PhD AKULA Nidarshan

Adopting business model approach for developing ship design strategy to optimise life cycle costs and emission by ReDesigning for circular economy.

Maritime industry accounts for approximately 2% of global greenhouse emissions. This is small, but it is the only mode of mainstream cargo transportation for which the greenhouse emissions (per tonne-km) have increased. Even with extensive development in energy efficient designs and technologies, one of the primary reasons for this increase is the non-complementary aspects of prevalent design strategies and the business model of various stakeholders (like ship builder, owner, and operator) during the life cycle of a ship.

In the last 30-40 years, the design strategy to reduce emissions has centred around development of highly optimised hull forms and propellers for a “Design Draught” and corresponding load factors. This would have resulted in reduced propulsion power requirements, which in turn would have lowered the fuel consumption and thus the emissions.

Operations data indicates that this strategy doesn’t fit the business model of shipping trade. Due to trade requirements, during 40-55% of their operational time, ships are not operating at their design draught and load factors; whereby reducing the efficacy of these designs. Additionally, analysis of fuel energy distribution shows that only 43-49% of fuel energy is utilised for propulsion. In conclusion, even when operating in ideal weather conditions, design draughts and load factors, the efficacy of these designs will be limited to improving only the propulsion power component (i.e., 43-49%) of fuel energy. These non-complementary aspects, resulting in reduced overall efficacy of CAPEX intensive design/technologies has also led to lower adoption rate.

The pathway to reducing the emission’s footprint of maritime industry should focus on developing new design/technology solutions that are not only financially viable but also complement the business model of shipping trade. This will not only result in higher adoption rates but over a period, will reduce CAPEX (DDEX/SPEX) and ensure extended research to further improve the design/ technology.

Based on the root cause analysis for lower adoption and reduced efficacy of prevalent design strategy, it is proposed to develop a standardised, retrofit friendly, common modular hull as a viable solution to achieve significant reduction in emissions. This design strategy will encourage investments in R&D of ship’s power plant and enhance ship’s circularity. Additionally, by utilising the proposed retrofitting criticality index, ship owners gain greater flexibility to select design/technology features based on their budgeted CAPEX. 

At the shipbuilding stage, this strategy promotes mass production, resulting in lower CAPEX, shorter lead times and higher flexibility for equipment selection. During shipping operations, it helps in reducing inventory costs, ease to source new or remanufactured parts globally and reduce drydock/repair costs and off-hire time. Most importantly, in the era of technology transition, it gives ship owners a higher degree of financial security by increasing the ease with which ships can be retrofitted. In some cases, ships can also be upcycled whereby extending the life and reducing the consumption of new raw materials (related costs and emissions). In conclusion, we present a business model based circular design strategy/concept which enhances cost savings and emissions reductions over the entire life cycle.