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23rd Week Topic:The Capesize Bulk Shipping Market in 2024

Since 2024, the Capesize bulk shipping market has gradually recovered from the downturn of the past two years, with the shipping index in this market currently up by 42% compared to 2023.
According to data from the HiFleet ship database, there are nearly 2000 Capesize vessels with a total capacity of 380 million deadweight tons and an average age of 10.6 years. Due to the decreasing number of vessels being scrapped in the past three years, only 6 Capesize vessels were reported to be scrapped last year, resulting in an aging average fleet age for this vessel type. Currently, there are 586 operating vessels with an age of 15 years and above, totalling approximately over 1 billion deadweight tons, representing 29.3% of the entire Capesize bulk carrier fleet. Over the next three years, the number of operating vessels of this type aged 15 years and above is expected to significantly increase, reaching 813 vessels in 2025, 991 vessels in 2026, and a notable 1071 vessels in 2027, representing an 83% increase compared to this year.
In the past two years, new ship orders have remained at around 130 vessels, with a total of 106 Capesize vessels delivered during this period. From 2024 to the present, nearly 120 new ship orders have been placed, with only 19 vessels delivered by the end of May. In the past two years, due to the sluggish Capesize bulk shipping market, orders for this type of vessel have remained stable. However, in 2024, with the market's continuous growth, there has been a noticeable increase in new orders for Capesize vessels, and deliveries of these vessels are expected to accelerate in the second half of the year, potentially putting significant pressure on the shipbuilding industry.
Regarding demand, the market continuously receives positive news related to Capesize bulk carriers. One notable project is the Ashburton Mining Project, a joint iron ore venture between Baowu Group, the Australian Mineral Resources Limited, POSCO from South Korea, and the American Metal Coal Company, with a designed annual capacity of 30 million tonnes iron ore.
The project commenced on June 16th last year, with the first shipment departing on June 1st this year, bringing about an additional 3% to the Australian Capesize shipping market. Another significant project is the Simandou Mountain Iron Ore Project in Guinea, which is predicted to gradually engage over 150 Capesize vessels in the market starting in 2025.
Capesize vessels are facing both an aging trend and the incremental impact from the market. In recent years, new orders for these vessels have faced competition from orders for other vessel types, potentially tilting the balance of market supply towards shipowners. The near future outlook for this market appears promising, which may also stimulate the rise of other bulk carrier vessel types.

25th Week Topic:Panama Canal ship traffic in 2024

In 2024, the Panama Canal has seen changes in ship traffic. Due to the rainy season and rising water levels in Lake Gatun, the Panama Canal authorities announced an increase in thenumber of ships passing through start from in mid to late July. In the second half of 2023, the Panama Canal faced long queues due to continuous drought, prompting the authorities tolimit ship traffic twice, impacting efficiency. Ship traffic in the first quarter of 2024 decreased by 35% compared to the previous year. It is anticipated that ship traffic in the first half of 2024 will be close to 4000 ships, the lowest level in nearly four years.
Despite the overall decrease in total traffic since 2024, monthly ship traffic through the Panama Canal has been gradually increasing. In May, a total of 702 ships passed through the canal,averaging 23 ships per day, a 3.4% increase from April. Container ships are the main type of vessel passing through the canal, accounting for 47% of total traffic. Bulk carrier traffic hassteadily increased since the beginning of the year. The number of anchored ships at both ends of the canal has been steadily rising since February, with significant improvements in the waiting time for bulk carriers. The waiting time for container ships remains stable at around 23 hours due to their efficient management, occasionally experiencing abnormal waiting times.
The Panama Canal's significant feature is that over 90% of ships passing through the new locks are container ships, while over 50% of those passing through the old locks are oil and chemical tankers.
Starting from June 15th, the draft limit for ships passing through the new locks has been increased from 13.41 meters to 14.02 meters but remains below the original limit of 15.24 meters.
Recent improvements in rainfall in the Panama Canal region have led the authorities to ease transit restrictions in the past few months, with further relaxations planned. The increase in daily ship traffic to 34 ships starting on July 22nd is expected to bring traffic closer to the normal level of around 36 ships per day.
The previous restrictions on ship traffic in the Panama Canal led to some confusion and detours in navigation, increasing nautical miles and affecting the shipping market. The gradual easing of these restrictions will offer shipping operators opportunities to improve routes, potentially reducing detours and influencing maritime dynamics, including changes in the Red Sea situation.

