29 September 2023 (Lloyd's List) - X-PRESS Feeders wants to launch a low-emission shortsea service in Europe next year using bio-methanol-fuelled containerships.
The service, which is expected to be more expensive than comparable services, will test whether the market is willing to pay for cleaner shipping services, according to the company’s chief executive Shmuel Yoskovitz.
“We plan to operate two vessels in intra-Europe trade most probably between Rotterdam and Finland,” he told a Marine Money conference in Singapore.
The first ship will be delivered in the second quarter of 2024, followed by the second in the third quarter. They are part of 14 dual-fuel, 1,200-teu class feeder vessels ordered by X-Press in late 2021.
“Can I say we are confident methanol will be the fuel of the future? No. But we had to make a decision and that was the best one at the time,” said Yoskovitz.
In July 2023, the Singapore-based owner signed a deal to purchase bio-methanol from US supplier OCI Global for the newbuildings.
Under the offtake agreement, X-Press will use the methanol at a 65%-70% content, costing three times more than low sulphur fuel oil, according to Yoskovitz.
But the fuel can reduce the vessels’ main engine carbon emissions by 65%-70%, while total emissions by 50%-55%.
100% methanol is greener but costs five times more than conventional bunkers and the availability is limited.
“We did the best we could,” said Yoskovitz, adding the blend considered operational factors of the intended service. “We don’t just buy methanol to say we burn it.”
By his estimate, translating the higher fuel cost into freight rates means shippers will need to pay about 30% extra. This seems substantial, but is minor if spread across each cargo item.
“So this raises the question, will consumers be willing to pay? We will be lying to ourselves and clients if we say shipping will be cheaper or cost the same with green fuels in the next 10-15 years.”
On the sidelines of the conference, Yoskovitz told Lloyd’s List the company is pinning high hopes on the so-called ‘book and claim’ system to sustain the methanol-powered route.
This measure allows the emission profile of a low/zero carbon fuel to be separated from its physical flow in a supply chain. Shippers can then obtain carbon credits by paying the premium for a greener-fuelled vessel without necessarily loading cargo on it.
“Say we run the Rotterdam-Finland service but only half want to pay extra. So in theory we can still sell the other half of CO2 credits to someone else,” Yoskovitz said. “That is what we really want to do.”
