Energy audits in shipping companies

Transportation Research Part A 125 (2019) 35–55

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Energy audits in shipping companies Hannes von Knorring1

T

Gothenburg Research Institute, School of Business, Economics and Law, University of Gothenburg, Sweden

ARTICLE INFO

ABSTRACT

Keywords: Energy audit Ship energy efficiency management plan Energy efficiency gap Energy efficiency barriers Shipping

An energy audit is a method for determining the most cost-effective measures that improve energy efficiency in an organisation. This article describes a longitudinal action-research case study of an energy audit performed in 2012 on a short-sea ship owner and operator and a followup study conducted three years later. The study showed that following the suggestions made in the audit would have had a significant economic impact but that few of the audit recommendations had been successfully implemented. An analysis of the qualitative and quantitative material collected during these two studies pointed in particular to the need to understand energy efficiency measures in their organisational context; many of the measures concerned redesigning organisational routines. It became obvious that more studies of practice are needed in order to evaluate policies and programmes aimed at achieving a transition to low carbon emissions in the maritime sector. Despite the failure of this particular audit, energy audits in shipping companies should be paid more attention because of their relative success in other sectors.

1. Introduction - Head of Operations, ShipCo2: I’d like to finish an energy efficiency programme at some point. Because I’ve never experienced that. I’ve been part of starting many, but they’ve never gotten anywhere. In April 2018, countries in the International Maritime Organisation (IMO) decided to reduce total emissions from the international shipping sector by ‘at least’ 50% from 2008 levels by 2050 (IMO, 2018). In order to reach this goal, increased energy efficiency and changes in fuels will be necessary.3 Several studies have indicated substantial technical and economic potential for improved energy efficiency in the international shipping sector (Buhaug et al., 2009; Faber et al., 2009; Bouman et al., 2017). Regulations aimed at improving energy efficiency thus appear to promise billions of dollars in cost savings (Bazari and Longva, 2011). Despite the economic and political attractiveness of energy efficiency measures, however, it seems that they may remain mere potential in shipping, as in many other sectors (Sorrell et al., 2004). After all, if these were so attractive, would they not already be implemented? One explanation is that any processes aimed at implementing energy efficiency measures in practice are conditioned or even constrained within established institutions by such issues as contractual forms, business models, and standards, and various technological arrangements (Rehmatulla and Smith, 2015; Poulsen and Johnson, 2016). Assessments of a technical potential may thus be seen as E-mail address: [email protected]. Postal address: Gothenburg Research Institute, Box 603, 405 30 Göteborg, Sweden. 2 ShipCo is a fictive name for the shipping company in which the case study presented in this paper took place. Given names and gender of interviewees are also fictive. 3 Energy efficiency has been defined in such studies as the energy required to perform a certain amount of transport service – tonnes of fuel per tonne of cargo and nautical mile, for example. 1

https://doi.org/10.1016/j.tra.2019.04.017 Received 25 April 2018; Received in revised form 3 April 2019; Accepted 30 April 2019 Available online 16 May 2019 0965-8564/ © 2019 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/BY/4.0/).

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incomplete in the sense that they do not explain to what extent the potential is – or can be made – relevant to actors in practice (Shove, 1998). In this article, I examine how energy efficiency could be made relevant, on the basis of an action research intervention into a shipping company (hereafter referred to as ShipCo). The intervention was an energy audit: a systematic method for determining the most cost-effective measures to improve energy efficiency. The key result of the energy audit conducted at ShipCo in 2012 was an estimate of a potential to improve energy efficiency by 12.5%, of which 8% could be achieved in a relatively short time via a first wave of recommended measures (Johansson et al., 2012). Achieving such improvements would have been of great strategic importance for the company, as it had been running at a loss for a number of years. An 8% reduction in fuel costs corresponded to about 9 million USD, or a 30% reduction in the total losses made in the year of the audit.4 Thus in 2012, everyone from ShipCo’s top management, including its CEO, lent great support for the audit. Three years later, however, a follow-up study showed that ShipCo seemed only to have successfully implemented one proposed energy-saving measures of minor importance, related to bunker fuel purchasing. The energy audit estimated the impact of this measure to be less then 0.1%. In this paper, I use the concept of the ‘action-net’ (Czarniawska, 1997) to discuss how the institutionalised actions and artefacts, such as IT systems at ShipCo, conditioned the subsequent work with energy efficiency after the audit. And I use the results of my study to further the discussion on policy interventions into shipping company practices – issues that require greater attention. If energy efficiency is treated solely according to technical or economic characteristics, a price on emissions or a technical standard understandably becomes essential (Schwanen et al., 2011). But if it is recognised that achieving a more energy efficient shipping sector will require shipping companies to become better at working with energy efficiency, other forms of policy instruments become more interesting to investigate. Energy audits, for example, are common in public policy programmes for energy efficiency in industrial sectors (Lu and Price, 2011), but they are not part of the current regulatory scheme for shipping companies (Johnson et al., 2013). In Section 2, I discuss energy efficiency in the shipping sector and energy audits. In Section 3, I give a brief overview of the theoretical framework employed in the paper. Section 4 deals with methodology and provides an introduction to the field study on which this paper is based. In Section 5, the results of the energy audit are presented, and Section 6 contains analyses of the field material collected during the audit and the follow-up study. In Section 7, I discuss the results and present my conclusions. 2. Background It has been claimed that greatly improved energy efficiency is required in order to transform the shipping sector to a low-carbon future; this entails, among other actions, switching from the combustion of heavy fuel oil (HFO) to other fuels, including biofuels (Brynolf et al., 2014). The potential for reducing CO2 emissions was most recently revisited by Bouman et al. (2017). They reviewed articles on various energy efficiency measures in the shipping sector and calculated that a potential reduction in CO2 emissions by 2050, as obtained by applying known energy efficiency measures ranged from 33% to 77% compared to a baseline emission growth scenario. This potential for improved energy efficiency has been attributed to a variety of measures, which include the management of energy use on board ships, maintaining hull smoothness, and better planning and executing of voyages (Bouman et al., 2017). Some technical measures are applicable only to the design of new ships, whereas others can be retrofitted to existing ships. Some operational measures, such as decreasing time in port (Moon and Woo, 2014; Suárez-Alemán et al., 2014; Johnson and Styhre, 2015) or slowing down at sea through a Virtual Arrival system (Jia et al., 2017) offer a substantial cost-effective potential, but may be possible only through collaboration and information sharing among many stakeholders (Johnson and Styhre, 2015; Schøyen and Bråthen, 2015; Poulsen et al., 2018). Two international policy instruments exist with the aim of mitigating GHG emissions from the shipping sector through increased energy efficiency: The Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP). Even if these instruments worked as intended, however – a question addressed by Faber et al. (2015), Johnson et al. (2013), and others – they would not lead to a decrease in total emissions (Bazari and Longva, 2011). Reaching the targets set in the IMO for 2050 would require new sets of policy instruments. Key to understanding the potential for energy efficiency is the relationship between ship speed and the power necessary to maintain that speed, such power being approximately proportional to the cube of the speed (see also Psaraftis and Kontovas, 2013). Large improvements in ship energy efficiency can thus be achieved with minor decreases in ship speed; a 10% reduction in speed corresponds to a 27% reduction in fuel use per hour. This also means that actors may adapt ship speed to compensate for poorer charter rates or increases in fleet capacity (Smith, 2012; Mander, 2017). Similarly, shipping companies may respond to cost increases due to carbon pricing with either speed decreases, technical improvements, or by passing on these costs to customers (Kosmas and Acciaro, 2017). In the years following the latest financial crisis, which saw both low charter rates and a substantial growth in fleet size due to orders placed just before the crisis, total GHG emissions from the shipping sector were reduced (Smith et al., 2014). These events illustrate the significant and complex role of ship speed for energy audits of ship operating companies; a substantial part of recommended measures concerns the optimal management of ship speed and time. Literature on energy efficiency in the shipping sector repeatedly points to the same problem: A large cost-effective potential for improved energy efficiency exists, but it is not realised in practice. This phenomenon is often referred to as an ‘energy efficiency gap’ (Jaffe and Stavins, 1994b): a gap between practice and what, in theory, is cost effective. Attention was paid to this issue as early as 4

ShipCo is a publically listed company. Financial data, such as losses that year, are listed in their yearly financial reports. 36

