Shipping Executive: We Can't Order New Tonnage While Carbon Rules Are So Uncertain

Shipowners ordering new vessels today face a smorgasbord of options with little guidance over how their choice will be viewed in the decades to come. File Image / Pixabay

A shipping executive has lifted the lid on the chronic uncertainty owners currently face over decarbonisation while pondering new additions to their fleet.

Hamish Norton, president of Star Bulk Carriers, told a podcast this week that orders across the shipping industry were being held back by indecision over future regulation.

"We're not brave enough right now to order a newbuilding in the face of environmental regulations that are clearly, let's say, unstable," Norton said in a podcast hosted by Capital Link on Tuesday.

The question hinges on whether a new ship ordered today will still be allowed to trade towards the end of its commercial life.

While all shipowners by now will have the IMO's objective of halving GHG emissions by 2050 firmly in mind, no concrete guidance has yet been given on the timetable for carbon-emitting ships to be phased out.

"In the old days, when you ordered a new building that was legal at the time you ordered it, it was grandfathered in for its entire useful life," he said.

"We do not have faith that at this point, if you order a newbuilding that's legal today, that it will be grandfathered in."

Hostage to Fortune

This uncertainty applies in particular to ships running on VLSFO or using scrubbers, but to some extent it also remains unknown whether gas-powered tonnage ordered today will still be allowed to operate by the 2040s. Increasing wariness of all types of fossil fuels by both regulators and banks could well force a wide variety of ships to be scrapped early in the coming decades.

"We want to wait and see what the political environment looks like, what the regulatory environment looks like and what we're seeing in terms of the actions of other shipowners," Norton said.

"Almost all the other shipowners are taking the same attitude; they're waiting, they're seeing what the regulations end up requiring.

"They're seeing what sort of engine they're going to need to use, they're seeing what sort of fuel they're going to need to use.

"And so I think, across all sectors of shipping, dry bulk, tankers, container ships, you name it, there's going to be less ordering than you would normally have while people figure out what kind of ship is the ship of the future."