The Workboat Show proved once again to be one of the best places to go to see the latest in technology and products targeted to the commercial marine industry. There were some cool new and innovative products as well as a lot of familiar faces with updated versions of products we’ve seen before.
What was evident, however, was that many products and offerings that were targeted to vessel systems associated with engines or propulsion equipment listed fuel savings as a key reason to purchase their technology.
With fuel prices continuing to rise (up another $34/ton from my last post) there is little doubt that fuel economy will once again become a very significant issue. Operators will once again start actively looking for ways to reduce fuel consumption to cut costs; and once again, the industry comes to this point with less than 10% of all vessels afloat today equipped with the tools necessary to measure and monitor fuel use.
So two things;
1)Ask yourself one question – “Is reducing fuel consumption important to my company?” If the answer is yes, how will you address the issue?
2)If you haven’t done so – please take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, December 8, 2010
Monday, November 29, 2010
Effiiciency Measures To Be Showcased at WBS
The WorkBoat Show starts on Wednesday and this year there will be more vendors than ever promoting efficiency measures, services, products and technology.
Last post I indicated that fuel prices were on the rise - right after I said that they fell from $782.50 on 11/15 to $740.00 on 11/24. However, today they were back at $772.50. It's still any one's guess how high they will rise, but one thing for sure, the trend continues to be upward and there will be a lot of emphasis on ways to reduce fuel consumption.... Not just to save on fuel costs but also to reduce emissions.
As you wander around the show this year looking at the various efficiency offerings ask yourself one basic question. If I'm not measuring fuel consumption accurately, how will I know if any of this stuff delivers the benefits?
Marine Fuel Management systems are not only designed to help operators analyze and adjust how the vessel is being operated but to accurately measure fuel consumption to prove other technologies or strategies. The best way to do this is to generate an accurate baseline fuel consumption measurement before application of efficiency technologies or strategies and then again after the measure are in place.
One of the reasons that operators are skeptical of various efficiency measures is that in the past they have used measurements that lacked the accuracy necessary to effectively prove the benefit. A 2%-3% benefit can represent a substantial savings but without MFM it is nearly impossible to measure.
So remember -
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Last post I indicated that fuel prices were on the rise - right after I said that they fell from $782.50 on 11/15 to $740.00 on 11/24. However, today they were back at $772.50. It's still any one's guess how high they will rise, but one thing for sure, the trend continues to be upward and there will be a lot of emphasis on ways to reduce fuel consumption.... Not just to save on fuel costs but also to reduce emissions.
As you wander around the show this year looking at the various efficiency offerings ask yourself one basic question. If I'm not measuring fuel consumption accurately, how will I know if any of this stuff delivers the benefits?
Marine Fuel Management systems are not only designed to help operators analyze and adjust how the vessel is being operated but to accurately measure fuel consumption to prove other technologies or strategies. The best way to do this is to generate an accurate baseline fuel consumption measurement before application of efficiency technologies or strategies and then again after the measure are in place.
One of the reasons that operators are skeptical of various efficiency measures is that in the past they have used measurements that lacked the accuracy necessary to effectively prove the benefit. A 2%-3% benefit can represent a substantial savings but without MFM it is nearly impossible to measure.
So remember -
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Friday, November 12, 2010
Wake Up Call! Fuel up ~20% since July!
We continue to see indications that even more significant increases in the price of marine fuel are just around the corner. I reported on Oct 13th that the price of MDO in Houston was $740/ton – which was significantly up from Sept 20th which was up from July 19th. Houston MDO on July 19, 2010 was $650.50 - today its $771.50. So, we’re looking at an increase of $121/ton in only 4 months. On November 4th, Energy and Capital published an article highlighting 6 events they believe will drive oil to $130/barrel by spring of next year. Among these are; the falling dollar, fear of inflation, and increased demands.
There is general consensus that these forecasts are on target which means that once again, as fuel prices begin to rise, companies will start looking for ways to reduce consumption or change their contracts to mitigate the impact of higher prices.
I’ve come to believe that nearly all mariners are from Missouri! The “Show Me” attitude and high concentrations of “the skepticism gene” seem to have slowed the recognition of the obvious; MFM is the best and most cost effective way to find, quantify, institutionalize, and sustain measurable reductions in fuel consumption.
There are more systems and vendors to choose from now than in 2007 when we had a similar run up in prices. Most marine operators waited too long last time to pick a system and MFM is not a “one-size-fits-all” solution. It is essential that the operator understands the success criteria and selects the right vendor.
So here is your wake up call! Without the capability to accurately measure and monitor fuel consumption and key performance indicators that contribute to efficiency, actions to manage fuel use are much less effective and predictable and may leave you without the ability to implement the "right" strategy.
If you haven't done so already,
1)Outline your fuel reduction strategies
2)Determine by vessel type how you will achieve these results
3)List the KPI's you need to measure to prove the results
4)Prepare a short list of MFM vendors that can meet your needs
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
There is general consensus that these forecasts are on target which means that once again, as fuel prices begin to rise, companies will start looking for ways to reduce consumption or change their contracts to mitigate the impact of higher prices.
I’ve come to believe that nearly all mariners are from Missouri! The “Show Me” attitude and high concentrations of “the skepticism gene” seem to have slowed the recognition of the obvious; MFM is the best and most cost effective way to find, quantify, institutionalize, and sustain measurable reductions in fuel consumption.
There are more systems and vendors to choose from now than in 2007 when we had a similar run up in prices. Most marine operators waited too long last time to pick a system and MFM is not a “one-size-fits-all” solution. It is essential that the operator understands the success criteria and selects the right vendor.
So here is your wake up call! Without the capability to accurately measure and monitor fuel consumption and key performance indicators that contribute to efficiency, actions to manage fuel use are much less effective and predictable and may leave you without the ability to implement the "right" strategy.
If you haven't done so already,
1)Outline your fuel reduction strategies
2)Determine by vessel type how you will achieve these results
3)List the KPI's you need to measure to prove the results
4)Prepare a short list of MFM vendors that can meet your needs
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Friday, October 29, 2010
Is Slow Steaming the Way?
Some of you are members of the Linked-In community, a business oriented social network site. If you are, you undoubtedly follow some of the Groups that are targeted to the Marine Industry, such as; Maritime Executive or Maritime Network (there are over 25 Marine Industry groups). Recently there was a discussion within the Maritime Executive Group on the Current Trends in Reducing Operating Costs.
There were many suggestions – slow steaming – low friction coatings – optimized routing - optimizing the engines – and others – all, however, attributed the savings to the one area that nearly everyone agreed offered the most opportunity for meaningful savings – a reduction in the amount of fuel being consumed. So, if there is near unanimous agreement that reducing fuel consumption is the most obvious place to look for meaningful savings, why is there not more intense interest in MFM solutions that offer the best and most accurate way to measure and prove these savings?
Take, for example, slow steaming. If you are going to reduce speed to save fuel, why not use technology to help you find the best way to do that. Everyone knows that the relationship between fuel consumption and speed is non-linear. Peak efficiency, therefore, is not just a matter of guessing at a setting; it is finding the most optimal setting. That is something that cannot be done if the way you measure fuel consumption is by sounding the tanks once per day or calculating fuel consumption at the end of the trip.
If you’re going to be serious about efficiency, then you must be serious about measuring the things that contribute to efficiency. Whether you are operating an existing fleet, planning for a retrofit, or building new vessels; MFM should be a serious consideration.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
There were many suggestions – slow steaming – low friction coatings – optimized routing - optimizing the engines – and others – all, however, attributed the savings to the one area that nearly everyone agreed offered the most opportunity for meaningful savings – a reduction in the amount of fuel being consumed. So, if there is near unanimous agreement that reducing fuel consumption is the most obvious place to look for meaningful savings, why is there not more intense interest in MFM solutions that offer the best and most accurate way to measure and prove these savings?
