Smoke & mirrors
EEXI & CII++ policies being like ‘smoke and mirrors’ is a sentiment we’ve been hearing a lot recently.
Loosely translated, this old British phrase means: something intended to disguise or draw attention away from an often embarrassing or unpleasant issue.
We understand this comparison: As it stands right now, the penalty for ‘non-compliance’ (D or E rated) is little more than an administration task – that may well appeal to owners not looking to hold assets for much longer or suspicious of where policy direction may move next. Doing the minimum for now may feel like a tempting option. Industry media is awash with speculation about what might happen to those not landing a C or above rating:
“Charterers may well decide that they will only charter ships rated A-C” …
stonefort comment: it is far from certain that such policy would make financial sense, even if the rating was visible pre-fixture.
“Ships rated at D or E may become commercially unviable” …
stonefort comment: the operative and largely unhelpful word here is ‘may’.
“Non-compliant vessels will end up being scrapped” …
stonefort comment: for a number of reasons, this is far from being certain.
“Ships rated D and E will be forced to take corrective actions which may involve significant cost to the shipowner” …
stonefort comment: may also not involve significant costs…
“The market will probably generate its own penalties, for example D or E rated ships not being considered favourably when fixing the vessels or, indeed, attracting lower rates” …
stonefort comment: wholly price dependent / plenty of plausible scenarios that may dictate otherwise.
However, whatever your opinion is on EEXI and CII, using less fuel to move the same amount of goods from A to B, in the same time, is only good for everyone. Owners with more fuel-efficient tonnage than their market competitors have greater commercial leverage when fixing out on longer terms. Those with same vessels on spot trade have comparatively lower operating costs and therefore greater margin. We have now witnessed one hardware technology that has been independently verified to prove between 5-10% Net savings, and this is Silverstream Technologies’ Air Lubrication System (ALS). We are not the only ones to recognise this. The order list from shrewd owners only continues to surge – currently above 100 contracts (for newbuild and retrofit). Our advice would be to join this group, plan the next opportunity for installation and look forward to reduced costs, emissions & improved ratings (without slowing down…) in the future. As always, please do reach out to discuss or find out more.