For each of us there are personal milestones to celebrate or look forward to but for the shipping industry as a whole this time of year is generally about attempting to foresee market conditions for the coming year and for wondering if the new regulations that come each year have been properly prepared for.
A year ago it was anxiety over how the strategies adopted for meeting the new SOx cap were the right ones for individual companies and whether the wrong choice might make its operation uncompetitive.
This year is very different. There is only one major regulatory change to deal with and incorporating cyber security into safety management systems is not really that difficult. A safety management system after all has two aims; to avoid problems in the first place and secondly to mitigate the effect of any problem by careful preparation.
There has been plenty of advice on how to recognise weaknesses in systems onshore and onboard and also on how to react. There will doubtless be much more advice to come as the cyber criminals always manage to be one jump ahead of their victims.
The bigger problem is that there is only a requirement for shipping companies to protect their systems but as more and more digitalisation of port and regulatory bodies takes place one has to wonder what protection is built into the maritime single windows and the various vessel traffic management systems that are in operation around the globe.
Almost certainly 2021 will be about recovering from the effects of the COVID-19 Pandemic.
It has become clear that the world was not prepared for this in any way. The response to it has certainly split the world population into different camps. Some will say that the reaction was not fast enough or comprehensive enough while others are arguing that there has been a massive over reaction to a disease which although it has claimed many victims is not the threat that it has been made out to be.
The arguments will doubtless rage for a long time yet and will probably never be finally settled. For shipping though there is no option not to comply with the rules. Hopefully the development of multiple vaccines in the last weeks of 2020 offers a glimmer of hope for a return to normality sooner than might otherwise have been the case.
Whether seafarers will be given priority in the queue for vaccination remains to be seen. The likelihood is that probably they will not despite the best efforts of global institutions and bodies such as the IMO and ILO. Many of us have championed their cause but except in a few cases all please for assistance have fallen on deaf ears. As an industry we still have to fight and win this battle.
Cruising to make a comeback
For ship operators, the pandemic has not been an entirely bad thing unless they happen to be from a Bsector such as cruising which has been badly affected. From being the sector that was riding highest it has fallen furthest and there is no real certainty as to when it can restart operations. The wave of new and more virulent variations of the virus seem to have sparked more travel restrictions and border closures which will make recovery even more difficult. The bad press that cruise ships received in 2020 may cause some ports and countries to reconsider whether actively inviting them to call needs reconsidering. But many of these places rely on tourism for survival and with appropriate precautions in place will surely look to bring back lost traffic. The pandemic may also have put off some potential clients but cruise afficionados are a hardy bunch and will doubtless be itching to escape the months of lockdowns and restrictions as soon as they can.
For containership operators 2020 has proved to be a boom year as regards freight rates. Congestion at ports caused by boxes being used as short to medium term storage by importers hit by the effect of lockdowns, has been the theme for the year end. The resultant container shortage has seen cargo interests willing to pay very high sums just to keep cargo moving.
Oil tankers found a use as floating storage because of a dramatically reduced demand for fuel and bulk carriers were still needed to keep essential commodities flowing. The oil and gas offshore sector may still be subdued but it is being boosted by more offshore wind activity.
EEXI and CII keeps efficiency on top of the agenda
Throughout 2020, decarbonisation has remained at the top of the agenda and is being pushed hard from every quarter. However, the question of how committed nation states are to the climate agenda has been raised recently with UN Secretary-General António expressing disappointment at the virtual summit organised by the UK in mid-December that G-20 countries are “spending 50% more in their stimulus and rescue packages on sectors linked to fossil fuel production and consumption than on low carbon energy”.
Within the shipping industry, we are expecting that 2021 will see the IMO putting flesh on the bones of the EEXI and CII initiatives adopted at MEPC 75 in late November. This appears to be the opportunity for the IMO to give more recognition to energy saving measures of all kinds but especially for those such as coatings, battery systems and wind assistance which are now mostly excluded because their impact is so variable.
Through the period up to MEPC 76 in mid-summer 2021, governments around the globe will be taking stock of the cost to economies of the pandemic and how best to ensure economic recovery. The ‘green’ agenda has most definitely been in the ascendence in recent years but whether that will remain the case is questionable. Populations that have spent 2020 bottled up under lockdowns and restrictions will not take kindly to any government that seeks to impose further restrictions on their lifestyles. That may mean that many governments determine that a rowing back on decarbonisation is an essential to avoid a resurgence of the populism that saw Donald Trump elected as US president in 2016.
