Latest bcg.perspectives by The Boston Consulting Group include an analysis on how the shipowner  may decide which marine fuel option will provide the highest return in the coming years and how they will comply with the increasingly stringent rules and regulations imposed by regulators.

According to the analysis, shipping companies need to decide when to invest in switching to liquefied natural gas or other environmentally friendlier fuel options. Uncertainty about the effective date of a global cap on sulfur emissions has added to the complexity. The choice among fuel options is not clear-cut, as each one has benefits and drawbacks. To help shipping companies navigate through the challenging investment decisions, BCG has developed a proprietary tool that evaluates the business case for each fuel option over the next 15 years. If their investments to comply with emissions regulations are well designed and executed, companies can expect a net positive return.

The answers to a set of strategic questions can help companies identify which option is the best fit:

  • Do you know the business case for investments in each fuel option for your fleet, as segmented by vessel type, vessel size, and route?
  • What percentage of your fleet operates exclusively in ECAs or in locations where LNG infrastructure exists or is being developed? When might LNG infrastructure be in place in other locations served?
  • Will your fleet be ready to comply with new rules and regulations imposed by the IMO and other regulatory bodies?
  • How will the evolution of prices for distillates affect the right time to invest in LNG-fueled engines or scrubbers for HFO?
  • Will investing in scrubbers for HFO yield returns quickly enough to justify the expenditure, or should you focus exclusively on LNG to comply with emissions regulations?
  • Have you measured the operational and economic risks that could occur if you do not pursue the bunker option that offers the highest return in the coming years?

For many companies, the answers will point to the need to develop a better fact base for assessing fuel options in the dynamic environment. Companies that take action now to understand their options will be best positioned to reap the benefits of wise investments in the future.

Source: bcg.perspectives

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