MSC: ‘We are willing and ready’ to further adopt alternative fuels

World’s largest container shipping company MSC is ready to embrace alternative fuels as part of its commitment to decarbonize its operations, Claudio Abbate, Vice President of Maritime Policy and Government Affairs at MSC Group, said.

Abbate said the company was “willing and ready” to further adopt and embrace alternative fuel solutions while speaking in Lisbon for the Economist Impact World Ocean Summit 2023.

The panel examined the wider adoption of decarbonized shipping trade routes, also known as green corridors, as well as potential solutions to challenges still facing the industry regarding the wider adoption of new marine fuels.

“Participation in green corridors allows us to share with peers experiences and ideas on the adoption of new technologies and different fuels. Green corridors are certainly a practical way to start the decarbonization pathway but, being present in over 160 countries around the world, we believe that experience gained shall be transferred across the industry because we need global and flexible solutions to achieve our decarbonization goals,” Abbate said.

“Also, it is imperative that we keep in mind the necessity for not only supply of alternative fuels at scale, but also efficient and timely accessibility to fuels” he added, stressing the importance of having an interconnected network of sufficient bunkering infrastructure.

Commenting on what the future holds for the sector given the rapidly evolving landscape of regulation and alternative fuels, Claudio pointed out the importance of fuel flexibility and maintaining a range of fuel options as what appears to be potentially viable or mainstream today may not be in the future.

The Swiss-based container shipping giant MSC has the largest orderbook by far in the industry with around 134 containerships on order including the latest contract.

Namely, in January 2023 MSC placed an order for ten LNG-fuelled boxships with Zhoushan Changhong, a joint venture between privately-owned Jiangsu Xin Chang Jiang Group and state-owned China International Marine Containers Group (CIMC).

The ten 11,500 TEU vessels have been designed by CIMC’s subsidiary CIMC Ocean Engineering Design and Research Institute (CIMC ORIC). The delivery of the newbuilds will be spread between 2025 and 2026.

Aside from the dual-fuel propulsion, enabling the vessels to run on both LNG and conventional fuel, the ships will also adopt the most-advanced ammonia-ready design.

MSC has 14 megamax ships and 22 neo-panamax ships on order scheduled for delivery in 2023, according to Alphaliner. The orders are spread between Chinese and South Korean shipbuilding majors.

Even if some deliveries will be delayed to 2024, the Geneva-based carrier is certain to receive another major capacity boost this year.

In June 2022, the company took over its first LNG-fueled containership, MSC Washington. The LNG dual-fuel 14K TEU ultra large container vessel (ULCV), equipped with LNG fuel gas supply system (FGSS) by C-LNG Solutions, was built by Yangzijiang Shipyard, China. A month later, the company took over the second LNG-fuelled vessel from the batch MSC Virginia.

MSC is exploring retrofitting projects involving various types of fuels including LNG and methanol for its existing fleet.

The two solutions remain the key options for owners that want to act today on lowering their emissions as the technology is readily available and the bunkering infrastructure is in place.

“Methanol also has a role to play and we are planning for that in our newbuilds that are not being primarily built to run on LNG so that we will be able to facilitate a transition to green methanol when it becomes available at scale, should that prove to be the best option,” said Bud Darr, Executive Vice President, Maritime Policy and Government Affairs, MSC Group, during a recent conference on Alternative Fuels hosted by DNV.

MSC announced its interest in methanol a year ago when the company revealed it was joining the Methanol Institute together with Oldendorff Carriers saying that methanol might be one of the multiple solutions for the company’s fleet moving forward.

However, the company has not yet confirmed any orders featuring methanol as a fuel for its new containerships.

The company has been investing significantly in its fleet renewal, and one of the reasons behind the buildup of fleet capacity has been the company’s strategy to operate as a stand-alone carrier in the major deep-sea trades once the 2M Alliance ends in 2025.

Speaking recently at Transpacific Maritime Conference known as TPM23, MSC CEO Soren Toft said that MSC prefers to operate its own ships and will likely see the proportion of chartered tonnage in its fleet decline in the coming months, as well as sending some older ships to be recycled. 

Overall, the impact of improving the operational efficiency of the fleet to comply with the UN IMO’s Carbon Intensity Indicator (CII) may absorb 7-10 percent of the world’s container shipping fleet capacity, he said.

When asked about the company’s future plans, Soren acknowledged that MSC’s desire to serve the whole market differs from the stated strategy of some other carriers.

“For us, it is about how we can build the next 53 years of history and not just the next quarter,” he added.

This means realizing investments that will ensure the company’s growth, enhancing the fleet and developing productive container terminals.

With respect to the decarbonization of the shipping sector, Soren agrees that there is a need for a global carbon price or global research and development (R&D) fund that would incentivize companies to develop green solutions. He also called on energy companies that are in the process of producing viable alternative green fuels to accelerate the transition and called for further cross-industry collaboration to achieve this. 

MSC is looking at a multi-pronged approach, deploying several types of net-zero energy sources such as synthetic LNG, green methanol and ammonia, to propel the MSC fleet of the future when these fuels become available at scale. Whatever the solution, a net zero future will add costs to the supply chain and these costs will ultimately be passed on to the consumer, he pointed out.

“Decarbonization is something that we must solve,” he said. “This is not something that we maybe should fix, this is something that we absolutely must fix, and I’m sure we will.”