Making a ‘pig’s breakfast’ of regulation

 It’s not often you hear the industry’s approach to increased regulation being described as a “pig’s breakfast”. The striking analogy comes from the mouth of one of the industry’s ship operating heavyweights: BW Group chairman Andreas Sohmen-Pao.

Speaking at Sea Asia in Singapore, Mr Sohmen-Pao was part of a panel discussion invited to give its views on the prickly issue of regulation.

“I think we’re making a pig’s breakfast of regulation,” he said. “Either you regulate or you don’t regulate. We’re in the worst of worlds where it’s stop, start, stop, start regulation. There isn’t clarity of direction and we don’t keep moving forwards at a steady pace.”

Despite starting the ballast water management regulation process ten years ago, the industry is today in a “semi-pregnant state”, he complained.

“I’m a great believer in human ingenuity in solve technology but the one way in which we will never have the technology is if we don’t keep moving forward.”

Strong leadership

Mr Sohmen-Pao stressed the need for strong leadership to bring together industry and regulators to find solutions.

“We’re allowing ourselves to get bounced around and we’re going round and round in circles. In the end we all suffer for it. It needs somebody to just say we will never get a perfect consensus, let’s get close and then let’s move.”

Lloyd’s Register’s marine director Tom Boardley, speaking from the ‘frontline’ of technological developments for ballast water management systems, added his concerns.

“Everyone is talking about new technologies and saying that it’s available and that we can transfer it from land-based industries to marine. But what we’re discovering is that, particularly in water treatment, a lot of what works on land is only certified by national authorities and sometimes in a ‘less rigorous’ way. When it comes to the shipping industry everyone is regulating everyone else, so effectively you have cross border regulations making the bar that much higher.

“I think that all of us have a real challenge to make this technology work because no-one is going to say ‘don’t worry about evasive species or emissions from shipping’,” said Mr Boardley. “We have to find the answers, but it’s not going to be cheap.”

Regulator responsibility

AP Moller-Maersk Group executive board member and chief executive of Maersk Drilling Claus Hemmingsen believes that regulators need to shoulder some of the responsibility, instead of expecting the industry to take all the slack for technologies that remain unproven even at this late stage in the ratification and enforcement process.

“Regulators need to ask if they are willing to take the consequences when they try to regulate with something that is not yet invented or is supposed to be invented.”

The biggest questionmark hanging over incoming ballast water management and emission regulations is the robustness of the monitoring process, the panel pointed out.

“One thing that is scaring us more than regulation itself is how that regulation is introduced and how it is controlled,” said Mr Hemmingsen. “You leave the industry in a vacuum when you do not know what to do and the greatest uncertainty are the consequences.

“We do not know if it will be enforced, so can you afford to invest as a responsible shipping company?”

Fellow shipowner Khalid Hashim, managing director of Precious Shipping, is in agreement. “The good guys will always do it, but there’s unfair competition as there will be many that will not follow the regulations. They will just get away with it because enforcement is not strict enough and that is a big issue especially when you talk about the emission control areas.”

He complained that for a conscientious ship operator, operating costs in relation to regulations keep increasing and “there is nothing we can do about it”.

Monitoring moves

From the technology side, Mr Boardley admitted that existing monitoring technology is not good enough, but he believed that this is an area where the industry will soon see a breakthrough. This will lead to a fairer operating environment where those flouting new regulations will be caught and penalised. That said, he added that based on Port State Control evidence seen by Lloyd’s Register, “most” people are complying with regulations.

Of course, increased regulation is not unique to shipping and with a global trend towards greater openness, more consumer protection, and no wrongdoing, the regulatory pressures on the sector are likely to get worse before they get better. To face this future, ship operators need to integrate the risks from regulation into their business and not treat regulation as a standalone problem, the panel advised.

And just as ship operators get to grips with soon-to-be-enforced regulations, there may be another significant regulatory headache on the horizon.

“The next one that I think is coming is carbon tax,” warned Mr Sohmen-Pao. “A government somewhere is going to say ‘I’ve had enough, I’m going to start taxing anyway’.”