Green maritime transport calls for a holistic approach
The shipping industry must look beyond zero carbon fuels to decarbonize the sector. ‘Circularity’ and ‘servitisation’ could be the new buzzwords to watch out for, according to Danish Ship Finance (DSF).
In its latest review of the shipping market, DSF proposes the idea of consolidated fleets of super standardized vessels as an attractive business case for circular maintenance where spare parts can be refurbished, reused and recycled multiple times to reduce costs and reduce the environmental footprint.
The servitisation model – which DSF defines as the place where OEMs expand their activity to include the use of their equipment instead of selling it – allows optimal data extraction from the standardized vessel fleet, which allows the equipment manufacturer to improve performance and optimize the vessel.
DSF recognizes that circular maintenance is not a new concept, with some vehicle and industrial plant manufacturers using it to refurbish, reuse and recycle their used products and parts. But combine this circularity with the concept of a standardized fleet and vessels can be provided as a service at an all-inclusive fixed price per minute with circular maintenance reducing costs. With an eye on the distant horizon, DSF notes that all of a ship’s elements, maintenance and demolition could be designed for circularity, with all materials and components designed to be recycled, remanufactured and reused.
The concept of vessel as a service opens up new levers of value for operators
But this level of change will not happen overnight. “This type of change will require not only shipowners, but also equipment manufacturers to change their market model to one that sells ‘traffic time’ rather than a product,” said DSF. Currently, most vessels are operated under a business model where “the asset guides decision making”, he added. Therefore, operational renovations and upgrades are only done if they deliver immediate savings without requiring long ROI investments. An asset play model seeks to take advantage of short-term market imbalances, while the servitization model proposed by DSF seeks to improve the long-term efficiency of assets. “The servitization model allows for investments with long payback periods that can even extend to the next lifetime,” said DSF.
Another advantage of the servitization model is that the risk of stranded assets is reduced, as equipment manufacturers can improve the performance of a vessel when needed, provided these improvements do not increase the cost of its. use.
DSF extends this model even further, suggesting that vessel ownership could be aggregated across fewer entities, even across vessel segments. “Ship operations may remain fragmented but over time may consolidate in accordance with the application of new technologies that can reduce margins and increase competition,” he said.
The concept of vessel as a service opens up new levers of value for operators. While traditional players generate income only through freight rates, those using this new business model can also generate income by trading carbon-free fuels and vessel operations data. “Traditional players may find it difficult to compete on costs, as new players can reduce costs through circular maintenance and economies of scale while providing additional services through the advanced vessel connectivity system that has been developed. scaled-up centralized ownership base, ”DSF said.
Relying on the proposed centralized ownership model, DSF asks if there is a potential in a scenario where individual operators reserve the transport of goods on vessels shared between several in order to optimize the use of capacity and reduce their environmental footprint. “Experience from other industries (the telecommunications industry, for example) suggests that structural separation can help create more value if shared infrastructure allows for massive scale-up across a larger customer base. “, he indicates.
The success of alliances and pools already hints at the potential here. This next step will support the ability of asset owners to scale and achieve economies of scale through standardization, enabling them to establish a critical asset base that enables major investments in new technologies. digital.
“Initial investments will be aimed at increasing operational efficiency and routing (to reduce fuel consumption), but the focus will soon be on moving to adjacent areas to establish an ecosystem based on a platform that orchestrates data-driven insights across supply chains to optimize value creation and develop new revenue streams, ”said DSF.
The overall goal here is to create a ‘fully integrated transport system as a public transport service that includes a digital platform, access to the latest freight mobility offers, incentives (e.g. cost reduced mobility, zero carbon mobility, transparency) and measurement tools (including CO2 to ensure that all transport services are operating at full efficiency ”.
DSF draws on the experience of other industries to support its theory that a service model powered by data from the exploitation of the standardized asset base could become at least as valuable as the exploitation of assets. herself. “The ship-as-a-service model will allow gamers to focus on monetizing data throughout the ship lifecycle through recurring revenue and paid upgrades, which could potentially include related ones. to the autonomous capabilities of ships, ”said DSF. “In today’s market, the lack of an established ecosystem often results in island solutions that are difficult to scale between a few players, which end up generating much less value than they would with a scale solution. “
Source: The Baltic briefing