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Ocean carriers seek competitive edge in choice of green fuels

By Greg Knowler

Choosing the right alternative fuel pathway is shaping up as a source of competition for ocean carriers during shipping ’ s transition period from fossil fuels to greener options , shipping industry experts say .

Just how long that transition period will be remains unclear , but carriers must make their fuel choices now , with the International Maritime Organization ’ s ( IMO ) interim emissions targets for 2030 fast approaching . Tightening regulations on CO2 emissions and fuel intensity that carry stiff penalties for non-compliance are adding pressure on carriers .

Bryan Wood-Thomas , vice president of environmental policy at the World Shipping Council ( WSC ), told the Journal of Commerce carriers have entire departments devoted to bunkering purchases and strategy and looking at how far out to extend supply contracts .

“ The baseline is an intensively competitive landscape , because you ’ re deciding who you ’ re going to buy fuel from on what contractual terms and over what period ,” Wood- Thomas said .

The fuel choice by carriers — at least for now — is increasingly between LNG and methanol , which together comprised 70 % of the total 1.7 million TEUs in orders made in 2024 , according to Sea-web , a sister company of the Journal of Commerce within S & P Global .

While methanol led the way in 2023 , last year saw a resurgence in LNG-capable ship orders amid growing concerns over the availability at scale of methanol . Both LNG and methanol are produced from fossil fuels , but the intention is to gradually replace conventional LNG with more sustainable bio-methane and enable dual-fuel methanol ships to be ammonia-ready .

Despite significant challenges in using ammonia as a marine fuel because of high toxicity , it is beginning to feature on the order book . On Feb . 14 , Ocean Network Express ( ONE ) took delivery of the 13,800-TEU ONE Sparkle , the first of a 20-ship order for methanol- and ammonia-ready vessels .

Surcharges ‘ jealously guarded ’

Peter Keller , chairman of maritime industry coalition SEA-LNG , said container shipping has always tried to protect currency and fuel from the volatility that governs those markets . “ We ’ ve had fuel surcharges and currency surcharges since the early days of containerization , and the industry has jealously guarded those because they don ’ t need external sources becoming competitive advantages or disadvantages ,” Keller told the Journal of Commerce .

Competitive discussions around the price of fuel would continue as the industry moved down the pathway to greener energy sources , he said .

“ In the transition period , there will be no way to generate a fuel surcharge that ’ s going to protect different price advantages or price differences between fuels ,” Keller said . “ It might be able to be done on a regional basis in terms of individual trade lanes , but certainly not globally .”

As a trade body representing container shipping , the WSC is fuel agnostic , but Wood-Thomas said it was clear that conventional LNG would have its attraction “ for a period .” The question carriers would need to figure out is how long that attractive period would be , with the next question focusing on the availability of bio-LNG and , ultimately , green methane .

“ The baseline is an intensively competitive landscape .”

“ The investment value of LNG tonnage is the ability to convert over time to other fuels that may be your only choices in terms of compliance with a particular greenhouse gas [ GHG ] intensity standard ,” Wood-Thomas said . “ What is less certain about green methane is what the technical analysis [ will ] stack up to down the road .”

This uncertainty was highlighted in a recent report by Tristan Smith , professor of energy and transport at the London-based UCL Energy Institute . Smith noted that shipowners need to make huge investments in assets with a lifespan of over 20 years without a clear view of whether evolving regulations and technology would make those vessels obsolete .

“ How does someone make a business case for something if it ’ s an applicable solution in the 2030s but doesn ’ t have any role in the 2040s ?” he asked .

Fears over methanol supply see resurgent LNG ship orders

Methanol- and LNG-powered container ship capacity ordered

TEU capacity

1,400,000

1,200,000

1,000,000

1,000,000 800,000

600,000

400,000

200,000

Source : S & P Global

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LNG Methanol

© 2025 S & P Global

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50 Journal of Commerce | March 3 , 2025 www . joc . com