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Mare Forum 2005
Shipping in a Responsible Society
Quo Vadis?
12 &13 September 2005
Hilton hotel Cavalieri
Rome - italy
  
Mare Forum
2005 Rome 12-13 September
Chairman’s synthesis
Shipping in a Responsible Society
- Quo Vadis?
A record number of both sessions and speakers
characterised Mare Forum 2005, which was designed to
provide a comprehensive “progress report” on the central
theme of ship quality, along with a range of associated
peripherals affecting both the shipping industry and
those who regulate it. The quality shipping debate which
began with high level participants in the 1990s
developed the concept of the “chain of responsibility”
and in Rome, all links in that chain were fully
represented, a measure, in itself, of progress that has
been made. The account summarises the two day event,
with due apologies to those who feel that their
important contributions have been diminished or ignored.
Setting the scene
The debate has advanced a long way from the early
emphasis on outlawing sub-standard ships and circular
arguments upon what is meant by “quality” . Themes
explored by keynote speakers ranged over issues of
corporate social responsibility, governance, introduced
by Mr Ugo Salerno and the need to satisfy the
aspirations of a wide range of stakeholders which went
far beyond those immediately concerned with the ship and
her voyage. An industry which cared about wider social
responsibility was also one which was by definition,
highly professional and focussed on providing the
precise logistic service demanded by customers, who
themselves cared about their own social responsibilities
for sustainability and reputation, in a virtuous circle.
But such an industry, as suggested by Mr Nicola Coccia,
needed to acquire an identity and a good public image,
which itself required proper promotion and enhanced
transparency. So the theme of visibility and what others
thought about the shipping industry was soon introduced
and was one that permeated the whole meeting, virtually
from beginning to end. Ministerial speakers all
emphasised the issues of visibility and image. Italian
minister Mario Tassone provided examples of how shipping
might be promoted in the Mediterranean, because it was
necessary to rebalance transport modes which had become
over-reliant on road haulage , with its attendant
congestion. UK Minister Stephen Ladyman suggested that
this awarness and visibility bore strongly upon our
committment to direct participation in a European
shipping industry, rather than leaving the industry to
those who might be able to do it cheaper. There was a
downside to merely stepping back and becoming customers
of others in marine transport.
The Dutch Minister Mrs Karla Peijs suggested that
innovation and efficient use of transport were keys to a
continued European presence in this industry , along
with highly professional people operating in a
sustainable fashion. She urged progress to improve the
industry’s green credentials, which were , notably in
the area of emissions and recycling, falling behind that
demanded by modern societies.
High technology and innovation were clearly keys to the
continued prosperity of the industry, although major
shipbuilder Mr Corrado Antonini was concerned about
regulatory fragmentation and the need for an
international regulatory approach . He also worried
about the way in which pressure was building in costs in
a fiercely competitive industry , and the way in which
this might impact upon the development of the more
robust and better quality ships which were demanded.
There was also need, he suggested, for regulators to
focus rather more upon maintenance, which bore so
strongly upon the ultimate quality of a shipping
operation.
The need for an industry to be rather prouder of its
achievements was the strong message of Mr Robert
Somerville, who pointed to the unarguable statistical
proofs of progress and improvement attributable to an
industry that does not enjoy the credit it deserves for
what it delivers to the world. Lay hold of such facts
and let them be known more widely - was his recipe for
dealing with those who seized upon the tiny incidence of
loss or damage and made this the unwarranted story of
shipping. Mr Guiseppe Bottiglieri emphasised the
importance of owners being in the forefront of technical
innovation, and broadened what had been a somewhat
Eurocentric debate to encompass the great Chinese engine
room pumping away on the other side of the world, and
accounting for so much of the present maritime
prosperity.
Freedom of the seas
The political and practical imperatives of regulation
were dealt with in a session which asked whether
regionalism could coexist with an international industry
and an effective international regulatory regime, albeit
one which was undeniably eroding traditional freedoms of
the sea. The old order is changing , we have the
anxieties and rights of coastal states to satisfy over
issues which go far beyond navigation, to protection of
the environment and security. But could regional
regulation , as was suggested by Mr Fotis Karamitsos,
not “add value” to international regulations, by
sharpening up their implementation, for a start. Did not
the EU produce harmonised and timely implementation of
international regulations?
Or was the spread of regionalism, as pointed out by Mr
Bill Gallacher, merely a recipe for bedlam? He suggested
that positive public awareness of the shipping industry
was growing, not least because of IPOs being publicised
in city pages. And even negatives, like the aftermath of
Hurricane Katrina , point to the importance of tankers ,
when fuel prices soared.
Crossing the whole spectrum of regulatory responsibility
was the US Coast Guard and a synopsis of its current
activity from Rear Admiral Thomas Gilmour was presented
by Adm. Robert North. And once again there was a return
to the importance of shipping to the global economy, in
an integration of transport, trade and production as
evidenced by Dr Hans Payer. Here were facts which could
be laid hold of, by those wishing to inform the wider
world about shipping in an era of fundamental change,
when globalised existed because of precise and efficient
shipping. He offered positive predictions for the future
, as world trade, which itself generated demand for
ships, increased.
