This challenge entails increasing our fleet efficiency and reducing emissions, while continuing to meet the ongoing demand for the transportation of refined products and chemicals. At Ardmore, we recognize that this energy transition will take time. It’s an evolution, not a revolution. With this in mind, we introduced the energy transition plan in early 2021 and as a natural extension of our strategy with a focus on seizing opportunity, decarbonizing and continuing to build value in a changing market environment. This plan is rooted in a sound commitment to deliver tangible results today in terms of efficiency gains and carbon reduction, while strategically positioning Ardmore for the future. Most importantly, it fosters a forward-looking mindset, rooted in performance reality.
Central to this approach was the establishment of an internal team dedicated to the energy transition. This team possesses marine engineering and naval architecture expertise and operational experience and is led by our Director of Innovation, Garry Noonan. The ETP team is focused on working collaboratively with customers, technology providers and our broader organization to develop valuable projects and investments for our fleet. A crucial aspect of their work involves true experimentation, which supports the development of novel, as well as practical solutions to execute across our word. Additionally, I would like to emphasize the valuable support and guidance provided by our newly formed Sustainability Committee of our Board. Which is chaired by Dr. Kirsi Tikka, who holds a Ph.D. in Naval Architecture and has extensive experience in the design and classification of vessels.
And she is joined by Helen Tveitan, Head of Carisbrooke Shipping; and Mats Berglund, the former CEO of Pacific Basin shipping. In summary, this dynamic plan aligns seamlessly with our overarching principles of performance and progress. Turning to Slide 18, here we focus on some of the key initiatives outlined within the energy transition plan. As we just discussed, we’re active in deploying energy efficiency technologies across our fleet. In addition, with the expected increase in demand for the chemical and specialized product trades, including renewable fuels, we expect to gradually shift our fleet composition and revenue mix more towards these cargoes. And furthermore, we emphasize our commitment to collaboration through energy transition projects, which involves partnering with customers as we aim to address their specific energy transition priorities.
Since introducing this plan in 2021, we’ve really come a long way. These initiatives are fully embedded in Ardmore’s culture today. As we turn to the next slide, we’ll examine some key ETP technologies. So moving to Slide 19. This slide highlights some of the latest technologies we have implemented last year and are piloting this year. Notably, since the inception of our energy transition plan less than three years ago, we’ve truly embrace the spirit of experimentation, conducting diligence on over 200 potential solutions and successfully implementing 14 of them to-date with returns ranging from 40% to well over 100%. And as you can see in the image, our team has examined a wide range of efficiency projects across all areas of our ships from the propeller, to the engine room, to the bridge and beyond.
And this also extends ashore to cutting-edge software utilized to optimize performance. On the next slide, we’ll drill down into a case study for one of the solutions in more detail. So turning now to Slide 20. The installation of micro boilers on our vessel is a great example of one of these very practical investments. This modest cash outlay of $225, 000 per ship yields a strong return of 40%. This unit creates tremendous efficiency when our vessels are important, enabling us to reduce the level of fuel typically consumed by the ship’s larger main boiler by harnessing the heat naturally emitted from the operation of our generators. By the end of the first quarter, 50% of our fleet will have these units installed. Importantly, when we undertake multiple projects of this nature, the cumulative impact to our performance is significant.
Now moving to Slide 21. Where we highlight our long-standing capital allocation policy, which remains our guidepost and one we know that we frequently discuss with all of you. Given our strong financial position and low breakeven, we have the ability to pursue all of our capital allocation priorities simultaneously. And with this strong earnings environment and a robust financial position, we are pleased to declare another dividend. And since the reinitiation of our quarterly dividend policy in the fourth quarter of 2022, Ardmore has paid $50 million of total dividends to our shareholders, which represents nearly 10% of our market capitalization. As discussed earlier, we’ve invested significantly in our fleet’s efficiency, improving performance and ultimately, the quality of earnings.