26th Week Topic: 2024 Market for Capesize and Ultramax Carriers

Supramax and Ultramax bulk carriers focus on small-sized miscellaneous goods, with a market characterized by a wide range of customers and goods. In addition to intersecting with bulk cargo, small miscellaneous cargo includes sugar, fertilizers, timber, rice, sulphur, cement, salt, scrap iron, wood chips, pulp, and various others; miscellaneous goods encompass vehicles, equipment, steel coils, steel plates, wooden boards, and more.

Currently, there are around 4,150 Supramax and Ultramax bulk carriers operating globally, totaling 2.35 billion deadweight tons with an average vessel age of 12 years. From 2020 to 2024, this vessel type is projected to see an average annual growth in deadweight tons of approximately 3%, increasing to 4% from 2025 to 2026.

In comparison to the same period in 2022, the total volume of dry bulk cargo loaded in 2023 increased significantly, primarily driven by coal imports in China. The transportation volume of small miscellaneous cargo in 2023 notably declined, leading to a 49% decrease in freight rates for Supramax and Ultramax bulk carriers in that year. However, since early 2024, freight rates for this vessel type have significantly rebounded compared to 2023, with a 27% increase year-on-year in the first quarter and a 39% increase in the second quarter. This could be attributed to China's reinvigoration in the international trade market post New Year and the increased demand for this vessel type due to the Red Sea factor causing additional detours.

The El Niño-induced drought in 2023 remains fresh in memory, resulting in reduced grain production in Argentina and parts of the US, along with lowered water levels in the Mississippi River affecting grain exports. Grain exports from these regions decreased by 45% and 25% respectively year-on-year, while Brazil saw a record-breaking 28% growth in grain exports compared to 2022.

Between 2021 and 2022, new deliveries of this vessel type were around 7 million deadweight tons annually, reaching 9 million deadweight tons in 2023, with close to 4.5 million deadweight tons already delivered in the first half of 2024 and an anticipated delivery volume of 9 million deadweight tons. This equates to a healthy level of 3.6% of the entire fleet.

By 2024, over 1,000 Supramax and Ultramax vessels will exceed 15 years of age, with this number expected to reach 2,000 vessels by 2027, representing about 50% of the fleet. The efficiency and carbon intensity requirements set by the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) have reduced the operating speeds of most vessels, coupled with aging fleets failing to meet increasingly stringent carbon emission standards, which might lead to accelerated scrapping due to non-compliance. While available auxiliary technologies and speed reduction measures could extend CII compliance for vessels by 1 to 2 years, this may eventually lead to increased scrapping, seeming to favour the newbuild market in the long run. Factors such as high costs of newbuilds, higher US dollar interest rates, limited shipyard availability, among others, will likely continue to impede an explosive growth in new vessels. It can be foreseen that with the eventual conclusion of the Russia-Ukraine war, the transport demand for rebuilding Ukraine will sustainably elevate the dry bulk shipping market.

27th Week Topic: Overview of the Arctic Northern Sea Route

In recent years, due to the gradual melting of ice in the Arctic Northern Sea Route during the summer, and the sailing distance from the Baltic Sea to the Far East can be reduced by nearly 30%, along with savings on canal tolls and bypassing the turbulent waters of the Red Sea, it is evident that the number of commercial ships transiting the Northern Sea Route is gradually increasing. HiFleet has been monitoring the passage of ships in this route.

The "Regulations for Navigation on the Northern Sea Route" issued by the Russian Federation in 2013 delineate the geographical area of the Northern Sea Route (NSR), which starts from the northern end of the Bering Strait, passing through the Chukchi Sea, the De Long Strait, the East Siberian Sea, then through the New Siberian Islands, the Severnaya Zemlya Archipelago, Kara Sea, ending at the northern tip of Novaya Zemlya.

