Environmental, Social & Governance Report

Material Issues

Environment

Fighting Climate Change

The global shipping industry is responsible for 90% of world trade by volume but it is also a large and growing source of greenhouse gas emissions. The EU has put in place legislation to achieve climate and energy targets to reduce the sector’s carbon footprint.
In November 2020, MEPC 75 approved the new EEXI regulations and corresponding amendments to MARPOL Annex VI, introducing new short-term mandatory measures, requiring the application of technical efficiency measures for existing ships (EEXI regulations) and the reduction of operational carbon intensity indicator (CII) for ships in operation, while the guidelines are subject to finalization and approval at MEPC 76 in June 2021. The Shipping industry is now more than ever pushed by increasingly stringent regulations to develop cleaner and energy efficient vessels, while research on alternative options is constantly increasing and a considerable investment is made in the development of advanced technologies, emission abatement mechanisms, energy-efficient engines and alternative fuels for ships to enable the industry meet the decarbonization and sustainability target.
In 2020, the long-awaited implementation of the new 0.5% limit on fuel oil sulphur of ships trading outside Sulphur Emission Control Areas (ECAs) was introduced in the shipping industry as of January 1st, with significant impact on shipping dynamics and important benefits for the environment and human health. Moreover, as of March 2020, the carriage of non-compliant fuel for combustion purposes for propulsion or operation onboard ships, was prohibited, unless a ship is fitted with an Exhaust gas cleaning system (SOx Scrubber). The need for a smooth transition to IMO 2020 increased the need for familiarization with the new detailed product, along with the necessity for the proper handling and onboard operational aspects, as the shipping industry to date relied on specific residual and distillate fuels, based on ISO 8217:2017 marine fuel quality standards. Apart from issues related to the availability and specifications, the nature of the new fuels raised concerns on contamination and incompatibility that may lead to engine issues that require close monitoring. In Danaos, we achieved a successful and smooth transition from HSFO to VLSFO without experiencing any major disruption or any delay and off-hire, which is reflected in our impressive technical utilization percentage of 99.9%!

Conforming to Environmental Laws & Regulations

We have established and implemented a robust Environmental Management System and our fleet systematically complies with or exceeds environmental laws and regulations as imposed by:

  • IMO
  • U.S. Oil Pollution Act of 1990
  • CERCLA (spills and releases of hazardous substances)
  • Clean Water Act
  • Clean Air Act
  • EU MRV regulation.

We carefully examine potential incidents of non-compliance and we set appropriate action plans to investigate the incident and to ensure that similar incidents do not occur in the future.

During 2020 there were no incidents of non-compliance with environmental laws and regulations.

Ship Optimization for Energy Efficiency

Our R&D Department has extensively investigated the options in minimizing the transportation cost and the subsequent fuel consumption required per TEU. This includes optimizing the vessels’ design, their operating profile and monitoring their performance. In this context, we have studied and evaluated 38 methods of optimizing the energy efficiency of vessels, which we have categorized according to the system that was optimized: propulsion system (main engine-propeller), fuel, on board energy management, reduction of hull roughness, intervention on the hull design to reduce friction or ripple resistance, or improvement of vessel operation. Having studied all these measures, we arrived at a conclusion as to whether they would be worth implementing on the containerships, by taking into account each ship’s hull lines, equipment, and special features and assessing its dynamics through CFDs studies and model tests in experimental tanks.
The launching in Waves of a new smart interactive control form with built-in deep dive and diagnosis features that will guide the user in the performance evaluation and problems identification process is the ultimate tool for the day-to-day operation that aims to enhance the accomplishment of energy efficiency and performance excellence targets.
The development of a sophisticated environmental routine that will incorporate an interactive Carbon Intensity Index calculation, vessel rating and projection of emitted CO2, setting the foundation for effectively responding to a potential emission trading or levy scheme will be launched within the next year.
Moreover, in Danaos we have implemented the Scrubber Monitoring feature that is custom designed in our Waves data analytics platform for our vessels fitted with SOx Scrubbers, in order to provide the user with good insight on the scrubber operational data almost in real time, while at the same time one is able to easily confirm compliance with the regulatory requirements for all parameters. Moreover, the Scrubber Reference log is a feature incorporated in Waves in 2020, in order to demonstrate compliance in case a failure occurs in a monitoring sensor by indicating compliant operation in the same conditions and ensure that the regulations are met until the malfunction is rectified.

