EEXI and CII: The dual regulations impact global fleet dynamics

With 156 days to go, discussions on future regulations of the International Maritime Organization on existing energy-efficient vessels (EEXI) and carbon strength indicators (CII) are as confusing as the large scrubber discussions in 2019.

According to Clarkson’s Research, the average age of tanker fleets worldwide is currently around 11.6, bunkers around 11.5 years and container ships are 14 .1 years. This means that owners are likely to need to upgrade most of these vessels to extend their lifespan.

The EEXI is the first hurdle many shipping companies will have to overcome next year. This compliance mechanism relies heavily on Engine Power Limitation (EPL) for older tonnage. An estimated 10% speed drop cuts fuel usage by 27% over the distance travelled, with a similar decrease in carbon emissions, according to data from RightShip.

Kris Fumberger, RightShip’s head of sustainability and environment stated that the vessels looking for an EPL may get omitted from cargo that needs a speed higher than what the reduced engine power can produce and hence might yield very few revenue-generating voyages over a defined period against other vessels that attain their optimum emissions by investing in retrofitting energy saving equipment.

CII, meanwhile, should cater to the market with a more robust metric which will result in greater transparency of operational emissions. The impact of which on the market is expected in 2024 as for the next year, ship owners will amass a track for each of their ships that will set the basis for the first A-E CII rating.

Geir Olafsen, CDO of the Norwegian platform for measuring, reporting, and estimating shipping emissions, Siglar Carbon said that he expects owners to be more unwilling to contest for cargoes that would have a predictable negative contribution to their annual CII and thus fares on such passages may experience upward pressure due to lessened interest from ship owners.

The in-depth function clarified what the new rules mean for individual shipping segments when it comes to reducing fleet capacity, and looked at the technical details of the rule implementation.