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The future of shipping: contemporary challenges

IAMU Special Lecture

October 15, 2010

Special Lecture
15 October 2010
The future of shipping: contemporary challenges
by Efthimios E. Mitropoulos
Secretary-General, International Maritime Organization

Chair of IAMU, Members of the IAMU International Executive Board, Representatives and students of the IAMU Member Institutes, Ladies and gentlemen,
 
We live today in a global society which is supported by a global economy. Shipping plays a vital role in this, underpinning international commerce and providing the most effective delivery mechanism for the vast majority of world trade.
 
The maritime industries have seen enormous change in recent years. And, today, they stand poised on the brink of even more change. At IMO, we are constantly trying to anticipate the new demands that the changing face of shipping will make of us. The prospect of ever-larger containerships, of new tanker designs, of cruiseships capable of carrying increasing numbers of passengers, of new propulsion systems that might radically alter the familiar appearance of some ships, of further integration of data into so-called e navigation systems, and the many other developments on the horizon, both known and, as yet, unimagined, will present exciting challenges.
 
As always, change is primarily driven by economic considerations; but environmental-, safety- and security-related concerns now exert a stronger influence than ever before. What cannot be ignored or denied is that shipping today is a global transport system capable of moving millions of tons of cargo and thousands of passengers entirely without incident each day, every month and all year round.
 
Having said that, there is, equally, no denying that, from an economic perspective, the maritime sector has had to batten down the hatches to weather the financial storms that have rocked the global economy in the past two years.
For me, this is an opportune moment to re-emphasize that financial difficulties should not lead to a lowering of standards in shipping through cutting corners or skimping on key items such as maintenance, repair and training. Rather, in a difficult market, let quality, not price, become the prime differentiator. Those who continue to provide their customers with a quality service throughout times of recession will be in a better position to prosper once the economic situation improves.
 
The green shoots of recovery have been observed and reported in several places around the world but the plant is still tender and requires care and attention. But, however fragile the recovery may be, one thing of which we can all be fairly certain is that, no matter how global markets may contract, expand or otherwise metamorphose, there will always be a demand for ships and shipping.
 
Decade on decade, seaborne trade has continued to grow and, with the world’s population predicted to continue to rise, the demand for shipping can only increase. The reality is that, in good times and bad, in today’s global economy, hundreds of millions of people all over the world rely on ships to transport the great multitude of commodities, fuel, foodstuffs, goods and products on which we all depend. 
 
Yet, for most of those people, shipping, together with the huge range of related activities in the maritime sector, does not register a particularly strong echo on their personal radar. The very nature of shipping makes it something of a “background” industry.  For most people, most of the time, ships are simply “out of sight and out of mind”.
In reality, shipping has a very good story to tell – about how it carries more than 90 per cent of world trade safely, securely, efficiently and at a fraction of the environmental impact and cost of any other mode of bulk transportation.  We must, therefore, spare no effort to increase awareness, among the general public, of shipping’s good story and ensure that, through the media, national and international, these everyday realities are always given due prominence.
 
Of course, in any effort to improve public perception and raise positive awareness, the most important element is not the image but the reality. For, if we had already attained the ultimate goal of an industry with zero accidents, zero loss of life and zero pollution, I do not think we would need to worry too much about the image of shipping, although we would still wish to promote its global role, contribution and benefits. Redoubling our efforts to be proactive in preventing accidents and, consequently, fatalities and environmental damage, would, by itself, attain the success we seek.
 
Ladies and gentlemen, one of the main reasons why IMO decided to make this year, 2010, the Year of the Seafarer was to draw attention to the difficulties faced by those that operate the world’s shipping fleet. Seafarers are, in effect, the lubricant without which the engine of world trade would simply grind to a halt; but their working lives are beset with problems, both actual and potential, and they almost universally lack the recognition and credit they deserve.
 
Inevitably, there has been considerable focus on piracy, which, apart from being a threat to trade, has a direct, significant and very personal impact on the seafarers involved. It is a source of great concern, and a genuine anathema in the 21st century, that the threat of piracy and armed robbery against international shipping is as pernicious today as at any time in history.
 
