DNV Marks its 100-Year Presence in the Greek Market in Commanding Fashion, Despite the Challenges of the Pandemic
Shipping’s path towards decarbonization is far from a clear one. DNV has analyzed the existing trends in many occasions. Can you offer us some insight, as to which you expect to be the prevailing technologies and fuel options as we head towards 2050?
In DNV, we developed the Maritime Forecast to 2050 report, which supports the maritime industry into navigating towards the IMO decarbonization targets for 2050. Over the next decade the shipping industry needs to start rolling out the next-generation ships running with zero carbon emissions. This will require accelerated technology development, large-scale piloting for deep-sea vessels and safety standards development. According to the report, a clear and robust regulatory framework must be in place to ensure the global availability of large volumes of carbon-neutral fuels; to enable their safe use; and, to incentivize their uptake while retaining a level playing field. Furthermore, picking the wrong fuel solution today can lead to a significant competitive disadvantage. Managing decarbonization risks is critical to protecting a vessel’s future value, profitability and competitiveness, and for shipowners to ensure that their ships are on an acceptable GHG emission trajectory.
This report offers the industry a vision of the changes ahead, offering guidance, highlighting trends, and providing valuable insights for maritime stakeholders. The future fuel and technology picture for the shipping industry is complex and getting more so. By setting out three decarbonization pathways forward and a detailed library of 30 scenarios we hope to enhance shipowners’ ability to navigate technological, regulatory and market uncertainty due to decarbonization – and maintain their vessels’ competitiveness, profitability and value over time. Sixteen different fuel types and ten fuel technology systems are modelled in the report.
Reducing the GHG emissions has become the defining decision-making factor for the maritime industry and the pressure to act is mounting. The main concern is about finding the right pathway towards decarbonization for 2050. Truth is that there is not one solution to achieve the challenging target. “Perfect is the enemy of good” and we should not wait for the ideal solution to suddenly arrive, doing nothing while being afraid of the risk.
In the Maritime Forecast report, DNV has used its model to demonstrate the detailed effects of the pathways on a newbuild Panamax bulk carrier. Here a dual-fuel LNG engine and fuel system emerges as the most commercially viable option, when compared to conventionally fuelled vessels using either low sulfur fuel or marine diesel, or HFO with a scrubber. This configuration is an attractive option due to both favourable gas prices and a regulatory compliance regime that is already in place. While also being flexible, the dual-fuel option enables the use of new compatible carbon neutral and zero carbon emission fuels as they enter the picture.
Do you have an estimate/projection of the cost that this decarbonization effort will have for ship owners?
DNV has recently delivered a report to the IMO as part of the comprehensive impact assessment of the approved EEXI and CII requirements towards 2030 (see MEPC 76/7/INF.68/Add.1)
The EEXI and CII requirements, assuming the most stringent reduction factor options for CII, will increase the cost of shipping per tonne-mile of about 16% in 2030 relative to a scenario without the additional requirements. However, relative to 2019 the cost is expected to decrease by around 6% due to an increase in average size of the analysed fleet, improvements in energy efficiency for newbuilds, and improvements in logistical efficiency. In other words, the expected cost increase of new regulations is offset by the general cost efficiency improvements after 2023. This scenario assumes availability and use of blended biofuels on existing ships, for a total 6-7% of the total energy mix in 2030. In addition, we will see speed reduction as a key compliance option for existing ships, and energy efficiency and LNG/LPG for new ships.
DNV has not done a similar analysis of the cost towards 2050, although in our Maritime Forecast to 2050 modelling a carbon price of around 400 USD/tonne was needed to incentivize the necessary reductions to achieve a 50% absolute emission reduction in 2050. This price heavily depends on the cost and availability of alternative fuels for use shipping.
Do you think that, at some stage, a levy will be imposed on shipping costs, in order to offset the investment needed to reach the goals set? Just recently, Maersk’s head, Mr. Skou talked about an increased shipping cost, footed by consumers, as long as shipping gets cleaner
We support measures to improve shipping’s environmental performance. But they should be implemented at the international level to ensure that there is a level playing field across the industry.
Which are the ship owners’ priorities at present, when it comes to deciding their future investment strategy? Do you see a lot of hesitance in terms of newbuilding orders, because of the uncertainty on the future, especially in terms of the ships’ compliance, moving to the latter stages of their working lives?
A decrease in new shipbuilding orders has been noted, as shipowners do not know what engines and fuels to use for their new vessels. Ships built today will have to compete with vessels coming onto the market in five, ten- or 15-years’ time, and must consider future standards to remain competitive. Considering the uncertain future that lies ahead, failing to be future-proof in the newbuilding phase could lead to that asset being stranded in the not so distant future. And the key is, flexibility, as shipping transitions to a lower carbon future and as the fuels of today may not be the fuels of tomorrow. Fuel flexibility and technologies to bridge changing fuel usage have been identified as essential strategies for both individual owners and the shipping industry to adapt to the energy transition and prepare for a low carbon future. In the deep-sea segment especially, dual-fuel solutions and alternative fuel “ready” solutions, such as, LNG, could smooth this transition as medium solutions, by laying the groundwork for a future retrofit. Combined with bridging technologies, such as, adaptable storage tanks, onboard systems and shore-side fuel infrastructure, this could give the industry more options as new fuels and technologies emerge. Therefore, the main things shipowners should prioritize are fuel-flexibility and future-proof technologies.
DNV has kept expanding its presence in the Greek market over the past few years. Can you detail the developments of the past, rather challenging year and what are your plans moving forward?
