* Limassol conference deals with regulation, pricing, pollution and hi-tech *
More than 850 shipowners, managers and maritime professionals meeting in Limassol this week seem to agree that the industry’s difficult years are behind them and that the future bodes well for the sector.
Lively debates during the biannual Maritime Cyprus conference, co-organised by the Department of Merchant Shipping, the Cyprus Shipping Chamber and the Cyprus Union of Shipowners, dealt with a wide range of subjects, ranging from the interaction between the industry and regulators, to the dilemma facing the tanker sector.
At the same time, issues that had been neglected in past years have become new priorities, such as pollution and the impact it has on the greater maritime sector, conversion to LNG fuel, novel ship design and the use of hi-tech services, and the labour sector, primarily the involvement of young executives.
This year’s “Maritime Cyprus” opened at the Evagoras Lanitis Centre on Monday, aptly titled “Yesterday’s World, Tomorrow’s Today”, where President Nicos Anastasiades highlighted the important role shipping plays in the recovery of the Cyprus economy and promotion of the island in general.
Cyprus has established itself as a respectful maritime flag and as a base for international shipping operations, offering a favourable regime for foreign investors, he said, adding that Cyprus is one of the fastest growing economies of the European Union whereas foreign direct investment has significantly increased.
The president said that the shipping sector has been catalytic to the recovery of the economy which is why the government has declared that it will establish an independent Deputy Ministry for Shipping, a long-standing demand of all stakeholders. The new Deputy Ministry will start from March 1, 2018, replacing the Department of Merchant Shipping, presently a division of the Ministry of Transport and Communications.
Regulators vs. Industry
The conference discussions started on Monday with “Future Shipping Strategy: Regulators vs. Industry”, moderated by Transport Minister Marios Demetriades.
The keynote addresses were delivered by Kitack Lim, Secretary General of the International Maritime Organisation and Magda Kopczynska, Director of DG Move of the European Commission, on behalf of Violeta Bulc, Commissioner for Transport of the European Commission. Lim and Kopczynska participated in the panel discussion together with Esben Poulsson, Chairman of the International Chamber of Shipping and Niels Smedegaard, President of the European Community Shipowners’ Association.
Views were aired on the future challenges for commercial shipping, with the importance of intensifying cooperation between all players in the maritime sector, ensuring a level playing field, and preparing today the shipping of tomorrow.
All panellists agreed that they do not see there is as a question of “regulators versus industry”. There is a long and successful history of regulators and industry working together to achieve common, shared objectives; objectives which, if achieved, will have a beneficial and positive effect not just on the industry but far beyond. It was stressed that the regulators need to be more proactive and the speed of adapting to technological developments should increase.
One of the main challenges identified was the decarbonisation of the maritime sector. Particular reference was made to the ambitious efforts made jointly by the regulators and the shipping industry to reduce carbon dioxide emissions. Views were exchanged on the discussions currently underway at the IMO regarding the development of a global strategy that will set the percentage by which the sector’s total carbon dioxide emissions should decrease. It was mentioned since shipping is a global issue, the IMO remains the most appropriate forum.
Among the points raised was that future shipping legislation should establish requirements for the use of technology that is already effectively available to the industry and not within laboratories. An environmentally sustainable industry also needs to be economically sustainable. The need for the development of alternative fuels and new propulsion systems in order to potentially lead to a zero carbon future was also expressed.
The industry’s commitment to a low carbon future was noted as well as its desire for an even better approach to maritime legislation, building upon the comprehensive global framework already provided by the IMO.
Another challenge referred to was digitalisation. It was noted that the automation of shipping is already becoming a reality and will accelerate in the years to come with the advantage of enhancing navigational safety and making operations more efficient. It was further noted that the challenge of cybersecurity also needs to be planned today.
Tanker Owners
The second panel discussion was on “Tanker Owners; An Endangered Species?” Themis Papadopoulos, President of the Cyprus Shipping Chamber moderated the discussion with fellow panellists Robert Burke, CEO of Ridgebury Tankers, Rob McLeod, Head of Risk Marketing of Hartree Partners Advisory Services UK and Kevin Oates, Managing Director of Marine Money Asia Pt.
The discussion focused on whether the tanker owners are facing an endangered future.
The panellists analysed the fact that although the demand for oil is changing due to the shift to renewable sources of clean energy, the need for transporting crude oil and oil products with tanker vessels will not extinct and this is highly unrealistic, at least not for the next 25 years which is the life span of the tankers built.
It was mentioned that it is not possible that the world will no longer need crude oil and clean products or that oil will be able to be transported from source to consumption without using tanker vessels. The West may pursue more enthusiastically the move to renewable energy but the demand for oil will increase in Asia, Africa and other emerging economies of the world. It was noted that routes and trades may change dramatically going forward and the tanker fleet size may need to be adjusted to fit changes in demand.
The importance of the environment protection was stressed but so was the need to fulfil the basic economic needs in the emerging economies of the developing countries. The panellists concluded that tanker owners are vulnerable but certainly do not constitute an endangered species. They noted that they anticipate an improvement in the market. Maintaining a balance between supply and demand is essential for ensuring a bright future for tanker owners.
Future of Shipowners
Monday’s third discussion explored “What does the future hold for Shipowners”. George Mouskas, Member of the Executive Committee of the Cyprus Union of Shipowners was the moderator with the panel comprising Andreas Hadjiyiannis, President of the Cyprus Union of Shipowners, Panos Laskaridis, CEO of Lavinia Corporation / Laskaridis Shipping Co Ltd and George Procopiou, Chairman of Dynacom Tankers Management Ltd.
