6th Analyst & Investor Capital Link Shipping Forum
(part of Posidonia 2018 seminars)
Piraeus, 4 June 2018
Keynote address by Kitack Lim, Secretary-General
International Maritime Organization
Ladies and gentlemen,
It is a pleasure to be here and I am grateful to the organizers for the opportunity to speak to you today.
For those of you who may not be aware, IMO is the United Nations agency responsible for safe, secure, environmentally sound, efficient and sustainable shipping, and our main task is to develop, adopt and promote the regulatory framework within which international shipping operates.
Our mandate was originally limited to safety-related issues, but subsequently this remit has expanded to embrace environmental considerations, legal matters, technical cooperation, maritime security and other issues that affect the overall efficiency of shipping.
IMO is driven by its Member Governments, of which there are currently 174. They send their representatives, usually a mixture of policymakers and technical experts, to IMO's highly specialized committees and sub-committees, each with its own well-defined agenda. They will sit together, typically for a week or more at a time, to discuss issues impacting international shipping. Other non-governmental bodies assist in this, offering their expertise and representing their own policy interests. Industry groups, environmental concerns and many others are thus able to participate in the process.
Within the context of shipping, IMO's work can, and does, have huge implications. New regulations adopted by IMO usually become mandatory throughout the industry, in the form of international conventions or treaties to which Governments, both flag States and port States, become parties. As such, they affect both day-to-day operations and long term policy decisions for the shipping industry.
In many cases, ship-owners find they have more than one way to meet new regulations. They might, for example, have to choose between retro-fitting new on-board systems or equipment or radically changing operational procedures. And in some cases, even ending a ship's economic lifetime early and investing in brand new ones.
So it is clear that IMO regulations can play a very important role in investment and financing decisions surrounding shipping. That's one reason why it's so important that all sectors of the maritime world are aware of what goes on at IMO and, to a certain extent, have some input to the decision-making process.
Ladies and gentlemen, this morning you have participated in very interesting roundtable discussions dedicated to the dry bulk, tanker, container, LPG and LNG sectors, particularly about the financial risks and opportunities in each of them.
All of these sectors are protected by a comprehensive regulatory framework developed by IMO that covers how the ships are designed and built, how they are equipped and how their crews are trained, as well as operational measures including how their cargoes must be handled and safeguarded. And that's typical of IMO's work throughout the entire industry.
This afternoon, the focus moves towards industry challenges and the future of shipping. This is something that must be seen within the context of the current drive towards a more sustainable society, something with which the world as a whole is becoming increasingly concerned.
Global efforts in this context are now focussed most sharply on the 17 Sustainable Development Goals, or SDGs, which were agreed and adopted by the nations of the world in 2015. They are, without doubt, the most far sighted and important set of goals that mankind has ever conceived, setting out clear targets to end poverty, protect the planet and ensure prosperity for all.
So what is the link to shipping – and to you? Well, by providing improved access to basic materials, goods and products, by facilitating commerce and helping create prosperity among nations and people, shipping is helping lift millions of people out of poverty.
Shipping, of course, needs to secure its own sustainability, and that embraces both financial and environmental sustainability. In this, IMO is making very significant progress.
For example, in April this year, IMO's Marine Environment Protection Committee adopted an Initial Strategy for reducing greenhouse gas emissions from international shipping.
I cannot stress strongly enough how significant this is. For the first time, there is a clear policy commitment to a complete phase-out of GHG emissions from ships, a specific linkage to the Paris Agreement and a series of clear levels of ambition – including at least a 50 per cent cut in emissions from the sector by 2050.
The Strategy includes a series of candidate measures that might be applied to achieve these targets in the short, medium and long terms and now we must begin the detailed work of agreeing which of these, or perhaps others, will actually be adopted. But to have this overall framework within which the technical discussions can now take place is a truly historic breakthrough.
Another key IMO measure which is helping shipping secure its environmental sustainability is the forthcoming reduction in the global upper limit of permissible sulphur content in ships' fuel oil. Without getting too technical, 1 January 2020 has been set as the date for a significant reduction in the sulphur content of the fuel oil used by ships, from the 3.5 per cent limit currently in place to 0.50 per cent. You may have seen this referred to in the industry and the media as "IMO 2020".
This is a landmark decision for both the environment and for human health. It demonstrates a clear commitment by IMO to ensuring shipping meets its environmental obligations.
The date will not be changed – so the important thing now is to ensure consistent implementation of the requirement. IMO is currently developing relevant implementation guidelines which will look at a range of issues including the impact on fuel and machinery systems resulting from new fuel blends or fuel types – including the safety aspects – and issues surrounding mechanisms for verification and control.
The sulphur limit regulation provides a perfect example of why it is important that shipping takes proper consideration of IMO matters when framing its investment strategies. Ship-owners have options with regard to how they meet these requirements, and they need to understand what they are in order to make the right choices for them.
Ladies and gentlemen, this is an important year for IMO, as we celebrate our 70th anniversary. And, while we have used the occasion to recall our past achievements, we have also been keen to look forward, into the future.
All around us, in every part of our lives, we are encountering radical new models for the way we live, usually driven by innovative digital technology or artificial intelligence. This so-called digital disruption will arrive in the shipping world very soon. The next 10 or 20 years will see as much change in shipping as we have experienced in the past 100 years. The shipping world must learn to move fast and adapt quickly!
Technology holds the key to a safer and more sustainable future for shipping. Thanks to new technology emerging in so many areas – such as fuel and energy use, automation and vessel management, materials and construction, shipping is entering a new era.
But technological advances present challenges as well as opportunities. Their introduction into the regulatory framework, therefore, needs to be considered carefully. We need to balance the benefits against safety and security concerns, the impact on the environment and on international trade, the potential costs to the industry and, not least, their impact on people, both on board and ashore.
IMO must be ready. Our challenge is to ensure that the benefits offered by these emerging technologies can be fully realized but without compromising safety, security or environmental protection. If shipping needs to be more nimble and more adaptive in the future, then so, too, must IMO.
In this way, IMO can continue to help shipping make its contribution to global sustainable development and, at the same time, secure its own sustainability.
Regulatory developments can, and do, send a clear signal about the shape and profile of shipping in the future and, therefore, send a strong signal to investors and technology developers about the way forward.
They send a clear message to the shipping industry about the kind of investment decisions it needs to make, and a clear message to those at the forefront of technology, research and development that there will be a market for innovative ways to make shipping cleaner and greener.
Ladies and gentlemen,