The Baltic Exchange is calling on owners, operators and charterers to feed into a project that aims to give the industry better tools to benchmark and reduce emissions from shipping.
The Baltic has already launched its indicative CO2 emissions figures and Energy Efficiency Operational Indicator (EEOI) reference values, which cover standard bulkers and tankers trading on the benchmark routes for which the organisation produces rate assessments.
Now the Baltic is working on refining these theoretical numbers, making them more accurate — and urging the industry to help by contributing “real-world” data.
Already, the organisation is working with large fleet operators, owners and charterers active in both dry and wet trades, but the Baltic wants to increase participation in the project.
Martin Crawford-Brunt, previously CEO of RightShip, is the Baltic’s strategic carbon lead and is working on the project through his consultancy firm, Lookout Maritime.
He told TradeWinds that the Baltic’s EEOI numbers will provide market participants with the ability to compare voyages between different carriers on a like-for-like basis.
“At a high level, it’s really just to provide the ability to measure and compare voyages across various operators, ship types and routes. The aim of that is to identify what ‘good’ looks like in terms of the efficiency of that ocean transportation — so reducing the carbon emitted for the transport work done is the objective,” Crawford-Brunt said.
“And that supports global prosperity and global trade without providing an increased burden on the environment.”
The EEOI was selected because it is most representative of a round voyage in the way ships are traded, including ballast legs, Crawford-Brunt said.
The Baltic’s EEOI indicator is also forward-looking rather than a reflection of past performance, such as annual emissions reporting (AER) metrics or the International Maritime Organization’s mandatory fuel oil data collection system (DCS), he added. This means it can be used for contemplated voyages as well as a reference point for the past.
There is also a clear demand for simplification. Shipping companies and charterers are requesting a simpler and common reference point to benchmark their own emissions data, Crawford-Brunt said.
“Market participants on either side — whether you’re an owner or a cargo interest or an investor — what you really want to be able to understand is directionality: is this a good voyage? Was that a good voyage? And is there anything that can be done to improve that voyage?” he said.
Once you have that knowledge, you can make more informed decisions and take action to cut vessels’ emissions and EEOI assessments, he continued.
“Can you reduce the ballast leg length, for example? Can you take a bigger ship and carry more cargo on the same route? Can you put a more efficient ship on that route that consumes less fuel? Or can you through digitalisation and other ways improve the operation of that ship to reduce your fuel, so that all those actions will reduce your EEOI score?” he asked.
Stephen Aitchison, senior freight market assessor, told TradeWinds that the consultation with the industry will help the Baltic numbers better reflect operational realities.
“One of the reasons we need this market engagement is really ours [EEOI methodology] is a set distance between two ports, not taking into account any weather routing or anything like that,” Aitchison said.
This will help explain variations in EEOI scores and how the numbers are affected by operating conditions.
Going forward, it is hoped that the Baltic’s theoretical basis and real-world data can be combined with input from vessel-tracking platforms and data providers to make these assessments as realistic and practical as possible.
Mark Jackson, the Baltic’s CEO, sees the project as part of his organisation’s work to ease the burden of decarbonisation on the industry.
“There are two things that are going on at moment: you’re in an unregulated, voluntary market, but you’ve got various regulations coming towards you as a shipowner. All of these conversations are happening at the same time — and they’re not all joined up in the same place,” Jackson told TradeWinds.
“What we’re saying is that we recognise that and we’re trying to make that conversation a little bit more joined up.”
Jackson said one strength of the Baltic’s reference system is that it is based on the benchmark routes and vessels that are already widely understood and used by the industry, which will help with adoption.
Jackson said the Baltic is “just trying to help the conversation at this point”.
The Baltic Exchange is also working on a separate study looking at the commercial impact of the IMO’s incoming Energy Efficiency Existing Ship Index (EEXI) regulation on shipowners and other market participants.
Unlike regulations such as IMO 2020, EEXI only applies to owners when vessels’ respective certificates come up for renewal.
This could have an effect on owners if, for example, ships fixed on index-linked charters based on speed warranties of up to 14 knots have to de-rate their engines to a maximum speed of 12 knots in order to comply with EEXI. Index-linked rates are based on Baltic-produced indices, leading to questions as to whether this will necessitate change in the calculation methodology.