It could be years before any tankers head to the shipyard to get retrofitted with emissions-cutting technology, BRS Group said.
The French shipbroker said ships have the option to slow down or install new technology to cope with the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations that kicked in at the start of the year. Tanker owners have largely only done the former, and that could have been due to recent poor earnings.
“What has definitely not been seen is the widespread retrofitting of energy-saving technology to tankers with few tankers fitted with wind-assisted propulsion across the past few years,” BRS Group said.
“However, this could happen at a relatively rapid pace in the event of a persistent market downturn … which would otherwise lead to the least efficient tankers being squeezed out of the market.”
The broker said it does not forecast such a downturn until at least 2027.
Slower speeds and efficiency upgrades are methods owners can use to comply with both EEXI, which deals with a ship's design, and CII, which concerns its operation.
BRS Group said going slower could create complications as market conditions could incentivise higher speeds and more fuel consumption. But technological solutions require off-hire time, hitting owners’ bottom lines.
Should ships opt for technology to deal with the regulations, it will be a relatively small portion of the 68% of the global fleet built before 2015.
Those ships were not subject to the Energy Efficiency Design Index rules, which were put in place to ensure newbuildings were more fuel efficient.
BRS said few ships are sailing at their designed speeds.
Still, the rules would have an impact on fleet size, which is already set to be a positive for tanker earnings as few newbuildings are set to hit the water in the coming years, the firm said.
“Considering our expectations for tightening fleet-side fundamentals over the medium-term, and that the least efficient vessels are now poised by the [International Maritime Organization] to keep steaming speeds in check, the introduction of the EEXI and CII will undoubtedly tighten the effective tanker trading fleet capacity over the next two years,” BRS said.
