Initial analysis suggests compliance with EEXI will limit the operational flexibility of some ship types and increase scrapping – trends which will be accelerated by the CII
Maritime research and forecasting consultancy Maritime Strategies International is helping owners, charterers and financiers benchmark the environmental performance of their vessels.
MSI has added a new tool, Environmental Credentials, to its Forecast Marine eValuator service, enabling users to understand the performance of their vessels and fleets – and those of their competitors – against regulatory and market benchmarks.
Environmental Credentials assessments are created when users run an FMV report – for individual ships, sectors, classes and fleets – providing ratings against the International Maritime Organization’s EEXI and CII regulations to 2026 and Annual Efficiency Ratios for 2020 and 2021 measured against the Poseidon Principles trajectory and a ‘zero emissions’ scenario by 2050.
Owners whose vessels fall below the specified regulatory standards or required market measures will need to consider adjustments such as use of engine power limiters (EPLs), optimisation of operations and retrofitting energy saving technologies to improve fuel consumption, or alternatively utilising lower or zero carbon fuels.
In its Q1 2022 dry bulk market report* MSI assessed the EEXI values of the fleet by using a range of data sources, sense-checked with a selection of owners. It estimates that just under 80% of dry bulk ships will not meet EEXI regulations and in almost all cases, MSI believes that dry bulk vessels will fit an engine power limiter to meet the requirements.
Early analysis suggests that the Capesize fleet, ironically given its young age, could be impacted the most. This is because a large share of the existing fleet was constructed between 2006-2011, before more fuel-efficient designs were developed in 2013-14.
“Older vessels requiring a large EPL to meet EEXI criteria would have the least flexibility of operations, reducing their potential to speed up to meet laycan windows when faced with delays such as those caused by bad weather; ultimately this would lead to lower cargo volume and a reduction in potential freight revenue, reducing the economic life of a ship,” said Will Fray, Director, MSI. “A significant number of 10-15 yr old ships are at risk and over the next five years will age into a bracket much more susceptible to being scrapped, particularly if freight markets decline from today’s levels, as forecasted by MSI.”
The environmental credentials are currently available for tankers, bulk carriers and containerships and will be extended to specialist vessel sectors in the very near future. FMV also provides users with historical, current and forecast vessel asset values, one year timecharter rates and operating costs.
The full impact of CII regulations will likely take longer to realise and MSI will be undertaking more analysis to help understand the likely impact once EPLs are considered. In MSI’s current Base Case, CII is one justification for a sharp rise in vessel scrapping from 2024.
