The International Chamber of Shipping (ICS) is made up of shipowners’ associations from around the world that collectively represent the interests of approximately 80% of the world’s commercial fleet owners and shipping managers.
TFG recently sat down with its Secretary General, Guy Platten, to find out what is being done to alleviate shipping supply chain delays associated with both COVID and the war in Ukraine, as well as what the commercial maritime industry as a whole is doing to reduce their carbon footprint.
According to Platten, 2020 and 2021 were hugely disruptive to the industry, both positively and negatively.
On the one hand, COVID-19 restrictions meant that ports became congested due to increased health and safety measures, which in turn, caused delivery slowdowns and a spike in the price of imported goods.
Macro-overview of 2020-2 trends in the global shipping industry
2021 was also a record year for shipping container rates.
Ordinarily, this would not be a problem: most large container ships can hold around 20,000 containers onboard, demonstrating how efficient shipping as a method of transport can be.
However, when coupled with port congestion, difficulties changing crews, and an event like the 2021 Suez Canal blockade, matters can soon threaten to spiral out of control.
According to Platten: “When you get a black swan event like an ultra-large container ship blocking the Suez Canal for six days, it brought home to many people just how fragile the supply chain can be.
“This is one of the world’s busiest shipping channels – it takes about 11% of world trade, so a blockage of six days can have a massive knock-on effect in terms of late deliveries, and overall supply chain resilience.”
Impact of the Russia-Ukraine conflict on the maritime industry
He added that although things have slowly begun to improve as COVID recedes, the conflict in Ukraine is beginning to have a similar effect, not just with regards to grain shipments (Russia and Ukraine collectively account for around 40% of the world’s total wheat exports), but also in terms of human resources: currently, 15% of the global seafarer population comes from these two countries.
Many of these crewmen are currently trapped onboard ships in Russian and Ukrainian ports, which have been shut since the war began. Not only is this causing a humanitarian crisis in terms of crew welfare and security, but it is also leading to manpower shortages across the maritime industry.
“You can’t just magic up 280,000 well-trained seafarers going forward.”
Although the ICS is working closely with authorities in the Ukraine and Russian Federation to try and open humanitarian blue corridors to allow these ships to leave port, reaching an agreement is still some way off.
In the meantime, though, conditions are becoming dire: “We know one ship, which is down to last three days of supplies, so it’s a real concern for us.”
All of this is leading to spiking prices in basic commodities again, just when the industry was starting to recover from COVID issues.
“I was speaking to a colleague in Egypt just yesterday, who says that grain prices have gone up four times, 400%, in the last few weeks, which is an incredible amount.”
Shipping and global emissions
Given all of this, it is hardly surprising that greening the industry has slipped down the list of priorities.
At the moment, commercial shipping emits about 3% of total global emissions, which is equivalent to the size of Germany.
Although this may sound like a lot, it is relatively little compared to say, trucking or air transportation when it comes to moving cargo from A to B in terms of its environmental footprint.
Despite all of this, the industry remains committed to decarbonise to net-zero by 2050.
However, to meet that target, a lot needs to happen.
Firstly, the industry needs to pour more resources into research and development to find viable alternative fuels that can be produced at scale and zero-carbon fuelled enabled ships.
“We’ve proposed to our international regulator a fund, a research and development fund, paid for by a levy on each ton of fuel purchased by ships.
“We’ve got quite a bit of member state support for that, but we need far more in order to make that happen.
“We also need some sort of market-based measure as well, some sort of carbon levy, which will incentivise ship owners to make the switch in terms of their fleet.”
Emerging technologies and the revolution of shipping
Technology also has a role to play.
By utilising emerging tools such as blockchain and the internet of things (IoT), Guy hopes they will find ways to fully digitise processes within the shipping supply chain such as payment verification, paperwork processing, and shipment tracking, so that it is more efficient overall.
“During the COVID pandemic, we’ve seen a massive acceleration in the take-up of digitalisation out of necessity, whether that might be remote surveying of ships, the online training of crews, producing e-bills of landing – all these things started to really ramp up, which has been a real positive.
“But we do need a common standard, which may require the introduction of appropriate regulation.”
There is also scope for technology designed to improve cybersecurity onboard ships to avoid incidents like phishing attacks or a crew member inadvertently plugging their phone into a navigation system and corrupting the whole navigation or inventory system.
In some instances, the technology already exists but just needs to be adopted and rolled out on a wider scale.
“I was speaking to someone earlier, an author who gets books printed in China. He was able to track his container load worth of books right the way through the storms in the South China Sea, through the Suez Canal, and all the way to the UK.
“So the technology is there, and it’s really quite exciting.
“It can really make our supply chain more efficient once we embrace it and we continue on this journey.”
This video interview was recorded at World Trade Symposium 2022.