Jonathan Andrews' Insights from TMS TACCC 2023

Good afternoon everyone. San is right; he does push too hard, but he does so with the very best of intentions. As you have seen this morning, he is a very passionate believer in this transition, and we are very pleased to have him on our board. Good shipping reference. I think there is probably quite a lot of knowledge in the room about P&I clubs. I can see former colleagues and industry experts in front of me, so I won't go into too much depth, but these are organizations that are there to support the shipping industry, and we are actively involved in supporting our members, indeed the industry as a whole, in this transition, trying to give support and guidance in the learning process, especially on the important aspect of crew training. I'm not pressing the right button, it seems. That one. There we go. Just push harder, apparently. So, without further ado, let's get into the detail. I think to begin with, just a sort of state of the nation as has been reflected on earlier. 90% of world trade is transported by the shipping industry. This makes the sector responsible for just under 3% of global emissions. To put that figure into perspective, China presently accounts for 26%, the United States 12%, and the European Union 9%. Today, I intend to briefly cover concerns that will affect ports and vessels, what types of key initiatives we see developing, and how these will influence safety, training, and insurance risk. We're surely all aware that global temperatures are rising. These rises are affecting areas across the planet differently. The gradual melting of polar ice caps has led to a rise in sea levels, while water levels in river areas have reduced due to reductions in rainfall and increases in temperature. Both these events pose problems for shipping, emphasizing the need for training programs to ensure climate change issues affecting shipping are broadcast to the industry and are well understood. Many ports were built and developed in lower, flatter coastal regions and could be put at risk by rising sea levels. These operations are exposed to instability and functional issues caused by flooding, storm surges, and other weather-related phenomena. This could cause issues for vessels using ports in these affected regions when arriving, departing, or during cargo operations, and may cause the legal and insurance industries to reassess how some of these claims are dealt with. Ports located in river areas, which are further from the open oceans, may be adversely affected by changes in the water cycle as global temperatures have intensified and increased the rate of water evaporation, leading to reduced rainfall, resulting in ships being left with less navigable water when using such harbors. The implications for safe shipping operations should be immediately obvious and may expose vessels to an increased risk of grounding. Masters and officers are well aware of the need to plan and monitor weather conditions that may affect their operations when in port. However, in areas that may be more prone to climatic issues, this reinforces the need for specialist training packages for crew which will alert them to areas that may be more susceptible to the effects of weather. This year, we have seen limitations on the number of vessels and draft restrictions put in place on European inland waterways, the Pana River, and the strategically important Panama Canal, leading to a buildup of vessels awaiting transit. What may be less obvious is the effect this may have on barge transportation and their viability whilst using inland waterways and short sea routes affected by reduced water levels. Less navigable water may mean that cargo traditionally transported by barge may have to be carried to strategic ports by road, thus increasing greenhouse gas emissions. Before we move on, I would like to mention the possibility of well-established shipping lanes coming under threat from new routes opening due to melting ice. These provide challenges in themselves; although they may be shorter and burn less fuel, they open vessels up to new dangers and require crews to undergo specialist navigational training. Major ports see a great deal of vessel traffic throughout the year, leading to a constant clustering of vessels all radiating emissions into the local environment, and this was a point talked about previously about just-in-time arrivals. Emission reduction will be reliant on the partnership between ports and vessels, as both need to put projects in place to reduce their footprint. The abundance of technologies available are all aimed at reducing the carbon footprint of shipping operations. However, the difficulty posed by this is that no one project can solve all of the challenges. Ports will need to provide greener infrastructure not only for their own commercial operations but for vessels and third parties involved in the transportation of cargo to and from the port. These include projects like offshore power, alternative fuel availability and scalability, carbon capture and storage, electrification of smaller vessels, and biofuel for transport vehicles using the port. Offshore power generation involves massive infrastructure projects that could power ports and cities around the area and require specialist vessels to install systems such as offshore wind or wave generators. In addition to the foundations, these require a great deal of cabling to be installed in and around the field and then back to the shoreline, which may be able to power the port and provide green shore power to vessels. But the necessity for alternative fuel infrastructure also needs to be developed in line with the next-generation order book of vessels. This year alone, we have seen 323 alternative fuel-capable vessels being ordered, which equates to about 45% of the total ordered this year. 36% of these vessels will be made methanol-capable, which not only illustrates specific fuel direction but that nearly half will be capable of alternative fuel. This makes scalability of different fuel types a pressing priority, as we've heard earlier. These figures show that consideration must be given for inclusion of alternative fuel education in seafarers' formal education, as there currently is a gap in this field. In our view, these types of projects will no doubt lead to risks, some that are forecastable and others that may not be apparent until something goes wrong. Regrettably, casualties such as collisions, groundings, and dragging anchor will still occur. The dangers of dragging anchor may be obvious to some, and when anchoring in areas near wind farms and combined with changing weather patterns, may make this routine vessel operation riskier. Dragging anchor across inadequately protected cables could have a catastrophic effect on power generation. This becomes a concern for operators due to the ever more sophisticated digital methods of tracking and monitoring vessels. The risk associated with the new types of alternative fuel must also be understood, especially for routine and emergency scenarios. This will ensure vessel operators remain confident that their commercial operations are unaffected and that ports can deliver on alternative fuel shoreside power requirements and greener means of loading, discharging, and transporting cargo to or from the vessel. P&I clubs will be able to offer significant value to members as these alternative measures are open to the market. Problems and issues that arise out of the operation of vessels using these measures can be packaged into formalized articles, circulars, and presentations to assist ship owners in the period that will undoubtedly be part of this technological adoption within the industry. As insurers, we see traditional pollution risks and claims evolving with the introduction of different fuels, moving from pollution-based to potentially more people claims. What is unclear is the frequency and severity of any such claim. It is therefore imperative to develop new training programs and courses not only for fuels but for the risks surrounding infrastructure that is being installed in and around ports. This knowledge will arm seafarers with the skills and experience they need to continue driving global trade. So, to conclude, our industry has certainly changed. It will continually do so at pace, and with pace comes the inevitable pressure of expectation to move and evolve with the times. The major development milestones in previous generations, like radar, AIS, and digital charts, are milestones marked with many years between them. Green and digital innovation is happening on a near daily basis, and we must recognize the need to adapt to the current and future pace of development. This rapid change can invariably bring about some uncertainty regarding the types of technology or fuels that will become mainstream tools to reduce carbon emissions. But what is certain is that clubs are well placed to adapt, as they have done for more than 100 years. As we better understand why claims occur and how to avoid or mitigate issues around them, we can assist and support our members, seafarers, and third parties in this field, and more importantly, how their operations can remain safe, efficient, and profitable. Thank you very much for your attention.