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European Community Shipowners Association (ECSA), AGM, Malta

05/10/2016

European Community Shipowners Association (ECSA)
Annual General Meeting, Valetta, Malta, 5 October 2016
Keynote address by Kitack Lim, Secretary-General
International Maritime Organization

Ladies and gentlemen,

It is a pleasure to be here today and I am grateful for the opportunity to share some thoughts with you at your annual general meeting.

You don’t need me to tell you that this is a difficult time to be a shipowner.

The global economy has returned to growth after a drop in global trade following the financial crisis of 2008, and so has world seaborne trade.

In theory, this should be good for shipping. But, even though trade volume is at record levels, overcapacity is keeping freight and charter rates low. According to recent estimates, the world fleet has grown by 50 per cent since the 2008 crisis.

Profit has been hard to find for shipping companies. Indeed, for most, survival has been the priority.

Yet the industry must find a sustainable and viable way forward. Because shipping, as the only really cost-effective way to transport the vast majority of international trade, will be central to global sustainable development and growth in the future.

Despite the current gloomy financial outlook, shipping today still transports more than 80 per cent of global trade to peoples and communities all over the world. It still provides a dependable, low-cost means of transporting goods globally, facilitating commerce and helping to create prosperity among nations and peoples.
 
A safe, secure, clean and efficient international shipping industry is indispensable to the modern world – and this is provided by the measures and standards developed and maintained by IMO.

As a specialized agency of the United Nations, IMO’s main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.

Why is it so important for shipping to be regulated globally? Because global regulations apply equally to all participants. They do not allow anyone to gain an advantage either by cutting corners or by imposing unilateral requirements. They create a level playing field. And, perhaps most importantly, they ensure that ships have to comply with the same rules and technical standards wherever in the world they operate and regardless of which flag they fly.

Imagine how impractical it would be if different regulations applied to the same ship at either end of its voyage. It would place shipowners in an impossible situation and seriously jeopardise the flow of global trade.

These are important principles. Everybody suffers if they are undermined, not just the shipping industry but the billions of people all over the world who depend on it.

The relationship between global and regional or national regulations is an interesting one. I see no inherent conflict when global regulations have a local or geographical element – such as when they establish Emission Control Areas or ship routeing measures. The point here is that the measures have been discussed at the appropriate international forum – IMO – and they apply equally to all relevant ships operating in the area in question, regardless of flag. Equally, I see no problem when regional or national regulations reflect and reinforce the international regime agreed by all governments at IMO.

But if national or regional regulations differ from the established international regime, then we have a problem. And in some cases, local or regional regulations can actually prevent the international regulatory regime from entering into force.

There is, for example, an EU regulation covering ship recycling. There is also an IMO convention on the same subject – the Hong Kong Convention. Both have the same overall objective – to improve safety and environmental conditions in recycling facilities.

Most EU states have not ratified the Hong Kong Convention and it is still some way from meeting its entry-into-force criteria. But if the Hong Kong Convention doesn’t enter into force, then European shipowners may find themselves at a disadvantage compared with others who are not bound by the EU regulation.

Of course, there are two sides to every coin. The other side of this coin is that the power and influence of a strong regional voice can be positive and beneficial. A decision at regional level to ratify and implement a global convention will hasten its entry into force and spread its implementation. This  will not only help ensure the playing field remains level for all shipowners, it will also help the overall objectives of the convention to be achieved.

That is why I welcome very much the supportive stance that has been taken by ECSA on a number of issues. You have made very clear your support for the global process, as pursued through IMO, and I appreciate that very much.

Take, for example, IMO’s work to control CO2 emissions from shipping.

Addressing global warming and climate change is one of today’s most urgent challenges – not just for shipping but for the whole world.

The collective will shown by global leaders during COP 21 in Paris last December and the subsequent signing ceremony in New York in April this year was very encouraging. And this has been reinforced by the recent announcements by the United States and China.

But, from shipping's perspective, this is a particularly difficult challenge. Finding an effective way to allocate emissions from ships is not straightforward. Ships can move between different flags as easily as they can sail between different countries – which makes finding a global solution to this problem all the more important.

We have, of course, been actively tackling this matter from the technical and operational perspectives. As you know, in 2011, IMO adopted the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP).

More recently, in April this year, IMO approved mandatory requirements for ships to record and report their fuel consumption which are expected to be adopted later this month. This will be another significant achievement.

In your position paper on this subject issued in May, you  point out that adoption of this global scheme would enable alignment with the EU’s own MRV regulation. It will be interesting to see how that idea develops. From my own perspective, all I would urge is that the broad picture – and by this I mean the world’s urgent need to achieve truly sustainable development – remains the prime consideration when the policymakers decide which route they intend to take.

The fundamental issue that needs to be tackled is how to address overall CO2 emissions from international shipping. And, despite the financial difficulties many shipping companies face today, overall demand for shipping is growing.

Consumers easily forget that it is their consumption patterns which dictate world trade – what goods are shipped, how much is shipped, where it is shipped to, and at what cost – both economic and environmental. This is a fundamental issue and it cannot be addressed by shipping alone.

Ladies and gentlemen, ensuring that shipping is safe, environmentally sound, energy-efficient and secure are common objectives for both IMO and for shipowners. And there is no shortage of evidence to show that, together, we have been successful in working towards many of these.

Nevertheless, we continue to look for further improvements. As you will no doubt be aware, some of the key areas that we are currently addressing include:

• reducing harmful emissions from ships;
• developing goal-based standards for ship  construction;
• passenger ship safety – both the giant modern cruise ships of today, the ferries operating internationally - as well as domestic ferries;
• implementing the Ballast Water Management Convention;
• the application of the Polar Code, which becomes mandatory from the beginning of next year;
• the development of e-navigation, and
• the continuing efforts to address security, piracy and other maritime crime.

Finding consensus on these and other issues, through a process of discussion, is one of the great strengths of IMO. All our Member States have an equal say in the process. Large or small, developed or developing, at IMO, all have the same voice.

In this process, you, the shipowners and ship operators, are vital collaborators. We have a duty to ensure that any challenges in implementation can be addressed before they turn into problems – and your input is vital in this respect.

IMO does not represent or speak for the shipping industry. IMO represents the collective views and decisions of its 171 Member governments; and they represent the billions of ordinary people, all over the world, who rely on shipping every day of their lives, whether they realise it or not.

Those people need a viable, profitable shipping industry. Their prosperity, their well-being and, in some cases, their survival, depend on it.

Finally, I would like to thank ECSA for their cooperation with IMO issues.

All the best,

Thank you.

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