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Fuel Saving Practices in Container Liner Shipping

Digital Ship Hamburg, February 2013

Andreas Mrozek

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Hamburg Süd

Challenges and future factors to consider

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Hamburg Süd2

Oetker-Group1

Fuel Saving3

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Divisions

Food Beer and Non-Alcoholic Beverages

Sparkling Wine, Wine and Spirits

Shipping Banking Other Interests

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Sales and Employees 2011

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10,011

Food Beer Sparkling Wine Shipping Other Interests

Sales:(Mio. Euro)

Employees: 26,228

2,337

11,488

1,813

5,907

671

2,023

4,752

4,468

438

2,342

Banking

Consolidated balance sheet total:(Mio. Euro) 3,051

574Employees

Total

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Hamburg Süd

Challenges4

Hamburg Süd2

Oetker-Group1

Competitive Environment3

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Hamburg Süd Strategy 1990-2012

Mission Statement:

Hamburg Süd is the leading ocean carrier offering high quality transportation services in a worldwide liner network with

special focus on South America and Reefer Trades.

Strategy:

� Market Leader in South America

� Focus on Reefer Business

� Cost & Price Leadership

� Quality Carrier (Hardware + Personnel + IT = Service Quality)

� High share of owned ships (target: 60%) and container (over 80%)

� Cost advantage

� Risk covering potential

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A global service structure

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Europe / Mediterranean – South America / Central America

Europe – Mediterranean / Inner Med / Pakistan / India

Mediterranean – Canada / Central America

Europe – North America / New Zealand / Australia

Europe – North America

North America / Central America / Caribbean – South America

Intra South America

North America – New Zealand / Australia / Pacific Islands

Asia – Central America / North America / South America

Asia – South Africa / South America

Asia – India / Pakistan

Asia – Australia / New Zealand

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Wherever you need us

Over 300 offices worldwide (around 100 owned)

Hamburg

Morristown Hong Kong

Sao Paulo

Miami

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Length: 272 / 286,5 m Slot Capacity: 5.500 / 5900 TEU Width: 40 m 2004/09 Monte / Rio

Length:185 m Slot Capacity: 1.200 TEU Width: 28 m1981 Monte Rosa

2010/12 Santa Length: 300 m Slot Capacity: 7.100 TEU Width: 42,8 m

1990 Length: 200 m Slot Capacity: 2.000 TEU Width: 32,2 mCap Trafalgar

Cap San/Bahia2001/07 Length: 254 m Slot Capacity: 3.700 TEU Width: 32 m

Hamburg Süd – Development of Vessel Types

2013/14 Santa Max Length: ca. 336 m Slot Capacity: ca. 9.600 TEU Width: ca. 48,2 m

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Hamburg Süd

Challenges4

Hamburg Süd2

Oetker Group1

Fuel Saving3

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Why is fuel saving essential?

Cost side:

� Fuel cost has been increasing over the last years on a permanent basis

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Total Fuel Cost development (bil. US$)

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0,5

1

1,5

2

2,5

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3,5

4

Q1-

2010

Q2-

2010

Q3-

2010

Q4-

2010

Q1-

2011

Q2-

2011

Q3-

2011

Q4-

2011

Q1-

2012

Q2-

2012

Q3-

2012

Q4-

2012

bil. U

S$

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Bunker Price Development 2004-2012 IFO 380 Rotterdam

Source: Platts Oilgram Bunkerwire [CON-C]

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3

549

728

165

714

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50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800U

SD

/ t

Ø 233 Ø 292

22nd Feb. 2013:

618 USD/t

Ø 345 Ø 475

Ø 352 Ø 450 Ø 618 Ø 641

2005 2006 2007 2008 2009 2010 2011 2012 2013

Ø 623

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Why is fuel saving essential?

Cost side:

� Fuel cost has been increasing over the last years on a permanent basis.

� Fuel cost has become the most expensive single cost item in containershipping companies.

� Saving potential still exists, whilst other cost categories have less room forimprovement

� Marginal savings have a large effect on cost improvements

Environmental protection side:

� Reduction of CO2- emissions

� Target of Hamburg Süd: Reduction of CO2- emissions per transported teu km by 26% from 2009 to 2020

� Social responsibility and customer expectation: Detailed, competitive and improving CO2 footprint

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Which fuel saving techniques are applied?

