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.
Whose responsibility?
“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.
It seems to me that we have series of opinions and one liners from ship management leadership, which on the face of it makes sense. However, maybe more telling and probing would be a detailed, transparent and critical view of owners on the role, responsibilities and liabilities of managers? Both by those who use managers and those who do not?
It is possible they would only speak under anonymity, however I suspect wide and varying views by owners on why, how and what they see managers as and for? Some play as a team, many see the dictator and servant role asa love, many pass the buck when it suits them. Some just see the DOC as a means of passing liability while directing the decisions… while calling the ship manager a cockroach… yes a true statement.
Totally agree.
What is also missing is a legal opinion (Ince, HFnW) and what the P & I Clubs have to say.
Brilliant point – and one that we will endeavour to cover for you when we produce our next Shipmanagement magazine. Thanks. Well noted!
Cheers.
At the end of the day most things seem to end up with lawyers and the Clubs are run by lawyers,
from the standpoint of an institution , the existence of of a risk manager has less to do with actual risk reduction than it has to do with the impression of risk reduction –is this a true ?
philosophers since Hume and modern psychologists have been studying the concept of epiphenomenalism or one when one has the illusion of cause and effect —- so does the compass move the boat ?
“is this a true ?” Depends on your base criteria. Which is true. Your point being?
“so does the compass move the boat ?” To some degree, yes. Your point being?
Hi David : lets look at how risk is managed in a similar industry -therefore what is the truth for example in the airline industry ? do airlines have risk management speaking from a technical viewpoint –of course they have !!!!! but really its not called risk management in a similar way its nominated or practiced in the marine world ( with possibly the exception of gas ships and tankers ) i think they do not because they are fully aware that any compromises in maintenance and equipment and personnel selection is going to , in all probability , lead to a disaster for them / so there the technology speaks the truth –there is no question of an impression of risk –its live and present and has to be eliminated not minimized ; what we , unfortunately have done is coat this risk with various regulations which then provides an impression of risk reduction / etc but when really the bottom line is how have you managed to eliminate risk comprehensively and in a technologically competent way ; am sure that most ship managers are fully aware of this reality but are constrained by market dictates for them to change their ways the market and the nature of maritime trade has to change simultaneously the way risk is perceived also changes ; once could debate endlessly about the various regulations etc whether they provide an impression of risk reduction and not real risk reduction but we will not get into this ; am also sure many ship managers will disagree with this but risk elimination has to be driven by technology uptake rather than an overt procedural dependence ; i am hopeful that with the new fuels coming in the way risk is dealt with is going to change drastically , may not be immediately but for sure in the near future ; as a caveat i speak only from a dry cargo perspective so ship managers running tankers liquid and gas may really not agree with my views
Zero risk ships would put shipmanagers out of business. Shipmanagers love risky unsafe ships!
Don’t talk daft.