The market
The market value of global container shipping services was estimated at $480 billion in 2010. That same year, this mode of transport carried a combined total of 500 million standard containers over more than 600 billion kilometers. The loading capacity of the global container fleet has increased from 4 million containers in 2000 to 12.5 million today. Containerized ocean freight flows are expected to maintain a growth rate of 6.9% over the decade from 2008 to 2017. Experts predict that intercontinental trade between Asia and Europe will experience the fastest growth, averaging 9.8% in volume and 9% in revenue, as Europe is considered to be five years behind the United States in terms of shifting production to Asia. The appeal of ocean-going containers is evident in the fuel cost per TEU (Twenty-Foot Equivalent Unit): shipping a container from Shanghai to Atlanta is cheaper than shipping it from Guadalajara, Mexico, to Atlanta. The global container shipping network is the backbone of the globalized supply chain, carrying approximately 60% of the value of world trade and over 90% of its volume. The value chain that moves a container from shipper to consignee encompasses five distinct sectors: (1) the origin, routing, and capacity acquisition of shipments, (2) containers, (3) vessel operations, (4) the loading and unloading of shipments, and (5) inland delivery. Vessel operations account for half of the total cost, while loading and unloading account for 17%. Hamburg is becoming the center for financing and operating new vessels. Germany owns 35% of the world's container ships (1,644 out of 4,619), and nearly 60 maritime banks and investors are headquartered there. AP Møller-Maersk (Denmark), which acquired P&O Nedlloyd, is the world's leading shipping company with over €43 billion in revenue in 2010. Container shipping has revolutionized global manufacturing. It costs $10 to ship a television from Asia to Europe, $1 for a vacuum cleaner, and 1 cent for a bottle of beer. It's even cheaper in the other direction. The low shipping cost makes it worthwhile to send Spanish tomatoes to China to be processed into ketchup and then ship them back to Europe for consumption. However, new research shows that in a single year, one large container ship emits the same volume of pollutants as 50 million diesel cars. Cargo ships are fueled by lower-quality bunker fuel that contains up to 2,000 times the amount of sulfur emitted by diesel cars. The world's largest container ship, owned by Maersk, can carry 15,200 40-foot containers at a constant speed of nearly 50 km/h and consume 380 tons of fuel per day at sea.
Innovation
The fuel used in ships consists of waste from petroleum and refining residues. It is the cheapest energy source available. All the ships worldwide burn a combined 7.3 million barrels of oil per day, equivalent to the entire production of Saudi Arabia. This makes shipping by far the world's biggest transport polluter, emitting—according to the Guardian—260 times more sulfur oxide than the entire global car fleet. The world's 15 largest ships emit as much SOx (sulfur dioxide) as the world's 760 million cars. The United Nations' International Maritime Organization (IMO) states that the current fleet could save up to 10% on energy consumption, and a new ship could adopt technologies that reduce consumption by 30%. Nuclear power has been promoted as an alternative energy source for ships. There are 150 ships in operation that use nuclear propulsion, most of them submarines. However, the nuclear option is largely ruled out due to the complexity of maintenance and the risk factors in the event of an accident. Switching to a clean fuel would increase costs and put pressure on oil prices while leaving the industry with a lower-quality product that has no buyers. Vatche Artinian is an American of Armenian descent, holding a Master of Science in Electrical Engineering and an MBA from the University of Southern California, after earning a Bachelor of Science in Electrical and Computer Engineering from California State Polytechnic University. He was fascinated by flywheels, which have been used since the Bronze Age to store kinetic energy. He realized that new high-speed motor technology, combined with magnetic bearings, allows for efficient energy storage. Mr. Artinian and his team built energy storage systems based on a magnetic motor that can operate continuously at rapid cycles (12 seconds discharge, 18 seconds idle, 12 seconds recharge, and 18 seconds idle). The team complemented these designs with magnetic bearings that levitate the flywheel, spinning the unit at up to 60,000 revolutions per minute (RPM) without friction or heat. The team realized that the magnetic bearings reduce maintenance to almost nothing since there are no bearings to replace or lubricants to refill. Mr. Artinian (Chairman of the Board) and Larry Hawkins (Chief Technology Officer) then founded Calnetix, a privately held high-tech company that has become, over the past 20 years, a leader in high-speed motors, magnetic bearings, and magnetic drives for distributed energy systems. In 2004, they decided to develop their flywheel technology and created Vycon, a company that designs and manufactures high-speed DC energy storage flywheels. After successfully demonstrating this technology, the company raised $13.7 million in 2010 from American, Danish, and New Zealand investors to increase production and meet the growing demand for clean energy storage.
The first cash flow
A mobile crane can load and unload a container from a truck or railcar onto a container ship in about a minute. Mr. Artinian realized that the lifting power and the energy required to time the descent demand a significant amount of fuel. In fact, this action represents the second largest cost of container transport, after operating the ship itself. Mobile cranes are powered by onboard diesel generators. When the crane is raised, energy is drawn, and during lowering and braking, regenerated power is sent to a resistor bank where it is dissipated. Vycon has designed and now delivers flywheels that recover and store this energy, ready for use in the next lift, thus reducing energy consumption by 30 to 35 percent, thereby decreasing noise and improving generator life. The flywheel operates with such precision and reliability that Vycon offers its customers a 20-year warranty. This technology can be retrofitted to existing cranes, resulting in immediate cost savings. The first system was installed at the Long Beach Container Terminal in California, where it has been operational since May 2006.
The opportunity
This application in the container industry represents only a tiny reduction in the dramatic emissions of the shipping industry. However, the same flywheel system that has proven itself on such a large scale is a platform technology that offers an alternative to lead-acid batteries used as backup power for the uninterruptible power supply (UPS) required by data centers and servers. This technology enables information storage and communication networks with a battery-free alternative. This Vycon technology received seismic certification from the Office of Statewide Health Planning and Development (OSHPD) in California in April 2011 after tests demonstrated normal operation before, during, and after simulated seismic activity. Existing operations demonstrate that flywheel technology has a return on investment (ROI) of two and a half years, surpassing the total cost of ownership of a traditional battery-powered UPS system. Vycon was named by Inc. magazine for two consecutive years (2010 and 2011) as one of America's most enterprising and fastest-growing private companies, with three-year sales growth of just under 800%, the highest in the energy sector across the United States. Levitation-based technologies that operate stably and safely over extended periods, providing better service at a lower cost, are certainly part of the Blue Economy's portfolio of innovations.
