New international rules to reduce carbon emissions have led to a significant slowdown in the speed of older ships. Ship broker Intermodal said in its latest weekly report that the combination of the existing Ship Energy Efficiency Index (EEXI) and Carbon Intensity Index (CII) with the Emissions Trading System (ETS) affects ship speeds and indirectly limits the availability of capacity. Through the analysis of ship tracking data, it can be observed that the average speed of bulk carriers has dropped to a low of 10.86 knots.

The report provides a comprehensive analysis of oversized handyships. The report shows that the speed of both environmentally friendly and non-environmentally friendly ships has declined after peaking in mid-2021. Yiannis Parganas, head of research at Intermodal, said that this trend has continued since mid-2023, with average speed continuing to decline, but with less change in speed for environmentally friendly ships than for non-environmentally friendly ships. In 2023, the earnings of non-environmentally friendly vessels increased, but the average speed decreased from the middle of the year, remaining below 11 knots. The speed of environmentally friendly ships has also declined, sailing at an average speed of 11.15 knots in the second half of 2023.

Intermodal analysts note that the current speed gap between eco-friendly and non-eco-friendly vessels exceeds the five-year average, with the gap usually narrowest during this period of the year because the first quarter is traditionally a slow season. The new regulations limit the possibility of non-environmentally friendly ships speeding up during the peak season, thus boosting the profits of environmentally friendly ships. The figure above shows the speed difference between a 5 year old extreme Handyboat and a 15 year old Super large handyboat. These regulations (EEXI/CII and ETS) provide owners of environmentally friendly vessels with increased operational flexibility, allowing them to operate at higher speeds when the freight market increases.

Parganas believes that overall, the minimum speed of eco-friendly and non-eco-friendly vessels has decreased by 7.8% and 7.3% respectively from the five-year high, and 4% and 4.4% respectively from the five-year average, which will not only benefit freight rates, but will continue to enhance the attractiveness of vessels in the secondary market.

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