Shipping Transition

Shipping sector – most challenging aspect of this transition is how to manage an existing (expensive) asset base which is based on fossil fuels as new fuels are uncovered and start to emerge. At some point a majority of ships have new fuels and how does one manage the old fleet as most industry players do not have balance sheets to sustain a mass write off of assets. The other fundamental risk is which technology have you bet on – if you chose “wrong” technology it could be catastrophic

Business opportunities in my view pre-suppose that customers will start to reward the early mover- in this case enhanced results for ‘greener’ fleet could be sizeable. Some evidence from the transition to low Sulphur fuels suggests this could be possible but challenge at the moment is selecting the right technology as building ships is an expensive endeavour

Main network effect could be explained by Maersk choosing methanol AND financing the plants to produce green methanol. If enough industry majors took this path could move system to this solution. Ultimately the tipping point will be a combination of carbon cost (tax), regulatory requirements and a clear choice of fuel which becomes available worldwide

Walter Eric Salisbury Bryant, Singapore