Industry Failing to Reduce Bunker Costs Due to Systemic Market Failures

by Ship & Bunker News Team
Monday July 13, 2015

Two systemic market failures have kept the industry from reducing its bunker costs by adopting energy efficiency measures, according to a major new report by the Global Commission on the Economy and Climate (the Commission).

"First, there is little reliable information on ship efficiency and the expected gains from different technologies and operational measures," The New Climate Economy report stated.

"Second, incentives are split between the ship owner and charterer. Though individual contracts vary, ship charterers often bear some or all of the fuel costs, while the owner is responsible for the ship’s technology and design."

The report suggests that by "fully embracing" the available efficiency measures the industry could significantly reduce its bunker consumption and make savings of as much as $200 billion annually.

The Commission noted that the organisations RightShip and Carbon War Room are already helping charterers to choose vessels with lower fuel costs by providing a public rating system of over 70,000 vessels that grades each ship on design efficiency, with Clean Shipping Index also providing a similar service.

"However, these voluntary initiatives do not yet have full industrywide influence, and they lack a single, standardised methodology for evaluating efficiency," the Commission said.

The report also noted that even ships with similar designs can operate with vastly different efficiencies, and the most efficient crude oil tanker is about one-fifth as fuel-intensive as the least efficient.

Ship & Bunker News Team
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