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Exploring the potential of slow steaming for tankers

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Exploring the potential of slow steaming for tankers

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    1. Exploring the potential of slow steaming for tankers What the recent escalation in fuel prices has taught us

    2. Aims Understand how supply of the fleet is determined in the short run Ship speed and emissions relationship Exploring different operational decisions

    3. A new era of bunker prices

    4. Ton Mile Trader 4 4

    5. Ton Mile Trader 5 5

    6. Ton Mile Trader 6 6

    7. Ship speed and emissions “With all the technological innovation that’s happened to make ships more energy efficient, all we have to offer is…go slow?” – Representative of Saudi Arabia Maritime Affairs, IMO GHG meeting Fact is, we’re not close to moving fleet off of oil for a while Engine power is approximately related to ship speed by a third power function Reducing speed by 10%, energy consumption and CO2 are reduced by ~ 24% (IMO, 2000)

    8. Shipping industry is a fan… “You don’t even have to believe in global warming and the climate debate – it is pure good business to reduce costs through bunker savings.”–Soren Skou, CEO, Maersk Tankers Maersk Tankers managed to sail its VLCCs (very large crude carriers) at speeds of less than 10 knots on 28% of its ballast legs between 11 and 13 knots on more than 33% of its operating days. Slow steaming could mean bunker savings worth $400,000 for a VLCC sailing from the Middle East to Asia.

    9. The optimal speed: shipowner’s perspective The speed where agent is at max profits (revenue – costs for single voyage) A higher freight rate increases speed, while a higher fuel price slows it down, all else constant Other factors: fuel efficiency (k); distance (D) Route choice

    10. Understanding mindset of operator Different optimal speeds for: Laden leg: incorporating future voyages into calculation If the agent knows he has a fixture when he sets off If the agent doesn’t have a fixture Ballast leg Agent does not generate any money, so cost of leg is minimized Costs include opportunity cost of alternative daily value of ships A model is only as good as its assumptions… Conduct interviews with tanker operators

    11. Go via Suez or Cape of Hope?

    12. Questions? Sophia Parker UCL Energy Institute Sophia.parker.09@ucl.ac.uk

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