Virtual Arrival means reduced emission Greening Logistics European Parliament Brussels 28 April 2010 Manager Research and Projects

Measures to reduce emission from shipping Technical Engine, hull, design,…… EEDI* Alternative fuels, kites. sail….. Operational (Behavioural change) Speed Logistics SEEMP** including Virtual Arrival Market Based Instruments (Carbon Pricing) to stimulate the above alternatives or to offset Cap-And-Trade Levy Same main measures as promoted by UNFCCC *Energy Efficiency Design Index ** Ship Energy Efficiency Management Plan

Virtual Arrival, an OCIMF - INTERTANKO project to reduce emission Background Potential emission reduction for existing shipping said to be 15% or more (at no cost?), but Fuel costs % of operation/running costs for owners What then curbs emission reduction? Shipowners have continuously been working to reduce fuel consumption for decades Many stakeholders – chain of responsibility Several commercial and practical obstacles such as who should pay for the time, who should pay for the bunkers, 3rd party obligations, and contractual implications Virtual Arrival is a project that involves several stakeholders and implies co-operation and the removal of commercial obstacles Chain of responsibility Shipowner Charterer Terminal Class Flag Broker Insurer Flag

Virtual Arrival, A way to reduce emission By taking advantage of known inefficiencies in the supply chain i.e. reducing speed when the terminal is not ready to discharge the cargo In addition to directly reduced emissions, other benefits are: Reduced port congestion Improved safety Reduced congestion and emissions in the port area Reduced use of fuels Potentially increased use of weather routing Important pre-conditions: The safety of the vessel remains paramount The authority of the vessels Master remains unchanged The basic terms of trade remain the same

What is needed to do to make Virtual Arrival work? A known delay at the discharge port A mutual agreement between two (or more) parties to adapt the ship’s arrival time to take advantage of the delay An agreed Charter Party clause that establishes the terms for reducing the speed to adapt to the new arrival time An agreement on how to calculate and report the Virtual Arrival and the performance of the vessel Point 4 above may involve a Weather Analysis Provider (WAP) The OCIMF/INTERTANKO Virtual Arrival project group has a WG to work out certification criteria for WAPs..but firstly a win – win situation for all based on trust and transparency

The impact of Virtual Arrival on GHG emission Tonnes CO2 emission at full speed: 2,081 CO2 emission at reduced speed: 1,179 Reduced CO2: 902 Reduced SOx emission 23 Bunker saved 190 (43%) Assumed reduction NOx emission: 43% Tonnes CO2 emission Days Voyage length Start voyage Virtual Arrival time Actual time of arrival Time on deumurrage Virtual arrival decision point

Virtual Arrival An actual voyage done The oil traders had a stem loading from Batumi in the Black Sea. –Built up with a number of barges and rail cars The cargo destination was identified as the Isle of Grain and there was a known delay at this port. –Tank space only available before the 16 th

Virtual Arrival – The Reality

Virtual Arrival The daily report An initial report of the voyage using historic speed and consumption data. The vessel is given a revised ETA*. It then reduces speed to make that ETA. Daily progress reports issued to all concerned parties. A final report would be produced showing the savings during the voyage. *Estimated Time of Arrival

Virtual Arrival – the reality Charterer approached the market and found an owner that understood and was receptive to the Virtual Arrival concept The vessel was chartered Vessel sailed on 2 nd September 2009 and charterer engaged a Weather Analysis Provider* to do the virtual arrival analysis Vessel arrived in Isle of Grain at 1000 hrs on the 16 th September. The virtual arrival was 0650 Sep 15th. Reduced emissions was: –CO mts –Nox 4.4 mts –Sox 3.5 mts This represented a 27% reduction in fuel consumptions and emissions over the length of the voyage. Bunker Savings 59 m ts of HFO. *A Weather Analysis Provider specialises in weather and vessel performance analysis.

Summary Virtual Arrival is initiated by the industry The Virtual Arrival concept takes advantage of inefficiency within the transport chain through an agreed and managed reduction of a vessels passage speed Virtual Arrival delivers absolute reductions in emissions from the ships involved