As the maritime industry faces increasing pressure to improve efficiency and meet strict environmental regulations, understanding key factors like ship performance, emissions compliance, and reputation management has never been more important. This Article explores key factors affecting ship performance, including fuel consumption and maintenance, and discusses critical regulations like EEXI, CII, EU ETS, and FuelEU Maritime.
Ship Performance
A ship’s performance is influenced by numerous factors. Internal elements, such as crew operations, and external conditions, like weather and currents, directly affect fuel consumption and emissions. Without reliable data, identifying potential energy savings and implementing corrective actions becomes nearly impossible. Real-time data enables informed decision-making to enhance performance and safety. For instance, optimising auxiliary power consumption would be ineffective if a fouled hull is the primary cause of excessive fuel use. Consistent and precise data also supports benchmarking, allowing vessel performance to be compared against industry standards or fleet averages.
Regulation
In addition to optimising ship performance, measuring and monitoring emissions to ensure compliance with regulatory requirements is essential. Furthermore, the ever-evolving maritime regulatory landscape means that companies must keep abreast of legislation and ensure their reporting systems can adapt.
EEXI and CII
Critical emissions requirements implemented by the International Maritime Organization (IMO) include the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). The purpose of these requirements is to reduce the carbon intensity of all ships by 40% by 2030 compared with 2008.
A further challenge for shipping companies is that achieving a higher CII rating will become increasingly difficult each year. This is because rating thresholds will tighten, decreasing by approximately 2% per annum.
Additionally, vessels with lower CII ratings may be considered higher-risk investments by banks, potentially leading to higher loan costs or reduced financing availability.
EU ETS
Another critical consideration for shipowners and managers is the European Union’s Emissions Trading System (EU ETS). Vessels over 5,000 GT must buy EU emissions allowances (EUAs) to cover their annual emissions, with each EUA equivalent to 1 tonne of CO₂.
The cost of EUAs will increase over time as the number of allowances available in the market decreases. The EU ETS follows a “polluter pays” principle, meaning that while shipowners are responsible for compliance, the cost will likely be passed on to charterers and ultimately consumers.Â
Fuel EU Maritime
Starting 1st January 2025, the FuelEU Maritime regulation will apply to vessels over 5,000 GT calling at EU ports. This regulation requires ships to measure the carbon intensity of their annual fuel mix against a specified target.
Like the EU ETS, FuelEU imposes financial penalties for using carbon-intensive fuels. However, it also focuses on lifecycle emissions (well-to-wake) and offers financial incentives for compliance.
Reputation & Transparency
The shipping industry is a close-knit community, and news – whether good or bad- travels fast. A strong reputation is critical for securing business, and accurate emissions reporting demonstrates a company’s commitment to environmental, social, and governance (ESG) goals.
End-to-end transparency in emissions reporting is essential for supply chain visibility. All stakeholders involved in a vessel’s voyage now expect access to reliable emissions data.Â
1 IMO (accessed Dec, 2024) EEXI and CII – ship carbon intensity and rating system
2 Carbon Chain (Jan, 2023) The IMO Carbon Intensity Indicator (CII): What is it and how to prepare?
3 Carbon Chain (Jan, 2023) The IMO Carbon Intensity Indicator (CII): What is it and how to prepare?
For a more detailed understanding and exploration of the topics covered in this article, refer to our report, Transforming Maritime Operations: Unlocking Accurate Data for Sustainability and Compliance, commissioned by SailPlan.
