ICS Leadership Insights No 18 Full v7
ICS Leadership Insights No 18 Full v7
Leadership
News
Industries face decarbonisation hurdles p6
Ukraine: 12 months and counting p7
Disaster management for maritime p8
Conserving biologically diverse areas p9
News Analysis
Insights
Climate law risks for shipowners p10
ICS in action
Funding the Net Zero Transition, updates to
STCW guide, Africa’s green potential, writing
women into maritime history p12
Maximising
collective
knowledge
CTM’s John Michael Radziwill discusses the
value of active partnerships, commercial
co-operation, and the route to achieving
shipping’s emission targets
Decision Maker
Powered by
thought John Michael Radziwill, CEO of
shipowner and manager CTM
talks about the power of collective
knowledge, praises environmental
regulations and maps a pathway to
greener operations for shipping.
Can you tell us a bit about CTM and how consolidation usually happens in low markets, like the
it operates? current one where it makes sense to market and
trade cargo ships under one entity and share all the
We are a shipowner and ship manager with a revenues. You both reduce fragmentation and have
fleet of 200 vessels including joint ventures and better information, because unlike being one ship by
charters – and we have a financial interest in 63 of yourself, you are one ship in a pool of 100. Additionally,
these ships. A lot of the assets we manage are our timing is everything in shipping. If you are a single ship
own – and we work through what we call thought or a small fleet and there is a delay, this can have a
partnerships. significant hit on your revenues and knock on effects.
We have 31 different clients, including ourselves, so Also luck will play a big part on your bottom line, since if
that’s 31 different perspectives on what is driving you are unlucky with rates for your asset, you are locked
markets and how to optimise our operational effi- in until that contract ends. By contrast, if you have 100
ciency when managing these assets. We want to find ships, you can redeploy a different ship if there is an
the most opportune or creative way to manage the issue. Plus you smooth out the peaks and the troughs
assets entrusted to us so we are open if someone has for revenues, and eliminate randomness. I think the
a way to do it better. more you can eliminate randomness, the better it is.
Are we likely to see more consolidation in What do you see as the benefits of operat-
the dry bulk markets and what advantages ing vessels in a pool in the current market?
or disadvantages could this bring?
I think commercial cooperation should be
I don’t see any disadvantages – and several flexible with as many ships as possible that
advantages to consolidation! Commercial should be able to come and go rather than direc-
2
tional positioning by a lot of ships. In the latter you How are your vessel pools preparing for the
are locked into Contracts of Affreightment (COAs) CII and how do you think this regulation will
and need vessels to cover them, which takes away change the market?
your flexibility.
Rules are rules, so of course we are working
We designed our Capesize, Supramax and Panamax towards the good CII certificates. It’s an ever
pools to have this agility. Ships can come in with three evolving process, because through the thought part-
months’ notice and leave with three months’ notice - nerships we are fine tuning our ideas. We’re always
or really, at the end of your voyage. This is the same trying to enhance our data collection in order to really
as having a single ship in a spot market. If the owner understand what’s going on. A ship’s CII rating will
wants to take a directional view, perhaps to de-risk definitely matter more in a low rate environment than in
their long shipping risk, then they can take their ship a high rate environment.
out of the flexible cooperation, and fix it in the time
charter market, or sell it – all of which would require In my experience, in a high rate environment, people
a three month window anyway. We don’t want to take will focus more on price, with the environment being
away any flexibility from owners. a lower priority. After all, you buy or rent the best you
can afford. And if what you can afford is a ‘D’-rated
Agile scaling up has improved our performance. Our ship, that’s what you will take. In fairness, that’s what
Capesize pool performed at around 14% better than has happened historically and I would expect that at
the Baltic Capesize Index in 2022, net of differentials a certain rate level, the rating will start to really matter
and fees - and our Supermax pool performed 8% bet- again – but either way, we will be prepared
ter than the Baltic Supramax Index, net of differentials
and fees. So the benefit of being in our pool versus the
spot market was between $600,000 to $800,000 What more do you think shipping needs to
per ship, which is pretty substantial, particularly for do on the environmental front?
owners with multiple vessels in our fleet.
