For decades, people and goods have moved freely between continents at increasing speeds. But, for the shipping industry, the greatest catalysts of globalisation have yet to set in.
Mature, western economies increasingly will find themselves extending operations not only China but also a host of Asian economies, and, with time, even African nations as well to look for new opportunities and growth markets.
”Population growth is accelerating in Africa and Asia, and that will dominate the future to a great extent,” says Ulf Holm, a professor of international business at Uppsala University. ”Given that the economies continue to develop, this is where the large markets will be. We see it in China today. Previously, we saw it in Japan, South Korea and Taiwan,” he adds.
Over the next few decades, economists expect an already globalised world to become even more interwoven. Within a few years, the relatively mature economies of the European Union and the United States will have created the world’s largest regional free-trade zone. At the same time, Asian and African nations are expected to enjoy the strongest growth rates during the 21st century, spurring trade and mutual investment opportunities with other continents. As Asian firms look to acquire businesses in Europe and North America, western businesses will also further deepen their presence in the Chinese and other markets.
As in the past, shipping – the mass-freight option with the lowest rate of carbon emissions – will physically link these economies. While international freight took a hit in the wake of the 2008 financial crisis, the sector has a steady growth outlook over the forthcoming decades. By 2050, the OECD expects freight in tonne-kilometres to have increased by three or four times in the globe’s three largest corridors: the North Pacific, the North Atlantic and the Indian Ocean.
But does that mean the freight industry will be conducting business as usual? As Asian countries cement their dominance in global shipping, new demand will cause vessels to frequent routes to Africa and South America –at least Brazil – to an even greater extent than before. Growing environmental concerns and volatile energy prices will also add to a melting pot of new conditions for the shipping industry.
”The days of oil are numbered,” says Riku-Pekka Hägg, Vice President of Ship Design at Wärtsilä Marine Solutions. The slashed price of crude oil, which dropped by more than 50% in 2014 before starting to rebound, renders the introduction of new LNG carriers even more inevitable.
”The industry is shifting towards gas, while new types of fuel are being explored, as well as new technology, which will improve efficiency,” Hägg says.
Having completed its first dual-fuel vessel in 2003, Wärtsilä has long been primed for the transition. ”Wärtsilä was one of the first companies to focus on LNG as fuel,” says Anil Soni, who serves as Director of Strategic Development at Wärtsilä Marine Solutions. ”We have been the pioneer of what is touted as the fuel for the future. As of today, we have a proven record of more than 1,300 engines running on gas, with more than 12 million running hours.”
Infrastructure to follow suit
But a transition to vessels powered by liquefied gas is dependent on access to fuel bunkers, of which there is a dearth on international waters at present.
”There are 8,000 sea ports in 200 countries. Out of those, 46 hope to get into LNG. Only 15 are open for LNG bunkering today. And they are almost exclusively in north-western Europe,” says Jacob Thygesen, head of sales for merchant activities at Wärtsilä Ship Design. ”We have, of course, done our homework.”
The Asian countries with some of the world’s largest ports – China, Singapore and South Korea among them – will, therefore, need to shift to infrastructure increasingly dominated by LNG. ”It’s clear that Asian governments are going to push this development forward,” Thygesen says. ”They will be motivated by rules and regulations, of course, but also by the fact that they want a cleaner environment.”
China, South Korea and Japan account for more than 80% of global shipbuilding annually. But despite their dominance in the shipbuilding sector, they could take time to adapt to new technologies. ”It’s an entire supply chain of LNG as fuel,” Soni says. ”South Korea, Japan and China have built up their expertise in building LNG-fuelled ships, but convincing the all the ship owners, regulators and bunker suppliers to move along is not that simple.”
Over the next two decades, the shipping industry will move away not just from oil but also will begin to leave fossil fuels behind altogether. A globalised economy entails transnational efforts to tackle society’s challenges. In 2011, 55 nations entered the first international agreement to curb emissions in the shipping sector. As a result, ships completed in or after 2013 and weighing over 400 tonnes will need to improve their efficiency by 10%, rising to 20% between 2020 and 2024, and to 30% for ships completed after 2024.
”There will be a much stronger focus to get shipping cleaner. That’s not only about efficiency but also how we cut emissions and help reduce the carbon footprint,” Hägg says. ”Hybrid technology will become a source of energy for vessels. Renewable energy sources, like solar power, will be used to charge the batteries. The technology will make the hybrid leap. Within 20 years, that solution will be much more common.”
Climate-friendly shipping does not depend only on new energy sources. Design developments will provide shortcuts to building ships that are better at conserving energy. ”From a design perspective, we look very closely at the underwater body of the ship to provide it with maximum propulsion efficiency, as well as at operational qualities to make the ship safe and quick to operate,” Thygesen says.
