In an interview with HANSA, Peter Hinchliffe, Secretary General of International Chamber of Shipping (ICS), criticizes the EU, suggests a process adjustment at IMO and talks about the trend to smaller ships
Ballast water, scrapping, ECAs … is the shipping industry overloaded with regulation?
Peter Hinchliffe: The industry is hardly regulated[ds_preview] and in fact almost every impact on the environment is regulated in some way. But that is fine and ship owners want the regulation because they want everybody to bear the same burden. That’s why they want it to be regulated on the international level. The biggest problem at the moment is that there is so much pending regulation which creates uncertainty. One example is the Ballast Water Convention with the known problems in the US. Once the convention enters into force, the ship owners won’t know which equipment they should buy. Another area is the sulphur regulation. What is a problem is the date of a global cap of sulphur emissions. We have forwarded a paper to the IMO saying that regardless what you decide you must decide now, because we need to inject certainty into both the shipping community and the production industry. There is no uncertainty about what is required but when it is required. Another problem is regarding CO2. There is uncertainty after the UNFCC Paris Agreement as we don’t know yet if the IMO will develop any additional measures. In principle, we are not against that, but we want to see the IMO start a substantial debate so that we can see what is going to happen.
How big is the problem of regional regulation, as the industry seems to prefer global approaches but criticizes slow pace at IMO?
Hinchliffe: We always support that regulation should be done at IMO so that every ship is concerned. Regional regulation, be it in the US, Europe or in Australia, which are the areas where we suffer most, is extremely unwelcome.
How to solve this problem?
Hinchliffe: First, the IMO is not too slow. It takes time to create an international agreement because you have to have a consensus among the member states. Of course that takes time. But actually that doesn’t take any longer than regional regulation. What takes the time is getting member states in sufficient numbers to bring the convention into force. Europe is one of the worst cooperation partners. They see what is being developed, the European Commission puts in place a European regulation. The states then say that they don’t need to ratify the international convention when they are bound by a directive of Brussels. So they are actually holding back the development on the global level. That is extremely damaging to the industry. A really good example is recycling. What Europe is doing is developing a regulation which limits the number of yards that European owners are allowed to use. But they are not ratifying the international convention. That would be more effective than whatever else Europe could do. Europe could only create a disadvantage for European ship owners. That is obstructive.
So there is no way to make the IMO more efficient?
Hinchliffe: It is not the IMO. Its job is to create a debating forum for its member states and to facilitate the development of regulation. If the states don’t then take the process forward to completion by ratifying, then they cause a problem, not the IMO. And I am particularly frustrated with the European member states. They usually want the same thing but they fail to take the step of actually helping the global industry. They are just obstructive.
How much weight has the voice of ICS in international organizations? How would you describe your work with the IMO?
Hinchliffe: We were the very first industry organization invited to be in the IMO as an observer back in the 1970s. I think the Secretary General would agree that we make a big contribution, we engage very actively in the debate. That is what the ship owners expect from us. I also think people would agree that what we say is common sense value and that we are helpful. We will always be pragmatic.
Are there br[e]aking or driving forces in the process?
Hinchliffe: One of the problems is that the IMO has no obligation to look beyond the regulation they are developing. But what they have a mandate to do is to ask what are the implications of the regulation more widely, for example the cost impact. There is no requirement to do a risk analysis about the wide impact. We put a paper to the IMO Council back in December. We say that it is not good enough when a member state has a new idea, for what it is supposed to do a risk analysis, and the IMO takes that on trust. The IMO needs to take ownership of that process to look much more widely at the impact. We don’t want to stop the regulation but have a better understanding amongst the whole member states. And we found that this is pretty widely supported by the member states because there is an understanding that the current process is not quite right. We are trying to improve the process. There is a really interesting side benefit. One of the reasons for the long time until a convention enters into force is because member states are unsure about the impact. If you now have this process of risk analysis and impact analysis in place owned by all member states, then they are likely to ratify more quickly. So whilst this might take you slightly longer to develop the regulation the actual implementation should be much faster and more efficient.
How would you integrate this?
Hinchliffe: We need to integrate an official step into the written process. This might take six months or a year but we think that time will be saved because the ratification process will be much quicker.
What do you think could happen in respect of ship types or trades?
Hinchliffe: The really interesting thing what happens in trade is that there used to be a very clear linkage with GDP. That ratio started to break down in the last five or ten years, because developing countries are not so much focused on import-export of physical goods. They are following the developed world by producing a service industry. The manufacturing industry is diversifying. You don’t need for example to produce steel in Europe and send it to the Far East, it is being manufactured locally. This brings the manufacturer much closer to the consumer.
The ratio of maritime trade by GDP is being reduced. Linked to that partly is that many trade routes are getting shorter. You will see people find it too expensive and unnecessary to have such long trade routes. That will have an impact on the demand for maritime trade and on the demand for different types of ships. I think we are in a process of transition to a different trading model and the shipping industry will adjust to that. This will take time and it will be expensive but the industry will adjust, because that is the only way to survive. We will also see that requirement for efficiency will lead to design changes. I don’t think that we have seen the end of what can be delivered. Fundamentally, the hull design of a bulk carrier has not changed for 50 years. There must be something that can be done.
Would you say that the newest very big vessels won’t be necessary?
Hinchliffe: I don’t think ship owners are wasting their money. Clearly they see the demand and that demand will continue, but I think we will see an increasing demand for smaller ships.
Michael Meyer
