Lloyd's List: The Shipping Podcast

In a market where unpredictability has become predictably common, the whole concept of accurate earnings guidance from the lines fell overboard several quarterly reports ago. Forecasts are couched in ever more provisional language as volatility and black swans continue to demand near constant expectation management amid yo-yoing sentiment. While US retailers were baulking at the return of $10,000 container shipping rates for a forty foot box from Shanghai to New York a few weeks back, the lines were more concerned about the looming long winter to follow the unexpectedly early peak season. But port congestion is easing and there’s been a rates correction, so does that mean the market is heading for some semblance of balance? Any feelings of relief may be short-lived as more and more economies get embroiled in a trade war and tariffs become a hot-button issue in the upcoming US election. There’s the Red Sea to consider, the looming union contract negotiations in the US, the Panama canal, potentially more reshuffling in the alliances… the list goes on. So what happens next? Featured on this week’s edition of the podcast: Sanne Manders, president of Flexport Chantal McRoberts, director of Drewry’s supply chain advisory team Tan Hua Joo, co-founder of Linerlytica

THE prospect of a dominant Trump presidency is significantly more like than it was only a week ago. But what does that mean for shipping? Will the anticipated “Trump trade” really result in more inflation, higher interest rates and sweeping tariffs? Will the inevitable bonfire of Biden’s environmental rules put the brakes on shipping’s already hesitant energy transition? And what about the all important trading relationships with the EU and China? Are we entering an accelerated period of protectionism? Political risk is difficult for markets to price and if this week has taught us anything it is that there are few certainties when it comes to US politics generally right now and Donald trump specifically. But with Trump 2.0 now looking increasingly like the base-case scenario for business to plan for we taking a deep dive on the podcast this week into what a second term of Trump would look like for the maritime markets. Our senior US reporter Greg Miller takes the podcast reigns this week and talks to Jason Miller, a freight economist and professor of supply chain management at Michigan State University.

The explosion of sanctions have demanded a compliance sea change from the marine insurance sector. But despite the rapid pace of investment to keep up, P&I Clubs have found themselves struggling to enforce an increasingly unenforceable regime. The flawed nature of the oil price cap regime is hardly news. But while the rest of the industry get to criticise from the sidelines it is the P&I Clubs who have been left to walk a precarious regulatory tightrope. The clubs have been politely telling government and industry for some time now that it is not for them to determine what should or should not be considered a lawful trade. And yet government and industry are increasingly looking to them for answers and enforcement they cannot provide. This is not just a problem for the P&I Clubs to deal with alone. The main catalyst for the growth of the dark fleet is not so much ships removed from International Group Clubs then moving to less reputable insurers, though clearly that does happen. Rather it is because of the oil price cap regime that new operators are specifically establishing themselves with a corporate structure which does not rely on G7 Coalition service providers at all and thus puts them, perfectly legitimately, beyond the scope of the oil price cap sanctions. That also typically means the use of low-quality flags and class plus insurance that is probably illusory in the event of an incident. Discussing the unintended consequences of sanctions on the podcast this week: Tony Paulson, head of Asia & corporate director at the West of England P&I Club Daniel Tadros, chief operating officer at the American Club Capt. Rahul Khanna, global head marine risk consulting, Allianz

