Rotterdam-Singapore route: Pricing and availability of green fuels still need improvement to meet future demand

Based on current order books, the potential demand for sustainable variants of methane and methanol for containerships on the Rotterdam-Singapore route could reach up to 5 million tonnes per year in 2028. However, availability and affordability still need to be improved to enable the switch to sustainable fuels, according to the Port of Rotterdam’s latest report.

In August 2022, the Maritime and Port Authority of Singapore (MPA) and the Port of Rotterdam signed a memorandum of understanding (MoU) for the creation of the Rotterdam-Singapore Green and Digital Shipping Corridor (GDSC), dubbed the “world’s longest”. Under the MoU, the partners aim to cut emissions on the 15,000-kilometer route by facilitating the use of low- and zero-carbon fuels.

Multiple fuels are being developed to support low- and zero-carbon sailing for large boxships, with bio-based and synthetic (e-) variants of methanol and methane leading the way. Ammonia and hydrogen are anticipated to follow in the coming years.

The order books consist of dual-fuel vessels capable of sailing on either methane or methanol and fuel oil. The partners in the Rotterdam-Singapore GDSC, supported by industry players, are expected to operate over 200 vessels by 2028 that can use bio- or e-versions of methane or methanol. Currently, the number of vessels includes 90 large containerships on the route, with a combined transport capacity of 1.5 million containers (TEU) per year.

In July this year, the MPA reported a growing demand for greener fuels in 2023. Bunker sales in Singapore reached a record 51.8 million tonnes in 2023, surpassing the previous high, with alternative fuels accounting for 1.2% of the sales, according to the port.

However, the pricing mechanisms and the availability of fuels remain key drivers of actual demand for sustainable methane and methanol, the Rotterdam Port pointed out.

Furthermore, sustainable fuels are estimated to be two to three times more expensive than fossil fuels and could account for a significant portion of the total cost of ownership for container vessels.

This makes it difficult for shipping companies to commit to long-term offtake agreements, thereby hampering investments from suppliers in new production facilities, it was highlighted.

To address this “chicken-and-egg” problem, the partners called on international bodies such as the European Union (EU) and the International Maritime Organization (IMO) to act and support the production of sustainable fuels by helping to match demand and supply.

This could be similar to the marketplace mechanisms used by the European Hydrogen Bank but tailored specifically to bridge shipping fuels, the port noted.

Meanwhile, the Maritime and Port Authority of Singapore and the Port of Rotterdam agreed to work on reducing 20% to 30% of emissions from international shipping by 2030 at the third Green Corridor workshop held in Rotterdam last September.

In addition, Singapore and Rotterdam have jointly assessed the readiness of both ports and steps ahead such as adopting similar bunkering standards and safety frameworks to accelerate the adoption of zero and near-zero emission fuels.

This April, German shipping major Hapag-Lloyd and A*STAR’s Centre for Maritime Digitalisation (A*STAR’s C4MD) joined the initiative. A*STAR’s C4MD aims to develop advanced computational modeling, simulation, and artificial intelligence solutions for a safe, efficient and sustainable maritime ecosystem. 

The corridor partners believe that the corridor’s approach, supported by the strong industry coalition will provide greater certainty in demand and help scale up production of zero and near-zero emission fuels. This will also help to close the cost gap and encourage even wider adoption of such fuels.