Cargo owners needed to help lead change

Coupled with the dearth of technical know-how among owners, the need for cargo interests to become more closely involved in sea transport is “perhaps the greatest challenge of all” for the shipping industry today, says Dr. Martin Stopford.

A new era of collaboration between cargo and vessel owners could help transform shipping, he says, but cargo owners need to take the first step. 

“It takes two to tango. If you want to run more efficient shipping, you need the cargo owners to step up and share the load,” he tells Generations.

Highlighting the last great era of “industrial shipping” – bulk shipping in the 50s and 60s and the oil majors’ tanker operations in the 70s – both, he notes, were driven by the cargo owners’ hands-on approach.  

“The cargo owners built the ships, ran the ships, built the terminals, the cargo handling facilities and the coastal manufacturing plants and you ended up with a total logistics system, which was about as good as you can get. In many cases cargo interests led change by giving independent shipowners a long time-charter, enabling them to build bigger and more efficient ships. The owners thus became industrial shippers, not speculators.”

This totally integrated supply chain, perfected by the likes of oil company Shell in the 70s, has been largely relegated to history. “The seminal change of the last twenty years is the fact that the cargo owners have walked away from this close involvement with the transportation process and have left the independent owners to take, what has become, a greater risk. 

Deserves thinking about

“In today’s market, cargo owners sit on one side of the table, ship owners on the other, and the whole focus of the business is the next shipment.”

This major shift in emphasis over the past two decades, from the long term to the short and from lengthy time charters to a dependency on the spot market is, he says, “something that really deserves thinking about.”

Reservedly optimistic, in spite of the current “adversarial relationship between shipowners and cargo interests,” Stopford believes cargo and shipowners may soon have to become more cooperative, whether they like it or not.

Brazilian mining company Vale’s Valemax vessels are one example of of the problems of a unilateral approach. The drivers going forward are rising fuel costs and environmental pressures, both of which could be addressed better by bringing cargo owners back to the table as part of a long term approach to improving transport efficiency.

“With bunker fuel for an Aframax vessel now costing three or four times more than the ship, the economic model hasn’t changed but the value and importance of the components has. 

“So slowly, cargo owners are looking at the transport operation in a more serious way, because it is so much more expensive now.” 

Stopford believes that only with this cooperation from the charterers can the industry truly begin to re-examine how it operates. “Many of the things the industry needs to do could be much more effective with the cargo owners’ participation,” he says. “But managing that is, perhaps, the biggest challenge of all.” 

Slowly, cargo owners are looking at the transport operation in a more serious way, because it is so much more expensive now.

Select region / language