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Green revolution in shipping. 6.5 thousand alternative fuel ships in 2025

By Marek Grzybowski

The Clarksons Green Technology Tracker study from May indicates that shipowners have committed a significant amount of tonnage investment to low-carbon technologies. Ships with engines adapted to use two or three types of fuel are increasingly ordered by operators and now account for 48% of the total order backlog. This means that operators will launch 843 ships with LNG installations on the market in the near future, according to Clarksons experts.

Ships with LNG systems are still popular with operators. Hence their large share in order portfolios. Shipowners gained experience in their operation, shipyards in the production of ships with gas-powered engines, and ports mastered the procedures for bunkering them from land and water.

A large fleet of ships with LNG systems is already in operation, including several ferries built at Remontowa Shipbuilding for a recipient from Canada and electric ships for Norway, Finland and Iceland from CRIST and Remontowa Shipbuilding. There are 362 ships adapted to use LNG in the seas and oceans.

Clarksons experts estimate that about 5 thousand. various types of technologies to save fuel and reduce emissions of harmful substances have been installed. On the other hand, 48% of the order book includes ships with systems using alternative fuels, with 191 ships equipped with engines adapted to burn ammonia in their contracts.

In Green Technology Tracker Clarksons calculates that by 2025 the share of ships with engines using alternative fuels will reach 6.5%. Today, it is estimated that a total of 5.5% of the merchant fleet is powered by alternative fuels, while in 2017 only about 2.3% of merchant ships used alternative fuels in their engines. It was mainly LNG.

LNG systems on ships dominate
“LNG is characterized by a tried and tested technology, a well-functioning supply chain and interchangeability in other applications,” emphasizes Nicola Contessi, a research fellow at the York Center for Asian Research in Toronto, specializing in shipping and transport, in Maritime Executive. He points out that the reduction of LNG imports by EU countries from Russia has strengthened these benefits.

Nicola Contessi has calculated that LNG fuels 93% of the active fleet using alternative fuel engines and 57.5% of the contracted fleet. As an example of the increase in demand for green fuels, he cites the sale of a bunker in Rotterdam in the second quarter of 2023. Indeed, the port of Rotterdam has seen an increase in demand for green fuels.

The percentage share of sales in Rotterdam of alternative fuel bunkers (including all bio-mixtures, LNG and methanol) increased by 10% in the quarter, compared to 7% in the first quarter. Demand for bunkering biofuels increased significantly in the second quarter of this year, after a drop in demand recorded in the first quarter.

S&P Global notes that “biofuels have become a popular choice among shipowners looking to decarbonise [ships in operation – MG], providing a drop-in solution that requires little or no ship modernization.”

Methanol, ammonia, hydrogen
Methanol is another fuel fleet operators rely on. The fuel can be used after the ship is rebuilt, or even better, when the installation is installed during construction. The solution is not as common as ships with LNG systems.

A limitation in the dissemination of methanol in ship propulsion systems is the poor adaptation of ports to handle this type of vessel. Ships capable of safely bunkering are not widely available at destination ports. The infrastructure that allows methanol to be bunkered from the quay is also not very developed.
Ammonia as a marine fuel still raises numerous concerns and objections. This is due to the fact that bunkering technology has not been extensively practiced and mastered. Therefore, the conditions and procedures for safety and environmental protection are not known.
Hydrogen on large ships is still the melody of the future. We already have the first solutions behind us. Hydrogen-powered ships have been introduced by leading technological countries, but these are still experiments at taxpayers’ expense.

Not (new) technologies
The green revolution on ships is not limited to the search for alternative fuels. Shipowners are looking for ways to save fuel consumption, often introducing several technical improvements.
Clarksons estimates that Energy Saving Technology (EST) has already been applied to more than 6,250 ships, representing 27.3% of the fleet (by deadweight).
The most commonly used are various types of propeller nozzles (>2000), modernized rudders (>1600), Flettner rotors (>20), rigid sails and spinnakers (>12), air lubrication systems for the hull (>350).
Not very new technology, but still not always common. Today, they are used more and more often, when shipowners have chosen to save fuel. Since the “slow steaming” system has already exhausted its possibilities, the time has come to dig up proven technical solutions and introduce new fuels.
The combination of many technical solutions is also a challenge for design offices as well as production and repair shipyards. The course for green ships is already set and the movement to introduce environmentally friendly solutions is accelerating. The green revolution in shipping is a fact and is gaining momentum.

