Do you dare to finance the unknown?

What will last forever in its original form? Without innovation any sector is bound to leave the world stage. However without solid financing opportunities there is no world stage to seek. No innovation happens without adequate financing.

A paradox seems to exist between finance and innovation. Where one relies on security, the other thrives on creativity. What they do have in common is craftmanship. And exactly there it is where we need to build a bridge between these two disciplines.

Let me zoom in on innovation first. Moving forward means changing and developing new methods. Those methods might fail the first time. And the second time. Some might never succeed at all. The maritime industry is no exception to this path.

Many of the vessels are prototypes and a failing ship cannot only place the business in a dangerous situation, but more important she can also hurt her crew and the environment where she sails. Seldom a certain innovation crashes your belief in what you once held as the truth. More often a series of rather small improvements create a stepping stone for an improved future. Whether it concerns the reduction of fuel consumption, the increased safety onboard and in ports or a more efficient sailing route from loading to unloading and reloading again: only when one looks back the road to innovation is clear.

But using the rearview mirror will leave us in past times. What we label as innovation depends on where and when we live. Ten years ago a vessel with sails was a wonderful thing for your free hours on the water. One hundred years ago it was a given fact for cargo vessels. And these days? We are rethinking the use of sails integrated in highly modern vessels. The lesson? Don’t overlook old manners.

A business case is financeable when enough variables are well known and the project has a positive return over the duration of the financing agreement. It makes sense not to finance the most expensive greenest vessel of the century when the capital expenditure (capex) is too high today and it’s not set in stone if the turnover will be sufficient enough or the contract will be renewed by the supplier.

But why ignore the sea of possibilities to green a vessel - sailing with an optimal hull form, using recyclable batteries, having hydrogen as power source to name a few - and stick to what we know? If the future was predictable and the coming twenty to thirty years - the age most vessels can surely reach - would be a copy of the last twenty years it would make sense. But do you remember when your last past five years were a replica of the lustrum before those years?

Regulation is toughening up, the speed of technological change is increasing and the group of people that is done with non-sustainable practices is growing.

We know that vessels built today and delivered to the shipowner this year or next year will use outdated technology in ten years’ time. What do we do then? Refit those vessels which makes them then relatively more expensive compared to a then new built? Scrap them and burn capital? Building something new that has to work right away and is safe enough for the people on board is as scary as it is exciting.

Buying a prototype like that and trusting that your people are safe at sea and that it won’t mean the end of your company is a big leap as well. However unproven technology becomes proven technology becomes old technology. It’s not that long ago that vessels on LNG were a far away thing of the future. Let me make one remark here; with a steady pace a marathon can be run. Trying to combine the pace of a marathon and a 100 meters sprint is never a good idea. You either burn up or you’re too slow. That goes for sustainable solutions as well.

The analysis of a new maritime project involves the understanding of trade flows, geopolitical developments, the way a vessel will be operated on a long journey, the need for clean energy, how nature bounces back or not and the ageing of equipment. To sum up a few. And there comes the bridge we need to build in place. The business case of yesterday is not the one leading us to a clean maritime sector. To build the sustainable vessels our industry needs, two types of cooperation are crucial.

First of all the dialogue between companies within the maritime value chain should be an invitation to new technologies. Challenge one another to come up with the best solution when building a new vessel is a necessity and that should include a bonus/ malus system that works two ways and rewards the company that dares to initiate and is successful. Secondly, when we combine the brainpower of the finance world and the maritime world in actual projects, we might dare to take higher risks that are definitely doable. Knowledge can serve as a guarantee to defeat uncertainty.

Zooming out we see that shipping makes up for approximately ninety percent of world trade.. Add to that the fact that the offshore wind sector hasn’t reached its full potential and that we are not even close to understanding the scope of the ocean economy.

Though the added value of the maritime industry will alter the need for specific vessels is expected to continue. There are no guarantees but certainty can surely not be found in the past. Let me conclude with an invitation to the sector that has my heart: speak up about your ambition, your view of the maritime future and your knowledge of the need for ships in a global world.

Challenge the world to see the potential of sustainable maritime business solutions and those who are forward looking will dare to finance the future.

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