Incorporating Sulfur and CO2 Emission Reduction Options into the Container Fleet Capacity Renewal Alternatives for a Shipping Operator in the Post-COVID-19 Era

Abstract

In this article, a cost-benefit decision framework is proposed to analyze the three alternative options of the container fleet capacity renewal for a ship operator. In this decision framework, the ship operator can trade off the following factors: MGO fuel or LNG option vessels, carbon neutrality, and other investment factors. The following variables are considered: the distance of the round trip, the prices of LNG and MGO, the freight rates of each option, and the initial investment ratios of new vessels. It was found that (1) the retrofitted vessels were more stable and suitable in an uncertain shipping market and have better investment potential. (2) The MGO option was the best option before the epidemic of COVID-19. In the postepidemic era, under the double carbon (carbon neutral and carbon peaking) policy, the advantage of low fuel consumption for the LNG ships disappeared due to the increase in LNG prices, and the NPV advantage of MGO ships becomes significant.