smarter solutions for bulkers and tankers …

© Wärtsilä

SMARTER SOLUTIONS FOR BULKERS AND TANKERS

OPTIMISING TCE & FUTURE PROOFINGWARTSILA WEBINAR 9 JUNE 2020 15:00 CET / 09:00 EST

09/06/2020 [Presentation name / Author]1

© Wärtsilä 9.6.20202

WEBINAR PRACTICALITIES

Test audio if needed

File>Preferences>AudioHide control panel

Ask a question using the widgetUse this to undock the Questions widget

The webinar is 45 min + up to 15 min Q&A

• High bandwidth Wi-Fi or hardwire is better

• You will be muted when you join

• Questions can be sent with the questions widget in the control panel

• The recording will be shared after the webinar

• Local telephone numbers at own cost (in case audio by telephone)

• Sit back and gain insight!

© Wärtsilä

Kevin HumphreysGeneral Manager,

Merchant and Gas Carrier Segment,Wärtsilä Marine Business

Paradigm Shift

Johnny KackurGeneral Manager,

Merchant and Gas Carrier SegmentWärtsilä Marine Business

Optimised Power & Propulsion

Systems

John HatleyDirector, Market Shaping,


Business Case

Gavin LipsithHead of Content,

Wake Media

Moderator

YOUR PRESENTERS

© Wärtsilä

09/06/2020 4

GROWING UNCERTAINTY OVER CAPEX DECISIONS

Install EGR/SCR?Right system? Install or scrap?

Install scrubber or buy MGO/VLSFO?

Which fuel? When to build?

Sulphur BallastWater

NOx limits

IMO 2050

ACCELERATING CHANGE

Each decision can limit operational flexibility and useful lifeDirect impact on revenue generation and vessel value

© Wärtsilä

09/06/2020 5

EMERGING BUSINESS OPPORTUNITIES

Designed built and operated to be

competitive now and in the future

Increasing operational flexibility to

weather volatile markets

Greater transparency on vessel performance

for e.g., green financing,

charterer specifications

Data and Insight Flexibility Future Ready

ACCELERATING CHANGE

Greater scrutiny now than ever before. The opportunity to deliver starts with a shift in how a vessel is conceived

© Wärtsilä

FUTUREPROOF MERCHANT VESSEL INVESTMENTS

A PARADIGM SHIFT

Kevin Humphreys General Manager,Merchant and Gas Carrier Segment

9 June 2020 SMART SHIPPING | Kevin Humphreys6

© Wärtsilä© Wärtsilä INTERNALINTERNAL

WHY HAVE TRADITIONAL RELATIONSHIPS CHANGED

WHAT ARE THEY CHANGING TO

HOW CAN WE MAKE OUR VESSELS FUTURE READY

09/06/2020 [Presentation name / Author]7

© Wärtsilä

Why is the industry transforming?

* Identified in McKinsey Project Exploration study

Offshore

Cruise

Ferry

Gas Carrier

Containership

Fuel efficiency

0.2 BEUR

1.3 BEUR

0.3 BEUR

14.5 BEUR

0.5 BEUR

Time at Terminal

0.7 BEUR

-

1.0 BEUR

2.1 BEUR

-

20 BEUR waste not addressable by conventional product development*

Big data analytics

Intelligentvessels

Smartports

Disruptive forces

© Wärtsilä9

Common language to deliver value

9 June 2020SMART SHIPPING | Kevin Humphreys

© Wärtsilä 09/06/2020 [Presentation name / Author]10

Why change business model?

• GHG accountability

• Bank lending terms

• Investors demands

• IMO regulations

Bus

ines

s M

odel

TIME

Old Way

New Way

TODAY

DISRUPT OR BE DISRUPTED

© Wärtsilä

Technology and collaboration enabling future proofing of vessels and business returns

Past Present Future

Little to no collaboration

Some collaboration

Partner to deliver value

COLLABORATION TO DELIVER VALUE

© Wärtsilä

Business and financial case agreed between counterparties with value silos

independent of suppliers

Yard delivers design to technical specification and budget based on

makers list

9 June 202012

TRADITIONAL STRUCTURE OF NEW VESSEL ORDER

Yard

Suppliers on Makers List

Owner

Bank

Investors

Charterers


FUTURE FOCUSED APPROACH TO NEW VESSEL ORDER

Yard contracted to deliver vessel with future value and return that benefits all

Collaboration between suppliers and yard to deliver vessel with reduced

suppliers and higher integration

Business and financial case agreed Vessel need and profile agreed Upfront Technology Integration