Based on the trajectories of different ships passing through the Northern Sea Route, the marine industry categorizes these ship routes into coastal, middle, high-latitude, and polar routes. The majority of ships follow the middle route, which enters from the Bering Strait into the Chukchi Sea, crosses the De Long Strait south of the Wrangel Island, enters the East Siberian Sea, passes north of the Siberian Islands through the Vilkitsky Strait, continues southwest of the Dmitry Laptev Strait, and then northwest along the Novaya Zemlya to reach the Barents Sea. During the summer when ice conditions ease, some ships may bypass the De Long Strait and Dmitry Laptev Strait.

The passage of ships on the Northern Sea Route is organized and implemented by the Northern Sea Route Administration (NSRA), a government agency of the Russian Federation. NSRA offices are located in Murmansk, Vladivostok, and Arkhangelsk.

Foreign ships navigating the Northern Sea Route, if the captain lacks experience in ice-covered areas, must be subject to mandatory pilotage. If the captain has over three months of ice navigation experience, they can self-navigate the ship through the Northern Sea Route. However, in mandatory pilotage areas such as the Sannikov Strait, Dmitry Laptev Strait, Vilkitsky Strait, and Shokalsky Strait, regardless of the captain's experience, pilotage is required.

Commercial shipping in the Northern Sea Route is concentrated from mid-July to mid-October. This area is extremely sensitive, and ships intending to transit the Northern Sea Route need to have the appropriate technical capabilities, as well as face challenging navigation plans. While the development and utilization of the Northern Sea Route may bring opportunities for shipping, it also poses significant environmental risks.

28th Week Topic: Latest Updates on Container Ship DALI

HiFleet ship data shows that the public concerned container vessel DALI finally left the Port of Baltimore at 7 a.m. local time (Monday) on 24th June of 2024 since the bridge collision incident to unload and repair in other ports in the United States. Investigators from the National Transportation Safety Board (NTSB) completed face-to-face interviews with the crew, conducted an exhaustive inspection of the ship's systems and tested electrical systems. So far the container vessel has been docked in the port of Norfolk for about 20 days. In the early morning of March 26, 2024 Baltimore time, the container DALI was leaving the port of Baltimore when the ship lost power and propulsion and struck the base supporting the central truss span of the Francis Scott Key Bridge, caused the bridge to collapse. Six construction workers who were on the bridge at the time were killed, one was seriously injured, and a crew member on the DALI was injured.

A preliminary investigation report released by the NTSB in May showed that the DALI had experienced two power outages the day before the accident. The first was due to the crew mistakenly blocking the exhaust pipe of the generator. The second was due to insufficient fuel pressure. The NTSB said electrical circuit breakers HR1 and LR1 suddenly tripped about three boat lengths from the Francis Scott Key Bridge after DALI left port, which caused a whole vessel power outage. The investigation ruled out the quality of the fuel itself.

On Monday, June 10, after more than two months of salvage work, local salvage companies recovered and removed about 50,000 tons of bridge debris and restored the Fort McHenry Federal Passage to its original level of operation, with a width of 700 feet and a depth of 50 feet, and transiting of the Port of Baltimore returned to normal.

Baltimore's mayor and other city officials accused the ship's technical management company and owners of negligence in the bridge collapse in a court filing in late April, which listed a series of allegations accusing the two companies involved of "careless, negligent, grossly negligent and reckless" conduct and called the vessel unseaworthy.

The DALI incident has had a major impact on the Marine insurance market, directly resulting in the death of six people and billions of dollars in damages, the ship P&I club faces huge costs in the lawsuit surrounding the Baltimore bridge collapse, and the P&I faces higher reinsurance premiums in the future as well. The extent of the financial impact depends to a large extent on the success of the limitation of liability of shipowners and managers.

There are all kinds of safety risks and challenges in ship safety management, and any negligence may lead to tragedy or cost a terrible price. Including entering enclosed space, working aloft and overside, hot work, navigation safety, cargo carriage, ship stability, bad weather, team collaboration and communication, standard operations and procedures. Good seamanship and safety are always at the forefront of seafarers' minds. The vast majority of all kinds of maritime accidents are related to human factors. Often when the crew is tired and anxious, its safety awareness will be greatly reduced, and it will often reduce the due awareness of safety hazards. The International Maritime Labor Convention (2006 MLC), which came into effect in 2013, helps crew fatigue in management, but in the face of efficient ship operation and the conflict situation in which ship operators pursue high profit, crew members are often forced to walk in the gray edge of the implementation of the convention.

