URSABLOG: Clubbable Progress

It is rare in the shipping industry – and I suspect in other industries too – that people can gather together publicly and discuss issues that affect them without the conversation degenerating into either a standoff between preconceived positions, or worse, reiterating the party line – whatever that may be – in preprepared rehearsed statements, designed, literally, not to rock the boat. Too often people are too concerned about how they will appear to the rest of their peers, or are not prepared to listen to things that may challenge their world view, to even enter into a serious discussion. It is even rarer in my experience that people listen carefully to what people are saying as opposed to noting who is saying it.

In a welcome development, the Piraeus Marine Club has decided to offer food for thought on top of the excellent food and drink it offers to its members and their guests on a daily basis. We at URSA Shipbrokers were honoured to prepare and present on their behalf their First International Chartering Conference. This idea, conceived and developed by Yiannis Floutakos , our managing director, in combination with our research analyst Dionysis Tsilioris (and occasional contributor to this blog) proved challenging to those of of us involved in delivering it, ?because we decided to tackle not one, but two of the main challenges facing our industry today: Carbon Intensity Indicator (CII) regulations and the upcoming EU Emissions Trading Scheme (EU ETS), which will cover international shipping in EU waters from the beginning of 2024.

It was important for us to be able attract relevant and knowledgeable speakers and panellists for an event scheduled to last for an afternoon, and in that we were lucky to also have the assistance and support of both the Piraeus Marine Club and the Union of Greek Shipowners. After brainstorming for a long time – perhaps too long – we came up with a structure that seemed promising. The afternoon would start with a couple of reflections from those very close to the action in the persons of Harry Fafalios , Chairman of the Greek Shipping Co-operation Committee, and Konstantinos Antonopoulos of Major & Grove, but also legal counsel for the Union of Greek Shipowners . This was to be immediately followed by a presentation with relevant supporting data from AXSMarine . After lunch – this was the Piraeus Marine Club after all – we planned a panel discussion, where we would be joined by Harry and Konstantinos, but also Adamantios Catsambis , commercial manager at Eurobulk, Dimtris Anassis , partner at Hill Dickinson, and rarely for such an event, a charterer: Alex Haubert , freight manager at Amaggi.

Whether it was the topic or the lineup, interest and attendance exceeded our expectations (especially as it was not free), and in the end we were jammed into a dining room stripped of most of the tables but filled with enquiring minds. I was feeling nervous about the whole thing, and not just because I was to be the moderator of the panel discussion, but also because I am a ship sale and purchase broker, and may be a bit at sea with the topic anyway. But in the sale and purchase market we are already noting price differentiation between those ships that have ‘eco’ main engines – electronically controlled to reduce consumptions – as opposed to mechanically controlled. I wanted to know the backstory driving this demand for ‘eco’ ships, and whether it was based on real operational and market factors, or just ‘greenwashing’. I wanted to be educated and enlightened.

I have a number of conclusions to make after what was indeed a very enlightening discussion and an enjoyable.

Firstly, on CII, it appeared that everyone was in agreement that the base regulations were flawed. The market was left to interpret and try and influence chartering practice in the spirit of the regulations, but were at a loss on how to do it. Harry Fafalios, who was on the BIMCO drafting committee to produce a clause to be inserted into time charterparties explained that it was almost impossible to come to a consensus between the owners and charterers in what is normally a collegial atmosphere. This was not because one side was trying to get one over on the other but because it was unclear how to equitably and constructively balance the owners’ and charterers’ responsibilities in a document that usually clearly defines and differentiates between the rights, duties and obligations of each of the parties. Shipping, as George Economou memorably commented in an albeit different context, is not a team game, and yet here was a regulation that so blurred the boundary line between the parties to such an extent that it led not only to confusion but confrontation. If this was meant to encourage co-operation and collaboration in the shipping industry it failed.