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McKinsey: The economic potential of generative AI

Generative AI is poised to unleash the next wave of productivity. We take a first look at where business value could accrue and the potential impacts on the workforce.

AI has permeated our lives incrementally, through everything from the tech powering our smartphones to autonomous-driving features on cars to the tools retailers use to surprise and delight consumers. As a result, its progress has been almost imperceptible. Clear milestones, such as when AlphaGo, an AI-based program developed by DeepMind, defeated a world champion Go player in 2016, were celebrated but then quickly faded from the public’s consciousness.

 

Generative AI applications such as ChatGPT, GitHub Copilot, Stable Diffusion, and others have captured the imagination of people around the world in a way AlphaGo did not, thanks to their broad utility—almost anyone can use them to communicate and create—and preternatural ability to have a conversation with a user. The latest generative AI applications can perform a range of routine tasks, such as the reorganization and classification of data. But it is their ability to write text, compose music, and create digital art that has garnered headlines and persuaded consumers and households to experiment on their own. As a result, a broader set of stakeholders are grappling with generative AI’s impact on business and society but without much context to help them make sense of it.

The speed at which generative AI technology is developing isn’t making this task any easier. ChatGPT was released in November 2022. Four months later, OpenAI released a new large language model, or LLM, called GPT-4 with markedly improved capabilities.1 Similarly, by May 2023, Anthropic’s generative AI, Claude, was able to process 100,000 tokens of text, equal to about 75,000 words in a minute—the length of the average novel—compared with roughly 9,000 tokens when it was introduced in March 2023.2 And in May 2023, Google announced several new features powered by generative AI, including Search Generative Experience and a new LLM called PaLM 2 that will power its Bard chatbot, among other Google products.3

To grasp what lies ahead requires an understanding of the breakthroughs that have enabled the rise of generative AI, which were decades in the making. For the purposes of this report, we define generative AI as applications typically built using foundation models. These models contain expansive artificial neural networks inspired by the billions of neurons connected in the human brain. Foundation models are part of what is called deep learning, a term that alludes to the many deep layers within neural networks. Deep learning has powered many of the recent advances in AI, but the foundation models powering generative AI applications are a step-change evolution within deep learning. Unlike previous deep learning models, they can process extremely large and varied sets of unstructured data and perform more than one task.

More in the McKinsey Report: The economic potential of generative AI

Authors
Michael Chui
Eric Hazan
Roger Roberts
Alex Singla
Kate Smaje
Alex Sukharevsky
Lareina Yee
Rodney Zemmel

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ESG – trend or necessity? Shipping, ports, offshore and shipyards under the pressure of innovators

By Marek Grzybowski

An ESG guidance for shipping was published this summer,. The implementation of an ESG strategy in shipping has implications throughout the ship supply and operation chain, from design through manufacturing, operation and port service.
The guide, developed jointly by Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping experts together with Boston Consulting Group analysts, is intended to help companies operating in maritime transport implement comprehensive ESG (Environmental, Social and Governance) strategies. The essence of ESG was explained during a special webinar by Tanja Dalgaard, Chief Strategy & Operations Officer, Anne Katrine Bjerregaard Head of Strategy & Sustainability Office, Mikkel Krogsgaard Managing Director & Partner, BCG Peter Jameson Partner, BCG.
– In the world of maritime business, as in other industries, ESG reporting covers topics such as recycling, greenhouse gas emissions, other types of air pollution, environmental impact, business ethics, employee health and safety, as well as safety management and prevention accidents, explain DNV experts.
Remi Eriksen, Group President and CEO, DNV and Knut Ørbeck-Nilssen, CEO of DNV GL, pointed out the need for a comprehensive approach to the implementation of the ESG strategy during the presentation of the “Energy Transition Outlook 2023” and “Maritime safety trends” reports during Nor Shipping 2023.

ESG sets standards
According to DNV, ESG reports and sustainability reports are intended to reveal the achievement of parameters in all three areas that are important for the functioning of a modern company. Reporting these parameters is intended to meet the expectations of stakeholders cooperating with the partner.
It’s about being transparent in assessing corporate responsibility. The report makes it possible to publish information that a business partner has rules, initiatives and strategies for managing under risk conditions and the ability to take advantage of the opportunities offered by management that takes into account ESG requirements.
In maritime industries, reports are published by leading companies operating both in the shipbuilding industry and maritime transport, in ports and offshore, in fishing and tourism, as well as companies operating in the vicinity of these industries.