Take, for example, slow steaming. If you are going to reduce speed to save fuel, why not use technology to help you find the best way to do that. Everyone knows that the relationship between fuel consumption and speed is non-linear. Peak efficiency, therefore, is not just a matter of guessing at a setting; it is finding the most optimal setting. That is something that cannot be done if the way you measure fuel consumption is by sounding the tanks once per day or calculating fuel consumption at the end of the trip.
If you’re going to be serious about efficiency, then you must be serious about measuring the things that contribute to efficiency. Whether you are operating an existing fleet, planning for a retrofit, or building new vessels; MFM should be a serious consideration.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, October 13, 2010
Fuel Prices Continue To Climb
On September 20th I reported that the Houston MDO price, according to BunkerWorld, was $691.50 which was a $40/ton increase over July 19th. Today Houston MDO is $740.00/ton. That’s nearly a $50/ton increase over September 20th. That comes out to approximately $0.30/gallon increase in fuel costs from July 19th to today, which is starting to be noticeable.
For one client that I’ve worked with, that increases the cost for their regularly scheduled trips (approx 600 miles) by over $3,200. They make this trip twice per week, 52 weeks per year. So extending this, if fuel prices remain at their current levels his cost of operation for the year could easily increase by over $330,000!
Fuel prices will not stay at these levels but the jury is out on whether they will increase or decrease. Once we get past the November elections and with the deep water drilling moratorium lifted, there should be more certainty. One certainty is that it will cost more to get a barrel of oil out of the Gulf of Mexico. If the economy starts to rebound and transportation demands start to increase there will likely be additional pressure on supply and demand economics that could further drive the price of fuel upwards.
An operator, similar to the one mentioned above, that is consuming in the area of 1 million gallons of fuel per year – per vessel can expect to pay between $2.1 and $2.5 million for fuel. With even a modest savings of 2% the savings would range from $42,000 to $50,000 per vessel. Most MFM scenarios can identify from 2% to 5% in savings potential, or more. But, as I’ve stated before, savings in this range are nearly impossible to identify and monitor without an MFM solution in place.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
For one client that I’ve worked with, that increases the cost for their regularly scheduled trips (approx 600 miles) by over $3,200. They make this trip twice per week, 52 weeks per year. So extending this, if fuel prices remain at their current levels his cost of operation for the year could easily increase by over $330,000!
Fuel prices will not stay at these levels but the jury is out on whether they will increase or decrease. Once we get past the November elections and with the deep water drilling moratorium lifted, there should be more certainty. One certainty is that it will cost more to get a barrel of oil out of the Gulf of Mexico. If the economy starts to rebound and transportation demands start to increase there will likely be additional pressure on supply and demand economics that could further drive the price of fuel upwards.
An operator, similar to the one mentioned above, that is consuming in the area of 1 million gallons of fuel per year – per vessel can expect to pay between $2.1 and $2.5 million for fuel. With even a modest savings of 2% the savings would range from $42,000 to $50,000 per vessel. Most MFM scenarios can identify from 2% to 5% in savings potential, or more. But, as I’ve stated before, savings in this range are nearly impossible to identify and monitor without an MFM solution in place.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, September 29, 2010
Monitoring fuel consumption continues to become more important!
In response to my last post, Daniel Kane of Propulsion Dynamics sent me the following information;
I want to thank Daniel for the information! You should check out the services that Propulsion Dynamics can provide and feel free to contact Daniel at dkane@propulsiondynamics.com with any questions.
This information further reinforces the value of automatically collected data that can be used to help operators identify what you might call “tipping points”. What I mean by tipping points is simple – gradual changes make very little difference when looked at individually; however, accumulated over time, they eventually reach a point where to let the conditions continue to exist may be more problematic (i.e. costly) than correcting them now. This is true of hull fouling - and It is also true of a number of other factors associated with a ships use of fuel that together often represent a significant waste of energy and resources.
MFM solutions can capture valuable data that can be used by companies like Propulsion Dynamics as an input for further analysis. By monitoring fuel consumption on a continuous basis you develop a history that can be looked at in varying degrees of granularity. Gradual changes are recorded on every voyage and reports, to provide daily, weekly, monthly or other comparisons, can provide valuable insight and facilitate more timely decision making. Timely decisions make the most efficient use of resources – be they people, equipment, or money.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
MEPC 61st Agenda 5 MEPC 61/INF.213 August 2010
REDUCTION OF GHG EMISSIONS FROM SHIPS - Impact Assessment of possible MBM.
12.96 The Ship Efficiency and Credit Trading proposal would require ships (existing as well as new) to regularly repeat sea-trials to re-assess their EEDI values. Such repeated sea-trials could be performed back-to-back with dry dockings where the hull performance has been optimized with re-coating, etc.
IMO MEPC 61/INF.18 Agenda item #5 July 23, 2010 REDUCTION OF GHG EMISSIONS FROM SHIPS Marginal Abatement Costs and cost-effectiveness of energy efficiency measures.
5.66 “By reducing the frictional resistance of a hull, consumption of bunker fuel and thus emissions of CO2 can be reduced; this is the often the outcome of a hull resistance management program. One way of reducing the frictional resistance is to enhance the smoothness of a hull by means of coatings that prevent/reduce fouling. In addition, the hull can be cleaned periodically.
I want to thank Daniel for the information! You should check out the services that Propulsion Dynamics can provide and feel free to contact Daniel at dkane@propulsiondynamics.com with any questions.
This information further reinforces the value of automatically collected data that can be used to help operators identify what you might call “tipping points”. What I mean by tipping points is simple – gradual changes make very little difference when looked at individually; however, accumulated over time, they eventually reach a point where to let the conditions continue to exist may be more problematic (i.e. costly) than correcting them now. This is true of hull fouling - and It is also true of a number of other factors associated with a ships use of fuel that together often represent a significant waste of energy and resources.
MFM solutions can capture valuable data that can be used by companies like Propulsion Dynamics as an input for further analysis. By monitoring fuel consumption on a continuous basis you develop a history that can be looked at in varying degrees of granularity. Gradual changes are recorded on every voyage and reports, to provide daily, weekly, monthly or other comparisons, can provide valuable insight and facilitate more timely decision making. Timely decisions make the most efficient use of resources – be they people, equipment, or money.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, September 20, 2010
What's up with fuel prices?
Diesel prices continue to trend upward. From July 19th of this year through today, the price has fluctuated significantly. Looking at this period (based on Houston MDO prices as reported by bunkerworld.com) the price per ton was $651.50 on July 19th and its $691.50 today. That’s a $40/ton spread over 60 days with a low during that period of $644.00 and a high of $692.50. The trend now appears to be upward but prices for the last six months have been significnatly lower than the previous 6 months and the DOE does not project a significant increase in 2011. So, given the DOE's council, we may not see much of an increase during the next year!
Maybe I’ve just lost faith in what the government says; but what appears to be obvious to me is that the lower prices we see today will be replaced by higher prices, perhaps significantly higher prices, when economic conditions begin to improve. Prices, normally driven by supply and demand, have increased modestly over the last 6-months - in a stagnant economy! We’ve also seen several other things that promise to have an impact on prices; tighter environmental regulations (imposing higher priced low and ultra-low sulfur fuels), Mid-East instability (that could erupt at any minute and change the game dramatically), and the BP oil disaster (which will increase the cost of drilling for everyone).
It’s a real possibility that prices will begin a steeper climb than the DOE projects once the economy starts to rebound. If so, marine operators may once again find themselves in the position they were in during the summer of 2008 - “needing” to look at Marine Fuel Management (MFM) ASAP. That’s good for the MFM vendors – but it can be bad for the operators who find themselves virtually backed into a corner with too little time, too little patience, and not much flexibility.
MFM solutions can help companies reduce fuel consumption and deliver a true ROI if they are selected and implemented properly; BUT, they are not one-size-fits-all! The process of selecting the right MFM solution begins by developing a well thought out understanding of your current situation – what information you have today, how you get it, and where the holes are. Then, by looking at your vessel’s operating profile, what information you need today, and when you need it; it’s possible to develop a clear picture of the solution that will work for your operation.
