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A cleaner shipping deal could save your company some green

Over the past five years, the energy efficiency of cargo and container ships has become the subject of far closer scrutiny.

Some big companies that charter them for transport, notably agricultural giant Cargill, have vowed not to use vessels that perform poorly when it comes to fuel consumption or greenhouse gas (GHG) emissions. At least, unless senior management overrides that decision.

Now, several big industry banks — notably Germany’s HSH Norbank and KfW IPEX-Bank — also are weighing in. They will use efficiency rankings, in particular the ones cooked up by Carbon War Room and data partner RightShip, to steer financing decisions.

The rating scheme ranks more than 75,000 ships on an alphabetic scale of A to G, with “A” rated vessels performing the best. 

“Eco vessels with lower fuel consumption have a cost advantage over less energy-efficient vessels,” said Carsten Wiebers, global head of maritime industries for KfW IPEX-Bank. “We see a clear trend towards a two-tier market of high and low efficiency vessels — more energy-efficient vessels have an enhanced marketability as well as a higher revenue potential for the ship owner and thus [are] a more favorable risk profile for financiers.”

Among other things, these banks and others will look at the data for evaluating credit approvals, when considering retrofit loans, and mulling transfer of ownership.

There’s a pretty simple economic reason: more energy-efficient ships last longer (an average of eight years) than those that are less efficient. Three locations, the Port Metro Vancouver, Port of Prince Rupert and Port of Barbados, offer financial incentives to owners of the most efficient fleets using their facilities.

“There are financial advantages to owning more efficient ships. For one, they are more likely to have the loan repaid,” said Victoria Stulgis, senior operation associate, shipping efficiency, for Carbon War Room. 

Stulgis said KfW IPEX-Bank and its peers believe that moving forward, cleaner ships will have a business advantage with multinational oil companies and agricultural companies that rely heavily on shipping for transportation.

That’s primarily because the company chartering a vessel is often responsible for fuel costs. Generally speaking, KfW IPEX-Bank estimates that the most efficient vessels use 30 percent less bunker fuels than similar ones that haven’t been optimized for those considerations.

Three years ago, Cargill Ocean Transportation made a decision not to use any ships that perform in the “F” or “G” range of the efficiency database. It is also part of the Sustainable Shipping Initiative with Maersk, Unilever, Akzo Noble, Wartsila and others.

“We’ve been able to use specific examples and data to show our customers, employees, suppliers and partners in general that the topic of sustainability is important to our business,” said John McCluckie, head of sales and marketing for the Cargill shipping operation, in early April. “We’ve heard from our customers that our focus on environment and community is something they really appreciate, and we’ll work together to address some of their sustainability concerns.”

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