We are experiencing an age of global trends and disruptions that has never been seen in the recorded history. And not only is this disruption occurring, but it also occurring in an unprecedented and accelerated rate.
This is as disruptive as changing from sail to stream. But instead of doing it in a space of 40 years, we are asked to do it in a space of 10. This is also as disruptive as the introduction of the container which revolutionized bulk goods shipping.
Shipping as we know it, connects the globe today; we have ships of all shapes and sizes carrying every sort of cargo to ports that look different all around the world. But shipping and ports are under stress today. We are experiencing the largest shipping recession since 1845.
The changes in global trade are profound; it continues to grow and grow with the estimate for 2015 being 10 billion tons of cargo carried. But we also have to look at the changes in global population: In 1990, we had a global population of 5.3 billion, in 2015 it was 7.3 billion, and it is projected in 2050 to be 9.7 billion. Think about that: these people are consumers that we are going to bring cargo to market to satisfy their needs.
We are also having changes in routes. I think it is important for all of us to look at the One Belt One Road strategy, because even though the depictions are only reflecting Asia and Europe and Africa, there is a movement that is bringing it around the globe. There is now also a Polar Silk Road that has been identified by the Chinese government as well as the acquisitions and investments that are being made there. There is a daisy-chain going around the world and it is going to change our patterns of trade.
Looking at the acquisition of natural resources in Africa, the Chinese have actually bought a lot of the natural resources in countries throughout Africa. Now they are building the infrastructure to extract these resources and the infrastructure to transport them. This is going to be an enormous market, an enormous amount of trade and tonne-miles. But we do not know who is going to get these tonne miles, do we?
Other disruptions relate to:
-The impacts of technology. Fleet and port efficiency equals digitalization in today’s world. We also have advances in communications; real-time is really here.
-Increasing automation afloat: We keep reading about automation and there is a project up in Norway where there will be a fully autonomous, unmanned vessel going between three ports, starting in 2020.
-The size of ships: This is going to be extraordinary. Currently our largest ships are about 23,500 TEU. It is expected by 2050 to be at 50,000TEU, double the size of today’s ships.
-Emerging risks: Cyber security is chief among them. You can’t go a day without seeing another example of a cyber-attack. Most recently in shipping, the Port of San Diego experienced one, we had Cosco over the summer, a year ago was the Maersk Petya attack, etc. The more connected we become, the more vulnerable we are and it is important to be prepared for that.
-New transactional tools: Blockchain, Blockchain, Blockchain. There is a bit of denial about the application of Blockchain to transactions in the shipping arena, but every day, we are seeing more examples of how it is being used in the container or dry bulk sector. If I were a broker right now, I would try to figure out how I could add value to this industry, because my world is about to change.
We are also experiencing what I also call a regulatory tsunami:
- We have Emission Control Areas of 0,1% Sulphur in North America and North Sea Baltic, it is also coming to the Mediterranean.
- The EU program for MRV which started in January this year, the IMO DCS which is going to start in January of 2019
- The 0,5% global Sulphur cap from January 1, 2020
- The 50% reduction of GHGs by 2050 over 2008 levels. We are developing a strategy to be published due in 2023. I know we are focusing on 2020 right now because this is few months away, but pay attention to 2023! We all need to work together to develop that strategy because if we don’t, it will be done to us and I don’t think this is a position shipping wants to be in.
- The use of heavy fuel oil in the Arctic is being scrutinized and I would not be surprised if they matched the Antarctic ban on HFO. Currently the issue is being evaluated by the Arctic Council.
- And of course we have the Ballast Water Management Convention that was implemented last September and we have tight deadlines on implementation. Meanwhile, the US framework is different.
So why are we focusing on all these regulations right now?
People are affected by emissions and there are changes in our planet. For example, the shrinking of the Arctic is obvious. There are also changes in Environmental Activism: The public drives government, the government drives us. We also have 24/7 news so if you sneeze in Piraeus, it will be heard around the world. Additionally, the governments’ role is growing, for instance, the Paris Agreement, although a photo of the White House might not be the most appropriate one…
Shipping has to bear its responsibility and we are bearing our responsibility. The global sulphur cap is a reality, there is no question about it, but look at the advances we have made. We went from 4.5% in 2005 to 3.5% in 2012, to .5 % in 2020. We are still working on how we are going to do it for 2020 but it is happening and the IMO continues to re-enforce that.
