Chairman of V.Ships: Regulation needs to be fit for purpose

Decarbonization in the shipping sector is inevitable. However, charting the way forward for the sector seems to be a very complex and demanding task as the industry stakeholders look at how regulations and market-based mechanisms can help the sector transition into a greener future.

Regulation will definitely play a role in the process since market-based measures are not sufficient to incetivize the sector to decarbonize on its own merit.

Nevertheless, the shipping industry has been overwhelemed recently by the introduction and entrance into force of different environmental regulations, the most recent example being the IMO Sulphur Cap.

Despite being supportive of the overall aim behind the decarbonization drive, the “tsunami of regulations“ has not been very welcome by the industry due to the lack of pragmatism in their application and often technical inadequacies, availability issues or infrastructural challenges rendering these regulations a great burden for shiponwers.

Graham Westgarth, Chairman of V.Ships, believes the shipping industry needs to come forward and engage with the regulators so the legislation that comes out is shaped in a way that it is fit for purpose.

Speaking during a webinar hosted by the International Chamber of Shipping on Wedneday morning, Westgarth said that shipping needed to be much more part of its own destiny to avoid scenarios from the past.

Defining the clear roadmap to decarbonize is essential, as he explains. But in order to do that, the shipping industry needs to learn from other industries, explore new technologies, engage with regulators and technology providers, financial and public bodies.

“We’ve seen that happen time and time again where the regulation and the technology available do not match and then that creates massive capital beting wasted,” he said.

Commenting on the challanges the shipping sector faces moving ahead, Westgarth pointed out that one of the factors that differentiates shipping from other industries is the degree of fragmentation.

“This is a hugely fragmented industry, but not just only from the shipowning perspective, where you have many different type of vessels and trading patterns, but also from the shipbuilding and equipment supply persective. Aside to ICS, there are many more organizations in the sector fighting for space and airtime so it’s a very complicated industry.”

In conclusion, the sector is not in control of its own supply chain like, for example, the automotive industry.

The end products, the ships themselves, are expected to undergo the biggest changes in the decarbonization process.

And if you are looking at only one particular element, and not at the entire supply chain, it becomes difficult to find optimum solutions, he further explained.

“That takes me to the role of the IMO. On the plus side, its approach up till now has always been flag-neutral and that’s meant that we create a level-playing field, which I personally feel is essential for the sustainability of shipping. On the negative side, it can’t put legislation in place which extends beyond the supporters of the shipping industry itself, and it’s really a technical body that lacks commercial understanding and expertise.”

Hence, the role of the shipping industry should be to try and educate the regulators to better understand how shipping actually works and how people make and lose money.

“The one thing that all of this brings, the new technology, and new regulation, is that it actually flows down to the people on the ships and they already have to work under extreme duress, especially during this Covid time. The failure to meet these regulations may have a legal impact on them, so we shouldn’t forget about the people component of all this.”

“We need to match the technology with the regulation, market based measurements and improvements in financial instruments and it’s very complicated. This will require the shipping industry to be much more open and engage in a way that it has never done before.”