You may only need a bare bones system to receive the benefit you desire; or, you may need a more comprehensive solution – but you don’t need to make a mistake. Give yourself some time to look into this issue while fuel prices are reasonable. This allows you to have an action plan in place and thought out, so when prices do go up (and they will) you can be ahead of the curve having already identified the solution that delivers the most benefit and positions your company with a competitive advantage.
In the mean time, a properly implemented system could begin delivering a savings now – and who doesn’t need additional margin in today’s marine market!
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Maybe I’ve just lost faith in what the government says; but what appears to be obvious to me is that the lower prices we see today will be replaced by higher prices, perhaps significantly higher prices, when economic conditions begin to improve. Prices, normally driven by supply and demand, have increased modestly over the last 6-months - in a stagnant economy! We’ve also seen several other things that promise to have an impact on prices; tighter environmental regulations (imposing higher priced low and ultra-low sulfur fuels), Mid-East instability (that could erupt at any minute and change the game dramatically), and the BP oil disaster (which will increase the cost of drilling for everyone).
It’s a real possibility that prices will begin a steeper climb than the DOE projects once the economy starts to rebound. If so, marine operators may once again find themselves in the position they were in during the summer of 2008 - “needing” to look at Marine Fuel Management (MFM) ASAP. That’s good for the MFM vendors – but it can be bad for the operators who find themselves virtually backed into a corner with too little time, too little patience, and not much flexibility.
MFM solutions can help companies reduce fuel consumption and deliver a true ROI if they are selected and implemented properly; BUT, they are not one-size-fits-all! The process of selecting the right MFM solution begins by developing a well thought out understanding of your current situation – what information you have today, how you get it, and where the holes are. Then, by looking at your vessel’s operating profile, what information you need today, and when you need it; it’s possible to develop a clear picture of the solution that will work for your operation.
You may only need a bare bones system to receive the benefit you desire; or, you may need a more comprehensive solution – but you don’t need to make a mistake. Give yourself some time to look into this issue while fuel prices are reasonable. This allows you to have an action plan in place and thought out, so when prices do go up (and they will) you can be ahead of the curve having already identified the solution that delivers the most benefit and positions your company with a competitive advantage.
In the mean time, a properly implemented system could begin delivering a savings now – and who doesn’t need additional margin in today’s marine market!
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Thursday, September 9, 2010
Reasons for MFM: Environmental Reporting
This is the final post in the series Reasons to Implement Marine Fuel Management. It is also one of the longest but there is valuable information that all marine operators, regardless of size or type of vessel, should note.
Environmental reporting as a reason for MFM may sound like a stretch to some – especially the skeptical; but, if you follow the news, you may be familiar with the EPA, IMO, the impact of ECAs, possible cap and trade legislation… and on and on and on. You cannot dispute that environmental issues are and will continue to be, more onerous every day and, we all know that with increased regulation you always, ALWAYS have increased reporting. Nor can you dispute the correlation between reducing air pollution and reducing fuel consumption.
What is also obvious is that this increase in regulation comes at a "cost" to the marine industry - in fact, all industries using fossil fuel. A variety of approaches have been proposed, but they all seem to stem from an economic model that is based on imposing a financial penalty for pollution from the use of fossil fuel in an effort to encourage users to find ways to reduce fuel use or convert to alternative fuels. With the addition of “caps” on emissions, the cap and trade approach limits the total amount of emissions permitted and creates an additional monetary incentive to reduce consumption by allowing operators to sell or trade emissions credits earned by reducing pollution.
Of the various carbon tax or cap and trade regulations being considered there is talk of two different ways to implement them; upstream models or downstream models. The following is taken from page 12 of the 2008 CBO Study on “Policy Options for Reducing CO2 Emissions”.
"“Administering an “upstream” tax or cap-and-trade program for CO2 emissions would involve taxing or regulating the suppliers of fossil fuels—such as coal producers, petroleum refiners, and natural gas processors. Compared with a “downstream” design, which would tax or regulate users of fossil fuels, an upstream approach would have two administrative advantages. It would involve regulating a limited number of entities, and it would not require firms to monitor actual emissions. Rather, each firm’s tax payment or allowance requirement could be based on the carbon content of its fuel and the amount it sold.”" The full study can be found at http://www.cbo.gov/ftpdocs/89xx/doc8934/02-12-Carbon.pdf
The jury is still out as to how this will impact various groups of marine operators. There will likely need to be different approaches for large blue water ships vs. small brown water boats and several categories in between. The IMO has yet to decide whether it should opt for a cap-and-trade system, in which ship-owners trade permits to emit carbon dioxide, or impose a levy, or a tax. It's obvious they will do something and whatever they do, it will cost!
The CBO appears to favor taxing the suppliers of fossil fuels rather than the users of fossil fuels. If this approach wins, every gallon/liter/ton of marine fuel will carry an additional tax (or penalty) on top of what promises to be ever increasing prices for fuel. If the other approach wins marine operators will be forced to pay a tax (or penalty) for emissions based on every gallon/liter/ton of marine fuel consumed.
If the price of fuel is increased to include a carbon tax it becomes more important to identify and implement strategies to conserve fuel – even if the cost of fuel is being passed through to the customer. The same is true if marine operators are forced to pay a carbon tax for what they consume. In these situations MFM can help automate this process and ensure accurate values are reported.
Not only does an MFM solution allow the user to accurately monitor and report fuel consumption, it also provides the granularity that is required to know how fuel is being used and where it is used. This last point, WHERE fuel is used, may be more important and have more value as different schemes for taxing pollution are implemented. Where can identify equipment (main engines, generators, boilers), or GPS location in order to facilitate reporting within geographic boundaries or zones, such as ECAs.
Each gallon of diesel fuel consumed puts 22.2 pounds of CO2 into the atmosphere. So let’s create an example scenario and assume we are looking at a tug operating with two 3000 hp diesel engines. For 75% of the time the engines are under 80% load. At 80% load the engines consume 140 GPH/engine. The remainder of the time it is at idle with consumption at 20 GPH/engine. Let’s further assume that the vessel is performing this work 75% of the time during a typical year and at dock in a cold iron scenario the remainder.
Under this scenario, the vessel would be working 6570 hours per year and consume 1,445,400 gallons of diesel fuel – which converts to over 16,000 tons of CO2.
U.S. Rep. John Dingell, has proposed a carbon (and fuel) tax with real bite: $10 per ton of carbon content, plus an additional 10 cents per gallon for gasoline and jet fuel. That would rise each year for five years to $50 a ton of carbon and 50 cents a gallon for gas and jet fuel (http://www.thedailygreen.com/living-green/definitions/carbon-tax). So far no specific proposal has been made for marine fuel but let’s assume it will be similar.
Using the above tugboat example there would be a carbon tax of
- $160,000 the first year escalating to
- $802,000 by the 5th year plus
- $144,500 fuel tax the first year up to
- $722,700 by the 5th year
That’s an additional $305,000 cost the first year escalating to $1,525,000 by the 5th year – ON TOP of the price of fuel!
Let’s say the price of fuel is $3.00/gallon. A fuel reduction strategy that produced even a modest 2% savings would deliver the following;
- $86,000 savings in fuel (first year)
- $2,890 savings in fuel tax (first year)
- $3,208 savings in carbon tax (first year)
- $92,098 total savings the first year
Assuming fuel prices remain constant for 5 years (unlikely) the same 2% reduction, the potential savings the 5th year are the following:
- $86,000 savings in fuel (fifth year)
- $14,454 savings in fuel tax (fifth year)
- $16,043 savings in carbon tax (fifth year)
- $116,497 total savings the fifth year
The ROI on this for the typical MFM solution is one year or less. With numbers like these, implementing MFM begins to make good economic sense. Without MFM this level of savings may be nearly impossible to identify or achieve.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Environmental reporting as a reason for MFM may sound like a stretch to some – especially the skeptical; but, if you follow the news, you may be familiar with the EPA, IMO, the impact of ECAs, possible cap and trade legislation… and on and on and on. You cannot dispute that environmental issues are and will continue to be, more onerous every day and, we all know that with increased regulation you always, ALWAYS have increased reporting. Nor can you dispute the correlation between reducing air pollution and reducing fuel consumption.