The presence of naval forces in the piracy hot spots off the coast of Somalia and in the Gulf of Aden (an achievement unique in history given their countries’ origin) has had a welcome positive effect. But it is worrying that the perpetrators of these unlawful acts appear to have moved their activities further offshore, into the wider Indian Ocean and into waters as far south as the Seychelles and, most recently, Madagascar.
 
While recognizing that, in the case of Somalia, the root causes of piracy must be addressed on land, IMO is doing everything in its power to 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 established in the context of an ad hoc Security Council resolution; issued advice to Governments, shipowners, ship operators and seafarers about practicable avoidance, evasion and defensive measures for use by their ships while sailing through piracy-infested areas; 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.
 
In 2009, IMO developed the Djibouti Code of Conduct, which has so far been signed by 16 States from the affected region and 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 held hostage; and the conduct of shared operations both among signatory States and with navies from other countries.
 
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 Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia, which has, through the efforts of its Contracting States, helped to achieve a reduction in  the overall number of this kind of unlawful acts committed in that region, particularly in the Straits of Malacca and Singapore.
 
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 World Food Programme to deliver humanitarian aid to Somalia, the IMO Council has recognized that much remains to be done and has decided that the theme for next year’s World Maritime Day should be “Piracy: orchestrating the response”. This will provide 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 serve aboard ships.
 
Piracy is a problem that is damaging on several different levels. For those who find themselves actually subject to attack – typically seafarers, fishers or passengers – the immediate danger to life, the traumatic prospect of being held captive against a ransom demand and even the mental stress of having to sail, relatively unprotected, through known hot-spots, are things that no innocent civilian should have to face during their normal working lives.
 
In this context, the development of effective care for seafarers who may be caught up in piracy attacks is essential, both so that they are mentally prepared for what may happen to them and so that they can receive proper post-traumatic treatment and counselling. Organizations such as the International Transport Workers’ Federation and the Seamen’s Church Institute have been very active in this regard with the latter intending to brief the December meeting of our Maritime Safety Committee about its relevant work.
 
The Republic of Korea has been a very active supporter of international efforts to suppress piracy and armed robbery against ships.  It is, for example, a member of the highly successful ReCAAP, to which I referred earlier; it contributed towards the cost of the Sub-regional meeting on piracy and armed robbery against ships in the western Indian Ocean, held in Dar es Salaam, United Republic of Tanzania, in April 2008, which drafted what eventually became the Djibouti Code of Conduct; and participated in the Sub-regional meeting in Djibouti, in January 2009, to conclude that agreement.  Subsequently, the Republic of Korea contributed US$50,000 to the Djibouti Code Trust Fund, which is helping the countries of the region to put into practice the provisions of the Djibouti Code.
 
In July 2009, the Republic of Korea hosted the Seoul High-level Meeting on Piracy off the coast of Somalia alongside the 3rd Seoul International Maritime Forum, and its Navy has played an active role in counter-piracy operations off Somalia, including sending five warships and holding command of Combined Task Force 151.
As we speak, men and women of the Republic of Korea’s navy serving aboard the destroyer Wang Geon are continuing this vital mission in the area, and I think I can safely speak for the entire maritime community, when I offer my most sincere gratitude to all those from the Republic of Korea who are participating in this remarkable international effort.
 
Piracy may be a key challenge but it has not diverted IMO’s attention from other arenas. The Organization has continued to work on its core objectives of safety of life at sea, maritime security, facilitating international seaborne trade and protecting the environment.
 
Perhaps the most significant challenge to our environment today is the preservation of the earth’s atmosphere. IMO and the shipping community at large have been, and are continuing to work towards combating atmospheric pollution, as well as limiting or reducing emissions of greenhouse gases.
 
Atmospheric pollution is addressed in Annex VI of the International Convention for the Prevention of Pollution from Ships, or MARPOL.  Annex VI was adopted in 1997 and set, for the first time, limits on sulphur oxide and nitrogen oxide emissions from ships’ exhausts; 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, which entered into force in July this year, providing for further reductions. 
 
With regard to the emission of greenhouse gases from shipping, the Organization is in the final stages of developing a robust regime to regulate shipping at the global level.
 
