28 February 2023 (Lloyd's List) - MEDITERRANEAN Shipping Co is likely to redeliver between 40 and 60 ships and scrap others, chief executive Søren Toft said.

Speaking at the Journal of Commerce’s TPM Conference, he said while capacity will increase by 7%-9% in the next couple of years, “very little [demand] is needed to tip the balance”, and that demand could improve in the second half of the year.

He said the International Maritime Organization’s carbon intensity indicator is expected to increasingly absorb more tonnage and that the IMO will likely make its requirements more stringent from 2027 onwards.

“And then eventually, once enough ships have transitioned to the green fuels and the green fuels available there will be a new tipping point.

“I can say we still have the capacity to redeliver 40, 50, 60 chartered ships that we will probably do because we prefer to operate our own ships, [as] we do operate them well. We’ll be scrapping some ships as well because we can make use of the current situation to do that.”

Mr Toft declined to speculate on orders for new ships but said that MSC is growing and expects to continue to grow.

“We do this because yes, we’ve gone through a couple of good years and we have used that momentum to really renew our fleet, and it’s a commitment to make sure that we uphold the new regulations of the CII,” he said, adding that new IMO regulation will absorb 7%-10% of the global capacity as “things move forward until the day we get the green fuels, and then there'll also be some scrapping that we will have to do so that we continue to improve”.

He flagged green methanol, ammonia and synthetic LNG as the green fuels the industry will likely transition into, but said the biggest obstacle remains their availability.

“[Decarbonisation] is something that we absolutely have to fix, and I am sure we will, but it will take time. It is not a quick fix. If you look at the shipping industry, it is not the ships that are the problem; it is not the engines that are the problem; the real issue in shipping is the fuel availability, it is as simple as that.

“And of course, it’s the chicken and the egg situation because the people that are going to make multibillion dollar investments into the future fuels want certainty that there’s demand, and the ones that are contracting ships, they want to make sure that they have fuels available for the ships to sail. And this is where some of the regulation is lacking.”

He said that regulation to support to the availability of these fuels is inadequate, and reiterated calls for a global carbon price and a global research and development centre.

“I have said also more recently, let’s [determine] that by 2032 we can only produce ships that can be powered by one or two or three of the future fuels, because then you give enough lead time — 10 years — for the energy companies to really help with the fuel availability.”