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Climate Change

Nippon Yusen to order 12 LNG-fueled car transporters for $912m

Japan shipper is responding to automakers' aims to cut emissions in supply chains

Vehicle transporters that use traditional fossil fuels produce 25% more carbon emissions than LNG-fueled carriers. (Photo by H.aruga)

TOKYO -- Japan's maritime shipper Nippon Yusen will invest over 100 billion yen ($912 million) in 12 new vehicle transporters fueled by liquefied natural gas, as auto manufacturers seek to reduce carbon dioxide emission in their supply chains, Nikkei has learned.

Nippon Yusen's order is the biggest in Japan for LNG-fueled ships. Such ships are expected to produce 25% less carbon dioxide emissions compared with current transporters fueled by petrol.

Carmakers have been trying to reduce emissions in their supply chains. LNG-fueled transporters is already a bidding requirement for companies that want to work with Germany's Volkswagen. Japan's Toyota Motor began to demand carbon dioxide emission reductions from major suppliers that it has direct transactions with, and is expected to make similar requests of its transportation companies in the future. Honda Motor is also expected to try to cut emissions in its supply chain.

There are only about 10 vehicle transporters fueled by LNG, out of about 700 globally. Nippon Yusen, which is the biggest owner of such transporters, is placing an early bet by making the large investment.

Nippon Yusen will order Shin Kurushima Dockyard and Nihon Shipyard, which is an joint venture of Imabari Shipbuilding and Japan Marine United, to build six vehicle carriers each. Each will have loading capacity of about 7,000 vehicles.

Nippon Yusen has 120 auto carriers in operation as of March. Only one of them is fueled by LNG. By the end of 2028, the company aims to have 20 LNG-fuelled transporters. It costs about 10 billion yen to construct one of these, 20% higher than the petrol version. Nippon Yusen is expected to have made some cost savings by ordering six vessels from each builder.

The shipper aims to cut its greenhouse gas emissions by half by fiscal 2050 from its 2015 level. The shipbuilding industry is developing carbon dioxide reduction technologies, including the use of ammonia and hydrogen, that are expected to be commercialized as early as the late-2020s. Nippon Yusen is also counting such next-generation ships as an option.

New technologies for environmentally friendly ships are seen as opportunities for the Japanese shipbuilding industry. Japanese shipbuilders have been losing orders as they faced competition from Chinese and South Korean players.

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