Future wealth gain solutionsReduced environmental impact

Fuel flexibility & efficiencyIncreased future reseal value

Owner

Bank

Investors

Charterers

Collaborate with Technology Suppliers

Yard

Technology suppliers support

yard and integration

© Wärtsilä14

DESIGN VS. NEED

Actual vessel operation

Historically Vessel Design Didn’t Meet Your Most Profitable Operating Profile

% of Total

SPEEDSPEED

% of Total

Operational Profile 2007-2008

Vessel design intent

© Wärtsilä

TYPICAL VESSEL OPEX BREAKDOWN AS PERCENTAGE OF COST

SMART SHIPPING | Kevin Humphreys9 June 202015

Crew52%

Stores8%

Spares8%

Fees & Service7%

Insurance6%

Management Fees5%

Repairs4%

Lubes4%

Transportation3%

SQE, Environmental, Vetting3%

Owners Account

Gross Charter Paid63%

Broker Commission 2%

Bunkers17%

Canal Tolls10%

Discharge Port4%

Stevedoring2%

Pilots, Tugs1%

Bunkering Port1%

Loading Port1%

Charterer Account

© Wärtsilä

WÄRTSILÄ INTEGRATED CONCEPT

9 June 202016

New Paradigm of Merchant Vessel

Investment

New Engine Room Concept:• Highly efficient 4-Stroke• PTO Generators• Reduced CAPEX• Low weight for increased cargo• CPP

Efficiency & Emissions: • Wartsila 16V31DF• Reduced VOC Emissions• SOx & NOx Control• Efficient slow steaming

Optimized Sailing• Fleet Operations Systems• 24/7 Remote monitoring and troubleshooting• Revenue maximizing platforms

Poseidon Principles audit compliance

Drastically reduced emissions

Reduced integration cost

Redundancy for safety and reduced offhire

Higher asset resale value

Counterparty risk reduction

© Wärtsilä

POLL

9 June 202017

© Wärtsilä

BUSINESS CASE:

NEWCASTLEMAX

ENHANCED INVESTMENT & ENVIRONMENTAL RETURNS

John Hatley Director Market Shaping

9 June 2020 SMART SHIPPING | Kevin Humphreys18

© Wärtsilä 9.6.2020 [Presentation name / Author]19

BUSINESS CASE

DEFENDERConventional Propeller

CHALLENGER Energo Flow

208K DWT NEWCASTLE BULK CARRIER

© Wärtsilä20[Presentation name / Author]09/06/2020

Capital Costs Vessel Operating Costs

Voyage Expenses Cargo Costs

Debt: Principal & InterestEquity Returns & DividendsDepreciationProceeds from sale or scrappingInvestment Administration

Crew & Officer WagesProvisions, General & AdministrativeSpares, Stores, Lubes, WaterRepairs & MaintenanceInsurance, Hull, P&I, PollutionTechnical Management FeesCommunication Expenses

Port & Terminal ChargesCanal TollsPilotage, Tugs, Line handlersRisk Bad Weather DelaysRisk Port Congestion Delays

Cargo LoadingCargo DischargeStevedoring

FUELCOST

Vessel Owner Pays Cargo Charterer Pays & Bareboat Charter Rate

Vessel Owner Pays Cargo Charterer Pays & Time Charter Rate

Cargo Charterer Pays & Cargo Freight

Vessel Owner Pays

Bareboat Charter

Time Charter

Voyage Charter or Spot Voyage

Liner Service

Vessel Owner Pays

CHARTER TYPES AND COST RESPONSIBILITIES

© Wärtsilä 9.6.2020 ONLY21

BUSINESS NEEDSBALANCING STAKEHOLDER REQUIREMENTS

• Equity Return• TCE Rate• Ship Utilization• Asset Resale Value• Reduce CO2 & emissions

• Charter Rate• Safe & Reliable transport• Lower fuel cost burden• Reduce CO2 & emissions

Traditional Investment ReturnsAnnual SavingsPaybackNet Present Value Wealth GainAsset Resale Value

