The number of new vessels on order has fallen due to ship owners’ uncertainty over which alternative technology to use at a time when they face new pressure to switch to less-polluting fuels, Bloomberg reported on 8 January.
In 2018, the International Maritime Organization set a target to cut shipping’s greenhouse gas emissions in half by 2050 from 2008 levels. The deadline had prompted some ship owners to hold off on new orders until it became clearer which new fuels would be the best option, Bloomberg said.
The IMO had also introduced rules at the start of 2020 that banned marine fuel containing more than 0.5% sulphur for ships not fitted with pollution-reducing scrubbers.
Alternative fuel options available to ship owners include ammonia, hydrogen, biofuels and electrification. However, most were still in the trial stage and would not be scalable for at least a decade, according to Bloomberg, so opting for a technology that didn’t take off could prove costly.
Orders had fallen almost 10% in 2019 and by more than 50% in 2020 – the lowest level in at least two decades, according to IHS Markit data.
“People aren’t ordering ships because we don’t know what to fuel them with,” Morten Aarup, head of market research at Danish vessel owner D/S Norden A/S, was quoted as saying at a recent panel discussion on shipping trends.
Aarup had urged engineers and ship designers to “come together urgently” to find the best solution.
Jayendu Krishna, a director at Drewry Maritime Services, agreed that the new targets had contributed to the drop in new vessel orders. While several alternative fuel projects had begun, it was unclear which ones would be scalable, he was quoted as saying.
Ship owners who failed to switch to new, cleaner vessels could find themselves at a competitive disadvantage as more customers demanded environmentally-friendly transport, according to Bloomberg.
About 12.3% of vessels on order had alternative-fuel propulsion, compared with just 0.6% of the current global fleet, according to data from Drewry.