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BIMCO: The impossible mission of improving operational efficiency year after year

While the new regulation applies to ships, measuring efficiency becomes complex as the charterer usually holds the key to improving operational efficiency.
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Lars Robert Pedersen, Deputy Secretary General at BIMCO published an article in the March Bulletin magazine discussing the various complexities involved when ships attempt to improve operational efficiency each year:

The International Maritime Organization (IMO) recently approved regulatory changes that will require ships to improve their CO2 emissions per transport work annually. In the best-case scenario, the new amendments may not be damaging to the industry’s efforts to reduce its carbon footprint. In the worst-case scenario, the ships’ CO2 emissions will rise, as more ships will be needed to obtain the required improvements.

If a car owner was asked to improve the mileage of their car each year through operations – and, thereby, reduce how much CO2 it emits – certain behaviors could be changed and improved at first. The car owner could avoid having the engine running while stopping for a red light, and aim to drive carefully, with a “feather” on the accelerator. After such operations and behaviors had been improved, however, the car owner would quickly run out of any other option but to drive downhill continuously.

What would you do when you have run out of options? Sell your car and buy a new one, once you have used all the operational tools available? How quickly will you run out of ways to improve the operational efficiency of a new car?

Similarly, with a ship, certain improvements can be made in the beginning to increase its operational efficiency, but – as with a car – you will quickly run out of options.

This is, nonetheless, what ships will probably be required to do – improve their CO2 emissions per transport work year after year – if and when the new IMO regulatory changes to MARPOL Annex VI are adopted and enter into force, with the requirement to improve their Carbon Intensity Indicators (CIIs). This will probably happen in 2023.

The amendments have been approved by the IMO, and will be up for adoption at the Marine Environment Protection Committee’s (MEPC’s) 76th session, to be held later this year.

What is efficiency?

Before we even begin to look at how a ship’s operational efficiency can be improved continuously, year after year, we need to discuss what efficiency is, as the amendments will be regulating how much CO2 it emits in relation to its transport work. Like the mileage of a car, how many litres of petrol it consumes per kilometre driven.

So, what is efficiency in the context of CII? The new regulation does not directly define it in terms of a chosen metric, but it seems certain that the metric given by the guidelines is the annual efficiency ratio (AER) – the grams of CO2 emitted per deadweight tonne, per nautical mile travelled. The deadweight of a ship is constant, as it is the ship’s maximum carrying capacity.

The emissions of a ship are, to a large extent, determined by two factors: its speed and submersion in water. The more you load onto a ship, the harder it becomes to push it through the water. But when you always measure against the full capacity of a ship, as is the case with the AER, it means the submersion is not a variable in your efficiency metric. In fact, the lighter the ship, such as an empty one, the better the efficiency, because it is light in the water and emits less CO2 per full deadweight of the ship travelling. So, however many miles you travel, an empty – or not very loaded – ship will be more efficient than if it is fully loaded and submerged deep in the water.

In conclusion, a ship not carrying anything is more efficient than a fully loaded ship – everything else being equal – according to the AER metric. Similarly, a slow-steaming ship is more efficient than a ship going at full speed, everything else being equal.

What, then, is the intention of the new regulation? It may be that some will end up loading less to improve efficiency – which would, ultimately, require more ships for the same amount of cargo transported and, for the total fleet, result in more CO2 emissions than without the regulation.

Efficient operation of a tanker or a bulker is normally thought to be when a ship goes fully loaded from port A to port B, and then loads in the same port to go fully loaded to the next port, and so on. Inefficiency, on the other hand, is going from port A to port B, then sailing empty to the next port. With the AER metric, however, the more you travel in ballast (empty), the more efficient your average annual rating will be, because an empty ship emits less CO2 compared with a laden one.

The charterer holds the key?

This discussion leads us to another issue. The shipowner may hire out the services of a ship for months, or even years, to a “time charterer”, who then decides which ports the ship will call at and what cargoes will be carried. The charterer may also have the right to adjust the speed of the ship. All of these factors have an impact on a shipowner’s ability to improve the operational behaviour of their ship.

A time charterer has the freedom to operate the ship without being responsible for the continuous operational efficiency improvements that will be required year after year. They may decide that a cargo needs to be transported from port A to port B at best possible speed, perhaps choosing actions and operations that are inefficient according to the AER metric. When the annual assessment of the ship’s rating is due, the shipowner could end up in a situation where the operational efficiency of the ship has not improved, or even worsened, and will be required to develop a plan to improve the efficiency next year. This is a difficult situation for the shipowner, because the plan may conflict with the contractual rights that the time charterer has to trade the ship freely.

To further complicate the matter, a group of large charterers has recently announced the Sea Cargo Charter, under which they commit to improve the operational efficiency of the ships they employ by monitoring – and seeking improvements to – the Energy Efficiency Operational Indicator (EEOI).

The EEOI is different from the soon-to-be-mandated AER metric in that it rates the CO2 emissions against the cargo tonne miles. Where the AER implicitly rewards ballast voyages, the EEOI rewards loaded voyages. Only if the speed changes do the AER and EEOI respond comparably. 

In the future, as a shipowner, you can make a plan, but you should cross your fingers that your ship’s charterer will follow it, even if the plan is not in his or her best – or most efficient – interest.

It is complicated to see how this will work in practice, because the new regulation will apply to the ship, and it is often the charterer who holds the key to improving a ship’s operational efficiency – even though not everyone agrees how efficiency should be measured.


Photo credit and source: BIMCO
Published: 4 March, 2021

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.
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September 4, 2026

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.
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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.
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September 4, 2026

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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