The panellists said that the market is improving and that the very bottom ship prices belong to the past. There is a substantial increase in the dry cargo ships’ rates and a slight increase in the rates for container ships thus the future looks promising.
The supply and demand of bulk carriers seem satisfactory. Shipowners are not discouraged from ordering new ships but they should do so prudently and wisely. It was noted that the preceding year was a record year for scrapping of ships whereas the following year will be a record year for lowest deliveries of new ships.
The impact of the Chinese economy on the profitability of the shipping industry was analysed whilst it was noted that the Indian economy is also experiencing an impressive growth.
The ship finance parameters were analysed and it was stressed that shipping is a name lending industry. The reluctance of European and American banks to finance shipping has created a vacuum that was taken over by Chinese banks. Nevertheless, banks are slowly making funds available. Once better rates are made available, there will be ample ship financing.
Finally, the importance of innovation was highlighted and so was the existence of quality focused services.
Cost of Smoke
Tuesday’s session kept the momentum, starting with the debate on “The cost of smoke”, moderated by Ioannis Efstratiou, Acting Director of the Department of Merchant Shipping of Cyprus. The panel included Georgios Christofi, Head of Environment & Capacity Building Unit of the European Maritime Safety Agency, Tony Paulson, Chairman of the Pollution Committee of the International Group of P&I Clubs, Peter Hinchliffe, Secretary General of the International Chamber of Shipping and Philippe Baumans, Hull Panel Chairman of the International Association of Classification Societies.
This panel debated the air pollution burden imposed by shipping, which in the past years has led to an upsurge of international, regional and national regulations. Some of these regulations will enter into force in the near future while others are on the development stage.
Greenhouse gases (particularly CO2) and Sulphur Dioxide (SO2) are nowadays the key environmental issues on air emissions. Panellists referred to the implementation of the new EU Regulation of Monitoring, Reporting and Verification (MRV) of CO2 emissions from large ships using EU ports and on the further reducing of SO2 emissions to 0.5% worldwide from 1 January 2020.
During the debate, panellists agreed that Liquefied Natural Gas (LNG) is maybe the fuel of the future since it significantly reduces air emissions.
From the insurance perspective, it was noted that greener ships will not automatically get a discount in premiums, as premiums are based on claims records. However, a less greener ship has a higher probability to have a worse claims record. Thus, there are indirect incentives on insurance with respect to greener ship. It was noted that the shipping industry is prepared to take responsibility for its air emissions but it should certainly not be blamed for global warming.
The panellists highlighted that climate change and environmental protection require a global response particularly when dealing with actions from the shipping sector. Maritime transport is widely recognised as an environmentally sustainable and energy efficient mode of transport.
Smart Shipping
The second panel looked at “Smart Shipping”, with Anastasios Papagiannopoulos, President of BIMCO as the moderator. The panel comprised of Dr. Steffen Gau, Marine Business Development New Construction of Lloyd’s Register Marine and Offshore covering the discussion on Novel Ship Designs, Cynthia Hudson, CEO of HudsonAnalytix, covering the discussion on Cyber Security and George Ward, Project Support Manager of ECDIS Ltd, covering the discussion on Digitalisation.
On novel ship design, it was mentioned that newly designed ships have additional and novel equipment on board that make ships more efficient. This equipment will lead to decreased air emissions from such new ships. The role of the shipowners during the design stage and of the classification societies during the building stage of new ships was referred to.
With regard to digitalisation, it was emphasised that it is coming to the shipping industry fast thus, the industry needs to be ready to embrace its benefits and prepare for the threats it poses such as cybersecurity. The importance of preparing employees and crews on the future technologies through training was highlighted.
Autonomous ships will become a reality, but we should not expect to see unmanned ships for many years to come since seafarers on board cannot be replaced by vulnerable digital systems.
On cybersecurity, it was stressed that cyber risk is here to stay for both companies and ships but cyber risk management is possible and achievable. Therefore, the shipping industry should take protective measures. Personal, confidential and operational information is at risk. The shipping industry constitutes a target for cyber attacks since a lot of information and money is at stake.
It was noted that cybersecurity sustainable investments should be materialiased and the level of cyber maturity should be continuously reinforced as the cybersecurity issue needs to be a continuous improvement process.
Young Executives
The Young Executives Session – which has become an integral part of “Maritime Cyprus” – took place for the sixth time. The young executives (under 40 years of age) were presented with the opportunity to discuss and exchange views and perspectives on the subject “Challenging the Business Model”.
This year, the Young Executives Session was organised by YoungShip Cyprus and the discussion was mainly focused on the use of new technologies, rethinking and redesigning the business process and the challenge of the traditional business model.
The speakers, through their personal professional experience, stressed the importance of start up, innovation and employment of new key technologies, ensuring at the same time eco-friendly and sustainable growth. It was noted that not only is legislation changing to promote such technologies, but also clients’ preferences as they are the ones who support and promote these changes. It was further highlighted that young professionals today are the ones who need to make the change happen.
The moderator of the discussion was Dyveke Meland, Member of YoungShip International and Chairman of the Board of YoungShip Bergen. The group of panellists consisted of Constantine Komodromos, Co-Founder and CEO of VesselBot, Sotiris Kambanellas, Vice President of YoungShip Cyprus and Tor Ostervolt, CEO of ECOSubsea.
