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The Roadmap to Decarbonisation – Liner Fuel Choices Remain Under the Spotlight

A carbon free maritime sector by 2050 may seem a very long way from here, but big liner operators are already starting to make plans well in advance.

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Neil Dekker of shipping and commodity sector due diligence, credit reporting and risk management consultancy firm Infospectrum on 25 May published an article titled ‘The Roadmap to Decarbonisation – Liner Fuel Choices Remain Under the Spotlight’; the article has been shared with Singapore bunkering publication Manifold Times:

A carbon-free maritime sector may seem a distant prospect, but the largest liner operators are aready making plans to comply with regulatory measures well in advance of the key 2050 deadline. However, many questions need to be answered and challenging decisions need to be made.

The liner sector may be considered by some as one of the smaller components within the broader maritime decarbonisation movement, given its relatively small total fleet size when compared to the dry bulk and tanker sectors. However, its small number of prominent operators are proactive on this huge issue. As the carriers of virtually all our daily consumer goods, they are very much in the shop window, and while the regulatory aim of a carbon-free maritime sector by 2050 may seem well distant today, decisions on vessel newbuilding orders and fuel types are having to be to be made now. A global liner sector fleet of around 5,400 vessels clearly consumes an enormous amount of bunkers. And to put this into perspective, Maersk, the largest shipping company in the world (with a fleet of over 700 vessels), consumed 10.3 million tonnes of fuel in 2020 at a total cost of USD 3.84bn. The latter figure would of course have been considerably higher had it not been for the disruption brought on by the effects of COVID-19. Estimates also suggested that container vessels accounted for around 30% (or about 184m tonnes) of global shipping industry CO2 emissions in 2019.

The need to decarbonise is gaining more traction in the maritime world, with a coalition of major charterers (including high-profile companies such as Cargill, Bunge, Louis Dreyfus, ADM, Trafigura, Shell, Norden, Torvald Klaveness and others) launching the Sea Cargo Charter framework in October 2020 to assess and monitor ongoing greenhouse gas emissions in the maritime supply chain. It is assumed that many more companies will sign up to the charter, and member operators will need to be increasingly transparent in terms of how they are improving emissions and meeting ongoing regulatory requirements.

As it stands, IMO regulations require all vessels to be compliant with 0.5% sulphur emissions, but new proposals requiring vessels in all sectors to meet more stringent operational efficiencies and carbon intensity are being pushed through to take effect from 2023, and so the operating environment continues to change. As of January 2021, about 915 container vessels were fitted with scrubbers (meaning they continue to have the option to use high sulphur fuel oil ‘HSFO’), with the vast majority of the remaining fleet using very low sulphur fuel oil (‘VLSFO’). While liner operators enjoyed low VLSFO prices for much of 2020, they will be wary that the average Rotterdam price in May 2020 of USD 190 per tonne currently stands at around USD 470 per tonne. However, sharp cyclical movements in the oil industry are not uncommon, and they will continue throughout the transition of the maritime industry to its ultimate aim of carbon-neutrality. Will these price developments primarily drive future decisions regarding choice of fuels and engine configurations?

Indeed, many ship owners and operators continue to look at the decarbonisation movement as a cost issue, and as such, often delay strategic decision making – ultimately the approach taken with regard to decarbonisation does not just lie in using VLSFO or burning HSFO with the use of scrubbers. These are interim measures only, and much more work is needed. Given what is happening in the automotive world, where diesel-fuelled cars will no longer be made by most European car manufacturers in the near future, the continued production of IFO 380 on a global level will presumably be near-term only. Any stakeholders (particularly ship operators/owners) thinking that they can start to make decisions in early 2049 because they do not want to consider potential additional costs in the interim, will have a big shock in store.