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the late 1970s and early 1980s, following the oil crises of 1974 and 1978. Sack (1976) described in detail the energy conservation programme of the US Navy and discovered that, beyond projects to monitor and improve hull performance through paints and cleaning, the US Navy also attempted to quantify inefficient use of energy and recommend modifications for their ships. (In current vocabulary, these are clearly energy audit methods.) Sack emphasised the role of ship crew training – ‘without whose cooperation and understanding no conservation is possible’ (p. 115) – and briefly described a handbook for that purpose. Sweeney (1980) reported on one year’s work on an energy conservation programme at a shipping line, Matson Navigation Company (MNC).5 Key to the programme was the creation of a new position, a ‘Manager of Shipboard Energy Conservation’, who was placed in the organisation and had ‘authority commensurate with involvement in the workings of engineering, maintenance and repair, vessel operations, and purchasing; and assured easy communication between the conservation manager, ship crews and shoreside personnel.’ (p. 73). Apart from explaining in detail various technical measures related to main engines, Sweeney described the implementation phases in which the energy management programme was introduced. The following topics were included: how energy use was reviewed and followed up on vessels; which new routines were created to manage energy efficiency projects; how the manager worked with performance data to locate savings potentials in voyage execution; how to deal with deficiencies in such data; how this new work with energy efficiency on board was a shift from a ‘traditional… watchstanding and maintenance role’ and required a ‘quantum jump in awareness’ (p. 81); and more. The author did not have theoretical ambitions, as the research on ‘barriers to energy efficiency’ was in its infancy (Blumstein et al., 1980), and the concept of ‘energy efficiency gap’ was coined even later (Jaffe and Stavins, 1994b). What is clear, however, is the description of work with energy efficiency as a distinct new mode of operation for MNC – a mode that required new actions and actors in management and on board. Sweeney’s account allows the reader to understand that cost-effective energy efficiency measures are not simply something that any unprepared shipping company could easily pick and choose from a list; rather, energy efficiency required a comprehensive programme, tailored to the specific shipping company. Attention to energy efficiency and conservation in shipping companies waned in the literature as oil prices fell again in the 1980s, and the topic has regained the attention of researchers only recently. Some researchers have considered institutional arrangements – in particular, how energy costs are divided in contractual relationships (for analyses using agency theory, see e.g. Rehmatulla and Smith, 2015; Rehmatulla et al., 2017) – and the relationship between energy efficiency and the on-going practices of shipping companies. I focus here on the latter research. Together with colleagues (Johnson et al., 2014), I established an action research project to improve energy management practices in a short-sea shipping company through the implementation of an energy management system standard. Implementation was rendered more difficult than anticipated because of such issues as poor project management maturity in the company, problems with establishing means of data collection, and insufficient communication between ship and shore. In a similar vein, Armstrong and Banks (2015) discussed energy efficiency in the context of a general description of operational practices in shipping companies as performed by different actors. They mentioned the dilemma that results when technical, operational, and commercial management are divided in ship operations: [M]any of the functions fall under the responsibility of operational stakeholders. Yet in practice it is predominantly the technical stakeholders that are engaged in the energy efficiency discussions... While operational stakeholders have little experience in data analysis and developing trends, technical stakeholders have little involvement in holistic ship operations. (p. 41) This may mean that Key Performance Indicators (KPIs) in different departments may counter each other in terms of energy efficiency. The authors argued for integrating internal processes and ship monitoring systems. Poulsen and Johnson (2016) conducted an interview study of energy management practices in 34 Danish shipping companies. The shipping companies that were working systematically with energy efficiency, and in particular with the monitoring and following of ship energy use, needed several years to establish such practices. The authors found that companies with fleets of ships that they either owned or chartered for long terms, could work together with crew energy efficiency more easily than could shipping companies that preferred to have ships on short-term charters (the crews of which would rotate every few months). Viktorelius (2017) conducted an ethnographic study of a large European ferry company. He found that although the company had spent a great deal of resources on developing and installing energy performance monitoring systems, in practice, the implementation and use of these systems on board had been far from straightforward. Some problematic issues included social boundaries between bridge and engine room crew, lack of attempts by the onshore organisation to introduce the systems properly, and, an emphasis by crew to focus on the current and next voyage, rather than on analysing and discussing past voyages (Viktorelius and Lundh, 2016). Although such case studies of energy efficiency practices are not statistically generalisable, they offer a working hypothesis that non-implementation of measures could be interpreted as a lack of ability to organise and manage work with energy efficiency in shipping companies. Consequently, the implementation of measures requires effective organising, which may require years to establish. Wan et al. (2018) argued that the sector is not ‘technologically savvy’ and simply cannot be expected to implement measures at a sufficient pace. They concluded that market-based measures, such as a fuel levy, are essential in decreasing emissions. Yet, although potentially effective, the implementation of market-based measures comes with its own set of diplomatic problems (Chircop et al., 2018; Psaraftis, 2018). Moreover, as noted by Schwanen et al. (2011) in their review of climate change mitigation research in

5 The energy conservation programme had seen 10.5% savings in sea passage costs during this first year, of which approximately 7.25% had been due to speed reductions and 3.25% due to other conservation measures. Fuel use in port had been reduced by about 4.7%. In total, 36 455 barrels of fuel oil had been saved. Unfortunately, the article seems to be – still, almost 40 years later – the only available account of how work with energy efficiency can be successfully introduced, organised, and managed in a shipping company.

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transport: Insights from engineering, (neo-classical) economics and to a lesser degree psychology prevail and most research is predicated on the use of quantitative methods embedded in positivist epistemological frameworks… Yet, like all scientific perspectives, technoeconomic and psychological approaches are inevitably partial: they articulate the objects of knowledge/government in particular ways, expelling certain of their facets into invisibility. (p. 1002) Other theoretical frameworks and methods thus lead to complementary views on the nature of relevant policy interventions. Schwanen et al. (2011) called specifically for more social science contributions, including those that draw on ethnographic and participatory approaches. The positive consequence of introducing other scientific perspectives is that many and varied policy options and pathways for climate change mitigation should be explored. (see also Sandén and Azar, 2005; Jacobsson et al., 2017) Energy audit programmes are one promising device. They have introduced improvements in other sectors, but are not (yet) a part of the package of measures common to the shipping sector (Johnson et al., 2013). Now standardised by ISO, energy audits are defined as follows: An energy audit comprises a detailed analysis of the energy performance of an organisation, equipment, system(s) or process(es). It is based on appropriate measurement and observation of energy use, energy efficiency and consumption. Energy audits are planned and conducted as part of the identification and prioritisation of opportunities to improve energy performance, reduce energy waste, and obtain related environmental benefits. Audit outputs include information on current use and performance and they provide ranked recommendations for improvement in terms of energy performance and financial benefits. (ISO, 2014, p. 5) In the 1970s, energy audits were presented to companies as a means of cutting energy costs in the face of soaring energy prices resulting from the oil crises (Hora, 1975; Lambert and Stock, 1979). Addressing energy security and conservation goals was also made part of governmental programmes. The diffusion of cost-effective energy efficiency measures may be seen to be hindered by incomplete information in markets – lack of information on measures and their costs and effects (Jaffe and Stavins, 1994a), for example. In this way energy audits and assessments have been important parts of information programmes by reducing the costs for companies associated with gathering such information (Brown, 2001; Jaffe et al., 2005). Governmental energy audit programmes have had varying degrees of success (Lu and Price, 2011), however. An important parameter in studies of these programmes has been the implementation rate – the proportion of measures suggested in the audit that organisations actually implement. A regional energy audit programme in Sweden had seen only a 20% implementation rate (Thollander et al., 2007), whereas an Australian energy audit programme led to an 80% rate of implementation (Harris et al., 2000). Low implementation rates have led to discussions about the quality of audits and the competence of the auditors. Thollander et al. (2012), for example, argued that a skilled auditor must have both an engineering background and the ability to produce clear and concise information in the energy audit report. Researchers who study energy audits are usually evaluating government programmes. Case studies of individual audits also exist, although they often describe the actual audit, and not what the company did afterwards (Engin and Ari, 2005; Gordic et al., 2010; Kabir et al., 2010). With the exception of Erkut and MacLean (1992), there are few studies of energy audits in the transport sector. Furthermore, little research attention has been directed towards an understanding of how, in practice, organisations deal with the information provided by the audit. The case reported in this paper helps to close these gaps. 3. Theoretical framework In the studies summarised in the previous section, two aspects were often highlighted: that achieving greater energy efficiency in a shipping company requires a comprehensive management programme and that energy audits may be useful in establishing such programmes. Thus the challenge becomes how to check the accuracy of these postulates in practice. In this article, I rely on Actor-Network Theory (ANT), which was introduced as an approach to the study of the workings of science and how technical innovations succeed (or fail – see e.g. Latour (1996)). ANT is based on the assumption that innovations such as energy efficiency measures recommended in audits are spread by a process of translation (in contrast to the better-known diffusion model of innovation (Rogers, 1962)), and that new ideas become realised in practice only if they are adopted and translated by actors following their own interests. As Latour (1984) explains: [T]echnical progress is mostly (though not always) interpreted from the standpoint of the diffusion model: steam engines, electricity or computers are endowed with such inertia such that they can hardly be stopped except by the most reactionary interest groups or nations; their inertial force is not what has to be explained, but rather the ability of some groups to slow them down… [This diffusion model] may be contrasted with another, that of the model of translation. According to the latter, the spread in time and space of anything—claims, orders, artefacts, goods—is in the hands of people; each of these people may act in many different ways, letting the token drop, or modifying it, or deflecting it, or betraying it, or adding to it, or appropriating it. (p. 266 – 267) Such process of translation changes both the translator and what is being translated (Serres, 1982; Latour, 1984). Thus innovation happens because ideas meet resistance – not despite the resistance (Czarniawska and Joerges, 1996). The translation model suggests that it is important to study how new ideas to improve energy efficiency interact and merge with or how their implementation is conditioned by (Lindberg, 2014), technologies, ideas, and practices already established in an organisation. In my study, I followed the suggestion of Czarniawska (1997) to treat energy efficiency programmes as action nets – collective 38

