Since September 2008 and the collapse of the Lehmann Brothers bank, there is not a real structural recovery in shipping markets, but there are some exceptions. One exception is the cruise industry, which makes huge amounts of money and is investing in newbuilds. Also the offshore wind energy is doing rather well, with all the new projects being built.
Regarding 2020 and global sulphur cap, I want to mention that we are concerned as an industry about the new fuels that will be there. The big question is will the compliant fuels also be safe fuels.
If you look at the total bunker supplies for the world fleet, it is about 300 million tons. Around one third is in Singapore, Fujairah, Rotterdam and Antwerp, with two thirds being all over the globe. Especially for ship-owners of deep sea bulker vessels, they are concerned about the quality of the new fuels.
So what do we do as an industry? We must prepare ourselves, while IMO supports the industry in preparing for the new situation by publishing guidelines on:
- Risk assessment and mitigation plan (impact of new fuels);
- Fuel oil system modifications and tank cleaning (if needed);
- Fuel oil capacity and segregation capability;
- Procurement of compliant fuel;
- Fuel oil changeover plan (conventional residual fuel oils to 0.50% sulphur compliant fuel oil);
- Documentation and reporting.
There are also guidelines for the fuel oil suppliers. Of course we have the ban on carriage of non compliant fuels from 1st of March 2020. This means that if you have a vessel and no scrubber installed, and you have a fuel of sulphur content above 0.5%, then ship-owners will have a serious problem.
Another item on the agenda of IMO is the issue of open-loop scrubbers. We all know that there is quite a number of ports around the world banning the use of open-loop scrubbers. This is becoming a real obstacle for ship-owners. What we ask is transparency and an updated table with all the ports with restrictions on the use of open-loop scrubbers. Now there is a submission by the European Commission to the IMO, to have this discussion at an IMO level. The submission talks about the use of open-loop scrubbers in sensitive areas, which could be ports or coastal waters.
It is also very important not to punish ship-owners that invest in open-loop scrubbers, with these investments being ongoing in this market. So if there would be new regulation to limit the use of open-loop scrubbers, for us as an industry the grandfather principle is crucial when we talk about new regulations that have a retroactive effect. So the ship-owners that invest in good faith in open-loop scrubbers, should not be punished and should be allowed to use their scrubbers.
Another environmental challenge, but perhaps also opportunity is the CO2 reduction. When we talk about the position of the industry, the decision of IMO to establish an initial strategy on C02 reduction, meaning that the CO2 emissions in the shipping industry should go down 50% by 2050 compared to 2008, is fully supported by the industry. This is a real key change. The initial strategy, to be finalized in 2023, is important as it constitutes a first of its kind decision on global industries to present such a clear target.
It is also very important for the shipping industry that it now knows what it has to achieve. You might think 2050 is a long way, but I have two remarks about that. Some say that newbuilds should be completely carbon free by 2030 for the world fleet to meet the 2050 target and the second remarks is that IMO is now discussing short and medium term measures. There is a lot of pressure from the European Commission and the European Parliament on IMO to take substantive decisions in the upcoming meeting of the environmental committee in May. As happened in 2018 from the side of the industry, there are submissions to the IMO and I think that is also a very important development. If I compared the shipping industry with the industry five years back, we are now steering the discussions, because we are submitting submissions to the IMO about what we think as an industry is possible when we talk about CO2 reductions. That is very important because in IMO on the one hand you have very ambitious European Member States, and on the other hand you have countries like the US, Argentina and Brazil that are more conservative. The decision in April 2018 was based on the submission by the industry and it gives the good impression that if we conform with our own proposals, then we can really influence the decision making by the IMO.
The short and medium term measures mean that the shipping industry has to deliver before 2023. In 2023, IMO will decide on the final reduction strategy up to 2050 and perhaps the 50% goal will go up. It is also very important to say that the IMO initial strategy also includes a full decarbonization of the shipping industry, as soon as possible.
Above text is an edited version of Mr. Martin Dorsman’s presentation during the 2019 SAFETY4SEA London Conference.
You may view his 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.
Martin Dorsman, Secretary-General, ECSA
Mr. Marin Dorsman has been appointed as ECSA, European Community Shipowners’ Secretary General in Brussels. Mr. Dorsman since November 2017. Mr. Dorsman transfered to ECSA from the Royal Association of Netherlands Shipowners (KVNR) where he has held the position of Managing Director since 2011. Before taking that position he worked for five years as the association’s Deputy Managing Director. He has a Doctorate Degree in Macro Economic Policy and over 30 years of experience of different leadership roles and a sound knowledge of shipping. Prior to his time at the Royal Association of Netherlands Shipowners he worked as a civil servant for the Dutch Government, including six years at the shipping policy department. Mr. Dorsman has also contributed to the work of organisations such as the International Chamber of Shipping, the European Sustainable Shipping Forum and has chaired ECSA’s Shipping Policy Committee and Taxation Working Group.