What is also obvious is that this increase in regulation comes at a "cost" to the marine industry - in fact, all industries using fossil fuel. A variety of approaches have been proposed, but they all seem to stem from an economic model that is based on imposing a financial penalty for pollution from the use of fossil fuel in an effort to encourage users to find ways to reduce fuel use or convert to alternative fuels. With the addition of “caps” on emissions, the cap and trade approach limits the total amount of emissions permitted and creates an additional monetary incentive to reduce consumption by allowing operators to sell or trade emissions credits earned by reducing pollution.
Of the various carbon tax or cap and trade regulations being considered there is talk of two different ways to implement them; upstream models or downstream models. The following is taken from page 12 of the 2008 CBO Study on “Policy Options for Reducing CO2 Emissions”.
"“Administering an “upstream” tax or cap-and-trade program for CO2 emissions would involve taxing or regulating the suppliers of fossil fuels—such as coal producers, petroleum refiners, and natural gas processors. Compared with a “downstream” design, which would tax or regulate users of fossil fuels, an upstream approach would have two administrative advantages. It would involve regulating a limited number of entities, and it would not require firms to monitor actual emissions. Rather, each firm’s tax payment or allowance requirement could be based on the carbon content of its fuel and the amount it sold.”" The full study can be found at http://www.cbo.gov/ftpdocs/89xx/doc8934/02-12-Carbon.pdf
The jury is still out as to how this will impact various groups of marine operators. There will likely need to be different approaches for large blue water ships vs. small brown water boats and several categories in between. The IMO has yet to decide whether it should opt for a cap-and-trade system, in which ship-owners trade permits to emit carbon dioxide, or impose a levy, or a tax. It's obvious they will do something and whatever they do, it will cost!
The CBO appears to favor taxing the suppliers of fossil fuels rather than the users of fossil fuels. If this approach wins, every gallon/liter/ton of marine fuel will carry an additional tax (or penalty) on top of what promises to be ever increasing prices for fuel. If the other approach wins marine operators will be forced to pay a tax (or penalty) for emissions based on every gallon/liter/ton of marine fuel consumed.
If the price of fuel is increased to include a carbon tax it becomes more important to identify and implement strategies to conserve fuel – even if the cost of fuel is being passed through to the customer. The same is true if marine operators are forced to pay a carbon tax for what they consume. In these situations MFM can help automate this process and ensure accurate values are reported.
Not only does an MFM solution allow the user to accurately monitor and report fuel consumption, it also provides the granularity that is required to know how fuel is being used and where it is used. This last point, WHERE fuel is used, may be more important and have more value as different schemes for taxing pollution are implemented. Where can identify equipment (main engines, generators, boilers), or GPS location in order to facilitate reporting within geographic boundaries or zones, such as ECAs.
Each gallon of diesel fuel consumed puts 22.2 pounds of CO2 into the atmosphere. So let’s create an example scenario and assume we are looking at a tug operating with two 3000 hp diesel engines. For 75% of the time the engines are under 80% load. At 80% load the engines consume 140 GPH/engine. The remainder of the time it is at idle with consumption at 20 GPH/engine. Let’s further assume that the vessel is performing this work 75% of the time during a typical year and at dock in a cold iron scenario the remainder.
Under this scenario, the vessel would be working 6570 hours per year and consume 1,445,400 gallons of diesel fuel – which converts to over 16,000 tons of CO2.
U.S. Rep. John Dingell, has proposed a carbon (and fuel) tax with real bite: $10 per ton of carbon content, plus an additional 10 cents per gallon for gasoline and jet fuel. That would rise each year for five years to $50 a ton of carbon and 50 cents a gallon for gas and jet fuel (http://www.thedailygreen.com/living-green/definitions/carbon-tax). So far no specific proposal has been made for marine fuel but let’s assume it will be similar.
Using the above tugboat example there would be a carbon tax of
- $160,000 the first year escalating to
- $802,000 by the 5th year plus
- $144,500 fuel tax the first year up to
- $722,700 by the 5th year
That’s an additional $305,000 cost the first year escalating to $1,525,000 by the 5th year – ON TOP of the price of fuel!
Let’s say the price of fuel is $3.00/gallon. A fuel reduction strategy that produced even a modest 2% savings would deliver the following;
- $86,000 savings in fuel (first year)
- $2,890 savings in fuel tax (first year)
- $3,208 savings in carbon tax (first year)
- $92,098 total savings the first year
Assuming fuel prices remain constant for 5 years (unlikely) the same 2% reduction, the potential savings the 5th year are the following:
- $86,000 savings in fuel (fifth year)
- $14,454 savings in fuel tax (fifth year)
- $16,043 savings in carbon tax (fifth year)
- $116,497 total savings the fifth year
The ROI on this for the typical MFM solution is one year or less. With numbers like these, implementing MFM begins to make good economic sense. Without MFM this level of savings may be nearly impossible to identify or achieve.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Thursday, September 2, 2010
Reasons for MFM: Monitor Fuel Reduction Strategies
This is the fifth post in the series on Reasons to Implement Marine Fuel Management.
Historically, fuel reduction is one of the main reasons companies implement a Marine Fuel Management solution. Starting in the early 2000s, some MFM vendors began to imply that by using their system a customer could see 10%-20% or more in fuel savings. Purchasers of these systems often found that their expectations were not met. I don’t believe any of the vendors making these claims were deliberately making false claims; the problem is that fuel reduction strategies for marine vessels are not a one-size-fits-all proposition. The type of vessel, the way it’s being operated, the type of work it is doing, and the conditions it is dealing with, all have a significant impact on what can be done to save fuel.
I worked with a tug company a few years ago that did coastal towing as well as ship docking. Line haul operations lend themselves quite nicely to fuel reduction strategies because there are long periods of uninterrupted operation. Harbor work, however, is more ad-hoc and less consistent requiring a different approach. It’s no surprise then, that this customer found the same techniques used with their coastal towing operation, did not work with their harbor tugs. What they did find, however, by monitoring fuel consumption data from the harbor tugs, were some “behaviors” that were wasting fuel.
The data (fuel consumption, lat/lon, speed, and engine rpm) showed that the tug would leave its dock, travel out to meet a ship, escort the ship to the ships berth; then, when the job was done, the tug would return to its dock. On the return trip to dock, under no time pressure, the tug was routinely traveling at top speed. After further evaluation it was determined that this was not necessary and by instructing the tug to slow down when there was no rush to get back, they were able to save a considerable amount of fuel without impacting business.
Fuel reduction strategies take many forms, like the one previously mentioned based on behavior modification, to the use of fuel additives or engine hardware, to different props, different tow configurations, hull coatings, and so on. However, it really doesn’t matter what your fuel reduction strategy is, without a way to accurately measure its effectiveness, you have no real understanding of how well it is working – or if it’s working at all.
Most companies use a manual system to account for fuel consumption. Depending on how the manual system is implemented there may be significant errors introduced. Some operators have told me the error could be as much as 2%-5%. Without MFM, a small incremental change in consumption of 1%-2%, whether it is positive or negative, is nearly undetectable. But, even if there is no error in the manual accounting system, the granularity of the information makes it less useful (perhaps even meaningless) for identifying areas where improvements are possible or for evaluating various optimization strategies.
The previous example would not have been easily identified based on a manual system. Without information of sufficient granularity to help you understand some of the details showing how fuel is being used and under what conditions, it may be impossible to identify areas where improvements are possible or implement strategies to correct such situations.