Most ship owners view the lifetime of vessel assets to be 20 to 25 years, but even newbuildings in the pipeline today may potentially have a much shorter lifespan given that the choice of fuel type is so paramount. At the very least, costly vessel retrofits in terms of new engines (from a very small number of manufacturers) and additional specification are likely to be required. And these vessels will then be temporarily taken out of the supply chain, but at what additional costs for shippers and consumers in terms of delays? Hence, a co-ordinated approach is required with the oil majors and bunker suppliers involved at an early stage. Remember, meeting global decarbonisation measures as a part of the climate movement are not solely incumbent on the fuel users, but the fuel manufacturers and suppliers too.

SL2 Con 266 ship propulsion power tcm71 181978 2

What are some of the key questions and considerations for stakeholders in the container sector?

For owners/operators:

  • What type of fuel should be utilised (biodiesel, methanol, ammonia, LNG, hydrogen, and other forms of biomass or renewable power)?
  • Renewal of fleet, investment decisions? Which shipyards?
  • Vessel specification, engine type for shipyards?
  • Financing (European banks/financiers are already insisting on so-called “Green loans” only)
  • Ensuring a global supply of fuel at all key locations and from which suppliers?
  • Increased credit lines from fuel suppliers
  • A change to new suppliers, and building new commercial relationships?
  • Cost versus any potential backlash from shippers/clients as part of their Sustainability standards and requirements

For fuel suppliers:

  • Research into new fuels
  • Meeting of fuel standards which will evolve over time
  • Meeting individual fuel capacity and requirement levels, including storage (in co-ordination with oil/energy majors). This largely depends on which fuel(s) operators use, which remains undecided
  • Investment in new bunkering vessels?
  • Meeting geographical fuel availability levels
  • Deal with fuel stability and compatibility challenges

To date, most of the top 10 global liner operators have embraced decarbonisation. Not only are they in the shop window, but they have large operating fleets and seemingly decisions should not be delayed given the clear cost implications. In addition to Maersk’s huge fleet, MSC has a current fleet of about 590 vessels, CMA CGM (560), COSCO (500), Hapag-Lloyd (250), Ocean Network Express (230), and Evergreen (200). And the majority of these vessels are large boxships.

Despite the negative impact of COVID-19 in 1H 2020 on global cargo volumes, the container sector has been red-hot since about July 2020, with freight rates, revenue and profits all rapidly heading north for the key operators, to historic highs. The graph below charts the freight rate developments on two core trade routes during this time frame, highlighting that they have reached record levels in under 12 months. This has encouraged many industry players to embark on substantial newbuilding commitments, but most have a firm eye on the future. Maersk recently announced its intention to deliver the world’s first carbon neutral liner vessel by 2023. The 2,000 TEU vessel will reportedly operate on standard VLSFO, although the plan is to eventually utilise either e-methanol or bio-methanol. Hamburg and Singapore-based owner Asiatic Lloyd has recently ordered two conventionally-fuelled 7,100 TEU containerships from a Chinese shipyard that are classed as “ammonium-ready”. However, by way of warning, a previous attempt by Hapag-Lloyd to convert an “LNG-ready” vessel to LNG, proved to be uneconomic.

Selected spot container freight rates 2020 to 2021

This aside, CMA CGM has already championed the use of LNG, with its series of 23,000 TEU newbuildings all geared towards this fuel-type, and a global supply-chain deal extended by French oil major Total in the bag. The company has just placed another order for 22 vessels which includes 12 units (of 13,000 TEU and 15,000 TEU capacity) that will also be configured to run on LNG. However, not all liner operator majors and wider sector stakeholders see LNG as the future fuel (it is seen by some more as an interim measure, and as a fossil fuel, emits harmful methane). MSC is exploring the hydrogen route, and more recently has joined a global initiative led by the Hydrogen Council. Ocean Network Express recently trialled the use of biofuel with a sustainable fuel manufacturer called GoodFuels. Hapag-Lloyd’s most recent order for 24,000 TEU newbuildings comprises vessels with dual-fuel capability; the company has also tested a biofuel based on cooking oil. The larger Asian-based liner operators (Evergreen, HMM, Yang Ming, and COSCO) have been noticeably quiet concerning their future strategies. However, this still proves that the leading bunker suppliers/producers need to maintain their current active research levels into alternative fuels and viable solutions in order to ensure that they are future-ready for the energy transition.

