A pioneering LNG-powered containership project is netting massive savings on fuel costs, according to Hamburg-based broker Arkon Allied Container (AAC).

The conversion of the 1,036-teu Wes Amelie (built 2011) to LNG propulsion is saving between €3,500 ($3,900) and €3,800 per day, or about half the current charter rate for the vessel, managing director Ole Gabs said.

But, Gabs said, extending the conversion project to other vessels in the series is contingent upon the availability of subsidies from the German government.

Structurally identical

The Wessels Reederei-owned, Unifeeder-operated Wes Amelie was converted to LNG fuel in 2017 for use on feeder routes in the North and Baltic seas.

There are 23 vessels in the series, 16 of them structurally identical, which have been lined up as possible conversion candidates.

But the sticking point, Gabs said, is that the conversion cost for each vessel is €8.5m ($9.4m).

Other potential candidates for conversion include the 1,036-teu Wes Janine (built 2012), Wes Gesa and Wes Carina (both built 2011).

The Wes Janine was taken recently by Ocean Express Network for four to five months at about $7,800 per day. The rate is close to that paid by Unifeeder to extend the charter of the Wes Amelie.

The Danish feeder operator is taking the LNG-powered vessel for a further 12 months in October for about €7,000 per day. The deal includes a profit share on the fuel savings that will be split between shipowner and charterer.

Gabs, whose company is responsible for the commercial management of the vessels, referred to the substantial savings on LNG bunkers loaded at Rotterdam.

The 1,036-teu Wes Amelie (built 2011) receives LNG fuel from the 7,500-cbm Kairos (built 2018) in April in Sweden Photo: Nauticor

“The LNG price is very, very favourable. I can only say that the investment in LNG makes sense,” he said.

“We want to build more ships, but it only makes sense with subsidies,” Gabs said.

AAC was formed in August 2018 and operates a fleet of about 100 containerships.

The lion's share are smaller vessels of between 1,000 teu and 2,000 teu, but it has been expanding its involvement into larger boxships of up to 3,500 teu.

Larger tonnage includes the 3,398-teu Tim S (built 2005), which was acquired by AAC shareholder Nordic Hamburg. AAC has also taken commercial management of the 3,625-teu Primavera (built 2012) and 3,426-teu Lilly Schulte (built 2008), which are in the process of being delivered to Elbdeich Reederei.

AAC has also been expanding its fleet with ships from Visser Shipping of the Netherlands and FL Schiffahrt of Germany.

Buying in

“Some of our owners are buying into this segment, so we are getting more and more active,” Gabs said.

Gabs conceded that the charter market for smaller boxships has not recovered as it has for larger vessels. But he said that AAC had only a few ships working in the spot market.

He expected rates would pick up for smaller vessels in the 1,000-teu to 1,500-teu range due to the ageing global fleet and low orderbook.

AAC has carved out a niche operation in the LNG market, having begun as a project manager for 1,400-teu vessels ordered by Finnish owner Containerships, now part of CMA CGM.