ESG in ports

“Cargo operators recognize the role of ports [in implementing the ESG strategy] and will favor those who act according to the requirements,” noted Mark Nailer, head of the maritime division at Midstream in an article for Hellenic’s “Shipping News Worldwide”. In his opinion, “the adverse impact of the global port and terminal sector on [substances and CO2 – MG] emissions and local communities is significant.
Emissions and air pollution account for a large part of this impact, while the safety of workers [ports – MG] is another major concern. It is estimated that reducing port emissions could directly improve the health of more than 3.5 billion people by reducing air and water pollution – and indirectly improve health and well-being by helping to mitigate climate change, Nailer points to the UNCTAD report.

ESG in the shipbuilding industry
In many cases, it has already been said that shipyards should be hybrid, i.e. ensuring production and repairs taking into account environmental, social and ethical requirements.
One of the leading shipyards in implementing ESG is the Hyundai Heavy Industries Group (HHI). Already at the beginning of 2021, it adopted an ESG strategy. Within the five companies operating in the HHI Group, committees have been established for environmental protection, shaping social responsibility and implementing ethical management practices. The five participating companies are: Hyundai Mipo Dockyard Co., Hyundai Construction Equipment Co., Hyundai Electric Energy Systems Co., Hyundai Heavy Industries Co. and Hyundai Samho Heavy Industries Co.

Why (not only) Shipping Companies Don’t Have an ESG Plan
Increasingly, however, many shippers and logistics companies, as well as final recipients, demand information about the comprehensive carbon footprint related to the transport of goods between ports, and often from the producer to the consumer. High demands are placed on sea tourism and ferry operators. This is increasingly required of fish and seafood producers and processors as well as logisticians operating in this industry.
Offshore oil and gas operators and wind farm builders pay attention to sustainable development. It can be expected that the ESG strategy will soon become the flagship of every company that intends to operate in the maritime industry. On the other hand, the ESG standard will determine the level of involvement of shipowners and ports, offshore operators and fish producers in the sustainable development of our globe.

More: BSSC

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Organizations today face ten significant shifts. Here’s what to do about them

 

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Business leaders around the world are currently addressing not only economic volatility, geopolitical instability, and the lingering effects of the COVID-19 pandemic but also a range of organizational shifts that have significant implications for structures, processes, and people. The shifts include complex questions about how to organize for speed to shore up resilience, find the right balance between in-person and remote work models, address employees’ declining mental health,1 and build new institutional capabilities at a time of rapid technological change, among others.

To help CEOs and their leadership teams consider such questions, we have launched McKinsey’s The State of Organizations 2023 report. The report is an account of an ongoing research initiative that seeks both to pinpoint the most important shifts that organizations are grappling with and to provide some ideas and suggestions about how to approach them.

As part of the research, we conducted a survey of more than 2,500 business leaders around the world.2 Only half say their organizations are well prepared to anticipate and react to external shocks, and two-thirds see their organizations as overly complex and inefficient. We also spoke with business leaders to gather inspiring stories and best practices from beacons—organizations that have been able to adapt to recent economic and operational disruptions and forge new paths. Finally, we developed four points to consider in addressing the ten organizational shifts, leveraging the survey results, the quantitative research with executives, and insights from our work in the field and through existing McKinsey research.

The ten most significant shifts facing organizations today

Through the State of Organizations Survey, conversations with CEOs and their teams, and the findings of recent McKinsey research, we have identified ten of the most important organizational shifts that businesses need to address today. These shifts are both challenging and harbingers of opportunity, depending on how organizations address them.

1. Increasing speed, strengthening resilience.

2. ‘True hybrid’: The new balance of in-person and remote work.