Adam Catsambis, with responsibilities as a chartering manager for an owner of bulk carriers and containerships noted that in one case of a long-term time charter already in existence, the owners and charterers simply agreed to work together over time to make sure that the CII rating was not affected adversely, without having a specific clause in the charterparty at all. He admitted that this was only possible because of the length of the period of the time charter, the ongoing relationship between the charterers and the owners, and the fact that it was a containership. He doubted whether this approach would work in the dry bulk market.

Alex Haubert said that the very publication of the BIMCO CII clause had made a new club – mostly of companies with significant chartering interests – united by their opposition to the clause. People that he had never met got in touch with him to join in their protests by letter, jointly signed, by all of them. He also noted that BIMCO, to their credit, made it their business to meet every single one the signatories to listen to and address their concerns. Nothing much really changed however. Dimitris Anassis commented that due to the structure of the different trades (and perhaps their relative health) tanker charterers had more or less incorporated the BIMCO clause universally and intact, maybe because they already ensured that in their interests had been heard by those drafting the original regulations.

Secondly, on EU ETS, there was again agreement between the parties, but this time because the relevant BIMCO clause had been drafted cleanly, assigning rights, duties and obligations between the parties, but this was because the regulations were clearer and did not try and attempt to force the parties to work together. Instead, as Konstantinos Antonopoulos explained, both in his original speech and the panel discussions, the implications for shipowners were more significant in issues of incorporation, taxation and settlement of the allowances due than in the execution of the charterparties. Non-compliance of transfer of allowances, and default were also discussed, as well as the opportunities for shipowners themselves to start trading in allowances; they are seen as quite cheap at present.

Overall the discussions were long and detailed, but never boring, especially as the panellists were eloquent, engaged, thoughtful and respectful, and my role as moderator was made much easier because of that. None of the panellists had been told what to expect in the way of pre-planted questions, so none of them had pre-planned replies. What also made it easier for me as was that the audience of senior decision makers and stakeholders in the industry were also attentive and interested, which created a productive atmosphere in the room. Very few people left early, and very few – as far as I could see anyway – were passing the time away browsing on their mobile phones. I had put myself under some pressure to be educated about things that do not normally feature in my normal reading matter, but I needn’t have worried: all I had to do was guide the conversation in a way so that I – perhaps one of the least informed in the room – could understand it. And, having educated myself, but more importantly been present at the conference, I came away with new insights and ideas for my own work in the sale and purchase market.

My final conclusions are more general. I was impressed that the Piraeus Marine Club is reaching out to the needs of its members, and co-operating more closely with the Union of Greek Shipowners. A club of like-minded people should promote these types of discussions so that it remains relevant to their members’ interests. This conference was unique in both the make-up of those that attended, and in the way the topics were discussed. Our genial and gregarious host GEORGE ALEXANDRATOS , President of the Marine Club, welcomed us and concluded the proceedings in this spirit. We at URSA were honoured – genuinely – to be so heavily involved in it.

It was also refreshing to be involved in a conference where there was a genuine desire to learn and share knowledge, not to just network and schmooze, or promote a particular brand or pursue a certain gripe. After attending many conferences where the aim has been unclear, the purpose self-serving, where self-promotion overrode insight, and the take-aways consequently (and immediately) forgettable, this new approach is very encouraging for the industry as a whole, and the Greek shipping community in particular.

It also gives us self-confidence I hope, that we in that community (I am including myself as I hope to be seen as at least ?one of its adopted sons) are able to find the resources within us to develop further, not ignoring the outside world, but listening to it, each other, and sharing knowledge and opinions for the good of ourselves, our companies, our community and our industry, even for the environment. Those not from Greece, or not familiar with the Greek shipping community – and maybe some of those within it – would have been impressed, perhaps envious, and would even maybe have had their preconceived ideas and challenged by a very impressive show of intellectual collegiality.

The final conclusion? The market will decide. But the fact that many market players and decision makers were in the room felt special, and if this is the future, for the Piraeus Marine Club and the Greek shipping community, then it works.

Simon Ward

www.ursashipbrokers.gr