May 1, 2015


More rules, regulations and rumblings

Spring is in the air but for parts of the shipping industry, winter is clinging on. As the conference circuit moved from snowy Connecticut to balmy Singapore for Sea-Asia, pundits and players alike struggled with volatility in all its forms – except where it was most needed.

Going backwards – or forwards?

It’s been another busy month for the International Chamber of Shipping which sought to dismiss claims by green NGO Transport and Environment (T&E) that ships have become less rather than more efficient in terms of CO2 production over the last 20 years.

T&E based its claims on a report it commissioned from consultancy CE Delft, but ICS said it had been selective with the findings using data from before the Energy Efficiency Design Index came into force in 2013.

The ICS claimed T&E was trying to confuse overall design efficiency with an approximate estimate of fuel efficiency based on generic data. Modern ships are designed for optimal efficiency, it said, which requires far less fuel than was previously consumed.

The latest IMO Green House Gas Study found that international shipping had reduced its total CO2 emissions by more than 10% between 2007 and 2012 and the ICS accused T&E of twisting the results of the CE Delft study to imply that the EEDI was failing to deliver the required improvements.

CE Delft stood behind its findings, saying that ships could still improve their design efficiency by about 5-15% on average by going back to 1990 designs. “The ICS needs to take the results seriously and show us why the EEDI targets shouldn’t be reviewed,” said John Maggs, policy advisor at Seas At Risk and president of the Clean Shipping Coalition.

Still a warming topic

The question of CO2 emissions was also raised from another source. The Marshall Islands – the world’s third biggest flag state – called for the setting of a new global target for reducing greenhouse gas emissions.

Despite shipping being the only industry with a mechanism for reducing carbon emissions, shipping remains outside international climate negotiations, the registry said. Quoted in a submission to MEPC 68 in May, Minister of Foreign Affairs Tony de Brum said the goal of keeping global temperature rise under 1.5 to 2degC requires action from all countries, and all sectors of the global economy.

“International shipping must be part of the action. While the sector currently contributes only 2-3% of global emissions, its projected growth is a real cause for concern. Without urgent action, it is estimated that the sector could soon account for between 6 and 14% of global emissions – as much as the entire European Union emits today.

Since the signing of the Kyoto Protocol he said, the industry had seen too little movement on the issue and global shipping emissions have continued to rise unabated. In order to lead by example, the Marshall Islands is the first country in the Pacific to set a target of 20% cut in the use of fossil fuels for domestic transport by 2020.

Roundtable takes on the hackers

The Round Table of international shipping associations has made a submission to the IMO on the issue of cyber security, outlining the steps it believes should be taken to address the vulnerabilities in computer-based systems onboard ships.

Since all major systems on modern ships are controlled and monitored by software, including the main engine, steering and navigation systems, ballast water and cargo handling equipment, the vulnerabilities are numerous and the threats imminent, the Roundtable said in a statement.

“The question of protection is a complex set of issues and not just about operating a firewall on a ship or installing virus scanning software on the onboard computers,” the group said.

The organisations have already begun working with industry partners on guidance to ship owners and operators on how to minimise the risk of a cyber-attack through user access management, protection of onboard systems and development of contingency plans.

“The Round Table is taking cyber security seriously,” said Angus Frew, Secretary General of BIMCO. “The standards under development are intended to enable equipment manufacturers, service personnel, yards, owners and operators, as well as crew, to ensure their shipboard computer-based systems are managed securely – and kept up-to-date to protect against the ever-growing threat from exploitation by criminals.”

Confidence waning once again

Confidence levels in the shipping industry fell to their lowest level for two-and-a-half years, during the three months to February 2015 according to the latest Moore Stephens Shipping Confidence Survey.

Survey respondents identified overcapacity as the biggest factor behind the fall, but also expressed concern about the effect on the industry of lower oil prices and the growing influence of finance sources from outside shipping.

Average confidence is the lowest since August 2012, with charterers reporting the biggest fall while optimism on the part of owners was also down though slightly up among ship managers.

CWR touts energy efficiency as key to finance deals

Environmental lobby group Carbon War Room has released a survey which it claims shows the increasing use of energy efficiency data by banks and financiers in deciding whether to finance new building and vessel retrofits.

The survey says it found financial institutions such as HSH Nordbank and KfW IPEX-Bank are using efficiency data when assessing risk and return with inefficient vessels seen as representing a higher risk investment.

Energy efficiency data is also being used in credit-approval processes for sale and purchase decisions, loan assessments for retrofit projects and re-sale or scrapping decisions, the CWR said, with banks citing efficiency as a key indicator for a vessel’s profitability.

Carsten Wiebers, global head of Maritime Industries, KfW IPEX-Bank said his bank’s shipping portfolio and credit approval process had been analysed based on the methodology of the EEDI.

“In view of the beneficial risk profile and environmental benefits, we favour eco-ships over ships with poorer energy efficiency,” he said. “More energy efficient vessels have an enhanced marketability as well as a higher revenue potential for the ship owner and thus a more favourable risk profile for financiers.”

The CWR says banks see a two-tier market in commercial shipping with higher efficiency vessels marked out by their higher new building cost which much be weighed against an increased likelihood of being chartered and maintaining asset value over time, presenting a lower investment risk for financial institutions.


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