THEME – INNOVATION IN SHIPPING

Flying the flag for the environment

For a long time, innovation in shipping was about operating ships with as small a crew as possible. Now the focus is moving to better exploitation of energy and low emissions to the environment.

By Morten Andersen

Low emissions of sulphur. Low emissions of nitrogen oxides. Low particle emissions. Low energy consumption per freighted ton.

These are the most important arguments for using new maritime technology developed through Danish innovation projects.

“The considerable attention being given to protecting the climate fits like a glove with the Danish shipping industry’s agenda. It’s not just about Danish shipowners wanting to appear more environmentally friendly. While in the old days the operational costs of shipping were dominated by wages, today fuel accounts for more than half of the total. So if you keep energy consumption down, you save lots of money and at the same time protect the climate,” says executive vice president Jan Fritz Hansen of the Danish Shipowners’ Association.

Part of the explanation of why shipping companies are focusing on innovation that can reduce fuel consumption, is that innovation in the last twenty years or so has brought down wage costs. Today, even the biggest ships can be operated by about 15 people. Another part of the explanation is that energy prices in general have increased in recent years. There is also a third explanation:

“Until the financial crisis started in autumn 2008, we had ten years of amazing boom. The boilers were fired up and everybody was busy running after all the goods that needed to be transported around. Now the activity has decreased slightly, there is more focus on costs. And energy costs are prominent among them,” explains Jan Fritz Hansen.

Supporting taxes on emissions
According to the Danish Shipowners’ Association, innovative solutions developed by Danish shipping can save about 15 per cent of energy consumption for existing ships up to 2020. This is possible through a blend of new technology, improved routines while at sea and optimisation of route planning. For newly built ships, it is possible today to achieve a 30-40 per cent improvement in energy efficiency.

The Danish Shipowners’ Association hopes global limits will be implemented for how much greenhouse gases the shipping industry is allowed to emit. Aviation and shipping are today exempted from the international agreement on protection of the climate, the Kyoto Protocol. Many observers think however that the exemption will be withdrawn in association with the UN Climate Change Conference in Copenhagen in December.

“We support a market-based system where greenhouse gas emissions are subject to a tax or covered by quotas. That will be an advantage for Danish shipping. You can say that Danish shipping companies will get more out of their investments. As it is today, the investments do not quite pay, although you save on fuel costs,” says Jan Fritz Hansen.

At the same time, a system with either quotas or taxes would lead to greater demand for maritime technology from Danish suppliers, he believes:

“Suppliers will benefit from Danish shipping companies being early innovators. This applies not only to energy consumption, but also to the environment. There is a lot of talk about climate, but one must not forget the objective – that the extent to which shipping contributes to air pollution has to be reduced.”

Maersk Line “Sustainable Shipping Operator of the Year”

The international initiative Sustainable Shipping gave shipping company Maersk Line the award as the “Sustainable Shipping Operator of the Year” at its first presentation of international environmental awards in July 2009. The award was given for the shipping company’s work with slow steaming. In situations where there is no urgency for bringing the cargo to its destination, it is possible to achieve major savings in fuel consumption by letting the ship sail more slowly. This enables 10-30 per cent of fuel consumption to be saved - for one large cargo ship it corresponds to saving 10,000 tons of CO2 emissions annually.

http://www.sustainableshipping.com

High environmental profile
After pressure from countries including Denmark, the International Maritime Organization (IMO) is to introduce stricter limits on how much pollution ships are allowed to emit. Attracting most attention are the nitrogen oxides (NOx), emissions of which are generally unwanted and especially a problem in harbour towns because they can be harmful to health.

MAN Diesel is developing technology to reduce NOx emissions that is targeted at both new and existing engines. For the latter the focus is initially on fuel injection nozzles in two-stroke diesel engines. This type of engine is used by ocean-going ships such as supertankers and large cargo vessels. 75 per cent of all ship engines of this type worldwide are built by licensees based on MAN Diesel’s design.

For newly built ships, IMO will introduce stricter requirements regarding NOx emissions in 2011. These are expected to be further tightened in 2016. In addition to the tougher legislation for newly built engines, requirements on limitation of emissions for engines built before 2000 will be introduced in 2010. The expected service life for a ship is 30 years.