3. Making way for applied AI

More: Full Report (92 pages)

Authors:  Patrick GuggenbergerDana MaorMichael Park, and Patrick Simon

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The Asian shipbuilding industry is going full speed ahead

 

By Marek Grzybowski

The shipbuilding industry is booming and shipowners are fighting for places on the docks. Unfortunately, but in Asian shipyards. European shipyards save themselves by orders for passenger ships, specialized ships and ships. Companies from the shipyard’s environment save themselves by selling the latest equipment and technologies to Asian shipyards.
– Demand for innovative ships is growing and it looks like the reopening of decommissioned shipyards, especially in China – announces Mohamed Rabie of SnP Broker Intermodal in the latest report.
Prices of ordered ships and on the secondary market remain high. Prices for new LNG carriers in June 2023 were around USD 218 million. Indicative prices for 5-year-old used LNG tankers in June 2023 were estimated at USD 200 million, Banchero Costa reports. This is important information for Poland, because we are planning to build an FSRU terminal in Gdańsk. And some terminals are built on the basis of modernized units purchased on the secondary market.
For comparison, Newcastlemax bulk carriers in June 2023 were contracted for approximately USD 66.5 million, and USD 60 million for the Standard Capesize. In June 2023, 5-year-old Newcastlemax ships cost USD 50 million, and Standard Capesize around USD 46.3 million.

High prices for new and used ships
In June this year, the shipyards demanded about USD 130 million for the VLCC vessel, USD 83 million for the Suezmax and USD 67.1 million for the Aframax for the new oil tankers. For the 5-year-old tanker, prices in June 2023 were estimated at around USD 97.6 million for VLCC, USD 69.2 million for Suezmax and around USD 64.2 million for Aframax.
Product prices remained stable. For example, in June this year, the MR2 tanker was contracted for approximately USD 46.6 million. On the other hand, the 5-year-old MR2 ship was offered in June 2023 for approximately USD 42.5 million, according to Banchero Costa experts in the latest reports.
– During the first 6 months of 2023, a total of 719 ships were contracted, of which 24.2% were bulk carriers, 23.09% were tankers (oil and products), 9.46% were containers, 5.01% were LPG tankers, and 4.31% LNG carriers, according to the latest Intermodal report.

The shipyard’s production capacity is increasing
– The shipyard’s production capacity is expected to be increased by 1.5 million CGT after the reopening of 12 shipyards in China. Thus, the 299 active shipyards in 2023 represent a total production capacity of 54 million CGT, believes Chara Georgousi.
Utilization of the 80 leading Asian shipyards is projected to increase to 83% in 2023 from 65% in 2022, while in 2024 it could increase to 91%. According to her, “Leading shipyards in South Korea and China are ahead of shipyards in Japan and other countries.”
The procurement structure for environmentally friendly ships is also changing. The number of units ordered with dual-fuel engines is increasing, the number of orders for power plants with scrubbers (washers) is decreasing. This is good news for European manufacturers of innovative engines, scrubbers and ship propulsion systems powered by batteries or LNG.
– In the first five months of 2023, 20% of the ordered ships will be able to use alternative fuels – says Antonis Tsimplakis – columnist for “Naftemporiki”. 6% of them will be fueled with gas from LNG tanks, 9% with methanol, and only 5% with LPG.

Alternative fuel course
Market analysis conducted by Intermodal shows that from 2022, most new ships ordered are equipped with some kind of emission reduction technology or with “off-the-shelf” technologies for the use of alternative fuels. According to Intermodal, this trend will continue in the coming years.
Today, in the case of the active fleet, approximately 0.54% of ships use alternative fuels, while in the shipyard order book the percentage that will use alternative fuels reaches 14.69%.
– Currently, 911 ships use LNG as fuel, 182 ships use LPG, 127 ships use methanol and only 27 ships use hydrogen. Of the current order backlog, 10.31% of ships will be powered by LNG, 2.03% by methanol, 1.91% by LPG and just 0.42% by hydrogen, according to Tsimplakis.

China is the leader – orders increased by 67.7%
Published by the China Association of the National Shipbuilding Industry (CANSI) Statistics after the first half of this year. reported that there was an increase in the number of new contracts in Chinese shipyards by 67.7%. Among them, export orders account for 92.8% of contracts.
Orders for the construction of new ships rose sharply this year. Container ships and LNG carriers still dominate the docks of Chinese shipyards. More oil and product tanker contracts have emerged.
– In the first half of the year, Chinese shipyard workers delivered ships with a carrying capacity of 21.13 million tons, which means an increase of 14.2% year on year – reports CANSI.
In the first six months, China’s shipbuilding output accounted for 49.6% of world output. However, the portfolio for new orders for shipbuilding accounted for 72.6% of global contracts, which corresponded to 53.2% of the deadweight capacity in the global market.

More: BSSC