Navigating Clean Shipping: Alejandra Teran's Voyage with SAILCARGO

Hello and welcome to this episode of Conscious Design. I'm your host, Ian Peterman, and author of the Conscious Design book, and I'm excited today to have Alejandra Terán. She's the CMO of Sail Cargo, and they are constructing and operating world-leading fleet of zero-emissions sailing cargo ships, which is quite amazing. Welcome to the show.

Thank you, Ian. Such a pleasure to be here.

Yeah, so I love this idea. Wind blows all the time, so let's use it. What, stepping back a little bit, how'd you guys start? What got you to say, hey, let's look at some old technology here and bring it back?

So it all started a few years ago when 2 of our founders met in a sailing boat working and transporting cargo in Europe. And there they had this amazing idea of why not bringing this to Latin America. This Lynx Dumont, one of the founders, he had lived in Costa Rica for a while in an area of Monteverde there, and he said Costa Rica is one of the countries with the most strict wood extraction policies and most sustainable, so why not building this ship from scratch. He's a wood crafter and really good just working the wood all around. That's where the opportunity came, and with the idea of building a bigger ship powered by wind and also combining old technology or traditional ways of shipping cargo that before was very successful, and then new technologies came, other kinds of ships like container, conventional shipping. came to make shipping more efficient, yes, but also more impactful to the environment. So the idea of bringing back this traditional way of shipping cargo is to prove the value of clean shipping, generate a movement, and combine this with modern technology. It will have renewable energy, electric propulsion systems as an auxiliary A way of advancing or moving the vessel when it's in ports or with when there's the wind.

Right. Well, I love that combining the old stuff with the new. How are you guys approached? So, right, sails, one of the arguments I've heard is, oh, it gets in the way of loading and things like that. What's kind of your target in terms of what cargo is this? Obviously this is not going going to be exactly the same as like a giant cargo container ship, right? Where the huge cranes. So where do these kinds of vessels fit into the shipping market? Because I didn't even know that was a thing in Europe. So where does this fit in and how can we maximize these?

Okay.

Yeah.

So the vessel can have a cargo capacity of 250 tons. The type of products that we'll be shipping is dry goods, not refrigerated, but dry goods. And especially with that clean story. For example, you have organic coffee that you can buy in the supermarket, but it passed through a container ship. So here we offer a solution to companies that want to mitigate or clean their carbon footprint by shipping with zero emissions or with very low emissions. The cargo that this ship will have, 2 cargo holds. So the way the cargo is uploaded to the ship is by the grúa, like with some—

Like a conveyor?

See, I forgot the word. Like a stick with a pulley. That same rigging system is used to do this, uploading, loading the ship. So the cargo capacity, I already said it, 250 tons. It will be— it is equivalent to 9 20-foot containers. And we have possibility to load the huge sacks. For example, we already have all of our northbound voyages full. With a green coffee going from Colombia, Santa Marta to New Jersey, for example. And they have this huge stacks and that's the way it's uploaded. It's—

Right.

Yeah.

It's not a, those are bags. Those are really big bags instead of, you don't put coffee beans in a shipping container.

No. Well, in this, we can't ship one container, like No, it's just huge sacks or pallets.

Got it. Okay, then. So you're looking at mostly dry goods. Is that food? Is mostly food an interest? Food export or transit between?

Or so the time of shipping, it increases, right? We are fully dependent on wind. It's less, it's lower than conventional shipping. Definitely. That's why, for example, we can take papayas or products that get there Very fresh. So we have received letters of intent from ginger roots, turmeric, coffee beans, also other products like kayaks, or more like seeds and grains, also avocado oil. All that.

Okay.

And it's incredible how our vision is to prove the value of clean shipping and also demonstrate that there's demand for this kind of service. So we have been receiving an increased amount of inquiries to ship cargo, and it really fills our hearts with hope that people are trying to do things different. The bad thing is that there's not enough offer of this kind of vessels or ways of transportation yet, but we are all— there's a lot of companies that now are trying to innovate in this kind of reducing the carbon emissions of the shipping industry. And we're there also generating awareness and making a difference. Yeah.

That's awesome. What's the speed and cost comparison when you look at, right, a traditional giant container ship? You said it's a little bit slower, but obviously green, right? No, no, no giant engines putting out carbon, no fuel. How's that cost comparison?

