Are we saving the planet or lining our pockets?
Back in April of this year France made a submission to the IMO urging for the introduction of a global speed limit for commercial vessels. Since then 113 shipping companies have all followed suit, issuing an open letter to the IMO agreeing with Frances’ proposal. For the record, the majority of signatories are from the Greek shipping community and whilst there are a few big players on the list, none of the main liners have put their names to it. Yet.
Most of us have a pretty decent moral compass, we know the difference between right and wrong and whilst we might not always make the best decisions, we do so mostly in good faith. I’d have to question the compass guiding Ardmore Shipping during a recent telephone call discussing their Q1 Earnings. The CEO of Ardmore was asked about the letter to the IMO calling for speed limits on all commercial vessels in a bid to reduce greenhouse gases. A laudable, if not perhaps slightly simplistic viewpoint, but certainly made with the best intentions. The transcript goes something like this…
Analyst – “Okay. And then I just want to ask — kind of the news that hit yesterday about proposal for like a speed limit for the IMO. Were you guys the signatories to that? And what are your thoughts on that, and kind of how that would potentially play out for MRs?”
Ardmore Shipping CEO – “We’re not signatories. However, we are very engaged in the industry forums in terms of discussing ways to meet the targets, and we think it’s a very realistic one. I think that the various technology-driven solutions are going to come much later. So I think people are realizing that operational methods are really the way to go early on. And it seems like a really interesting idea. Obviously when you slow ships down, you’re essentially reducing effective supply, and that’s got consequences for the market. I doubt regulators would intend to put constraints on ships that result in the charter markets going haywire. I don’t think we would complain if that happened, but that’s probably not really in the cards. But, overall we think it’s a pretty sensible component of an overall longer-term solution.”
Essentially, Ardmore are dismissing any technological solutions because, and this is where it gets really fun, by implementing slow steaming regulations they stand to increase their revenue. If ships slow down the demand for them increases, liners have to increase the number of vessels in their service to meet the demand and the rates go up. The vessels’ value increases and with more vessels at sea, the potential for a surge in newbuilds also increases.
I’m all for working together to create solutions for a better environment, because let’s be honest, we haven’t got a Planet B to go to if this one goes belly up. But to dress up something as an environmental cause but really be rubbing your hands in glee at the thought of all those extra dollars you’re going to make? No, that’s just not right and smacks strongly of one very misguided moral compass.