You are currently viewing Sustainable Shipping Part 1: Hapag-Lloyd AG – a global player dares the shift

Sustainable Shipping Part 1: Hapag-Lloyd AG – a global player dares the shift

Since 1st of January this year the new IMO 2020 (MARPOL2020) regulations are in place. The new regulations reduce marine pollution and will lead to improved air quality. It supports the industry on its way to become more sustainable.

All vessels are required to use fuel with a max. sulphur content of 0.50% m/m worldwide (0.10% m/m SOX in emission control areas) compared to 3.50% m/m before. CO2 emissions have to be reduced by 30% from 2030 and 50% by 2050 all compared to 2008. With shipping being 100% emission-free by 2100, solutions have to be found and applied.

In our new blog series, we will investigate how shipping companies are coping with the new regulations and what their strategies for reducing their carbon footprint are.

Hapag-Lloyd’s strategy towards low sulphur fuels

We start our series with Hapag-Lloyd AG, one of the world’s leading liner ship companies, with headquarters in Hamburg, Germany. It has a fleet of 237 container ships and a total transport capacity of 1.7 million TEU.

Hapag Lloyd announced at the beginning of the year to apply three promising solutions for compliance to IMO2020; using very low sulphur fuel oil (VLSFO) on 217 of their vessels, installing exhaust gas cleaning systems (EGCS) on 19 of theirs vessels and converting one of their vessels mid-2020 to run on liquified natural gas (LNG) and VLSFO. At the moment Hapag-Lloyds fleet has 17 ships that could potentially be converted to LNG if test runs are successful.

Fuel shift might cost up to 1 billion USD annually

Complying to the new rules comes at a cost. Installing EGCS is estimated to be around USD 7-10 million per ship; converting “Sajir” a 15000 TEU vessel to LNG will be an investment of approximately 30 million USD, adding the price difference between high sulphur fuel oil and VSFO, Hapag-Lloyd AG estimated the additional cost to sum up to USD 1 bn annually in the first years.

Shipping fleet CO2 emission to be halved by end of 2020

Hapag-Lloyd decided to also invest in biofuels. Mainly to reduce CO2 emissions. In February this year “Montreal Express” refueled with “B20” a mix of 20 % eco-friendly biodiesel and 80% LSFO. The biodiesel is based on cooking oils and fats that had previously been used in the food service/catering industry.

“By the end of this year, we want to have reduced our specific CO2 emissions by 50 percent compared to the reference year 2008. Biofuels like ‘B20’ can help us reach this target. This is because, in addition to having a low Sulphur content, the fuel also emits less climate-damaging CO2 during combustion,” explains Jörg Erdmann, Senior Director Sustainability Management.

Hapag-Lloyd started test runs with” Montreal Express” between Europe and Canada to gain information if the biofuel-mix has adverse effects on equipment and fuel processing on board the vessel.

“If the test is successful, more ships from Hapag-Lloyd’s fleet could operate using the ‘B20’ fuel in future,” says Jan Christensen, Senior Director Purchasing & Supply at Hapag-Lloyd.

Biofuels have the highest potential in CO2 emission reduction

With these trials, Hapag-Lloyd is taking a great step towards reaching its climate-protection goals. At the moment all solutions still have their challenges in regard to infrastructure, costs, availability and sustainability. Compliant fuel, LNG, EGCS, as well as biofuel solve sulphur emissions, but in terms of CO2 reduction biofuels have the highest potential out of the selected solutions.

In the next part we will have a closer look at the strategy of A.P. Møller – Mærsk A/S. Stay tuned!

Do you also want to make the shift towards more sustainable fuels? Contact us!