Intercargo Chairman John Platsidakis is quoted grumbling in
The Economist. “We (shipping) carry 90% of world trade and we emit only 2.7% of
the CO2 but still we are treated as if we are acting with indifference to the
environment.”
Mr Platsidakis, I am afraid that a) perception is everything
in today’s world, and b) things are going to get worse. And they are going to
get worse partly because, if a joint Lloyds Register, Qinetiq and University of
Strathclyde report is to be believed, global seaborne trade will more than
double by 2030. I believe that things will get worse simply because a major
shipping weakness- inability to effectively lobby before one sided and
unworkable regulations are passed- will be exposed on a larger scale if trade really
takes off.
I have a few issues with that report, by the way, that cites
mainly Chinese- but also Indian and other BRIC expanding economies with their huge
populations- driving demand for commodities, finished goods and everything else
under the sun. To me, these economies, their populations and their GDP numbers
are not sustainable- they never have been. Also, in a part of the world mired
in poverty, and where social security and State support is absolutely absent,
there is only so much disparity that will be tolerated by the effectively
disenfranchised before something gives. And so chances of upheaval in countries
like India and China, and consequent major global economic turmoil are high.
After all, the Arab Spring kick- started over a small episode, when Tunisian
Mohamed Bouazizi set himself on fire after a dispute with a government official
over where he could sell his fruit and vegetables. Optimists may think that was
a black swan event. Realists will disagree.
But coming back to Mr Platsidakis- and our- problem, which
is not just one of perception, by the way. The IMO, which should know better,
being industry specific and all, has long made regulations that pander to the
perception that shipping is some unique monster that is destroying the environment.
The problem is that shipping today cannot really afford the huge financial cost
of dealing with over stringent emission and ballast water regulations that the
IMO has passed. I doubt very much that it will be able to pass on these costs
to the consumer- the Chairman of the ICS reckons these will to be to the tune
of ‘hundreds of billions of dollars.’ Just the ballast water regulations may
cost the industry upwards of 50 billion.
Shipping has no choice but to lobby; it will be squeezed out
of its last breath if it does not. And it needs to allocate resources –money
and people- to lobby. This is where shipping- one of the oldest businesses in
the world- fails. Don’t tell me this is because we are an international
industry, fragmented and incoherent. Look at the airlines, which are clearly
focused; they have, not so long ago, effectively got the EU to back off
regulations that threatened their profitability. It is not that shipping is
incapable of getting its act together and soliciting cooperation; after all, it
started the marine insurance business, amongst others, over informal meetings
at a coffee house in London. But that was long ago.
It seems to me that modern shipping suffers from a singular
combination of hubris, stinginess, short sightedness and lethargy. And of
course, the old failing that every seaman will confirm: owners and managers are
often penny wise and pound foolish. Nobody wants to spend a dime before the
horse bolts. We will spend millions afterwards searching for the horse.
Let us assume that global trade will actually double by
2030, as the Lloyd’s et al report would have you believe. I bet that the costs
of complying with environmental regulations will go up at least five times from
now until then. Common sense says that shipping should try to influence
regulations before they are passed instead of cribbing about them afterwards,
or asking the IMO to rethink its rules, which is what the industry is doing at
present with the ballast water and clean fuel debate.
If things are bad now, imagine the scene a decade or two
down the road. We will be drowning in a deluge of regulations; it is clear that
the IMO is far from done yet. Equally clearly, the industry bodies we have are
incapable of doing what is required. Also, the new shipowners of 2030 will be
based in the East, particularly in China; existing industry bodies are largely
Western. This mismatch will fragment us further.
Shipping must find an effective way to lobby. It needs to
set up an international body to do so, and it must go in to battle with a war
chest. Scrimpy shipowners should be made to realise that the cost of complying
with bad, expensive and almost unworkable regulation is much, much higher than
the cost of lobbying. It is critical that shipping persuade, cajole and influence
politicians, think tanks and regulators, like all other industries do. It should find a creative way to get funds
for that war chest- perhaps some association of shipowners can start by levying
a small one-time cess on all shipowners. Say a small fraction of a cent per Gross
Tonne registered. That amount is not crippling for any shipowner, and it should
add up; there is supposed to be a billion Gross tonnes or so out there. That
should give us the beginning of that war chest.
John Platsidakis has got it right when he complains about
how unfairly shipping is treated, but being right does not matter so much.
Being able to influence regulations to make them more balanced does.
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