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actions undertaken to achieve a common goal, and related to one another by means sanctioned by a given institutional order. Such an approach is tailored to ‘minimize that which is taken for granted before an analysis’ (Czarniawska, 2004, p.784), and has been found useful in a range of empirical settings – studies of safety in cement mixing (Gherardi and Nicolini, 2000), organising medical treatment (Lindberg and Walter, 2013), trust in blockchain payment systems (Campbell-Verduyn and Goguen, 2018), and governance of public transport (Fabianski, 2018), for example. The action-net framework draws its inspiration from a range of other approaches – from Weick (1979), the suggestion to focus on studying processes rather than structures, for example, and from DiMaggio and Powell (1983) the idea that prevailing institutions (that need not be necessarily coherent) determine the actions that are deemed appropriate at a certain time and place. According to institutional theory, phenomena such as the existence of a cost-effective potential to improve energy efficiency should thus come as no surprise. In established organisational fields, argued DiMaggio and Powell, organisations are subject to forces which make them more similar to each other, without necessarily making them ever more efficient. In their early stages, innovations may spread and improve performance in these organisations, but these ideas later spread in order to provide legitimacy – not as a function of their effect on performance.6 The action-net framework is similar to ANT in many ways. It emphasises the treatment of humans and artefacts symmetrically, all of which can be actors.7 Furthermore, the action-net framework directs the researcher’s attention to how entities like formal organisations come into being. Thus, actions come first in an action net. Then, when their connections are repeated and become routinised, actions may lead to networks, but also to actor-networks, including formal organisations – legal persons.8 The point worth emphasising is how various actions become connected to one other, thus producing an action net. Such connections emerge in the process of translation. Actions that affect energy use on board a ship may be measured according to some protocol and transmitted to managers ashore, who are then able to take further action or not. And, these actions, mediated through some other protocol, may or may not result in actions back on board that improve energy efficiency. It partially depends on the current institutional order. What do we usually to do? What would be out of place? Actions can become institutionalised when repeated over time, so that in a wellestablished action net, individual actors can be replaced, yet the actions will continue. In order to be established, an innovative action must be repeated, and ways must be found to connect it to the already existing action nets. Connections in action nets are supported and stabilised when inscribed in specific technologies or routines, thus making them less susceptible to random changes (Latour, 1991; Joerges and Czamiawska, 1998; Holmström and Robey, 2005). In this article, the ANTinspired definition of routines by Pentland and Feldman (2008) is especially helpful: ‘routines are generative systems that produce repetitive, recognizable patterns of interdependent action carried out by multiple participants’ (p. 236). Accordingly, routines are not simply checklists or rules that are merely followed; rather, ‘people engage in organizational routines based on their understanding and interests, and they privilege some performances over others as “the way things are done around here”’ (Feldman and Pentland, 2005, p. 97). Building on Latour (1984), Feldman and Pentland (2003) suggested that an idea of or a rationale for a routine should be treated as the ostensive aspect of a routine and the enactment of the routine as its performative aspect. Thus, designing and establishing new routines is not as easy in practice as is often assumed (Pentland and Feldman, 2008). New checklists, software, and rules do not automatically render new actions. In a change process, it is thus important to pay attention to both currently popular ideas and concrete actions (Eriksson-Zetterquist et al., 2009). But when a set of actions or a routine becomes stabilised and inscribed in artefacts, this means that changing it or introducing new actions encounters obstacles. The existing literature somewhat surprisingly identifies IT systems in particular as a problematic set of technologies when attempting organisational change; they can be conceived of as ‘frozen organizational discourses’ (Bowker and Star, 1994) because of the ways they keep existing routines in place. The action net model can be useful in explaining how change programmes succeed or fail. (See e.g. Pipan and Czarniawska, 2010, for an analysis of the implementation of Management Accounting in three organisations.) Here, I report a study of the initial analysis, resulting recommendation, and subsequent work with implementing energy efficiency measures into an organisation. In this view, successful implementation of the recommendations from an energy audit is equivalent to a construction of a new action net: a new set of collective actions that improve and maintain a level of energy efficiency. An energy audit motivates and prescribes actions. These new actions may require changes to current practices – the ways in which voyages are planned and how data is collected, for example. This paper reports how such new actions that improve energy efficiency become stabilised – or not – over time. Such stabilisation may take forms of new norms, routines, and even institutions; the new actions may also become inscribed in various artefacts. An important element of this process is the meeting of such new actions with existing norms, routines, institutions, and technologies, which may yield to or refuse the necessary translations. Finally, this theoretical framing provides a way of problematising the concept of a ‘potential’ for energy efficiency. ‘But technical potential,’ wrote Elizabeth Shove (1998), ‘which cannot be realised for a range of perfectly explicable sociotechnical reasons is not really technical potential, or at least it is not technical potential which is of any relevance in the race to reduce CO2 emissions.’ (p. 1110). The way the term is used in current models and reports leads to an unfortunate connotation: that of potential in the mathematical or physical sense (e.g. a gravitational potential). According to these models, shipping companies are clearly using too much energy. But as noted by Löfgren and Czarniawska (2012), there are other ways to analyse such phenomena, by focusing on how a

6 The action-net framework differs from institutionalism, as it focuses on nets created here and now, in accordance or in contrast with existing institutions, in a situation in which it is much too early to judge if such a net will be institutionalised. 7 Actants, in the original ANT vocabulary. 8 Thus it differs from ANT, in that the action-net approach does not focus on construction of (macro) actors; this may be a further development of an action net, but not necessarily so.

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potential is constructed: [A] usual starting point for a discussion and analysis is an “objective existence” of a surplus or an overflow. In contrast, we wish to push it back in time, asking: Who decides that there is a surplus or overflow? For whom is it good? Bad? For how long? (p. 10) In this article, the potential is directly constructed and made relevant to the concerned actors through the energy audit method. But it is a temporary construction, and the identified measures, cost-effective as they are, carry no internal momentum. The measures will not merely ‘diffuse’, but are left in the hands of the personnel of ShipCo. What happens thereafter – if and how the identified potential is translated into actions – is revealed only over time. 4. Method This energy audit study is a longitudinal action research project; I participated in planning and performing the intervention and conducted the follow-up study. Thus, this is a case study in the sense of a ‘study of development of a certain phenomenon’ (Czarniawska, 1997, p. 65). The first part of the study, conducted in 2012, focused on how the energy audit at ShipCo was constructed, based on the researcher’s own account, combined with the accounts of those involved. In the second part of the study, conducted in 2015, I asked personnel at ShipCo about their past and present work with energy efficiency in the light of the results of the 2012 audit. It should be emphasised that such studies neither reveal ‘what really happened’ nor answer the impossible question of ‘why ShipCo failed to implement the audit measures’. They reveal how people account for their past and present actions at a specific time, as their accounts may differ in time, particularly in turbulent settings. The action research approach, as is well known, is typically used by researchers who strive to understand and improve upon matters of concern in practical settings. One of the hallmark action research projects in the shipping sector was conducted in Norway (Walton and Gaffney, 1989). It is a diverse field (Chandler and Torbert, 2003), with many applications found in management (e.g. Gummesson, 2000) and transportation research (e.g. Näslund, 2002). Näslund recommended the method to understand better the messiness of logistics in practice. An action research study is especially fitting for studying change processes, because ‘interventions settings can provide rich data about what people do and say—and what theories are used and useable—when faced with a genuine need to take action’ (Huxham and Vangen, 2003, p. 36). As in other forms of interpretative research, action researchers construct their credibility from situating themselves for a prolonged period in the midst of the practices they wish to study (Czarniawska, 2007). The study reported here was part of a longer project that focused on improving energy management practices in shipping companies (Johnson, 2016); I participated in conducting the audit according to the consultant’s procedure. It should be added that participatory approaches are also a way of lessening the hierarchical power relations between researchers and other stakeholders, and giving the stakeholders a voice in formulating problems and solutions (Schwanen et al., 2011). In this way, the long-acknowledged risk in fieldwork of ‘going native’ – adopting the language and perspectives of the culture, tribe, or organisation under study and thus being unable to have an outside, critical perspective – is dealt with here by explicitly aiming for knowledge that is co-produced by researcher and practitioners, in a certain setting and for a certain purpose (Clark and Dickson, 2003). In this case, the purpose was to conduct an energy audit at ShipCo so that it could become a basis for an effective energy management programme. Nevertheless, there are ways to contain bias within action research. It is often seen as a circular methodology, consisting of a problem-formulating phase, an implementing-solutions phase, and a reflective phase. In order to show impartiality, researchers need to subject their advocated solutions to inquiry (Coughlan and Coghlan, 2002). The main output of this process is this very paper, in which I subject our initial solution (the energy audit) to critical examination by collecting field material at various times and by constant comparison of this material with research findings from different fields. The fact that our solution was not successful is, as Flyvbjerg (2006) noted, a common feature of a case study. Case studies rarely confirm researchers’ expectations, but ‘[contain] a greater bias towards falsification of preconceived notions’ (p. 237). Action researchers often share methods of collecting and analysing field material with ethnographers (Huxham and Vangen, 2000; Hammersley and Atkinson, 2007). So, during the audit, I collected and analysed field material according to the rules of the energy audit method, as described in Section 4.2. The interviews were conducted according to the consultant’s semi-structured interview protocol. For the follow-up study, I prepared a semi-structured interview protocol on the basis of the energy audit report and an initial analysis of the interviews. To write this article, I analysed all interviews according to the grounded theory approach (Charmaz, 2006), transcribing, coding, memo writing, and iteratively comparing the results to literature on energy efficiency and management and organisation studies, as reported in Sections 2 and 3. It was a process of continuous triangulation among different sources gathered at different times, with past results reported in literature. This method should have resulted in limited biases arising from a limited theoretical framing or by studying a phenomenon at a single time. Moreover, I presented the results at various stages to academic peers. (See Acknowledgements.) It should be added that present and former employees of ShipCo had no responsibility for the content of this paper; nor did the consultant. The main goal of this type of study is typically particularisation rather than generalisation (Stake, 1995): ‘We take a particular case and come to know it well, not primarily as to how it is different from others but what it is, what it does.’ (p. 8). ShipCo was chosen for this study not because it is typical or atypical (for more on this topic, see Flyvbjerg, 2006), but because of its interest in pursuing greater energy efficiency. There was nothing in the many accounts gathered during this study that suggested that the characteristics of ShipCo’s business model, personnel, access to technology, and the market-related challenges it faced over the time of this study were unique to ShipCo. (See the ‘capability benchmark’ described below in Section 4.2 and its result in the section Management and Organisation in the Appendix.) If the action-net framing of this case – the idea that energy efficiency measures are seen as changes to current institutionalised actions, rather than objects that are more or less cost-effective – were to hold for other 40