Monetize Environmental BenefitsCO2 reductionCorporate Sustainability Goals

• Debt Rate• Risk Reduction• Asset Residual Value• Poseidon Principles:

Green Credentials across Loan Portfolio

Investment Profiles

OWNER

CHARTERERBANK

Charterer Owner Bank


SAVINGS AND 8% WACC ON CAPITAL:

Charterer>Savings - Min $55K to $111K with CO2 credit>5 Year NPV Savings $228K to $465K & CO2 reduced 7,085 tons

Owner>Returns - TCE boost $82K to $139K with CO2 credit>5 Year Wealth Gain $12K to $249K with CO2 Payback 3.9 to 2.3 years with CO2 >5th Year Resale value + $0.9 to $1.5 million with CO2

TEC gains from split fuel savings = Asset higher value & faster resale

Bank>Annual CO2 reduction 1,417 tons>Loan risk lowered Year 5 - Asset Residual cushion up $0.9 to $1.5 million

LADEN 11 KNOTS, BALLAST 12.5 KNOTSCHALLENGER OUTCOME IN ECO MARKET

© Wärtsilä

LADEN 12.5 KNOTS, BALLAST 14.2 KNOTS

9.6.2020 [Presentation name / Author]23

SAVINGS AND 8% WACC ON CAPITAL:

Charterer>Savings - Min $82K to $167K with CO2 credit>5 Year NPV Savings $343K to $700K & CO2 reduced 10,655 tons

Owner>Returns - TCE boost $123K to $208K with CO2 credit>5 Year Wealth Gain $185K to $541K with CO2 Payback 2.6 to 1.6 years with CO2 >5th Year Resale value + $1.4 to $2.3 million with CO2

TCE gains from shared fuel savings = Asset higher value & faster resale

Bank>Annual CO2 reduction 2,131 tons >Loan risk lowered Year 5 – Asset Residual cushion up $1.4 to $2.3 million

CHALLENGER OUTCOME IN STRONG MARKET


ACTIONS PRESERVING INVESTMENT RETURNS

Tornado plot illustrates the key attributes and impact magnitude on Net Present ValueReveals Key Management Focus & Actions to Mitigate Risk = preserve wealth gains

Wake Savings, $159.0

Wake Savings, ($713.3)

HFO Burn, $334.4

HFO Burn, ($813)

Price HFO, $728.0

Price HFO, ($728.0)

Assessed Co2, $906.8

Assessed Co2, ($906.8)

($1,500) ($1,000) ($500) $0 $500 $1,000 $1,500

Pessimistic Realistic Optimistic

NPV Thou $

Min

or I

mpa

ct

M

ajor

Im

pact

Tornado Plot: NPV Wake Field

Pessimistic Realistic OptimisticNPV Thou $

CHALLENGER CASE: MANAGEMENT FOCUS

© Wärtsilä 09/06/202025

TRUSTED EARLY COLLABORATOR ENHANCES RETURNS

Paradigm ShiftOriginatorThomas Kuhn 1962

© Wärtsilä

POLL

9 June 202026

© Wärtsilä

POWER AND PROPULSION

MAKING IT WORK FOR YOU

Johnny KackurGeneral Manager,Merchant and Gas Carrier Segment

9 June 202027

© Wärtsilä© Wärtsilä INTERNAL 9.6.202028

POWER AND PROPULSION

PROPULSION MAIN ENGINE AUX GENSETS DIGITAL SOLUTIONS

© Wärtsilä 08/04/202029

SMARTER PROPULSION


SMARTER POWER AND PROPULSION


© Wärtsilä

9.6.202031

CASE AFRAMAX TANKER

SMARTER PROPULSION MACHINERY

• Standard specification: 2-S + FPP• Service speed Td: 14.5 kn• CMCR: 13.450 kW• NCR: 9100 kW

WHAT KIND OF IMPROVEMENTS ARE POSSIBLE FOR BULKERS AND TANKERS?

Optimization Point: Hull lines, Main Engine & FPP

© Wärtsilä 9.6.202032

SLOW-STEAMING IS HERE TO STAYSMARTER PROPULSION MACHINERY

Source: Clarksons April 2020

• 11,5 kn Td: 4700 kW• ME load: 35% (CMCR 13.450 kW)

• 11,5 kn Tb: 3700 kW• ME load: 28%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

8 9 10 11 12 13 14 15

kW

kn

Aframax speed power curves incl 15% SM, laden & ballast

Td

Tb

Meaning propulsion powers are almost 50% lower!

