Nautilus Labs aims to reduce emissions in the shipping industry through data and greener legal frameworks

• Estimates its solution can eliminate 15-25% of C02 emissions
• Relying on biofuels alone is not enough due to ship lifespans

International shipping accounted for about 2% of global energy-related C02 emissions in 2022. The International Maritime Organization's (IMO) recently revised GHG strategy targets net zero emissions around 2050. The challenge however is that 99% of international shipping energy needs are met through fossil fuels, and transitioning to sustainable fuels poses a challenge for older assets. Proposed solutions run the gamut from ammonia, battery and hydrogen fuel cell propulsion technologies, methanol-fuelled vessels and hydrogen combustion.

New York City-based Nautilus Labs is betting on data as a decarbonisation solution and estimates that they can eliminate about 15-25% of carbon emissions from Singapore-flagged vehicles through changes in the chartering and operational process, without negative impacts on financial returns.

In normal circumstances, vessels travel at high speeds during their routes and face waiting times once they arrive at port – known as Sail Fast, Then Wait (SFTW) - resulting in unnecessary fuel consumption and generating additional emissions. Nautilus Labs argue that eliminating practices like SFTW can reduce carbon emissions and positively impact the air quality and overall health of communities and residents that live in the vicinity of the ports.

The identified pain point is the legacy charter party agreements, which tend to be rigid commercial structures that have remained unchanged. According to the company, existing shipping agreements do not offer incentives, hinder collaboration, impede efficiency and create zero-sum relationships, with financial penalties such as performance claims forming the basis of most commercial agreements.

The following is an email interview with Leslie Dang, Global Head of Revenue, and Managing Director, Singapore of Nautilus Labs who shares how a greener legal framework can help address the logistical and environmental challenges facing the shipping industry.

SM: Other forms of transportation have been adapting sustainability solutions with some level of urgency. The electrification of trains and trucks, and the use of sustainable aviation fuels, for example. But it feels like there hasn’t been much progress within the shipping industry. Is that a myth or is the industry slow to act?

LD: Shipping faces unique challenges compared to other sectors. Ships often operate in multiple jurisdictions, making regulations harder to coordinate. Despite this, significant advancements have been made. Initiatives like the Emission Control Areas (ECAs) since 2006, Energy Efficiency Existing Ship Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP) since 2013, and Poseidon Principles in 2019 showcase the sector's commitment. Measures like low-sulphur fuel mandates in 2020, the Sea Cargo Charter, and 2023's Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) standards further demonstrate strides toward sustainability. However, the industry deals with extended ship lifespans ranging from 20-25 years, and many ships weren't built for cleaner fuels. Infrastructure limitations also hinder rapid adoption. Future developments, including the EU Emissions Trading System in 2024 and IMOs carbon pricing in 2027 show continued commitment to addressing environmental concerns. Initiatives such as green shipping corridors between Singapore and other ports such as in California or Australia further demonstrate the industry's ongoing efforts to enhance environmental responsibility.

SM: Part of the problem as you have framed it is the current Sail Fast, Then Wait (SFTW) approach. This suggests that decarbonisation can be achieved through efficiency in route planning, which is what I understand from the just-in-time approach that you are developing. However, it seems to me that increasing sea temperatures will drive more adverse weather conditions, which in turn could impact shipping times and routes. How does this relationship work, and how important are weather predictions in being able to plan for better routing?

LD: More adverse weather conditions are an increasing concern because of climate change, and this indeed impacts shipping operations. The relationship between weather and route planning is crucial, as adverse conditions can lead to delays, safety risks, and increased fuel consumption. To address this, technology plays a pivotal role. Equipping ships with the right technology is essential for making safe and efficient decisions in challenging weather. This technology incorporates real-time weather data to improve predictions, aiding operators and crews in their decision-making processes. It's imperative that these systems automatically update as new inputs, such as changing weather forecasts, become available and hence allow vessels to adapt their routes and speeds in response to evolving weather conditions.

Warmer seas also increase hull fouling, where marine life grows on the underside of the vessel. The longer a vessel sits in warmer water, the more quickly the hull gets fouled and needs to be cleaned. Fouling increases drag in the water, meaning the vessel needs to burn more fuel to go at the same speed, which results in degraded efficiency. Such impact on vessel performance has to be included in route and speed planning to make accurate predictions.

SM: What considerations are involved in being able to achieve just-in-time arrival?

LD: At the heart of just-in-time arrival lies the precision of arrival simulations. This hinges on an accurate, vessel-specific Digital Twin that predicts the ship's responses to expected weather conditions. Reliable weather forecasts are imperative, as is a clear definition of "just in time." While we currently target vessel ETAs, innovative Virtual Arrival initiatives are in progress. These aim to synchronize berth availability with vessel arrival and align the financial incentives of all stakeholders in doing so, avoiding unnecessary waiting times in port. This seemingly straightforward concept necessitates substantial shifts in port processes and charter parties. Although in its infancy, this transformative approach holds promise for widespread adoption across the industry, sparking our enthusiasm for its future impact.

SM: What happens if for some reason a ship is delayed, how does this affect your solution - Green Charter - and the efficiencies that you are trying to address?

LD: If a ship experiences an unforeseen delay, our solution is designed to adapt seamlessly. The system automatically updates in response to changing inputs, such as adverse weather or unexpected circumstances. Green Charter serves as a collaborative platform for ship owners and charterers to, among other use cases, promptly address the reasons behind the delay. This open dialogue allows for the swift identification of issues and the implementation of immediate corrective actions. By fostering transparent communication and responsive adjustments, our approach ensures that the overarching objectives of sustainability and operational efficiency are consistently pursued, even in the face of unexpected delays.

SM: You list TotalEnergies, Eastern Pacific Shipping, BHP, and XT Shipping as some of your clients. Is there an indication of how much CO2 emissions have already been avoided as a result of your solution?

The extent of total CO2 emissions avoided through our solution is not disclosed. However, it's important to note that technology like ours promoting market efficiency, has the potential to significantly reduce the maritime industry's carbon footprint. While plenty of academic studies have shown that the change of operating patterns, such as slow sailing, could cut emissions by 15-20%, estimates suggest that technology that drives market efficiency could contribute to emissions reductions of up to 30%. The precise impact hinges on various variables, but the overarching objective remains clear: driving the industry toward greater sustainability by enhancing operational efficiency and thus curtailing its environmental impact.