A fireside chat with shipping economist Martin Stopford
4 min read
18 Nov 2020
David J. Cord
4 min read
18 Nov 2020
The next 30 years could be as revolutionary to shipping as steam engines were in the age of sail. British economist Martin Stopford discusses his vision of the industry in light of Covid-19, climate change and smart shipping.
Martin Stopford has built a glowing maritime career both in business and academia. He is currently the non-executive president of Clarkson Research. Stopford chats with us about his paper on the possible future of the shipping industry in light of the pandemic and current events.
In your paper you talk about the next 30 years as similar as to what happened in the late 1800s when the maritime industry made the jump from sail to steam. Are we really in the midst of such a huge revolution?
Yes, I believe the situations are comparable. We are building a totally different way to carry cargo, just like they did when steam replaced sail. They built a completely new industry around regular liner services, which was not possible before because schedules depended on if the wind was blowing or not.
Everyone is talking about the pandemic, but the maritime industry must also handle climate change and the industry 4.0 digital revolution. So far, practical progress has been patchy and disjointed, but by shaking up the status quo, the pandemic might be the alarm bell we need.
How is the Covid-19 pandemic and recession impacting the industry currently? When you published your paper, orders were down 75%.
There have been a few big contracts, but orders are still low. Investors are uncertain, so it is quiet in shipbuilding. Remember, there is about a six- to nine-month lead time on new contracts.
And what about a recovery? You looked into your crystal ball for a few different scenarios about our future.
The first scenario is pretty optimistic. China has recovered quickly, for instance. The third scenario is at the other extreme. We have a deep economic downturn and a large fall in seaborne trade. In the second scenario, the recession continues into next year and we have some problems and delays to the recovery. There is a close correlation between industrial production and shipping, so watch how quickly industrial production bounces back. I think number two is a fair scenario.
What about politicians? Are they helping the recovery?
Oh yes, or at least they are trying. Governments need economies to bounce back or else they won’t collect taxes and have funding for their programs.
But could they roll back environmental regulations to try and jump-start the recovery?
New ship orders have dropped, so there is a ship requirement “hole” caused by Covid-19. This will probably be filled with speculative or policy-driven countercyclical ordering. It is logical for governments to support new technologies and new designs to get them the market. The Chinese will do this.
We will also see a spike in new building in the 2030s to replace the ships from the previous shipbuilding boom 25 years ago. It would be a mistake to replace these ships with old technology, so we need to get new developments going. It is urgent to begin putting this new technology on the water so we are ready for the next generation of ships. I don’t just mean new engines, but whole new platforms for ships.
How are we going to cut our emissions in half by 2050?
The keystone is the propulsion system of the ships built in the coming decade. The problem is that no zero-carbon propulsion system is available for commercial ships. Meeting the carbon challenge will take one step at a time, in which design innovation is introduced in three technology waves.
In Wave 1, diesel vessels are designed for slow speed sailing. Equipment is fine-tuned for energy and carbon saving to meet new IMO standards. Wave 2 will see low-emission dual-fuel and gas engines leading to hybrid ships with batteries and advanced digital systems. Wave 3 will have zero-carbon, all-electric ships which will become available when new power plants have been developed.
Say I have a time machine and travel to 2050. Hopefully, the world won’t look like Blade Runner, but what will the maritime industry look like?
It won’t be unrecognisable. Cars today are similar but look different from what they did in the 1980s, and ships will be the same way. The biggest difference will be that ships will be floating computers. There will be integration between fleets of ships, logistics networks and customers. The personnel will also be different. Today it is a male-dominated industry and I hope it will be different in 30 years.
We still have big obstacles, so we need a leader in regards to industry standards. Everyone is using proprietary software, but we need industry protocols like they have in the automobile industry so one functional system can work with all others. Maybe Wärtsilä would be interested in taking the lead on this.
The industry has a clear sustainability goal but we need to start now: 10 years will fly by. Carbon neutrality is a steep hill to climb, but there will be big rewards for those that climb it.
Martin Stopford’s paper "Coronavirus, Climate Change & Smart Shipping" is available through Seatrade Maritime News.