The Emergence of Eco-Ships: Inevitable Market Segmentation?

Many shipping companies are engaging in “greening” activities, signalling a “paradigm shift” in operations and thinking. The shipbuilding industry has also been developing innovative ships designs which are more fuel efficient and environmentally friendly. Ship owners thus face a dilemma as to whether to invest in new eco-ships or optimise their current fleet. If such vessels become commonplace it is possible that the gap between eco-ships and inefficient ships will deepen in terms of operational costs and daily hire rates. This could result in a situation where a two-tier shipping market develops, split between companies operating eco-ships and those operating more ‘inefficient’ ships. This issue thus raises a number of important questions: will eco-ships provide a more competitive approach in the market? Are they a better investment for the future? and as a consequence, is it likely that a two-tier shipping market is developing? This paper therefore addresses the aforementioned issues and discusses the impact of the development of eco-ships and in the creation of potential market segmentation in the Dry Bulk Sector. The continued depressed market conditions means that such challenges have become urgent and further investigation into the financial implications and competitiveness repercussions of eco-ships is required. Semi-structured interviews were conducted supported by secondary data analysis to provide further insights into the issue. In conclusion it is suggested that there may already be some elements of a two-tier market developing which are likely to increase as such technologies become more mainstream.