Renewable energy Is also coming to ships
Vuosaari is the most efficient harbour in the world, says Emanuele Grimaldi. The CEO of Finnlines is sticking to the shipping company’s investment programme and believes in the sustainable development of shipping. He strongly criticises the coronavirus support granted to passenger shipping companies by the Finnish government, as it distorts competition.
Emanuele Grimaldi, CEO of Finnlines and Chairman of the Board of the Grimaldi Group, has two primary concerns about the pandemic. The first concerns companies’ struggle for survival, while the second relates to how the world’s 1.6 million seafarers are going to survive the coronavirus maelstrom healthy and sane.
“The coronavirus has already caused – and will continue to cause – unprecedented upheavals and suffering in all areas of human life, not just the economy. Although many major European countries, including my home country of Italy, are gradually starting to return to normal, the USA still has the worst ahead,” he says, assessing the daily changing status of the disease.
The coronavirus has already had a hefty impact on maritime transport. Take new cars, for example, in whose transport the Group is a major international player. Like other industry, car plants have been closed and the car trade has collapsed everywhere.
“Under normal circumstances, we would be transporting cars across the Baltic Sea: all of the Volkswagens sold in Finland, Volvos from Sweden, and plenty of Fords made near St Petersburg from Russia to the West. We also transport Fiats and German cars across the Atlantic to North and South America. Even though car plants are opening their doors again, it will take a long time for production and demand to meet. Very few people are buying new cars in the current situation,” says Grimaldi, describing the collapse in consumer confidence.
“I’ve calculated that the Grimaldi Group’s business will contract by 15–20 per cent this year. This translates to EUR 500–600 million in monetary terms, provided there isn’t a second wave.”
In the same breath, he also admits that cargo shipping companies are downright lucky compared to passenger and cruise companies, whose business has completely dried up.
Support distorts competition in the Baltic Sea
The reduction in cargo traffic, and particularly the complete end to passenger traffic, has driven shipping companies into difficulty. Many countries have begun to support strategic maritime transport and in Finland, for example, the National Emergency Supply Agency has set aside EUR 45 million to spend in this area during the spring.
However, as this is an international sector, those in shipping circles have been jealously following the funding received by competitors in other countries. Finland’s decisions on support for vessels sailing under Swedish and Estonian flags have already been greeted with reproach by local shipping organisations. The head of Finnlines numbers among these critics.
“We’re really disappointed in the Finnish Government, as it treats shipping companies differently. It is, of course, clear that support given to Viking, Tallink and others puts Finnlines at a disadvantage in the Baltic Sea.” The EU Commission’s competition law may also have something to say about this,” says Grimaldi.
He says that Sweden is treating all shipping companies equally. And likewise Denmark and Germany, whose ferry companies had to suspend dozens of routes as borders closed. Finnlines demands only this kind of equal treatment from the Finnish Government as well.
“We’ve made huge investments in Finnish vessels and ports over the years.”
“These days, the rules of fair competition are respected less in the Baltic Sea than in the Mediterranean, where Italy, Greece and Spain are supporting all operators equally,” says Grimaldi, who holds Finland largely accountable for this.
“Why has Viking’s thirty-year-old ship Gabriella been given support, while our ten-year-old ship serving the same route has not? I strongly fear that the relief funds being paid by the Finnish Government will fall into the wrong hands,” says Grimaldi.
According to the Finnish Government and the National Emergency Supply Agency, there is no need to support cargo routes between Finland and Germany, as it is a market-based and financially profitable business. Grimaldi does not share their opinion.
“Finnlines’s modern fleet and skilled seafarers are just as important in safeguarding food, medical and other strategic shipments to Finland as other operators. We’ve made huge investments in Finnish vessels and ports over the years, and we’re also extremely proud of Finnlines’ Finnish roots,” says the Neapolitan shipowner.
Crew changeovers must be safeguarded
Another big problem caused by the coronavirus maelstrom concerns respect for seafarers and, in particular, crew changeovers. Grimaldi, who is a member of the Board of the International Chamber of Shipping (ICS), is very concerned about the impact of a prolonged pandemic on the mental health of those working aboard ships.
“About 1.6 million people work in the merchant navy. The majority of them can’t get home, because there are simply no flights. How long can these people last before their mental health breaks down? I know of cases in which Chinese or Indians don’t dare to seek hospital treatment, even though they’re in need of care,” says Grimaldi, stressing that people whose shifts have ended cannot simply be left defenceless aboard ships, as has been the case.
“We’ve chartered several flights to fly Grimaldi personnel home, but this only solves one tiny fraction of the overall problem.”
Just over 10,000 of the Grimaldi Group’s approximately 15,000 personnel work aboard ships. The Group employs many people from countries such as the Philippines, India and China. Finnlines’ vessels also have many employees from outside the EU, as do Finnish vessels in general.
Grimaldi stresses that cooperation between all actors and countries – even up to UN level – is required to resolve the problems associated with crew changeovers.
“The right for crews to changeover is not only a mental health issue, but will soon also be a human rights issue,” says Grimaldi, reminding us of the chorus of foghorns that was sounded on May Day by all the ships in the world.
“With this, the sector wanted to remind people of the important role seafarers play in safeguarding security of supply under all circumstances.
During this pandemic, I think that seafarers are as important as doctors, medical staff and food distribution professionals. They should be appreciated.“
Renewable power for ships too
Even without the pandemic, shipping is facing major challenges that are not going anywhere fast. Global warming and pollution demand sustainable operations. The solution to this equation requires renewable energy sources, clearer fuels, and myriad technical solutions.