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cases, which can be determined only by the reader and by further research, it should have consequences for such issues as the types of policy measures beyond carbon pricing that could be considered. This issue is discussed in Section 7. 4.1. The site The origins of the energy audit in ShipCo were a joint industry-academia research project aimed at improving energy management practices in two shipping companies. This was to be achieved through the implementation of an energy management system standard (Johnson, 2016). As a part of this project, an energy audit was performed in 2011 for a smaller, short-sea shipping company, which ShipCo later acquired. A year after the acquisition, ShipCo decided to conduct a new energy audit on its entire operations. In both cases, the same consultant conducted the energy audit using the same method. This paper is concerned only with the 2012 audit, however; the 2011 audit is described in Johnson et al. (2014). In 2012, ShipCo operated a fleet of 37 dry bulk, container, and roll-on/roll-off (RORO) vessels, 7 of which it fully owned and another 2 of which were partly owned. (The rest were on various forms of charter agreements.) Many ship ownership structures were complex, however, as discussed in Section 6. ShipCo was a subsidiary of a larger enterprise, which also owned a subsidiary company in the supply ship market. In 2012, the entire enterprise comprising these two subsidiaries included 800 employees, the majority on board ships. The ships were operating mainly in short-sea trade, and ranged from roughly 4 000 to 20 000 DWT.9 In 2014, ShipCo operated a fleet of 21 vessels, and had almost 300 employees, approximately 50 of which were land based and the rest based on board. By 2015, the time of the follow-up study, ShipCo had downsized to a fleet of only 12 vessels and 7 land-based employees, although this number does not include the technical management staff and crewmembers, who had formed an independent company. 4.2. The energy audit method The energy audit was conducted during May and June 2012, according to a methodology developed by the consultancy company. This method at the time preceded the ISO 50002 standard on energy audits, which arrived in 2014, but lies close to its definition as quoted in Section 2. The method divided energy efficiency into six areas on which the shipping company was to be assessed, as depicted in Table 1. In order to understand practices related to energy efficiency at ShipCo, 25 people were interviewed in the shore organisation, some of whom were interviewed in groups of two. Seven crewmembers were also interviewed – 3 by phone and 4 during two onboard visits. Their functions are described in Table 2. The consultant followed a semi-structured protocol in the interviews, adapting it to the expertise and responsibilities of each interviewee. The answers were put into a ‘capability benchmark’, which the consultancy used to assess the performance of a shipping company in relation to average and leading practices. Following the interview sessions, quantitative data on ship operations that ShipCo was collecting for operational purposes were gathered to produce estimated savings potential in four steps, as described in Table 3. This estimation of the total potential was followed by a recommendation for implementation of a limited number of measures deemed by the consultant to be most rational to begin with, referring to factors such as cost effectiveness and ease of implementation. The consultancy sent a draft of the final report to the involved staff, then revised it based on their comments. An executive summary of the final report was presented to the Board of Directors of ShipCo. I participated in all 12 interview sessions, 9 of which I taped and transcribed in full. I also participated in the data analysis. Three years after the audit, I conducted 5 interviews with 6 people; interviews lasted between 1 and 2 h each. Their functions are described in Table 4. The number of interviews was small for two reasons: Few of the audit recommendations had been succesfully implemented; and the company was severely downsized, which meant that many people present during the audit were simply no longer employed by ShipCo. 5. Results of the energy audit The audit resulted in a total assessment of the potential for improving energy efficiency in ShipCo, according to the process described in Table 1. A summary of the audit report is available in the Appendix. The potential itself is displayed in Fig. 1. The audit report further estimated that an 8% improvement in energy efficiency could be achieved in a relatively short timeframe by focusing on the activities described in Table 5. The report was presented as an executive summary to ShipCo’s Board of Directors and in full detail to other involved staff. 6. How the energy audit worked in practice ShipCo now had a plan to start working with energy efficiency, with measures prioritised and tailored to the organisation. The action-net framework chosen for this study, as described in Section 3, requires an understanding of the consequences of the implementation of these measures. It is necessary to examine how current actions, technologies, routines, and institutions condition these new suggested actions, and if and how new actions became established into a new action-net. 9

Dead-weight tonne (DWT) is a measure of the amount that a ship can carry. 41

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Table 1 Energy audit prioritised areas. 1 2 3 4 5 6

Voyage performance: fleet planning and ship allocation; chartering and contracts; voyage planning; speed management; weather routing; port operations Ship performance: hull and propeller condition; auto-pilot and rudder; energy saving devices Fuel management performance: routines pre-, during, and post-bunkering Main and auxiliary engine performance: ME efficiency; AUX engine efficiency and utilisation; boiler efficiency and utilisation Secondary consumer performance: cargo operations; thruster operations; heating, ventilation, and air conditioning (HVAC); lighting; insulation; water production; incinerating Management and organisation performance: strategy and tactical plans; performance management; competence and training; culture and awareness; environment and corporate social responsibility (CSR); life-cycle perspectives

Table 2 Interview sessions 2012. Interview session # a

1 2b 3b 4b 5b 6b,* 7b 8b,* 9b,* 10b,* 11a,* 12a,* 13c,* 14c 15d,* 16d,*

Interviewee(s)’ function(s)

Number of persons

CEO Sustainability co-ordinator Chief Informational Officer (CIO) HR manager Fleet manager RORO chartering and operations Bunker fuel purchasing Superintendent bulk Technical manager Superintendent RORO Bulk chartering and operations Master (Ship S1) Chief engineer (Ship S1) Master (Ship S2) Chief engineer (Ship S2) Master (Ship S3) Chief engineer (Ship S3) Master (Ship S4) Container chartering & operations Accounting (2)

1 1 1 1 1 2 1 2 1 1 2 1 1 1 1 1 1 1 2 2

a

Face-to-face interview, notes taken. Face-to-face interview, taped and transcribed. c Telephone interview, notes taken. d Interview performed by the consultant only. * Group interview. b

Table 3 Work process for estimating the potential for energy efficiency. 1 2 3 4

Estimating time in the different operational segments: time in port, manoeuvring, and sea passage Estimating fuel consumption, in main and auxiliary engines, and in boilers, in each mode of operation Analysing how possible energy efficiency measures, taken from a database at the consultancy or arising from the data collection, would affect fuel consumption in each operational mode Summarising the total effect on fuel consumption

Table 4 Interview sessions 2015. Interview session # b

1 2b 3b 4b 5b,* 6a

Interviewee(s)’ function(s)

Number of persons

Cargo owner (customer) Environmental manager Former sustainability co-ordinator Container operations Fleet manager Operations manager Cargo owner

1 1 1 1 1 1 1

a

Face-to-face interview, notes taken. Face-to-face interview, taped and transcribed. * Group interview.

b

42

Tonnes of fuel

8000

4.0%

7000

3.5%

6000

3.0%

5000

2.5%

4000

2.0%

3000

1.5%

2000

1.0%

1000

0.5%

0

0.0%

Cost savings (%)

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Fig. 1. Total potential for improved energy efficiency in ShipCo. Table 5 Recommended measures. 1 2

3 4 5 6

Establish harmonised reporting procedure: - The procedure for monitoring and reporting energy use is currently fragmented. - Better monitoring and reporting is essential to enable fuel savings and to ensure the company’s focus on energy efficiency. Strengthen procedures for and focus on speed management and port operations (3% to 4% savings): - Implement strengthened procedures for port operation to ensure optimised performance. - Establish speed/consumption curves for all vessels, and have detailed followup and analysis of voyage consumption and performance via monitoring tools. Improve propeller and hull performance (1.5% savings): - Implement structured followup and guidelines based on industry best practice. - Implement hull and propeller polishing regimes and a monitoring and reporting framework. Strengthen the focus on bunker fuel purchasing aspects (50 000 USD savings): - Optimise bunker fuel Remaining On Board (ROB) to minimise the amount of capital tied up and to improve cargo intake. Establish a framework for maintaining engine performance management (2% saving): - Establish a harmonised tool for energy performance reporting and followup. Improve the generic energy efficiency focus framework (0.5% saving): - Decide and document how relevant onboard and onshore persons’ roles shall work to optimise energy use. - Develop and implement energy efficiency checklists, where relevant for these roles. - Combine information dissemination with course development and officer seminar training, and other culture-building initiatives.

The analysis, as described in Section 4, gave rise to three main themes with which to discuss these issues: IT systems, routines, and means of communication between ship and shore and among various departments. It was also evident that ShipCo’s recent history of mergers and acquisitions played a role. The time of the audit – 2012 – is covered in Section 6.1, and the time of the followup, which occurred three years later – 2015 – in Section 6.2. 6.1. The 2012 energy audit It must be remembered that the 2012 energy audit took place in turbulent times for ShipCo. The company was under financial stress and was incurring a loss, and that management had a number of other problems to deal with. Over several years before the audit, ShipCo had acquired a number of smaller shipping companies, and they were trying to learn how to have these units work together. Some of the companies remained in their original offices, spread around the country. We are many small shipping companies that have become entangled [in a larger company]… There are different cultures. No one takes a common position in terms of management: this is how we do shipping at ShipCo. (A member of the top management group) There was shared recognition that things had to be changed, but changes undertaken before the 2012 audit were difficult and were taking their toll. A manager with long tenure in the company explained that they ‘were still harmed by all the previous changes’. CEOs had changed repeatedly over the past couple of years, so it is not surprising that another manager lamented a ‘lack of stability in discussions’. The HR manager emphasised, however, that there was a great deal of interest in pursuing energy efficiency, as the energy prices are ‘sky high’. During the good years, the manager explained, ‘you don’t have to think about these cumbersome things’. At this point, (2012) ShipCo certainly had top management support and involvement, which is noteworthy, because previous research often stresses the positive role of top management support when implementing energy efficiency measures (e.g. DeCanio, 43

