hese are turbulent times for our industry. Ship owners have been thrust from the relative comfort of gradual change to seismic shifts and mounting complexity – a process set in motion by the International Maritime Organization’s (IMO) 2020 sulphur cap on marine fuels. This pace is set to accelerate as the various hurdles of greenhouse gas (GHG) emissions reductions looms towards 2050 targets.

Driven by regulatory and commercial pressure, the progression towards more efficient engines and lower sulphur fuels will require increasingly sophisticated technology from bow to stern. This is especially true in the area of cylinder lubrication, where higher levels of performance will be instrumental in meeting evolving engine needs. It’s a situation ExxonMobil is prepared for – we have been here before as an industry. In a process which began 20 years ago in on-highway transportation, engine lubrication proved a critical enabler for leaps forward in engine design, fuel quality and emissions performance. Importantly, our experience proves that operators can never be too prepared.

The 2050 deadline may seem far away, but vessels being designed and commissioned today may still be on the water in 30 years, rendering the timescale rather more immediate. In this white paper, we will explore what the changes we expect over the coming decades mean for marine lubrication, and how this knowledge can help operators build resilience into their businesses ahead of IMO 2050.

Rising to the challenge of more severe operating conditions
Next generation marine engines will require next generation oils
Meeting the IMO’s 2050 GHG reduction targets requires engine builders and ship designers to deliver significant efficiency improvements. To achieve this, many operational fundamentals are changing. Next generation engines will operate at higher pressures and combustion temperatures, creating a far more severe environment for lubricating oils. Put simply, as OEMs continue to push the boundaries of engine design, there is a pressing need for cylinder lubricants to ‘do more’.

Otherwise, inadequate lubrication performance can cause insufficient engine cleanliness and protection, resulting in lubricant related deposits and engine damage, higher maintenance costs and increased engine downtime. Given the competitive nature of the shipping market, this is a risk operators can ill afford. Like developments seen in on-highway lubrication, the solution will come in the form of more advanced, higher quality oil formulations.

Cylinder lubricants of the future can, therefore, be expected to offer improved high-temperature viscosity, greater thermal stability and better detergency. Product lifecycles are also likely to shorten significantly, favouring suppliers who can invest heavily in R&D to keep pace with engine builders’ performance requirements.

Source: ExxonMobil

Adjusting to a multi-fuel reality
Following the IMO 2020 sulphur cap, and in preparation for 2050 emissions targets, vessels’ inventories will increasingly comprise a variety of fuels, including alternative fuels. Operators also need to prepare for more fuel switching as legislation evolves, further impacting the engine and cylinder oil requirements. Given the unpredictability ahead, ship owners will need engine designs that offer maximum fuel flexibility. They will also need strategies to cope with increasing complexity, placing growing emphasis on strong relationships with fuel and lubricants suppliers, as well as on lubrication solutions that meet their changing needs. Again, we can expect shorter product lifespans and a growing need for formulations to be flexible – both to changing fuel specifications and quality. Critically, cylinder oils of the future will need to control deposit levels more than ever before. Detergency and oxidation control will become increasingly important, and we may even see oils that are compatible with multiple fuel types.

Exploring real time engine oil optimization
Over the coming decades, we will also see growing on-board digitalization, accompanied by a proliferation in available performance data. Given the introduction of more complex engine and fuel technology, it will be critical to make full use of this potential. Scrape down oil analysis services such as Mobil ServSM Cylinder Condition Monitoring have already seen an increase in development due to its ability to deliver a range of critical preventative maintenance and operational benefits, from optimising cylinder oil feed rates to identifying issues with abnormal wear. Importantly, they can be tailored to the needs of each operation and supported with training to ensure maximum long-term gains.

Mobil ServSM Cylinder Condition Monitoring helps triple piston ring life
Orient Overseas Container Line (OOCL) was looking to safely extend piston ring life in a vessel’s engine, beyond the designer’s recommended 24,000 hours. ExxonMobil suggested implementing Mobil ServSM Cylinder Condition Monitoring as part of a Condition Based Overhaul (CBO) approach. An engine inspection after 53,000 hours revealed that components were free from deposits, and that wear on the piston rings was well within acceptable tolerances. This information enabled the vessel operator to extend the life of the piston rings to 72,000 hours, achieving significant savings and reducing downtime.

Preparing for tomorrow, today
As the industry charts its course towards 2050, ship owners face a journey punctuated by disruption. The increasingly severe operating conditions of next generation engines will change several important parameters. These, without optimum lubrication, risk causing significant maintenance issues – more frequent machinery replacements, increased downtime and escalating costs – with a direct impact on operators’ bottom lines. In short, it has never been more important to start planning for tomorrow, particularly if you are considering purchasing new build vessels now and running them for their full lifecycle – by which point the 2050 deadline will be upon us.