Frankly, I think that shipowners have done a
pretty good job environmentally of keeping
You mentioned thought-partnerships emissions down. Despite all the headlines, emissions
as a major factor of your success – have really gone down per tonne of cargo trans-
can you elaborate? ported. My favourite thing to talk about is the benefits
if we put a speed limit on the fleet. We would get past
We’ve been operating ships for a long, long time a lot of our emission targets very quickly. I think we’re
together with our clients and we objectively getting there with the new regulations, but it just
take in different views and administer them properly. seems like a hard way – which I find personally frus-
This is not a case of too many cooks spoiling the trating.
broth, but many cooks working to get the broth
exactly right. We don’t get pulled in too many different
directions since our clients are very experienced in Regarding a shipping speed limit, do you
this space – and in some aspects, they are more think that we would need a larger fleet if we
experienced than us. So we maximise the benefits of slow speed, thus creating more overall emissions
everyone’s knowledge. – or should everyone adjust their expectations
for cargo transport?
What we have created is an active partnership for
the pools’ strategies, with CTM handling the imple- So firstly, we already have plenty of ships, so
mentation, administration and people management. filling the gaps caused by slow steaming won’t
Not all our clients contribute to the thought partner- be an issue. But I think that the industry has been
ship – and they are not forced to. But when a client getting it wrong by not looking at the optionality
has assets that are worth millions of dollars, the offered by the speed of a ship. Slowing a ship down
majority want to discuss what their manager is doing would make the freight pie bigger, and we would all be
with them. in a more lucrative business. Plus you could have
But when a client has assets that are worth millions of dollars, the
majority want to discuss what their manager is doing with them
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I think at a high level,
being better to the
environment comes
down to being selfless,
and not selfish
more cargo per ship, which would bring down the fuel all of us to remain disciplined in the current day rate
cost and ship emissions per tonne of cargo, because environment. But even if it improves, we still don’t
it would just be a much more efficient use of vessel have a clear line of sight as to what the new fuel
space. It’s amazing that we haven’t embraced this sources will be, so I’m not anticipating a boom.
mentality, particularly in 2021 when we had huge lines
of congestion and ships were being ordered to speed
to port just to wait there. I think this is simple-minded, What fuels are on your radar in the short
short term thinking. and medium terms?
I’m fairly certain that no one cares if their bushel of For the next five years, I think we will stay
wheat, barrel of crude oil, or tonne of iron ore arrives conventional. I think there’s a lot to be said
in port, five or seven days later – and you would be about biofuels. And after that, it’s really anyone’s
doing the environment and your bottom line a big guess. I think it’s worth saying that the fuel consump-
favour. This is a similar logic as just-in-time, and I feel tion, the efficiency, environmental footprint and
that the best way to kind of start to implement this is carbon emissions of the conventional engines are
to put a speed limit on ships just like you have speed getting pretty good. In our fleet, we have seen that one
limits on highways. of our 2010-built 180,000 tonne ships consumes 60%
more fuel than our 2022-built 180,000 tonne ship. So
in 12 years, you’ve had a 60% reduction in the amount
Do you expect a boom in newbuild ordering of fuel consumption. That’s not only the engine, that’s
in the near future? also the hull design, fuel saving devices, etc. I think this
was a normal evolution in shipbuilding and we have
I’m proud of being part of a dry cargo industry done a fairly good job, but we can do a lot better and
that has not over supplied itself in the past few be more efficient at reducing our emissions.
years, especially in 2021 – although admittedly, a lot of
that was because we don’t know what the new fuel I think at a high level, being better to the environment
sources are going to be. But I would argue that dry comes down to being selfless, and not selfish. If we all
cargo owners have done a pretty good job of being were selfless, we would get there a lot quicker – and
disciplined – and unfortunately it will be very easy for no one would lose commercial advantage.
4
A place to Space to Room to
The ICS
MARITIME HUB
[email protected] +44 20 7090 1460
maritimehub.ics-shipping.org
News
6
News
777
criminate threat posed by an unknown and companies, submitted a joint open
number of sea mines adrift in the Black letter to the UN Secretary-General on
Sea, continue to cast long shadows over 20 February, urging immediate action to
merchant shipping. outbound voyages evacuate the seafarers and their vessels.
ICS hopes that the joint overture will
Despite hosting only three inspection increase pressure on decision makers to
teams, the Joint Coordination Centre has
steadily reduced the number of vessels
awaiting authorisation to sail. As of 1
March, 33 vessels were waiting for inspec-
22,747,287
metric tons of grain
find a solution.
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News
8
News
Nearly 200 nation states at the United may be needed for ships to be ultimately
Nations have agreed final draft text for The agreement is intended to cover discussed and decided by the IMO.
a treaty to protect high seas marine life.