Even the simplest MFM solutions typically provide fuel consumption data on a per engine basis and most can also capture time, date, speed, engine RPM, and vessel location. With this information it’s possible to learn much about how various pieces of equipment are performing and how the vessel is being operated, identify hardware or best practices that work, propagate these throughout the fleet, monitor the results, and look for additional areas of improvement.
Sound familiar? This is essentially the Shewhart Cycle for continuous improvement; plan-do-check-act-repeat! The first step in this process, however, requires information that few operators have today without an MFM solution implemented on at least some vessels in their fleet. Almost every operating company can identify areas where improvements are possible if they have accurate information with the necessary granularity.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Historically, fuel reduction is one of the main reasons companies implement a Marine Fuel Management solution. Starting in the early 2000s, some MFM vendors began to imply that by using their system a customer could see 10%-20% or more in fuel savings. Purchasers of these systems often found that their expectations were not met. I don’t believe any of the vendors making these claims were deliberately making false claims; the problem is that fuel reduction strategies for marine vessels are not a one-size-fits-all proposition. The type of vessel, the way it’s being operated, the type of work it is doing, and the conditions it is dealing with, all have a significant impact on what can be done to save fuel.
I worked with a tug company a few years ago that did coastal towing as well as ship docking. Line haul operations lend themselves quite nicely to fuel reduction strategies because there are long periods of uninterrupted operation. Harbor work, however, is more ad-hoc and less consistent requiring a different approach. It’s no surprise then, that this customer found the same techniques used with their coastal towing operation, did not work with their harbor tugs. What they did find, however, by monitoring fuel consumption data from the harbor tugs, were some “behaviors” that were wasting fuel.
The data (fuel consumption, lat/lon, speed, and engine rpm) showed that the tug would leave its dock, travel out to meet a ship, escort the ship to the ships berth; then, when the job was done, the tug would return to its dock. On the return trip to dock, under no time pressure, the tug was routinely traveling at top speed. After further evaluation it was determined that this was not necessary and by instructing the tug to slow down when there was no rush to get back, they were able to save a considerable amount of fuel without impacting business.
Fuel reduction strategies take many forms, like the one previously mentioned based on behavior modification, to the use of fuel additives or engine hardware, to different props, different tow configurations, hull coatings, and so on. However, it really doesn’t matter what your fuel reduction strategy is, without a way to accurately measure its effectiveness, you have no real understanding of how well it is working – or if it’s working at all.
Most companies use a manual system to account for fuel consumption. Depending on how the manual system is implemented there may be significant errors introduced. Some operators have told me the error could be as much as 2%-5%. Without MFM, a small incremental change in consumption of 1%-2%, whether it is positive or negative, is nearly undetectable. But, even if there is no error in the manual accounting system, the granularity of the information makes it less useful (perhaps even meaningless) for identifying areas where improvements are possible or for evaluating various optimization strategies.
The previous example would not have been easily identified based on a manual system. Without information of sufficient granularity to help you understand some of the details showing how fuel is being used and under what conditions, it may be impossible to identify areas where improvements are possible or implement strategies to correct such situations.
Even the simplest MFM solutions typically provide fuel consumption data on a per engine basis and most can also capture time, date, speed, engine RPM, and vessel location. With this information it’s possible to learn much about how various pieces of equipment are performing and how the vessel is being operated, identify hardware or best practices that work, propagate these throughout the fleet, monitor the results, and look for additional areas of improvement.
Sound familiar? This is essentially the Shewhart Cycle for continuous improvement; plan-do-check-act-repeat! The first step in this process, however, requires information that few operators have today without an MFM solution implemented on at least some vessels in their fleet. Almost every operating company can identify areas where improvements are possible if they have accurate information with the necessary granularity.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Tuesday, August 24, 2010
Reasons for MFM: Enhance Fuel Accounting and Reporting
This is the fourth post in the series on Reason to Implement Marine Fuel Management.
Enhancing fuel accounting and reporting probably seems obvious, but I think many may view this as a convenience only, rather than an opportunity to improve margins.
It’s true that MFM solutions (depending on which one you choose) can be a great convenience for both the vessel’s crew as well as shore based personnel in accounting and maintenance departments. In the last post I went into detail regarding the benefits for maintenance departments so I’ll focus this post on other aspects – but I will only have time to scratch the surface.
So lets start with an obvious benefit, automatically reporting fuel consumption can help shorten billing cycles. For many operators today, fuel is a pass-through item. Traditional methods of accounting for fuel for billing purposes are both labor intensive as well as inaccurate. For longer trips, manually sounding the tanks and reporting fuel consumption is probably the most common method. For shorter trips, such as those typical of harbor tugs, estimating fuel consumption may be more typical. Either way, this can result in inaccuracies, delays in invoicing, and disputes.
Even the most basic MFM can provide an immediate and accurate accounting of fuel consumed to do a job, automatically, whether that job covered a few hours or many days or weeks. The more sophisticated MFM solutions can tie the information to specific start and end times, GPS locations, and even allow the input of job numbers. The output can be in electronic formats for input to other systems, and in some cases, automatically transmitted to shore. These capabilities can facilitate more accurate and timely billing for work completed.
One customer that I worked with a few years back did harbor work and was using the information from their MFM system for next-day billing. This particular MFM system transmitted data to shore on a daily basis. The customer was able to extract fuel consumption information to provide an accurate accounting of fuel used from the time the tug left the dock until it completed the job; the company was then able to prepare an invoice that could be sent to customers on the day after the work was done. Not only did this help the company from a cash flow standpoint but it improved customer satisfaction because their customers had confidence that the invoicing was accurate.
Harbor tugs are not the only ones interested in this capability. Over the past couple of years I have worked with four different oil companies that were interested in better accounting for fuel consumption by offshore support vessels that they had chartered. Almost all OSV contracts are based on a day rate PLUS fuel. Because OSV operators don’t pay for fuel they have historically not been very interested in fuel management technologies or strategies.
The oil companies, however, have gotten more interested each year. They want to know how much fuel is actually being consumed. While the cost of fuel is not the most important thing to the oil companies, they still want the vessel operators to do everything possible to help control these costs. There are a couple of reasons for this.
First, the oil companies DO pay for the fuel and they want to make sure they can account for all the fuel they are being charged for, that consumption is within vessel specifications, and that the vessel is being operated efficiently when possible. A recent project for one of the largest OSV operators in the world at the request of the oil company that chartered their vessel, showed some interesting results. It showed that the vessel spec sheet did not match actual operations. The vessel was actually consuming significantly less fuel than the spec sheet indicated it would. It also identified an engine issue where one engine consumed nearly four times the amount of fuel as the other identical engine when the vessel was at idle - and this particular vessel spent many hours at idle. Having the MFM system on board gave the oil company confidence that it was being charged for actual fuel consumption and helped the OSV operator's maintenance department address the engine issues.
Second, the larger the oil company the more environmental pressure they are under. If they can accurately report and show that they are reducing fuel consumption where possible they can demonstrate a concerted effort to reduce pollution – every gallon of fuel saved represents 22.2 lbs. less carbon dioxide in the atmosphere. In the previous example, the main reason the oil company required the system on the vessel they chartered was to identify and report fuel reduction based on changes in operation and then calculate the tons of CO2 emissions which were reduced based on these strategies.
There are many other ways MFM enhances fuel accounting and reporting and many more examples I could share. The bottom line for this benefit, however, is the same as for the previous benefits.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Enhancing fuel accounting and reporting probably seems obvious, but I think many may view this as a convenience only, rather than an opportunity to improve margins.
It’s true that MFM solutions (depending on which one you choose) can be a great convenience for both the vessel’s crew as well as shore based personnel in accounting and maintenance departments. In the last post I went into detail regarding the benefits for maintenance departments so I’ll focus this post on other aspects – but I will only have time to scratch the surface.
