Exploring Drivers Shaping the Choice of Alternative-Fueled New Vessels

Abstract

The urgent imperative for maritime decarbonization has driven shipowners to embrace alternative marine fuels. Using a robust orderbook dataset spanning from January 2020 to July 2023 (encompassing 4712 vessels, 281 shipyards, and 967 shipping companies), four distinct multinomial logit models were developed. These models, comprising a full-sample model and specialized ones for container vessels, dry bulk carriers, and tankers, aim to identify the key determinants influencing shipowners’ choices of alternative fuels when ordering new vessels. It is interesting to find that alternative fuels (e.g., liquefied natural gas) are the most attractive choice for gas ships and ro-ro carriers; others prefer to use conventional fuels. Furthermore, this study reveals that shipowners’ choices of new fuels significantly correlate with their nationality. While it is well-established that economic factors influence shipowners’ choices for new ship fuel solutions, the impacts of bunker costs, freight rates, and CO2 emission allowance prices remain relatively limited. It is evident that the policies of the International Maritime Organization (IMO) to reduce carbon emissions have increased the demand for building new energy ships. This research contributes to bridging research gaps by shedding light on the intricate interplay of factors that influence shipowners’ preferences for alternative marine fuels amidst global regulatory shifts. It also offers valuable insights for policymakers aiming to incentivize shipowners to transition towards sustainable energy sources.