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1993; Thollander and Dotzauer, 2010). 6.1.1. IT systems Traces of previous mergers and acquisitions could be seen clearly in the material gathered for the audit, in particular as evidenced by the diverse ways in which data related to energy use and operations (e.g. speed, time in port, remaining bunker on-board) were gathered and used or not used. (See Voyage Planning and Port operations in the Appendix.) The current IT systems not only dealt with voyage reporting and energy use, but in some cases were connected directly to various accounting systems. One group used a simple spread-sheet programme, another used a commercial programme suite, yet another a system custom-built by an external IT consultancy. A key point of the audit was to do away with local reporting and analysis-taking that had occurred throughout the company and to create a company-wide regime for monitoring, analysing, and following up many aspects related to energy use. (See the section on Management and organisation in the Appendix.) During an interview, a top manager spoke of the difficulties of imposing a new common regime but recognised its necessity. The IT manager was also aware of the challenge: ‘[replacing the systems] isn’t really driven by the operators, they are of course happy with what they already have’. Indeed, the issue of having one common company-wide IT system had been discussed before but had been postponed. Thus any suggested change is a contentious issue. The CEO was convinced that it was crucial to change the reporting scheme and lent full support to the suggestions in the audit. A new system would decrease the effort necessary to work with improving energy use and would help to communicate the progress. The suggestions made in the audit would require minimal investments in infrastructure: The IT solution suggested by the consultant was tailored to the older IT systems available on some of the ships that the company did not own but had chartered. The discussions with the IT manager allowed the consultant to recognise that the entire system needed to be changed. He recommended that the company use something simple in the interim – something that could run parallel to current systems – so that the IT aspects of the project would not dominate the efforts. 6.1.2. Routines All the recommended measures (Table 5) can be seen as changes to current routines, as defined in Section 3. The actual differences in actions could be perceived as slight, but the changes required a shift in the logic or design of the routines. One example was the main engine performance reports. (See the section on Main engine performance in the Appendix.) The responsibility of ensuring that the engines are in working condition belongs to the chief engineer on board. ShipCo, like other shipping companies, has technical managers (‘superintendents’) ashore, and they place a great deal of trust in the crew members to do their job – to ensure that the main engines are maintained well enough not to compromise safety. Thus such performance reports were often conducted on board and relayed to the office. But instead of using the reports to ‘check if there’s anything wrong’, as a technical manager ashore described this part of his work, the new task would be to monitor performance to find inefficiencies in the order of 1%. (There are clear similarities to Sweeney (1980) description of MNC’s move away from the ‘traditional… watchstanding and maintenance role.’) Such a move would require that a test and report would have to be conducted for all ships according to the same standard, whereas it was currently done locally by the technical manager ashore. At the time of the audit, the main engine performance reports were handled at the discretion of individual technical managers; one of them kept the reports in their mailbox, for example, and the other printed them. Two other technical managers, who were previously employed in the most recently acquired smaller short-sea shipping company, explained that one of the first things they had to do after joining the larger company was to create a new machinery report. They also described the effects of having ships in the fleet with different models of ownership and management on these routines. Formally, one ship had technical management from a third-party company in Holland, for example, but ShipCo still worked with maintenance issues. The contractual arrangement meant that all performance reports were sent to the company in Holland, however – not to ShipCo. ‘There are a lot of these things,’ they concluded. Another example of changing logics of the routines can be seen in Suggestion 2, Table 5, concerning the way commercial operators for the larger bulk ships planned voyages. (See the section on Voyage planning in the Appendix.) These ships were carrying cargo on contracts of affreightment, whereby the commercial operator (ShipCo in this case) pays for the fuel costs. The operators who conducted the longer-term cargo planning for the vessels stated that they had, of course, already recorded and followed up on fuel use – only not in the way the consultant envisioned: -

Consultant: I guess there is some kind of judgement of fuel consumption [when you plan the voyages]? Operator: Yes. C: Where does it come from? O: Experience. That is, what they have consumed historically. C: Do you have speed–consumption curves for the ships? So that you know from, say, 10 knots to max speed – that’s like 14 to 14.5 knots on these ships, right? – what the consumption profile is, so to speak? O: Well, we have access to them, but we don’t use them. C: No. O: It’s all too theoretical to work in reality. C: Why? O: Well [fuel consumption] depends on wind, weather, and loading condition. It’s different from time to time. But it’s not just the

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bunker costs that are important [in planning], there’s so much more included in the bottom line. The TC-net10 is the most important. And bunker costs are the largest part. C: Do you have any justification for making these decisions? Do you weigh bunker fuel costs versus net income? Especially now when the market isn’t good. O: Yes, we do, it’s calculated for every trip. C: But how is it calculated? Do you enter some kind of standard fuel consumption [regardless of speed]? You don’t calculate the trade-off [among speed, fuel consumption, and earnings]? O: No.

The audit recommendation suggested a change from the way these operators conducted their work. It required moving from planning that relied on experience and rules of thumb, on the autonomy of ship captains, and on trust in them from the shore side, to more centralised ways of determining the most energy and cost-efficient voyages, providing common tools for executing them, and then following up on them. The actions they performed were similar in a way; they already make judgements about fuel consumption, but the overall idea is very different. This new idea was considered alien, ‘too theoretical to work in reality’; it was not aligned with current institutions. But, as pointed out in Section 3, institutions are not necessarily coherent. The change was less significant for other personnel in parts of the company, who had already started thinking along these lines: - Operator: So, you’re thinking that if you have a theoretical curve, and with this distance and normal draft you will have this bunker consumption. And then you should be able to show how well you did. - Consultant: Yes. - O: That’s not so complicated. Actually, we have all the necessary figures. They are collected in the voyage report… I think there is money to earn for us here, if you take a more scientific approach and make small adjustments so that you see what different times will cost, and then you can optimise for shallow water, for example, and determine if you should go faster or slower. 6.1.3. Communication New routines would also require a new kind of dialogue, as the interviewees – ashore and on board – complained about ‘one-way communication’ and ‘isolation of competences’. Actions in isolation are not sufficient. These actions need to be connected through processes of translation and form a coherent net. Indeed, MNC’s new ‘Manager of Shipboard Energy Conservation’ was specifically placed in the organisation to enhance communication among various departments (Sweeney, 1980; but see also Armstrong and Banks, 2015). What means were available for such processes to take place? One example given by interviewees was conferences for senior crew: ShipCo used to hold such conferences twice a year, but had failed to hold a conference during the previous two or three years because of the poor market situation. Interviewees gave examples of relationships between ship and shore or ship to ship that were working well, but claimed that this was not sufficient for the whole company. It was perceived to be difficult to estimate the extent to which information was actually shared at ShipCo, as was and understanding of what was actually ‘best practice’. As one manager said: ‘we get a lot of answers [from the ship crews], but when we ask if they are sure if this is the best way of doing it, and if they are sure everyone does it in the same way, nobody can say yes.’ Another example of the need for dialogue was stressed by an operator who had independently developed what was perhaps the most sophisticated system at ShipCo for tracking performance of one of its liner services. When asked about how they use these figures in practice to follow up from the shore organisation, he answered: ‘Well we haven’t gotten there yet. It’s mostly me sitting here looking [to see] if the numbers go off in some direction. There’s no forum where we sit down and follow up.’ The personnel of ShipCo were clearly aware of the lack of communication and dialogue; time would tell if they succeeded in improving it. 6.1.4. ShipCo gets started ShipCo Board members appreciated the final presentation of the consultant’s 2012 audit report, and the company set to work implementing the recommended measures. The consultant was going to continue with small projects – helping to implement a main engine performance-monitoring regime, for example. The joint project on energy management systems ended a few months later, in 2012 (Johnson, 2016). I met representatives from ShipCo afterwards from time to time and asked about their progress, but did not systematically collect any material until three years later. 6.2. Following up on the energy audit results (2015) Working with energy efficiency had continued to receive top management support, according to one manager. People had been assigned to the task of implementing measures as recommended in the 2012 audit, and an IT system for monitoring performance had been established. Yet, the top managers and others interviewed in 2015 claimed they had failed. How and why? - Manager: Well, there have been many changes in the company; ships have disappeared [i.e. were sold] and then people have quit

10 Ships under time charter are hired for a specific time. The charterer, in this case ShipCo, pays not only for the costs of hiring the ship, but also for all voyage costs, including costs for fuel. The interviewee is here referring to the net result of the contract. What matters is the end result of the earnings and costs. For an overview of contractual forms in bulk shipping, see Pirrong (1993) or (Panayides, 2018).

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or been laid off, and we haven’t had a baseline, we haven’t had real… It became too complicated! Easy, it needs to be easy. Author: Is it because the management didn’t put its foot down and said… M: No, I wouldn’t say that. It actually came from them. A: I’m thinking in terms of resources, so that you would have someone available with the time to do this. M: Yes, no, not specifically. We did have a dedicated person who did this. First there was Alice,11 and then there was Bob, who was previously a senior crewmember of one of our ships. He followed up everything, wrote feedback to the ships. Then [after he was fired in the restructuring] there was Charlie who did it. But then we all worked with following up, sending out to the ships. But it wasn’t always the case that issues [related to energy efficiency] were caught in this process.