“Our calculations show that if half of the ships that our technology is relevant for, introduced it, then it would save the environment more NOx than Denmark’s total emissions,” says head of department Michael Finch Pedersen of MAN Diesel, and elaborates:

“We know that Danish shipping companies known for their high environmental profile would like to adopt the technology. The other shipping companies will be obliged to do so when IMO’s requirements come into force. IMO’s rules are certainly a bit unusually worked out: the shipping industry is only obliged to introduce the technology if it has been demonstrated that it works. But we are well on our way to doing that. We had actually only anticipated being ready to test one solution for a single engine type, but right now we are on the way with tests for three different designs.”

Customers want green approval
The three engines for which MAN Diesel has developed environmentally friendly solutions are the most popular engines worldwide produced in the period 1990-2000.

“There will possibly be a few of our customers who are unhappy that we are getting the technology ready,” acknowledges Michael Finch Pedersen.

“It is naturally an expense for them to buy it. In return they can probably expect to gain reductions in their harbour duties. NOx is a health problem in harbour towns. Especially in the USA there is a major focus on it, and many harbours are planning reduced taxes for ships with low emissions. In addition there is an increasing number of the shipping industry’s customers who make environmental requirements. For example large chains such as Wal-Mart and IKEA want green approval on the entire value chain, including the transport of their goods. So low NOx emissions will be a competition parameter in the future.”

MAN Diesel’s projects form part of Partnership for Cleaner Shipping, which has the Danish Shipowners’ Association and the Danish Environmental Protection Agency as the key players. Another project in the partnership focuses on reducing sulphur emissions.

Aalborg Industries has developed a scrubber, which “washes” the emission gas from the main engine of ships. The technology is known from land-based power stations.

“Right now (July 2009) we are installing a scrubber on a Ro-Ro cargo ship owned by DFDS. This is the first time in the world that such a large scrubber has been installed on a ship. It is a pilot project where we aim to demonstrate that we can achieve the same high efficiency at full scale on board a ship as in our laboratory tests,” says managing director Jan Vestergaard Olsen of Aalborg Industries.

Efficient cooling on container ships

In collaboration with Danish shipping companies and suppliers of maritime technology, Aalborg University has developed advanced regulation of cooling systems for container ships. Preliminary tests indicate that the regulation can reduce energy consumption for cooling by about 80 per cent. For a single ship this means a saving of DKK 2 million (EUR 269,000 million) annually in energy consumption – and at the same time correspondingly less impact on the climate.

An added bonus: fewer particles
Aalborg Industries expects to have a commercial version of the sulphur scrubber ready during 2010.

“We actually believe so much in a favourable outcome that we are continuing our development of the next generation of scrubbers in parallel with the ongoing project. We hope to launch a later version which is just as efficient, but takes up less space. The current scrubber is four metres in diameter, so it requires a modification to the ship to install it,” continues Jan Vestergaard Olsen.

The solution emanates from another business area of Aalborg Industries, namely scrubbing flue gases from the Inert Gas Systems (IGS) of ships.

“The scrubbed emission gas from the boilers is primarily used to avoid explosion risks in the oil tanks, but further development of the technology has shown that it could be used to scrub sulphur from the diesel engine flue gases. It also revealed the important added benefit that a significant reduction in particle emissions can also be achieved. In the future we will probably see requirements for lower particle emissions from ships,” says the director.

P, Ernie & Enzo by Kit Kjølhede Laursen http://www.kit-k.com

Every little helps
“Shipping is a relatively conservatively thinking industry, where safety and reliable operation are the key focus points. Thorough testing of the system is therefore of uttermost importance before serious shipowners continue to ride the green wave. Furthermore, IMO requirements are expected to be the driving force in the global use of the scrubbing system, provided that they achieve final ratification within the planned period. At that time we will be ready with a cost-effective solution which guarantees compliance with IMO requirements,” promises Jan Vestergaard Olsen, Aalborg Industries.

