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Nor-Shipping Conference - What’s next, IMO?

Next Generation Shipping

May 24, 2011

Nor-Shipping Conference
Oslo, 24 May 2011
Next Generation Shipping
What’s next, IMO?
Address by E.E. Mitropoulos, Secretary-General, IMO

Ministers, Excellencies, Chairman of the IMO Council, ladies and gentlemen,
 
Attempting to look into the future is rather like peering through a frosted glass window. The shapes and outlines are there but definition is lacking and clarity is absent. And, yet, here I am being asked to do exactly that.
 
There are many, better qualified than I, to predict what may happen to shipping over the next few years from a commercial perspective. Most of them seem to be anticipating a rocky channel ahead and, in the immediate term, the outlook appears to be far from rosy – unless, of course, Nor-Shipping has the same positive effect on the markets – the Baltic Dry Index, in particular – Posidonia had one year ago!...
 
Container trades are facing their shortest ever cycle, with freight rates plummeting again after the crash of 2009 and the relative boom of 2010; similarly, in the dry bulk markets, one cannot be over-excited with recent developments, with freight rates still far from the partial recovery of 2010. And, although one should differentiate among rates for VLCCs, Aframaxes and product carriers, one cannot ignore the sluggish tanker market that has seen rates fall dramatically and earnings struggle to rise above operating costs – except, of course, for the short-term charter rates for LNG carriers that rose spectacularly recently.
 
Owners, who placed orders for new tonnage in the euphoria of 2004 to 2007, may live to regret their decisions, as growth in the supply side of shipping is, it seems, set to outpace growth in short-term demand and fleet utilization to drop below the levels usually regarded as comfortable.
 
To make crystal-ball gazing even more difficult, completely unpredictable events have recently served to make an already opaque picture even more disjointed. Floods in Australia, the earthquake and tsunami in Japan, and unrest in north Africa and the Middle East, for example, have all had a detrimental effect on certain trades, and we still do not know what the full consequences of the situations they created will be.
 
Against such a gloomy background, we may take some comfort from the indications that long-term demand continues to grow. Both India and China, for example, where even modest per capita growth in consumption is expected to generate strong demand in the corresponding trades, are now embarked on huge power-generation projects. The coal and iron ore sectors are expected to be the major beneficiaries, with Australia and Brazil leading the group of exporters – the latter having already embarked on an ambitious project comprising 6 ultra large ore carriers, of the Chinamax type, of 400,000 dw tons each; not to mention last week’s nightmarish report concerning a 600,000 dwt bulk carrier!...
 
But, while the economic outlook for shipping may, in the prevailing circumstances, be uncertain, the march of technology seems inexorable, as the industry seeks constantly to improve its efficiency and improve performance – both from the commercial and environmental viewpoints.
 
Economic and environmental concerns are already prompting concerted efforts to cut fuel consumption. Kites and delta wings harness the wind in a modern-day nod to a bygone era; the use of liquefied natural gas as a fuel is sparking a great deal of interest – and not just for ships carrying LNG as a cargo: here, in Norway, for example, a variety of LNG-powered passenger ferries and other vessels are already in operation, while one company is reported to be taking delivery of two LNG-powered ro-ro cargo vessels later this year; and ports are now beginning to develop the necessary infrastructure for LNG re-fuelling.
 
Air lubrication, aimed at reducing the friction between hull and sea water to reduce fuel consumption, is also being looked at by a number of shipowners, while fuel-cell technology appears to have a strong future in smaller vessels, or as a replacement for auxiliary engines aboard larger ships.
 
On the bridge, integrated systems (including ECDIS and electronic navigational charts) have become the norm (with AIS and LRIT used for both navigational safety and security purposes), while the concept of e-navigation seems set to open doors to enhanced berth-to-berth navigation, including new ways of tracking and monitoring vessels at sea.  And we should not be surprised if, along with the greater conceptual integration of safety, efficiency and environmental concerns epitomized in IMO’s Marine Electronic Highway project for the Malacca and Singapore Straits, we see, sooner than we can imagine, e-navigation eventually ushering in a satellite-based, global vessel traffic management and monitoring system through harmonization of marine navigation systems and supporting shore services.
 
