Challenge

TMS Tankers needed a clearer view of how its Aframax, Suezmax and Very Large Crude Carrier (VLCC) fleets would perform as shipping emissions regulation tightens over time. 

While Carbon Intensity Indicator (CII) had already been adding pressure to the fleet, concern was also increasing around European Union Emissions Trading System (EU ETS) and FuelEU exposure, particularly for vessels trading through European routes. At the same time, growing charterer decarbonisation expectations, ageing vessels and future fuel capability constraints were creating additional commercial and operational pressure across the fleet. Uncertainty around future fuels and emissions reduction pathways further increased the need for clearer long-term compliance planning and fleet transition decision-making.

Approach taken

LR Advisory established CII baselines across the fleet and projected compliance risk under both moderate and aggressive carbon intensity reduction scenarios. TMS vessels were benchmarked against ~300 comparable vessels using LR Advisory’s emissions estimation and ship performance models, with trading patterns and operational profiles examined to understand how voyage distance, waiting time and fuel exposure were influencing CII performance and future regulatory costs.

A structured gap assessment then identified the improvement requirements for each vessel and evaluated the decarbonisation levers available, including speed optimisation, energy-saving devices, onboard carbon capture technologies, biofuel adoption and alternative fuel retrofits. A parallel risk assessment examined the key external forces bearing on TMS’s transition strategy, covering regulatory, commercial and fuel supply dimensions. The analysis also included a future fuel readiness assessment across biofuels, LNG, methanol and ammonia, evaluated against TMS’s actual trading ports and bunkering hubs.

In the last part of the study, LR Advisory undertook detailed techno-economic modelling, where all applicable solutions were examined on a vessel-level to identify the optimal compliance pathways that extend vessels’ lifetime while maximising revenues. Finally, LR Advisory developed a set of actionable items, including specific ESDs installations aligning with vessels’ drydock schedules and gradual biofuel integration for each studied vessel, to meet CII targets while minimising regulatory costs through their remaining useful economic life.

Solution

Lloyd’s Register (LR) Advisory supported TMS Tankers in developing a fleet-wide Energy Transition Strategy spanning CII baselining and competitor benchmarking, gap assessment and decarbonisation pathway evaluation, and future fuel readiness, designed to support longterm transition planning under tightening regulatory requirements.

Key activities & outputs

Phase 1

  • Fleet-wide CII baselining and future compliance projections under moderate and aggressive reduction scenarios
  • Competitor benchmarking against 301 comparable vessels using LR modelling tools
  • EU ETS and FuelEU exposure analysis by vessel and fleet type.

Phase 2

  •  Gap assessment and decarbonisation lever evaluation
  • Risk register covering regulatory, charterer, fuel supply and technology dimensions.

Phase 3

  • Future Fuel Readiness assessment across biofuels,LNG, methanol and ammonia
  • Alternative fuel availability analysis mapped against TMS bunkering ports
  • Long-term decarbonisation pathway assessment against IMO, SBTi, IEA and charterer-led trajectories.

Phase 4

  • Vessel level techno-economic modelling to identifycost-effective compliance pathways against CII
  • Detailed analysis of the potential regulatory costs under the identified compliance pathways, including both EU frameworks and the drafted GHG Fuel Intensity (GFI) targets under IMO’s Net Zero Framework.

Key client benefits

  •  A structured, evidence-based foundation for fleet transition planning, grounded in actual trading data and projected regulatory requirements
  • Vessel-level visibility of compliance risk and the operational levers available to address it
  • Clear view of EU ETS and FuelEU cost exposure by fleet type, linked to route allocation and trading patterns
  • Assessed understanding of where each alternative fuel stands in terms of technology, infrastructure and commercial readiness relative to TMS’s bunkering ports
  • Insight into how charterer decarbonisation strategies and long-term emissions trajectories could affect access to premium contracts
  • Data-driven basis to select the most cost-effective compliance options for each vessel while maintaining regulatory compliance.

Project outcome

The project established a detailed baseline of current fleet performance and projected compliance risk, with benchmarking against comparable competitor 
vessels revealing differentiated CII outcomes across fleet types. The assessment gave TMS a precise understanding of where each part of the fleet stood relative to the market and where compliance risk was building under tightening reduction scenarios.

The gap assessment identified specific improvement requirements at vessel level and evaluated which decarbonisation levers were applicable and in what timeframe. The fuel readiness assessment mapped the maturity and availability of alternative fuels against TMS’s actual trading and bunkering footprint, highlighting where near-term options existed and where supply and infrastructure constraints remained a practical barrier.

The detailed techno-economic modelling provided clear, vessel-specific compliance measures to support the operational and investment decision-making under the evolving decarbonisation regulations.

Impact on customer's business operations 

The assessment results gave TMS a basis for making informed decisions on vessel deployment, fuel strategy and longer-term fleet investment grounded in its own operational data rather than industry generalisations. The EU ETS and FuelEU analysis connected route allocation and fuel efficiency directly to future cost exposure, giving commercial and technical teams a shared framework for evaluating trade-offs.

The risk register and fuel readiness findings brought the longer-term transition picture into focus, identifying where regulatory, charterer and fuel supply risks were most acute, and where the practical constraints on alternative fuel adoption would require early attention. The thorough techno-economic modelling translated regulatory requirements into actionable vessel-specific pathways, identifying the most cost-effective combination of levers to achieve CII compliance while balancing revenue performance and operational constraints.

Conclusion

By integrating current performance analysis, regulatory cost modelling and future fuel readiness within a single engagement, the TMS Tankers Energy Transition Strategy connected the immediate compliance picture with the longer-term transition decisions the fleet will face, giving TMS a foundation for planning that moves beyond regulatory reaction toward strategic preparation.The risk register and fuel readiness findings brought the longer-term transition picture into focus, identifying where regulatory, charterer and fuel supply risks were most acute, and where the practical constraints on alternative fuel adoption would require early attention.