Growing regulatory pressures

Growing regulatory pressures

An annual growth rate of 2.8%. That is not a figure for a nation’s rate of GDP growth, although it might be. Nor is it a figure for a nation’s population growth, although, again, it might be. It is the rate of growth, in tonnage terms, of the world merchant fleet since 1949.

I have always said beware of putting a ruler on a graph and extrapolating from an historical trend in order to see what the future looks like, because in the short or medium term, that is absolutely bound to give a wrong answer. In the case of very long term trends – secular trends, over Kondratieff cycles – it is more likely to be right.

I compared the number with rates of GDP growth and with rates of population growth in order to shock – 2.8% per annum is a high rate in either category. We know, at the back of our minds, that world trade moves mostly by sea, and that the volume of trade by sea, measured in ton-miles, grows faster than the rate of growth of the world economy.

Now, what else do we know at the back of our minds? We probably know that the ‘rich world’ is growing rather slowly. What is the ‘poor world’ doing? It is getting richer, rather quickly, but because, at this stage, the changes are still small, we can miss them. We sort of know that Africa is no longer a basket case, that Latin America is not now ruled by military dictators with a fondness for comic opera uniforms, and so on.

We are aware, at the back of our minds, that most people have a mobile phone, most people have a refrigerator, most people have a television, most people have a sewing machine, most people have a bicycle, many have a motor bike. Thirty years ago, they did not have these things. The impact of these things on trade by sea is real, but modest. What happens when everyone wants a car? What happens when everyone wants a foreign holiday?

One part of our industry has understood this – the cruise sector. Be honest – if you are not in the cruise business, you have never believed the cruise sector’s growth forecasts, have you? But they have been right every time.

A rate of growth of 2.8% annually, compounded annually, produces a doubling of the original number in 15 years. In the year 2000, the world fleet was half the size it is now. In 2030, it will be twice the size. There won’t be twice as many ships, but there will be bigger ships. Allowing for scale effects, that is not quite twice as much steel, not quite twice as much fuel, emissions, paint, luboil, etc.

These are fearsome quantities.

The impact on the world’s seas, and on the air above them, of twice as much merchant shipping is going to be ghastly. People will notice. There will be regulatory changes. Serious ones.

Our own little UN body, the shambolic and sclerotic IMO, may squawk a bit, but we all know that it can’t keep up. We are going to be noticed by national governments, in ways that we have not been used to. The United States is already asking us about the oil in our stern tube bearings and our bow thrusters and what we are doing about it at the next docking. The US government has understood, and they are right to do so. There will be a lot more of this, in ways that we cannot well foresee, and it probably will not be pretty.

Time to start thinking about it?

 

 

This article appears in the Spring 2015 issue of SinoShip Magazine, which can be read online here.

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2 Comments

  1. Jarkko Tiainen
    March 12, 2015 at 11:57 am

    Great post with valid question at the end, I hope our mutual answer is Yes!

  2. Sam Chambers
    Sam Chambers
    March 13, 2015 at 9:33 am

    I hope so, I really do, but I fear for the majority the answer is still No