Major shipowners in Greece agree that regulatory uncertainty is keeping a lid on newbuilding investments. Some believe this would be a good thing for the industry in the near future, but some apparently do not.
Several of the biggest names in Greek shipping were engaged in heated debates over the industry impact of greenhouse gas emissions rules during a Capital Link virtual conference.
“We have to embrace environmental regulations,” Star Bulk Carriers chief executive Petros Pappas said on Thursday. “I think in the future this is going to benefit us.”
Despite having established long-term decarbonisation targets, the International Maritime Organization has yet to decide on how to regulate ships' emissions.
Many shipowners and investors have refrained from building new vessels due to uncertain regulatory requirements, so orders in most shipping sectors are at decades-low levels.
This will lead to reduced vessel supply and less competition in the coming years, boosting existing players’ profitability so they can better prepare for low-emission shipping, Pappas said.
“I am personally optimistic for the future,” he said. “For existing players, more regulations will actually create entry barriers for us.
“That might give us the opportunity forwards to see better markets and make some money.
“More profits going forward … will then be used to order those vessels that have zero emissions and do not exist today.”
‘Good news’
The IMO is scheduled to introduce short-term decarbonisation measures by 2023, which are expected to focus on technical and operational measures for existing fleets.
But the industry consensus is that low- or zero-carbon fuels are needed for the IMO’s aim to halve emissions from international shipping before 2050. Their associated infrastructure and propulsion technologies are not yet developed.
The first commercially viable zero-emission ship is not expected to be built before 2030.
Tsakos Energy Navigation chief executive Nikolas Tsakos, who has called on his peers to hold off ordering ships for years, said the uncertainty is "short- and medium-term good news” as it curbs vessel supply.
“We are not here losing sleep for what vessels we would not be able to build,” Tsakos said. “This is good news for all of us.
“Greece has the youngest fleet in the world … That give us time for a comfortable market,” Tsakos said, as there is little pressure to order vessels for fleet renewal.
Tsakos added that his company would not build more ships before more clarity emerges over future fuel technologies, unless there are specific requirements from clients.
Navios Group CEO Angeliki Frangou suggested the benefit would be more on the industry mentality, saying that more companies are being pushed to adopt “digital” rather than “analogue” ways to decarbonise.
“We need to have lots of step-by-step solutions. You have technological unknowns,” Frangou said. “Very adverse situations can be very beneficial overall.”
Critical voices
On the other hand, Capital Maritime & Trading’s chairman Evangelos Marinakis lamented that the shipping industry has not moved towards decarbonisation despite many discussions among stakeholders.
“It’s all very well said about [the] environment … But little progress has been done from everybody in the industry,” Marinakis said.
In 2019, Capital Maritime signed a letter of intent with Hyundai Heavy Industries for up to 10 VLCCs that can run on LNG, which is seen as a bridge fuel to low-emission shipping. But the business evaporated as the shipowner could not find satisfactory charters.
According to Marinakis, cargo owners in the tanker and container sectors have failed to provide sufficient technical guidance and commercial support for the decarbonisation of shipping.
“It’s up to us, at the end of the day, to pay the price without getting any compensation from anybody in the industry,” he said.
“This is something we should be aware and be concerned [about].”
George Procopiou, who founded Dynagas, Sea Traders and Dynacom Tankers Management, said shipowners’ pursuit of green shipping can often be curbed by muddling regulatory process.
“We have a lack of clear and transparent regulations,” said Procopiou, who has been a vocal critic of the IMO for years.
Procopiou suggested that regulators should be realistic about emission targets and focus more on fuel suppliers and marine equipment makers.
“Shipowners do care deeply about the environment. We go for the best [ships] available,” he said.
“The politicians are promising the impossible. So, we have to divide the desirable from the doable.”
