SECTOR SPOTLIGHT – TANKER SECTORS RESPONSE TO STRUGGLES OF COVID-19 WHILE IMO2020 REALITIES and 2030/2050 EXPECTATIONS CONTINUE TO IMPACT

As the tanker sector emerges from the impact of the COVID-19 Pandemic, it continues to dust itself off and march forward towards the environmentally sustainable future that it undeniably the only way forward. The tanker sector will now be in a bit of a daze, simultaneously trying to repair itself from the damages of COVID-19 all while developing new technologies, operational regulations and social responsibility that is the modern requirement, but also what many see as a possible industry disruptor.

All players involved in the tanker sector are used to answering to a myriad of interested parties, whether that be their boss, their employee, regulators, customers, insurance underwriters or shareholders, but as the importance of environmental responsibility increases, the list of those whom they answer to also grows. It is widely accepted that the only way forward for the tanker sector, and their sibling sectors within the maritime industry, is to reroute and regroup into a more sustainable and conscious version of itself. Though the uncertainty of future regulations, what the long-term lifespan of these greener technologies and ships will look like, and the sense of urgency that has come with pressure of the transition has left many invested parties worried on its ability to do so.

The pressure for the maritime industry to incorporate more sustainable practices, decrease carbon emissions and reduce overall pollution has created immense stress throughout the industry. Many have been vocal about the difficulty of reaching IMO 2030 guidelines and keeping up with the external pressures from governance, shareholders, customers, and the general public.

“What is different now is that, whether related to the pandemic, to the influence of social media, or to the loss of political center, there is unprecedented urgency,” states Robert Bugbee, President of Scorpio Tankers. “Nobody is satisfied with the status quo, and nobody seems satisfied with incremental steps. Voices are stridently demanding fundamental changes to how vessels are designed, how they are operated, and the basis of relationship between owners and these stakeholders. In this environment, setting a direction and making long-term decisions is fraught with uncertainty and complexity.”

Getting there is not going to be a path through calm seas, but it is one that cannot be missed nor denied, and the tanker sector is more than ready to take this transition on aggressively. The sense of urgency that the current socio-political climate puts on the immediate transition to cleaner technologies, combatting social injustices and overall solving the great issues of the world can create a sense of panic for many, by being told that they are not doing enough, fast enough. Quick fixes are not going to save the environment nor the world, but smart and intentional development of technologies, social responsibility efforts and increased thoughtful regulation are what this world needs and the only way forward.

Last year, the International Maritime Organization (IMO) set the new IMO2020 regulation, requiring lower sulfur emissions from the shipping industry. The projected decrease of overall sulfur oxide emissions was an astounding 77%, signaling that the maritime industry was ready to take on the challenge. That sense of urgency that many in the industry were, and still are, feeling was not due to the inability of the sector to properly transition but because of the pressures from socio-political environment of today and the inability to look 20 years in the future to see exactly what the industry will look like. IMO2020 was successfully implemented without any substantial damage to the industry, despite the negative outcomes that many believed would occur. The IMO’s next initiative of cutting greenhouse emissions by at least 40% by 2030 and then 50% by 2050 should be held with the respect and knowledge that the IMO was able to slowly prepare the industry so that the regulations could successfully lower environmental impacts while not negatively impacting the industry’s success.

Robert Bugbuee, President of Scorpio Tankers

Scorpio Tankers is a tremendous testament to how possible it truly is to meet the IMO’s regulations. Always interested in vessel design and operability, Scorpio has managed to maintain a top tier and industry leading position. As published in their 2019 Sustainability Report, their GHG emissions are 23% below the 2030 IMO mandate and they have no plans on stopping. According to Scorpio’s Bugbee, Scorpio “has spent considerable time studying alternative fuels and new technologies for everything from hull coatings to weather routing to predictive algorithms for safety and operational risks.”

Like many of their sector counterparts, alongside Scorpio’s concern with environmental impact and meeting the IMO regulation, they are increasingly dedicated to the safety of their seafarers and are increasingly concerned with the governance of developing countries, most pointedly the presence of possible corruption and piracy. Recognizing the importance of the ability to measure high standards regarding the shipping industry’s Corporate Social Responsibility/Environment, Social and Governance, NAMEPA has created the shipping industry’s first known standards program. “The maritime industry is rapidly recognizing the importance of demonstrating its commitment to sustainability” NAMEPA Chairman Joe Hughes, CEO and President of the Shipowners Claims Bureau. “NAMEPA identified the need to provide the industry with a standard guideline of expectations relating to a company’s efforts in CSR/ESG. We are pleased to provide this tool for the industry to support its efforts towards sustainability.” Companies, organizations and individuals can assess their efforts to become more sustainable through this process, with successful candidates receiving NAMEPA’s coveted MSP seal and certificate.