A number of the vessels in the current orderbook have a dual-fuel specification and so companies are hedging their bets, but it remains unclear if the dual-fuel caters for the new range of fuels on the horizon such as hydrogen, methane and ethanol.

Of course, there are so many questions to answer, but liner operators are starting to look at these in earnest. The leading liner operators could be considered as amongst the first taking steps to fulfil decarbonisation aims. But whatever sector you trade in, you are all part of this process, start engaging, and everyone (primarily shippers) will have to come to the party to a degree in terms of paying for the “new maritime world”.

 

To find out more about Infospectrum’s counterparty risk services, please click here 

Photo credit: Infospectrum
Published: 28 May, 2021

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Milestone

China: Chimbusco and BJEC enter green methanol cooperation agreement

Document was signed between Ding Lihai, deputy general manager of Chimbusco, and Li Jianjun, deputy general manager of BJEC.

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Chimbusco x BJEC MT

China Marine Bunker (PetroChina) Co.,Ltd. (Chimbusco) and POWERCHINA Beijing Engineering Corporation Limited (BJEC) on Thursday (3 July) formally entered into a green methanol strategic cooperation framework agreement.

The document was signed between Ding Lihai, deputy general manager of Chimbusco, and Li Jianjun, deputy general manager of BJEC.

BJEC, a subsidiary of China Power Engineering Group, is experienced in the survey, design, construction and technology research and development of large-scale renewable energy projects.

Moving forward, the two parties said they will respectively focus on their core advantages and work together to promote the production, supply, storage and refuelling of green methanol as an energy source to help support the low-carbon transformation of the shipping industry.

Ding Lihai said: “The shipping industry is one of the important sources of global carbon emissions. Promoting low-carbon fuel is the key to the transformation of the industry. As the main force in the supply of bunker fuel, Chimbusco has been committed to expanding its clean fuel supply capacity. The cooperation with BJEC will integrate the advantages of green energy development and fuel supply, accelerate the large-scale application of green methanol, and meet the needs of shipping companies for clean fuel. We look forward to providing effective solutions for the green transformation of the shipping industry through the joint efforts of both parties.”

Li Jianjun said: “Implementing the ‘dual carbon’ goal is an important responsibility of enterprises. BJEC has accumulated strong technical strength in the field of green energy. This cooperation with Chimbusco will focus on the entire industrial chain of green methanol, from raw materials, production to supply, to provide clean and sustainable fuel solutions for the shipping industry. The complementary advantages of both parties will promote the rapid development of the green methanol industry and inject strong impetus into the low-carbon transformation of the shipping industry.”

 

Photo credit: China Marine Bunker (PetroChina) Co.,Ltd.
Published: 8 July 2025

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Milestone

Towngas and Royal Vopak collaborate to expand green methanol supply chain network

‘Towngas has recently completed a 6,000-tonne green methanol bunkering project, the largest in Asia,” said its Chief Operating Officer – Green Fuel and Chemicals.

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Towngas x Royal Vopak MT

Hong Kong and China Gas Company Limited (Towngas) and Vopak China Management Co., Ltd. (Royal Vopak) on Tuesday (8 July) said both recently signed a strategic framework cooperation agreement to collaborate in areas such as green methanol production, storage, bunkering, and trading etc.

Focusing on the Chinese mainland, Hong Kong, and Asia-Pacific markets, both parties are joining forces to expand an efficient green methanol supply chain network and support the shipping industry’s low-carbon transition.

The two parties will capitalise on their respective strengths to expand the supply network of green methanol.

Towngas employs proprietary technology to convert agricultural and forestry waste as well as scrap tyres into green methanol, and has obtained multiple international certifications and provides a sufficient supply of green methanol for maritime fuel bunkering.