The future may also bring new and unforeseen dangers. New navigational hazards, such as extensive offshore wind farms or tidal energy installations, may emerge; while the melting of the polar ice caps may re-write not only the map of the world but also the charts of the oceans – which has prompted IMO to intensify its efforts to develop a Code for ships operating in polar waters.
 
One thing of which I am certain is that manpower issues will become increasingly important. Manpower surveys are still predicting officer shortages and this is something the industry cannot afford to ignore. If the global pool of competent, properly qualified and certified seafarers is to meet the predicted demand, then seafaring must be seen as a viable career choice for young people of the right calibre.
 
And what about climate change and sustainable development; the unacceptable scourge of piracy off Somalia; and the implementation of the Millennium Development Goals – all awaiting action now!
 
And what of IMO in the future? I mentioned a few moments ago the unpredictable events that can affect the commercial side of shipping and trade. Similarly unforeseen events have shaped the work of IMO in the past – one thinks, for example, of the disasters that befell the Torrey Canyon and the Exxon Valdez; the Herald of Free Enterprise and the Estonia; the Erika and the Prestige, or politically-motivated acts such as the hi-jacking of the Achille Lauro and the terrorist attacks on New York and Washington ten years ago and subsequently on the USS Cole and the tanker Limburg. All have had a profound influence on our work – as, I am sure, last year’s Deepwater Horizon disaster in the Gulf of Mexico will have. And, while we have to be prepared for others to be added to that sad litany, it is my profound hope that none shall.
 
Revising and updating the existing body of IMO measures seem likely to remain the Organization’s bread-and-butter for the foreseeable future. But how strong, I wonder, will be the appetite for brand-new regulations?  In this respect, the introduction of goal-based standards for ship construction is a change of emphasis that might well find favour in other areas of the Organization’s regulatory framework, too.
 
It is also quite possible that the IMO Members might want to give the Organization a more “robust” role, perhaps with regard to verification and compliance monitoring. The removal of the word “Consultative” from its title in 1982 and, more recently, the responsibility given to the Organization for verifying compliance with certain aspects of the STCW Convention show that such a concept is not entirely without precedent; and perhaps the Member State Audit Scheme, currently voluntary but set to become mandatory in less than four years, is one example of where such a strengthened role might be contemplated.
 
After all, the precedent has been well established in other UN agencies, several of which regularly assemble and deploy inspection teams to verify compliance with international standards and agreements. 
 
Developments in ship design, equipment and technology may also herald the demise of some of IMO’s long-standing sub-committees as their work reaches a natural conclusion, and, perhaps, the emergence of new bodies, with new specialities, as other issues – issues that may not be so easily accommodated within the existing structure – take centre stage. In this regard, one thing I would offer as a hope, rather than a prediction, is that piracy falls rapidly off the agenda as the measures now being taken to eradicate the problem begin to take hold. That is optimistic, I know, but we must at least pray, and act as vigorously as possible, for such an outcome.
 
I wonder, too, about the make-up and alignments of national delegations to IMO meetings. In other international fora, regional representation (with countries aligning into similar-interest groups, whether along geographical or political lines) is not unusual and we are already seeing this occurring within IMO too – and not always providing the best outcomes, in my view.
 
We may also see changes in IMO’s processes and its working practices. Environmental concerns, for example, place a question mark against the long-term desirability of the kind of large-scale, “in person”, meetings that have been the principal modus operandi for IMO to date. Technologies, such as e-mail or video- and web-conferencing, seem likely to play a more prominent role in the future.
 
Also, on the subject of IMO’s working arrangements, I wonder whether the coming years might see an increase in the Organization’s currently rather limited presence in the field. As ever, it will be a matter of weighing the costs involved against the perceived benefits.
 
Ladies and gentlemen, I do not know how much store you can set by this misty-eyed glimpse into an uncertain future; but I do know that I am under strict instructions to keep this speech to less than 10 minutes. So let me conclude, not with a prediction, but with a request. To all members of the maritime community, whatever the future brings: maintain high standards; enshrine best practices; embrace corporate social responsibility; provide a clean, safe and comforting workplace and, please, recognize and reward the seafarers, on whose labours we all so heavily depend.  And exert any influence you can, wherever and whenever, to bring the scourge of modern-day piracy to an end.
 
Ladies and gentlemen,
 
Thank you.
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