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Taking stock of shipping’s energy transition – making efficient progress?

‘Efficiency’: it’s a word you will hear discussed at length today around the offices and conference calls of shipping companies and charterers around the world. It’s not just talk either: brokers across the industry are reporting record numbers of orders for ships with enhanced energy efficiency or new fuels technologies. But are these million dollar decisions made in the boardroom far from those lowest paid in our supply chain? 

Today, global shipping accounts for 90% of global trade. It is the most efficient way to transport goods across our planet. Yet, shipping is responsible for 3% of world emissions, producing 940 million tonnes of carbon dioxide each year. 

Various studies published recently focus on the pace of progress of shipping’s transition compared to the Paris 1.5°C targets. The tone of these reports vary in terms of outlook and positivity. Some praise the exponential growth of green technology development and the effective collaboration between industry stakeholders, whilst others report a bleaker picture of our shipping’s future. 

These studies agree that the scale of efforts made to date are minimal compared with the monumental effort required to meet a 1.5°C target. This requires our industry to chart a new course towards cleaner and sustainable operations. Orders for ships that use new, lower carbon fuels like hydrogen, methanol or ammonia are gathering pace, with Clarkson’s recently reporting that 44% of orders placed for ships are for those using lower carbon fuels. Today however, energy efficiency is the optimal tool of choice for ship owners looking to make an improvement. 

Energy efficiency comes in all shapes and sizes. Each solution looks to target a reduction in the amount of fuel a ship consumes to meet a desired speed. This can include technologies which harness energy from the wind, reduce fuel consumption by ejecting bubbles under a hull or simply replacing conventional lighting with more efficient LED’s. A suite of efficiency solutions can also work in harmony to make significant inroads. 

Energy efficiency makes business sense. Simply put, ship owners want to ensure that the cost of a technology is covered by the fuel (and carbon tax) savings promised and the higher charter rates possible with a lower emission vessel. Orders for solutions are at a record high across the industry, with many owners able to demonstrate a positive business case for a given solution. Air lubrication in particular is seeing a surge in orders, with some 244 orders recently reported by Tradewinds. 

Whilst energy efficiency makes sense for the owner and/ or charterer, key boardroom decisions will inevitably trickledown to yard workers and manifest as increased pressure to deliver on the installation business case. This increased pressure could directly impact safe delivery of crucial decarbonization projects. Shipyards with the responsibility of installing solutions have come under duress to deliver on time and on budget. Even the added costs of a day’s delay can quickly bring a business case into the negative. This pressure on time is soon felt by the workers tasked with installation. This leads to demands to work longer hours and take reduced breaks in order to bring a business case back on track. Even worse, tired people can often make mistakes, putting a worker and their colleagues at even greater risk of injury and harm. 

Recently in South Korea, pressures between shipyards, workers and owners reached a peak. A labour crisis is expected to peak with a shortfall of 10,000 workers this year, with many leaving the ship building industry to find safer, better paid work in other areas, particularly in consumer electronics. Tradewinds recently reported ongoing discussions between Evergreen, the world’s sixth biggest container shipping company, and the South Korean yards, to find a solution to ongoing delays. 

Rather than tackling the underlying problem, shipyards are looking further and further afield to find people to meet labour shortfalls. It was recently reported that the South Korean government had offered visas for 3,000 Nepalis to try and fill these gaps.

So what can be done to ease the pressure on shipyard workers who may fall foul of excessive work demands brought about by the rise in sometimes complex technology installations. The issue could well be managed via a two pronged approach where the overall scope of technology installations is both reduced, by virtue of technology selection and design, and shared more evenly by attracting skilled labour back to the industry. For instance:

  • Spreading the load by tackling short term labor shortages. Finding temporary labour from far flung shores will only ever be a stop gap solution to labour issues. Such issues have been highlighted by the Maritime Just Transition Task Force in the recent mapping of a maritime just transition. The ten point action plan makes recommendations which could just have a positive effect on these labour disputes. Adopting appropriate labour standards and a just transition plan as part of a decarbonisation project would help to take away pressure from shipyard workers. With a rapid increase in the number of decarbonisation projects in our industry, shipyards must adopt a just approach to increase pay, improve working conditions and reduce incidents. By doing so this will attract more skilled ‘home grown’ talent back into the yards and in doing so create a virtuous circle of labour supply.
  • Reducing the complexity of technology installation. Energy efficiency technology selection will play an important role as some technology categories, and even technology solutions within those categories, place more or less demand on the yard and the workers themselves.  Encouraging owners to select ‘plug and play’ style technologies reallocates a lot of the short term intensity of installation activity back upstream to the fabrication stage of the project lifecycle. Having modularized equipment delivered semi-finished/ finished to the yard and ready for direct installation removes a significant amount of the preparatory work and complex engineering that would have otherwise had to be completed by the yard. This approach enables the yard to focus on the value additive work they have become extremely efficient at doing. Alex Routledge, CEO Armada Technologies claimes that “plug and play energy efficiency solutions are the key to scale, commercialisation and overall environmental decarbonization. Overburdening the yards with bespoke, intricate, and time demending work that could otherwise be completed off site by specialist sub-suppliers is a surefire way to create bottlenecks in our supply and roll out”. Alex goes on to state that “The Armada Air Lubrication solution is fabricated and delivered finished to the yard, meaning the scope for the yard is reserved for more standard structural modification and cable runs and not complex integration of machinery and/ or bespoke foundation support integration necessitated by other energy efficiency technologies”. 

Today, it feels like the race to install technology and reduce emissions of the shipping industry is coming at the detriment of shipyard workers. To reverse this, greater focus needs to be given to improving pay, work conditions, training and safety to ensure the industry can retain a workforce with the skills necessary to help the industry meet its decarbonization objectives. Similarly, careful selection of plug and play energy efficiency technologies could also significantly reduce the time consuming, non-standard work currently overburdening the yards. 

Looking to the future, there is some hope for the gathering momentum in maritime energy efficiency. Our shipping industry is  rife with innovation with the public funding to bolster it. As suppliers push to bring new solutions to market, innovation in this space will continue to accelerate. It is from this position that an ever increasing marketplace for efficiency solutions will develop. At the same time, the industry must adopt a just approach in its transition to ensure those tasked with installation and operating decarbonisation solutions don’t suffer under the pressure. 

About the authors

James Helliwell – James is a young engineer in the maritime industry with a passion for decarbonising the industry through collaboration. He is currently leading several joint industry projects to bring new fuels to the next generation of ships. He has a background in developing and deploying energy efficiency solutions. He was recently the winner of the Future Maritime Leaders award from the Global Maritime Forum. 

Alex Routledge – Alex is a co-founder and CEO of Armada Technologies. A Naval architect by background with experience of shipping operations and global ship construction. Alex is focused on the development, demonstration, and large scale deployment of high impact enviro-tech to tackle the global environmental crises.

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