Heading towards Decarbonization

In the context of the global fight against climate change the shipping industry is heading towards decarbonization, as IMO has adopted mandatory measures to reduce emissions of greenhouse gases from international shipping, by at least 40% reduction in carbon intensity by 2030 and pursue efforts towards 70% by 2050 and total annual GHG emissions reduction by at least 50% by 2050 compared to 2008. In order to achieve the overall goal, technical and operational initiatives are taken into consideration, including advanced emission abatement technologies and the introduction of alternative fuels use in shipping operations. The alternative fuels are power sources, which serve as substitute of fossil fuel and contribute to direction of shipping sector towards net zero emissions.
Danaos through several studies during the last years has examined ammonia, methanol, hydrogen, LNG-LPG as the most promising alternative fuels for propulsion, with ammonia as one of the most promising solutions for achieving shipping decarbonization targets. Biofuels are also under review with a potential contribution if the lifecycle effect is considered in the cf factor by IMO. Among the new technologies, we have examined fuel cells, alternative ship propulsion technologies, such as wind-assisted propulsion and carbon capture & storage, which may have reasonable potential in shipping applications.
Further to the latest MEPC 75 held within November 2020 and in anticipation of the next MEPC 76 (expected in June 2021), that will advise all details relevant to the EEXI (Existing Energy Efficiency Indicator) and the CII (Carbon Intensity Indicator), the technical and operational measures selected in order to achieve the IMO decarbonization targets, Danaos as a first step, has proceeded with the calculation of the EEXI for all vessels basis on the available guidelines by IMO.
For all company vessels, extensive study has been performed in order to identify the most efficient way to comply with the requirements. EPL has been selected as the measure to reach the EEXI limits. An average EPL limit in the range of 50-60% was identified basis available guidelines.
Moreover, a commercial and operational study has been performed after the EPL limit has been determined for each of the vessel series. The actual maximum load and maximum speed within the last year have been checked in order to see the actual impact on the current operational profile in case the EPL was in place.

Decarbonization Initiatives

We have been in contact with various initiatives since we are closely monitoring all developments around the decarbonization and alternative fuels and we are constantly monitoring our vessels’ performance and compliance through Waves Data Platform.

In 2020 Danaos became a member of the Global Maritime Forum (GMF), adhering the Getting to Zero Coalition statement.

We are also members of the Ammonia Energy Association (AEA) since July 2020, participating in meetings and keeping up to date with all latest developments for the use of Ammonia in the maritime industry.

We support the Poseidon Principles that help banks align their shipping loans with the climate goals set by the IMO.
The signatory banks measure the carbon intensity of their shipping loans, relying on the global Data Collections System for fuel oil Consumption by ships (“IMO DCS”) and then publicly report how their shipping loans align the adopted climate goals. As a result banks will focus on financing “green” assets, such as ships with technologies that allow for low GHG emissions. Ship owners on the other hand will focus on such technologies and in turn will be able to justify a longer return on investment.

For 2020, 35% of Danaos fleet already complies.

Climate bonds initiatives are also explored in order to verify our fleet’s compliance.

We have also been in contact with Science Based Targets (SBTi) and Methanol Institute (MI) in order to investigate our participation in various initiatives and different schemes.

0
Signatory banks have already committed to the Principles

Key Partnerships

We are actively seeking the participation in industry associations and committees in order to contribute to the advancement of the shipping sector through the exchange of experience and the support and promotion of sustainability and environmental issues.