Like the heads of many other shipping companies, Emanuele Grimaldi is extremely interested in technology. He sees sustainable development as a challenge that will open up countless new opportunities to strong operators.
“Sustainable development is a challenge, the virus is a problem,” he states, adding that shipping operators – Grimaldi Group and Finnlines included – have been working to find cost-effective solutions for years.
Ammonia and hydrogen fuels are being continuously developed. And here it is a question of more than just money. These solutions require the manufacture of environmentally friendly fuels on an industrial scale. Hydrogen could be a good fuel, but its manufacture is highly polluting.
“Ammonia is widely used as a fertiliser and is produced in vast quantities, but current methods will not produce a sufficiently clean fuel. Ammonia produced using clean electricity would, however, make a good marine fuel, as it’s easy to transport and use at reasonable temperatures,” says Grimaldi.
Grimaldi considers LNG to be a transition-phase option that is burdened by being a fossil fuel.
Instead of LNG, he believes in cleanly generated electricity that can also be used to produce the aforementioned ammonia and hydrogen fuels.
“Wind turbines have demonstrated their competitiveness in renewable energy production. Green electricity can also be generated using solar, tidal and wave power. I consider electricity produced using renewable sources to be the future solution for all transport, not just ships. The future belongs to the electric car,” says one of Europe’s largest car transporters.
The world has been talking about ‘slow steaming’, that is, speed limits for ships. The idea is that slowly moving ships consume less fuel and produce fewer emissions.
“We’re already sailing at the slowest possible speed that is acceptable to our customers. Traffic between Germany and Finland must run to a certain schedule. Likewise traffic between Finland and Sweden, where passengers and cargo must reach their destination the following morning.
“The drawback of slow steaming, aka speed limits, is that it’s very hard to supervise,” says Grimaldi.
“In spite of the low price of crude oil, fuel costs are one of the Grimaldi Group’s largest expenses. At current prices, fuel costs us EUR 500–600 million per year, that is, more than the salaries of 15,000 people. That’s why we take savings seriously.”
Investments difficult to tamper with
The modernisation of Finnlines’ fleet is not only a question of money but also new technologies, such as hybrid solutions. Three hybrid roros and two superfast ropax vessels have been ordered from China, and the combined investment is in the range of about a half a billion euros.
Work on the first new build will start in June and the shipyard will be remotely supervised from Helsinki. But how does Finnlines’ investment in a new ship sit with the aforementioned coronavirus-related losses that are threatening the Grimaldi Group?
“I would not immediately touch the investment programme. If business begins to go really badly, I’d rather start scrapping ships, oldest first,” says the owner of the family business, which operates more than a hundred merchant navy vessels.
Emanuele Grimaldi thinks that the best-possible ice-strengthened fleet should be used in the Baltic Sea. The underlying idea is that Finnlines’ new hybrid vessels will also serve as models for the Grimaldi Group’s new ships, nine of which have been ordered from China by the parent company. Although this Mediterranean fleet naturally has no need for ice-strengthening.
Finnlines’ future hybrid vessels will use traditional fuels with scrubbers, as well as lithium batteries that will charge as the ship sails. Battery energy will be used in harbours to achieve zero-emission port visits.
“Hybrid vessels save energy in many ways, with a hull shape that lowers water resistance, friction-reducing air bubbles, and slippery paint. If each area generates savings of say five per cent, their combined impact will improve the ship’s energy efficiency, lower consumption and reduce emissions,” says Grimaldi.
“But the energy game does not stop here. In ten years’ time, we’ll certainly have better and cleaner solutions available.”
Vuosaari Harbour is a source of pride
The Grimaldi Group is not only a shipping company, but also a global logistics company whose vessels visit about 120 ports all around the world. As the head of such a group, Emanuele Grimaldi if anyone is familiar with a lot of ports, their operators and their operating methods.
“Vuosaari is the most efficient harbour in the world, and should be a source of pride for not only Helsinki but Finland as a whole. And I’m not just saying this on behalf of the Grimaldi Group, Finnlines, Finnsteve or our associated company Steveco, but because I know that our competitors agree.”
Grimaldi says that Finnlines has been involved in the harbour’s design from the outset, and has invested about EUR 400 million in Vuosaari. Most recently, the company put about EUR 20 million into cranes for post-panamax-class vessels.
“When Vuosaari opened in 2008, the global economic crisis was just beginning. We survived that recession, so why not a pandemic? In the current situation, I would hope for support from the Port of Helsinki and a reduction in port charges for a few months, that is, until the worst is over,” says Grimaldi.
“Shore power is an important step towards sustainable development and fossil-free ports.”
When it comes to what the future holds for port service, Grimaldi sees the growing importance of information and a data-led approach. Automation, robotics, machine learning and artificial intelligence will all become more common, both on land and at sea. Data security will also become increasingly important for shipping companies and logistics operators. This has already been seen in the major data breaches and ransomware incidents that have been directed at companies in the sector.
Like other advanced harbours, Vuosaari has made considerable investments in shore power, aka ‘cold ironing’.
“Shore power is an important step towards sustainable development and fossil-free ports. We’re interested in this for our older vessels in particular. The new hybrids can also make some use of shore power, although they are able to operate at port using battery power,” says Emanuele Grimaldi.