INTERCARGO: We Don't Burn Bunkers For Fun

Nicholas A Pappadakis, Chairman Emeritus, INTERCARGO, called for an end to "the era of blue-sky regulations."

Keynote speakers opening the Connecticut Maritime Association (CMA)'s 2014 annual conference on Monday said environmental regulations put in place during last decade's boom period for shipping ignore the current day reality for ship operators.

"We don't burn bunkers for fun," said Nicholas A Pappadakis, Chairman Emeritus, INTERCARGO, who called for an end to "the era of blue-sky regulations."

And BIMCO President John Denholm said ship operators were not only dealing with unfair environmental legislation but also the "double whammy" of depressed freight rates caused by an ongoing period of over capacity.

Recovery?

"The good news is that after one of the most severe downturns in world trade, the global economy and world trade is once again growing," said Denholm.

"The bad news is that in the euphoria of the boom in the noughties we built too many ships, and today most sectors in the market have a surpless capacity of about 20%. And some considerably more than this."

Although much absorbed by slow streaming, that overcapacity has led to an increase in vessel scrapping.

However Denholm said that counter to this there has been a substantial amount of newbuilding taking place too, as the arguments for investing in a new generation of eco ships were "compelling".

"Contrary to what you would expect there has been a large amount of newbuilding as owners who have the means seek to exploit the benefits of the new super eco ships," he said, adding that the flood of new orders would delay the return of a supply and demand balance in the market, and the recovery of freight rates.

"I do believe that with the newbuilding we're in for an inevitable period of over capacity and that's going to mean depressed freight rates for some time to come, and that must be the biggest challenge facing out industry," he said.

"At the same time as facing this challenge we're going to have to face the double whammy of having to implement the well intentioned, but ill advised environmental legislation which was put in place in the boom years of the noughties."

"Now don't misunderstand me. I, like most shipowners, am committed to the environment."

"I support the environmental agenda as does BIMCO, but I do not believe that some of the legislation that is in place is either fair, or properly thought through."

CMA's next event, CMA Shipping 2015, will be held on March 23-25, 2015 at the Hilton Stamford Hotel, Connecticut.