DNV’s Energy Management service has identified substantial fuel savings that can be made by today’s shipping companies.
By adopting a new and holistic approach and taking into account organisational factors as well as technology solutions, improvements of 5-15% are realistic. Since the fuel bill can account for as much as 50-70% of the total voyage cost, small savings could have a big financial impact.
Looking beyond technology
Shipping companies have tried to save fuel - and the cost of fuel - for years, but have only partly been successful. In spite of knowing what to focus on, it is still difficult to fully realise the savings potential. Thus, history tells us that the key challenge is to see the proposed solution through to implementation, thereby ensuring that the desired fuel saving is achieved.
DNV has seen examples of companies having little or no knowledge of how effective they are in managing energy consumption and costs. Amongst other factors contributing to this scenario is that their monitoring systems may not be good enough and that they are not benchmarking their performance over time so that they know how they are travelling. Also, ship management has traditionally not been very focused on saving fuel, so their efforts to reduce consumption and/or costs often end up falling short of the initial objectives. An example is the increased use of silicone hull paint. Companies are willing to spend 3-4 times more on silicone anti-fouling paint than traditional materials, but they are rarely able to document the savings that arise as an outcome. When other variables are added, including the condition of the propeller, wind and current, how do they know if the paint is really contributing to saving fuel?
Many companies start with solutions that are too complicated and give up when these fail. A more logical and structured approach is to begin with what is easy to implement and has a high financial impact in order to create enthusiasm for fuel saving within the organisation before initiating more complex solutions. By this is meant, it is important to do things in the right order - this is as much about understanding organisational changes as it is about saving fuel.
Another factor contributing to the current state is that, typically, companies have not been set up for optimising fuel consumption. There is very little ownership of the fuel bill, as the technical department is focused on off-hire and safety whilst the commercial department’s main focus is on revenue and market share. There is a need to understand the underlying drivers within your own organisation and recognise that the principles of change management can be a powerful tool when applied in a professional manner.
Energy Management
DNV offers Energy Management (EM) services that are focused on process improvements and take a holistic approach by addressing organisational and technical issues. EM is run as a dedicated project and starts off by identifying potential improvement areas to reduce fuel consumption; secondly, the solution for how this potential should be realised is defined; and thirdly, the implementation of these solutions is supported to actually achieve a reduction in fuel consumption.
The DNV EM approach is structured into six closely related disciplines.
Voyage Performance addresses the commercial aspects as well as the application of speed and voyage scheduling.Ship Performance analyses the hydrodynamic side of operating ships.
Bunker Management uses the expertise of Det Norske Veritas Petroleum Services, looking at all aspects of bunker prices -quality and quantity.
The main and auxiliary engines are analysed and have demonstrated major shortfalls in terms of close monitoring and performance analysis.
The user typically examines all the indirect energy consumers, such as reefer systems, ventilation, heating, thrusters etc.
The last and embedded discipline of any EM project is Management and Organisation. In our experience, without the commitment and buy-in from senior management, the project is more than likely to fail.
Verifiable Success
Any improvement has to be measured to verify success. Unclear roles and responsibilities will have to be identified to ensure that fuel savings are properly accounted for. Technology can to a small extent solve your organisational challenges but there is no quick-fix tool or solution.
Our benchmarking is effective and we are able to use our experience to advise you on your standing relative to the best practices of our reference clients.
Knowledge Transfer
DNV is typically heavily involved at the beginning of an EM project, but as it proceeds we enable the shipping company to take over more and more of the project in its own right. This is key to the ongoing success of the project and our approach ensures that an extensive transfer of knowledge takes place throughout all phases of the interaction with our clients.
We work to gain the support of all departments and ranks. We address Energy Management as a company-wide project not just a ship management project. The effort has little value unless the whole company is involved, including the commercial, sales and operational units; after all they are all in it together. If people communicate properly and understand each other’s challenges then half the battle has been won.
Quick Results
The biggest savings and perhaps the easiest to achieve come from scheduling and speed management.
Many captains are very conservative when it comes to speed and passage management, they would prefer to ensure their ETA by speeding up at the start of the voyage and slowing down or even waiting at the end (hurry up and wait). This is expensive and burns more fuel than required. A speed reduction of only one knot can reduce fuel consumption by 5-10 per cent.
Container ship schedules are sometimes set over a year in advance and often require relatively high speeds between some legs to ensure that the arrival times are met. The captain has little incentive to go slow and would prefer a buffer to make sure he gets to the next port on time. This is not fuel efficient and needs to be recognised when planning future routes.
Game on!
Some companies say it is too expensive to use external support to reduce their fuel consumption, but the fact is that, with the large fuel reduction potential and today’s high fuel prices, it is much more expensive not to initiate, or to delay, the implementation of structured fuel reduction initiatives.
DNV has so far carried out Energy Management projects for more than 15 ship owners over the past couple of years and can utilise not only this experience but also experience gained from its more than 150 years of leadership in the maritime industry to achieve the best possible outcome.
During a recent project with a major Asian Container company, DNV demonstrated at the pilot implementation of quick-wins more than 5% fuel reduction, resulting in the following savings;
Reduction in HFO consumption of 90,000 ton annually
Reduction in fuel costs (improved bottom line) of 50 MUSD annually
Improved environmental performance of 290,000 ton CO2 annually
Client statement:
“DNV added a lot of value by first helping us understands where we are compared to the industry and compared to the leading organizations with regards to Energy Management. DNV’s tested methodology and commanding knowledge of best practice was then used to identify and prioritize the best next challenges for our organization to take on”
DNV presented Energy Management for a client and he decided to move forward on his own using internal resources. 10 Months he recognized that they had achieved very little and he called in DNV to assist (and had lost valuable time)
A Nordic based tanker company decided to hire DNV for an Energy Management assessment. They recognized that they had done very little I terms of fuel saving and needed a starting point. DNV helped the client to identify savings in the range of 12 – 30%.