So lets start with an obvious benefit, automatically reporting fuel consumption can help shorten billing cycles. For many operators today, fuel is a pass-through item. Traditional methods of accounting for fuel for billing purposes are both labor intensive as well as inaccurate. For longer trips, manually sounding the tanks and reporting fuel consumption is probably the most common method. For shorter trips, such as those typical of harbor tugs, estimating fuel consumption may be more typical. Either way, this can result in inaccuracies, delays in invoicing, and disputes.
Even the most basic MFM can provide an immediate and accurate accounting of fuel consumed to do a job, automatically, whether that job covered a few hours or many days or weeks. The more sophisticated MFM solutions can tie the information to specific start and end times, GPS locations, and even allow the input of job numbers. The output can be in electronic formats for input to other systems, and in some cases, automatically transmitted to shore. These capabilities can facilitate more accurate and timely billing for work completed.
One customer that I worked with a few years back did harbor work and was using the information from their MFM system for next-day billing. This particular MFM system transmitted data to shore on a daily basis. The customer was able to extract fuel consumption information to provide an accurate accounting of fuel used from the time the tug left the dock until it completed the job; the company was then able to prepare an invoice that could be sent to customers on the day after the work was done. Not only did this help the company from a cash flow standpoint but it improved customer satisfaction because their customers had confidence that the invoicing was accurate.
Harbor tugs are not the only ones interested in this capability. Over the past couple of years I have worked with four different oil companies that were interested in better accounting for fuel consumption by offshore support vessels that they had chartered. Almost all OSV contracts are based on a day rate PLUS fuel. Because OSV operators don’t pay for fuel they have historically not been very interested in fuel management technologies or strategies.
The oil companies, however, have gotten more interested each year. They want to know how much fuel is actually being consumed. While the cost of fuel is not the most important thing to the oil companies, they still want the vessel operators to do everything possible to help control these costs. There are a couple of reasons for this.
First, the oil companies DO pay for the fuel and they want to make sure they can account for all the fuel they are being charged for, that consumption is within vessel specifications, and that the vessel is being operated efficiently when possible. A recent project for one of the largest OSV operators in the world at the request of the oil company that chartered their vessel, showed some interesting results. It showed that the vessel spec sheet did not match actual operations. The vessel was actually consuming significantly less fuel than the spec sheet indicated it would. It also identified an engine issue where one engine consumed nearly four times the amount of fuel as the other identical engine when the vessel was at idle - and this particular vessel spent many hours at idle. Having the MFM system on board gave the oil company confidence that it was being charged for actual fuel consumption and helped the OSV operator's maintenance department address the engine issues.
Second, the larger the oil company the more environmental pressure they are under. If they can accurately report and show that they are reducing fuel consumption where possible they can demonstrate a concerted effort to reduce pollution – every gallon of fuel saved represents 22.2 lbs. less carbon dioxide in the atmosphere. In the previous example, the main reason the oil company required the system on the vessel they chartered was to identify and report fuel reduction based on changes in operation and then calculate the tons of CO2 emissions which were reduced based on these strategies.
There are many other ways MFM enhances fuel accounting and reporting and many more examples I could share. The bottom line for this benefit, however, is the same as for the previous benefits.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, August 16, 2010
Reasons for MFM: Identify Maintenance Trends and Issues
This is the third post in the series on Reasons To Implement Marine Fuel Management.
Another area where MFM solutions have proven to deliver positive results is associated with maintenance. In particular, MFM solutions can help identify potential maintenance issues before they become significant and costly problems or lead to catastrophic failures. They can also help companies with routine maintenance scheduling and budgeting.
For example, most engine manufacturers instruct users to perform engine maintenance at specified intervals based on hours of operation. With more information about how the engine is being operated these maintenance schedules can be optimized. Rather than simply considering the hours of operation, combining the engine’s cumulative RPMs and fuel consumption can allow maintenance schedules to be shortened or extended based on a more comprehensive view of the engines operating parameters.
Let’s say two identical engines are scheduled for top overhauls at 4000 hours. One of the two engines is on a vessel that operates 75% of the time under 80% load while the other spends considerably more time at idle in a standby mode and only spends about 45% of its operating hours under 80% load. If at 80% load the engines are operating around 800 RPM with fuel consumption at 140 GPH and the remainder of the time around 320 RPM with consumption at 20 GPH; there is a significant disparity in the number of RPMs and amount of fuel consumed by these two engines for the same number of operating hours.
In this scenario the second engine would have operated 1,200 (30%) fewer hours at 80% load, turned over 34 million (20%) fewer RPMs, and consumed over 144,000 gallons (32%) less fuel. What are the chances that both engines have the same amount of wear simply because they both accumulated 4000 hours of operation? MFM solutions provide an efficient and automatic way of capturing and reporting this information. By factoring into the equation engine RPMs and fuel consumption, maintenance departments have additional information to help them make important decisions. This gives them more control and flexibility over their time, budget, and resources.
So let’s extend the above scenario and assume that a company has two vessels and the engines on each have operated 4000 hours. If money is no object and logistics are not a problem, the ideal thing is to overhaul both. But, money is tight and logistics are an issue; the company only has the budget or time to do one of the two vessels.
With the MFM information on hours, rpm, and fuel consumption the maintenance department has significantly more performance information to help them prioritize their maintenance schedules and budget by overhauling the vessel that is most likely to have more engine wear. In fact, by monitoring this information on a regular basis – weekly, monthly, or even quarterly, maintenance departments can be more proactive and effective at planing maintenance budgets, schedules, and logistics.
Regular monitoring can also identify changes in performance that represent other problems that should be investigated. In addition to being an indication of engine wear, a gradual change in fuel consumption can also indicate other issues, such as; hull or prop fouling. By monitoring these recorded changes, maintenance departments can be alerted to trends that indicate degraded performance and decisions can be made to further investigate the situation. Sudden, but small changes in fuel consumption, that without MFM may go unnoticed, can indicate damage to the hull, prop, rudder, or other equipment that can lead to more significant problems and increased cost of operations if not identified and dealt with quickly.
There is little doubt that even when implementing the simplest MFM configuration, there are many ways an MFM solution can be used to provide relevant information that can help improve the overall effectiveness and efficiency of a maintenance department.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Another area where MFM solutions have proven to deliver positive results is associated with maintenance. In particular, MFM solutions can help identify potential maintenance issues before they become significant and costly problems or lead to catastrophic failures. They can also help companies with routine maintenance scheduling and budgeting.
For example, most engine manufacturers instruct users to perform engine maintenance at specified intervals based on hours of operation. With more information about how the engine is being operated these maintenance schedules can be optimized. Rather than simply considering the hours of operation, combining the engine’s cumulative RPMs and fuel consumption can allow maintenance schedules to be shortened or extended based on a more comprehensive view of the engines operating parameters.
Let’s say two identical engines are scheduled for top overhauls at 4000 hours. One of the two engines is on a vessel that operates 75% of the time under 80% load while the other spends considerably more time at idle in a standby mode and only spends about 45% of its operating hours under 80% load. If at 80% load the engines are operating around 800 RPM with fuel consumption at 140 GPH and the remainder of the time around 320 RPM with consumption at 20 GPH; there is a significant disparity in the number of RPMs and amount of fuel consumed by these two engines for the same number of operating hours.
In this scenario the second engine would have operated 1,200 (30%) fewer hours at 80% load, turned over 34 million (20%) fewer RPMs, and consumed over 144,000 gallons (32%) less fuel. What are the chances that both engines have the same amount of wear simply because they both accumulated 4000 hours of operation? MFM solutions provide an efficient and automatic way of capturing and reporting this information. By factoring into the equation engine RPMs and fuel consumption, maintenance departments have additional information to help them make important decisions. This gives them more control and flexibility over their time, budget, and resources.
