Unilateralism is the Killer of Invention

Paul Hardy, NSI

Last week we saw the Trump administration hit the maritime headlines calling for a staggered approach to the roll out of IMO2020. Many articles point towards the administrations fear of high gasoline prices entering an election year dictating policy. I believe this to be too facile an explanation and not in line with recent policy on Iran, Saudi Arabia and Russia which, on face value seems to be driving crude prices up rather than down.

On the one hand, at current prices shale oil feasibility is moving in the direction of US energy self sufficiency whilst the administration is showing it can effect the market and in some instances control the ability to sell of some of the world's largest producers. Like it or loath it, it is a very bullish policy.

So why now should the administration involve itself in marine affairs? Are they worried about the potential price spike? On first look this ties in with domestic politics but, many of the US refineries have invested heavily in upgrading their infrastructure to cope with increased distillate production. Distillate use in shipping should also see a return to profitability for this sector after years of having to 'get rid of the bottom of the barrel' to shipping.

A staged approach would in theory if applied globally benefit those countries with heavier crudes and less sophisticated refining infrastructure exponentially. This does not tie in with 'America first' policy drivers. Of course US flagged vessels would be able to burn HSFO for longer but there would be no competitive advantage over other shipping lines as they would also be burning HSFO.

The question is how this staggered approach could be implemented to benefit US industry and promote 'America First'? The natural thing to do would be to make a unilateral decision that all US flagged ships could burn HSFO in US waters for an extended time period. This would drive more ships/shipping co's to be registered in the US whilst giving them a competitive advantage when calling in the US delivering products for the world's largest consuming nation.

This would though be absolutely catastrophic for green campaigners and other shippers alike. The nature of global politics at present would likely see a copycat effect whereby other large powers implemented similar policies to counteract such a move. We would see 'protectionism on the sea'.
The biggest economic effect would be on those companies who have invested time, money and effort planning for IMO2020. Especially those with orders for scrubbers. Unilateralism really is the killer of invention.

As an industry we pride ourselves being connected and working to a common goal to get ships supplied. IMO2020 has thrown down the gauntlet but I believe through collaboration we will get there and make it a success. We all know that improving our environment and reputation is a key driver for customers, shipping companies, bunker suppliers and even for many of us within our own families. We are being asked to act collectively and I sincerely hope we will continue in this way in a non-political environment.