Yeah. So Seiba, our vessel, that's the name, will, it's like, can go up to 14 knots, but we're calculating her average speed for 4 knots per hour. Right. And yeah, compared to this shipping conventional vessels, it's slower. Right.

Does it cost a similar amount? Like if I were to ship a bunch of coffee How does the price compare?

Okay, the price compared, it is a little higher than conventional, especially because it's a niche, it's a dedicated service, and it takes— since the duration is higher, right? Since the duration is longer, we definitely overcharge a little more than the conventional shipping, especially because of fossil fuels. are subsidized in this kind of conventional shipping, and we need to pay, for example, for the crew. Wind could also be considered a type of fuel, and it's free, but we also have all the expenses that it requires to transport the goods for a longer time. The value added here is that it could be used as a marketing campaign for the companies and pay that price increase, right? So in the packaging of the product that you're shipping with us, you can use it as an advantage And charge a little more for this differentiation that this kind of service can give you.

Right. Well, there's, there's things I'm thinking about too, is there's starting to be things like carbon taxes and things like that that will offset. And it's interesting you brought up the subsidized part. That was something I've talked to a couple people in the shipping world that are trying to help introduce ideas like sales Dave brought up before, like, oh, when you actually do a true price comparison, if you remove all the government subsidies, it actually is really expensive. And then these other options are cheaper. It's just the subsidy part is what makes it affordable. And so there, hopefully that will change, or the carbon taxes that are coming out, those might just undo all the subsidies that are happening.

Yeah.

It's interesting.

Also, it's another insight that's happening in current shipping industry is that ships are trying to reduce their carbon emissions by slowing the pace of the ship so that it's taking longer. Yeah, they reduce the emissions. That's amazing. And they're going slower.

Interesting.

Yeah.

So part of that fuel burn is the fact that they're trying to go so fast then.

Exactly.

And they're not used to it. Okay. So if you slow it down to be more efficient and you've removed the subsidies, sales are even better.

Exactly. You don't need to burn anything. You have the power of wind that is going to propel your ship in a no impact or very low impact to the environment.

Right. Jumping over to the technology side, you mentioned things like having electric propulsion, I mean, obviously you're in a bay, you don't, you don't want to go trying to sail through there. What are some of the things that you guys are bringing besides electric propulsion to modernize, right? I'm sure it's not 1800s sailing ships that you guys are building. What all are you able to bring from the modern world to this type of ship?

We're bringing traditional boatbuilding techniques. Right? But we are combining them with modern technology and using computers and renderers and all that, the boat building process that can incorporate modern technology. But also the propulsion system, it's really interesting how it works. So it is a dual propulsion or twin variable propulsion propeller system where depending on the pace or that the level of the wind. So you're— the vessel is advancing fast with good wind, so you place the propellers in a certain way so that it generates the kinetic energy to charge the electric batteries to be able to use it in the electric motor. That's the propulsion system that's gonna incorporate. It's amazing, just by using all the— there are so many types of energy that you can Get in the sea, right? So you can get solar energy, you can get generate kinetic energy, you can get wind. That's the auxiliary propulsion system. We are now developing, working on another project or side project, which will be used for our future fleet, and it's developing, designing green hydrogen cells to be used specifically in this type of vessels. So we're working with Adacta Rocket Company. This is a company here in Costa Rica. of an astronaut, a recognized astronaut here, Franklin Chan. And we are working together to develop this kind of, say, auxiliary propulsion system for our next vessels.

Right. So being able to use seawater to make, to do hydrogen then.

Yeah.

That'd be great.

Well, it's a design that sells to be fueled with liquefied hydrogen. Yeah, it's very interesting. Okay. Yeah.

Yeah. Hydrogen is a— I'm very fascinated by hydrogen technology. There seems to be quite a lot actually now. Even Honda and Toyota are making some engines over the last couple years. So it seems to be growing and it seems like a great application for ocean because you're not really as like a car has obvious weight issues, right? You have a lot more. You actually need weight for a ballast in order, in order to sail well. That's awesome. That's awesome. As far as like, so you mentioned you have a ship now, like what's your fleet now and what are, you mentioned you're developing for your next level of fleet. What does that look like?

Yeah, so phase 1 is the Finnish Seiva. We are now 65% advanced in the construction. It's— we are in a regenerative shipyard, and maybe I can explain later how this works and what's our vision with it. After Ceiba, we already have the initial wood of Pitaya. Pitaya is a replica of Ceiba that is going to be built in the same shipyard. And we will be buying other vessels to be refitted and adapted to ship cargo. And increase our fleet and increase our offer, right? So the demand that is increasing.