While yet to be formally adopted, the
gaps in ocean governance and will “For international shipping, the matters
agreement forms the substance of an help ensure that emerging high which the convention is designed to
international legally binding instrument address are within the remit of the IMO,”
under the UN Convention under the Law seas industries will be as well- explained ICS Policy Manager (Legal) Emily
of the Sea on the conservation and sus-
tainable use of marine biological diversity
regulated as shipping is by IMO Rowley, who has been representing ship-
ping at Intergovernmental Conference for
of areas beyond national jurisdiction Emily Rowley, over five years. “The agreement is intended
(BBNJ agreement). ICS Policy Manager (Legal) to cover gaps in ocean governance and will
help ensure that emerging high seas indus-
The new treaty addresses four main Kunming-Montreal Global Biodiversity tries will be as well-regulated as shipping
elements of ocean governance: marine Framework in December 2022 at COP15. is by IMO. The agreement is also intended
genetic resources, including questions to enhance cooperation and coordination
on the sharing of benefits; measures Liz Karan, Director of Pew’s Ocean Govern- between UN agencies and other global
such as area-based management tools, ance Project, said, “The effective imple- and regional regulators of activities on the
including Marine Protected Areas (MPA); mentation of this landmark treaty is the high seas, promoting a holistic approach to
environmental impact assessments; only pathway to safeguard high seas biodi- the protection of marine biodiversity and
capacity building and the transfer of versity for generations to come and pro- ecosystems areas where no one State is
marine technology. vides a pathway for nations to fulfil the 30 responsible for preserving them.”
by 30 target. Governments and civil society
Notably, the treaty sets out a process to must now ensure that the agreement is The ICS has welcomed this landmark
enable the establishment of cross-sec- adopted and rapidly enters into force.” agreement, having actively participated
toral MPAs and other area-based man- in talks on the BBNJ since 2016. This has
agement tools in the high seas and the The agreement takes account of the ensured that the international shipping
underlying seabed. BBNJ will assist in IMO’s role and the measures that emerge community is engaged and represented at
delivering agreed upon targets of 30% from it will complement existing regula- UN negotiations, and to reiterate the the role
global MPAs as decided in the tions, with the detail of any measures that of the IMO as shipping’s global regulator.
9
News Analysis
Shipowners may be vulnerable The increasing trend and scope of cli- plan to tackle emissions from consumers
to strategic litigation, examining mate litigation could herald new legal risk using its products.
for shipping companies and directors,
sustainability reporting and legal experts have warned. According The Shell case, the first of its kind in the
compliance planning to to the Grantham Institute, the number UK, is part of a trend for ‘derivative actions’
meet future decarbonisation of actions has grown year-on-year over against directors. Diana France, a partner
the past two decades and increasingly at law firm HFW, told ICS that stock listed,
obligations, as climate litigation targets corporations rather than govern- multinational ship operators carrying fossil
targets corporations. ments, with businesses now defending products were the most likely targets due
half of all cases. to their trade’s involvement in the oil and
gas industry.
A recently launched lawsuit against
directors of Shell for failing to protect Other shipowners. and shipping stake-
the business from climate-related risk holders viewed as having defined climate
highlights the trend. The case, brought requirements, could also face climate
by climate activists Client Earth, argues litigation in different jurisdictions.
that Shell directors neglected their duty
to shareholders by setting climate tar- “If you can point to a compulsory obliga-
gets below those needed to reach Paris tion that’s not being complied with, that’s
Agreement targets. very helpful for a claim,” France said. “But
the detail depends on where you are in the
The claim against Shell’s directors is world and exactly what the claim is.”
based on the company’s alleged failure
to consider physical and energy transi- Winning the case may not be the point,
tion risks to the business. The company as groups often use “strategic litigation”
is also claimed to have failed to comply to apply pressure on companies to
with an order in a Dutch court to redress decarbonise faster. Translated to ship-
its strategy, which a third-party report owners, this could lead to interrogation
assessed had no short-to-medium term of sustainability reporting and compli-
10
ance planning, including choices of
technology and fuels to meet future
A survey of the biggest 95 Contractual disputes are also expected to
proliferate as climate obligations play a big-
climate obligations. owners revealed that 35% ger role in shipping. Owners competing for
a tender could bring an action if their rival’s
Haris Zografakis, a partner at law firm Ste-
phenson Harwood, told ICS that climate
have already pledged to green credentials are material in securing
the contract and then shown to be untrue,
compliance plans that are justified, spe- comply with either IMO’s 2050 for example. The Carbon Intensity Indicator
cific, “and above all, acted on” are the best (CII) is also ripe for dispute. For example, if
defense. To dissuade actions, plans for greenhouse gas reduction operators refuse work contracted by char-
compliance may need to be more con- terers because it would affect their vessel’s
crete than the potential future improve- target or committed to net-zero CII rating, they could be sued for not fulfill-
ments listed in a vessel’s Ship Energy
Efficiency Management Plan.
emissions by 2050 ing their employment order.