29th Week Topic: The Red Sea marine environment is facing unprecedented risks

On July 16, HiFleet reported that a Greek Aframax tanker was attacked by a drone boat in the Red Sea. The Houthi forces released video footage on their website claiming responsibility for the attack on the Greek-owned tanker "Chios Lion," which resulted in a massive explosion on the vessel's port side, sending flames into the sky. According to HiFleet's ship registry data, the "Chios Lion," a 107,500 deadweight tanker built in 2010 and flying the Liberian flag, is owned by a Greek company. The ship had departed from Tuapse Port on the eastern Black Sea, transited through the Mediterranean, and was attacked by a drone bomb in the Red Sea near Yemen. Satellite imagery revealed an oil slick over 125 miles long in the Red Sea, extending northward from approximately 60 miles northwest of Hodeidah, Yemen. The satellite images from July 14 did not show this oil slick, while it appeared in the images from July 16.

The Houthi forces have been attacking vessels in the Red Sea for several months in protest against the war between Israel and Hamas. Although many ships have chosen to avoid the area, rerouting thousands of miles to Africa, some vessels still risk passing through. In June, Houthi attacks in the Red Sea surged significantly, marking the most active period of the year so far, ultimately leading to the sinking of two ships. One was an 82,000 deadweight ton bulk carrier owned by a Greek company, which also suffered a drone bomb attack on its port side; the other was a Ukrainian cargo ship named "Verbena," which caught fire after being struck by a missile from Houthi forces while heading west in the Gulf of Aden. The fire became uncontrollable, forcing the crew to abandon ship, and it subsequently sank shortly thereafter. Earlier this year, the Houthis also sank a vessel named Rubymar, resulting in a fertiliser leak. Other ships have sustained varying degrees of damage this year, with some continuing to their destinations while others await assistance from salvage professionals.

Commercial vessels are under ongoing attack from Houthi forces in this waterway, creating a disaster for the Red Sea environment. The sinking of ships could have catastrophic effects on the surrounding marine ecosystem, particularly due to the leakage of fuel and other oils. Should harmful substances enter the ocean, they pose a grave threat to the sensitive marine life in the sea around.

30th Week Topic: Shipping market in the first half of 2024

HiFleet shipping big data monitors maritime bulk commodities and container transport each day. Since the shipping market surge triggered by the COVID-19 pandemic in 2020, we have seen a strong recovery in the market driven by imbalances in production and trade in 2021, followed by a booming energy transport market due to the EU energy crisis resulting from the war in Ukraine in 2022. The sanctions on Russian crude oil and refined products led to significant profits, giving rise to a fleet of shadow tankers. As we approached the end of 2023's fourth quarter, the Red Sea crisis emerged, causing a large number of vessels to reroute around the Cape of Good Hope, consequently tightening vessel supply in the market. This has continued to benefit the container market and is expected to develop further into 2024, with no immediate signs of the Red Sea crisis dissipating. Regardless of legality, the shipping market has enjoyed bountiful years, with some capitalizing on the market's lows while others achieved great success in market operations. With the first half of 2024 behind us, let us take a look at the main shipping markets from various perspectives.

Between January and June 2024, global maritime trade overall grew by 2.3%, maintaining positive growth for 18 consecutive months, marking the longest period of positive growth since 2019. This reflects an improvement in global macroeconomic trends, particularly with inflation easing in the US and Europe. The Chair of the Federal Reserve has indicated that inflation is expected to remain below around 2.5% over the coming year, while China’s imports remain strong, and certain export sectors in China are also experiencing continued growth, notably with cumulative steel plate exports reaching 36.45 million tonnes from January to June, an increase of 31.2% year-on-year.

