap after every energy shock

Steam turbine disappeared after 1980

First large 3000 TEU containerships in 1972 designed for 30 knots


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Response after Oil Shock

Steam turbine containerships re-engined

New VLCCs and containerships only with diesel engine

Projected FO price in 1981 for 1990 was $40 a barrel

Engine technology leaped from 165gr/bhp hr to 125 gr/bhp hr and

long stroke engines appeared

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Where are we now in terms of

Technological Development?

The oil shocks of 1973 and 1980 already incentivized eco-ships

Engine efficiency research has reached a plateau with electronicengines

Hull form development as well

Technology for energy saving appendages, painting still progress

Emission control on NOX will make engines less efficient


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What are really the Shipyards claiming?

Better consumption at full load evenkeel beaufort 0 weather conditionsat a lower speed

How?

By increasing the propeller diameter and lowering RPM

By more economic ultra long stroke engine

By optimizing the hull for a lower speed mainly making it shorter andbeamier (containerships)

All the above however are still on paper. The real savings at sea stillremain to be seen.


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What is Really True?

The efficiency of the larger propeller is achieved at the expense ofpropeller immersion. Increased trim to compensate will reduce inpractice the efficiency benefits

Wider hull will experience greater resistance in heavy weatherconditions so the effect of saving in real conditions may be diminished

The main engine SFOC savings are marginal


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Can existing Ships Adapt?

The main engine can be de-rated and together with TC cutout will

operate efficiently at low loads

The propeller can be replaced by a new one, optimized for lowerspeeds

Modify the shape of bulbous bow

With these changes on a 8,500 TEU containership built in 2010

compared to a new design you can get the theoretical differencedown to 6%


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Existing design improvement

Investment cost : approx. USD 2,000,000

Total improved fuel efficiency: 12%

Low r esistancecoating 2%

Trim optimization2%

Additional device 2%

Engine derating &new propeller 6%


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New design specifications

Electronic enginewith tuning 4%

Long str oke engine2%

Total fuel efficiency: 18%

Low resistancecoating 2%

Propellerefficiency 3%

Addition al device 2% Optimum hull form

5%


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Assume that there are 10 % consumptionsavings ECO vs Conventional

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Examine the case of a post-panamax 5,000 TEU containership

For a new 5,000 TEU containership the TCE required for a 12% equity

IRR is $23,200 USD/day hence the optimal speed is 16.5 knots


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What are the Economics on an Asia Brazil Run?

$548

$582 $570 $549 $548$570 $549 $548

$582$589 $577

$550 $548

At an average speed of 17 knots, a sailing distance of 24,295 miles, 27.2port days & consumption differential 10%:

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How does an Investment Compare?

Containership Investment Appraisal10% consumption differential 15% consumption differential

5,000 TEUNew design

5,000 TEUexisting designat 12% Equity

IRR

5,000 TEUExisting designat market price

5,000 TEUexisting designat 12% Equity

IRR

5,000 TEUExisting designat market price

Price $44.0 mil. $31.4 mil. $20.0 mil. $28.2 mil. $20.0 mil.

Equity IRR 12% 12% 26.7% 12.00% 22.7%

Financing 60% 40% 40% 40% 40%

Opex $7,000 $8,000 $8,000 $8,000 $8,000

TCE $23,202 $21,266 $21,266 $20,031 $20,031

Year built 2014 2000 2000 2000 2000


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Assessment for a Kamsarmax Bulk-Carrier

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Examine the case of a Kamsarmax Bulk-Carrier

For a new Kamsarmax Bulk-Carrier the TCE required for a 12% equityIRR is $16,150 USD/day hence the optimal speed is 13.6 knots


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What are the Economics on an Asia Europe Run?

$548

$582 $570 $549 $548$570 $549 $548

$582$589 $577

$550 $548

At an average speed of 14 knots, a sailing distance of 25,009 miles, 30 portdays & consumption differential 10%:

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How does an Investment Compare?

Kamsarmax Bulk-Carrier Investment Appraisal10% consumption differential 15% consumption differential

80,000 dwtKamsarmaxNew design

80,000 dwtKamsarmax

existing design at12% Equity IRR

80,000 dwtKamsarmax

existing designat market price

80,000 dwtKamsarmax

existing designat 12% Equity

IRR

80,000 dwtKamsarmax

existing designat market price

Price $30.0 mil. $24.5 mil. $20.0 mil. $22.5 mil. $20.0 mil.

Equity IRR 12% 12% 17.2% 12% 14.9%

Financing 60% 40% 40% 40% 40%

Opex $5,000 $5,000 $5,000 $5,000 $5,000

TCE $16,143 $14,716 $14,716 $14,005 $14,005

Year built 2014 2007 2007 2007 2007


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Do we Need ECO-Ships?

$426$414

$435 $418$426 $435

$418 $414

$424 $418$422 $414

At present we don't need new ships

The premium the eco-ship can command is very small compared to the

investment required

Investment on existing ships is more profitable at todays prices


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the logical illusion of eco ships - dr. coustas

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