Optimal Slow Steaming Speed for Container Ships under the EU Emission Trading System

Nestor Goicoechea and Luis María Abadie
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Nestor Goicoechea: Escuela de Ingeniería de Bilbao, University of the Basque Country (UPV-EHU), 48013 Bilbao, Spain
Luis María Abadie: Basque Centre for Climate Change (BC3), Scientific Campus, University of the Basque Country (UPV/EHU), 48940 Leioa, Spain

Energies, 2021, vol. 14, issue 22, 1-25

Abstract: Slow steaming is an operational measure in ocean-going vessels sailing at slow speeds. It can help climate mitigation efforts by cutting down marine fuel consumption and consequently reducing CO 2 and other Greenhouse Gas Emissions (GHG). Due to climate change both the European Union (EU) and the International Maritime Organization (IMO) are analysing the inclusion of international shipping in the EU Emissions Trading System (ETS) in the near future or alternatively implementing a carbon tax. The paper proposes a methodology to decide the optimal speed of a vessel taking into account its characteristics and the factors that determine its economic results. The calculated cash flow can be used in valuation models. The methodology is applied for a case study for any container ship in a range from 2000 to 20,000 Twenty-foot Equivalent Units (TEU) on a leg of a round trip from Shanghai to Rotterdam. We calculate how speed reduction, CO 2 emissions and ship owner’s earnings per year may vary between a business-as-usual scenario and a scenario in which shipping is included in the ETS. The analysis reveals that the optimal speed varies with the size of the vessel and depends on several variables such as marine fuel prices, cargo freight rates and other voyage costs. Results show that the highest optimal speed is in the range of 5500–13,000 TEUs whether or not the ETS is applied. As the number of TEUs transported in a vessel increases emissions per TEU decrease. In an established freight rate market, the optimal speed fluctuates by 1.8 knots. Finally, the medium- and long-term expectations for slow steaming are analysed based on future market prices.

Keywords: slow steaming; container ship; greenhouse gas emissions; bunker price; freight rate; optimal decision (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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