Overthinking it: A Christmas toast to the shipping industry

Charlie Du Cane, commercial director at Seastar Maritime, explains how he learned to fall back in love with shipping.

A few years ago, I found myself sitting on a friend’s sofa in Singapore pondering why on earth I was still in the business. It was early 2016 and I was listening to him have a fraught telephone conversation with one of his lending banks that didn’t want to pay the final instalment on a newbuilding that was meant to deliver later that year, without a further call on the owner’s meagre reserves. The reason, of course, was that between ordering and delivery the vessel’s market value had declined so much that they were breaching more covenants than a badly stowed containership loses boxes in a storm. In my own company management time was overwhelmingly focused on restructuring charters, cutting costs and trying to work out who to fire next. There is nothing more depressing, in my experience, than sitting in a Belgian stevedore’s meeting room, begging for discounts from a row of unsympathetic, unsmiling functionaries who seem to take the request both badly and personally.

So why didn’t I hang up my shipping boots (or do I mean waders?) and naff off to become a monk or a pilates teacher or something more soothing and possibly profitable. I would love to say I had some great insight as to how I was going to feel about the business four years later, but actually the reason I didn’t jump was I was in hock to my employer for the best part of $50,000 as they had paid for me to complete an MBA that tied me to them for a couple of years. Penny pinching was the origin of my foresight. Incidentally I still have moments where I have doubts about the particular trade I have chosen to ply. I noticed the other day that my now former company acknowledged that it was still focused on restructuring, meaning they had been at that grim task for nearly seven years, a testament not only to the tenacity of their team but also to how unrelentingly cruel a business like ours can be if you get on the wrong side of commercial history. It can make you bleed for a decade. Indeed, even when it’s not a total disaster, the returns in shipping pale next to other industries. Not long ago I was out discussing raising money with a friend in whose clean tech business I am a tiny shareholder. When I asked if he might put me in touch with some of the family offices he has invested in his firm. “Sure I can ask, but they won’t be interested. We have averaged 83% returns in the last five years. What has your average bulk carrier returned in the last decade?” The man had a point.

Take Covid-19 for example, some industries have just had to move people in to home working offices and kept going relatively unscathed, and others have had their businesses destroyed by lack of income. Conversely some have thrived. But, outside of hospitals, nowhere has Covid-19 been lived in the way it has been by our seafarers, as they have struggled to stay sane, cooped up month after month. Although us shore-side types cannot begin to understand that suffering, anyone who has taken delivery of a ship this year, or attempted a crew change, will have lived Covid-19 with an intensity that few who haven’t actually contracted it or fought it have.

Of course it’s not just Covid where shipping finds itself at the heart of the storm. The global consensus that seems reached on the need for a green revolution is now something we need to think about every day and factor it into our tactical and strategic decision making. What is becoming clear is that the stresses of becoming IMO 2020 compliant (and financial whoops daisies of the scrubber story) are just a foretaste of what the next few years might hold as we grapple with a future where we still don’t entirely understand what the regulatory environment will look like and, partially by extension, we don’t really know what our ships will be propelled by. It could be anything from sails to nuclear reactors and anything in between, or, most likely, a combination of most options. This is frankly going to be the easiest aspect of how the green revolution affects shipping – the arbitrary application of regulations good and bad is already beginning to happen in certain jurisdictions – mandatory carbon offset, tightening MARPOL reporting, and open book ‘green’ scores for ships. All of this is already happening and is a taste of what is going to be a rapidly evolving, confusing and occasionally counterproductive legal minefield in which we will be tacking for dear life. For a lot of businesses going green means sticking a turbine on your roof, and making sure the daily coffee run is done on an electric bicycle. For shipping, maybe it’s going to need a bit more thought.

I could keep flicking through the newspapers and show how every other article means something significant to shipping. Blockchain, AI, Brexit, US-China trade wars, famine in Yemen, reshoring, re-offshoring, the inauguration of Joe Biden – in pretty much every page I find something that could be a game changer to the industry, and demands our attention.

So this is my toast: here’s is to the shipping industry – a business that puts us at the heart of the world as we find it, and never lets us stop growing, changing and learning how to roll with the punches and moving forward. Merry Christmas one and all!