In addition to these investments, as Tony described, we have recently taken advantage of some selective transactions to modernize our fleet. By acquiring a 2017 Korean-built Eco-Designed MR tanker while concurrently executing an agreement to sell our 2010 built Ardmore Seafarer. To put this into perspective, when considering the increased fuel efficiency of the new vessel and avoiding the expense of upcoming drydocking for the Seafarer, we see this as an interesting investment effectively buying seven vessel years and a cost equivalent to the current average annual depreciation rate. Examining our balance sheet, we aim to sustain leverage through market cycles supporting a resilient financial position and a high quality of earnings while giving us the foundation needed to opportunistically execute well-timed investments.
Turning now to Slide 22. As we just discussed, Ardmore’s team is focused on leveraging our platform and consistently creating value through shipping cycles. In an industry challenge by technological and regulatory uncertainty, we recognize the volatile and dynamic nature of the shipping landscape. At Ardmore, we’re built to thrive in such conditions. To conclude, I want to emphasize that our purposeful strategy, energy transition plan, capital allocation plan and dedicated team at sea and ashore are all aligned and focused on generating long-term value for our shareholders. With that, I’m very excited to hand it over to Gernot and hear what he has to say about the volatile tanker markets and how Ardmore is delivering industry-leading performance.
Gernot Ruppelt: Thank you, Bart, and good afternoon. It’s good to be back in New York and to present to you on another successful year and on why we believe there is more to come. Over the next 15 minutes, I will take you through main drivers on the demand side, touch on supply fundamentals. And then I will provide some real-life examples of how Ardmore continues to capture the full benefit of these extraordinary markets. Turning to – here we go, Slide 25. This is the world today. This slide highlights some of the key changes in cargo movements over the past two years. In green, you see how cargoes move today. Contrasted in red is how they used to move before. The difference in voyage length, red versus green represents the increase in the demand picture in product tankers.
What is behind these very long distance trades? To begin with, Europe is structurally short refined products, in particular, diesel and jet fuel. And it has been like that for a while. Europe has been increasingly sourcing its refined products from overseas. That was purely for economic reasons and largely on the account of Europe’s aging refinery system. And on top of that, the EU refined products embargo. No more diesel from Russia. European product inventories are around historical lows. To cover those shortfalls, long-haul imports from the U.S. and from East of Suez markets are replacing short-haul voyages. What used to be a one-week voyage, Baltic Russian ports to Northern Europe or the Black Sea to the Mediterranean, and that now takes three to five weeks.
That is a significant jump in itself. On top of that, you add substantial disruption in the Red Sea, which all of us see and read about in the news every day. Vessels are navigating around the Cape of Good Hope to avoid the Red Sea. This adds another 30% to 70% in voyage length depending on origin. And that is on top of what is already a very long voyage to begin with. Then in the West, completely unrelated to any geopolitical events, the Panama Canal has essentially run out of water. MR traffic to the canal has reduced substantially. Here you can see, what used to be a very typical trade on the left in red, from Houston to places like Ecuador or Peru on the West Coast of South America. Sourcing the same products from Asia is about 3x the voyage length and we’re seeing exactly this play out.
For the past 150 years, the world has relied on the Suez Canal and later the Panama Canal to connect global trade at significantly shorter distances. Well, today, once again, merchant ships are going around the Cape. So to summarize what are the factors in play, long-term demand drivers, Europe, structurally short diesel, two separate yet concurrent geopolitical events, Russia, Ukraine, and the recent events in the Red Sea. And third, climate-related changes and water shortages in Panama. This confluence has resulted in a substantial increase in tonne-miles and a remarkably tight supply in product tanker markets. Slide 26 is providing more detail on the points I just made, and I will not run through them one by one. But the charts on the right paint a clear picture.
The number of product tanker transits to the Suez Canal is down by 60% and decreasing further. The number of Panama Canal transits is down by 40%. It is an evolving situation and the trend line continues to point down. Turning to Slide 27, where we continue on the theme of demand drivers. As Bart alluded to earlier, the energy transition is unfolding as an evolution, not a revolution. Demand for oil remains a steadfast factor. Reflected in the upper right graph, the International Energy Agency, aligning with industry projections, foresees continued growth in oil demand. Beyond the persisting demand for oil, there is a consistent pattern of refinery expansion in the East strategically located near points of production. This expansion results in heightened ton miles for product tankers meeting the consumptions demand in the West.