That's awesome. And you said you already have people wanting, basically wanting to place orders. So it sounds like it's going, you're getting a lot of interest right now. How does that, you know, you shift capacity to interest?

Yeah, well, we already have this customer, Cafe Williams. He is, uh, they are a huge importer of green coffee from Canada. And we have not yet found a southbound customer, but we will find it very soon. We are trying to define what's the best route. There are a lot of companies interested in shipping with us, but the best customer that fits to ideally, yeah, ideally to our route. Right.

Because you're looking to do, you don't want to sail an empty ship. Is what you're what you're trying to avoid.

Oh no, no, exactly.

Got it. Awesome. That's great. It sounds like there's a lot of market interest, which is good. And it sounds like mostly you're you what you're missing is let's say U.S. back. Is that the direction or you have customers? Which way is the hardest to kind of fill in terms of getting customers?

Both ways are important. Latin America that we are trying to. To keep with the Latin America route, but also if there's like another client interested in crossing the Atlantic and willing to pay more, we can adapt to these routes and to these customers, right? We know that our demand study says that either both ways, so we Latin American countries import a lot of products from the United States, from Mexico, and both ways. Now we have this COVID tie-in that's shipping coffee from Colombia could also ship coffee or cacao from Costa Rica. So that demand is there. We totally believe it and have seen it. It's just getting the right client.

Right. That's awesome. That is good to hear that it's going so well. You said your current ship is 65% done. How long does it typically take to build, to lay down a a hole for one of these ships.

We started the company from scratch. We got a piece of land in Central Pacific coast of Costa Rica. We had to start— there was nothing in the land, and we had to build the shipyard from scratch, build also living spaces for the boat builders and shipwrights to live there also, because this is a boat building knowledge is not something that you can get talent from Costa Rica specifically. We have a lot of carpenters, but specifically boat building, it's none. So we get the people, boat builders, shipwrights from Europe, from the United States that come and stay in the shipyard. And it's, it's a beautiful place where they reduce the emissions, not having to transport or to fly over. far distances to get to work. They live there, they build the boat, and that's how we're doing it. So it's 65%. It usually— I mean, in 2019 we laid the keel and we are 65%, but the next phases of construction will take— we're estimating the launch for 2025.

Okay.

So it all depends. Also, we depend on private investment, and it also depends on the private investment and the resources that we have in the moment to advance in the construction. But yeah, that's the estimation. If last time I was speaking to our technical director and asking the same question, like Pitaya, the next vessel, if we have the complete shipyard like more industrialized or more adapted to what we need to advance faster in the construction, that 3 years could be a good estimation of the time that it will take. When we have all of the infrastructure ready to build in a more efficient way.

Got it. Well, it's good. It sounds like, you know, that was a lot of work to go from zero to build an entire shipbuilding facility and then begin building the ship. So that's a tremendous amount of work. Kudos to you guys taking that on. I'm curious, how has the talent been? Because like you mentioned, there isn't— Costa Rica doesn't, but also just generally wood ship construction is a very, very niche group of skills. Did you have any issues finding people? Is that— or have you had to train people, or have you been able to find enough people to be able to build it without— because I would've thought that you needed a lot of training to get people into it.

There are a lot of boat building schools, really good ones in Europe, and Europe is trying to come back and reactivate the history and the skills that we had before. In fact, as something very curious, this project has been having a lot of awareness since inception. We have not had to search for boat builders, they come to us. They want to work with us and have this experience of building the largest wooden sailing cargo vessel in the world. It's something that thankfully we have not had any trouble. And the beautiful thing about Sail Cargo, and this is thankful to Lyn Simon, this founder that we have, our founder, is that he believes in the social impact and Although we have a lot of carpenters in Costa Rica, we are placed or we are based in marginal area. It's called Punta Morales in Puntarenas. And this area, the people, the workers, the community is mainly dependent on fishing. And the sea are reducing the amount, right? When you fish the fish, it's smaller. And it's really sad to see the economical impact that this family is going to have. So what the, the vision is to have a social impact also. So by bringing this international talent, we also employ locals to be trained by these professional boat builders. And that way we share knowledge and create a bigger crew of boat building, national and international.

