The International Maritime Organization (IMO) low sulfur emissions regulation is all set to come to force starting 2020, with container lines bracing themselves for a scenario that would have the single largest bearing on its margins going forward. Currently, ships are allowed to burn bunker oil that has a 3.5% sulfur cap, which would be reduced to 0.5% next year - altering the fuel supply landscape and ship engine fundamentals for good.
In light of this, two options could be zeroed in - one is fitting sulfur scrubbers to the ship’s exhaust stream and the other is building a vessel engine that could run on bunker fuels with far lesser sulfur content. Though the former sounds like a quick-fix solution as scrubbers would allow ships to continue burning heavy sulfur bunker fuel, it does not come cheap, setting container lines back by tens of millions of dollars in the process.
The ripple of carbon footprint regulations and treaties like the Paris Accord have reached different verticals, with OEM major Renault Group announcing plans to cut its carbon emissions 6% by 2022 - which would not be possible without tweaking its maritime supply chain that accounts for 60% of its parts’ movement.
The spotlight fell on Neoline, a maritime startup that Renault has chosen to partner with for help transitioning towards cleaner ocean transport. Neoline is building two experimental roll-on/roll-off car carriers that use sails as their main propulsion system, which the company insists would reduce fuel consumption by at least 80%.
“Fuel consumption is 50% of the operating cost right now. And with the new regulations on sulfur in 2020, they say that fuel prices will rise by about 50%, which means the freight costs will also increase with it,” said Jean Zanuttini, CEO of Neoline. “Our alternative will give us a low carbon footprint, low fuel consumption, and also the capability to be independent of fuel prices - giving cost predictability to our shippers.”
For now, Neoline is happy working in the ro-ro shipping vertical and is not looking to venture into the larger container line market, which Zanuttini believes is “more difficult and highly industrialized for a startup to come in and rise up.” Though ro-ro vessels are much smaller in size compared to container lines, the freight could be horizontally "rolled in and rolled off" unlike vertical loading as is the case with the latter.
Ro-ro vessels travel at the speed of 15 knots, but Zanuttini explained that Neoline does it at 11 knots on average, as the 25% reduction in speed would end up saving half of the energy spent by ships. “We take out most of the fuel costs and invest it in the capital expenditure at the beginning,” he said. “Our ships are a bit smaller with a length of 136 meters while the ships on the transatlantic are usually 200 meters long. But we are specialized in carrying oversized cargo which is not easy to carry on other vessels - our main garage on the boat reaches a height of 9.8 meters.”
Neoline’s vessel comes equipped with a 4,200 square-meter sail which is the primary propulsion system and a 4,000 kW engine that acts as auxiliary propulsion. Zanuttini mentioned that the auxiliary propulsion would allow the vessel to reach a maximum speed of 14 knots if the need arises.
“If we don’t find the wind, which is rare but can happen, then we can patch up with the engine. It is interesting because we can keep up with our ETA, and can have the same functionality like any other ship because there is a difference between our maximum engine speed and commercial speed,” said Zanuttini.
Keeping up the promise of reducing carbon emissions, the engine on the vessel uses marine gasoil (MGO) instead of the usual marine heavy crude oil. “Marine gasoil coupled with SCR reduces nitrogen oxide at the exhaust, making our fuel far less polluting compared to heavy crude oil,” said Zanuttini. Neoline is also working on reusing discarded car batteries, optimizing them to act as a supplement to the generators on board.
Zanuttini was optimistic about Neoline’s first pilot run to commence by early 2021, provided the financing objectives are met by June 2019. “Our service would be open to any shipper. We have great loading rates from France to the U.S., but what we lack now is freight moving from the U.S. to Europe, and in that regard, Neoline would welcome any interested shipper to work with us on this new niche that we are building,” he said.