It’s all go on the environmental front. The regulators are back with a new shopping list for shipping and they’re in a hurry.

Martin Stopford joined Clarksons in 1990 and was previously a Vice President at Chase Manhattan Bank and a Director of British Shipbuilders. He was appointed to the Board in September 2004. He is also head of Clarkson Research.

Let’s start with the easy bit, what the regulators want. Ship emissions of carbon dioxide, sulphur and nitrous oxide are on the “most wanted” list along with the practice of transporting organisms in ballast water between regions; use of toxic SPC paint systems; and selling old ships to Bangladesh and Pakistan demolition yards to be dismantled in appalling safety conditions which pollute the environment. That’s basically what they want at the moment.

Will it happen? With 160 maritime states, the regulatory process is driven by horse trading as well as horse power. It all takes a long time, during which time shipowners are left in limbo, wondering what they should build into their new ships. Anyway the new regulations on ship emissions, for example sulphur, are being debated at a time when the industry already has an order book of 9,000 ships representing 47% of the fleet in tonnage and worth $500 billion. Deliveries stretch into 2011 and nearly all were ordered before emissions became a hot topic. Worse still, we don’t have reliable statistics to monitor how shipping’s environmental footprint is changing.
Customers are another problem. The companies who import cargo are still light years from the compromises which would allow the shipping industry to produce the major emission savings. One effective way to reduce carbon emissions would be to operate ships more slowly, but the new generation of super-container ships are all designed for service speeds of 25 knots, absolutely at the top end of the speed range. Fast transit times and the ability to meet fixed day schedules are still the crucial competitive issues.
Another shocking solution would be to ship less cargo. Do we Europeans really need two tonnes of cargo per person every year? Maybe not, but try telling that to investors who spent $187 billion on ordering new ships last year. Globalisation is still much higher on the agenda than the environment. The global world ships an extra 350 million tonnes of cargo a year and the consensus, whether on oil, iron ore or containers, is that it will be a lot more in future.

Then there are the suppliers. Many ship­owners would love to burn low-sulphur bunkers, and would be willing to pay a reasonable price, but when will they be available? That is a matter for the bunker suppliers, more than the shipowners. The refinery investment would be massive, or so we are told. The problems faced by tanker owners over many years concerning the availability of facilities for emptying slop tanks is a small example of this sort of problem. The world is a big place, and “it takes two to tango in the regulatory dance”.
If things could be left to marine engineers and naval architects it would be easy. They would define new goals; develop new designs; and the objectives would be achieved. But unfortunately the regulators have to get 160 nations to agree on the goals, which make it a trickier because the world still wants to have its cake and eat it. So next time you think about the new maritime regulations use the “acid (sulphuric, obviously!) test” – “Are we really making progress towards the goal?” If you think the answer is “no”, then maybe your company should be defining its own goals and making its own tougher rules. We all know it makes sense.

Date: 2008-06-13