Although Trump was defeated in the 2020 election, he retains a massive personal support and may well be contemplating a second term attempt in 2024. Throughout Joe Biden’s presidency, that will have an effect on the policies he dares to follow and the extent to which he will be allowed to undo what Trump has done since 2016 on a global level.
Brexit promises resurgence of UK as a maritime leader
On the political front, the UK’s final cutting of the EU apron strings on 31 December 2020 will have repercussions. At the end of 2020, there were reports that the UK was planning to become the new Singapore as far as shipping was concerned. These reports were not confirmed by the UK government – engaged as it was in delicate negotiations with the EU it could hardly be expected that the government would make comment on such rumours.
However, the UK does have the opportunity to make several changes and profit from its newfound freedom. On the edge of the EU but no longer a part of it, there is the possibility of dumping all the EU MRV measures and emission trading plans for shipping and making the UK the natural choice to become the hub for EU cargoes allowing importers and exporters to avoid the extra costs involved in transporting by ships facing levies for long deep sea voyages beginning or ending in EU waters.
The UK has already begun the process of selecting the new Freeports it plans to establish, and it is very likely that many of the other ideas in the Singapore rumours will become firm policies in the short term. There may be some short term hiccups in developing the new trading relationship with the EU but many are quietly confident that the negative aspect has been overhyped and things will soon settle down. Yes there will be some new forms to complete but 90% of UK businesses have no trade with the EU and the remaining 10% also import and export from other countries so are well versed in completing customs forms.
Fuel mix to increase
With regard to technology, it will almost certainly be alternative fuels that attract most of the spotlight in 2021. Leaving aside LNG – which now finally is beginning to be adopted at a faster pace than ever before – LPG and methanol have already made breakthroughs and will likely gain more followers in 2021.
Ammonia is now being prepared for commercialisation with leading engine makers MAN Energy Solutions and Wärtsilä actively preparing for a 2024/25 debut. It is very possible that this may be brought forward by a year or two with the first orders for ammonia-fuelled or ammonia ready ships coming in 2021. Announcement of a retrofit project is also a possibility in 2021. As with ammonia so with hydrogen although it would appear from events in 2020 that Belgium’s BeHydro is the current leader as the two majors concentrate on ammonia.
We will also see more ports and terminals investing in shore power connections allowing ships of all types and sizes the option of recharging battery systems during port stays. Battery technology advances will be in the form of safer systems and also perhaps a move away from lithium ion technology. Several alternatives a re being developed and there could well be some news of a new system in 2021.
Fuel cell projects appear to be multiplying and there will be plenty of willing pioneers among ship operators to provide a test platform. This does seem to be a repeat of events of around a decade ago but this time the optimism may well be better placed.
Biofuels are another area of interest and, along with synthetic fuels, if the price can be lowered sufficiently and the IMO persuaded to recognise them as carbon neutral a boom in production and sales looks to be imminent.
However, it should not be expected that fossil fuels will be easily abandoned. Just about every analyst expects them to be the dominant fuel for a few decades yet. That should be a sufficient spur for both scrubber manufacturers and also for the emerging carbon capture on board technologies.
New technologies to build on 2020 boost
2021 will also see more developments in the autonomous ship arena. The iconic Yara Birkeland has now been completed but is not yet in service. It was planned for it to begin life as a crewed ship so any autonomous operations will be under similar conditions as many of the tests already carried out on other vessels.
It has been predicted that unmanned vessels would not find favour with many traditional ship operators. And while it would be headline making if any leading operator announced big plans, one wonders if the outrage over the treatment of seafarers during 2020 may have some owners quietly exploring the potential of such vessels for the future.
Usually major news on technology issues comes around the times of the major shipping exhibitions. Last year almost all were cancelled and even those postponed shows rescheduled for 2021 have been abandoned. This year the first show to really test the waters looks to be Nor-Shipping. Its mid-summer setting and the vaccine may prove its salvation and the first return to normality. There have been no hints of cancellation as yet but who knows what this pandemic has yet to throw at the world.
Remote order signings, ship surveys and repair assistance along with virtual exhibitions will be the order of the day for early 2021 and no doubt developments in this area through 2020 have provided a spur to one aspect of digitalisation in shipping. But shipping has always been an industry in which personal relationships and contact have been the order of the day and even if future generations will happily embrace a remote contact culture, those that are today’s decision makers are champing at the bit for a return to a more conventional atmosphere.