Our Emissions

We have developed our environmental indicators as a monitoring tool of our fleet environmental performance and as a means to evaluate the effectiveness of our energy efficiency improvement measures. Every year, we calculate the emissions of our entire Fleet, aspiring to be fully transparent on the parameters that can influence our efforts towards a more energy efficient management. We use those calculations as indicators of our environmental performance and share them with our clients, upon their request, in order for them to evaluate their fleet’s environmental footprint.
The company’s environmental footprint was improved compared to that of the previous year. Additionally, the total number of produced emissions for 2020 (CO2, NOx, SO2) is by a percentage of 2.5%, 2.6% & 81.8% respectively lower compared to 2019.
Within 2020, idling periods significantly increased, due to vessels entering the shipyards for drydocking and scrubber retrofit and shipyard delays related to the COVID-19 pandemic. On the other hand, the tn*miles index has increased compared to the previous year and as a result, the carbon intensity for 2020 has improved compared to 2019.
Moreover, the SO2 emissions are significantly reduced compared to the previous year due to the 0.5% sulphur content cap for ships’ fuel worldwide from 1st January 2020.

-2.5%

CO2 production (MT)

Thousands

-2.6%

NOX production (MT)

Thousands

-81.8%

SO2 production (MT)

Thousands

The effective utilization of the fleet under employment was 97.2%, excluding the effect of incremental off-hire due to shipyard delays related to the pandemic. The utilization percentage from a technical aspect remains impressive at the level of 99.9%, which means that the stoppages due to technical reasons account for only 0.1% of the total operating days.
Developed by the IMO as per MEPC.1 Circ.684, the EEOI index calculates the amount of CO2 emitted per ton/unit/TEU of cargo transported per nautical mile. CO2 output per cargo can be used as an indicator of a vessel’s fuel efficiency. This only reports CO2 emission as a result of fuel combustion.
Industry standardization and verification of CO2 data is a prerequisite in order to enable fair, reliable measurements of CO2 performance and to enable CO2 benchmarking with competition.

EEOI average (gr/tn.mile)

16.41

Average 2018

15.99

Average 2019

15.09

Average 2020

The average EEOI has been reduced by 5.6% for 2020. The operational profile of the fleet is almost unchanged within 2020 in terms of average speed and draft. The fleet’s average energy efficiency footprint was improved when compared to the previous year, mainly due to the increased ton miles index by 4% and the improved performance of the vessels after leaving drydock. Within 2020, 13 vessels in total were drydocked, 10 of which have optimized their bow, contributing significantly to the improved performance and consumption.
When it comes to each vessel’s individual assessment, mixing trends have been observed either upward or downward. Detailed performance analysis and comparison between 2019 & 2020 is completed for each of the company’s vessels within the first quarter of every year and results are updated in the SEEMP manual.

Utilization percentage: 99.9%

Ozone Depleting Substances

Danaos Shipping has incorporated the modifications from the old systems to the new ones and, according to the regulations, any deliberate emission of ODS is prohibited. For new building vessels, any installation containing ODS, such as halons and chlorofluorocarbons (CFCs), is prohibited. The Freon Types in use are R-404A and R-407C. Freon losses for 2020 were at 5% of the total capacity (1210kg approximately). Since 2016 we have managed to reduce our Freon losses from 11% to 5%. We plan to reduce greenhouse gas emissions and mitigate climate change, based on EU F-gas Regulation (517/2014) adopted 1 Jan 2015 for reduction of use of HFCs. A service ban on HFCs with high Global Warming Potential (GWP >2,500) like R-404A, R-507 and R-422D has been imposed since 1 Jan 2020. The F-gas regulation applies to all EU countries and EU flagged vessels. Therefore, replenishment of retrofit of systems with lower GWP refrigerants takes place where required. 

5%

Total Freon Losses

Since 2016 we have managed to reduce our Freon losses from 11% to 5%.

