Sustainable Shipping Initiative: Low oil prices hinder green developments

London: The current low fuel price is hindering uptake in technologies and other measures that will drive operational and environmental efficiencies, argues Alastair Fischbacher, chief executive of the Sustainable Shipping Initiative (SSI) in the first Maritime CEO interview of the year.

“The real financial pressure to reduce fuel costs is simply not there at the moment, as against 18 months ago when distillates were trading at $1,000 per tonne,” says Fischbacher.

The SSI is coalition of shipping leaders from around the world, which is taking practical steps to tackle the industry’s environmental issues.

Over the next 12 months, continued regulation, such as the European Union’s monitoring, reporting and verification (MRV) regulation, which requires all vessels over 5,000 gt to report on fuel consumption and CO2 emissions for voyages entering EU ports, loom large.  While MRV comes into force in 2018, from August 2017 companies will have to submit their monitoring plan and methodology.

“Regulations like this keep sustainability front of mind within the industry, but also raises concerns about how to ensure a level playing field,” Fischbacher says.

He cites the recent MARPOL Annex VI ECA regulation as a good example of this perceived unlevel playing field.

“There is real concern within the industry that current practice does not ensure shipowners and operators are all adhering to new regulations, which creates the foundation for, and danger of a two-tier system, where those that invest in compliance are worse off than those that do not,” Fischbacher says.

On market conditions for 2016, Fischbacher anticipates further consolidation within shipping is very likely.

“Trade’s spotty recovery from the global financial crisis, and intensified customer efforts to control costs has combined with excess capacity in many sectors to make consistent profitability more challenging,” Fischbacher says, adding: “Many companies are being forced to price at their marginal cost or less to stay in business, and it is likely that there will be some consolidation across the industry in the near future, but capacity does not seem to be reducing.”