Although international maritime transport is the most energy efficient mode of mass transport and only a modest contributor to global CO2 emissions (2.7 per cent on 2007 data), further improvements in energy efficiency and emission reduction are being actively sought, as sea transport is predicted to continue growing significantly in line with world trade and the attendant growth of the world merchant fleet.
 
IMO’s work on measures to enhance ships’ energy efficiency and thereby control and reduce their greenhouse gas emissions has evolved and developed over several years in tandem within the United Nations and in direct response to the mandate assigned to the Organization by the 1997 Kyoto Protocol. It consists of three distinct ‘building blocks’: technical and operational reduction measures, development of which is all but finalized, and market-based mechanisms, on which the Organization currently has also done a great deal of work and which are being pursued in accordance with a work plan set to culminate in 2011.
 
A working group of our Marine Environment Protection Committee has now completed the drafting of regulations for an energy efficiency design index, known as the EEDI, which would enable a minimum energy efficiency level for new cargo ship designs to be established. The EEDI is a complex mathematical formula that provides a specific energy efficiency figure for an individual ship design, expressed in grams of CO2 per ship’s capacity-mile, e.g. tonne-mile. A smaller EEDI value means a more energy-efficient ship design. Reducing the required EEDI, over time, will stimulate continued technical development of all the components influencing the fuel efficiency of a ship and will provide a transparent mechanism for comparison of the energy efficiency of individual ships.
 
Not only could it be the basis of the regulatory mechanism by which ship designers and builders would be required to produce increasingly energy-efficient ships, it would also be a useful tool for achieving such efficiencies, from a technical point of view.
 
The beauty of the EEDI lies in its being a non-prescriptive performance-based mechanism that leaves the choice of technologies to use in a specific ship design to the industry players – so long as the required energy-efficiency level is attained. It means naval architects and shipbuilders are free to use the most cost efficient solutions and incentivized to continue with technical development.
 
The EEDI is currently developed for the larger and most energy-intensive segments of the world merchant fleet – oil and gas tankers, bulk carriers, general cargo ships and container ships. Collectively, these account for some 72 per cent of projected emissions from new ships. For ship types not covered by the current formula, suitable formulae will be developed in the future, addressing the largest emitters first.
 
The second technical measure is the Ship Energy Efficiency Management Plan, known as the SEEMP, the purpose of which is to establish a mechanism by which a shipping company and/or a ship can improve the energy efficiency of vessel operations – and this is meant to apply to existing vessels, too.
 
Although sea transport is already, as I said before, the most energy-efficient mode of bulk transportation, enhancements in efficiencies can, nevertheless, reduce fuel consumption, save money and decrease the environmental impacts from ships still further. 
 
While the yield of individual measures may be small, the collective effect across the entire fleet of merchant vessels will be significant. In global terms, operational efficiencies delivered by a large number of ships will make a considerable contribution to reducing global carbon emissions.
 
The SEEMP provides an approach for monitoring ship and fleet efficiency performance over time, and encourages the shipowner, at each stage of the plan, to consider new technologies and practices when seeking to optimize the performance of the ship.
 
With regard to the third “building block” in IMO’s GHG strategy, the market-based measures or MBMs, last month’s meeting of the MEPC also held an extensive debate on how to progress their development following the submission of a comprehensive report by an Expert Group, which I commissioned last April to carry out a feasibility study and impact assessment of several possible market-based measures already submitted by governments and observer organizations.
 
The scope of the work of the Expert Group was to evaluate the various proposals on possible MBMs, with the aim of assessing the extent to which they could assist in reducing GHG emissions from international shipping. Priority was given to the maritime sectors of developing countries, least developed countries and small island developing states. The MBM proposals under review ranged from a contribution, or levy, on all CO2 emissions from international shipping or only from those ships not meeting the EEDI requirement, via emission trading systems, to schemes based on a ship’s actual efficiency, both by design i.e. EEDI and operation i.e. SEEMP.
 
Following the debate, which itself was not conclusive, the Committee agreed to hold an intersessional meeting in March 2011 dedicated to solely consider MBMs, in order to enable further progress in line with the agreed work plan, by narrowing down the number of proposed schemes.
 