In addition to scrubbing sulphur and nitrogen oxides, as well as reducing energy consumption, Danish shipping has played a leading role in more environmentally friendly anti-fouling paints and double hull oil tankers, which reduce the risk of leaks. So all in all, executive vice president Jan Fritz Hansen of the Danish Shipowners’ Association is an optimist both on the industry’s and the suppliers’ behalf:

“You can never say that you have the environmental problems under control. It will always be possible to do more. But I really think that we are well on our way to taking a quantum leap forward. At the same time we must be realistic and acknowledge that one single solution does not exist. It is an area where every little helps.”

International environmental award to Danish shipping innovation

The “Green Ship of the Future” project, which has 15 partners from Danish shipping companies, suppliers of maritime technology and research institutions, won the “Green Shipping Initiative of the Year” award, when the international initiative Sustainable Shipping gave the awards for the first time in July 2009. Green Ship of the Future, which focuses on reducing emissions and climate impact from shipping through innovation, was established in 2008 on the initiative of the Ministry of Economic and Business Affairs.

http://www.sustainableshipping.com

Exhaust gas scrubber absorption tower (front) and venturi installed in the stack of the DFDS RoRo cargo ship “TOR FICARIA” in Bremerhaven in June 2009. The tower, where a chemical reaction between sulphur dioxide and water takes place, has a diameter of 4.6 m and is 9.5 m high.
Photo: Aalborg Industries

Viking: Innovation is the key to success

Increased innovation will drive growth for Danish company Viking, the world’s largest manufacturer of rescue equipment for the maritime sector that despite a struggling market expects to double its development expenditure in the coming years. Through unique solutions and concept development, Viking is seeking to differentiate itself from its competitors, so that the group can continue to gain market share.

By Anne Klejsgård Hansen

Red numbers on recent quarterly financial statements from the world’s largest shipping companies bear witness to a catastrophic year for international shipping, and that is not exactly pleasant reading for the Danish company Viking Life-Saving Equipment, which has supplied rescue equipment for the maritime sector for 50 years. Viking’s managing director Kjeld Amann acknowledges that the market is significantly smaller and the competition correspondingly tougher, but that is not causing him to curb his ambitions. Quite the contrary.

“Our ambition is to continuously gain market share, and that also applies this year. But when tough times knock at the door, love goes out the window, and we clearly feel that competition on the market has intensified,” says Kjeld Amann.

“It increases the need to constantly differentiate ourselves from our competitors, and that requires development and innovation. So despite the financial crisis, we will be doubling our development budget in the coming years to keep ourselves a step ahead. Because as we see it, innovation is essential for success.”

Record year
Viking had a record year last year, when revenues topped DKK 1 billion (EUR 134 million) for the first time. Kjeld Amann does not expect revenues this year to equal that achievement, but expects them to reach “a reasonable level”.

The company’s aim is to maintain its leading position on the rescue equipment market while significantly growing its two other areas, equipment for the offshore industry, and equipment for the fire service, civil defence and the armed forces.

“We will continue to be primarily a supplier of safety and rescue equipment for the maritime sector, but our strategy is to spread out the product portfolio so that our other focus areas will represent a greater proportion of the business,” says Kjeld Amann.

Today between 65 and 70 per cent of the company’s revenue is generated from equipment for the maritime sector, while equipment for the offshore market accounts for 15-20 per cent and equipment for fire service, civil defence and other institutional units accounts for the rest.

Concept development
The money Viking is planning to invest in development and innovation is not solely earmarked for product development, since the company is focusing increasingly on concept development of individual package solutions for customers. It is in the latter area that the lion’s share of the development budget will be used.

In recent years the company has evolved from being a product supplier to primarily a supplier of one-stop-shop safety packages, and now the ambition is to supply package solutions to customers.

“Technological competence is essential, but in today’s world it is no longer sufficient to guarantee a gain in market share. We constantly have to develop ourselves, and concept development plays a key role,” says Kjeld Amann.

Today, Viking invests a lot of time in customer dialogue, which often develops into collaboration. The company can offer the customer exactly the required solution, and Kjeld Amann sees that as a great benefit for both parties.

