Shipping’s future lies beyond Brexit and beyond shipping
It wasn’t Brexit or the UK agenda that dominated proceedings — the myriad issues discussed throughout the week made clear the complexities facing the shipping industry over the next generation, and if there was a single unifying thread to the week it was that there is no silver bullet available for any of it
The agenda during London International Shipping Week made clear that the generational shift required to survive the disruptive headwinds blowing in would be less an adjustment, more a wholesale reinvention of business models
AS a domestic flag-waving exercise London International Shipping Week can be considered a resounding success.
While much of the overtly upbeat UK rhetoric could be written off as a case of preaching to the converted, the sight of a government finally committed to shipping and working in partnership with the industry had the feeling of substance and conviction.
The headline figures that revealed the UK’s maritime sector contributes more than £46bn ($56.9bn) to the economy was sufficiently enticing to draw Prime Minister Boris Johnson into an opportunistic bluster of TV ready soundbites, such was the positive nature of this pro-UK story.
And while the omnipresent shipping minister Nusrat Ghani was left to do the heavy lifting of preaching the good news of shipping’s status as “the lifeblood of our island economy”, the political engagement in this year’s event was there for all to see.
Yes, Brexit inevitably cast a long shadow over many discussions, but even the hardened Remainers and bemused European guests got the sense that, for the first time in living memory, and perhaps ever, the UK government is now working closely with the shipping and maritime industries.
The upside to Brexit is a high-level realisation that without a strong shipping and maritime industry, an island nation such as the UK faces some grave economic and security issues, and for that the industry can be thankful.
But it wasn’t Brexit or the UK at all that dominated proceedings, despite the best efforts of Ms Ghani’s drive-by speech agenda at almost every event.
Compared to the existential threat that decarbonisation, digitalisation and a wholesale rewrite of macro trade trends presents to the global sector right now, Brexit and the prorogation of parliament rather pales into insignificance and the ‘international’ part of LISW’s mandate thankfully dominated debate.
The myriad issues on the agenda this week made clear the complexities facing the shipping industry over the next generation, and if there was a single unifying thread to the week it was that there is no silver bullet available for any of it.
For the optimists, the option of silver buckshot was enough to keep them going, with many of the discussions starting to focus on the pragmatic prioritisation of how to innovate and finance their way out of the zero-carbon world trade dilemma.
A series of stark warnings from climate science experts and policy leaders during the week, notably headlined by the message that the decarbonisation of shipping would likely involve a doubling of freight rates to fund the shift to more expensive zero-emission fuels, divided opinion but certainly focused minds.
Nobody attending events in London could have left without being aware that change is afoot.
While the short-term tensions over trade, geopolitics and immediate demands of environmental regulations such as the sulphur cap and even ballast water had already captured the attention of the shipping industry, much of the discussion to this point has been masking a more structural shift that is taking place in the shadows.
The agenda in London made clear that the generational shift required to survive the disruptive headwinds blowing in would be less an adjustment, more a wholesale reinvention of business models.
It also made clear that most of the solutions lay outside of shipping, from the zero-carbon energy infrastructure to the collaborative global approach required from cargo interests and the digital transformation and integration of shipping into a global supply chain that will test core business assumptions.
As an industry we need to think critically about potential new sources of value, shifting competitive dynamics, and regulatory policies that affect both the revenue and expense sides of the business.
We need to consider the traditional guiding principles of value creation that are being corroded by the introduction of new technologies and more interconnected global supply chains.
We need to plan how we navigate the short-term agenda of trade and geopolitical tensions while planning to invest in a generation shift towards zero-carbon technologies that don’t yet exist and require a financing commitment that in most cases is fundamentally opposed to the industry’s core business of transporting energy.
We need to adapt to the new technologies and third-party algorithms that are redefining shipowners’ licence to operate and sustain a routinely unprofitable operational model without which the global economy would collapse.
Against that to do list, the immediate vagaries of the UK’s Brexit-induced challenges are certainly less worrying.
By all means let’s celebrate the positive sentiment and direction that LISW offered us, but let’s also focus our collective attention on the issues that really matter most to shipping right now and reach for a collective approach beyond shipping’s traditional borders.