Owners are increasingly relying on managers to help navigate the tsunami of environmental rules coming shipping’s way
The steadily increasing burden of regulation has benefitted the professional shipmanagement sector, but the next wave of regulation seems likely to concern atmospheric emissions which is a subject that goes straight to the owner or the time charterer’s bottom line. Will professional shipmanagers be able to maintain control of this?
Rajiv Singhal, managing director of MTM Ship Management, says that as shipping becomes ever more regulated environmentally, managers must roll up their sleeves and provide innovative technical solutions.
“If not,” he warns, “they will find it difficult to survive in times to come.
To meet regulatory requirements is not a mark of excellence, just a ticket to trade
“A shipmanager’s focus will be managing risk and optimising asset performance to meet current and future environmental targets,” says Bjoern Sprotte the CEO of shipmanagement at V.Group.
Carbon pricing in Europe, compliance to the International Maritime Organisation’s (IMO) Energy Efficiency Existing ship Index (EEXI) and Carbon Intensity Indicator (CII) regulatory requirements, certifications for the European Union’s monitoring, reporting and verification of carbon dioxide emissions from maritime transport (MRV) and the IMO’s Fuel Oil Data Collection System (DCS), along with the recognition of climate alignment within the Poseidon Principles and the Sea Cargo Charter – all these require managers to be very hands on and to ensure accurate recording of emissions data.
“To meet regulatory requirements is not a mark of excellence, just a ticket to trade,” says Despina Panayiotou Theodosiou, the joint CEO of Cypriot service provider Tototheo Maritime. Future regulations on emissions will include higher accountability, investment in monitoring tools and the ability to make technical adjustments to vessels, she reckons.
A problem both managers and owners face is the clarity of incoming legislation.
“The impact of the next wave of regulation and where responsibility will ultimately fall when it comes to emissions and implications such as carbon taxation remains to be seen,” says Kishore Rajvanshy, the managing director of Fleet Management.
Rajesh Unni, the founder of Synergy Marine Group, reckons regulators and flag states will look to the holders of the Document of Compliance (DOC)- the shipmanager – to ensure compliance with any upcoming regulation, something also picked up by Jianfeng Zhou, the managing director of Wah Kwong Maritime Transport Holdings, who specifically picks up the upcoming EU emissions trading scheme (ETS) in which the manager as the DOC holder will be responsible for reporting and settling payment for the emission allowance, of which the cost would then be passed down to owners or charterers accordingly.
Partner with a manager to remove the risk from your future business landscape
Carl Schou, the president of Wilhelmsen Ship Management, is concerned by the EU ETS where the responsible person for carbon tax does indeed look like it will be the DOC holder. The shipmanagement model is based on a service on behalf of owners and charterers, he points out. Internally, Wilhelmsen has got its legal team to assess the risk and steps ahead on how the company can manage this moving forward.
The burden for complying with regulations concerning atmospheric emissions will ultimately fall on the shipowner, argues Wallem Group CEO John-Kaare Aune. In this case, the manager’s role, according to Aune, will be to support owners in choosing the solutions that allow their vessels – the ships of the future – to achieve compliance while best serving their operational needs.
The scale argument
“Since we collaborate with so many shipowners, we are exposed to a far greater variety of technology than any individual owner would be, making our input highly valuable,” Aune says.
Synergy’s Unni picks up on this scale issue brought up by his Wallem counterpart.
“True scale is a prerequisite for owners to efficiently manoeuvre within and comply with such regulations and this is where the size and economies of scale of the shipmanager will feed back into the bottom lines of owners and charterers,” Unni tells Splash.
Regarding decarbonisation, Bjorn Hojgaard, the CEO of Anglo-Eastern, says the role of the shipmanager will be to understand the roadmap, from a regulatory as well as technological point of view.
“At the same time,” Hojgaard says, “being able to timely and accurately record and report emissions seems to be inevitable in order to be able to compete.”
“The responsibility of shipmanagers in this techno-commercial space is two-fold – provide the right guidance based on the type of project, return of investment and other parameters that should ideally be within the domain of the shipmanager and then to have this executed in a manner that would benefit the shipowner and the environment,” says Vinay Gupta, managing director of Union Marine Management Services.
Concluding, Unni from Synergy says he is sure more owners will decide to partner up with shipmanagers who offer future-proofed, digital solutions that enable them to comply with the myriad upcoming regulations in a cost-effective manner.
“In short,” Unni says, “if you want to eliminate the risk of non-compliance, which could carry a very high bill, then partner with a manager which has the scale, skillsets and technology to remove that risk from your future business landscape.”
This is one of the articles from Splash’s Shipmanagement Market Report, a 72-page magazine published this month. Splash readers can access the full magazine for free by clicking here.