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Container Shipping & Trade

Container Shipping & Trade

SEA\LNG survey: strong investment case for LNG in box shipping

Thu 24 Jan 2019 by Rebecca Moore

SEA\LNG survey: strong investment case for LNG in box shipping
Peter Keller (SEA\LNG): "...for this vessel type, on this trade route, LNG as a marine fuel delivers the best return on investment on a net present value basis over a conservative 10-year horizon”

SEA\LNG has released an independent study that it says reveals a strong investment case for LNG as marine fuel in the container shipping market.
 
SEA\LNG chairman Peter Keller said “We commissioned this study from independent simulation and analytics expert Opsiana to support shipowners and operators in analysing their investment opportunities in an informed way, while simultaneously providing deeper analysis of the assumptions that go into the 2020 decision process.”
 
He continued “The study unequivocally shows that for this vessel type, on this trade route, LNG as marine fuel delivers the best return on investment on a net present value basis over a conservative 10-year horizon, with fast payback periods ranging from one to two years.”
 
The results of the study, which analyses the case of a newbuild 14,000-TEU container vessel operating on an Asia-US West Coast liner routeing and compares six fuel pricing scenarios, challenge commonly held assumptions in relation to the economic performance of LNG bunkers.
 
A statement said “The results are even more compelling given the investment scenarios are compiled and compared based upon on a route with very little voyage time in emission control areas. LNG is also proven to be the best investment across a broad spectrum of business climates from strong freight markets with elevated vessel operating speeds to weak freight markets where slow steaming is employed.”

The survey uncovered that high capex for LNG engines and fuel tanks used to be a barrier to adoption – but that this has diminished. It said recent shipyard prices demonstrate substantially smaller LNG premiums above traditional vessels. “This is due to the extensive LNG newbuilding experience and technology improvements leading to shipyard efficiency gains, as well as current market conditions favouring buyers of newbuildings,” said the survey.

The analysis is supported by SEA\LNG’s 36 member organisations, who contributed maritime expertise and current, timely background information and data from across the LNG value chain.
 
While this study focuses specifically on the investment case for LNG within a key liner trade route, the coalition is collaborating with third parties on further independent research which will analyse the investment case for different vessel types and additional liner trade routes.
 
Mr Keller said “At a time when shipowners and operators deserve factual information with which to analyse options in an informed way, there have been too many unqualified assumptions about the investment case for LNG. While there remain many unanswered questions about the choice and prices of marine fuels going into 2020, SEA\LNG will continue its commercially-focused studies to provide authoritative intelligence regarding the investment case for LNG as a marine fuel for shipowners, shipyards, ports and wider stakeholders.” 

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