DNV Greece has been chosen as a home-market for DNV since 2016, and there is a very good reason for that: the strength of the Greek shipping cluster. Greece represents about 20% of the world’s total tonnage and 54% of European tonnage, meaning the country houses the world’s biggest shipping fleet concentrated in a very small place, with a population that represents, at most, 0.2% of the world population. At the same time, the fleet has an average age of 12.6 years, which makes it the youngest fleet in the world. And Greek-based shipping companies are considered to be of the highest quality and calibre worldwide. So, where else would you invest, rather than in Greece, if you want to invest in the maritime sector?
In DNV Greece, we offer a variety of services to cater to our Greek clients focused on our expertise in all ship types, especially focused on bulk carriers and tankers and, more recently, gas. For example, we have a chief surveyor onsite, and provide a full range of classification services, pre-contact services, as well as Maritime Advisory. We have our Maritime Academy which counts on the participation of approximately two thousand people per annum, and we have a strong Research and Development unit along with a significant Business Development department. A Greek surveillance network is also established around the world.
Moreover, in the beginning of 2020, we launched our Regional Maritime Gas Centre, which comes as an additional vote of confidence from the DNV organization towards our Piraeus office. For DNV, our region, South East Europe, Middle East and Africa is strategically important, as significant stakeholders reside with global impact in the gas supply chain. More specifically, gas carriers’ shipping managers have grown significantly in numbers and capacity, especially over the last 2 years with multi-million-dollar investments on new assets. Furthermore, LNG fueled deep sea vessels are managed, while there is a significant dynamic growth on regasification projects and LNG bunkering infrastructure.
Another key role of Greece in the wider regional energy market is shipping as a major player in the trading of LNG globally. Moreover, in our region, talking about Middle East as one of the largest LNG producers, there are strong collaboration between LNG exporters and regional shipping companies serving the glob’s needs to import LNG and move ahead with their decarbonization plans. See for example the huge LNG demands in China.
The year of 2020 was indeed a very challenging year, due to the outbreak of the pandemic, and the challenges continue, as COVID-19 remains. At DNV, we manage to keep delivering despite the travel and social distancing restrictions that came into force due to the pandemic. Our offices have remained fully operational around the world and our employees remain on the job, either in the office, on location, or at home, to help keep vessels and business running.
One of our key areas is keeping the fleet in service running, by making sure that wherever possible, surveys can continue to be delivered – even in cases where the surveyor cannot attend the vessel. During the pandemic DNV has been using our remote survey scheme through the globally available 24/7 DATE (Direct Access to Technical Experts) services. During the crisis, remote survey requests have ramped up significantly, with half of all vessels now having used the service, noting an increase of 33%, resulting into approximately over 300 remote surveys a week. It is worth to note that, during 2020, more than 1.500 remote survey cases were completed by the Piraeus DATE center.
Alongside remote surveys generally, DNV launched Machinery Maintenance Connect (MMC), a new, remote approach to the machinery planned maintenance system (MPMS). Instead of requiring surveyors to travel to each individual vessel and go onboard, machinery data can be processed via algorithms and presented to customers on a digital dashboard – enabling the survey of a complete fleet in one process and unlocking new insights into vessel and fleet performance.
In DNV, we have always worked, and we will continue to work, for the benefit of our customers, along with the benefit and well-being of our own people, this is our commitment. We will maintain our customer-centric approach, support the industry with our offered services and strategies, which are being customized according to the specific maritime segments’ needs, especially under the extreme circumstances we are facing due to the pandemic.
Furthermore, we will keep on assisting the maritime stakeholders to navigate through the uncharted waters of decarbonization, developing new strategies and advisory services which will support and guide them through this challenging megatrend.
The year of 2021 is a very important year for us in DNV – Greece. This is because, this year marks the 100 – year anniversary of our presence in Greece. Therefore, many initiatives will take place this year around this very special occasion, with important stakeholders by our side. We aim to celebrate this significant moment, underlining our glorious past, strong present, while looking towards a brighter future. This will be a “thank you” celebration, showing our appreciation to our people, our customers and all the important factors that have been by our side throughout this century. The initiatives will be communicated soon.
Can you offer us some data on DNV’s market share among Greek ship owners and its progress during 2020?
Our services, along with our expertise and customer-centric approaches have played their part into the significant growth of our DNV – Greece office: In 2016, 711 vessels representing 32.80 million GT were with DNV – Greece, and, at the end of 2020, this had grown to 847 vessels and 42.67 million GT, representing the 19% of the market share in Greece terms of million GT. The share of newbuilding contracting specifically for Greece has also been growing, with over 28% of Greek owned vessels contracted to DNV classification in terms of m GT by the end of 2020.
Do you expect remote surveys to be a mainstay feature moving forward?
Remote surveys proved to be of great value for the maritime industry, especially during the COVID-19 crisis and the quarantine, where physical attendance of the surveyor was not an option. With the first trials in 2018 and full fleet wide access from February 2019, DNV has pioneered this service in ship classification. By the end of 2020 DNV had hit the milestone of 20,000 remote surveys already conducted. This unique DNV service ensures safety and regulatory compliance through the use of modern technology.
Not all surveys can be completed remotely, but DNV ’s survey request system on Veracity can automatically indicate whether a survey can be executed remotely or not. Delivered from specialists in one of DNV’ s operational DATE centres in Hamburg, Oslo, Houston, Piraeus and Singapore, coverage is ensured around the clock. Remote surveys result in considerable savings in operational downtime, as well as, travel time and expenses.
This is obviously a very appealing option for our customers, but it is still important to have a surveyor attend a vessel – at least once a year. The annual survey remains vital for verifying a ship’s operational condition. There is no alternative to the surveyor – we cannot only depend on a livestream. It’s also about building relationships with customers and adding to our knowledge of the vessels in our fleet – all of these are much better with the personal touch.
Nikos Roussanoglou, Hellenic Shipping News Worldwide