Looking to next generation lubricants for help weathering the storm
Lubrication will be a critical factor in helping newer, more efficient engines achieve optimum performance. Faced with an ever-expanding operational envelope, next generation cylinder oils will require a far greater investment in development and testing, and reformulations will become more common. In parallel, cutting-edge condition monitoring platforms will play a growing role in identifying potential issues and offering solutions to mitigate them.

Act now to stay one step ahead
Rising to the challenges outlined in this white paper will require new levels of sophistication and collaboration throughout the industry. Operators looking to safeguard the efficiency of their fleets tomorrow need to understand and prepare for the changes to come today. Lubricants manufacturers, meanwhile, should be well on their way.

Backed by over 60 years of heritage of our MobilGard™ marine lubricants, ExxonMobil is already addressing these challenges by working closely with leading engine builders and components manufacturers to keep ahead of the curve. Is your lubricant supplier doing the same? Find out what they are doing to ensure their offer supports the long-term resilience of your operation.

To find out more about ExxonMobil’s marine lubrication solutions, visit www.exxonmobil.com/en/marine.
Source: ExxonMobil

Singapore, 4 May 2020: The maritime industry can benefit from digital technologies in a way that can have an immediate and transformative impact on design, operations, business models, and environmental impact. To harness this transformational power, the world’s leading classification society DNV GL and technology company Alpha Ori Technologies (AOT) have signed a Memorandum of Understanding (MoU) in which they agree to work together to contribute to the marine industry’s ongoing digital transformation. The MOU will also see the companies work together to unlock the benefits of new digital technologies and methods, including sharing data collaboratively, and the creation of frameworks and standards, to develop new and enhance existing products and services.

The MOU is based around the installation of Alpha Ori’s SMARTShip systems on BW LPG vessels, piloting the use of digital technologies to further enhance the relationship between ship operator and class. The following areas have already been identified as potential areas for exploration:

 Data exchange for digital class services
 Possibilities for continuous assurance
 Remote operations and monitoring

“There is a tremendous opportunity for the shipping industry to improve the way it works,” says Andreas Sohmen-Pao, Chairman of BW Group and BW LPG. “For those who are interested in cost savings on fuel and maintenance, good technology is critical: even the most brilliant captain cannot see every change in the weather; even the most brilliant chief engineer cannot hear every problem in the machinery. For those who are interested in staying ahead of changing environmental legislation and the related cost of financing, automated measurements will provide an indispensable edge. And for those looking to reduce the cost and challenge of physical inspections and service – even in calmer times where there are no restrictions on mobility – digital solutions provide an answer. Smart use of these systems will gradually separate the winners from the losers, and it is encouraging to see leading players like DNV GL and AOT collaborate to accelerate this development.”

“By deploying AOT’s SMARTShip application on a vessel, surveyors can access real-time data,” says Capt. Rajesh Unni, Co-CEO of AOT. “The resulting advantage is that one can remotely access the health of a vessel and verify whether a ship is compliant with IMO 2020 and other regulatory requirements. This digital approach is reliable, efficient, and can improve savings.”

“By working together with leading technology solution providers, alongside owners and operators we can unlock broader maritime digitalisation and build on the value these new technologies generate,” said Cristina Saenz de Santa Maria, Regional Manager for South East Asia, Pacific & India at DNV GL Maritime. “At DNV GL we want to continue taking advantage of the opportunities created by digitalization to offer new services and ways of working that enhance quality, are more efficient, and improve our customers’ experiences with class. Of course, with every step towards greater digitalization we must make sure that we are continuing to ensure safe operations at sea, while protecting life, property and the environment.”

As the MOU implementation continues, the partners will look to cover many of the most important emerging areas for maritime digitalization, including remote monitoring and operations, the digital supply chain and predictive maintenance systems.

About DNV GL
Driven by our purpose of safeguarding life, property and the environment, DNV GL enables organizations to advance the safety and sustainability of their business. We provide classification, technical assurance, software and independent expert advisory services to the maritime, oil & gas and energy industries. We also provide certification services to customers across a wide range of industries. Operating in more than 100 countries, our professionals are dedicated to helping our customers make the world safer, smarter and greener.

About DNV GL – Maritime
DNV GL is the world’s leading classification society and a recognized advisor for the maritime industry. We enhance safety, quality, energy efficiency and environmental performance of the global shipping industry – across all vessel types and offshore structures. We invest heavily in research and development to find solutions, together with the industry, that address strategic, operational or regulatory challenges. For more information visit: www.dnvgl.com/maritime

Despite lower volumes being fixed in the spot market, it is key to tracking developments in the container shipping market, as it quickly responds to the changing situation and adjustments to demand and supply.