There was considerable debate about the practicality of
regulation, acknowledging the facts that politics (which
drove regulation) tended to be local. But regulation
also needs to be practical and “fit for purpose” while
it is required to be “road tested” for the impact it
would make. But there were reminders that regulation was
a burden, and there was a desperate need to reduce “red
tape”, something which had yet to manifest itself.
And above all was the absolute need for it to be
international , a “coherent global shipping policy” for
a global industry. Could regionalism coexist with an
international industry ? With difficulty it seemed,
although there was surely a case to be answered where
“freedoms of the seas” impinged upon local sensibilities
, as with pilotless tankers in the Danish Straits.
The search for quality shipping
Several Mare Forums have tackled the issue of the poorly
performing flag state and Mr Brian Wadsworth suggested
that regulators themselves need to justify what it is
they do. There was the “power of a good example”
provided by an efficient flag state , and the issue of
reputation, which drove improvement to be considered.
Audits it was suggested, have proved practical in trials
, will become mandatory, and will attract good operators
to efficient and well regarded registries, while such
operators themselves will be rewarded by their
association with the good flag.
The substandard ship remained a problem, said Mr Philip
Embiricos, noting its ability for bending the rules,
saving costs and competing unfairly. It was only by
markedly raising the costs of this marginal tonnage that
improvements would be made. The derogation of
supervision by the state is a negative thing, said
Senator Henri de Richment, who advocated national flag
shipping , properly supervised, by a responsible state.
The vulnerabilities of class was explored by Mr Philippe
Boisson, who pointed to the false public perceptions of
what it is that class does, but which also explained why
class was invariably blamed after an incident. Unlimited
liabilities which could bankrupt a society would bring
in their wake a huge increase in fees and a vast
defensive bureaucracy. But there were plenty of other
risks in 21st century shipping, which demanded
management through risk reduction strategies. Others
were less easy to either predict or defend against
without the assistance of government, such as
terrorists, pirates or security threats of various
kinds, which range from hostage taking to more
traditional villainy, all of which was , said Ineke
Hamming, “not acceptable in the 21st century “ and which
deserved much more public awareness.
The search for greener shipping
The conference considered the ultimate responsibility
for environmentally friendly design, considering the
through life of the ship from cradle to grave, or design
stage to demolition. Companies could anticipate
regulation with voluntary action, and minimise the use
of hazardous materials. said Bob Smart. Treatment of
existing ships, however, neeeded to be realistic.
Health and the environment were powerful drivers now
pressurising the shipping industry, said William de
Ruyter , who suggested that the shipping industry, “a
big polluter in its field” , needed to follow industries
like the petrochemical sector which had moved far to
control its emissions. Action in this area, he said,
could do much for the industry’s image. For its part,
the European Maritime Safety Agency would be helping the
industry with its own audit of port reception
facilities, and would welcome reports about their
adequacy.
There was a place for advanced technology , said Michele
Sferrazza, who showed how the Aliswath project vessel,
produced speed and efficiency through advanced hull
design which reduced wash and other undesirable effects
. Franco Porcellacchia explained how a large cruise ship
could make as small an environmental impact as possible,
through design, specialist personnel and reputation,
which brought its own commercial reward.
The all-important human element
The human element strays into virtually every Mare Forum
session, and this meeting was no exception, with perhaps
the realisation that “people” factors are pressing in on
the industry, with its demographic problems afloat and
ashore, problems of sourcing and doubts about training
and education. “Who are the people on our floating
factories?” asked Mr Rajaesh Bajpaee, “what do we know
about them?” Is the industry attracting the best and
brightest? The availability of European seafarers was
considered, as were the consequences, should Europe
prove ineffective at attracting sufficient recruits. New
EU legislation will not criminalise seafarers, asserted
MEP Corien Wortmann-Kool , but broaden accountability
and liabilities.
Such a view was not shared by shipmanager Roberto Giorgi,
who worried about the scapegoating of seafarers, and
aggressive measures actually proving counter-productive
, in preventing people reporting non-conformities.
“Seafarers must know that we respect them” he asserted,
pointing out that there was a need to treat them as part
of the maritime security chain, rather than potential
terrorists.
But would there be sufficient numbers of them? Niels
Bjørn Mortensen previewed the BIMCO/ISF manpower
analysis , suggesting that the preliminary results
indicated that the pattern of labour supply and demand
would be far more complex than hitherto, when the report
is published in November. And as for the type of person
the industry needs, it would appear, suggested Umberto
d’Amato, that both practical and intellectually sound
people , with sea experience and university education,
would be required for our complex and sophisticated
industry. Once again, the image intruded, because the
public perception of shipping is important in any
consideration of its career opportunities. There was
also a need to be realistic, if we were hoping to
advance the careers of Europeans, with the present
reluctance to employ EU junior officers regarded as a
major problem.
The dash for short sea shipping
Optimism and pessimism competed for honours in a
serious debate about this market sector, which, it was
hoped might address the problems of landside congestion.
