Maersk dual-fuel ships are a necessary risk

Maersk has announced the redesigning of its ocean network in West & Central Asia that connects countries including India, Bangladesh, Sri Lanka, Pakistan, UAE and Saudi Arabia to the world.

The decision announced on Tuesday by Maersk to order eight 16,000 TEU container vessels with engines capable of using both low sulphur fuel oil and methanol was remarkable. It highlights one of the most important problems now facing all transport providers, one that cannot be avoided.   

Maersk, by choosing methanol as one of the fuel options for the vessels, has taken a risk. Methanol is not the most obvious non-hydrocarbon fuel option, with most production at present using methane as a feed-stock or some form of hydrocarbon such as coal. What Maersk has been obliged to do is establish its own fuel production network, with Maersk announcing on 19th August that it had agreed with the energy company European Energy, to establish a “new Danish facility to produce the approx. 10.000 tonnes of carbon-neutral e-methanol that Maersk’s first vessel with the ability to operate on green e-methanol will consume annually”.

The reasoning behind this was articulated by Robert Maersk Uggla, AP Moller Holdings CEO, who said that Maersk aimed to solve the issue of which fuel to use “by placing a significant order for ships ready to run on green methanol, thus creating demand for it.” This is very bold, with other shipping lines, such as NYK, already working on the adoption of ammonia as an alternative fuel. It implies a possibility of fragmentation in the bunker fuel sector.

Then there is the question of cost. Maersk themselves say that the additional capital cost of the ‘dual fuel’ vessels will be “in the range of 10-15%”, which is a significant impact on the cost base in a sector that until recently was very cost-sensitive.

Clearly, Maersk’s decision to buy these vessels is driven by a visionary desire to create a ‘de-carbonised’ shipping sector, although it is worth noting that the company also said that the policy was “part of Maersk’s ongoing collaboration with customers, corporate sustainability leaders including Amazon, Disney, H&M Group, HP Inc., Levi Strauss & Co., Microsoft, Novo Nordisk, The Procter and Gamble Company, PUMA, Schneider Electric, Signify, Syngenta and Unilever have committed to actively use and scale zero-carbon solutions for their ocean transport, with many more expected to follow”, suggesting that customers may be willing to pay higher prices for such services. Even so, the decision is a risk, although perhaps one that all transport providers may be faced with sooner or later.

Source: Transport Intelligence, August 26, 2021

Author: Thomas Cullen