ShipCo was going through turbulent times again. As another manager put it: ‘there have been a lot of issues; there has been a lot of anxiety, and it has been very messy for a very, very long time.’ As commercial manager recounted the time from 2012 to 2015: [After you left] the whole circus started with, what’s it called, the reorganisation: A whole new strategic thinking for ShipCo. It was decided to decommission the bulk part of the company and to place the bet on container [feeders]. And then we had [a second] consultancy, ManCon, working with us during this time. They had another energy efficiency philosophy, I guess you could call it, which built upon [the one you introduced in the audit]. But it was never implemented in the fleet. It got too complicated. A change of strategy to a more ‘asset light’ structure with fewer fully owned ships in the fleet had its advantages, as it made it easier to have a fleet that was well-suited to the market, with ships of the right size sailing close to fully loaded (which is energy efficient on a fleet level).12 But it also made it more difficult to have a single ShipCo-wide energy efficiency strategy, as illustrated in this excerpt from an interview with a manager: This ship for example, is owned by a company, which in turn is owned by ShipCo, and then [our customer] charters the ship on a bareboat contract for a longer period, and then they place the technical management and crewing at ShipCo, and operations at [another company not connected to ShipCo]. Almost all our ships have different owner structures: The bank owns one, we own one, and someone else owns one. Some ships we will have for only another month, others for a couple of years, and so on. So there are large differences with what you can do on a certain vessel. We can’t rationalise investing in a ship that someone else owns, and that we will only charter for a couple of months… And there are the ships that Company N operates, that some other companies own where we may be part owners, and for which we are ship managers. Furthermore, there are other ships that we own [directly] and are responsible for technical management, which we then charter out to others. Part of ShipCo’s new strategy was to make the technical management department into a separate company; this reorganisation was based on ManCon consultancy’s assessment that the technical management organisation was doing well.13 Changes in strategy made some energy efficiency measures more difficult to implement, but implementation should not have been impossible, as they mostly concerned the operations of these ships. The translation model suggests that actors following their own interests in making any changes, such as new energy efficiency measures, in the original work processes. In this case, the work with energy efficiency had not only been affected by the ‘whole circus’ of the reorganisation, but had also been interpreted differently over time. Three different people had been responsible for energy efficiency in different ways over the three years since the 2012 audit was conducted, and they all seemed to have made their own translation of the task. In the period following the audit, ShipCo had created a larger group to work on cost-cutting issues, which included energy efficiency. Alice, (who was not interviewed), was the first person interviewees pointed out as having responsibility to work with energy efficiency, was reported to have started working with Suggestion 4, Table 5, relating to reducing fuel ROB. (See the section on Bunkering in the Appendix.) She had previously worked with bunkering issues. Yet this was one of the least important measure in terms of economic impact, with an impact of less than 0.1% (as mentioned in the Introduction). Additionally, it was not easy to implement, as it required different actions related to bunkering on the behalf of crew. The previous strategy was to bunker at full tank whenever bunker was cheap. Furthermore, a crew might prefer to carry larger quantities of bunker fuel on board, for safety reasons – in order to divert to another port in case of a route deviation, for example. Interviewees seem to agree that Alice had been successful in implementing this measure; her position was removed, however, during the reorganisation. The second person to work on energy efficiency – Bob (who was no longer at ShipCo, and was not interviewed) – seemed to have worked more in accordance with the intentions of the audit. His aim was to establish new routines and to communicate more with 11

Names and genders of the presented persons are fictive. The short-sea bulk fleet, which had previously been under in-house commercial operations, had been outsourced to a third party. Although this company now paid for the fuel costs, according to the interviewees at ShipCo, it was not very interested in working with energy efficiency. Previously, these ships were on slow-steaming regimes (see Johnson et al., 2014; Johnson and Styhre, 2015), but at the time of the interviews they were going full speed again due to better market conditions, especially due to larger cargo volumes on the market. 13 This new technical management company also managed other ships whose cargo owners were also part owner of these ships. These cargo owners were very interested in energy efficiency and requested that the technical management company identify and carry out energy efficiency projects given a certain payback time. A representative of this cargo owner explained in an interview that they had no means of following actual fuel-consumption figures and thereby seeing the effects of this work with energy efficiency. This was rather a matter of trust and a long-term relationship. 12

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ship crews – not only on the vessels that ShipCo owned, but also on the chartered vessels. Bob had a technical background as a seafarer and was placed to manage energy efficiency during the reorganisation process, which created vacancies and a need to create new roles for certain people. Later, Bob was also laid off, however. The third energy-efficiency person, Charlie, had a commercial background. Charlie now worked with co-workers on trim and draft optimisation for the remaining fleet, and he was interviewed. This was not on the list of measures recommended by the consultant, but it was part of the assessment, and its relative impact can be seen in Fig. 1. 6.2.1. New IT systems? The energy audit called for a harmonised reporting procedure across the different ship segments in which ShipCo operated. (See Management and organisation in the Appendix.) Such a system would be necessary to track the results of efforts to plan and execute voyages in a more energy-efficient manner, the area with the largest potential for savings. (See Voyage planning in the Appendix.) At the time of this follow-up study, the task of monitoring energy use was in the hands of Charlie in the operational department. They were now in the process of changing the procedure from that developed by Bob. Charlie gave the following account: - Author: What is your impression of how [the monitoring and follow-up scheme] worked when you took over Bob’s tasks? - Charlie: It seemed Bob had just started to visit all the ships, and then he was laid off and I took over. So, I felt that I took over something that was not mine (…) Bob had done this work and travelled around and talked [with crew] and really looked into these reports… I continued to receive these monthly and daily reports but the discussion stopped. We stopped giving feedback, [or] only once in a while, so the discussion never got started. So, we did the work [with collecting data] but the final bit, having an on-going discussion and work being done on the numbers, never got started. - A: Because Bob had time to visit the ships and you don’t? - C: Yes, well Bob also had the ship owner’s perspective when visiting [which has disappeared as ShipCo now chartered ships instead of owning]… But I didn’t have the possibility to catch these things at Bob’s level, so I couldn't give feedback to the ships... The action-net perspective suggests that standards and IT systems do stabilise organising efforts, and make efforts ‘durable’. This, however, does not mean that such artefacts, once designed, have a deterministic effect – that checklists are followed, for example, or that software is used as intended. Here, some of the routine work as required by the system continued to be carried out – reports were being filled in on board and sent ashore. But the patterns of action (the discussions and the work being done) that were intended to be generated stopped. Although this may be disappointing, it is a common finding in the literature on routines. (see e.g. Pentland and Feldman, 2008) 6.2.2. New routines? As noted by the former environment manager, in order to keep working with energy efficiency, the new asset-light business model should have required new routines related to chartering new ships. This, however, would have required a ‘changed behavior’: - Former environment manager: Well, [ShipCo] doesn’t have technical management on these vessels in-house anymore, it’s been outsourced (…). But I should think that even though you as an owner don’t have technical management, you could set demands on those that do it for you: This is how we want you to manage our ships… You have to go after everyone, your suppliers and your clients, but that’s a tough part and kind of a changed behaviour... We should look a little bit beyond focussing on whether the ship can sail from Point A to Point B, whether it is available now and has a certain fuel consumption [at a given speed]… We should be a bit tough and try to tell them: This is how you should operate. We should make sure there is a [fuel consumption] baseline for this type ship [so that we can plan voyages and follow up on ship’s performance].14 It was not that ShipCo was unable to work with such routines. In contrast to the non-functioning fuel consumption-monitoring regime, ShipCo did have a working system for monitoring the performance of container ports. The energy audit consultant also recommended this action. (See Suggestion 2 in Table 5 and the Port operations section of the Appendix.) An interviewee noted that the crew and port personnel would each submit a report, then contrast the two systems to show that it was much easier for the crew to measure how many containers the port would handle per hour than it was to monitor energy use. In the case of disturbances or discrepancies in the container data, the crew could easily contact the port to request detailed information. Effecting ‘changed behaviour’, as suggested by the previous environment manager, would be difficult because the intended work with energy efficiency implicated other actions than those performed as part of current practices. Also, the action-net permitting personnel to manage energy efficiency would now need to span through more organisations. Organising energy efficiency across organisations is not new, of course, but it requires new contracts and standards and means of enforcing them. Once the contract is signed, it can be difficult to discuss variations in fuel consumption with the owner, unless there is an actual breach of contract. A person working in the Operations Department gave an example in which they could clearly see differences in fuel consumption between two sister ships – ships built to the same design specifications, and thus expected to have similar fuel consumption. The reports showed divergent fuel consumption figures but, because the reported figures showed that both ships operated below contractual fuel consumption, there was no legal way to start negotiations with the ship owners. 14