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ICS in Action
A round-up of ICS news and activites over the last month
ICS is the principal international
trade association for merchant
shipowners and operators,
representing all sectors and
trades and over 80% of the
world merchant fleet.
For more ICS contacts:
www.ics-shipping.org/
contact-us/
Funding the net-zero transition of shipping companies and governments
in implementing and enforcing STCW. It is Contact us
The ICS has submitted a revised pro- priced at £135 and is available in print and International Chamber
of Shipping
posal to member states at the IMO for digital ebook versions. 7th Floor, Walsingham House,
shipowners to make mandatory flat rate 35 Seething Lane, London
contributions per tonne of CO2 emitted to EC3N 4AH
create a new IMO fund, to be established Promoting Africa’s green potential +44 (0) 20 7090 1460
by 2024, to help accelerate the transition [email protected]
www.ics-shipping.org
by international shipping to net zero. The The Maritime Just Transition Task Force, of
ICS ‘Fund and Reward’ proposal has been which ICS is a founding member, has high- Editorial
submitted to IMO for consideration at lighted Africa’s potential to become a world Intent Communications
the next round of IMO GHG negotiations leader in green shipping jobs to maritime Namrata Nadkarni
(ISWG-GHG 14) in March. administrations across the region. +44 (0) 7598 025 513
[email protected]
The fund will reward the uptake by shipown- Speaking at the Green Shipping Confer- Samira Nadkarni
ers of low and zero-carbon fuels, as well ence in Accra on 15 February, Helio Vicente, [email protected]
as supporting alternative fuel production senior manager of trade policy and employ- Gavin Lipsith
and bunkering infrastructure in developing ment affairs at, ICS, noted that a future [email protected]
countries. The funds collected will be used global centre of maritime excellence for Paul Levey
to reward the uptake of eligible alternative seafarer training could be based in Africa, [email protected]
by first movers, based on the CO2 emissions bringing with it more jobs and wider bene- Tamara Parkin
prevented by their use. This should signif- fits for the region. [email protected]
icantly reduce the price gap with conven-
tional marine fuels whilst minimising the “Africa can leverage the strategic oppor- Design and layout
Phil McAllister
additional cost of marine fuel used by most tunities of this shipping revolution. But our [email protected]
ships today to minimise negative impacts on advice is that you need to move on this now, +44 (0) 1273 737481
trade, which is a legitimate concern among today,” he said.
many developing economies. Press and Communications
Hannah Patmore
+44 (0) 7498 418 438
Writing Women into
ICS updates STCW guide Maritime History Sales
Richard Emsley
ICS has published the fourth edition of its Lloyd’s Register Foundation and Lloyd’s [email protected]
+44 (0) 7730 289459
Guidelines on the IMO STCW Convention, Register are seeking stories of women in
helping shipping companies stay up shipping as part of a project titled ‘Rewriting
to date on the latest regulations and Women into Maritime History’. The project Disclaimer: Whilst every effort has been
made to ensure the quality and accuracy
guidance required to comply with IMO aims to highlight the activities undertaken of the information contained in this
International Convention on Standards of by women in shipping over the centuries. newsletter at the time of going to press,
the International Chamber of Shipping, its
Training, Certification and Watchkeeping affiliates and any person, firm, corporation
for Seafarers (STCW). The project will provide opportunities for or organisation who or which has been in
any way concerned with the furnishing of
organisations to be involved in outreach the information assume no responsibility
The fourth edition includes significant activities to engage a global audience. A as to the accuracy or completeness of
and, to the extent permitted by law, shall
updates related to new codes, including for key theme is diversity, equality and inclu- not be liable for any errors or omissions or
alternative fuel use and polar operations. It sion, ensuring that overlooked voices are any loss, damage or expense incurred by
reliance on information or any statement
also reflects changes in the working envi- heard and highlighting the many opportuni- contained in this newsletter.
Any views
ronment for seafarers, including technol- ties presented by a maritime career. or opinions expressed do not necessarily
represent the views or opinions of ICS, its
ogy changes, onboard processes and the affiliates or any person, firm, corporation or
growing importance of crew welfare. This year the project will focus on the UK organisation who or which has been in any
way concerned with the furnishing of the
and Ireland before branching out to global information in this newsletter.
The guide helps companies identify man- collaborations in 2024. Interested parties
datory and voluntary elements relating to are invited to join the initiative and submit
training, industry best practice and the role their stories.
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