“Customers are generally a lot more satisfied with the product when they have been involved in its entire development, and we also gain insight into what customers actually want,” says Kjeld Amann.

Viking Life-Saving Equipment

Viking Life-Saving Equipment A/S was established in 1960 by director Tage Sørensen.

Viking is still owned by the founding Sørensen family, which controls more than 85 per cent of the company through a family fund.

Viking has 22 subsidiaries and 1,250 staff in 50 locations around the world.

Viking’s annual revenues topped DKK 1 billion (EUR 134 million) for the first time last year.

Viking is a global market leader in providing and servicing of essential safety equipment for passenger and cargo ships, offshore installations, the defence industry, fire brigades, yachts and fishing vessels.

The head office is located in Esbjerg, Denmark, and the products are made at four factories in Denmark, Norway and Thailand. In addition to the production unit in Thailand, Viking also has its own facilities in Singapore and China.

Individual solutions
Viking’s focus on individual solutions tailored to customer needs is an important competition parameter for the company.

“The intense competition for customers means that the demands on us are constantly increasing, and we believe that it is the offer of individual solutions that makes customers choose us,” says Kjeld Amann.

For example, there is a major difference in rescue and safety equipment needs between a passenger ferry and a container ship.

A ferry typically has routes only within a limited geographical area, which can have safety measures that are very necessary, while others can be very unnecessary. A container ship on the

other hand typically transports goods over long distances, which can have different climatic and safety-related challenges, and so needs another type of rescue and safety equipment.

Two of Viking’s largest and most recent orders are from the British service company Serco, which has ordered 200 life rafts for 90 Royal Navy support vessels, and from the Norwegian Civil Defence, which has ordered 2,100 fire retardant work suits, that are used for rescue and military operations.
Photo: Viking

Customer needs in focus
It is not only in relation to the product itself that Viking focuses on individual solutions. The company also aims to offer customers a tailored package in relation to authority approvals, financing and service.

“In collaboration with the customer, we aim to develop a total solution which at the same time as fulfilling the customer’s wishes regarding the product itself, also makes the entire process as easy as possible for the customer,” says Kjeld Amann.

Since safety in the maritime sector is subject to a very detailed set of rules, in most cases determined by the International Maritime Organization (IMO), it is often very arduous and time-consuming for the customer to keep up to date with the rules in order to ensure the necessary authority approvals. Viking therefore offers to help customers obtain the necessary documentation.

In addition, Viking can provide assistance with financing in certain cases.

“We don’t want to play at being a bank, but we are a solid company and that gives us some advantages which we can use in a negotiation situation. But we are naturally aware that a longer credit period increases risk, and so we are busily involved with hedging at the moment,” says Kjeld Amann.

He also points out that Viking’s after sales service offer, an agreement where Viking handles all servicing of the rescue and safety equipment free of charge for a number of years, has a major value to customers in the current market.

“When we offer our customers an after sales service agreement, we can tell them that we have existed for 50 years, and that we fully intend to be here in 50 years time. That makes customers feel secure, which is an important parameter today,” says Kjeld Amann.

Focus on CSR gave Thai award

Although rules for safety, pollution and general working conditions are not exactly a focus area in all the places where Viking operates, the group maintains that its Corporate Social Responsibility (CSR) effort is not just something that applies to Danish staff.

“Our key principle is that we are not venturing into the world to evade European environmental rules. We equip our factories according to European norms in relation to working environment, emissions and staff relations,” says Kjeld Amann, managing director of Viking, the world’s largest manufacturer of rescue and safety equipment for shipping.

That attitude was rewarded this summer when Viking won the Thai Good Environmental Governance Award 2009 for its production plant in Laem Chabang in Thailand, for exceeding the national standard for environmental efforts and social responsibility.

“We are very delighted with the award. It shows that it is possible to maintain European standards without losing competitiveness,” says Kjeld Amann.

The Industrial Estate Authority of Thailand gave the award to Viking, which competed with 138 Thai companies in Laem Chabang’s industrial area south of Bangkok.

Most of Viking’s rescue products, from fire-fighter suits to life rafts, are now produced in Thailand.