About four billion tons of oils and chemicals are shipped by sea each year, said Alexander Walters, senior broker with Panasia Marine (Tankers) Pte. Ltd. in Singapore. Most of that volume is crude; base oils and finished lubricants account for about 16.2 million tons.

Over the past year, the shipping industry has engaged in a massive new building program, particularly for large vessels. For example, in the VLCC (very large crude carrier) category, the fleet numbered 535 vessels in June, with 213 new vessels on order, amounting to over 41 percent of the fleet. Delays are likely, Walters said, and experts predict cancellations of up to 60 percent of orders.

At the same time the industry faces overbuilding, freights have plummeted. Since September 2008, said Walters, rates out of the Middle East Gulf are down 30 percent; rates from Singapore to Europe or to the U.S. Gulf of Mexico are down 50 percent; rates from the U.S. Gulf to continental Europe are down 15 percent. While most intra-Asian rates are unchanged, rates northbound from Singapore are down 5 percent. Rates into Asia remain high because ship owners are reluctant to position vessels in Asia.

Several owners will not survive this recession, Walters concluded. Some owners came in as investors recently, and some wont survive.

Vessels are laid up and charter rates are crashing, agreed Caroline Huot, CEO and managing director of Gulf Oil Marine Ltd., a Singapore-based marine lubricant supplier, but different shipping segments are affected differently by the current shipping crisis.

Container vessels are the segment that consumes the most lubricants, Huot continued, and for the big boxships, the crisis hasnt peaked yet, so recovery wont come until 2011 or 2012.

Most ships are losing money today, Huot said, and marine lubricants are often the first negotiable item in a ship owners budget. Marine lubes are not a commodity, but cost is the big focus of ship procurement.

Several acute challenges face todays marine lubricant supplier, Huot said. New marine engines are more challenging, and marine lubricants are a high-technology product. Supply requires a worldwide network – a supplier must supply 700 to 900 ports. And ship owners demand more technical training and support from their lube suppliers.

The biggest technical problems, said Huot, are base oil issues and fuel sulfur content. For base oils, availability of heavy grades is a huge problem, as are quality and cost. With bright stock availability limited and API Group I base stock supply declining, Group II base stocks are becoming a major focus of the marine lube market.

OEM approvals are required [for marine oils], Huot said, so we have a problem producing the same quality of marine lube worldwide. And ship owners absolutely do not want a price increase on lubes. Marine lube suppliers urgently need lower cost base oils.

Tests are now underway on alternatives to bright stocks using the heaviest possible solvent neutrals, and formulas using Group II have been developed and OEM-approved, but the challenge is cost, said Huot.

With low sulfur fuels, cat fines in the fuel have raised wear issues, and with ultra-low sulfur fuels, over additization can lead to deposits and scuffing, Huot continued.

Our customers are in crisis, Huot concluded. The industry must adopt the new concept of blending on board for marine engine cylinder lubrication. This will assure steady renewal of the cylinder oil, improve viscosity control and cleanliness, and most important, will provide cost savings on additive consumption.

Winson Ang, marine technologist with Infineum International in Abingdon, Oxfordshire, U.K., wrapped up the shipping and marine lubricant sessions with a look at one solution to the challenges of using Group II base oils in medium-speed marine engine oils.

The key problem, said Ang, is fuel contamination in trunk piston engine oil, which can lead to piston udercrown deposits because of deficient asphaltene-handling properties in the oil. Using Group II base oils has resulted in customer complaints of dirty engines in the field.

Piston undercrown deposits can lead to high temperature corrosion of the piston crown, which in turn can cause severe engine damage and potential crankcase explosion, Ang said.

Asphaltenes are a serious contaminant of marine oils, Ang continued. Detergents, in particular salicylates, are currently used to stabilize asphaltenes in marine oils formulated with Group I base oils. But asphaltenes are harder to disperse in Group II oils because of the oils poorer solvency.

Reformulation is required to meet the challenge of Group II base oils, Ang concluded, and Infineum has developed a proprietary additive package containing an optimized detergent specifically for use with Group II oils. This package, said Ang, overcomes the unfavorable effects without compromising the advantages of these base oils.