panelists at Reed Smith’s London International Shipping Week while discussing
‘Tomorrow’s Maritime World, Today’ on September 12 concluded that risk
management is crucial to prepare the industry for tomorrow’s maritime world.
from a cross-section of the industry rendered the debate lively and significant
with their rich experience and they were concerned with the three pressing
topics in the industry: cyber risk
and technical advancements; current trends in finance; and environmental impact
of the industry. Though each topic will certainly have challenges unique to it,
the panelists concurred on the necessity of risk management.
On the second day, Panel
moderator and Reed Smith partner Andrew Taylor introduced the first topic of discussion:
cyber risk and technical advancements. Cyber security is the most significant
agenda for the industry as a whole, particularly post-Maersk cyber-attack. However,
what is the scale of the risk and is the industry responding appropriately?
The panelists agreed that ultimately it is about risk control. Indeed,
the crew, operators, owners and management companies must be educated about the
cyber threat, viewed Mark
O’Neil, president of Columbia Marlow Shipmanagement Ltd.”. Frank Coles, CEO of Transas
Marine added that “common sense needs to prevail” although he warned, “we don’t
know what we don’t know” therefore the onus must be on risk control.
When the discussion moved on to automation,
Mark expressed the view that automation is ‘ tapping at our door’ suggesting
automation is just round the corner as a reality; but, of course, there will be
human element still. According to Frank, however, the technology for automation
is here already and a number of shipowners are already controlling decisions
from a shore base on information they can receive from vessels. Laura Bugden,
company secretary and risk manager, said this could see the beginning of a
“very different type of seafarer”.
the legal implications of technological changes to vessels? According to Nick
Shaw, global head of shipping at Reed Smith, “lawmakers react to the
marketplace, but it can be a very slow process to effect legal change in the
international sphere”. Therefore, lawmakers are more likely to be asking
themselves ‘what is the minimum they can do to fit the current rules to the new
reality of autonomous vessels?
topic of discussion centred on current trends in finance. As the traditional
banks have exited, new players have filled the void. Despite the opportunities
for funds and Chinese leasing agencies, according to Albert Stein, managing
director of AlixPartners and a specialist in debt restructuring, the cost of
capital is different for big players than it is for the smaller players.
Therefore, more consolidation is expected according to all our panellists. Mark
confirmed “it will be the bigger players who can ride out the market as returns
become smaller than before”. Laura added that with these changes to the market
players, greater emphasis must be placed on governance.
topic of the day was the environmental impact of the shipping industry and the
response of the industry to the new regulations and the upcoming IMO 2020
global sulphur cap deadline. The discussion understandably turned to the cost
of compliance with the regulations. Laura was to the point and pragmatic when he summarized the
industry’s attitude and approach: ‘ no one has the money to throw at
it…therefore they’ll wait till the end’ again though, the reality of meeting
the 2020 global sulphur cap set by the IMO will largely rely on risk management
the changes required to make vessels environmentally compliant and to cater for
automation, the lifespan of a vessel could look very different. With the time
it takes to construct a ship, the industry needs to start considering now how
to construct ships that cater for some or all of these changes. The next
question will be how to ensure investments are still tenable. As Albert
commented, “spreadsheet models are going to be very different”.
Smith’s Shipping Group would like to thank Frank, Mark, Albert and Laura for
joining the panel for an enlightening discussion on the future of the shipping