Ships slow down as regulations ‘bite’

TThe inclusion of shipping in the ETS regulatory framework and the implementation of the EEXI and CII indices have led to a significant slowdown in average vessel speeds. In its latest weekly report, shipbroker Intermodal stated that “in February 2024, we discussed the impact of the integration of the Energy Efficiency Index of Existing Ships (EEXI) and Carbon Intensity Indicators (CII), alongside the Emissions Trading System (ETS), on the availability of shipping tonnage through the impact on vessel speeds in 2023. By December 2023, we observed that the average speed of Supramax vessels had fallen to its lowest level: 10.75 knots for non-green vessels and 10.94 knots for eco-designed vessels. With the ETS regulation now in force, it is important to analyse how shipowners are adjusting the speed of their fleets, especially older, non-green vessels, to comply with these new regulations.”

“According to our tracking data, the average speeds of both eco-friendly and non-ecological Supramax vessels in the first six months of this year fell to the lowest levels on record. Specifically, eco-friendly Supramax vessels achieved an average speed of 11.19 knots, while non-ecological vessels achieved an average speed of 10.87 knots, down 1.23% and 1.45% respectively compared to the same period last year. Compared to the five-year average, the declines are even more pronounced, with a 3.0% decrease for eco-friendly vessels and a 2.5% decrease for non-ecological vessels. This trend indicates a significant indirect reduction in the availability of freight tonnage,” said Yiannis Parganas, Head of Intermodal Research.

He added that “another noteworthy observation concerns the variability of average speeds during the year and, consequently, the operational flexibility of owners in adjusting the speed of their vessels to the conditions of the freight market. We usually observe an increase in average speeds during periods of higher profits and a decrease during periods of weakness. However, with the implementation of the new regulations, it seems that owners, especially those of non-green vessels, are forced to adopt a more conservative approach. Indeed, when calculating the coefficient of variation (CV) for each year, we can see that the CV level for 2024 is the lowest compared to previous years, while the variability of speeds of non-green vessels in 2024, measured by the CV coefficient, is 22.03% lower than the average variability observed in the years 2019-2023.”

The Intermodal analyst said that “looking forward, we can expect this trend to continue, given the tightening of regulations in the coming years, which is likely to play a key role in shaping and supporting the freight market environment.”
Nikos Roussanoglou, Hellenic Shipping News Worldwide