High-Efficiency Ships Have Higher Asset Values, Longer Lifespans

Cabon War Room survey

by | Apr 24, 2015

Cabon War Room surveyLeading banks in the shipping industry, including HSH Nordbank and KfW IPEX-Bank, use energy-efficiency data in making investment and financing decisions, according to a survey by Carbon War Room.

The global NGO says the banks indicated that vessel efficiency rankings — such as the A to G GHG Emissions Rating developed by independent ship vetting company RightShip and CWR — now form an important part of assessing risk and return, with inefficient vessels now representing a higher-risk investment.

Energy efficiency data is also being used in credit-approval processes for vessel purchases, loan assessments for retrofit projects, and re-sell or scrapping decisions, with banks citing efficiency as a key indicator for a vessel’s profitability.

Banks surveyed said have seen the formation of a two-tier market comprising high- and low-efficiency vessels. Eco-efficient vessels demand a premium price at new build stage, are more likely to be chartered, maintain asset value over time, and have a longer lifespan.

KfW IPEX-Bank also said last year that efficient container vessels of comparable capacity consume 30 percent less bunker fuel than inefficient vessels at the same operating profile. This represents a significant cost advantage, particularly if competing vessels are switching to more-expensive distillate fuels in Emission Control Areas.

A quarter of the non-container charter market vet potential vessels for efficiency before charter, CWR says. RightShip data analysis shows that the average lifespan of an “A” rated vessel is likely to be up to eight years longer than that of a “G” rated vessel. In addition, in 2014, three ports — Port Metro Vancouver, Port of Prince Rupert and Port of Barbados — began to use the A to G GHG Emissions Rating to offer financial incentives to the owners of more-efficient vessels entering their ports.

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