Royal Vopak provides green methanol storage and terminal services with its comprehensive storage and terminal infrastructure and coastal port network advantages.

Together, the two parties will achieve efficient resource allocation and ship green methanol to the Greater Bay Area, East China, South China, and the broader Asia-Pacific markets, further expanding the green methanol supply chain network.

Towngas and Royal Vopak will further develop multiple areas of regional cooperation, including in the Greater Bay Area. By leveraging the strengths of the ports in Hong Kong, Shenzhen, and Guangzhou, the partnership will focus on “production and storage synergy” as its core to strengthen cooperation around logistics and terminal facility construction, and to build an integrated green methanol storage and transportation network.

In East China, the two parties will centre their collaboration in Shanghai and Ningbo, two major international ports, to further strengthen cooperation in logistics storage and bunkering facility construction to meet the growing demand for green fuels at both ports.

In the Bohai Bay region, with Tianjin as the strategic hub, Towngas will transport green methanol produced at its northern China production base to Royal Vopak’s local storage tank farm, then achieve resource allocation through the Royal Vopak’s distribution network, supporting the supply of green methanol from northern China to the national and Asia-Pacific markets.

The two parties will also target key export markets, such as Singapore, Vietnam, Japan, and South Korea, to accelerate overseas expansion and boost the market competitiveness of clean energy in the Asia-Pacific region.

“Towngas has recently completed a 6,000-tonne green methanol bunkering project, the largest in Asia,” said Sham Man-fai, Towngas Chief Operating Officer – Green Fuel and Chemicals.

“It was completed with the support of Royal Vopak’s Tianjin storage tank farm facilities, laying a solid foundation for this partnership.

“Towngas’s Inner Mongolia green methanol plant is set to increase its annual capacity from 100,000 tonnes to 150,000 tonnes by the end of this year, with plans to further expand to 300,000 tonnes by 2028. Together with Royal Vopak’s storage and terminal services infrastructure and coastal port network, the two parties will build a comprehensive green methanol supply chain network.”

 

Photo credit: Hong Kong and China Gas Company Limited
Published: 8 July 2025

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Biofuel

Chimbusco Pan Nation bio bunker fuel supply volume in H1 2025 surpasses 2024 total

Company supplied over 78,000 metric tonnes of marine biofuel in Hong Kong in the first six months of 2025, surpassing its total biofuel supply for the whole of 2024.

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Chimbusco Pan Nation bio bunker fuel supply volume in H1 2025 surpasses 2024 total

Hong Kong-based marine fuel oil supplier Chimbusco Pan Nation Petro-Chemical (CPN) on Friday (4 July) said it has supplied over 78,000 metric tonnes (mt) of marine biofuel in Hong Kong in the first six months of 2025.

As such, the company said its biofuel volume for the first half of the year exceeded its total biofuel supply for the whole of 2024. 

“This record-breaking achievement highlights our commitment to sustainability and innovation in the maritime industry,” the company said in a social media post. 

“From January to June 2025, our team surpassed last year’s total, proving that dedication and excellence knows no limits—and exceeded 2024 by 80%!”

Manifold Times previously reported CPN setting a record for China’s largest B24 marine biofuel bunkering operation.

CPN delivered 6,300 mt of B24-VLSFO in Hong Kong to container ship XIN LOS ANGELES on 15 May. The supply exceeded CPN’s previous record of 5,500 mt delivered to the same ship in February 2025.

In April, the company also commenced supply of B30 biofuel in Hong Kong. 

Related: Hong Kong: CPN hits new record for China’s largest B24 biofuel bunkering operation
Related: CPN achieves largest B24 bio bunker fuel delivery in Hong Kong and China
Related: Chimbusco Pan Nation launches B30 bio bunker fuel supply in Hong Hong

 

Photo credit: Chimbusco Pan Nation Petro-Chemical
Published: 7 July, 2025

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