lead to a loss of value of 7 years out of 25 years. This means that 28% of the lifespan of the current fleet is removed which in itself represents a financial loss likely to be covered through higher freight rates. According to estimates made by UNCTAD, the value of the global container fleet was USD 159 billion in January 2021. Simplistically, removing 28% of the lifespan corresponds to a one-off loss of USD 45 billion. In relation to Maersk’s decarbonisation efforts, shipbroker reports indicate that Maersk just added an order of another four carbon-neutral 16,000 TEU vessels at a cost of USD 175 million each. This price approximately 13% higher than the current benchmark rate of USD 150 million for such vessels if built for conventional fuels. Again – simplistically – replacing the current fleet with a carbon-neutral fleet will thus be 13% more expensive and, based on the value of the current fleet, represents an added value of some USD 21 billion. Finally, the benchmark value of Maersk’s 16,000 TEU vessel equals slightly less than USD 11,000 per TEU of capacity. The current fleet has a capacity of some 25 million TEU, corresponding to a newbuilding cost of some USD 270 billion. Under normal circumstances this capacity would be built over 25 years, but with the accelerated plan it will now be 18 years. This means that the investment cost increases from USD 11 billion per year to USD 15 billion per year, an increase of USD 4 billion per year. It should be kept in mind that carriers would need to replenish the fleet even if they did not decarbonise. Hence the one-off simplistic cost of the speed-up would be some USD 70 billion. As the industry moves 180 million TEU per year, this would represent a cost increase of USD 22/TEU if split over the full 18-year transition period. Indications presently are that such green fuels are 3-4 times more expensive than regular fuels. Most likely this price will decline over time, but it is presently unclear what the exact price point will be eventually. According to Hapag- Lloyd’s latest quarterly results they spent EUR 457 million on bunker fuel and they moved 3 million TEU. At 1.14 USD/EUR this is USD 181/TEU in average raw fuel cost. If the green fuel is four times more expensive, this would add a cost of USD 543/TEU on average. It would therefore seem that the key impact on the shippers is more related to the cost of future fuels than the cost of the vessels. And of course a critical element here is the physical availability of the green fuels. But if we are a bit optimistic and assume such fuels will actually be made available, the financial ramifications of the transition will impact the shippers through the cost of the fuel. However, the past year has shown that many, though not all, shippers are clearly capable of paying thousands of dollars more in freight rates than prior to the pandemic. Not that any shipper is happy with the current state of affairs, but clearly it has been possible under the circumstances. Realistically, shippers should therefore already now begin to assume that once the market normalises this could well mean substantially higher freight rate levels in order to pay for an accelerated decarbonisation. And as a final comment: Yes, the above is extremely simplified and the numbers are highly uncertain, but as a ballpark estimate it shows that the process can be financially handled but will indeed also lead to higher costs for shippers.
Download PDF file
Cookie policy