World-Wide Shipping director Andreas Sohmen-Pao highlights the challenges facing the shipping industry and the regulatory bodies.
Whilst the director of World-Wide Shipping, Andreas Sohmen-Pao, is quick to recognize emerging trends in the shipping industry and remains optimistic about the future, he worries that people fail to recognize the role shipping plays in the global economy. "I believe that the industry is sometimes taken for granted. Until recently, cheap tonnage has been readily available. But today, we face a temporary shortage," he says.
Indeed, Sohmen-Pao compares current attitudes toward shipping with how most people view electricity: "You don't really think about it until there isn't enough. It's interesting to see how much attention these shortages are getting in the press, such as the UK's Financial Times, which is only now beginning to cover shipping on a regular basis."
Navigating regulations
Managing the recent increase in maritime regulations continues to be a challenge, but there are benefits, he points out. "New regulations have improved standards and raised the overall quality and safety of vessels. Companies like World-Wide and Bergesen, which are serious about improvement, welcome high standards.
"At the same time, some regulations seem to be knee-jerk reactions to short-term political issues, while others strike me as being rushed into law without careful consideration. I believe one has to look at the specific areas where legislation is being introduced, and how it's being introduced, in order to determine whether it's good or bad," he says. For example, the World-Wide Shipping director notes that the recent regulatory focus on the age of vessels assumes that older vessels lack the quality found on more recently build vessels. He argues that most people familiar with the business know that there may be some correlation between age and quality, but perhaps not as much as some of the regulators or politicians think, and not uniformly across all vessel sectors. "Gas carriers, for example, have a very different lifespan to oil tankers, and cannot be viewed in the same way," he says.
Alphabet soup
Today, the shipping industry is regulated by a complex web of international bodies, including the International Maritime Organisation (IMO), the European Union (EU), and the International Association of Classification Societies (IACS). Observing that there is a trade-off between the breadth of opinion offered within larger groups, and the responsiveness of smaller ones, Sohmen-Pao suggests: "It's good to be able to move forward in an efficient group, but it's also good to have a diversity of ideas and opinions in the regulation-forming process. I think the most important thing is how knowledgeable the regulatory group is, in order to ensure it arrives at sensible solutions. In the case of LAN (an agreement between LR, ABS and DNV to improve ship safety), I would imagine that the level of understanding of the issues is fairly high."
Sohmen-Pao adds that in the case where regulations have been formed by individual countries where a small group of politicians drive the agenda, knowledge of shipping is sometimes incomplete. "There is a danger, if an issue becomes politicised, that decisions get made based on emotions rather than on facts. I think that imposing the arbitrary cut-off dates for ships runs the risk of falling into the category of emotional legislation as opposed to fact-based legislation."
Policing regulations
With so many regulations, enforcing them can be a complex process for both regulatory bodies and shipping companies alike. "Customers are an extremely important constituent, and have a lot of influence over standards given that they are the ones who can choose which suppliers to use. But it is unfortunate that our customers have had to take on the role of ultimate standard bearers for the industry, which suggests that others have not been able to perform this role adequately. Imagine if every time we flew on an aeroplane we had to go and assess the captain's ability to fly the plane, or to check the plane itself. Similarly, as corporate buyers, if we were purchasing an IBM computer system, it would be very unusual for us to have to go into the factory and check on their production line and processes. We just assume that certain quality standards are in place."
Trusting class societies
Sohmen-Pao hopes that the classification societies will be able to adequately enforce standards within the industry and that the other key players will be able to trust that process. However, he recognises that conflicts of interest exist. "Class must balance its role as partner to its customers with their obligation to enforce regulations. It is a tricky relationship. You typically talk to your lawyers or doctors openly because they are not going to turn around and play the judge. It's very hard to play the role of confidant and judge at the same time."
Nevertheless, Sohmen-Pao feels the classification societies are generally good at providing services without compromising regulations. "While there's no easy way to manage this challenge, I believe class has worked hard to find the right balance."