See Appendix section Voyage planning. 47

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6.2.3. New means of communicating? Energy efficiency had been a theme during a previous conference for senior on-board officers on ships that were under technical management by ShipCo. The new environment manager told a success story in relation to this: - New Environment Manager: [A chief engineer] told us that when he was driving home [from the conference] he started calculating and realised: ‘OK how many lights do we have, what could we actually shut off. And then he started calculating in terms of oil… He really took this a step further, and he looked at every little space. Should it be lit or not?… - Author: So he looked only at electricity use? - NEM: No, he actually looked at everything, from which bunker tanks needed heating, where and how often the ship bunkered new fuel, to save money on that. But actually, there is a lot of energy going to lighting on these vessels. - A: So much stowage space, right, where everything is lit? - NEM: Yes, and really these lights are massive… So to give attention to this, and spread the good example, he was invited to the head office and was given a bunch of flowers by the CEO and so on. As for the rest of the fleet operated by ShipCo, the new asset-light strategies (with a third party responsible for crewing and technical management) implied that such efforts were much more difficult. Any new action-net spanning these organisations would have problems related to shortened time-scales. The majority of the time charter agreements were short-term, typically for three months, so there was always the issue of the amount of effort that should and could be spent on building a relationship with ship owners (often German banks) or with the crew members. In the operators' view, it was difficult enough to get the ship crew used to the route and specifics related to loading and unloading in three months; to take up the issue of energy efficiency would be truly 'over the top'. - Author: So you never talk directly to the owner [about energy efficiency]? - Operator: No, well, in some cases, if it is too cumbersome to do it through the broker, then the broker will ask us to talk directly to the owner, but otherwise everything goes through them. That is their role – to broker between owner and charterer. - A: But wouldn’t it be good to be able to speak to the corresponding technical department [sometimes third party], who might have the technical understanding of the specific vessel? - O: Well, that happens perhaps on the good will of the owners. If there is only one owner of a ship, who doesn’t have a technical organisation and lets the broker do most of the work, it’s difficult to get a discussion going. There has to be something... - A: Something to threaten with? - O: Yes, some kind of leverage, because if they follow the specifications [in the contract], then [having a discussion] isn’t interesting for the owner (...) If we’re on a three-month charter, how much co-operation can you get going? Part of the energy audit strategy was to obtain technical information on the energy use of ships operating at different speeds. But the second part of Suggestion 2, Table 5 – to create detailed speed vs. fuel consumption tables for all ships – had not been implemented, as it required information that was less accessible. Often, energy consumption at one speed only is given in the charter party specifications, but sometimes a span can be given. ShipCo still did not try to create speed profiles; nor did they follow up on the speed profile of a voyage over time. As indicated in the audit (Figs. 2 and 3 in the Appendix), relying on crew judgement could yield only large inefficiencies, if ships travel faster at the start of a voyage and slow down as they reach their destination. Although all ships now have to have a Ship Energy Efficiency Management Plan (SEEMP) on board, managers explained that they neither checked the SEEMP of the ships they chartered nor have specific requirements on energy efficiency of vessels when talking to ship brokers about potential ships to charter. In the end, however, they did pick the vessel with the lowest specified fuel consumption. In making decisions on which ships to keep in the fleet in the longer term, operators may recommend that a ship be excluded from future charter contracts, based on their analysis of such aspects as the service-mindedness of the crew and the ability to manage the route. On completion of my 2015 interviews, I left ShipCo, hoping to return when market conditions improved and the company started working on energy efficiency again. Perhaps energy efficiency would finally be seen by the Head of Operations, quoted at the beginning of this paper as saying ‘I’d like to finish an energy efficiency programme at some point’. But ShipCo continued to downsize, and the company as described in this article no longer exists. 7. Discussion and conclusions Achieving improved energy efficiency in international shipping is seen as crucial for the sector to mitigate its climate impact, a task which was recently given a concrete goal: to reduce total emissions by ‘at least’ 50% from 2008 levels by 2050 (IMO, 2018). Previous research has suggested that many shipping companies seem to struggle in their attempts to implement energy efficiency measures. The study reported in this paper was an attempt to understand this struggle better. Because of the relationship between ship speed and propulsive power, operational and structural measures form key parts of actualising (or not actualising) the potential of energy efficiency in shipping. Large savings are possible through the harnessing of speed reductions whenever possible. Such measures appear in models as being very cost-effective; they do, after all, require little or no investment. But as the study presented here shows, making these measures relevant to actors who are meant to implement them was something else entirely. If the potential is to make sense to actors in practice, it must be locally constructed. The energy audit was a way of doing that; it was to identify and 48

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prioritise measures on the basis of data that ShipCo was already gathering for commercial or maintenance reasons. In the theoretical framework employed in this paper, I argued that implementing energy efficiency measures require changes to existing action nets – action nets that had been constructed long ago to support the business model(s) of the shipping company. Institutional theory would suggest that these existing action nets need not necessarily be the most effective, but rather that they be like those in other similar shipping organisations. Indeed, the audit identified a substantial potential for improvement in terms of energy efficiency. But the existing action nets were also supported by artefacts such as IT systems, which are expected to entrench these action nets and standardise them according to industry norms. Establishing an effective energy efficiency programme would require the establishment of a new action net, and stabilising it into new routines. The audit at ShipCo suggested that implementing new routines would require changes in IT systems as well. Crucially, these new routines would allow that the potential remains under construction and fosters constant comparisons between theoretical optima and reality, and in this way would remain relevant to those involved. Finding that these measures had not been implemented was disappointing to me, but it is not surprising from the viewpoint of the theoretical framework employed in this paper. The study illustrates a phenomena long acknowledged by organisational scholars: that decisions are seldom ‘taken’ in organisations. Rather, decisions ‘happen’ as a result of organisational rules and practices (Cohen et al., 1972; March, 1991). There was no specific point at which personnel at ShipCo took the decision to move forward with some suggestions provided in the audit, and not to implement others, based, for example, on cost effectiveness. Thus, the results of the audit are neither expected to ‘diffuse’ unchanged at ShipCo over time, nor to be ‘decided’ upon based on a rational decision-making process. Rather they are to be translated by various actors who align these results with their own interests and competences. It is clear that actors did take up the measures, but each according to their current tasks. Moreover, each time the main person working on energy efficiency at ShipCo changed, so did the work with energy efficiency. This signals the absence of an established action net. If actions nets appropriate for energy efficiency had been supported by such measures as routines and software, it would not have mattered who was responsible for achieving energy efficiency. This case study serves as a reminder that studying how energy efficiency improves or not requires that the analyst follow the actors, wherever they go. Studying energy efficiency at ShipCo was no longer enough once the company had sold of most of its ships and was instead relying on shorter-term charters with third-party ship management. Any coherent action net creating energy efficiency for the benefit of ShipCo now requires actions to be connected and translated across formal organisations, which in turn requires new standards, contracts, and routines. The logic of energy efficiency is still the same under such a regime, but it obviously requires more work. This represents a challenge for researchers who wish to understand how energy efficiency improves or not. Researchers need to pick mobile methodologies (e.g. Czarniawska, 2007) in order to understand and describe the boundaries of relevant systems. The theoretical framing of the paper implies that forms of policy approaches other than carbon pricing are relevant. (see also Schwanen et al., 2011) It is clear from this study, that a shipping company may simply lack the capacity necessary to work effectively with energy efficiency. The question remains, however: Could policy intervention improve the capability of companies work effectively with energy efficiency and if so, how? As Jasanoff (2004, p. 16) put it: ‘Unlike Athena sprung full-grown from the brow of Zeus, social and political arrangements for exploiting, resisting, or quite simply accommodating technological change do not emerge, intact and fully formed, in response to innovation and discovery.’ In order to better align these arrangements to the benefit of technological change for climate change mitigation, further research would be useful in reforming the current regulatory regime, particularly the SEEMP. More specifically, it is essential that research be directed at determining how different shipping companies do establish effective energy management programmes. The study reported in this paper shows that if starting work with implementing energy efficiency measures in a shipping company is viewed as a process of introducing a new action net, a regulatory regime that is intended to encourage better energy efficiency practices would benefit from having recurrent audits. The fact that this particular energy audit did not lead to achieved savings for ShipCo should not be seen as a divisive argument against energy audits in the international shipping sector; rather it should inspire further research. After all, energy audits have seen success in other places (including, of course, other shipping companies, as the energy audit consultant may add if he were co-author of this paper). Through the EU’s Energy Efficiency Directive (2012/27/EU), energy audits recently became mandatory for all large enterprises in the EU. Under this directive, the first energy audit needed to be conducted before 5 December 2015 and repeated at least every four years. The set of large enterprises in the EU includes a number of shipping companies. Therefore, researchers who are keen on negotiating access to firms in the maritime sector should find empirical material readily available. Acknowledgements I am indebted to everyone working at ShipCo at the time of my study for sharing this process with me, and of course to Mikael Johansson, now principal consultant at DNV-GL, who had patience with me participating in his audit. I am very grateful for comments on the paper from Barbara Czarniawska. Josefin Borg, Patrik Thollander, and Martin Viktorelius also provided helpful advice. A version of the paper was presented and discussed at the Green Shipping Project – CPH 2019 Paper Workshop, Copenhagen Business School. An early draft was presented at a seminar within the Managing Transformation research programme at GRI, where Barbara Czarniawska, Ulla Eriksson-Zetterquist, Elena Raviola, Zehra Sayed, and Svetlana Sabelfeld gave helpful critique. An extended abstract was presented at the 2017 International Association of Maritime Economists’ (IAME) Conference in Kyoto, Japan. Finally, I wish to thank two anonymous reviewers for their comments. This study has been funded by the Swedish Energy Agency.

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Appendix This Appendix presents a summary of the audit results derived from the consultancy’s final 2012 report to ShipCo. The parts of the audit covering secondary areas of energy consumption (see Item #5 in Table 1, Section 4.2) have been omitted because of space constraints and their minor impact on energy efficiency. A.1. Voyage performance ShipCo operated its ships in the two patterns typically found in shipping: liner and spot (tramp) operation. In the case of ShipCo’s liner operations, its roll-on/roll-off (RORO) and container vessels were trading on regular schedules, in which it is necessary to optimise the speed of the ships on a schedule basis, as the ships have fixed time slots in ports along the route. In order to create a schedule, port opening hours and available times at berth thus needed to be matched with customer expectations. Comparisons of operational data for liner operations are simpler than for voyages in spot operation, as the route remains the same and each voyage can be compared to a theoretical benchmark. In the spot pattern, ShipCo’s smaller and larger bulk vessels operated on a market for goods (like a taxi service). Such operations may be more difficult to evaluate from an energy-efficiency perspective, as a number of the environmental factors more difficult to measure related to the route need to be considered when analysing data. Interviewees explained that the company had recently started an attempt to optimise the liner service routes from waypoint to waypoint – to optimise the speed and use of main engines between certain fixed points along fixed routes, determined by the port slot times. The ships had two main engines: For a given speed, there would be an optimal use of engines, as engine efficiency varies with the load. A ship could, for example, use two engines between certain waypoints, enabling it to sail at a higher speed, and then only one engine between another set of waypoints, so that the engines would always be running at optimal (higher) load. Yet neither the interviewees nor quantitative analysis performed in the audit could show such results. According to the interviewees, this was because the effort had simply not been going on long enough. Quantitative data gathered and analysed in the audit showed larger-than-expected differences in fuel consumption in the liner services. The same ship along the same route in similar loading and weather conditions would have different fuel consumption figures for the whole route. The audit found that ships seem not to have a routine for when to use one or two engines; furthermore, they would sometimes be traveling at a higher speed at the beginning of the route and slow down later, weather and loading conditions being equal. As fuel consumption is roughly proportional to the speed to the third power, this is less efficient than sailing at a uniform speed. One ship displayed differences of over 20% between routes, with similar weather and loading conditions but with differences in uniformity of speed, as seen in Figs. 2 and 3 and Tables 6 and 7. An analysis of operational data produced a preliminary speed-consumption table, to illustrate the optimal use of engines for a ship. The operational data were then assessed using this table for two ships, producing Fig. 4, which clearly showed that one of the ships could improve its engine use. Interviews revealed that crewmembers had different opinions about the circumstances under which only one engine should be used, as some crewmembers would prefer two engines in narrow passages for redundancy – for

