Lloyd’s List Top 100 People: Calm before the storm
The global maritime industry faces a pivotal moment in its history as game-changing environmental regulations such as Sulphur 2020, Ballast Water Management and Decarbonisation 2050 usher in a new era of shipping and trade. New technologies and new players will transform the industry in years to come
Environmental regulation has pushed everything else off the agenda for 2019 as the maritime industry stares down the barrel of the International Maritime Organization’s low-sulphur cap
THE global maritime industry has had a rollercoaster ride of a year, with political upheaval and shifting allegiances reshaping many existing trade relationships.
US president Donald Trump’s trade war with China and renegotiation of trade deals with Mexico and Canada, as well as Britain’s decision to leave the European Union, are working to reshape established partnerships that could, ultimately, slow global trade growth and make the costs of goods more expensive for end-consumers.
The re-imposition of US trade sanctions on Iran and changes to the membership of the Oil Producing and Exporting Countries (Opec), an alliance of powerful oil producers from the Middle East, Africa, Asia and South America, will have significant consequences for global energy patterns. A steady rise in protectionist regulation is further compounding these forces.
The outlook was very different 12 months ago. This time last year, the maritime industry was buoyed by signs of cautious optimism. Global economic indicators were pointing in the right direction, with the World Trade Organization predicting solid growth. The prospect of a slow but sustainable market recovery was seemingly within grasp.
One year later and the WTO has downgraded its outlook for global trade as risks accumulate. Escalating trade tensions and tighter credit market conditions will slow trade growth for the rest of 2018 and into 2019, WTO economists expect.
Trade will continue to expand but at a more moderate pace than previously forecast. The WTO anticipates growth in merchandise trade volumes of 3.9% in 2018, with expansion slowing further to 3.7% in 2019.
That is largely due to the uncertainty being created by the US-Sino trade war, which has seen tariffs slapped on billions of dollars’ worth of goods in the past six months. There is a risk of more to follow in 2019, should recent negotiations between the world’s two largest trading partners break down.
Given this backdrop, it might seem counter-intuitive that Lloyd’s List has decided to remove politicians of all stripes from our Top 100 most influential people in shipping report this year.
We have instead refocused on the people and personalities that make up our core maritime businesses — the shipowners and operators, shipmanagers and brokers, shipbuilders, port and terminal operators, cargo interests, traders and regulators. For it is how these people anticipate and navigate disruption on a global scale — be that political, economic or technological — that makes them true leaders of our industry.
Rise of the regulators
When we look back at 2018 in years to come, we may come to realise what a truly pivotal year it has been for the shipping industry. Having slowly crawled back from the abyss of the 2008 global financial crisis and prolonged industry downturn, which has resulted in widespread consolidation across the industry and some business failures, shipping now faces a raft of environmental regulations that are coming down the pipeline — and fast.
It is the calm before the storm.
In just over one year, the global shipping industry will take the leap into a new fuels environment, as the International Maritime Organization’s January 1, 2020 sulphur cap comes into effect.
Sulphur 2020 is a game-changer for shipping because it has stimulated the search not only for new types of fuel but also for new ways of working. Fuel-cell technology is under development to offer zero-emission shipping; connected propulsion systems linked to data analysis will lead to greater operational efficiency; and the need for shipowners to work more closely with engine manufacturers, class societies, bunker suppliers and fuel specialists will bring the benefits of partnerships.
The coming year will be one of finalising solutions to drastically cut sulphur emissions at the expense of other new initiatives or strategies. Indeed, perhaps the cap's biggest effect thus far is freezing time; the market is moving but nearly everything is geared towards January 1, 2020. Anything else until then is presented as almost insignificant compared with the impact of the new rules.
January 1, 2020 has become shipping's judgment day.
Meanwhile, owners and operators must also comply with the Ballast Water Management Convention, which has all but been forgotten in the noise of 2020. Relatively few vessels have installed BWM systems so far, shipowners’ association BIMCO warned in November. A last-minute rush could lead to bottlenecks and higher prices.
Another aspirational environmental target was set this year by IMO, with agreement to halve CO2 emissions by 2050 over 2008 levels.
As the industry will quickly discover, there are many hurdles to be overcome and much financial pain to be endured before zero-emission shipping becomes a reality. Yet the world’s biggest containership owner Maersk Line has already thrown down the gauntlet by committing to zero carbon shipping by 2050 — a huge leap forward from the IMO’s targets.
Deploying carbon-free vessels by 2050 is as courageous a commitment as it is a challenging task. Maersk must ultimately deliver on its promise or face the accusation of greenwashing. However, Maersk’s decision to unveil its plans may encourage others to follow in its footsteps, although the move has run into criticism.
Nevertheless, Lloyd’s List believes 2019 will be a singular year in terms of the regulatory argument taking the top of the agenda, which is why we have catapulted the IMO to the number one spot.
Secretary-general Kitack Lim’s influence is shaped by his own character and by the actions of the IMO secretariat. He is both a representative of the IMO and a guiding force within it. We believe the implications of environmental policies and decisions made by the IMO and by Mr Lim will only grow in the immediate and long-term future.
