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International Council of Containership Operators – the “Box Club”

Four Seasons Hotel, Seattle, USA

September 15, 2010

International Council of Containership Operators – the “Box Club”
15 September 2010
Four Seasons Hotel, Seattle, USA

Chairman, Members of the “Box Club”, Gentlemen,
 
It gives me great pleasure to be here with you today. I am always pleased to meet and exchange views with ship owners, managers and operators, as I firmly believe that an active dialogue between regulators and those of you at the ‘sharp end’ of the industry is crucial if we are, together, to develop and maintain standards that are effective, practical and capable of being widely implemented in the best interests of maritime safety, security and environmental protection.
 
From this perspective, meeting with the leaders of the shipping industry sector that, while counting for more than 50% of the gross tonnage of the world merchant fleet, is by 12 years younger than the average age of the world total and has one of the most enviable safety records, is an opportunity I do cherish.
 
Seattle and the other Puget Sound ports collectively make up a busy, vibrant and multi-faceted maritime hub. Alaskan oil is brought to the northern Puget Sound for refining while cruise ships pick up passengers in Seattle and, then, themselves head for Alaska and its wonderful scenic attractions.
 
These and other associated factors (the fact, for example, that Seattle is situated closer to the global economic engine of Asia than most other US ports and, as a result, it has become an important gateway for trade between the two continents) make the city an ideal venue for Presidents, CEOs and Managing Directors of the global liner shipping industry to meet at.
 
All ship types face their own special difficulties with regard to operational, environmental and safety issues – and containerships are no exception: from the security aspects of closed, unitized cargo, to finding the optimum operating speeds to minimize fuel consumption and emissions while maintaining competitive sailing timetables, the challenges you face are complex and testing – and, I would add, relentless, as evidenced by the consideration, this week, by our DSC Sub-Committee, of matters relating to the stowing and racking features of containers with limited stacking capacity, issues that might lead to amendments to the 1972 CSC Convention.
 
I know that environmental issues are high on your agenda and they are put into particular focus here, in this beautiful city and region, where the glories of nature and the necessities of industrial development are finely balanced. It should, therefore, come as no surprise that one of the topics I have selected to speak to you about today should be on current regulatory developments at IMO in the environmental arena.
 
Let me say from the outset that I am firmly convinced that you, as representatives of the shipping industry, and we, the regulators, share common aims in this respect. I regard the quest to continually reduce any harmful impact shipping may have on the environment as one on which we are jointly embarked and in which success will produce a “win-win” situation. I therefore, appreciate very much the industry’s support and co operation in our relevant endeavours and feel encouraged that, working together, we will be able to make the difference that the environment deserves, shipping is prepared to contribute to and IMO aims at achieving.
 
I do not propose to rehearse here the long and, I would suggest, successful history of IMO’s regulatory work in the environmental field. As shipowners and operators, you will, I assume, be fully aware of how MARPOL and the rest of IMO’s environmental conventions have helped reduce oil pollution – indeed, all pollution – and shape the industry from so many perspectives, at the same time giving you the framework within which to build efficient, clean, competitive and commercially successful operations.
 
Let me concentrate instead on what is perhaps the most significant challenge to our environment today, namely the preservation of the earth’s atmosphere. Although the shipping industry is a relatively small contributor to the total volume of harmful emissions (standing at less than 3 per cent of the world total on 2007 data), IMO and the shipping community at large are, nevertheless, continuing to work towards further reductions. We are responding to current and emerging environmental challenges seriously, proactively and decisively, motivated by our own green agenda, our genuine and ever-present aspiration to serve the best interests of the marine and atmospheric environment and our own duty of care for the planet we inhabit and the seas and oceans that sustain us.
IMO’s efforts to regulate and reduce emissions from ships have been conducted (and are still being conducted) on two fronts – combating atmospheric pollution, and limiting or reducing emissions of greenhouse gases – thus adding our own contribution to the world efforts to address the worrying phenomena of climate change and global warming.
 
The first of these, atmospheric pollution, is addressed in MAPROL Annex VI, which was adopted in 1997 and set, for the first time, limits on sulphur oxide and nitrogen oxide emissions from ships’ exhausts (otherwise known as SOx and NOx); prohibited deliberate emissions of ozone-depleting substances; and put a global cap on the sulphur content of fuel oil.
 
In 2008, IMO adopted amendments to Annex VI, providing for further progressive reductions in SOx emissions from ships; in the overall limits applicable both globally and in Emission Control Areas – known as ECAs; and in NOx emissions from marine engines. The revised Annex VI (which entered into force in July of this year) also allows, in certain circumstances, for ECAs to be designated for reduced SOx and particulate matter, or NOx, or all three types of emissions from ships. Indeed, the first new ECA to be designated as such and adopted under the 2008 amendments, following a joint proposal by the United States and Canada, is to be found here, off this coast, as part of the wider oceanic area covering the Pacific and Atlantic waters facing the two countries. This first, extensive ECA – the introduction of which is expected to stem ship-generated emissions that may have the potential to harm human heath – is expected to enter into force on 1 August next year.
 