Why should I pay any attention to spot container freight rates?

Over the past two years, the container shipping industry has faced several challenges, many of which were felt on the Far East to US West Coast (USWC) route. This route has taken the biggest direct hit from the trade war that started in 2018 and which, despite the signing of the Phase One Agreement between the US and China, is not over yet. Adding to the trade war headaches were higher fuel costs due to the IMO 2020 Sulphur regulation that came into effect on 1 January 2020, and now, the coronavirus is causing volumes to drop.

Despite lower volumes being fixed in the spot market, it is key to tracking developments in the container shipping market, as it quickly responds to the changing situation and adjustments to demand and supply. On the other hand, the longer-term contract rates are key to understanding where profits in the liner
industry are being generated.

“The long-term contract rates generate the most money for carriers, but their stability hides the volatility that the market is facing. The trends in the spot market are a much better reflection of the market conditions globally, as well as on individual trade lanes, and can therefore offer important input into the decision making processes,” says Peter Sand, BIMCO’s Chief Shipping Analyst.

The volatile spot market; a better indicator than the more stable long-term contracts

The long-term contract rates have been very stable since the start of 2018 when they stood at USD 802 per forty-foot equivalent unit (FEU). They remained around that level until May 2019 when they rose to USD 974 per FEU and have since then been slowly creeping upwards to USD 1,083 per FEU on 21 April 2020 (source: Xeneta).

In the same period, the spot rates have given a better indication of what the container shipping market experienced. Here, the effects of frontloading towards the end of 2019, ahead of a tariff hike on US imports of goods from China, are clearly visible with rates quickly rising from USD 735 per FEU at the end of June 2018 to USD 2,066 per FEU in mid-November. As usual in the in the gap between the calendar new year and the Lunar New Year, spot rates remained elevated until the first quarter of 2019, after which volumes and rates fell as the stockpiling rush ended.

IMO 2020 did little to lift freight rates
The much talked about IMO2020-adjusted Bunker Adjustment Factors (BAFs) did little to lift freight rates on the Far East to US West Coast route as bunker prices rose in response to the 1 January 2020 implementation of the IMO Global Sulphur Cap. Carriers that managed to implement BAFs mainly did so by lowering the basic freight rate.

It is particularly clear on long term rates that the total cost of sending a container from the Far East to the USWC did not increase in response to the new environmental regulation. Short term freight rates experienced a small hike as we entered the new year: going from USD 870 per FEU on 31 December 2019 to USD 1,159 per FEU on 1 January 2020.

However, this was not enough to cover the additional fuel costs at that time, and in fact represents (mostly) normal seasonality with rates rising at the start of the new year, as more goods are shipped ahead of the lull in production in the far-eastern manufacturing hubs over the Lunar New Year.

“The overcapacity that is rife in the market limits carrier’s ability to pass on their additional fuel costs linked to compliance with the Sulphur Cap. Although the bunker fuel price spread, between high- and low-sulphur marine fuels, has narrowed considerably since the start of the year, this power imbalance between carriers and shippers continues to hinder higher rates,” Sand says.

Coronavirus has had little effect on freight rates, hiding the real story
Both long- and short-term rates have remained stable even as the coronavirus pandemic has forced large parts of the global economy to shut down and thereby lower demand for container shipping. Freight rates have been largely unaffected due to the many sailings that carriers have blanked, resulting in large scale capacity reductions on many of the world’s major container trades.

Carriers have chosen a range of measures to lower capacity, including the idling of ships, and blanking of sailings, which has driven the idle containership fleet to record highs in the past few months. On top of this, some carriers have chosen to slow down their ships or avoid expensive canal tolls. A few containerships have chosen the longer route around the Cape of Good Hope in South Africa, rather than the shorter and more expensive route through the Suez Canal. The falling oil price has resulted in lower bunker fuel prices, lowering the cost of sailing the longer distance to below that of the Canal tolls.

These measures also reduce the available capacity and artificially hold up freight rates.

“While the cost of freight per container has remained stable, the lower volumes and fewer sailings mean that although carriers can reduce some losses by blanking sailings, the disastrous effect that the coronavirus is having on their bottom lines is masked by the stable freight rates for the time being,” says Sand.

For more information about the container shipping market, BIMCO members can access Xeneta’s monthly container market report here, on the member’s only market reports page.

For more insight on the container shipping market, join Xeneta’s “Coronavirus crises and the trade war – port-pandemic world”.
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