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Why shipping is a third-world industry

Why shipping is a third-world industry

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You may recall a fairy tale by Hans Christian Andersen in which a young and vain emperor is persuaded into buying from two confidence tricksters a suit of clothes that are “invisible to anyone who is unfit for their position or just hopelessly stupid”. When the emperor is dressed by the charlatans in the wonderful new clothes, everyone pretends to see them, until a small child, too young to know better, calls out: “But the emperor’s got no clothes!”

I used to work for a shipowner who, when a competitor bought an investment bank, said: “I like to own things that I can walk up to and pat”. His judgment proved correct.

We mistrust things that we cannot see in shipping because, to speak frankly, our industry operates on rather a low level of trust, and we suspect that if we cannot see something, there is probably a scam going on.

Paying for carbon dioxide produced in the course of a business – or ‘emissions trading’ to give it a sexier name – looks remarkably like the Emperor’s New Clothes. A lot of clever people busy making money out of something that we stupid people cannot see, or touch, or reliably measure, and telling us that it is all for the good of the planet.

There are plenty of scams involving stuff that we seldom see, but which we think we can measure, such as fuel oil, both as bunkers and as cargo (in the minds of some tanker owners, there is little difference) and we are used to them. Magic pipes, weird and wonderful piping plans, contents of bunker hoses dropped back – this is the stuff of everyday shipping.

We all know those venerable war horses, the International Chamber of Shipping (ICS), in the blue corner, representing capital in the form of shipowners, and the International Transport Federation (ITF), in the red corner, standing for labour in the form of seamen and dockers.

Well, it seems there is another ITF, and the ICS has picked a fight with this one, too. This one is the International Transport Forum, and it is an OECD (Organisation for Economic Co-operation and Development) think tank. It has decided that merchant ships ought to pay $25 per tonne of carbon dioxide emitted. Diving deeper into alphabet soup, this proposal popped up at the UNFCCC – the United Nations Framework Convention on Climate Change, as part of a proposed MBM (Market Based Measure) in accordance with UNFCCC CBDR (Common But Differentiated Responsibility). CBDR means that rich countries ought to pay more than poor countries.

The International Transport Forum thinks this would raise $26bn annually.

The ICS does not agree. The ICS says – and this is the good bit – that because some 70% of the world’s ships fly the flags of UNFCCC non-Annex I developing countries, the CBDR rules ought to apply and shipping should be paying, if anyone ever does pay, a levy on the basis of what industries in poor countries pays, which would be about a third as much.

This is specious reasoning. Every schoolboy knows that the flag of a ship has no necessary connection with the domicile or nationality of their owners, and indeed that shipowners are, as a class of people, a bit different to peasant farmers and such folks. I cannot recall when I last saw a shipowner driving a bullock cart.

Wait – it gets better! I quote the ICS press release: “Shipping meanwhile has already reduced its total CO2 emissions by more than 10% (2007-2012) and CO2 per tonne-mile by around 20% (2005-2015). It is therefore on course for carbon neutral growth.”

Well, I’m staggered! What public-spirited folks we all are! The ICS sees fit not to mention that its start dates for both runs of numbers coincide with the greatest boom our industry has ever known, with ships dashing from A to B at top speed, and they continue through a period of high fuel prices to end in a period of deep recession. Amazing as it may seem, if you slow your ship down, it burns less fuel per ton mile, but don’t let’s go telling the world that.

Oh, and the good news – none of this will happen any time soon. The IMO stopped talking about it in 2013, and is due to resume next year. So that’s all right, then.

Put the emperor’s clothes back in the dressing up box.

 

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Andrew Craig-Bennett

Andrew Craig-Bennett works for a well known Asian shipowner. Previous employers include Wallem, China Navigation, Charles Taylor Consulting and Swire Pacific Offshore. Andrew was also a columnist for Lloyd's List for a decade.

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5 Comments

  1. Simon Bennett
    November 30, 2015 at 10:10 am

    While it is true that not all the 70% of world tonnage registered with developing nations is also beneficially owned in developing nations, around 40% of the world fleet is owned or controlled by them – a proportion which is growing – while 60% of maritime trade now departs or arrives from ports in UNFCCC non-annex I nations. The majority of marine trade today and in the future exists to serve sustainable development in emerging economies, which is why it is inappropriate for OECD ITF to suggest that shipping should accept the same CO2 reduction commitments as OECD nations given the UNFCC CBDR principle. Unless we want to ration maritime transport? Also, while recent CO2 reduction largely is due to speed management, what is wrong with that, especially when it will soon be augmented by CO2 efficient ship designs due to the mandatory IMO EEDI?

  2. Abhijith
    November 30, 2015 at 12:21 pm

    Humor in shipping news is rare! Nice read. There are lots of emperors around. And enough confidence tricksters too 🙂

  3. Russ
    November 30, 2015 at 4:56 pm

    Bravo, Andrew. A great piece, and well needed. The more shipping people take their blinkers off, the more likely we will be able to understand the public’s struggle to see the members of our industry as a good corporate citizens. The ICS can spin all it likes, the reality is we’re an industry with some traditionally dirty practices, and a history of refusing to self-regulate. If society decides to ram some ill-conceived regulation down our throats, we’ve only ourselves to blame.

  4. Lars Bergqvist
    December 2, 2015 at 7:26 am

    Crewing of ships is certainly a third-world industry!

  5. Kaiti
    December 4, 2015 at 11:22 am

    Your writing actually made me want to read an article on shipping just for fun! Well done.