Chinese influence, Greek dominance
A year ago, we struggled to imagine a world where Chinese companies did not dominate the Top 100 list. With strong state backing and growing dominance in finance, shipbuilding and shipowning, China Inc looked set to lead for many years to come.
The stats are hard to ignore: Cosco’s signing of a strategic framework agreement with China Merchants Group has created a gargantuan footprint of more than 1,600 vessels, including 100 very large crude carriers (VLCCs) and 100 capesizes, with 80 ports in 30 markets around the world.
Through Cosco Group’s earlier merger with China Shipping Group, it already had the world’s largest dry bulker and tanker fleet.
Cosco Shipping’s takeover of Hong Kong’s Orient Overseas (International) Ltd has elevated the group into the world’s top three containership operators, along with Maersk and Mediterranean Shipping Co, and pushed French line CMA CGM down to fourth place.
The Chinese group also has extensive terminal interests, both domestically and around the world, as do China Merchants, Shanghai International Port Group and Hong Kong’s Hutchison Group. Together, this represents a very powerful force in the global ports industry.
Expect further action in the years ahead as Cosco sets its sights on being the world’s largest container line, although both Maersk and MSC are likely to fight hard to defend their top status. The Danish group, in particular, is moving the goalposts as its transforms itself into an integrated container transport group covering all activities along the supply chain.
Asian finance continues to expand, propping up shipbuilding, owners and operators. The Export-Import Bank of China (Cexim) became the world’s largest ship lender in 2018 with a $17bn portfolio and leasing firms ICBC and Bocomm are fast building their financial arsenal and clout.
The Belt and Road Initiative continues its global expansion with multi-trillion-dollar investments in modernising overseas infrastructure spanning more than 60 counties in Southeast Asia, Africa, Europe and South America.
So it is right that fully 12% of our top 100 global influencers are represented by Chinese nationals this year.
Yet Chinese influence in our 2018 Top 100 ranking is ever so slightly diminished from its clean sweep of last year because of the US-Sino trade war. Not because China is uninfluential, but because it is not competing on a platform of its making. China is effectively responding to changing circumstances that have been thrust upon it.
Only one nation tops China in terms of influence and presence in our Top 100. Greece — and Greek shipowners in particular — remain the strongest force in the global shipping industry, taking a massive 14% of the 2018 Top 100 spots.
From early-mover status to domination of the gas trades seen by big fish John Angelicoussis, George Prokopiou and Peter Livanos, to fast-expanding Star Bulk led by Petros Pappas and the relentlessly acquisitive Evangelos Marinakis’ Capital Group, Greek shipowners continue to teach the rest of us how to succeed in the counter-cyclical game. Meanwhile, Angeliki Frangou and George Economou continue to prove their savvy expertise at the top of some of the biggest listed shipping companies.
More broadly, British personalities remain influential in the services sectors, including legal, marine insurance and shipbroking. Norwegians make a strong showing across the shipowning, finance and tech sectors; while US nationals also show strength in finance and regulation.
Many of the new entries this year represent the US capital markets — such as JP Morgan’s Andrian (Andy) Dacy, who has been making waves with the size of investments, and Varde’s Stephen Seymour.
We have also included cruise in the Top 100 for the first time. It is not a sector we normally cover at Lloyd’s List, but cruise has undeniably led the industry in terms of environmental compliance and the take-up of sulphur abatement technology (scrubbers) in 2018.
The move by the world’s largest cruise operator Carnival to dual-fuel newbuilding vessels for its AIDA, Princess, Costa, P&O and Carnival brands with liquefied natural gas, which has spurred massive investments in land-based LNG infrastructure, makes its chief executive Arnold Donald — who succeeded the legendary Micky Arison — the obvious candidate for this accolade.
We expect the shipping industry to be dominated by tech disruptors over the next decade. A strong showing by Silicon Valley executives at Posidonia this year indicated that tradetech is squarely in its sights, with e-commerce, customer demand and technological advances already causing a paradigm shift in the supply chain.
Yet many areas remain fragmented and often disconnected.
The multifaceted nature of new technologies, including blockchain, the Internet of Things (IoT) and Artificial Intelligence (AI), enables the convergence of platforms and ecosystems. The hope is that optimising these technologies will facilitate better international trade and sustainable operations.
In an industry characterised by paper documents, acceptance of digitalisation is necessary to streamline operations. The maritime industry hinges on investment, innovation and collaboration in order to progress from the current trial and testing stage to implementation.
Adopting widespread tradetech is an end-to-end value chain proposal not just impacting isolated areas of shipping. New technologies can transform business by improving the data on which decisions are based.
The risk is that if shipping’s incumbents do not keep up with advances in technology such as 3D printing, virtual reality, AI and robotics, it will leave itself open to outside competition.
This is already being felt through the rise of shipper power. Online retailers Alibaba and Amazon have made no secret of their desire to improve — and to own — as much of the global consumer goods supply chain as possible. Whether they remain the dominant force, or whether some unknown newcomer could topple them from the top spot, is what makes our list and our rankings so interesting and so enjoyable each year.