Filip Beckers, who has current experience as a shipper
showed that SSS could be attractive as a realistic
option, but the sector was fighting for market share
against ever cheaper road haulage, using east European
drivers and who were competing aggressively.
Professor Harilaos Psaraftis worried that all the
schemes that had been devised by the European Commission
were failing to address the problems of an overaged
fleet which was still losing market share to road, which
was growing faster. A more energetic strategy would set
measurement goals , provide adequate resources ,
modernise the fleet and remove the bureaucratic
obstacles which still added to the cost and complexity
of shipping operations, and scarcely affected road
haulage.
There is concern that too many new sea routes are not
sustained , that the level of intervention is
insufficient, and that even in the Mediterranean, where
there have been spectacular gains on the “maritime
motorways “ promoted by the Commission, load factors are
still too low. Incentives for truckers to use ships
rather than the road could make a difference.
The shipping markets
The boom times in the shipping markets “were not
dead yet” , said Martin Stopford, whose comprehensive
tour through the supply and demand for ships still
showed good earnings , a tight supply/demand situation,
the continued effect of China and “wild cards “ such as
hurricanes and political problems intervening on the
world shipping stage. Worth considering that owners are
players again, after many years as humble supplicants .
But timing was still crucial , surpluses were growing in
a cumulative fashion, and 2007-8 could usher in a
difficult period.
Antonio Zachello , in considering tanker prospects
similarly saw storms ahead , that would drive further
consolidation . Bote de Vries saw increasingly
sophisticated ways of investing in ships , although
banks worried about dropping loan levels with cash-rich
owners needing to borrow less. Others were concerned
about the possible volatility of China , which had
become so important to the rest of the world , and
whether conservation driven by high priced energy will
depress ship demand.
Money matters
Sessions on investments in liquid and dry bulk and
the position of banks and shippers revealed a wide
variety in financial products , from the now traditional
long term investors within the German KG system, to IPOs
and mezzanine finance , “the only alternative to the
debt markets”. Finance was also “subject to fashion ,
its products driven by competition and demand, and the
perceptions, at any one time of the shipping industry.
Today, shipping was very much in the public arena,
witness the number of IPOs although opinion within the
industry is still divided as to whether it is “ready to
go public”. Many traditional owners, with long term
relationships with their bankers , would never consider
such a strategy, worried about the loss of control they
imagine would result.
Bankers, it is said, “are always willing to finance good
shipowners”. Here too the issue of image cannot be
avoided. If hapless investors lose their shirts when a
shipping investment goes down, is the reputation of the
shipping industry enhanced? Or will shipping be seen as
little more than a collection of pirates, as were the
dot-com entrepreneurs after the bubble burst?
Are banks an influence upon improvements in safety and
quality? They are certainly part of the quality chain ,
and while those who financed a sub-standard ship might
escape the opprobrium reserved for other players
involved, they have, says Gust Biesbroeck, some limited
scope to influence matters.
Image again
So to the final session, providing interactivity on
the industry’s image. There is no shortage of ideas and
people seem far from resigned to being in an industry
with no hope for an image enhancement. Paul Slater
introduced the Martitime Industry Foundation, a new
educational tool that the whole of world shipping can
feed into to ensure that better information about this
most essential industry is made available to students,
educators, researchers or the media.
Fotis Karamitsos urged less negativity towards
regulators and the public , less opacity, more
investment in the corporate image and an end to secrecy
and protection. Delegates were urged by Julian Bray, and
indeed others, to relate to media folk and not shoot the
messengers. There was some encouragement taken from the
increasing interest in improving the image of the
industry, which was seen as important, and not, as was
once the case, irrelevant.
Conclusions and recommendations -
The following eight points seemed to suggest
themselves from this marathon meeting , which might be
worthy of further consideration. They are offered as
mere suggestions of industry “needs” , rather than
policy proposals!
1. We need a collaborative, rather than
individual effort on the issue of image , to protect the
long term future of the industry.
2. We need to explain to a wider world what shipping
does , and be prouder of our industry, as part of a
continuous process of awareness enhancement,
rather than a “sticking plaster approach” after an
accident.
3. We need to convince the regulators that their
regulations are valid and relevant , that
their impacts are properly tested, and that their
results are practical.
4. We need to break away from a compliance culture that
resists change, to one of continuous improvement
and proactivity.
5. We need to promote the shipping industry as a
product with a much more professional approach , using
all the expertise that is available.
6. We need to value our people more, train them
better, offer them security and careers and defend them
against societal pressures to blame them.
7. We need to remain alert to all that is going on in
China (and other regions which clearly influence
world trade) and understand the scale and the problems
of that country.
8. We need to encourage innovation in every
field, in technology, systems and finance , in an
industry which has an undeserved reputation for
conservatism, but in reality is one of the world’s most
innovative.
Michael
Grey
Conference Chairman
16 September 2005
MICHAEL GREY
Commentator,
Lloyd's List
Conference
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JANNIS
KOSTOULAS
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