Protection of the Marine Environment

We adopt a Ballast Water exchange policy which prevents the transfer of harmful alien aquatic species from one region to another through Ballast water. All engineering, plan approval and installation work has been carried out in- house by Danaos’ R&D and Technical department. Each Ballast Water Treatment System has been evaluated for its efficiency, technical competence, operational flexibility, durability and environmental friendliness, based on its operational principle certification and acceptance by the IMO, USA Environmental Protection Agency and the European Committee.
Within 2020, a total volume of 6,055,711.80 cubic meters of ballast water has been exchanged through our fleet, contributing to the significant goal of marine environment protection and environmental footprint reduction.
In total 15 WBT have been installed in Danaos’ fleet within 2020, with capacity from 500 to 1500 m3/h.
From the 1st system installation (December 2018) until today in total 26 vessels, corresponding to 41% of Danaos fleet, have been successfully retrofitted with WBTS.
All engineering, plan approval and installation work has been carried out in -house by Danaos R&D and Technical department.

15 WBT

installed in Danaos fleet within 2020
0%
of Danaos fleet retrofitted with WBTS

Responsible Waste Management

The most common reason for the spillages is the human factor and minimizing the exposure risk associated with pollution is a challenging task. Danaos Shipping has developed a Safety Management System and policies that promote pollution prevention and we have taken a step further to predict and prevent any potential threats to the marine environment. Our fleet is being maintained at the highest standards of the market, providing safe boundaries for the pollutants transported.

Attracting, Developing, Retaining the best set of Crew

The human factor is being controlled by selected Crew Pools from Danaos Shipping owned Manning offices, in-house training to promote environmental safety culture & awareness, frequent visits onboard by the Technical and Quality experts of the office to evaluate the condition, safety and navigational measures and practices implemented. In addition, there are many onboard training programs and Computer Based Trainings (CBT) promoting training on the field. The SMS system of Danaos Shipping has been awarded with an ISO 9001 & ISO 14001. On top of the Regulatory requirements, Danaos Shipping has applied a Green Policy with regard to the chemical composition used onboard and a Garbage Management plan.
We are constantly operating with “zero spills” as our main goal, so it is not a coincidence that, in 2020, Danaos Shipping had a zero oil spillage record, something which rewards the structure and the efforts of the Company. These efforts include a comprehensive series of seminars and the superintendence modernization which aims to enhance inspection efficiency.
We have further taken measures to improve the management of waste generated by our headquarters. We monitor the average paper consumption per employee per day and we encourage our people to reduce the paper consumption. In 2020 the consumption of A4 sheets in our office was decreased by 22%.

Innovation and Digitization

Our R&D Department was established in 2011 aiming at generating innovative concepts and developing knowledge and competencies in a constantly changing and evolving maritime environment. We apply our technical expertise and knowledge to improve our fleet’s efficiency and our environmental performance, thus maintaining our competitive advantage and leading position in the shipping industry.

At times when shipping is facing stringent regulations and challenging market needs, our focus has been placed on the establishment of “digitally smart shipping” to enable ships’ management optimization. The key tool to manage the new challenges is through advanced technologies, intelligent management systems and innovative mechanics.
Moving forward from traditional applications to advanced technologies, we have implemented online data acquisition on our fleet and we have developed Waves Management system. Waves provides innovative business operational intelligence by aggregating and analyzing data gathered from multiple sources and incorporating big data analysis algorithms and visualization tools for extracting really valuable information and transform real-time data into useful insight.

Waves Management System incorporates the relevant modules and integrates departmental KPIs, in order to provide a holistic approach and have then operations optimized to meet well in advance the increasing regulations and need, while at the same time creating a true completive advantage and enabling the decision-making process. Going one step forward to the company’s full digitalization, we have designed the new Waves Control form to provide sophisticated data-driven alerts and a better visualization of fleet data, as well as to enable significantly faster operation of the system and facilitate the cooperation with the other systems.

In Danaos we are taking part in various EU Research and Innovation Maritime projects and programs, with main focus cutting-edge technologies and methods, such as energy efficiency optimization-advanced materials, robotics, artificial intelligence, big data analytics, blockchain, ΙοΤ, autonomy, zero emissions, alternative fuels and energy sources, next generation propulsion etc. In that way, Danaos is supporting projects aiming to new technologies and fuels to decarbonize and promoting their development, while at the same time identifying future trends at an early stage and keeping up with the latest developments in innovative maritime technologies and methods.

Innovation is the ability to see change as an opportunity - not a threat

Steve Jobs