� 1. Slow- steaming

� 2. Excellence in operating / performance optimization

� 3. Weather routing

� 4. Trim optimization

� 5. Hull optimization & hull/propeller maintenance

� 6. Main engine optimization

� 7. Waste heat recovery

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1. Slow steaming

� Traditionally Hamburg Sud operated in ‚slower-speed‘trades, therefore less saving potential as in other maintrades

� Average pro-forma speed reduced over years from around20 kn to 16/17 kn

� More port buffer

=> More realistic pro-formas

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160

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Knots

mts/d

OLD PANAMAX NEW 5000 TEU

Speed consumption curves of different vessel age classes

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diff =12t/d =7,800US$

diff =20t/d =13,000US$

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2. Excellence in operating / Performance optimization

� Advance scheduling and operational instructions by improvedcoordination

� Minimize change instructions to vessel (earlier/late eta)

� Routing

� Optimize/harmonize speed profile

� Cooperative approach with Master and crew

� Improved flow of information and data

� Effective controlling

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GL-Emission Manager (currently being developed)

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� Collects, reports and evalutes vessel operational data and consumption

� Allows detailed analysis of vessel and fleet fuel and environmental performance

GLGreen Server

Evaluation Tools

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3. Weather routing software

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� 1st step: Weather forecasting software installed on board of all vessel whichpermits dynamic route planning by Masters

� 2nd step: Shore-side routing support by weather routing service

� 3rd step: Effective and timely controlling of chosen route

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4. Trim-Optimizer

Data analysis result of energy loss:

� Onboard installation of sensors

� Individual vessel dataanalysis

� Automatic crew guidanceto improve trim / draftduring ocean sea legs

� Data analysis of energyloss

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5. Constructive hull optimization and hull maintenance

Constructive:

� Hydrodynamic hull optimization

� Reduced/optimized bulb shapeand size for low speed (forHamburg Sud of less importance)

� Becker twisted fins

� Schneekluth nozzle

� Self polishing coating

(but still antifowling)

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Maintenance:

� Hull polishing (exceptional situations only)

� Propeller / seachest cleaning: upon demand depending on trade profile

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Becker twisted fins

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6. Main engine optimization

� Downsizing of engines (down to which limit?)

� Common- rail- technology / electronic control:

Flexible injection optimized for partial engine load

� De-rating: Modified nozzle ring of turbocharger for lowerperformance optimization

� More modern engine technology: Continous improvement

� Super Slow Steaming Kits (additional blowers, etc., chartervessels)

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7. Waste heat recovery

� Exhaust gas boiler is used for bunker pre-heating

� With downsized, modern engines waste heat is notsufficient to pre-heat bunker oil.

� Alternative utilization of waste heat to generate energy

Turbo Generator

� A) vessel hotel consumption (generators)

� B) vessel propulsion (via Shaftgenerator)

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Hamburg Süd

Challenges and futurefactors to consider

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Hamburg Süd2

Oetker Group1

Competitive Environment3

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Future Challenges

� Increasing cost pressure due to competitive environment in container shipping

� Increasing bunker prices

� Environmental Regulations

� 2015: max. 0.1% Sulphur (= MGO) in ECA‘s

� 2020 (2025): max. 0.5% Sulphur worldwide

� Additional local requirements

� NOx Engine Limits (Tier III) for newbuildings as of 2016

� CO2 Limits

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The latest innovations?

� Succesfull managerial integration of the various savingcomponents is more important than the latest innovation.

� Example: speeding up of vessels to maintain schedule integrity

Main Engine bunker costs transpacific (16 days)

Vessel A @ 17kts: 800,000US$

Vessel B @ 20kts: 1,4000,000US$ (speed up due port congestion)

Difference : 600,000US$ for one vessel

� Additional costs for 9 vessels operated in this service:

2.2 Mil. US$ due speed-up on one leg only

3.8 Mil. US$ during whole roundvoyage

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What is the right investment into future?

Engineering

� Highly efficient smaller engines

� Propulsion improvement devices

� Dual- fuel engines (LNG, conventional fuels)

� Desulphurization systems (dry?)

IT

� Information technology (on board & ashore)

� Reporting technology

� Data evaluation technology

� Satelite communication technology

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Information Technology

� Collection of vessel data from various sources

� Vessel Operational Data

� Weather Routing

� Trim Optimizer

� Others

� Shoreside integration of vessel data for different user groups

� Operators

� Line Management

� Ship Management

� Controlling

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Thank you for your attention –Any questions?