John W. Butler, President and CEO, World Shipping Council

https://www.worldshipping.org
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John W. Butler

2016 will be a challenging year for the liner shipping industry, both in economic terms and on the regulatory front. The two are related.

Liner shipping is the backbone of the world economy. The liner industry moves more than 60 percent of the world’s seaborne trade measured by value. But the world economy remains in a slow-growth period, and the days when containerized cargo grew at a high multiple of GDP growth appear to be behind us. Slower demand growth coupled with increased vessel capacity — capacity driven by the need for increased efficiency and improved environmental performance — have created a market in which profitability is elusive.

Market pressures will increase on the economic side, and at the same time, new regulations will add significant costs that will require the industry to invest and to innovate.

As of July 1, 2016, changes to the Safety of Life at Sea convention will require that shippers provide carriers with a verified gross weight on every international loaded container as a condition of loading the container aboard a vessel for export. The International Maritime Organization ballast water convention may enter into force in 2016. And we will likely learn in 2016 or 2017 whether the global 0.5 percent cap on sulfur content for marine fuels will come into effect in 2020 as scheduled. That fuel sulfur cap will be the most expensive regulatory requirement the industry has ever faced.

Finally, although shipping — the most energy efficient form of transportation on the planet — has decreased its carbon dioxide emissions in recent years, and is the only transport mode already subject to a mandatory international energy efficiency regime, there might nevertheless be calls for additional carbon regulation.

Part of the challenge of 2016 and beyond is to ensure that new regulatory requirements are structured and implemented in ways that are effective in meeting their stated objectives while also allowing the liner industry to provide the services necessary to support a healthy global economy.