Shipping industry calls for more sustainability

SSI launches A Case for more action report

The Sustainable Shipping Initiative (SSI) has launched a new report entitled as ” The Case for Action” to encourage international shipping industry to operate with minimal impact by 2040. The report is based on interviews with experts across the maritime sector, from business, legislative and regulatory bodies and academia and intends to raise awareness of how the whole environment in which the industry operates could change.

The report identifies global trends such as newpatterns of trade, shifting global powers, risingfuel costs and changing customer demands – thatwill profoundly affect the maritime sector over thenext 30 years. The report also examines how they interact topresent three key challenges for the industry,and the risks and opportunities that these present.Finally, it explores how change happens in theshipping industry, and the role of industry leadersin driving future change.

Throughout the Case forAction, there are questions designed to stimulatethought and discussion on what action businessesmight take on their own and across the industry.

Vision2040The Case for Action sets the agenda for thesecond phase of the SSI, which will producea vision for an industry in 2040 that is resilient,socially and environmentally responsible, andprofitable.

In the third phase, members willdevelop an action plan to future-proof theshipping industry, and guide a series of specific,practical innovation projects. This will set outwhat key players need to do to achieve thisvision. It may include technical and engineeringinitiatives, regulatory and policy proposals, andnew models of finance and business.

Three key challenges

It is clear that the shipping industry’s operatingcontext will alter significantly over the next30 years. Cargoes and markets are changing,and there are new challenges in global oceangovernance.

Fuel costs are rising, althoughtechnological advances offer the potentialfor radical improvements in efficiency. Andcommercial customers, particularly theglobal brands, are incorporating sustainabilityinto their core business and coming underincreased pressure to address sustainabilityconcerns throughout their supply chains.

The changing context in which shipping mustoperate is summarised in seven global trendsthat SSI believes will profoundly affect the industryover the next 30 years (please see diagram below). Each ofthese will have direct impacts, but at least asimportant will be how they combine and interactto create significant, game-changing challenges.

Global Trends

Challenge 1 : Navigating a changing economic context

Over the next 30 years there is likely to be rapid and significantchanges in the direction of trade and the type of goodstransported. An industry that is highly mobile by its verynature should be well equipped to deal with this. But the keyquestions will be whether global trade grows or declines andhow the industry is governed.

Continued growth of free trade, clarity on the aims and influenceof rapidly growing economies such as China, within the contextof a strong, more directive ocean and maritime governance regimewould provide regulatory and economic certainty. This wouldenable industry leaders to invest for the long-term and preparefor the more disruptive possible futures identified in this report.However, there are several reasons why trade might decline.

Economic contraction, leading to ferocious competition for trade,would further squeeze already tight margins and magnify anycompetitive advantage – or disadvantage. Against a backdropof weak international ocean and maritime governance, and apatchwork of local and regional legislation, it would becomeharder to plan and invest for the long-term. Although theshipping industry might recognise the need to evolve, it wouldlack clear direction and resources for investment.

Challenge 2: increased scrutiny, higher expectations

In a highly networked, social media-savvy world, the shippingindustry is likely to come under increased scrutiny. Greatertransparency will encourage customers and other stakeholdersto favour strong performers.

Expect the shipping customer of the future to be interested inprice, security and speed, but also in wider performance factorssuch as working conditions, vessel efficiency, emissions,biodiversity and environmental/labour rights prosecutions.

This is a strong trend already seen in the land-side supplychain, with companies such as Walmart demanding thatsuppliers perform against a sustainability scorecard.We anticipate rapid proliferation of voluntary standards andcodes of conduct for shipping, together with raised expectationsfrom ports, financiers, insurers and others.

These demandsare also likely to be accompanied by increasingly stringentinternational, national, regional and city-based regulations.Sophisticated remote monitoring technology already enablesunprecedented transparency, and we anticipate a hugeexpansion of its application within shipping.

Challenge 3: the future of energy and climate change

Leaders of the energy establishment are warning that the ageof easy oil is over. Many believe we will reach ‘peak oil’ as earlyas 2020. Over the past two years we have already seen oilprices span almost the entire range that the US governmentprojected for the next 15 years. Volatile prices and insecuresupply are likely to present a significant challenge to shippingand the wider economy.At the same time floods, heatwaves and other extreme weatherevents offer increasingly alarming evidence of global warming.

This will increase pressure for shipping to be included in regionaland global regimes to reduce greenhouse gas emissions.Shipping companies and their partners recognise the need toinvest in energy efficiency and in the transition to new fuels,exploring new financial models to enable this to happen. Thisis challenging but necessary: companies that fail to act will bevulnerable to competition in an increasingly uncertain market.

There is uncertainty, however, over how to invest. Short-term pricefluctuations in different fuel types are a factor in this uncertainty,along with the need for coordinated action to develop supplyinfrastructure and the competing performance demands madeby strictures such as the sulphur regulations. Strong leadershipis required to prevent uncertainty resulting in inaction.

From safety to sustainability: a new global responsibility for shipping

The scope of sustainability concern has evolvedfrom local factory and on-board safety, to thefundamental global issues of the 21st century.Shipping’s responses have evolved too, fromthe SOLAS safety convention after the Titanicdisaster to the sulphur and nitrogen controlmeasures now being implemented by the IMO

How will the industry respond to, or be affected by, the global climate and resource constraintsnow taking centre stage?This graphic illustrates some key milestonesin sustainability, together with some of themajor actions taken by shipping so far.

Image credit: SSI – The Case for Action report pg 14 (please click image to enlarge)

For more information, please click at the report

Sustainable Shipping Initiative – The Case for Action

About the Sustainable Shipping Initiative

The Sustainable Shipping Initiative (SSI) brings together leading companies from across the industry and around the world with two leading NGOs, Forum for the Future and WWF, to plan how shipping can contribute to – and thrive in- a sustainable future. Forum for the Future is a non- profit organisation working globally with business and government to create a sustainable future.

See more at: http://www.forumforthefuture.org/project/ and hhtp://www.wwf.org