Maersk Hints at Retrofits, Not Newbuildings, as its Decarbonisation Future

Maersk CEO Søren Skou has previously said his company expects to go directly from using oil to new zero-carbon fuels. Image Credit: Maersk

Logistics giant AP Moller-Maersk has hinted that it sees retrofits, rather than new vessel orders, as the process that will take the company towards decarbonising its fleet.

Speaking on an investor call this week, CEO Søren Skou suggested the company was not expecting the need to decarbonise resulting in massive capital expenditure in the years ahead.

"In terms of CAPEX guidance and fuel technology, first of all we're still working on figuring out what is the best fuel for us for the future," Skou said.

"But the alternatives that we are looking at, they are fuels like alcohols, like ammonia and so on, which basically use the basic principle of a combustion engine.

"That means that if we end up finding exactly the right solution, then there will be a big retrofit opportunity for us."

The cost of decarbonisation is a significant worry overhanging the shipping industry. The idea that the fleet could largely be retrofitted to run on new fuels, rather than parts of it needing to be scrapped early to be replaced by newbuildings, would come as a relief to many.

"Already today there are engines in the world that are marketed which run on methanol and alcohol, and ammonia engines are under development," Skou added.

"I'm sure they will be more expensive than what we do today, but it's not like we are seeing a huge mountain of capex coming at us because of engine technology, if we end up where we think we will end up with ammonia or methanol or something like that as a future fuel."

Maersk is the largest consumer of bunker fuel in the world, using 10.3 million mt in 2020. The company is also one of the largest corporate consumers of any type of oil.

In a podcast released last month Skou revealed Maersk expects to order its first carbon-neutral ship as soon as 2023.

"Three years from now, we expect to buy the first order ... the first series of maybe small container ships that we can operate in a defined geographical area," he said.

"Then we can go out and make supply contracts with people that can provide, whether it's ammonia or alcohol, methanol and ethanol.

"We can fuel the ships that way, get the experience of what works operationally, or help make sure the safety works.

"Then we can be ready to start ordering large ships towards the end of this decade.

"A ship has a life expectancy of between 20 and 25 years, so we need to start replacing ships by 2030 in order to be ready at 2050."