The impact of regional environmental regulations on empirical vessel speeds

Abstract

Economic theory suggests that the use of more expensive low-sulphur fuel within an Emission Control Area (ECA) should result in lower vessel speeds. The objective of this paper is to investigate empirically, for the first time, whether the introduction of an ECA affects vessel speeds. We utilize a dataset of observed vessel speeds derived from the Automated Information System (AIS) for nearly 7,000 ECA boundary crossings over a three-year period. Our results suggest that introducing stricter sulphur regulations inside the North Sea ECA from 1. January 2015 did not affect vessel speeds once changes in macroeconomic conditions are accounted for.

Does energy efficiency affect ship values in the second-hand market?

“…Second, while cashflow shocks influence the investment decisions of shipping firms (Drobetz et al, 2016), the trading flexibility and modest investment size of small bulkers means that the second-hand market for Handysize bulkers remains sufficiently liquid throughout the shipping market cycle. Third, shipping assets have seen a gradual tightening of environmental policy in the past decade with the introduction of stricter sulphur limits in marine fuels -leading to higher fuel costsfirst in regional Emission Control Areas (Adland et al, 2017a) and globally from 2020. Fourth, the assets are known to be subject to policy risks, with both the EU and the International Maritime Organization (IMO) trying to reach an agreement on some form of carbon taxation (Lee et al, 2013;Hermeling, 2015;Wang et al, 2015) which would increase the future fuel costs.…”

Slow Steaming as Part of SECA Compliance Strategies among RoRo and RoPax Shipping Companies

“…Studies by Johnson and Styhre [31] and Zis and Psaraftis [16] suggested that reduced waiting time in port could support slow steaming and mitigate the additional cost effects of SECA for dry bulk shipping in the North and Baltic Seas. Using AIS data, Adland, et al [13] found that the strict sulfur regulation of 2015 did not affect the speed patterns of the vessels crossing the North Sea ECA. Furthermore, they claimed that vessel speed is not generally determined by fuel prices or freight rates but is rather dependent on factors such as route characteristics, vessel type, weather, market segment and conditions and the nature of the commercial contract between a shipper and a ship operator.…”

“…The compliance with the sulfur regulation was predicted to negatively affect the competitiveness of short sea shipping (SSS), in particular the Roll-on/Roll-off pure freight (RoRo) and mixed freight-passenger (RoPax) sectors operating in the North and Baltic Seas, by substantially increasing their operating costs [12]. In this context, a reduction in sailing speed-also termed 'slow steaming'-as an energy efficiency measure is deemed an immediately feasible approach for reducing operating costs and cutting the shipping carbon footprints on the environment [13]. Due to the cubic relationship between speed and fuel consumption, which is even higher than a cubic as asserted by Psaraftis and Kontovas [14], particularly for ships that sail at a comparatively faster speed-such as containerships, RoRo, and RoPax-a nominal speed reduction leads to a substantial saving in total fuel consumption.…”

Bi-Objective Optimization of Vessel Speed and Route for Sustainable Coastal Shipping under the Regulations of Emission Control Areas

“…Zis, et al [28] also demonstrated that the differentiated sailing speeds inside and outside the ECAs, which may further lead to additional carbon emissions per journey. However, some recent studies argue that the strict limit on sulfur content in fuel does not necessarily affect the vessel speed [29]. The studies above ignored how operation objectives affect the impacts on the speed within ECAs.…”