 

John Hadjipateras, CEO and President of Dorian LPG

In terms of governance and social responsibility, the shipping industry has been thrown into a crisis that is unimaginable. The crew change crisis has been headlined news for over a year, and for good reason. According to the International Chamber of Shipping, it is estimated that only 25% of normal crew changes occurred between March and August of 2020 due to borders being closed, suspension of many international flights and restrictions imposed by immigration and national health authorities. At least half a million seafarers have been impacted by the crew change crisis, with roughly 250,000 seafarers who served extended contracts while 150,000 required immediate repatriation in August 2020 alone. Although there were active efforts by the IMO to create a specific task force for the crisis (Crew Change Task Force) with protocols that recognized seafarers as ‘key workers’ and laid out ‘12’ steps that allow for crew changes to be completed without endangering anyone’s health. These efforts, while valiant, are reliant on the cooperation and alignment with national protocol; unfortunately many nations do not know just how truly essential seafarers are, leaving them without the essential worker title and stranded on ships or at homes without work. As some nations ease their guidelines, seafarers are beginning to return to normal. “Our crew rotation is now at normal levels,” says John Hadjipateras, CEO and President of Dorian LPG. “Though the situation is markedly improved we are still waiting for crew members to be recognized as essential workers and their transit and vaccination prioritized.”

It is widely known to those within the maritime industry that it is a relatively invisible industry to those outside, in comparison to how much global trade relies on it. Although shipping accounts for roughly 90% of all global trade, most non-maritime industry individuals would not call seafarers essential workers. This always has been an issue for the industry but with the COVID-19 pandemic, it allowed for the crew change crisis to occur. The lengths that had to be taken to alleviate some of the crisis were vast. Robert Bugbee of Scorpio Tankers explained that they “diverted vessels to what ports would allow crew changes, not knowing from one day to the next whether rules and logistical constraints would change. We chartered aircraft to move people in directions that commercial airlines were incapable of doing, repatriating 5,600 seafarers through 50 charter flights. We advanced payments to our seafarers at home who were unable to get back to work and provide for their families. Most of all, we engaged with our ship staff, knowing that fatigue, stress, and a void of credible information would all have a serious impact on their health.”

The current obstacles that the tanker sector is meeting are ones that can be seen across the entire maritime spectrum. These obstacles must be met with collaboration, understanding and patience. We are at the nexus of groundbreaking technologies, regulations and operations, and an overall sustainable future. Moving forward towards this sustainable future requires companies, seafarers, customers, and shareholders to understand that the route forward is not through calm seas, and will require a lot of renavigating, but the destination of sustainable and conscious shipping will be reached. Trusting that the IMO’s guidelines can, and will, be met through new technologies and collaboration, dedicating company times to invest in ESG/CSR programs will make sustainable changes and will attract customers and funders.  Putting a beacon of light onto how important the industry is to those outside the industry, will help bring the maritime industry into the future. It will sustain the maritime industry’s position as the largest contributor to global trade while retrieving the title of one of the world’s most sustainable industries.

 

NAMEPA Maritime Sustainability Passport sealTo learn more about NAMEPA’s CSR/ESG Program, visit NAMEPA’s CSR/ESG Maritime Sustainability Program – NAMEPA or email CSR-ESGProgram@nameapa.net with any relevant questions. The program is offered to NAMEPA members at no cost to qualify for the Maritime Sustainability Passport and receive the MSP seal. Non-members are welcome to apply to participate at a cost of $2000 or become NAMEPA members and have the fee waived. To protect the proprietary information of the qualifying companies, NAMEPA offers a non-disclosure agreement.

 

About NAMEPA: The North American Marine Environment Protection Association (NAMEPA) was officially launched in 2007.  NAMEPA is a marine industry-led organization of environmental stewards preserving the marine environment by promoting sustainable marine industry best practices and educating seafarers, students and the public about the need and strategies for protecting global ocean, lake and river resources to Save Our Seas.  For more information, go to www.namepa.net.

 

Scorpio Group is a global provider of marine transportation services.  Scorpio Tankers Inc. and Scorpio Bulkers Inc. own product tankers and bulk carriers respectively.  Scorpio Services Holding provides services to Group companies and third parties including pooling and technical management.  Scorpio has its principal offices in Monaco and New York.  For more information, go to www.scorpiogroup.net

 

Dorian LPG is a liquefied petroleum gas shipping company and a leading owner and operator of modern VLGCs.  Dorian LPG currently owns and operates 22 modern VLGCs. Dorian LPG has offices in Connecticut, USA, London, United Kingdom and Athens, Greece. http://dorianlpg.com/

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