A domestic market already known for operating tonnage that in many cases is substantially older than its international-flag counterparts appears destined to see vessels grow even longer in the tooth.
That was the take from two leading US-flag and Jones Act tanker and articulated tug barge (ATB) executives as they reported on supply-demand dynamics at Marine Money’s Marine Finance Forum in New Orleans on Thursday.
Older vessels are inevitable, said both Sam Norton, chief executive of Tampa-based Overseas Shipholding Group, and Matt Godden, chief executive of Seattle-based Centerline Logistics.
It is ironically the international push towards decarbonisation and a focus on developing alternative fuels that is contributing to vessels getting older, given uncertainty over future propulsion systems coupled with the high cost of renewing the domestic fleet, Norton said.
“I think that a lot of the changes being pushed by the international market and organisations looking to address climate change, these aspirational desires are well-intentioned, but the immediacy and availability of solutions is not there,” Norton said.
Norton shouted out a presentation from earlier on Thursday from John Hatley, decarbonisation advisor to Wartsila North America, who painted the current “buzz” around the development of green-fuel alternatives as “a mirage”.
Of current fuels under study, Hatley said hydrogen, ammonia and ethanol are all dirtier in their current development stage than diesel fuel, and this is not likely to change soon. He added that only LNG represents an improvement at present.
“Market noise obscures the fact that the vast majority of today’s available fuels originate from a carbon base and exhibit worse emissions than diesel — other than LNG— yet hype abounds,” Hatley told the conference.
In his appearance on the tanker panel later, Norton said he agrees with Hatley’s assessment and that the risk inherent in tonnage renewal is but one more factor contributing to insufficient vessel supply in the face of mounting demand.
“The marketplace is going to have to get used to older vessels and long-used assets than we’ve seen in the last 15 to 20 years,” Norton told panel moderator Hugh Eden of Jefferies. “You’ll see those life spans expanding.
It’s hard for Jones Act operators to pursue “a multi-hundred million dollar solution when there is no solution,” Norton said, referencing Hatley’s comments on propulsion.
“It’s beyond the capacity of any operator in the Jones Act to meet. Most operators will look to use their fleets for longer and to maximise their lives.”
Godden, whose company operates ATBs, called Norton’s assessment “spot on”.
“It holds for ATBs,” Godden said. “People are just going to have to get comfortable with longer-lived equipment. There’s just no way around it.”