The threat posed by Houthi missiles and uncrewed surface vessels sits at the lower end of the risk spectrum for shipping. Things could be worse. A lot worse. That was the rather worrying assessment this week from the latest in a series of Geopolitical risk webinars we’ve been running here at Lloyd’s List and for this week’s podcast we are bringing you a few highlights from the discussion. The Red and Black Sea risks inevitably came up, but more generally we were looking at the risks that should be higher up the shipping industry’s agenda right now. And there are many such threats on the horizon. For all their haphazard half truths and fictional claims, the Houthis have managed to prove how exposed maritime trade is now to even the most basic attacks on choke points. And, for all its lauded adaptability, seaborne trade is highly vulnerable and bad actors do not need a high level of sophistication to cause widespread disruption. They don’t even need a huge amount of successful attacks – there mere threat is sufficient in some cases to divert globalisation. Today it’s the Bab el Mandeb – tomorrow, what the Taiwan Strait? And what about the less visible threats to shipping security. It’s not just Joe Biden who is worried about Chinese spy cranes. China’s evolving trading relationships with US and Russia requires a risk assessment certainly, but the increasingly blurred lines between Chinese commercial and state-controlled entities is being flagged as a major concern by companies, particularly in relation to the data access and intelligence gathering abilities it affords the Chinese state. Featured on this week’s edition of the podcast: Nissa Felton - Senior Manager, Geoeconomic Influence & Threat Intelligence - Janes Mike Plunkett - Senior Naval Platforms Analyst - Janes Bridget Diakun - Maritime Risk Analyst - Lloyd's List Intelligence Michelle Wiese Bockmann - Principal Analyst - Lloyd's List Intelligence

As unpalatable as it may be to say out loud, global turmoil is pretty good for business. Shipping CEOs are as happy as shipping CEOs generally get to be.[Sidebar#LL1149672] They are after all a pretty philosophical bunch at heart and they understand that all this has been seen before and will be seen again. They know that unexpected good fortune tends to come with a flipside. What comes up must come down, and every action has an equal and opposite reaction — it’s just a question of being able to calculate the Newtonian market forces to know when you are about to get clobbered. All of which is by way of context to the conversation at the heart of this week’s edition of the podcast with Stena Bulk president and chief executive Erik Hånell. Hånell talks through his view about the immediate market prospects, but the conversation is about how to deal with uncertainty. As a business leader he needs to take strategic decisions now despite not knowing what lies ahead when it comes to fuels, technology or geopolitical risk. That presents a complex series of challenges.

When we talk about green shipping, are we always talking about actions that have a net benefit in terms of reduction of greenhouse gases? Are the commercial choices we make today about reducing absolute emissions, or just the most pragmatic financial options on the table? And are the regulations we are negotiating genuinely addressing the problem of climate change, or just part of a wider exercise in climate finance revenue raising? It’s not always a clear cut as we might like. Having agreed the ambitious 2050 net zero targets last year, we are about to ramp up into the difficult detail of how we get there and the details increasingly mater. This week’s edition of the podcast argues that we are at an inflection point. The detail of what gets agreed at the International Maritime Organization (IMO) over the next 12 months will come with consequences for shipping, but also the pace of investment into new fuels like green hydrogen. The various combinations of measures proposed at the IMO all entail a degree of revenue generation. The scale of revenues expected is unclear, as is the destination for the revenue. Are we ploughing that money into shipping’s decarbonisation efforts - bridging the cost differential to green fuels - or will we see that cash disappear into coffers of the poorest and climate most vulnerable States with little direct impact on shipping’s energy transition? Will the IMO agreements help or hinder shipping’s chances to get ahead in the queue for green hydrogen. Discussing these question on this week’s edition: John Butler, President and CEO of the World Shipping Council Rasmus Bach Nielsen, Trafigura’s Global Head of Fuel Decarbonisation Bud Darr, Executive Vice President, Maritime Policy and Government Affairs, MSC Group

There is a growing body of opinion across shipping that is routinely referring to nuclear, alongside carbon capture technology, as the only real options on the table that will allow shipping to fully decarbonise by 2050. Has the previously fringe option of nuclear powered ships now become sufficiently mainstream for the industry to genuinely consider leapfrogging ammonia and hydrogen as a more pragmatic solution? Featuring Myrto Tripathi, chief executive of the NGO Voices of Nuclear Mikal Bøe, chairman and CEO of Core Power Matthieu de Tugny, president, Marine & Offshore, Bureau Veritas

