WARNINGS that shipping is “entering a cycle of wait-and-see attitudes” and investors are losing confidence in the green transition, are unlikely to have surprised industry onlookers gathered at the Marintec Forum in Shanghai.

The subtext from China Merchants — that we should expect a more cautious and “prudent” approach from China when it comes to decarbonisation — was pretty well understood already.

And despite the carefully worded caution on display from the Chinese shipping giant’s vice-president Hu Bin, realistically there is no big issue here for China Merchants to become overly concerned about.

As Hu points out, CMES is building dedicated compliance teams focused on the EU’s existing carbon regulations and is well set up to deal with the rest. The anticipated proliferation of regional schemes and an era of regulatory complexity will spawn similarly dedicated banks of compliance professionals dedicated to deal with the problems long before they become a threat.

Prudence is the name of the game for Hu, and he knows his pledge to stay “cautiously ahead of the curve” when it comes to compliance risk is a typically understated certainty.

For those not charged with navigating a state-owned conglomerate through increasingly complicated compliance challenges, however, what happens next will require more than just prudence.

The friction that has allowed shipping to defy economic gravity thus far through disrupted markets only lasts so long. Over time it becomes a cost.

Just dealing with the current emissions trading schemes is testing many companies. The realistic scenario where all African schemes currently being considered appear alongside Chinese and several other schemes in the wake of an International Maritime Organization failure 11 months from now is going to sink companies under the weight of an impossible bureaucratic task.

It is the large companies hiring former government regulators and building up banks of compliance teams who are currently voicing their concerns.

There are large swathes of the industry that appear to have even clocked that there is a problem coming their way. For the ‘average’ small- to medium-sized shipping company left flailing, there simply is not going to be sufficient external management available to keep them afloat.

Talk to any of those who were doing business 10 years ago and they will tell you that the compliance, bureaucracy and regulation today is of a different magnitude.

Shipping is a hard business, and it is getting harder.

For those without the scale or resources to deal with the coming tidal wave of compliance complexity, it may ultimately prove too hard.

Richard Meade
Editor-in-chief, Lloyd’s List

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