Commentary Breakbulk & Project Cargo
Aggregating fuel demand could “ help the shipping industry crack the code on scaling sustainable fuels .”
Friendly foes ?
By Carly Fields
A recent proposal from the Global Maritime Forum ( GMF ) seeks to break the logjam in scaling sustainable alternative maritime fuels and , in turn , growing the multipurpose vessel ( MPV ) fleet by aggregating demand .
When it comes to vessel emissions , MPV operators are caught between a rock and a hard place . Emissions regulations , some of which are already in force in Europe , are barreling down on a rapidly aging MPV fleet , but operators have been reluctant to order new ships , in large part due to a lack of availability of alternative maritime fuels at scale .
As of the beginning of October , there were 171 MPV newbuildings on order , equal to just 10.8 % of the existing fleet , according to a Journal of Commerce analysis . With a large number of older , less fuel-efficient vessels that need to be phased out — the global MPV fleet has an average age of 15.8 years — these newbuilds will primarily replace existing tonnage , rather than adding to it , and as a result , fleet capacity is unlikely to keep up with cargo demand .
To guarantee fuel supply , MPV operators must commit to long-term , large-scale , highcost contracts . “ Without such agreements , producers cannot raise the capital to begin fuel production , stalling the transition ,” the GMF said in an August briefing .
To break the logjam and drive increased production of alternative fuels , the international non-profit is proposing vessel operators join forces to pool their collective fuel purchasing power . Aggregating fuel demand in this manner could jumpstart production and “ help the shipping industry crack the code on scaling sustainable fuels ,” the GMF said .
Joint procurement would give operators the collective bargaining power to negotiate fair prices , while also supporting fuel production and the development of key infrastructure , the group argued . Further , governments and / or international institutions could help subsidize production by buying fuel at scale and selling it to MPV operators at a discount .
On the supply side , the GMF said fuel producers should consider accepting packages of shorter contracts , rather than 10- or 15-year deals , a practice it called “ time stacking .”
Given the myriad challenges and market pricing dynamics working against them — the average price of a newbuild 12,000-dwt MPV rose to $ 31.75 million in 2024 from $ 21 million in 2018 , according to shipbroker Toepfer Transport — MPV operators may need to set competition aside to ensure they don ’ t get left behind in the global energy transition .
email : carly . fields @ spglobal . com
The dual-fuel AAL Limassol ( pictured ) can run on traditional bunkers or methanol . AAL Shipping
22 Journal of Commerce | November 2024 www . joc . com