Page 17 - Annual Review 2021 full

Annual Review 2021

In Retrospect

As vaccination programmes rolled out across However, given the scale of churn that is going to
countries and reduced the number of ill people be effected by the decarbonisation goals, maybe
afflicted by (COVID-19) pandemic, the global the real paradigm shift is finally on its way.
economy has begun to get back on track. This
resumption of global economic activity was All debates on shipping markets and strategy in
replicated in the freight market too. However, the 2021 were dominated with discussions on the
shipping sector continued to be tested in terms of decarbonisation issue and this is expected to
the operational challenges due to the continuing continue for the next 10 years, in the least. What
COVID-19 related issues and volatility in freight fuels the debate is that fact that there is no clear and
rates. singular solution or path to reaching the 2050 green
target. The only clear thing is the fact that going
Overall, the shipping markets have strongly forward, companies’ and the sector’s efficiency
recovered from the impact of COVID-19 with is going to be gauged by their efficiency in ship
intermittent disruptions driving further upsides. The operations in the context of carbon dioxide emitted
consensus by most analysts is that the disruptions per tonne mile. And by the look of it, a failure to
will fade out and the overall sentiment is expected adapt to the decarbonisation norms would be the
to remain positive against limited order book in surest guarantee of obsolescence.
some sectors.
Going by the extent of investments required by
The story remains the same for Indian shipping the sector to adhere to the green targets, at the
which is but a subset of global shipping. The issue least, every one of the stakeholders needs to work
that was unique to India was that Indian trade together. The Indian government, the banking
faced unprecedented issues due to shortage of infrastructure, ports, shipowners, shipyards,
containers and sky high freight rates. Today, cost charterers and the classification societies.
and time overruns are routine. This is making
Indian manufacturing and exports non-competitive. It has been widely reported that reduction in carbon
What made matters worse was the fact that today dioxide emissions will require a short-term, mid-
there is no Indian container shipping company term and a long-term game plan. Shipping experts
left as the government has opened the trade for have been quoted saying that it may also most
foreign shipping companies. This situation was likely require an out of the box solution, consisting
fully exploited by the foreign container shipping of four levers:
companies as they made the most of it by earning
super normal profits. • Alternate fuels,

Over the last 10-12 years, what has become routine • Greater uses of technology, such as energy
are the apocalyptic warnings at the beginning or the efficiency devices and next generation hull
end of every year for the shipping sector. It began resistance reduction design,
with the 2008 market crash that lead to a mayhem in
the freight market. Since then, every year, there has • Performance optimization in terms of speed and
been a nervous and an excited hope that in the next just-in-time shipping with the use of data and
year atleast the freight markets will see a secular digitalization,
recovery while at the same time, the sector and the
shipping companies have struggled to keep up with • Policies on market based measures.
some International Maritime Organisation (IMO)
deadline or other. Be it Ballast Water Management AN UPDATE ON SHIPPING IN
(BWM) or use of less than 0.5% sulphur from 1st
January 2020 then COVID over 2019 and 2020, and 2021
now decarbonisation. Containers

Every of these milestones was described then as The pent up demand in the COVID- 19 days led to an
the do and die issue of the century for the shipping unprecedented pressure on the need to transport.
sector even by the most diehard of optimists This coupled with massive port delays in China
and yet we’ve lived to see the end of 2021 today. and the disruption of the Suez Canal exacerbated
the liner cycles leading to further delays. Clearly,

17