The control of GHGs from shipping has been a complex and difficult task from both a conceptual and a technical perspective and, in my view, there can be no denying that the achievement of the MEPC in developing these measures to the extent that it has, along with the associated draft regulatory texts, is substantial and worthy of considerable praise.
 
But the political aspects of this issue have proved just as difficult, if not more so, for the IMO Member States. How should these measures be applied, and to whom? Should they be mandatory or voluntary? If mandatory, should they be introduced in IMO’s regulatory regime by means of amendments to an existing convention or form a new, stand-alone instrument? All of these questions have vexed the membership of the Organization and it has not yet been possible for them to reach consensus on them.
 
Personally, I view the outcome of the recent MEPC meeting as positive in the circumstances. Although decisions as to how to proceed with the next step of IMO’s climate change strategy were not reached by consensus, in spite of prolonged discussions to that effect, nevertheless the Committee made progress on all three elements of its work and it is expected that further substantial progress will continue to be made at the July 2011 meeting.
 
***
 
Ladies and gentlemen, to serve effectively maritime trade on the one hand and safety, security and environmental concerns on the other, requires a fine balance to be achieved. IMO, in partnership with the shipping industry and in consultation with environmental groups, is charged with developing and maintaining an international regulatory framework that allows just such a balance to be achieved and maintained – a framework within which efficient, clean, competitive and commercially successful shipping operations can take place.
 
There is today, quite rightly, a clamouring concern for our environment and a genuine fear that, if we do not change our ways right now (with all that this means, including making sacrifices), the damage we will inflict on our planet will render it incapable of sustaining – for future generations – the way of life we have grown accustomed to over the better part of the past century and the beginning of the new.
 
The environmental credentials of every country and every industry are now under sharper scrutiny than ever before. The pressure is mounting for every potential polluter, every user of energy and every conspicuous contributor to global warming and climate change to clean up their act and adopt greener practices. The transport industry is no exception to such scrutiny and pressure; indeed, it seems to attract more than its fair share of attention in this regard – certainly enough to ensure that environmental concerns are now high on the agenda in all of its sectors.
 
Ladies and gentlemen, I have spoken in some detail about two of the principal challenges that IMO and shipping face today and into the future: dealing with the insidious reality of modern-day piracy and playing an effective part in an era in which ever-greater environmental expectations become the backcloth against which all shipping operations take place.
 
In my World Maritime Day Message this year, I listed a series of further challenges to various players in the maritime community. At the time, they had particular reference to seafarers, but I think their essence has a more general relevance and I should like to conclude by paraphrasing some of them today.
 
- to members of the shipping industry, I would say: maintain high standards; enshrine best practices; embrace corporate social responsibility; provide a clean, safe and comforting workplace; recognize and reward those on whose labours your profits depend;
- to politicians, I would say: work towards the ratification, entry into force and implementation of all outstanding international measures that have a bearing on maritime safety and security and on shipping’s environmental performance;
- to legislators and law enforcers, I would say: aim at striking a fair balance in all of your actions concerning seafarers so that they do not become scapegoats caught up in the aftermath of accidents and incidents; treat them fairly and decently – they deserve every empathy and compassion;
- to educators, I would say: tell the younger generations about seafaring, the debt we owe to shipping and the attractions of the maritime professions; it should not take too great a leap of the imagination to stir maritime ingredients into the pot of learning through history, geography, biology, environmental studies, economics, business studies and many more; and
- to those in a position to shape and influence public opinion, particularly newspaper and TV journalists, I would say: take the time and trouble to seek out both sides of the story next time you report on an accident involving a ship; place the accident in its proper context, that of millions upon millions of tonnes of cargo safely delivered over billions of miles to all four corners of the earth by a talented, highly trained, highly specialized and highly dedicated workforce.
 
Ladies and gentlemen, I think that if, collectively, we can rise to these challenges, we shall be rendering a great service, not only to shipping, but also to the wider, global community that depends so much on it.
 
The omens are good and we should be able to deliver as long as we prudently set our objectives for the future; set our priorities to achieve them; and continue to work together.
 
Thank you.
 
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