Maersk Orders Eight More Methanol-Fuelled Ships

by Ship & Bunker News Team
Tuesday August 24, 2021

Container shipping firm AP Moller-Maersk has followed up its first order of a methanol-fuelled ship earlier this year with one for eight much larger vessels.

The company has ordered eight 16,000 TEU boxships for delivery from the first quarter of 2024, all designed to run on green methanol, with an option for four more in 2025. Its previous order was for a 2,100 TEU feeder vessel for delivery in mid-2023.

The ships will take about 1 million mt off Maersk's 2020 CO2 output total of 33 million mt.

"We think this is the best path, the best way of becoming carbon-neutral," Morten Bo Christiansen, head of decarbonisation at Maersk, said in a press conference announcing the order on Tuesday. 

"With the carbon footprint we have, we just don't think doing nothing is an option."

"We think we can get the fuels.

"Whether we get them on time remains to be seen, but we will get them."

Scaling Up

The ships will be built by Hyundai Heavy Industries, with propulsion technology developed in conjunction with MAN ES, Himsen and Alfa Laval, will be classified by the American Bureau of Shipping and will be registered under the Danish flag.

The company's previous order of a 2,100 TEU vessel was the largest that the firm found technologically viable when that order was conceived two years ago, but enough research and development work has now been done for larger vessels, Christiansen said.

The new ships cost $175 million each, and that figure is roughly 10-15% higher than the cost of ordering equivalent conventionally-fuelled ships, according to the company's estimates. Maersk has previously said the green methanol it plans to buy will cost roughly double current conventional bunker prices for the first few years -- meaning around $1,000/mt -- but given the much lower energy density of methanol, this will amount to somewhere closer to $2,000/mt in VLSFO terms to achieve the same propulsion.

"This order proves that carbon neutral solutions are available today across container vessel segments and that Maersk stands committed to the growing number of our customers who look to decarbonise their supply chains," Soren Skou, CEO of Maersk, said in a statement on the company's website on Tuesday.

"Further, this is a firm signal to fuel producers that sizable market demand for the green fuels of the future is emerging at speed."

Building a Supply Chain

The ships will consume 35,000-45,000 mt/year each of green methanol. Last week Maersk announced its first methanol supply deal, taking on the 2,100 TEU feeder vessel's 10,000 mt/year requirement from an as-yet-unbuilt plant in Denmark.

The company has yet to decide the ports at which the new ships will bunker, but it intends to have multiple options across the world. The 16,000 TEU size of the new ships make them more flexible than larger ones, and so the ships will not be restricted to the Asia-Europe trade.

"We have picked a handful of different deployment opportunities," Ole Graa Jakobsen, head of fleet technology at Maersk, told Ship & Bunker at the press conference.

"But we should also consider that it is not like we can only bunker where the fuel is produced.

"You will get into a situation where the green fuels will be transported."

While the methanol agreement last week was for synthetic methanol, or e-methanol, the company hinted that its supply of the eight new vessels is more likely to be of bio-methanol.

"We see that bio-methanol produced from biomass can probably scale up faster and probably for the next five or ten years will come at a lower cost than the e-methanol," Berit Hinnemann, head of decarbonisation business development at Maersk, said at the press conference.

"We see e-methanol as the most scalable option beyond that, but we do need both."

VLSFO Not Out for the Count Yet

The new vessels will have dual-fuel engines that are capable of running both on methanol and VLSFO. The company considers the VLSFO option as insurance against green methanol supply or customer demand for more expensive zero-carbon freight falling short.

"We are relying on customer demand," Jakobsen told Ship & Bunker.

"But right now we do not think that will be a problem, because there's a lot of demand coming.

"But in order to decarbonise our whole fleet you also need regulations to kick in."

In the press release Maersk highlighted that some of its largest customers -- including Amazon, Disney, H&M Group, HP Inc, Levi Strauss & Co, Microsoft, Novo Nordisk, The Proctor and Gamble Company, PUMA, Schneider Electric, Signify, Syngenta and Unilever -- have all committed to using zero-carbon solutions for their ocean transportation needs.