Time period: 2012-2013

Members involved: ABN Amro, AkzoNobel, Forum for the Future, Maersk, Wärtsilä

Partners: HFW, UNEP Finance Initiative, Deloitte, UCL

Shipowners face competition to charter out fuel-efficient vessels and are often unsure if investing in retrofitting their fleet will lead to an increase in profits, despite the availability of proven, cost-effective technologies. As charter durations get shorter, there are fewer opportunities to share investment with charterers, leading to a split incentive: a ship owner may invest the up-front capital to fit energy-efficient technology, but is not able to recoup the costs from fuel savings, as this goes to the charterers. This problem is particularly apparent for short-term time charters.

The members of the financing work stream of SSI worked together to develop Save As You Sail (SAYS) – a robust financing package to enable both owners and charterers to benefit from efficiency upgrades with a transparent understanding of expected savings, and new financing facilities for fund upfront costs.

To provide the shipping industry with access to financial tools and products to enable informed and transparent negotiations, guaranteed savings, and encourage third-party financing to vessel owners for efficiency upgrades.

Collaborating with knowledge partners across the industry, the work group developed and introduced Save As You Sail (SAYS), a robust financing package that seeks to enable both owners and charterers to benefit from efficiency upgrades.

Using the SAYS model, an owner and a charterer can identify the estimated fuel-cost savings and return on investment associated with different upgrade options; this is used to negotiate and agree on the charter hire rate. The owner has access to a loan for the upfront costs, to be paid back (with fixed-rate interest) over two to three years. If the first charter is shorter than the loan, SAYS enables changes of charterers during the financing period.

With some technologies providing a return on investment of 50% and more, there are sufficient fuel cost savings for the charterer, owner and finance providers to profit from the expected fuel cost savings.