The future price of maritime fuels

It is difficult to make predictions, particularly about the future*

Though our company name may suggest otherwise, also we find it difficult to tell what the future of maritime fuel prices will look like.

But we can make an educated prediction.

At We4Sea, we know many proven measures offering significant emissions reductions that are available today. We assist charterers and shipowners to adopt them, and monitor fuel efficiency based on solid performance data.

However, dramatic emissions reductions will require transitioning the maritime industry from using oil-based bunker fuels to alternative, non-fossil fuels such as ammonia, methanol, biomethane, or bio-oils. The common denominator: all of these fuels are not yet widely available and there is no global pricing for them (yet).

A range of such fuels are in various stages of development and demonstration; some are “drop-in” fuels compatible with existing vessels, while others require engine or vessel modifications.

For all these fuels, there are differences in the performance, cost, operational capabilities, and scalability of these potential fuel solutions and a single winner has not emerged; rather, it’s likely that the industry will rely on a variety of fuels, adding complexity to the transition.

Alternative fuel costs are expected to fall significantly after 2030 when markets develop, but if we look at production costs only, and exclude subsidies, current projections suggest they will remain more expensive than fossil-based fuels well into the future.

Source: MMM Center for Zero Carbon Shipping

As can be seen, all alternative fuels will come at a (significant) higher cost. All parties in the chain should accept to pay more for zero-carbon shipping services.

In the initial years of the transition, we expect zero-carbon fuels to be two to six times more expensive than traditional fossil fuels, depending on the fuel type.

In an earlier blog, we discussed the business case of a bulk carrier. Switching to a low carbon fuel, in this example the annual fuel costs may rise from the current 5,4 to 20 Million dollars in the next years!

Most vessels are off-the-grid in terms of performance monitoring

In our discussions with potential clients, some are anticipating this trend in fuel costs. They are investing in performance specialists which will increasingly have a seat at every management meeting, displaying real-time data on the latest trends in their fleet.

However, we see that the majority of the industry still relies on manual input from daily noon-reports, with an update frequency of 24 hours. An estimated 80% of the chartered world fleet runs effectively off-the-grid without sensors or sophisticated data collection, as mentioned in an earlier blog.

In terms of performance monitoring, you need a real-time data collection system, based on objective performance data that does not rely on manual input.  

It's high time to improve performance monitoring. Because: If not now, then when?

Advance your performance monitoring today

In order to stay competitive as an operator, now and in the future, it is essential to improve ship- and fleet efficiency.

A model-based approach such as developed by We4Sea offers data-driven solutions to improve your company's competitiveness, increase you fleet efficiency, reduce costs for fuel consumption and reduce emissions of vessels.

Interested in what we can do for you? Request a demo or a pilot on your fleet.

Trust us, you will be amazed.

* Quote by Mark Twain