Shipping Faces Half A Trillion Dollar Environment Costs, ICS Chairman Tells Nor-Shipping

Speaking to delegates at the opening of the Nor-Shipping event in Oslo today, the Chairman of the International Chamber of Shipping (ICS), Masamichi Morooka, said that impending new legislation to protect the environment potentially presented an additional industry-wide cost of more than half a trillion US dollars between 2015 and 2025. This is around 50 billion dollars of additional capital and operating cost in every single year for a 10 year period and beyond.

“As many companies struggle to survive during the difficult years ahead, we must persuade governments to avoid placing yet more straws that risk breaking the shipowner’s back – and the straws to which I refer are the impending costs of environmental legislation,” said Mr Morooka.

Much of these costs will result from the switch to low sulphur distillate fuel, assuming that a 0.5% global sulphur cap comes into effect in 2020, in addition to the 0.1% sulphur requirements that are expected to be enforced in Emission Control Areas in North West Europe and North America from 2015. However, the costs of installing new ballast water treatment equipment will also be significant, as will the potential contribution that shipping might have to make to the UNFCCC Green Climate Fund.

“The imminent switch to vastly more expensive, low sulphur distillate fuel is a very serious concern which is compounded by worries about the adequacy of supply and the dangers of modal shift,” said Mr Morooka.

He explained that the key message that ICS was communicating to regulators was the need for greater focus to be given to the economic sustainability of shipping, backed up by evidence of years of continuous improvement of shipping’s environmental performance. “Many of the expensive environmental regulations that are about to enter into force were conceived in a different world, at a time when shipping markets were booming and finance for retrofitting had not dried up,” he told Nor-Shipping delegates.

ICS stresses that the protection of the environment must always remain a priority for the industry, but the prevailing economic situation requires that a degree of pragmatism is applied to enforcement as a plethora of new environmental regulations is implemented. “Unless this is understood, there is a danger of creating real barriers to investment in our industry as we hopefully move closer to recovery,” said Mr Morooka.

More generally, asked to look ahead for the next two to five years, Mr Morooka said he remained positive and optimistic: “We are shipowners after all!” But he predicted it was probably unlikely that, for most sectors and trades, much will have fundamentally changed before 2015 or 2016.

“However, the decisions taken now, both by shipowners and regulators, will determine whether we are at the end of the beginning of our difficulties, or whether, as I hope, we are at the beginning of the end.”

Unless something very unexpected happens, the ICS Chairman felt it was unlikely that a lasting recovery in freight rates would begin in earnest in the immediate future. However, he believed that market forces would find a solution, which would almost certainly involve large numbers of ships going to the recycling yards much earlier than their owners had originally planned.

In order to avoid prolonging the downturn, he said it was important that shipowners take sensible and considered decisions about ordering new tonnage. Noting that shipyards have similar over capacity problems and are offering cut price ships, he remarked: “What might be in the rational interest of an individual shipowner might not always be good for the collective health of the industry as a whole.”

Notes To Editors:

• A graphic showing the potential costs of new environmental regulations is attached. Assumptions: Ballast water treatment equipment – average $2M per ship with IMO agreeing five year implementation of BWM Convention, assuming entry into force in 2015; differential between distillate and residual fuel of only $300 per tonne with global consumption remaining at 300M tonnes per year (in reality both figures are expected to be higher by 2025) and IMO confirming that global sulphur cap will apply from 2020; UNFCCC replacement to Kyoto Protocol coming into effect in 2020, with shipping contribution to GCF in line with IMF/World Bank proposals. Potential costs of proposed Tier III NOX Emission Control Areas, plus other anticipated requirements, have been excluded.

• The International Chamber of Shipping (ICS) is the principal international trade association for shipowners. Its member national shipowners’ associations will be holding their Annual Meeting in Oslo, in conjunction with Nor-Shipping from 5-7 June.

• A low resolution photo of ICS Chairman, Masamichi Morooka, is attached. High resolution version available on request.

Hutton’s Adjusts To Meet Customer Demand

Customer service and meeting fast-moving international deadlines are at the heart of a head office reorganisation by Hutton’s, the UK’s leading ship supplier.

Hutton’s has developed a centralised Customer Services department at its headquarters in Hull.

