Bloomberg News

Maersk Says More Ships May Cut Speed After Its Engine Study

October 04, 2011

(Updates with second study in third paragraph.)

Oct. 4 (Bloomberg) -- A.P. Moeller-Maersk A/S, the world’s largest owner of ships that carry manufactured goods, expects more vessels to cut speeds after it completed a study showing the practice doesn’t damage engines.

Maersk vessels sustained zero damage from slowing since the Copenhagen-based owner began lowering speeds to cut fuel costs in 2007, Jan de Kat, Maersk senior technical adviser, said by phone Sept. 30. The ship owner’s operating expenses declined as a result of the practice because it placed less strain on the engines, meaning they required less maintenance, he said.

Ship owners are seeking ways to burn less fuel after prices jumped 23 percent this year. Germanischer Lloyd AG, a Hamburg- based adviser to the maritime industry, is participating in a separate study on halving speeds by 2020 for new oil tankers and commodity carriers, Martin Koepke, an analyst at Germanischer, said at a conference in Brussels today.

“If you look at average speeds, we think they will be slower,” de Kat said. “There were a lot of concerns about soot build-up, vibrations and propeller health. We addressed those concerns and found solutions.”

The most economical speed for container ships is 10 to 15 knots instead of the standard 25 knots, according to the company, which has a fleet of about 500 vessels, de Kat said.

The findings from Maersk’s research were presented at the seminar today and should show other owners that they won’t damage vessels by following the same strategy, he said. Maersk is sharing its data with engine manufacturers and other ship owners to show ways to overcome technical concerns about slower speeds, de Kat said.

Voluntary Slowdown

Maersk backs voluntary slow-steaming rather than regulation so shipowners can retain the flexibility to keep shipments on schedule, de Kat said.

The company said its findings apply to any ship propelled by a two-stroke engine, the most common type for tankers, container ships and bulk carriers. Maersk said its own fleet has reached its lower limit and won’t slow further.

The average speed of all vessels has fallen about 27 percent since July 2008, when average daily earnings were 3.6 percent higher than today, according to data from Bloomberg and Clarkson Plc, the world’s largest shipbroker. As global demand sank and fleets swelled, shipowners reduced speeds to boost earnings by saving on fuel.

Some 90 percent of world trade moves on ships, according to the Round Table of International Shipping Associations.

Nearly all of Maersk’s container ships, and now some of its tankers, have operated at 10 percent of maximum power since January 2009, according to de Kat. The company said the engines haven’t been damaged as a result and its fuel savings average about 7 percent.

Engine Suppliers

Maersk said its slow-steaming practices have the support of its engine suppliers, Waertsilae Oyj and Man Diesel & Turbo SE.

Maersk had expected mechanical problems such as loss of lubrication, fires from soot build-up, corrosion of combustion parts and increased vibration levels, de Kat said. The company found that such failures didn’t occur and made mechanical tweaks to keep its engines functioning safely at low speeds, he said. Maintenance and operating costs fell, de Kat said.

Shipping accounts for 2.7 percent of global carbon-dioxide emissions, according to the International Maritime Organization, the United Nations agency responsible for the industry. Reducing ship speeds may cut emissions by as much as 30 percent from the 2007 level, according to a 2010 report produced by the Dutch advisory company CE Delft for Brussels-based environmental organization Seas at Risk.

Seas at Risk, host of today’s seminar in Brussels, said it is preparing another report, due later this year, on the feasibility of setting ship speed limits through global treaties or European Union legislation, John Maggs, policy analyst at Seas at Risk, said by phone on Sept. 30. Seas at Risk is a member of an organization that is one of 80 non-governmental groups with non-voting consultative status in the IMO.

The IMO or EU could require ports to deny entry to ships that violate speed limits, Maggs said. The economic incentives of slower speeds are causing the idea of speed limits to gain traction, he said.

That report is being funded by the U.S.-based ClimateWorks Foundation and the German Federal Environment Agency, according to Maggs.

The cost of ship fuel climbed to $624.17 a metric ton this year, according to data compiled by Bloomberg from 25 ports worldwide.

--Editors: Claudia Carpenter, Dan Weeks

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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