The fact that representatives of some 100 Governments were able to adopt, by consensus, the 2008 amendments to MARPOL on complicated issues of great importance and significance not only to the environment but also to the shipping, refining and ancillary industries, bears testimony to the conscientious manner with which the IMO Members address environmental matters nowadays and to the great results that can be achieved when States, with the same concerns and determination to produce meaningful solutions to global issues, work together. The co operation of the shipping industry and environmentalist groups to the development and adoption of those amendments was of great value, showing IMO and all its constituents at their best: united, determined and responsible.
 
Turning to the second strand of IMO’s efforts regarding atmospheric issues, the Organization is in the final stages of developing a robust regime to regulate shipping at the global level and, thus, contribute, from its perspective, to the slowing down of climate change.
 
As envisaged, this regime consists of three pillars: technical, operational and market-based measures – all designed to pave the way for significant reductions in GHG emissions. Significant progress has been made on all three and work has been continuing, in earnest, between sessions of our Marine Environment Protection Committee, which meets, once again, later this month, with this topic high on its agenda.
 
As an aside, I know that quite a few among you here today are also involved in the World Shipping Council, so I should like to take the opportunity, in this context, to acknowledge WSC’s contribution to the debate on possible market-based measures by proposing a standards-based system aiming at driving emission reductions from within the industry itself – which is one of the ten schemes put forward for consideration by an Expert Group, the findings of which will be reported to MEPC’s forthcoming session.
 
The essence of the World Shipping Council’s proposed “Vessel Efficiency System” is that existing ships failing to meet a required efficiency standard through technical modifications would be subject to a fee applied to each tonne of fuel consumed: the less efficient the ship, the greater the financial penalty. I wish I could predict for you how the MEPC will view this and the other proposed schemes but, alas, my crystal ball is not functioning as well as it might; all I can say, at this stage, is that the expert group saw merit in each of the proposals but did not come down in favour of any. I am, however, very keen to see the MEPC’s reaction to the Group’s conclusions and even keener to see it making progress on the subject.
 
Gentlemen, if our work on climate change is to serve the best interests of shipping, IMO and, most important of all, the environment itself, we must keep two broad objectives in mind. One concerns the measures we develop, which must be workable, effective, well balanced and proportionate to the level of responsibility of shipping within the world total of greenhouse gas emissions. The second is that we must not only conclude our work successfully but also in good time, thus confirming the seriousness with which we approach our task and highlighting the efficiency and effectiveness we aspire the outcome of our endeavours will have within the overall efforts of the community as a whole to stem greenhouse gas emissions.
 
Let us keep in mind that we work on a subject which lies within the context of the UNFCCC and that the European Union has already pronounced its own timetable regarding GHG reductions.
 
Once progress is achieved on the set objectives, the question then arises as to how best to incorporate the outcome of our work in the Organization’s regulatory regime. Given the seriousness of the contemplated measures and the need to ensure their wide and effective implementation and enforcement, I am convinced that consensus will be the best way forward. Not only would it be a continuation of one of the most successful traditions of IMO, it would, more importantly, send out a resounding message of unity and unanimity among all the parties involved: Governments, in the first place, international organizations and the industry.
 
In all of this, the goal remains unchanged: to deliver realistic and pragmatic solutions aimed at contributing effectively to worldwide efforts to address the phenomena of climate change and global warming and, in this, I know we share with you a common vision. We must all play our part and we must work together if we are to achieve the set objective.
 
***
 
I would like to move on now to the second topic that I have selected to address this morning, namely the continually worrying piracy situation and, more importantly, the steps that are being taken to address the problem and mitigate the risks involved.
 
Let me, first of all, remind you of a fact that is often overlooked: if we set aside Somalia-related incidents, the overall number of acts of piracy and armed robbery against ships has been reducing, year-on-year, since 2003. The coordinated anti-piracy efforts of Indonesia, Malaysia and Singapore in the Straits of Malacca and Singapore have been extremely effective in achieving just that in an area that constitutes the second busiest shipping lane in the world, forming an indispensable lifeline for the economies of the Far East and being used by many great ships, including containerships of the first rate. Furthermore, the establishment and entry into force of the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) and the efforts of the Contracting States to that agreement have significantly reduced incidents in the South Asia region as a whole. It is, I think, important to keep this welcome development in perspective.
 
Let me now address the situation in the Gulf of Aden, off the coast of Somalia and beyond. Although the presence of naval forces in the region has had a welcome positive effect, it is worrying that the perpetrators of the unlawful acts that cause us grave concern appear to have moved their activities further off shore into the wider Indian Ocean and into waters as far south as the Seychelles.
 