So let’s extend the above scenario and assume that a company has two vessels and the engines on each have operated 4000 hours. If money is no object and logistics are not a problem, the ideal thing is to overhaul both. But, money is tight and logistics are an issue; the company only has the budget or time to do one of the two vessels.
With the MFM information on hours, rpm, and fuel consumption the maintenance department has significantly more performance information to help them prioritize their maintenance schedules and budget by overhauling the vessel that is most likely to have more engine wear. In fact, by monitoring this information on a regular basis – weekly, monthly, or even quarterly, maintenance departments can be more proactive and effective at planing maintenance budgets, schedules, and logistics.
Regular monitoring can also identify changes in performance that represent other problems that should be investigated. In addition to being an indication of engine wear, a gradual change in fuel consumption can also indicate other issues, such as; hull or prop fouling. By monitoring these recorded changes, maintenance departments can be alerted to trends that indicate degraded performance and decisions can be made to further investigate the situation. Sudden, but small changes in fuel consumption, that without MFM may go unnoticed, can indicate damage to the hull, prop, rudder, or other equipment that can lead to more significant problems and increased cost of operations if not identified and dealt with quickly.
There is little doubt that even when implementing the simplest MFM configuration, there are many ways an MFM solution can be used to provide relevant information that can help improve the overall effectiveness and efficiency of a maintenance department.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, August 9, 2010
Reasons for MFM: Evaluate New Technology
This is the second in the series on Reasons to implement Marine Fuel Management
How often have you had someone call on your company representing a technology or product that they claimed could help you reduce fuel consumption by 2%, 5%, 10% - or more? One of the negative impressions that a vendor must overcome is that customers have heard promises like these for years from a variety of vendors of; fuel additives, lubricants, engine hardware, and even marine fuel management (MFM) systems. While the vendor (in fairness) may have seen such results at some point in time, under certain conditions, often the next customer is frustrated as claims go unrealized and expected savings can not demonstrated - for any of a number of reasons.
One of the reasons, however, may be that there is currently no accurate way of measuring fuel consumption on the vessel. In some cases the vendor’s claim of savings may be in the area of 2%-5%. While these are very realistic numbers for certain fuel additives, lubricants, and some engine hardware; often the savings cannot be verified because there is no accurate way to measure fuel consumption to verify the effectiveness of the technology. If you are manually accounting for fuel use there may be 2%-5% (or more) error in your measurement! A vendor whose technology delivers a potential benefit in this range may not be able to prove the savings because the method of measurement is inaccurate.
One of the values of an MFM solution is that customers can use the system to provide accurate verification that other technologies perform as advertised. An MFM system that is monitoring fuel consumption can provide accurate feedback to management teams and maintenance teams about the impact on fuel consumption of such things as; fuel injectors, fuel additives, lubricants, props, tow configurations, routes, various engine tuning parameters, and more.
A few years ago I worked with a customer that had a fuel management system installed on one of their vessels. They conducted a test to see if different injectors for their engines would result in a fuel savings as advertised by the vendor. They conducted a dead push at various RPM settings for 4 hours – ramping up from low RPM to high RPM. Then they changed injectors in one engine and repeated the process. The accurate fuel consumption data collected by the MFM system on board their tug allowed them to document a fuel savings of around 3%-4% with the new injectors installed.
They would not have been able to do this as fast nor as accurately – if at all – had they been relying on manual measurement from tank soundings. They would not have been able to watch the process in real-time nor would they have been able to chart the fuel consumption at various RPM settings to see if the savings was consistent across the range of RPM or different at different engine speeds. Nor would they have been able to export the minute-by-minute detailed data for further analysis in a spreadsheet.
Through the years I have talked to a variety of operators and vendors and heard stories about how they have tried various technologies but were unable to prove the savings. Some vendors have struggled with demonstrating a savings when there is so much error in the measurement process. Some customers have invested many thousands of dollars on technologies that failed to deliver for thier vessels. Having the ability to accurately monitor fuel consumption opens the door to proving the validity of various technologies and can help operating companies either keep from making risky investments in technologies that have not been proven on their vessels or allow them to make safe investments in technologies where savings have been demonstrated.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
How often have you had someone call on your company representing a technology or product that they claimed could help you reduce fuel consumption by 2%, 5%, 10% - or more? One of the negative impressions that a vendor must overcome is that customers have heard promises like these for years from a variety of vendors of; fuel additives, lubricants, engine hardware, and even marine fuel management (MFM) systems. While the vendor (in fairness) may have seen such results at some point in time, under certain conditions, often the next customer is frustrated as claims go unrealized and expected savings can not demonstrated - for any of a number of reasons.
One of the reasons, however, may be that there is currently no accurate way of measuring fuel consumption on the vessel. In some cases the vendor’s claim of savings may be in the area of 2%-5%. While these are very realistic numbers for certain fuel additives, lubricants, and some engine hardware; often the savings cannot be verified because there is no accurate way to measure fuel consumption to verify the effectiveness of the technology. If you are manually accounting for fuel use there may be 2%-5% (or more) error in your measurement! A vendor whose technology delivers a potential benefit in this range may not be able to prove the savings because the method of measurement is inaccurate.
One of the values of an MFM solution is that customers can use the system to provide accurate verification that other technologies perform as advertised. An MFM system that is monitoring fuel consumption can provide accurate feedback to management teams and maintenance teams about the impact on fuel consumption of such things as; fuel injectors, fuel additives, lubricants, props, tow configurations, routes, various engine tuning parameters, and more.
A few years ago I worked with a customer that had a fuel management system installed on one of their vessels. They conducted a test to see if different injectors for their engines would result in a fuel savings as advertised by the vendor. They conducted a dead push at various RPM settings for 4 hours – ramping up from low RPM to high RPM. Then they changed injectors in one engine and repeated the process. The accurate fuel consumption data collected by the MFM system on board their tug allowed them to document a fuel savings of around 3%-4% with the new injectors installed.
They would not have been able to do this as fast nor as accurately – if at all – had they been relying on manual measurement from tank soundings. They would not have been able to watch the process in real-time nor would they have been able to chart the fuel consumption at various RPM settings to see if the savings was consistent across the range of RPM or different at different engine speeds. Nor would they have been able to export the minute-by-minute detailed data for further analysis in a spreadsheet.
Through the years I have talked to a variety of operators and vendors and heard stories about how they have tried various technologies but were unable to prove the savings. Some vendors have struggled with demonstrating a savings when there is so much error in the measurement process. Some customers have invested many thousands of dollars on technologies that failed to deliver for thier vessels. Having the ability to accurately monitor fuel consumption opens the door to proving the validity of various technologies and can help operating companies either keep from making risky investments in technologies that have not been proven on their vessels or allow them to make safe investments in technologies where savings have been demonstrated.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, August 2, 2010
Reasons for MFM: Improve Operations Management.
This is a continuation of my previous post and the first of six follow-on posts addressing in more detail the reasons to implement Marine Fuel Management.
Saying that Marine Fuel Management (MFM) systems can help improve operations management is a statement that most often evokes little response. There are two reasons for this; 1)there are very few MFM systems installed compared to the global fleet so there are not a lot of references or case studies for these systems, and 2) “operations management” is a very broad area. Without specifics as to HOW MFM improves operations management; it’s difficult to assign a value to this benefit.
The facts are that MFM can help; improve management oversight, meet a variety of reporting requirements, enhance maintenance practices, improve the accuracy and speed of billing, provide a differentiating benefit for sales/marketing, evaluate the fuel efficiency strategies… and more. In fact, all of the remaining points in this series actually fall under the broader operations management umbrella. The key is to understand what operations management functions in your organization could benefit from MFM and then properly align expectations.
An MFM system is an information repository where information about vessel operations relative to fuel use is captured and stored. Certain data can be presented to the captain and crew in real-time – giving them a decisions support tool that has true value, especially if fuel savings strategies are being implemented.
