BIMCO: ECO Ships Worth 25% Premium

A $100-per-ton increase in bunker prices would raising the net present value of the investment in an ECO ship by $1.3 million.

A calculation by international shipping association Baltic and International Maritime Council (BIMCO) finds that buying an "ECO ship" is worth a 25 percent premium over traditional designs.

Comparing an ECO MR2-tanker with a non-ECO MR2-tanker, BIMCO found that the more economical vessel uses 15 percent less fuel, saving $2,197 per day.

The extra income means a ship-owner can afford to pay up to $8.31 million more for the ECO ship, which means about 25 percent extra when the standard vessel costs $33 million.

"Our calculations show that, should you choose to invest in an ECO MR2-tanker, you could pay up to 25% more for your vessel before settling for a non-ECO MR2-tanker, said BIMCO Chief Shipping Analyst Peter Sand.

The report explained that as bunker prices rise, the fuel-savings premium increases, making ECO ships more economically viable, with a $100-per-tonne increase in bunker prices raising the net present value of the investment by $1.3 million.

BIMCO reports that the current time-charter rates are not high enough to support investments in new vessels at current prices and that a standard ship should cost no more than $19.5 million to support the current rate of $12,750 per day, while an ECO ship should cost no more than $27.8 million.

"The current newbuilding prices reflect some optimism in the shipping industry," Sand said.

"Higher freight rates are expected to be part of not too distant future. From our calculations two results are striking; Firstly, newbuilding prices are not as closely related to the present market condition as they normally are – and secondly, ECO ships seem to be the best profitable choice for the future fleet."

The Japanese shipbuilding industry has taken on the building of ECO ships in recent years as a way of fighting lower-cost competition from Chinese and South Korean ship builders, according to The Asahi Shimbun.

After leading the industry for decades, the country was hit hard by less costly competition after the 2008 financial crisis, and company leaders say environmentally friendly vessels offer a way to compete.

"Eco-ships are prerequisites," said Masafumi Okada, managing director of Mitsui Engineering & Shipbuilding Co.

"We cannot fight without them."