While recognizing that the root causes of piracy must be addressed on land, IMO is doing everything in its power to eradicate the threat and thus restore safety of navigation in the wider region, acting, to that effect, in unison with the United Nations and other UN agencies, political and military alliances and industry organizations. The list of measures we have either initiated or been involved in is a long one; we have, for example, raised awareness of the issue and successfully called for action within the UN Security Council; participated actively in the work of the Contact Group on Piracy off the Coast of Somalia; issued advice to Governments, shipowners, ship operators and seafarers about practicable avoidance, evasion and defensive measures; and co operated with the United Nations Office on Drugs and Crime and the UN Department of Ocean Affairs and the Law of the Sea to assess the extent to which existing legislation provides a sufficient basis for the prosecution of alleged pirates.
 
Perhaps most significantly, in 2009, we developed a Code of Conduct, which provides a framework for co-operation on the investigation, arrest and prosecution of suspected pirates; the interdiction and seizure of suspect ships and property; the release of ships, persons and property subject to piracy; the facilitation of care, treatment and repatriation of seafarers, fishermen and other persons subject to such acts; and the conduct of shared operations both among signatory States and with navies from other countries. The Code, named after the capital city of Djibouti, where it was adopted, has so far been signed by 16 States from the affected region and we hope that others will join soon.
 
Looking slightly further afield, IMO has organized advisory missions and workshops in several regions of the world to build counter-piracy awareness, coordination and co operation among States, including support for the establishment of agreements similar to the ReCAAP and the creation of an integrated coast guard function network for west and central Africa to address not only piracy and armed robbery against ships but also all forms of maritime crime or illegal exploitation of marine resources.
 
Meanwhile, the industry’s response to the threat has been commendable, as evidenced by the fact that an estimated 80 per cent of ships transiting the Gulf of Aden apply the relevant IMO Guidelines (including following the Internationally Recommended Transit Corridor) and the industry-recommended Best Management Practices.
The efforts of the military have been of great value. IMO has been working in close co-operation with political and military alliances concerned since 2005, when we started working with NATO and the World Food Programme to coordinate the protection of ships chartered by WFP to carry humanitarian aid to the long-suffering people of Somalia. Since then, we have continued to develop civil and military co-operation with NATO, the European Union Naval Force, the Combined Maritime Force and individual nations providing naval and air assets to the western Indian Ocean area.
 
Whilst most of our anti-piracy campaign concentrates on the situation in the waters of the western Indian Ocean, we, nevertheless, keep an eye on other areas of the world affected by pirates and armed robbers, most significantly the Gulf of Guinea and, recently, the southern part of the Red Sea, which do cause us great concern in the light of some high-profile incidents that have reportedly taken place in those waters recently.
 
Notwithstanding the relative success of the various and multi-faceted efforts so far made by many parties to address the scourge of piracy, especially with respect to averting attacks on cargo ships chartered by the WFP, the IMO Council has recognized that much work still remains to be done if the ultimate goal of eliminating piracy is to be achieved. To that effect and in order to place even more emphasis on the full gamut of actions undertaken so far, it decided that the theme for next year’s World Maritime Day should be “Piracy: orchestrating the response”. This will provide us all with an excellent opportunity, throughout 2011 and beyond, to maintain and enhance our efforts to galvanize worldwide support and resources for effective counter-piracy strategies and operations, at the same time transcending our perennial duty of care for the safety of those who go down to sea on ships.
 
Gentlemen, let me conclude by saying a few words about this year’s World Maritime Day theme – one that, quite naturally, will have continued resonance in the years to come. As I hope you are all aware, 2010 has been – and still is – the “Year of the Seafarer”. Much has been done to raise their profile and to draw attention to the adversities they face in the execution of their duties in an often hostile environment and the debt that society as a whole owes to them. Looking to the future, in order to ensure that the impetus created this year is maintained, the Conference IMO convened in Manila in June, to adopt amendments to the STCW Convention, decided that, from now on, the 25th of June should every year be celebrated as the “Day of the Seafarer”. I urge you to ink this date in your diaries, and to start planning straight away how your company can join in the celebrations to pay tribute to what is, collectively, your – and the industry’s – most valuable asset.
 
***
 
As shipowners and operators, your prime motivation is commercial. I understand that. For obvious reasons, you are in competition with one another, often with other modes of transport and, sometimes, you might think, with the regulatory bodies and the national authorities. You are ultimately answerable to your stakeholders and, when all is said and done, without commercial success you simply have no raison d’être. And yet, despite the competitive nature of your business, there is much that unites you – indeed much that unites all of us. The regulatory framework within which you all operate, for example, needs to be fair, even-handed, practical and effective; moreover, we all have a stake in ensuring that shipping remains an attractive career option for future generations, and that means providing a safe, secure and rewarding working environment for those you entrust your ships with; and, of course, we all have a stake in ensuring that shipping is environmentally sustainable.
 
The part played by the industry as a whole in all this has been exemplary in many respects – and, in this, the contribution of the containership sector is one of a high standard indeed. I thank you for that, and have full confidence that the partnership established between shipping and its regulators will long continue, much to the benefit of all.
 
Thank you.
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