THERE has been a digital arms race in the shipmanagement sector over recent years.

Shipowners are increasingly looking to outsource the increasing regulatory and technical complexities that many companies are no longer able to deal with on their own.

That, in turn, has required shipmanagers to rapidly scale up their tools and expertise to the point that the largest managers are now expected to offer a full suite of technical and consultative services more aligned with classification societies than the third party management companies of the past. 

Those who can’t keep up are simply getting deselected, says V.Group chief executive René Kofod-Olsen.

“Shipping is only going to go one way,” argues Kofod-Olsen. 

“The world is moving extraordinarily fast and the industry is only getting more complex.” 

Scale is part of the equation, but according to Kofod-Olsen, the complexity challenges are the same for both large-scale clients with mature systems in place and smaller companies struggling with new requirements like emissions trading.

“Owners are looking at what this all means and whether they have the scale to run their business efficiently. They are looking at how to interpret all the new regulation and what ships to build, or whether to take a punt on a particular fuel. That’s what we are setting ourselves up to offer — we support shipping in managing the increasing complexities.”

As much as that is a sales pitch, it has also come with a significant capital cost that he views a basic requirement for growth. 

Dealing with the influx of carbon emissions accounting requirements from clients has seen V.Group expand a dedicated team from one to 10 and there is more investment to come. Similarly, the requirement to have credible platforms to calculate everything from Carbon Intensity Indicator options to emissions trading has been an opportunity cost of capital for the business. 

“It’s not that this represents an immediate and direct commercial upside for us, but I think indirectly, it is because it means we can support our clients,” he said.

Not having that functionality and the right algorithms to offer clients, is no longer an option, he argues. 

“If you don’t have a setup that is credible, you get deselected. It’s as simple as that”. 

While the most discerning requirements are coming from European business, Kofod-Olsen argues that waves of complexity are going to start hitting all regions sooner than most people think. 

“We know that other jurisdictions are potentially going to come in with their own regulations, so we need to be ready for that and learn from the EU situation. But generally the whole decarbonisation requirements are moving very fast and getting more complex with every month.”

According to Kofod-Olsen pragmatism is required and there is no single solution, even for those with mature strategies in place.

“I don’t envy the big balance sheets having to take on this level of uncertainty. Just look at Maersk and their decision to go back to LNG for the latest orders. Hats off to them for being willing to compromise and take a pragmatic stance, but it highlights to me that this is a moving target we are shooting at and there is no single solution to any of this”. 

Some investment decisions have effectively been on hold until there is sufficient regulatory clarity over global greenhouse gas emissions reduction legislation expected to be agreed next year. But Kofod-Olsen says that the industry has been investing in innovation and there is more to come. Specifically, the accessibility of low orbit satellite data has the potential to unlock a new wave of innovation. 

“I think you’re going to see an explosion in how we can better manage our ships and how much closer we will be with our seafarers, which is actually something that we are working a lot on. There is huge potential here.”

On the subject of safety, he says that standards of the mainstream industry have never been higher, but the “abomination” of the *dark fleet serving sanctioned trades is a disaster waiting to happen. 

“It is a big problem, and by the way, it is an increasing problem, day by day, because these ships are getting older and older and they are not operating within the same sort of maintenance regimes that we expect from our ships. So it is an evolving situation that is only going to go one way. 

“We need to be shouting this from the rooftops to get the politicians to pay attention, because we all know what is going to happen here.”

* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.

Download our explainer on the different risk profiles of the dark fleet here