Regulations, desulphurisation and shipbuilding oversupply are the three main challenges the European shipping industry must confront in order to survive on the global stage, according to John C Lyras, principal of Paralos Maritime Corporation and a very well known face in shipping since he started out in 1975.
Lyras comes from a Greek seafaring family with a tradition in shipping that goes back four generations. In his time Lyras has been president of the Union of Greek Shipowners, president of the European Community Shipowners Associations (ECSA) and today he is still vice chairman of the International Chamber of Shipping (ICS). He is also a founder member of Hellenic Marine Environment Protection Association.
Talking about the main challenges the European shipping industry is facing today, Lyras mentions “competitiveness” as the only way to survive. “This is the only characteristic which allows us to still command 40% of the world fleet,” he tells Maritime CEO.
Lyras states that the competitiveness of the fleet depends very much on the taxation regime in shipping, the tonnage tax system.
“I think the current regime of taxation in Europe has to remain as we are going to remain as Europeans in this business, and we are in an internationally competitive situation,” he says.
Another great challenge for shipping companies today is regulation, which affects the industry in safety and in the environment, especially decarbonisation and desulphurisation. For Lyras the lack of visibility of available fuels come 2020 is infuriating him.
“For me,” he says, “it’s unacceptable we do not know what products the bunker suppliers are going to supply before the 2020 deadline. This is not happening in other sectors and I don’t know why it has been allowed to take place in our industry. Is it easier to fit 40,000 ships with scrubbers or a hundred refineries? Why are the ships asked to desulphurise fuels?”
The seasoned Greek shipowner says regulators have failed to hold the right, timely dialogue between all parties – oil companies, shipowners and shippers.
“The regulators should have tried to harmonise those interests rather than exacerbate them,” Lyras maintains. “The shipping industry has not got the technology available to reduce emissions by 50% before 2050 with growing trades and populations.”
Lyras’ opinion is that technologies such as scrubbers and batteries do not work for oceangoing vessels, while they do for ferries and ships deployed on short sea routes. “You should have technology suitable for those ships and as an operator of bulkers I don’t see this is on the horizon yet,” he says.
Looking at the current markets, Lyras says he has never seen such polarised sectors where there’s one segment doing very well and another one very bad.
“In the past usually it was good for everybody or bad for everybody,” he recalls. In the last 10 years that has all changed with dry bulk in the dumps after 2008, and tankers doing better until the last 12 months where the roles reversed. Lyras reckons part of the reason for this bifurcation of earnings between the two sectors is down to the huge amount of speculation in shipping these days via derivatives, which he believes distorts the markets.
“Today it’s expectations that create the market rather than the real supply and demand picture,” Lyras reckons.
The Greek shipowner concludes his chat with Maritime CEO warning that the biggest problem shipping faces, something he believes has been the case since the 1980s, is the overcapacity seen in shipbuilding.
“It’s very easy to supply the market with ships when the market is good and oversupply it when it goes down. Furthermore, there is no way to date to regulate the shipyards that have been opened in Korea, China and Japan,” Lyras says, concluding: “This is an endemic problem for shipping which obliges shipowners to be more conservative since is very easy to oversupply the market.”
This article first appeared in the just published latest issue of Maritime CEO magazine. Splash readers can access the full magazine for free by clicking here.