Hafnia describes itself as the “the world’s leading product tanker company”, with 38 owned MR vessels, 13 owned handy sized vessels, 29 owned LR1 vessels and 6 owned LR2 vessels. It also manages a pool of some further 100 vessels, including managing the performance.
Michael Rasmussen, head of performance with Hafnia, explained how the company manages performance of its vessels, in a webinar organised by Tanker Operator’s sister company Digital Ship.
The company has meat on its commitments to decarbonise, with loan agreements with a bank which are linked to sustainability, including KPIs on how much its emissions must reduce.
“If we are fulfilling these KPIs everything is good. If we are not reducing the CO2 emissions according to our KPIs we get a penalty in terms of a high interest rate. If we do better there’s a little bonus with a lower interest rate,” he said.
To access funding for vessels from nearly any fund or bank in Denmark today, you are likely to have to produce “green accounts” showing what the Co2 emissions would be, he said.
The company is only 10 years old – and wanted to run its business in a different way from the start. “We wanted to make a modern company,” he said. “We did not have the 130 year history which many of the classical Danish shipping companies have. We were blessed with the blank canvas.”
Weather routing
The foundation of the performance management system is “basically the weather routing,” he said. “We use that as the first step of planning the route.”
It used to take “a couple of hours” to get a routing taking weather into consideration, now it is available instantly, he said.
The most important function of the routing system is of course to avoid inclement weather. The next important factors are choosing the best speed and reducing fuel consumption.
There can be choices of whether a route goes into or outside an emission control area (ECA). Outside the ECA the ship consumes low sulphur fuel, which has a “relatively low price”. But within the ECA it consumes gas oil (which has very low sulphur levels) and is more expensive.
If there are no different options about what route to take, then just having information about the weather is very helpful, he said, so you don’t send the ship into a storm.
The contractual agreement also needs to be taken into account. A charter party will say what speed the vessel is expected to take. “On a laden passage it is seldom lower than 12.5 knots. It could be 13, 13.5 knots.”
“It is no use if we think we can optimise here and there if the contract says you have to go 13 knots and you have to be at a certain place in a certain time,” he said.
Hafnia seeks to encourage charterers to agree to a certain speed range, rather requiring a specific speed, he said.
Once the route and speed is chosen, clear instructions need to be given to captains, and it is important that vessels also follow the instructions, he said.
Underway
Once vessels are underway, their performance and the changing weather can be monitored.
With automated weather routing, whenever the computer discovers a change in the weather forecast for the ship, there can be new weather routing advice generated and provided to the crew. This can happen any time around the clock.
Hafnia’s operators are monitoring the tracks of vessels, and the tracks of storms and other weather. “You can take proper action and make changes to the route as we go along,” he said.
Hafnia will typically set a maximum level of allowed fuel consumption and through this the CO2 level which can be emitted during any voyage – and then ask the vessel to manage the speed.
The captain is ultimately responsible for the choice of route, so it is called ‘advice’ rather than ‘orders’.
Gathering data
Hafnia takes data from the weather routing system into its performance monitoring software.
Currently, performance data is taken from a report sent manually from the ships at noon every day. But in future it will be automated and sent continuously. “There's many systems out there who can do it for you,” he said.
There is plenty of data which is possible to collect, but also it is not necessarily valuable to have more. But often, data is not of as good quality as the company would like.
One issue is having separate “speed over ground” and “speed through water” data. The difference is that “speed through water” takes into account any current. So if a ship is going 10 knots “speed over ground” moving directly against a current going 3 knots, the “speed through water” is 13 knots.
The “speed over ground” is important to the charterers, who can use it to calculate how long it would take to get from one point to another. But if you are analysing the performance of the ship, “It is important nice to know what the current is,” he said.
Calculating the vessel’s speed can involve “fumbling about in the dark,” since speed logs are “inaccurate to quite a large degree”. It can be done by taking the fuel consumption and working out what speed would have caused it.
Performance monitoring
All of this data is analysed to understand performance. The company is doing more and more data analytics. “We started a journey a couple of years ago, and we are still learning,” he said.
Managing the data is enormously complex. “We get a lot of a data which we can download and analyse. We need systems to manage the data for us.”
Hafnia uses software from Coach Solutions. “We had a great co-operation with Coach,” he says. “Whenever we say we would like to see x y z, we talk to Coach, and we get it done.”
All the owners, and their ship management companies if they have them, can access the data on Coach Solutions, so it is transparent. They can do their own analysis if they want.
It is important that companies with vessels in the pool feel that they are treated equally, and they can use the software to check this if they want to.
The performance monitoring work involves the technical department, commercial department, even the accounts department and investor relations department. It is where the company calculates its overall CO2 emissions, and builds up a business case for its customers and lenders.
“Performance is not something done in a dark room, it is coming up in the sunshine,” he said.
Keeping careful accounting can also let you see factors in different terms, such as understand how many trees you would have to plant per day to take as much CO2 out of the air, to compensate from the extra CO2 which the heavy fouling on your tanker is causing you to emit.
“That's an interesting calculation which I recommend people to do,” he said. “The methodology is online on Google.”
Customers
When the oil price is changing, it may suit oil traders if a vessel arrives earlier, so they issue a ‘speed up’ order to the shipping company. Under the terms of the contract, that requires the vessel’s speed to be increased to 16 knots.
More fuel will be used, which the trader will pay for. But this means that the CO2 emissions the vessels emit might be tripled, and so use up a bigger chunk of Hafnia’s CO2 emissions quota. It may mean that at the end of the year, vessels are sailing at just 8 knots to keep CO2 emissions down.
“Mother nature cannot send a bill to us [for the CO2 emissions],” he said.
So it is important that Hafnia’s customers recognise the need to keep CO2 emissions down, not just look at the cost of fuel.