However, certain sectors of the maritime market have seen divergence and fluctuation. The energy transport market, notably affected by the global energy security situation stemming from the Russia-Ukraine war, has outperformed other sectors in recent years, but this momentum appears to be shifting. Firstly, the growth in energy trade commodities has slowed towards the end of 2023 and into early 2024, which has impacted the growth of maritime crude oil trade amid OPEC+ production cuts and stagnant imports of crude oil from China. Additionally, the trade in petroleum products remains weak due to conservative global oil demand. The growth in coal trade has also slowed from a robust approximately 7% last year to the current level of around 0.3%.

In the first half of 2024, container trade, based on TEU statistics, grew by about 5% year-on-year, primarily driven by improving economic trends in Europe and the United States, alongside steady exports from China. In other areas, grain trade has shown a strong rebound as US and Ukrainian exports have contrasted sharply with the low figures of the first half of 2023, while iron ore and liquefied petroleum gas trades have also performed well. Overall, maritime car transport growth has significantly slowed, registering only around 4%, down from over 17% growth the previous year.

As 2024 began, global maritime trade revealed a positive outlook, with both bulk commodities and container trade driving growth.

31st Week Topic: Strong Container Shipping Market 2024

Since the beginning of 2024, the container market has shown strong performance, with a significant increase in the second quarter. This surge has pushed container freight rates and charter levels to a new post-COVID high. The booming container market in the first half of the year primarily benefited from disruptions in the Red Sea due to security concerns, although several other factors contributed as well. Many shippers loaded and dispatched goods ahead of time to avoid disturbances in the Red Sea, resulting in an earlier peak in trade volume. The underlying trade volume was robust, but schedule disruptions caused congestion hotspots, further affecting container shipping capacity. Recently, however, market momentum has eased, and freight rates may soften slightly in the third quarter.

In the second quarter, the container freight experienced notable growth. By early July, the SCFI spot freight index reached 3,734 points, doubling from the end of the first quarter and up 269% from early December last year. This increase in freight rates reflects the higher costs associated with vessels rerouting around the Red Sea, which also uses more container shipping capacity, along with improvements in international trade volumes.

In the ongoing third quarter, container ship charter rates have seen some increases, with chartering rates for various types of container vessels rising markedly and average charter duration extending from five months last December to approximately 18 months now.

Security disturbances in the Red Sea remain a key driver of trends in the container market. In the first half of 2024, the volume of container ships transiting the Suez Canal dropped by about 90%. Some regions are experiencing increased pressure on ports, with global container port congestion significantly rising; recently, up to 3% of container shipping capacity has been tied up due to port congestion.

Regarding new container ship construction, the number of new builds has declined by 23% from the start of 2024 to now, equating to a reduction of 13% in TEU capacity. The second-hand container ship market is also very active, with 71 container ships measuring around 310,000 TEU sold in the second quarter, and prices have risen.

Currently, the container fleet is undergoing rapid growth with a concentrated delivery of new ships. In the first half of 2024, the fleet expanded by 5.7%, with an expected annual growth rate of about 10%. However, the container demolition market remains weak, with only 36 container ships, totalling approximately 51,000 TEU, being scrapped in the first half of 2024.

The international situation remains uncertain, with the Israel-Palestine conflict seemingly complex and tangled. It is evident that disturbances in the Red Sea will continue to impact the container market in the second half of the year, and freight rates are likely to remain high, despite some recent softening. Looking ahead, 2025 could be a challenging year, as the Red Sea issues may not be resolved quickly, potentially leading to a new supply-demand dynamic and market pressures.

32nd Week Topic: Shipping Green Methanol Fuel and Supporting Industries

The demand for green energy in the global shipping industry is rapidly increasing, driving the swift development of the methanol-fuel ship market. Currently, the industry powered by green methanol is experiencing unprecedented growth and market demand. The entire supply chain, from technology readiness and ancillary services to fuel supply, is showing healthy development trends.