Also regarding the GHG reduction, the targets have been established but we have to work collaboratively to develop that strategy. Shipping needs to be at that table, so that we can come up with a practical strategy. None of these should be a surprise to us. The agreement on the Sulphur cap came in 2008. The question mark was whether it would happen in 2020 or 2025 but international pressure required us to look at it for 2020.
Also we have to remember that shipping was the first globally regulated industry on emissions. It was developed at the 1997 MARPOL Convention, when we came up with a discussion on CO2. So again, no surprises here.
We have also been developing tools. We developed scrubbers, we are looking at compliant fuels, with options including LNG, battery hybrid etc.), but there is clearly going to be a shift away from fossil fuels. I am now a convert to sail rotors, I am not a convert yet to having a spinnaker in front of a ship, but with a sail rotor I see how we can reduce the load on engines and increase efficiency. There are wind turbines, solar panels- we are looking at them all. We are also looking at compact nuclear fusion: This is a project being developed by Lockheed Martin at MIT and it would be interesting to see how it goes.
We have an opportunity to be proactive rather than reactive. Also we have the UN Sustainable Development Goals. We need to “conserve and sustainably use the ocean seas and marine resources for sustainable development”.
But here is where the opportunity comes into play. Currently, there is no “silver bullet” for reducing GHGs and shipping. There is not one solution:
- LNG is a bridging fuel
- Methane: You have to look at the net environmental impact. US has just rolled back its regulations on controlling methane leaks.
- Nuclear: Public acceptance? We shall come to see.
- Battery/hybrid: They work for short hauls, I don’t see them working for long voyages yet.
- Hydrogen: there is the issue of scalability again for deep sea and we are not there yet.
And I think a combination of technologies is not practicable to achieve decarbonization (sail rotors+solar+etc) from operational standpoint. But we have more opportunities.
We have to look at measuring outputs:
- Monitoring Compliance
- Reporting of activities
- Enforcement: We build the regulations but we have to work on the enforcememtn policies.
We also have to look in terms of sustainability at our next generations: Meeting millennials and Gen X expectations for instance for work-life balance and accepting more women in the industry. It has been proven that having a woman on your Board of Directors will increase your profit by 26%. And who doesn’t want to make money?
Above text is an edited article of Mrs Carleen Lyden Walker presentation during last SAFETY4SEA Conference in Athens.
You may view her video presentation herebelow
The views presented hereabove are only those of the author and not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.
Carleen Lyden Walker, Co-Founder and Executive Director, NAMEPA
Carleen Lyden Walker is the Co-Founder and Executive Director of NAMEPA (North American Marine Environment Protection Association) leveraging off her experience as a marketing and communications professional in the commercial maritime industry with over 40 years of experience. She specializes in identifying, developing and implementing strategic marketing and communications programs that increase the visibility and effectiveness of NAMEPA as well as the development of educational resources promoting marine environment protection. She works to develop strategic alliances between industry, regulators, conservation groups and educators to “Save the Seas”.
In 2015, Ms. Lyden Walker was appointed as Maritime Ambassador by the International Maritime Organization (IMO). She is a member of WISTA (Women’s International Shipping and Trading Association), the Connecticut Maritime Association, INTERTANKO, The National Press Club, WIMAC (Women in Maritime Association, Caribbean) and is a Past-President of the Propeller Club Chapter of the Port of NY/NJ. She was also elected to the Board of Trustees of the Coast Guard Foundation, Tall Ships America Foundation, Billion Oyster Foundation, American Caribbean Maritime Foundation and the New Era Academy Transportation Technologies Program in Baltimore. She sits on the Board of Gibbs & Cox.
Ms. Lyden Walker is also Chief Executive Officer of Morgan Marketing & Communications, is Chief Evolution Officer of SHIPPINGInsight, and the Founder of the Consortium for International Maritime Heritage. In 2010, she was awarded the Certificate of Merit by the United States Coast Guard and in 2014 a Public Service Commendation for her work on World Maritime Day and AMVER, respectively. She held a USCG Captain’s license.