Industry Insight: Three Ways to Increase Efficiencies and Minimize Costs for Future Success

by Tim Schweikert, VP, GE Marine
Friday October 16, 2015

The marine industry has recently been forced to face some serious challenges. While dealing with fluctuations in oil prices, operators have also had to tackle increasingly stringent environmental regulations and reduced emissions targets. In my last post, I discussed three ways in which the marine industry can increase efficiency, which can help to reduce both costs and emissions. Here I discuss three further ways to address the current challenges the industry is facing.

1. Efficiently meeting the requirements of more stringent environmental regulations

The context of environmental regulations is increasingly stringent: we are seeing Emission Control Area (ECA) zones emerge with very strict requirements for emissions. These regulations are increasingly widespread and are part of the 'new normal' for the marine sector.

As such, a whole range of innovations is needed here. For example, new engine technology eliminates the need for a selective catalytic reduction system (SCR) for exhaust gas after-treatment and for storing or using urea aboard a vessel. As a result it preserves valuable cargo and tank space and reduces emissions by an estimated 70 percent. 

A new application of a proven gas turbine-based power and propulsion system that's been used in cruise ships—the Combined Gas turbine Electric and Steam (COGES) system—addresses the same issues of environmental regulatory compliance. This compact, lightweight combined cycle power plant provides power for electric drive propulsion systems, leaves more room for cargo, and meets IMO Tier III and US EPA Tier 4 regulations today, with no exhaust treatment or methane slip.  While methane slip is not regulated today, many operators are concerned that it will be in the future, since methane is 21 times as damaging as CO2 from a greenhouse gas perspective.

As increasing efficiencies becomes ever more important in today's volatile market, vessel operators all over the world must look at every aspect of their operating model to ensure these are met to drive long term profitability.

2. A new approach to financing to enable projects and strengthen operators' financial capabilities

Instead of taking on the full risk of vessel design and development costs themselves at the beginning of a project, operators are partnering with strategic suppliers to share the capital outlays needed to construct ships. To support vessel operators in this volatile market, a similar approach can also be taken beyond the initial construction of the ship to ensure that vessel operators have cash flexibility for operating costs and strengthened long-term financial capability beyond construction.

This new approach to financing, both at the initial construction phase and later during operations, will enable the project, as well as strengthen operators' financial capabilities, to help deliver a more cost-effective marine future.

3. More innovative manufacturing techniques, cutting downtime in manufacturing docks

It is not just system design that can reduce costs; the actual implementation time of a new system is also critical. For example, many modular offshore systems are now pre-assembled at the factory to reduce installation time when deployed in dock or at sea. In one case, everything, including all electronics, controls and other auxiliary skids come pre-assembled and tested, increasing installation speed by up to 30 percent. This means less time in dock for shipbuilding or upgrade, which helps cut costs further.

The six areas for driving cost savings and efficiency that I've picked out over the past two blog posts are crucial to the future of the marine industry. More efficient and effective propulsion, power and positioning systems are driving down costs and driving up productivity. The emergence of multi-fuel, low-emission vessels are giving operators flexibility, cost-control and helping them achieve compliance with environmental regulations. At the same time, data analytics and vessel management software is giving operators better reliability and control over maintenance costs at sea and in dock, even as more sophisticated systems are reducing the environmental strain caused by the sector. What's really important however is to realize that these issues can't be solved in isolation: a whole-vessel strategy is necessary to compete in today's global marine space.