October 14 ------ Amid growing global calls for achieving climate neutrality, the bulk carrier sector is seeing a downturn in average speeds, resulting in a decrease of 2.5% in carbon emissions since the beginning of 2021, a new white paper published by Veson Nautical, a London-based provider of maritime freight management solutions, has found.
CII and EEXI regulations in the face of shipping market dynamics
The white paper, titled ‘How are the CII and EEXI Regulations Influencing a Strong Bulk Market?‘, points out that the reduction in average bulk vessel speed can be attributed to the sector’s endeavors to be compliant with the International Maritime Organization’s (IMO) regulations as the ‘main driver’ of the change.
The IMO’s Carbon Intensity Indicator (CII) and the Energy Efficiency Existing Ship Index (EEXI) regulations, put into practice from January 2023, mandate stricter efficiency metrics in order to ‘greatly’ impact fleet operations. More precisely, the IMO made it obligatory for all existing ships to calculate their attained EEXI to measure the vessel’s energy consumption and initiate data collection for the CII ratings report.
As Veson’s whitepaper points out, this placed a requirement on shipowners to modify non-compliant vessels and more stringent design criteria. On the other hand, strong market conditions – where demand is robust and freight rates are sturdy – are not typically conducive to fuel efficiency where speed and capacity are some of the most vital factors in play. That said, according to Veson, with both the EU Emissions Trading Scheme (EU ETS) and the IMO’s latest measures, vessels without adequate emissions reduction technologies are often stuck in limbo—facing non-compliance and financial penalties for excessive emissions associated with higher speeds.
In response to these regulatory demands, shipowners implemented certain steps, like the engine power limitation (EPL), which directly influences vessel speeds. This has led to ‘significant’ alterations in fleet operations to meet these new benchmarks, the white paper unveiled.
Bulk carrier sector: steps closer to decarbonization
The bulk carrier market, however, has shown ‘encouraging’ trends with the paper emphasizing that, ever since the IMO first introduced its carbon indicator, estimated carbon emissions from bulk carrier vessels decreased by 5 million tons, or 2.5% compared to three years ago, despite an increase in the distance traveled and time spent underway.
“The cubic relationship between speed and required power means that higher speeds result in proportionally higher fuel consumption,” Oliver Kirkham, Valuations Analyst at Veson’s marine valuation and market intelligence provider VesselsValue, emphasized. “The consistent decrease in average speed across the fleet from 2021 is therefore a key contributory factor in the decrease in total CO2 emissions.”
As per Veson’s paper, bulkers saw an increase in ships achieving an A or B rating, as well as a reduction in vessels achieving D and E ratings from 2021-2023. Over this period, the total annual CO2 emissions peaked in 2021.
Kirkham further explained that large bulk-carrying Panamax class vessels have seen their average speed decline by 3.3% compared to 2018, despite charter rates reaching their peak in April 2024, making it an increase of 23% in comparison to peak rates from seven years ago. “Similar trends are observed in the Capesize and Supramax sectors. This suggests that a reduction of sailing speed has been a driving factor in the overall increase in operational efficiency observed amongst the bulk carrier fleet,” he added.
According to data from the shipping association BIMCO, slowing down, or slow steaming – the practice of operating transoceanic cargo ships, especially container ships, at much less than their maximum speed – has enjoyed an ‘upward trend’, with 2023 data showing that the average sailing speed globally slowed to 13.8 knots—down by 4% y/y—with projections of the number dropping by 10% by 2025.
Nonetheless, London-based consultancy Houlder remarked that slowing down poses certain risks. In a recent statement, the company commented that it is not necessarily a no- or low-cost option, nor a viable solution. The reason behind this is said to be the often-hidden extra capital expenditure (CAPEX) for the ship to address the consequences of slowing down, such as modification to the turbocharger. If engine re-dating is considered, Houlder commented that CAPEX could be ‘more substantial’.
What about EEXI?
In 2021, a working group at the IMO agreed on a set of draft guidelines to support mandatory measures implemented to cut the carbon footprint of all ships. The group, called the Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 8), gave their nod of approval for guidelines based on measures regarding EEXI and CII—two measures that had, at that time, been newly adopted. Before any revisions or modifications, however, vessel valuation provider VesselsValue—which was taken over by Veson Nautical in 2023—warned that roughly 75% of the global fleet (bulkers, tankers and containerships) would not be EEXI-compliant before the regulation entered force.
Once it was put into effect, the EEXI placed existing vessels on a defined pathway toward improving design efficiency, with the EPL offering a ‘practical and economic’ way to correct the EEXI calculation and give a compliant result, Veson’s white paper indicated. Conversely, though, installing energy-saving devices (ESDs) is believed to have had a much lesser effect on EEXI ratings.
Despite this, as per the paper, one question remained: did the EPL installation have an overall impact on fleet performance? Since the effect of EPL is to limit the maximum possible speed of a ship, with an option to override this in emergencies, Veson’s research suggests that a noticeable upward trajectory in vessel efficiency would ‘only occur if the EPL was sufficient to reduce the upper-speed limit’.
Decarbonization-led regulations: an outlook
Ever since the IMO first introduced decarbonization-leading regulations, such as the CII and EEXI, industry bodies have pointed out numerous times the gaps in the framework(s) and how these should be addressed in order for the shipping industry to meet the global climate neutrality targets.
At the MEPC80 session in July 2023, the committee initiated a review of CII, EEXI and the Ship Energy Efficiency Management Plan (SEEMP) by giving the go-ahead to a plan for such a revision. The scope of the review included experiences with the enforcement of short-term measures by Flag States and Port State Control (PSC), the CII metrics and correction factors and voyage adjustments for the indicator. The revision was panned out across three phases, with ‘data gathering’ being the top-most priority until the meeting of the MEPC82 session, held in October 2024.
At MEPC82, member countries discussed how the industry’s emissions reduction targets could be further pushed forward to achieve net-zero by 2050. Vital issues about CII were on the agenda of the October session. Member countries reassessed the framework, ‘clearly defining’ its biggest gaps. At the same time, a correspondence group was formed to report to MEPC 83 on the review of the short-term GHG reduction measures.
The committee also agreed to hold a meeting of the Intersessional Working Group on Air Pollution and Energy Efficiency (ISWG-APEE 1) in April 2025, during the week before MEPC 83, to address the identified challenges and develop draft amendments to existing instruments or create new ones.
Source: offshore-energy.biz
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