© Wärtsilä 9.6.202033

OVER-POWERED WITH FPP... OR, SMART-POWERED...Smart Propulsion – EcoControl Flexibility with CPP

Automatic optimization of engine rpm and propeller pitch:• Less installed power (higher ME loads/efficiencies)• No Light Running Margin (increased propeller efficiency)

Current standard today:Static propulsion with FPP

Designed to avoid main engine from over-loading: • Over-powered (low ME loads/efficiencies)• Light Running Margin (lowers propeller efficiency)

© Wärtsilä 9.6.202035

INCREASED MAIN ENGINE EFFICIENCIES AT PART LOADSWÄRTSILÄ 31DF ENGINE

NEXT GENERATION PROPULSION MACHINERY

6800

7000

7200

7400

7600

7800

8000

8200

2000 3000 4000 5000 6000 7000 8000 9000 10000

kJ/k

Wh

kW

Low-pressure DF Engine energy consumptions, 5% tolerances, without engine built-on pumps

7X62DF 5X72 W31DF

4-7%

© Wärtsilä

IMPROVED PERFORMANCE WITH 2-STAGE TURBOCHARGING TECHNOLOGY

2-STAGE TURBOCHARGERS MAKES THE DIFFERENCE

Low pressure

turbochargerHigh

pressure

turbocharger

9.6.202036

© Wärtsilä9.6.202038

AUX GENSETS AND USE OF SHAFT GENERATORS

• Why are shaft generators seldom used?• Slow-speed generators are expensive• Slows-speed generators require a longer

shaftline, meaning that the engine room length migth have to be longer (loss of cargo space)

• Smart shaft generators• Very cost effective compared to slow-speed

generators• More efficient than slow-speed generators• Can also be used in port, less aux gensets required• Shore power & hybrid easily integrated

AUX GENSETS

© Wärtsilä 9.6.202041

SMART OPERATIONS

Firewall / Router

Firewall / Router

Informationflow

Remote Control RoomFleet operation Centre

Local display

Data Collection Unit

Artificial Intelligence

Wartsila Remote Expertise Centre

Real Time:• Expert guidance and advise• Technical support• Remote tuning




ALTERNATIVE FUELS

© Wärtsilä 9.6.202043

DECARBONIZING SHIPPING 1ST STEP: LNG

2ND STEP: ALTERNATIVE FUELSVerified: 2015 Indicative: 2020, Verified*: 2025Verified: 2003 Indicative: 2020, Verified*: 2022

* timing depends on the market demand

Ammonia

We have already technologies that are

capable of using Ammonia.

The needed combustion concepts to maximise engine

performance and related safety technologies are

currently being investigated

Methanol

Methanol technology development has been done and conversion capabilities

are proven.

Next, we will industrialise this technology on the

relevant portfolio engines according to market needs.

Bio- or Synthetic methane

Contains about 99% methane and can readily be

used in liquid form with equipment made for LNG.

Hydrogen

Our gas engines are already able to blend LNG with up to

20% hydrogen, and combustion concepts have made for 100% hydrogen.

Our future efforts will be directed towards maximising

engine performance.

CH4 MeOH NH3 H2

Diesel and Otto

combustion cycles

Liquid and gaseous

fuels

Three separate

fuel-injection systems

DF

The dual-fuel engine gives the best fuel-flexible choice for the future

THE COMBUSTION ENGINE: A TRUE OMNIVORE


• A paradigm shift is needed to build viable vessels fit for future challenges

• Technology selection and integration at early stages is key to maximise vessel efficiency, earning potential and useful life

• Future-proof vessels require technology providers as early-stage collaborators

• Lifecycle partnerships, capturing both traditional returns & environmental benefits; safeguard all stakeholder financial interests

© Wärtsilä

Q&ACHALLENGE THE TEAM

9 June 202046

Kevin HumphreysGeneral Manager,

Merchant and Gas Carrier Segment,Wärtsilä Marine Business

Paradigm Shift

Johnny KackurGeneral Manager,


Optimised Propulsion and

Systems

John HatleyDirector, Market Shaping,


Business Case

smarter solutions for bulkers and tankers …

Documents