Bringing together staff skilled in sales, accounts and client liaison, Hutton’s highly trained and knowledgeable Customer Services team will assist all its customers with any sales or technical enquiries they may have. They are able to respond to enquiries relating to any UK delivery location or port as well as handling orders for offshore industry clients based in Norway or the North Sea.

Hutton’s Customer Services department can be reached by dialling just one telephone number or sending one email, making it quick and easy to reach – +44 (0)1482 324093 or email:

The reorganisation comes as a result of feedback from customers who expressed a desire to simplify the order process. Alex Taylor, Hutton’s Managing Director, explained: “At Hutton’s we are constantly developing our services and product range to ensure we meet the highest expectations of our customers. We are very responsive to customers’ needs as well as being at the forefront of ship supply industry developments.

“This new department will simplify the ordering process and ensure quotes are handled quickly and accurately. We know our customers already see us as a one-stop-shop for their ship supply needs and we believe they will appreciate this streamlining of services.”

Hutton’s has been providing its quality services to ships calling at UK ports for more than 180 years. Today the company boasts first-class facilities and a fleet of state-of-the-art climate controlled vehicles which deliver a full range of provisions and technical products to international customers via all the major UK ports.

Investments in the latest technology, additional warehousing and modular freezers have enabled us to further increase the range of products we hold on stock. Hutton’s is now able to offer our customers a wide selection of products including ethnic foods, particularly Scandinavian, and specialist items.

Hutton’s also specialises in the supply of marine and offshore medical supplies, offering a management service for vessel medical supplies to ensure stocks are maintained at safe levels, any expired medicines are removed promptly, and onboard medical stores meet SOLAS, IMO and Flag State requirements.

Hutton’s comprehensive branch network provides logistic solutions through its nationwide network of warehouses and transport fleets. These include storage, distribution, and a full logistics service for international shipping and the handling of spares and goods in transit.

The company is developing fast, particularly in the Offshore sector where it is supplying customers involved in all aspects of the offshore renewables and windfarm sectors.

Alex Taylor said: “We are dedicated to providing cost effective and timely ship supply solutions and our approach is very much appreciated by our worldwide clients.”

Notes To Editors:

• Hutton’s can be found at Nor-Shipping on stand number: C03- 04a

ICS Launches Its Annual Review Of Shipping Developments

The International Chamber of Shipping (ICS) has published its latest Annual Review of maritime policy and regulatory developments, in advance of its Annual General Meeting, which is being hosted by the Norwegian Shipowners’ Association in Oslo from 5-7 June.

The 2013 Annual Review, which covers the wide-ranging scope of ICS’s activities as the world’s principal international trade association for ship operators, can now be downloaded free of charge from the homepage of the ICS website.

Printed copies are being distributed via ICS’s 36 member national shipowners’ associations, which collectively represent all sectors and trades and over 80% of the world merchant fleet to the international regulatory bodies that impact on shipping, including the International Maritime Organization (IMO).

The ICS Annual Review focuses on a number of key issues for 2013. These include the need for policy makers to balance the importance of protecting the environment with shipping’s economic sustainability, the ongoing debate about the regulation of CO2 emissions, the entry into force of the ILO Maritime Labour Convention, developments with respect to piracy and hostage taking, and discussions to ensure safe and pollution free ship operations in the Arctic (about which the ICS Board will join transport and shipping Ministers from around the world for a Summit in Oslo, on 5 June, hosted by the Norwegian Government).

Concise but comprehensive, the ICS Annual Review also addresses developments in maritime safety, labour affairs, manning and training, maritime law and insurance, as well as shipping and trade policy concerned with the maintenance of the ‘level playing field’ and open shipping markets.

In his introduction to the 2013 Annual Review, ICS Chairman, Masamichi Morooka, remarks: “The key message which I have been communicating to regulators during this first year in office has been the need for greater focus to be given to the economic sustainability of shipping, backed up by evidence of the continuous improvement of shipping’s environmental performance. The protection of the environment must always remain a priority, but the prevailing economic situation requires that a degree of pragmatism is displayed as a plethora of new environmental regulations is implemented and enforced.”

Mr Morooka also notes: “The impressive ability of ICS to reach consensus on difficult and complex issues has been something of a revelation to me, as has the very wide range of topics in which it is necessary for ICS to be involved on behalf of shipowners worldwide.”