Ten Issues for the Next Ten Years: Part Two

February 25, 2019 12:29 pm

The shipping industry is often seemingly on the brink of the biggest change since the last big change. It seems though that the next few years are really set to shake and shape the industry like never before. In the first part of this look at the issues shaping shipping, we covered the sulphur cap, autonomous ships, blockchain, pollution, and cyber security. Now in part two, we assess the other key challenges, threats, and opportunities for shipping in the decade ahead.

THE CHALLENGES AHEAD

#6 Keeping Safe

Safety is that perennial issue which needs to be thought about, invested in and constantly reinvigorated. Standing still on safety is to actually be moving backwards – there needs to be new ideas, new philosophies and a constantly evolving and renewed commitment to safety.

The challenges for shipping companies are always changing, and while many of the risks remain the same, there are new generations of seafarers to train, inspire and keep safe. While there are also new generations of clients and charterers who demand demonstrable results.

Developing a healthy safety culture is key to this, with dialogue, discussion, and engagement at its core. In studies conducted by Queens School of Business disengaged workers have 49 percent more accidents and 60 percent more errors and defects.

Companies with low employee engagement scores experience lower productivity, profitability, job growth and share price over time. So, the answer is good training and a culture of making seafarers feel empowered to talk, to think and to act properly. Where crew have the time, resources and support – then they usually take the right decisions when it comes to safety.

#7 Corruption

Fighting corruption is one of the biggest impediments to achieving the future sustainable development of shipping. Today, while most shipping companies are rightly wary of unethical practices, unfortunately, corruption continues to exist. From false certificates and checklists to bribery and insurance fraud, there are many dubious and downright dodgy practices which need to be stamped out, with efforts from seafarers, shore executives, and directors alike.

As an example of the scale of the problem, the Maritime Anti-Corruption Network (MACN) has collected over 27,000 reports of corrupt demands and anonymous incident reports globally across the shipping industry. According to MACN, one captain told them. “the customs officer threatened to delay the ship and fine us US$60,000 for an error on the luboil [lubrication oil] declaration. Then he asked us for US$7,000 to help us have no problem”.

Corruption is a real threat to seafarers and damages businesses and reputations. It is perhaps often considered as a problem that is seen as being too hard to solve, or the way things have always been done. Increasingly that is not acceptable, and will not stand either in a court of law or the court of public opinion. It is vital that in the coming year’s corruption is wiped out completely.

#8 Sharing the Oceans

The “Blue Economy” is an emerging concept which encourages better stewardship of the oceans. It is a means of highlighting and considered the close linkages between the ocean, climate change, and the wellbeing of the people who depend on the sea for the safe existence and livelihoods.

There have been concerns at the UN level, that industrial nations have seen the development of their ocean economies through the exploitation of maritime and marine resources – for example through shipping, commercial fishing, and the oil, gas, minerals, and mining industries – often without a view to the effects their activities have on the future health or productivity of those same resources. This is not something that will be allowed to continue, so shipping needs to recognise the shifting sentiment when it comes to the sea.

The blue economy model aims for improvement of human wellbeing and social equity, while significantly reducing environmental risks and ecological scarcities. It provides for an inclusive model in which coastal states – which sometimes lack the capacity to manage their rich ocean resources – can begin to extend the benefit of those resources to all.

So, in the years to come, shipping will have to ensure that it fits with the vision of others and is part of the solution for managing oceans. The Blue Economy model will increasingly see nations exert more power when it comes to issues such as protection and development of resources such as traditional ways of life, carbon sequestration, and coastal resilience in the face of climate change.

#9 The Flow of Trade

According to the Global Maritime Issues Monitor 2018 report, one of the drivers of changing trade patterns in the shipping industry is the continued rise in the importance of emerging economies, not least in Asia.

The flows are fuelled by broader demographic and economic trends and supported by significant investments in infrastructure. A good example would be the likes of China’s trillion-dollar undertaking, the Belt & Road Initiative (BRI). While the expansion of the Suez and Panama canals mean the flows continue, and the raw materials and fuel, crisscross the oceans with boxes full of finished goods or holds full of foodstuffs.

When the trade flows well and relatively unfettered, then shipping does well. It is the conveyor belt which feeds, clothes, fuels and entertains us. However, if there are changes to these trading patterns, then shipping can begin to look very vulnerable indeed.

This has perhaps been brought into sharp focus as the ongoing trade dispute and rafts of tariffs between the US and China have shaken confidence. While the likes of sanctions against Iran and Venezuela also have a knock-on effect. According to major global commodities traders, the impact of trade wars can have serious consequences for economic growth and global trade. If the patterns of movement change, then there are definite issues for the maritime industry – and this will remain a key concern in the years ahead.

#10 Pirates and Crime

The threat of piracy and terror attacks will remain a key concern for seafarers and shipping in the years ahead. While problems in any one particular area are often dealt with, it tends to be a case that somewhere else takes over the mantle and attacks spark up elsewhere.

Despite some progress off Somalia and in the Indian Ocean, attacks are still a problem and remain a fear for in areas such as West Africa and the Caribbean. There are also increased concerns about safety ashore, and according to industry data crimes against seafarers are a serious problem in some ports.

Perhaps complacency is a bigger problem in the years ahead. This happens as there are occasionally perceptions that piracy is dropping, however, the International Maritime Bureau (IMB) claims that global piracy rebounded to a 3-year high in 2018, they recorded 201 incidents of maritime piracy and armed robbery in 2018, up from 180 in 2017 and the highest since 2015.

This is a real and present threat and one that seems set to continue unless concerted action is taken. BIMCO recently called for a greater political will and collaborative approach. There certainly needs to be a new way of dealing with the issue, as piracy has persisted for too long.

You can see the first in this series of key issues set to shape and shake shipping in the decade ahead here.