In terms of newbuilding orders, those using alternative fuels are expected to surpass 100 million deadweight tonnes for the first time in 2024, while orders using LNG will reach 76 million deadweight tonnes, exceeding those powered by LNG. The demand for methanol fuel-powered equipment is significantly increasing, with many shipowners opting long-term for green methanol. In 2023, nearly 150 new orders featured two-stroke methanol fuel engines. According to related research reports, MAN ES has a 93% market share in this segment, having previously monopolized the global newbuilding market for two-stroke methanol engines. Earlier in 2023, WinGD secured a contract to supply methanol fuel engines for four 16,000 TEU container ships from COSCO Shipping, marking WinGD's first methanol fuel engine order globally and breaking MAN ES's monopoly. In the fourth quarter of 2023, WinGD received orders for six methanol dual-fuel 9,000 TEU container ship engines from Yangzijiang Shipbuilding, catering to a more diverse range of vessel types.

The methanol-fuel ship market has evolved significantly over the past decade, with major engine manufacturers continuously working to develop marine methanol engines, transitioning from having none to multiple technical pathways. The technical solutions for methanol fuel-powered vessels are now fundamentally mature, with two-stroke engines dominating the market.

Currently, the shipping industry is focused on establishing a robust and sustainable green methanol supply chain that is cost-effective, which is crucial for the steady adoption of green methanol in shipping. Market reports forecast that the global methanol market could reach USD 200 billion within the next five years, with the demand for marine green methanol becoming a primary growth driver. Industry experts suggest that to meet decarbonisation targets by 2030, nearly half of all new ships should adopt alternative fuels or decarbonisation technologies, necessitating approximately 30 million tonnes of green methanol, while the estimated amounts might be between 7 to 15 million tonnes. It is evident that the supply-demand imbalance of green methanol may become a significant bottleneck in the shipping decarbonisation process.

China has numerous green methanol projects with considerable capacity, but they are still some time away from production. In contrast, Europe's green methanol production capacity is increasing rapidly. However, the current capacity of green methanol is still insufficient to meet the rapidly growing market demand, indicating the need for improvements in the global green methanol preparation and supply system to fulfil the operating requirements of methanol-fuelled vessels.

As early as 2023, Maersk delivered the world's first methanol-powered container ship, with European Commission President von der Leyen attending the naming ceremony, emphasising efforts to promote green shipping. Recently, this Danish shipping giant ordered a batch of new vessels powered by liquefied natural gas, drawing market attention and indicating that the development of the green methanol supply chain may not be smooth sailing.

33rd Week Topic: Energy Saving and Emission Reduction for Ships

On 2nd August 2024, reports from London indicate that Canadian shipping startup Veer Group will travel to Germany to sign a shipbuilding letter of intent with Fosen Shipyard. They plan to construct two container ships with a capacity of 150 TEUs, powered by wind energy and supplemented by hydrogen, claiming to have zero greenhouse gas emissions. As the shipping industry seeks to reduce its greenhouse gas emissions, the adoption of energy-saving technologies in vessels has been steadily increasing. Data shows that, based on the global total tonnage of ships, over one-third have implemented at least one significant energy-saving technology, compared to just 10% a decade ago.

Energy-saving technologies in shipping, combined with alternative fuels and increasingly efficient engines, play an increasingly crucial role in directly lowering fuel consumption and emissions. The fuel savings achieved through different technologies vary, with typical reductions generally ranging from 2% to 10% on the market (and potentially reaching up to 30% in some cases). The actual level of energy savings depends on the compatibility of the energy-saving technology with the type of vessel and operational factors.

Currently, more than 8,700 recorded vessels have installed at least one important energy-saving technology, with over 40% of these ships employing multiple energy-saving technologies. The vast majority have adopted energy-saving solutions with propellers or related equipment. Nearly 23% of vessels have optimised their bow design to reduce wind and wave resistance. Over 10% have implemented optimisation solutions for hulls and coatings. More than 60 ships have adopted wind-assisted propulsion technology, and solar panels are also being utilised on vessels, among other innovations.

In terms of ship type, container vessels have the highest adoption rate of energy-saving technologies, exceeding 48%; followed by tankers, at more than 38%; and bulk carriers, which exceed 35%. Larger vessels tend to have greater potential for energy-saving technologies.