That's awesome. So you're able to train new people. And it's great. People are just finding you. People just— well, there's not many projects, right? It says there's not very many companies doing it. So that's great. It's still great that people are finding you and being able to bring that skill set. And I— yeah, Europe increasing. America hasn't yet. Maybe at some point we'll join and start building wooden ships again. But that's awesome. That's awesome. You guys are— it sounds like you guys are doing really well. A lot of interest. You have good investors backing you. Customers. It seems like a very good progress for you guys to be launching in 2025, which is exciting.

It is very exciting. We see that day as, as we, we are anxiously waiting for the day that we launch. And another important factor that we haven't mentioned and I wanted to explain is about how this shipyard is a very unique place in the world. Probably the only regenerative shipyard that is building this kind of ship. And by regenerative, I mean that we try to be the least impactful to the environment possible. So—

Hmm.

By using this traditional boat building techniques, by using certified sustainable wood, by living in the shipyard and having light or low-impact infrastructure. And by also trying to live like a zero-waste philosophy of using the wood scraps that we generate from the leftovers of the wood that we use, we use them to develop music instruments, to create also different products that we sell. The profit from these products, we sponsor or use them For our nonprofit, and with this nonprofit, what we do is plant 25 trees for every tree used in Seva, and that way we try to give nature more than what we take. I mean, we know wood, and it's really sad to cut a tree, or no, say for me, it's painful to cut a tree, right? But we have this reforestation program called Trees for Seas, and that's how we. try to compensate or offset our footprint for everything that we're doing to be giving nature more. Part of the regenerative model that we have, and it's an incredible experience. If anybody's in Costa Rica or is going to be traveling in Costa Rica, we have our shipyard open for visits.

Amazing.

We ask for a donation of $28. And we give a tour and you can live all the experience. We have a permaculture garden. There's an association of women that are cooking for the boat builders and the people that live there. And that way we support the community also. It's an incredible experience that people can be impacted also in how and see by just visiting the shipyard and seeing the majestic Ceiba because it's truly It's huge. It's 45 meters long and 8 meters wide.

That is a large ship. That's awesome. You guys are building, and you said it's the largest one being built in the world right now, right? I'm just curious because I always love the history of wooden boats. How does it compare to like 200 years ago when we were using just wooden boats? Is it a similar size or are you pushing, pushing the size bigger?

No, no, no, no. Actually, it's inspired in another old vessel called Ingrid. And yeah, it definitely— we had to do with the naval architect like some adaptations for the cargo holds, a little larger in the shape. I don't remember what exactly are the adaptations, but we had to adapt it, some of the parts of the ship. But it's completely inspired in old tall ships used for trading.

That's awesome. Well, As we're wrapping up, I want to make sure for anybody who's interested, where's the best place to find you guys? How do you invest? Come do a visit and a tour, all of that stuff. And anything else you want to— is there something else you want to add in that we haven't touched on? I love that you brought up the nonprofit part and the trees. That's great. But yeah, all of that. Anything else you want to add?

People can find us on our website, sailcargo.inc. Also, we have some active social media, Facebook and Instagram, and there we share not only the construction progress but also how we generate impact, or we communicate how is life in the shipyard, reducing the consumption of processed foods and consuming local, and why is it important, or sharing about the shipping industry insights and the impact of ballast water or the CO2 emissions, right? So all of this, you can follow us on our social media. Through our website, there's a place where you can see how you can support us. It would be amazing if we can get some other supporters because it's not only about supporting the project, it's about building a community of a shared purpose and Wanting to support projects that, yeah, that are generating an impact. How to support our social, our nonprofit? This other website, it's called Astillero Verde, but the same website of UpSell Cargo can bring you there. And there's ways to support either from donating to plant a tree or wanting to buy some of the music instruments that we have.

Fantastic.

Sure. And you can come to the shipyard and just join us there and we will happily receive you. Yeah.

Yes, absolutely. I would love to. I'm gonna have to see if we can make a trip down there while you're building your boat because I want to see that. It sounds awesome. For everyone, we'll make sure the links are put in the description. So in case you want to just click, those will be there and I really appreciate your time. This is super exciting for me and great to see you guys are, are doing so well. I hope this goes smoothly. You get to launch easily in 2025. Yeah, I'll be keeping an eye out on, on your sailing ship. Hopefully I see it.

Thank you, Ian. It was such a pleasure to be here. Thank you.