26 24

Ship speed (knots)

22 20 18

Voyage A Voyage B

16

Voyage C

14

Voyage D

12

Voyage E

10

Waypoints from North to South Fig. 2. Speed profile for ship A – Southbound. 50

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20

Ship speed (knots)

19

18

17

Voyage F Voyage G Voyage H

16

Voyage I Voyage J

15

14

Waypoints from South to North Fig. 3. Speed profile for Ship A – Northbound. Table 6 Route details for Ship A – Southbound. Voyage

Total fuel consumption (tonnes)

Time (hours)

Draft (metres)

Comments

A B C D E

94.6 116.9 82.4 125.7 133.0

69.6 66.4 74.0 66.3 64.1

7.3 7.8 7.6 7.8 8.0

On time On time 4 h early departure On time Late departure, arrival on time

Table 7 Route details for Ship A – Northbound.

F G H I J

Fuel consumption (tonnes)

Time (hours)

Draft (m)

Comments

83.6 108.3 83.4 115.2 90.0

64.5 57.3 62.1 56.7 61.9

6.8 6.5 6.4 6.5 6.8

1.5 h early departure, arrival on time On time according to schedule, but still fast sailing speed. On-time departure, 2-hour early arrival On-time departure, 6-hour early arrival On-time departure, 1.5-hour early arrival

safety reasons. The audit estimated an improvement potential of 10% if voyages were planned and executed better. As for the ships operating in the spot market, there were few data and tools available for the on-shore operational staff to plan voyages in an energy-efficient manner. Even though these ships were not on fixed schedules (because ShipCo’s operational staff tried to find contracts that enabled them to go on similar routes), it was possible to compare some of them. The same observation was made as in the liner fleet: Uniform low speed voyages were much more energy efficient (∼25%). The audit suggested that it would be possible to optimise speed in about 20% of the voyages by procuring and implementing a system for determining and following up on voyages. A.2. Port operations Port operations matter from an energy efficiency perspective, as any time wasted in port could be used to reduce speed at sea. In better market conditions, however (e.g. lower fuel price and higher charter rates), it can also be cost effective to maintain (not reduce) speed at sea and use extra time to perform more transport work (e.g. haul more cargo and/or travel longer distances over the same period). Interviewees perceived that stevedores could mismanage port operations at ports visited by the RORO fleet. Operators in the onshore organisation provided an estimate related to the container fleet: Ships were losing perhaps 5 to 6 h in excess port time 51

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Fig. 4. Procedure for determining current use of engines for two ships.

per round trip of 14 days – time that could be used to sail slower while still keeping to the timetable. Persons responsible for the bulk fleet also claimed that there were large differences in port performance, but that these differences were difficult to document. Overall, ShipCo did not have any routines for gathering and analysing data on the performance of port operations and on the consequences that poor performance may have for energy efficiency. The audit contained an estimate for long North–South and South–North trips for the liner fleet. Using data available for two ships, it was shown that leaving the port as soon as all port operations are finished rather than delaying departure and incurring unproductive in-port time – and using this saved time to sail slightly slower – would lead to estimated savings of 3% to 5%. As there are many other potential sources of unproductivity during time in port, this represents a lower bound. If all trips were managed to make their time in port one hour shorter, this could translate into sailing at 11.67 knots/hour rather than 12 knots/hour during a three-day voyage, which would imply total savings of about 8%. In case of another ship travelling on the spot market, the audit showed that for more than one-third of the voyages, the unproductive time spent in port from arrival to start of port operations, when added to the time from the end of port operations to departure, could be in the range up 4 to 8 h. The audit recommended procedures to manage port operations from an energy efficiency point of view, such as training, providing best-practice examples, and monitoring and following up on port stays. A.3. Hull performance The interviews showed that the onshore staff relied on the crew to assess hull conditions but there was no ShipCo-wide regime for making sure this was done: Captains could observe hull fouling but lacked instructions on what to do with that knowledge. Because ShipCo did not have the means to follow up on the energy use of vessels, the onshore organisation would have no means of detecting performance decreases due to hull fouling. There was a policy to clean hulls in the RORO fleet at regular intervals. The audit recommended establishing three annual hull cleanings in the companywide maintenance programme and a routine for hull performance testing. A structured means of testing would enable trending of performance. The audit estimated that a hull performance regime would enable savings in the order of 1% to 2%. The audit also covered propeller performance. No routines were in place to assess the degradations of propellers. Degradation typically happens to propellers made of alloys such as NiAl, which have to be polished at regular intervals to maintain smoothness. The audit referred to experience of the consultancy firm that working with propeller inspection and polishing can yield savings in the order of 2%. The vessel trim – the difference between forward and aft draft (depth below water) – can affect energy use as it (foremost) affects the wave-making resistance of the vessel. An analysis of operational data, together with interviews, found that ShipCo did not have any routine for managing vessel trim; vessels would use both negative and positive trim for the same draft. These data were documented by different means for different ships and, in some cases, not at all. The audit stated that there are different means of finding the optimal trim for different drafts and recommended that ShipCo start conducting its own trials. The audit estimated an energy-saving impact of around 1% from these measures. A.4. Bunker fuel purchasing Some of the routine processes and practices that shipping companies use for bunker fuel purchasing may lead to less energyefficient operations. Shipping companies could suffer from short lifting, whereby suppliers utilise uncertainties in measuring the 52

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amount of fuel delivered to under-deliver on the amount of fuel. Fuel is typically delivered according to an ISO standard, but the quality of fuel, including energy content (MJ/kg), can still vary. Shipping companies can also have different purchasing strategies: onthe-spot market or on various forms of long-term contracts with specific suppliers. Shipping companies can also have routines for timing of fuel purchasing, which in turn would affect the amount of extra fuel a ship should carry on board. The audit observed that ShipCo's organisation of bunker purchasing was fragmented. One division had its own bunker purchaser and another used the general purchasing organisation to buy on the spot market. Reports on fuel quality were being sent to different persons ashore, depending on local circumstances. As a result, it was not possible to monitor and follow up on bunker purchasing, and there was no way of choosing suppliers based on such data. Based on the previous experience, the audit suggested that savings of 2% would be possible by following up on fuel quality and performance. Quantitative data on the amount of fuel that ships were carrying showed that many ships carried anywhere from 10% to 50% more fuel than necessary for safety reasons. One possible explanation was that some of the ships had recently moved from trans-ocean service to short-sea service, thus operating shorter distances and travelling closer to shore than previously. Their new trade would require less fuel on board, but routines on ordering bunker had not been changed. The audit determined that savings in the order of 50 000 USD would be possible if fuel remaining on board was reduced by one operating day worth of fuel, based on 10% internal rate of return. A.5. Main engine performance The main engines on board use the most energy; they drive the propeller(s) and in some cases provide all electricity through a propeller shaft generator. Inefficiencies in the main engine therefore cascade through the system. In order to monitor the performance of engines, it is necessary to measure two factors: the amount of fuel entering an engine through fuel meters, and the torque produced in the propeller axis. A measure of engine energy efficiency is therefore g/kWh, specific fuel oil consumption (SFOC). The equipment necessary for producing these measures is not standard on board ships. Crewmembers will often periodically test machinery performance, however, using other measures related to cylinder pressure, such as charge air pressure, exhaust gas temperature, and load. These tests can also provide indications of performance. The audit found that ShipCo did not consistently monitor or follow up on main engine performance across its fleet. Some tests were performed regularly on the RORO fleet; the container vessels had a test done, but it did not include measures necessary to determine energy efficiency. No tests were found for the bulk fleet. For some ships, tests were documented digitally on Excel spread sheets, whereas for other ships reports were on paper only. Such diversity in records would make fleet-wide analysis time consuming. It was not possible to provide an accurate estimate of the potential for improved main engine efficiency. From previous experience, however, the consultant judged that it would be possible to enhance performance by 3%. A.6. Management and organisation The audit found that ShipCo, in comparison to other customers of the consultancy, was performing at average levels for technical aspects in parts of the fleet, but below average in aspects related to operations, management, and organisation. Although the strategic ambitions of ShipCo were more or less clear, there was some confusion about whether the target was to improve overall energy efficiency by 10% or by 5%; there were no tactical objectives chosen. In short, many routines that would enable ShipCo to monitor and manage energy use were missing. The interviews showed that definitions of roles and responsibilities in the company lacked reference to energy use and efficiency. Followup on several aspects of energy use and efficiency performance occurred in different parts of the company, and follow-up action was often left to individual initiative. Training and evaluation procedures similarly lacked reference to energy use. Crucially, different divisions in the company employed different tools for recording and communicating performance. Any general analysis would require much work in order to deal with a multitude of standards. The audit recommended that ShipCo should develop a single reporting procedure that would take the needs of all divisions into account. In the audit report, these needs had been mapped and suggested actions were outlined. The audit suggested that, although a range of automated performance measurement systems is available on the market, it was also possible to begin with a more economical solution through a regular spread-sheet programme.

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