A commonly used quote “you can’t manage what you don’t measure” is right on the money for understanding how MFM can help operations management. For example; say your company has a goal to reduce fuel consumption by 5% as part of an overall plan to reduce emissions. Then obviously you must have a plan in place to measure fuel consumption or you can't 'prove' that you've achieved your objectives.
Many companies do this by sounding the tanks and/or tallying bunkering tickets. While this may give you a crude estimate of fuel consumption it really does not provide management with much useful information to determine if the strategies that were put in place to achieve the 5% reduction goal were effective. In this case, if the numbers have gone down, an incorrect assumption may be made that the strategies were effective when in actuality a combination of operating conditions, tonnage, weather, tides, and/or river levels are what contributed to the difference.
On the other hand, if you are using a MFM system to measure true fuel consumption and have that information as part of a data set that includes the time, date, location, speed, engine RPM and/or propeller pitch; you have the information necessary to determine a wide variety of KPIs that contribute to your goal.
Let’s say you decide to conduct an experiment – you want to know the impact on fuel consumption, vessel speed, and arrival time of reducing the RPM on your engines from 850 to 840 for the northbound leg of a trip. You instruct the captain to watch his RPM and to not go above 840 during normal cruise times. You sound the tanks before the trip and again after the trip accounting for one refueling stop. Let’s assume that at the end of the trip the calculated fuel reduction was 3.5% with negligible reduction in speed and no appreciable increase in time.
This sounds like you made progress toward your goal of 5%, however, there are several questions that remain unanswered because you don’t really have enough information to know what factors actually contributed to the reduction. You don’t even know for sure that the captain pulled the RPM back to 840 and if he did for how long. Because the means of measuring does not provide the detail necessary to evaluate the results of the experiment, management is unable to draw meaningful conclusions. Likewise, if the results indicated that no fuel was saved – could you logically come to the conclusion that the experiment failed?
What you measure is important but how you measure is just as important if you want it to yield information that can help you manage. Automated systems, that collect accurate timely data in a totally unbiased manner, provide management with a rich historical record that can be analyzed to produce meaningful information that can be used by management to improve operations.
This information can help identify best practices and then monitor their implementation. They can also be used as part of a continuous improvement plan providing on-going measurement of identified improvement areas and information that can help find other ares where improvement is possible.
Saying that Marine Fuel Management (MFM) systems can help improve operations management is a statement that most often evokes little response. There are two reasons for this; 1)there are very few MFM systems installed compared to the global fleet so there are not a lot of references or case studies for these systems, and 2) “operations management” is a very broad area. Without specifics as to HOW MFM improves operations management; it’s difficult to assign a value to this benefit.
The facts are that MFM can help; improve management oversight, meet a variety of reporting requirements, enhance maintenance practices, improve the accuracy and speed of billing, provide a differentiating benefit for sales/marketing, evaluate the fuel efficiency strategies… and more. In fact, all of the remaining points in this series actually fall under the broader operations management umbrella. The key is to understand what operations management functions in your organization could benefit from MFM and then properly align expectations.
An MFM system is an information repository where information about vessel operations relative to fuel use is captured and stored. Certain data can be presented to the captain and crew in real-time – giving them a decisions support tool that has true value, especially if fuel savings strategies are being implemented.
A commonly used quote “you can’t manage what you don’t measure” is right on the money for understanding how MFM can help operations management. For example; say your company has a goal to reduce fuel consumption by 5% as part of an overall plan to reduce emissions. Then obviously you must have a plan in place to measure fuel consumption or you can't 'prove' that you've achieved your objectives.
Many companies do this by sounding the tanks and/or tallying bunkering tickets. While this may give you a crude estimate of fuel consumption it really does not provide management with much useful information to determine if the strategies that were put in place to achieve the 5% reduction goal were effective. In this case, if the numbers have gone down, an incorrect assumption may be made that the strategies were effective when in actuality a combination of operating conditions, tonnage, weather, tides, and/or river levels are what contributed to the difference.
On the other hand, if you are using a MFM system to measure true fuel consumption and have that information as part of a data set that includes the time, date, location, speed, engine RPM and/or propeller pitch; you have the information necessary to determine a wide variety of KPIs that contribute to your goal.
Let’s say you decide to conduct an experiment – you want to know the impact on fuel consumption, vessel speed, and arrival time of reducing the RPM on your engines from 850 to 840 for the northbound leg of a trip. You instruct the captain to watch his RPM and to not go above 840 during normal cruise times. You sound the tanks before the trip and again after the trip accounting for one refueling stop. Let’s assume that at the end of the trip the calculated fuel reduction was 3.5% with negligible reduction in speed and no appreciable increase in time.
This sounds like you made progress toward your goal of 5%, however, there are several questions that remain unanswered because you don’t really have enough information to know what factors actually contributed to the reduction. You don’t even know for sure that the captain pulled the RPM back to 840 and if he did for how long. Because the means of measuring does not provide the detail necessary to evaluate the results of the experiment, management is unable to draw meaningful conclusions. Likewise, if the results indicated that no fuel was saved – could you logically come to the conclusion that the experiment failed?
What you measure is important but how you measure is just as important if you want it to yield information that can help you manage. Automated systems, that collect accurate timely data in a totally unbiased manner, provide management with a rich historical record that can be analyzed to produce meaningful information that can be used by management to improve operations.
This information can help identify best practices and then monitor their implementation. They can also be used as part of a continuous improvement plan providing on-going measurement of identified improvement areas and information that can help find other ares where improvement is possible.
Monday, July 26, 2010
Reasons to implement Marine Fuel Management
Marine Fuel Management systems can and do deliver significant benefits when the right solution is selected and implemented.
There are many reasons to look into an MFM system;
1) Improve operations management
2) Evaluate new technology
3) Identify maintenance trends and issues
4) Enhance fuel accounting and reporting
5) Monitor fuel reduction strategies
6) Monitor and report fuel consumption for environmental reporting
Over the next few installments I will spend a little time discussing each of these. I welcome your comments and suggestions. If you have experience with any of the system currently available I'd love to hear from you.
There are many reasons to look into an MFM system;
1) Improve operations management
2) Evaluate new technology
3) Identify maintenance trends and issues
4) Enhance fuel accounting and reporting
5) Monitor fuel reduction strategies
6) Monitor and report fuel consumption for environmental reporting
Over the next few installments I will spend a little time discussing each of these. I welcome your comments and suggestions. If you have experience with any of the system currently available I'd love to hear from you.
Tuesday, July 20, 2010
I'm new to blogging, but I've worked in the marine industry for several years. During this time I have worked for companies with products focused on the Marine Fuel Management issue.
The fact remains that the vast majority of all of the commercial vessels operating globally have no automated way to monitor and report, much less help control fuel consumption. Fuel prices are now on the rise again and along with them, interest in marine fuel management is also increasing.
There are many different systems on the market today that offer marine fuel management from simple low cost systems to very complex and expensive systems. Many companies do not have the resources or the time to effectively look into addressing this issue or they don't fully understand how to go about defining their fuel management requirements.
For others the challenge is understanding where the benefits from such a system can be found.The purpose of this blog is to address and explore some of the issues and potential solutions that are available on the market today.
This blog is targeted to commercial marine operators for vessels of all sizes and I invite input from those familiar with these issues. I look forward to the exchange of ideas.
The fact remains that the vast majority of all of the commercial vessels operating globally have no automated way to monitor and report, much less help control fuel consumption. Fuel prices are now on the rise again and along with them, interest in marine fuel management is also increasing.
There are many different systems on the market today that offer marine fuel management from simple low cost systems to very complex and expensive systems. Many companies do not have the resources or the time to effectively look into addressing this issue or they don't fully understand how to go about defining their fuel management requirements.
For others the challenge is understanding where the benefits from such a system can be found.The purpose of this blog is to address and explore some of the issues and potential solutions that are available on the market today.
This blog is targeted to commercial marine operators for vessels of all sizes and I invite input from those familiar with these issues. I look forward to the exchange of ideas.
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