LNG Lucrative for PCTC Newbuilds, Study Finds

LNG as a marine fuel delivers the best return on investment and is a competitive option for newbuild pure car and truck carriers (PCTC) on Pacific and Atlantic trade lanes, a new SEALNG study shows.

“This is the second in a series of studies commissioned from independent simulation and analytics expert Opsiana,” Peter Keller, Chairman, SEALNG, said.

“Similarly to the results of the liner investment case, this study shows that shipowners ordering PCTC newbuildings should take advantage of the environmental, operational and commercial benefits of LNG.” 

The study considered two PCTC trading scenarios using a 6,500 car equivalent unit (CEU) vessel on the Atlantic Trade and an 8,000 CEU vessel on the Pacific Trade.

As explained, the study indicated that LNG as a marine fuel delivers the best return on investment on a net present value (NPV) basis over a conservative 10-year horizon, with fast payback periods ranging from one to three years on the Atlantic Trade and from less-than-one year to two years on the Pacific Trade.

These two routes were chosen based on trading scale, with approximately 3.2M vehicles shipped on the Pacific Trade and 1.7M on the Atlantic Trade every year. LNG proved to be the best investment across both trading zones.

This higher investment return was achieved without including the significant additional benefits and branding value gained by choosing LNG as a more environmentally friendly marine fuel, which could be worth hundreds of millions of dollars across the global PCTC fleet.

When corporate sustainability and environmental goals are included, including potential future charges on CO2 production, choosing LNG as marine fuel brings additional benefits, according to the coalition.

The study provides greater clarity for those investing in LNG and highlights seven key findings — LNG has a better return on investment, the CAPEX hurdle is diminishing, it delivers competitive energy costs, has higher environmental performance, and is the most financially effective long-term method for complying with the 2020 sulphur cap. It also underlines the fact that scrubber operation is significantly more expensive than widely reported, and that the cost of LNG is stable.

The financial results are more compelling given that this higher traditional investment return was achieved by choosing LNG, the only commercially viable marine fuel alternative available at scale today which is successfully able to achieve corporate sustainability and environmental goals, SEALNG said.

While this study focuses specifically on the PCTC investment case for LNG within a specific trade route, the coalition plans to analyze the investment case for a dry bulk vessel and a very large crude carrier (VLCC).

“LNG is a safe, mature, commercially viable marine fuel offering superior local emissions performance, significant greenhouse gas (GHG) reduction benefits, and a potential pathway to a zero-emissions shipping industry,” Keller concluded.

SEALNG is a UK-registered not for profit collaborative industry foundation serving the needs of its member organizations committed to furthering the use of LNG as an important, environmentally superior maritime fuel.