Past facts or gut feelings?

Malcolm Latarche
Malcolm Latarche

29 June 2016


That there should be a desire for information in what is considered to be the information age is not unsurprising but is it always possible and is it always a good thing? In the recent EU referendum campaign in the UK, some tried to explain that neither side could give factual information. For the Remain campaign the problems was that no one could say what new rules or regulations the EU would devise in the future and for the leave side the problem was that a cross party team could not really state with any certainty what would happen in the future because that would be for the government of the day to decide. You could say that such unclear circumstances are not the basis for making decisions but in reality that is all that we ever have. Everything based on past facts or big data is liable to sudden and dramatic changes that make all assumptions based on them useless. Successful entrepreneurs know this and most would find it hard to explain their success other than by saying they are relying on gut feelings. Yesterday the Danish Shipowners' Association launched a study on shipping CO2 emissions funded by the Danish Maritime Fund. The aim of the study is to gain a better understanding of the industry’s global emissions in order that future regulations can be based on concrete facts. "We lack knowledge about how and how much CO2 emissions from shipping can be lowered. There is a need for a concrete idea of ​​how far you get through technical and operational measures," said Maria Bruun Skipper, Director and Head of Security, Health, Environment, and Innovation at the Danish Shipowners' Association. It is a laudable aim but just like the call for information by those in the UK referendum it is likely not something that can be delivered. That is because to know what the industry’s emissions will be requires knowledge of what the trading environment will be and the geography of that trade. Who for example foresaw the rise of China, the 2008 economic crash or the consequences of the rapid decline of oil prices in 2015? Will globalisation be pushed further into reverse? The UK leaving the EU and a Trump presidency are factors that say it may but equally concerned environmentalists would also like to see a reversal for sustainability reasons. Then there are the interests of cargo to consider. Will slow steaming still be acceptable further down the line or will the operators need to return to the faster transits of pre-2008 to retain business? Will they be happy with the delays from transhipments caused by the inability of large ships to enter ports that were once considered as scheduled calls? On the technical side, it is reasonable to make some assumptions about the ability of engines to reduce emissions but changed regulations can affect even this. For example a possible expansion of NOx control areas will mean increased CO2 emissions assuming all other things remain equal. The Danish study will add to current and historic data but its value as far as helping shape the future will depend upon interpretation and perhaps it should be successful entrepreneurs guts rather than the voices of economists that should be most listened to.