Protectionism is the new emerging risk for global shipping according to the International Chamber of Shipping’s (ICS) “ICS Barometer Report 2023-2024” released today, which contains findings from a survey of 100 international shipping leaders. The report breaks down climate change into key issues affecting shipping businesses.
While in 2020-2021 the main source of concern was the pandemic, in the last two years this baton has now been passed to political instability, which is the leading risk factor this year and has led to a sharp increase in protectionism. This risk multiplier has reduced the industry’s reliance on public funding in traditional trade routes, with the avoidance of the Red Sea as a prime example, and the pace of the transition to decarbonisation, with fossil fuels remaining dominant on the marine energy front for the next decade.
International shipping leaders expect to face a more complex operating environment as many countries seek to formulate their own energy security policy in the coming years.
This political instability is also linked to the increased number of cyber-attacks by state and non-state actors – which are seen as a risk to shipping’s steadily growing digital infrastructure and ranked as the second highest threat for this year. And geopolitical turmoil brought malicious natural attacks to the forefront of concern for the first time, displacing economic instability. In fact, geoeconomic rivalry and associated protectionism was seen as a key factor driving respondents to both nearshoring and friendshoring of business activities.
Equal terms
Regulations remain the most important factor affecting business activities – not only reinforcing the need for clear and sustainable regulatory oversight to create a level playing field, but also enhancing transparency for investors and other stakeholders. Establishing a formal, phased path to net zero is likely to reduce the fragmentation of approaches to decarbonisation, which vary across regions and sectors depending on public policies and corporate ambitions, the report said. report.
Following the formal agreement at the International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC 80) to achieve zero greenhouse gas emissions by or around 2050, confidence is rising. Indeed, nearly 50% of leaders responding to the ICS barometer reported an increasing willingness to invest in low- and zero-carbon solutions following the IMO agreement, while only 23% of respondents remained undecided and a further 17% felt that this agreement has no impact on decision-making. This improved confidence in the regulatory process highlights the value of clear decisions and directions from governments and regulators, and is evidence that companies are taking a hands-on approach to decarbonisation.
The new fuels
However, to maintain this growing confidence, regulators need to ensure the implementation of meaningful policy measures, strong enforcement and access to finance with minimal administrative burden, the ICS stresses. Responses from shipping leaders indicated increased interest in new fuels, notably methanol, nuclear and wind power, although LNG, biofuels, heavy fuel oil (HFO) with pollution reduction technology continued to lead industry forecasts for the next decade.
The availability of infrastructure to deliver fuel to ports, the availability of that fuel as determined by competition in existing markets, and the creation and implementation of global and regional regulations that define safe operating standards remained key factors.
International shipping leaders expect to face a more complex operating environment as many countries seek to shape their own energy security policies in the coming years through investment in a mix of fossil fuel and renewable energy infrastructure.
Upcoming obstacles could take the form of shifts in trade routes, reduced public and private funding, and access to skilled labor. In any case, geopolitical and regulatory uncertainty makes the need for closer relationships between industry players, governments and regulators imperative.
In a statement by Emanuele Grimaldipresident of the International Chamber of Shipping, emphasizes among other things that “we are in a period of profound transformation characterized by decarbonisation, increased security risks and the evolution of regulations”. He adds that the key points causing a “strain” on the industry are the availability of public funding for green initiatives and the impact of market-based measures, which still require greater collective effort between industry leaders, government agencies and international partners to deal with them”.
Constant worry
Protectionism is also seen, Mr. Grimaldi continues, as a growing risk, driven by geopolitical instability, national energy security concerns, global and regional economic crises and government incentives for manufacturing that favor local production. This year’s ICS Barometer report focuses on reshoring, nearshoring, friendshoring and offshoring – assessing the perceived impact on current shipping operations, as well as the factors that may influence decision makers to shift their own operations.
Finally, the ICS chairman considers the issue of seafarers important as the availability of trained crew and personnel for certain roles remains an ongoing concern, with the potential to further affect the operation of the shipping industry. The report also draws attention to the alternative fuels market, where methanol and nuclear power have seen a significant increase in interest from industry respondents, while the emergence of extreme weather risks is identified as an area for the industry to watch.
#Protectionism #source #concern #shipping