Pragmatism seems to be the new buzzword sweeping through the shipping executive lexicon. What that means though requires a bit of decoding. Those of you who have been schlepping round the conference circuit at Posidonia in Athens this week will have no doubt noticed that it comes up quite a lot when talking about decisions that have not been made. A lot has happened in the past few years, we need to factor in energy security as well as energy transition. The technology is there, the regulation is coming, but realistically the fuel supply is not. We need to focus on efficiency this decade, and, by the way 2050 net zero now seems pretty unlikely now. We need to be pragmatic. Is this outbreak of pragmatism a genuine shift towards a more realistic conversation? Is it a resetting after the greenwashed ambitions that never really had any substance? Or are we starting to feel the ESG backlash playing out and pulling back on the difficult substance of what lies ahead in terms of the energy transition? There has certainly been a shift. Given that this push for pragmatism is coming, not from the environmental laggards, but from many of the most progressive voices who previously argued with conviction for ambition when it came to shipping’s energy transition and all that entails, the podcast this week reports from Posidonia. Joining Lloyd’s List editor-in-chief Richard Meade around Athens this week to discuss what this all means: Jan Dieleman, President of Cargill Ocean Transportation Knut Ørbeck-Nilssen, CEO of DNV – Maritime Matthieu de Tugny. President, Marine & Offshore, Bureau Veritas. Bud Darr, Executive Vice President, Maritime Policy and Government Affairs, MSC Group Christopher J. Wiernicki, CEO of ABS

This episode of the Lloyd's List Podcast was brought to you by Wirana - visit https://www.wirana.com/ for more information Shipowners are not having to woo bankers right now. They don’t need to. If anything it’s the bankers’ turn to buy the drinks at Posidonia this year and start talking up ways to deploy capital, because shipowners are paying down loans while they can and bank loan deal flows have slowed to a trickle. So there is limited appetite right now to engage with green finance which, for now, comes with little incentive beyond its availability in a market awash with options. But that is a situation that is going to change much quicker than many realise and there is a strong argument that the industry should start talking about that shift sooner rather than later. Capital has already started to become more selective around sustainability criteria and that trend is only set to continue in one direction. Ultimately, it is a trend that will change how shipping operates and arguably determine the future direction of the industry. Discussing the implications of green finance in shipping on the podcast this week are: Nina Ahlstrand, global head of sustainable finance DNB Markets Anastassia Tcherneva, head of shipping clients at ABN Amro Bank Alexander Saverys, chief executive of Euronav and CMB Michael Parker, global industry head of shipping & logistics at Citi and chair of the Poseidon Principles

This episode of the Lloyd’s List podcast was brought to you by Lloyd’s Register — visit www.lr.org/en for more information. THE US refrained from imposing new sanctions on Iran’s shipping sector for most of last year and was said to be lax in its enforcement of existing sanctions as it was eyeing a prisoner exchange deal with Tehran that took place over the summer. That appears to have changed after October 7. Iran’s backing of regional proxies like Hamas, who perpetrated the October 7 massacre, and the Houthis, who have been terrorising the Red Sea, have led the US government and congress to renew their interest in Iran’s oil and shipping sectors. On April 24, US President Joe Biden signed into law a national security spending package that included substantial changes to the administration’s authorities to impose sanctions and to investigate violations. One of the big-ticket items for shipping is the Stop Harbouring Iranian Petroleum Act, AKA the Ship Act, which instructs the president to impose sanctions on foreign ports, refineries, vessels and shipping companies that knowingly process or carry Iranian oil and products, expanding sanctions risk for maritime supply chain actors. The broader legislation also included provision expanding sanctions threat to Chinese financial institutions that process “significant financial transactions” involving Iranian oil or drones, and extended the statute of limitations for sanctions of violations from five to 10 years. However, whether these any measures will have an impact will hinge to a large extent — surprise — on enforcement. In this week’s podcast, our guests Brian Maloney, partner in Seward & Kissel’s litigation and investigation group, and Claire Jungman, chief of staff at advocacy group United Against Nuclear Iran, will walk through the nuances of the new bill, how it fits in with the existing alphabet soup of US sanctions authorities, and how it could impact maritime supply chains, especially in China, to where most of Iran’s oil is exported.