Can shipping fix it? Not yet, but we will have to quit soon

April 11, 2019

What do you get when you assemble the heads of shipping’s major trade associations? By large you get an agreement, since they are supposed to be aligned on all the big issues. But what happens when the issues are so big that old models simply won’t work in tackling the challenges of shipping in the 21st century?

Digitalisation, regulation, politics and sustainability – followed with both environmental and business terms – are redefining the shipping industry and causing huge amounts of nervousness about whether both of these together, spell a golden future or an extinction-level event.

The former scenario requires adoption of concepts that are in short supply in maritime; trust, transparency and collaboration, not to mention the re-imagining of shipping’s place in the supply chain.

No-one expected to solve these problems in a few days at the CMA Conference in Connecticut, but they were considered and the picture that emerged should make those who see a ‘business as usual’ scenario for shipping very worried indeed.

Whatever the future looks like, it is clear that it will be more expensive, for owners and end users alike. According to BIMCO’s Angus Frew, what the industry needs to find is a way to affordably adopt future regulation, combining investment in the environment with a viable business model.

To Intertanko’s Kathi Stanzel, this was an opportunity to take the moral high ground – sustainability and regulatory demands must be brought into the business model and taken fully into account.
The dissenting member of the group as so often, was Intercargo, whose Kostas Gkonis was insistent that regulation “should be something that can project into the future without compromising our past accomplishments. We need to ensure we do not disrupt shipping’s ability to meet trade needs by restricting it or raising costs.”

So, what is the big picture – not 2020 but 2050 and the goal of decarbonisation? It’s here that views become hardened, even though Stanzel at least believes the time for factionalism is over.
“2050 is tomorrow. It needs collaborative work; owners, tech providers, OEMs, fuel developers. Unless we do, we’re not going to get there. We have to stop thinking about positions; this is about common interests. The more we think this way, the easier and better it will be.”

Guy Platten of the International Chamber of Shipping agreed that shipping would need to demonstrate a very different level of engagement. “It will mean significant R&D that can be scaled up to big ships. They need to be coming out of yards by 2030 if we have any hope of reaching the target.”

Frew underscored this point: the industry cannot meet 2050 GHG emission targets by trying to make existing ships more efficient.

To Gkonis, the regulators are targeting the wrong player. Not only does the industry lack the technology or fuel it will require, it was unfair to put the burden on shipping rather than charterers, shipyards or OEMs.

“We’re not victims, we have goals to achieve,” countered Stanzel. “The will for this at IMO came from us back-benchers. We have no idea how to do this, but we will be with you all the way. I believe owners will make the investment and society will benefit from the service rendered.”

She accepted though that as least a big a risk for the industry is that it gets blindsided by political manoeuvring. Polarisation of views is a growing risk and consensus is becoming harder to achieve and maintain, added Platten.

“We need to modernise regulation towards a more goal-based regime. There is so much pressure we are in danger of fracturing the unity we have in the industry.”

There is more potential political risk from the EU and UNFCCC than the IMO, he suggested, but the struggle will be keeping the collective will together to enable IMO to reach its decisions.
Gkonis agreed that IMO has competence to achieve the objective, but to be effective, regulation must be tailored sector by sector to reflect the different influences in play.

In fact, the speakers believed there were measures that could be used to have some near term effect on efficiency and emissions. These are not new – port optimisation, just in time arrival and reducing time at anchor, but Frew pointed out there are projects from other industries that could be adopted and ‘marinised’ rather than simply sit on our hands.

Even so, those that have found some traction are still difficult in practice. Just in time shipping is where the trust comes in – between owner, charterer and terminal to use and not abuse commercial information. Stanzel quipped that one owner had tried it with a charterer who accepted the principle – only to try and stiff the owner for the fuel savings that accrued from the slow steaming.

Some ports are already working with container lines whose schedules, in theory at least should be accurate enough to predict arrive and departure. Safety and financial benefit both have to be weighed in the balance.

Ultimately the industry is faced with an equation it must solve and the clock is ticking. That will require the smartest brains from inside and outside the industry as well as the application of ideas that have been scarce for thousands of years of successful sailing. This time, however, the game has changed.