The majority of ships can implement energy-saving technologies during the new building phase. At the same time, over 2,000 existing vessels have been retrofitted or upgraded with energy-saving technologies during surveys, with modifications primarily focusing on 10 to 20-year-old non-eco-friendly ships, especially among container vessels.

The continued adoption of energy-saving technologies in existing vessels proves to be more cost-effective for shipowners compared to investing in new ships, while also providing ongoing business opportunities for equipment suppliers, design firms, and shipyards.

34th Week Topic: Biomethane Bunker Fuel

The direction of alternative fuel main engines for new vessels in 2024 is undergoing subtle changes, with liquefied natural gas (LNG) making a return as a primary alternative fuel for new ships, highlighting a more environmentally friendly market approach due to the negative carbon advantages of liquefied biomethane. Liquefied biomethane, also known as bio-LNG, has the potential to be regarded as a negative carbon fuel when considering its entire lifecycle emissions. As experts explain, the upcoming EU fuel regulation, FuelEU Maritime, which comes into effect next year, will gradually tighten carbon intensity limits for vessels, but will allow shipowners to pool their fleets to collectively achieve emission targets. This means that other ships can join compliant pools with those using negative carbon fuels, allowing them to benefit from the aggregated reduction in carbon intensity. 

Ships using a fuel blend of 30% liquefied biomethane and 70% fossil LNG can achieve a carbon emission reduction that equates to the compliance of 30 vessels employing conventional ultra-low sulphur fuel oil, thus forming a carbon compliance pool. Furthermore, this compliance pool is not limited to vessels within a single company; multiple companies can collaborate to establish such pools. This mechanism incentivises different vessels to form compliance pools, especially since not all shipowners are willing or able to use alternative fuel engines. 

Not every shipowner can easily change their operational model to incorporate alternative fuels, or have the capability to source alternative or bio fuels at refuelling points. However, the use of compliance pools enables these shipowners to share the benefits of alternative fuels or bio-LNG, even without direct usage of such fuels. From last year until now, we have observed a rapid rise in methanol as a mainstream alternative fuel in new shipping orders. Currently, as LNG becomes more widely available and competitively priced, the maritime industry is once again considering LNG as a fuel to comply with increasingly stringent greenhouse gas regulations, particularly the bio-LNG variant as a negative carbon fuel. Despite concerns from environmental organisations regarding methane leaks from LNG contributing to greenhouse gas emissions, shipowners still wager that this fuel can meet regulatory requirements. Industry professionals point out that progress has been made in addressing this issue, as engines with significantly reduced methane emissions are already available, suggesting this may not be a problem in the coming years. Like methanol and other alternative fuels, LNG can have a more favourable greenhouse gas emission footprint if produced in an environmentally sustainable manner, whether through producing liquefied biomethane from biological waste or synthesising LNG. The European division of NYK Group has partnered with Titan Clean Fuels to supply fuel sourced from liquefied biomethane for its vessels. 

At present, the carbon quota price for heavy fuel oil stands around €89 per ton, which is insufficient to drive significant decision-making changes. However, FuelEU Maritime differs in that fines for exceeding carbon intensity limits could reach as high as €2,400 per ton. According to S&P Global, Hapag-Lloyd is pursuing a tender that may involve 250,000 tons of bio-LNG to fuel its gas-powered vessels, while also establishing green shipping services in collaboration with the Zero Emissions Maritime Buyers Alliance (Zemba). 

Any form of biomass energy fuel is limited, yet synthetic fuels like synthetic LNG (e-LNG) are costly in terms of scaling, presenting challenges for acceptance in the shipping industry. Although bio-LNG may not entirely meet all decarbonisation needs within the shipping sector, its supply is expected to significantly impact maritime decarbonisation. Currently, there is approximately 30 million tons of biogas production capacity globally each year. Overall, liquefied biomethane could potentially satisfy around 13% of the shipping industry's total energy demand, indicating its potential as an important alternative fuel. As the International Maritime Organization strives to establish new policies to meet decarbonisation goals, and with the EU implementing FuelEU Maritime, this growing resource could play a crucial role in achieving carbon emission regulatory targets. Additionally, LNG has been more effectively integrated into the global fuel supply network than other alternative fuels, providing an inherent advantage.