With time, Wärtsilä’s ship fleet will develop navigational systems that are increasingly complex and rely on a real-time intake of data to make decisions. As the technology gets more complex, the crew manning any given ship will likely be cut a few members short. Those who remain will need a new set of skills to navigate global waters.
”And the technology needs to have a human interface so the crew can operate the vessel,” says Hägg, who adds that, while unmanned ships are not as imminent as driverless cars, the industry is headed in an automated direction. ”Eventually, the new vessels will begin to reduce the number of crew members. All of these steps lie on the path toward the unmanned ship.”
It might take longer than a couple of decades before we can stand ashore and watch immense cargos switch continents without a single human on board.
”We’re not only talking about nobody being on the ship but also about huge safety concerns,” Soni says. ”Ships are very big installations carrying expensive and sometimes dangerous cargos. I am not sure ships will be unmanned in the very near future. We might see five or six crew members in total, but unmanned ships are hard for me to foresee in the very near future.”
But when it happens, expect Wärtsilä to be at the forefront of the industry’s development.
”We spend quite a lot of money on research and development in this direction,” says Soni. “We are always trying to be not just a step ahead of the competition but a step ahead of the environmental challenges as well. We don’t just talk the talk.”
Wärtsilä’s new LNG series brings shipping into the gas age
As the transition to gas freight draws closer, there is a dearth of bunkers for the next generation of ships to refuel. Wärtsilä’s new liquefied natural gas designs are made for the shipping industry of tomorrow.
Only a fraction of the world’s ports can currently supply fuel for vessels that run on liquefied natural gas, or LNG, in what might be called the catch-22 of the shipping industry.
”For LNG-fuelled ships to go anywhere, they need assurance that gas is available,” says Anil Soni, director of strategic development at Wärtsilä Marine Solutions, who calls the situation a ”major hurdle” on the path to introducing LNG shipping infrastructure globally.
”It’s a famous chicken and egg problem. Shippers are ready to go for gas, but there aren’t enough bunker facilities to refuel, and investors are worried that there aren’t enough LNG-fuelled ships available to invest in LNG bunker facilities,” Soni says.
With its new design series, Wärtsilä has grabbed the problem by the horns, offering state-of-the-art LNG solutions with two bunkers and two carrier vessels. The WSD59 bunkers are between 85 and 99 metres in length, with gas consumption between 7.5 and 9.8 tonnes per day.
”The designs are extremely good with fuel consumption. They’re at the top of their class,” says Jacob Thygesen, head of sales for merchant activities at Wärtsilä Ship Design.
The WSD50 LNG carrier – around 140 metres in length – can travel at speeds up to 15 knots. Like the bunkers, Wärtsilä’s customers may cherry pick features to suit their needs.
”From a design perspective, we look very closely at the underwater body of the ship, to provide it with maximum propulsion efficiency as well as at operational qualities to make it safe and quick to operate,” Thygesen says.
Analysts believe the transition to LNG drew even closer after the price of oil was slashed in 2014. Still, only 15 ports worldwide can refuel LNG vessels. The need for bunkers to hold fuel for ships venturing beyond their own ports has never been greater.
”It’s irrefutable – governments must start to look at bunkering subsidies and incentives,” Thygesen says. ”There is a pressing need to establish LNG bunkers in these areas. Whoever doesn’t get onboard now will be left behind moving forward.”
Enormous ships could get even bigger in the future
Run the length of the world’s largest vessel about 100 times, and you’ve completed a marathon. Ships may well get even bigger. But one might wonder what the point would be.
”We’ve seen close to 400-metre long bulk carriers,” says Riku-Pekka Hägg, Vice President of Ship Design at Wärtsilä Marine Solutions. ”Vessels can of course get longer, wider and bigger.”
But how big? 800 metres long? 1200? ”Why not,” Hägg says, noting few limitations in terms of sheer size.
”I don’t see many problems from the naval architecture point of view. The biggest challenge is that these larger vessels would require a change in the whole port infrastructure.”
While a larger ship may save on emissions and operating costs or carry tens of thousands of cars at once, opting for the biggest model possible may not be such a wise choice. The larger a vessel gets, the fewer ports it will be able to enter.
Larger ships may also require that certain passageways, such as the Panama or Suez Canals, be widened. (A third, wider lane of locks in the Panama Canal is due to open in 2016).
”The question becomes how to use the vessels efficiently,” Hägg says. ”Rather than purely focusing on size, I would think about the vessel types that can make the logistics chain more efficient than it is today.”
Hägg says he favours a holistic approach to ship design that takes into account not just size but also the nature of the cargo and the efficiency of the logistics chain.
”How do you find a form of cargo that is more efficient, that might let the same vessels that transport steel carry other materials on their way back? That’s the development I would like to see,” he says.