Why invest in Eco ships? Michele FRANCIONI CEO RINA SERVICES S.p.A. Shipping and the Law - October 2014 INVESTING… IS THIS THE RIGHT TIME FOR INVESTING? SHIP SUPPLY - BULK CARRIER (1) Sources: Banchero Costa research “Dry Bulk Market Update” SHIP SUPPLY - PRODUCT TANKER Sources: Banchero Costa research “The Product Tanker Market” WORLD SHIP SUPPLY World fleet (mill. dwt) 1,400 1,200 1,000 800 600 400 200 2007 2008 2009 2010 Tanker Sources: Clarkson “World Fleet Monitor” 2011 2012 Bulker 2013 2014 (f) WORLD SHIP DEMAND Seaborne trade (mill. tons) 8000 7000 6000 5000 4000 3000 2000 1000 0 2007 2008 2009 2010 Liquid 2011 Bulk Sources: Clarkson “Oil and Tanker Trade outlook”, “Dry Bulk Trade outlook”, “Shipping Intelligence Network” 2012 2013 2014 (f) CHARTER RATES 1 year time charter bulker (USD) 1 year time charter tanker (USD) 50000 80000 70000 40000 60000 50000 30000 40000 20000 30000 20000 10000 10000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 Suezmax Aframax Panamax Handysize 2007 2008 2009 2010 2011 2012 2013 2014 Capesize Sources: Clarkson “Oil and Tanker Trade outlook”, “Dry Bulk Trade outlook”, “Shipping Intelligence Network” Panamax Handymax Handysize IS THE GAP SUPPLY/DEMAND GOING TO BE RECOVERED SOON? IS DEMOLITION ACTUALLY HELPING TO REDUCE THE GAP? Sources: Banchero Costa research “Dry Bulk Market Update” DO ECO SHIPS OFFER SIGNIFICANT RETURN ON INVESTED CAPITAL? BANKS VS PRIVATE EQUITY FUND New orders growth: 55m dwt in 2012 179m dwt in 2013 66m dwt in 2014 First Quarter Sources: Clarkson “Shipping Review and Outlook”; Lloyd’s List on-line PRO ECO SHIP OWNERS (1) PRO SECOND-HAND SHIP OWNERS (1) KEY FACTORS FOR CHOICE New building prices Second-hand prices Actual fuel saving Availability of good second-hand/resales Operational speed required by the market ECO SHIP FUEL SAVING, HOW MUCH? RINA Analysis Type Size DWT Convent. Ship Average daily fuel oil consumption (Tons) 2006-2010 Oil Tanker Handysize 40000 29.7 Eco Ship Daily Average daily Save per fuel oil ship consumption (Tons) (Tons) 2012-2013 22.3 7.4 % Daily Save 25% Speed (kn) 14.4 REGULATORY FACTORS IMO – Air emission: 0.1% SOx in ECA 01.01.2015 New and existing ships IMO – Air emission: -10% CO2 EEDI 01.01.2015 (2020 & 2025) New ships IMO – Air emission – NOx in ECA 01.01.2016 New ships IMO – GBS 01.07.2016 New ships IMO – Ballast Water Treatment not yet into force New and existing ships NEW ECO FEATURES : Is it worth investing? SULPHUR OXIDES (SOX) Exhaust gas cleaning systems (scrubbers) Nitrous Oxides (NOX) SCR - Selective Catalytic Reduction Ballast Water Convention BWTS IS LNG A SOLUTION? An holistic approach is needed Regulation Financial Issues Technical Solutions Laws & Authorizations Logistic Scenario Social Perception The key to success in the risk/return game is not to minimize or maximize risk but to manage risk Mark A. Johnson RINA SERVICES S.p.A. Thank you for your attention! Via Corsica, 12 16128 Genoa - Italy Ph. +39 010 53851 Fax +39 010 5351000 info@rina.org www.rina.org