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21.11.2019Media Releases

Breaking Waves Conference 2019: Keynote speech “The future of shipping, challenges and possibilities” by the CEO Mr Emanuele Grimaldi

Finnlines Plc                                                                    Media release, Helsinki, 21 November 2019

Breaking Waves Conference 2019: Keynote speech “The future of shipping, challenges and possibilities” by the CEO Mr Emanuele Grimaldi

The international seminar Breaking Waves, brought together top leaders and maritime experts in Helsinki on 21 November 2019, in order to discuss themes of interest to the industry, such as digitalisation, automation and environmental sustainability.

In his speech at the event Mr Grimaldi commented on the future of shipping, its challenges and possibilities.

“While shipping is already today the most efficient method of moving goods and people around the world, its green bar will be set higher and higher. In April last year the IMO concluded a ground-breaking agreement on CO2 emissions, “The Paris Agreement for Shipping”. IMO’s ambition is to reduce greenhouse gas emissions by at least 40% by 2030 and 50% by 2050 comparing to the 2008 level. Considering that the fleet capacity will have increased dramatically meanwhile, this means that we will have to reduce greenhouse emissions per ship by 80%. This means basically to aim for a zero-emission ship creation and diffusion,” Grimaldi said.

Read Mr Grimaldi’s keynote speech below.

Finnlines Plc

Tom Pippingsköld                   Tapani Voionmaa

CFO                                       Group General Counsel

Finnlines is one of the leading shipping operators of ro-ro services in the Baltic Sea, North Sea and the Bay of Biscay as well as a passenger service provider in the Baltic. The Company is a part of the Grimaldi Group, one of the world’s largest operators of ro-ro vessels and the largest operator of the Motorways of the Sea in Europe for both passengers and freight. This affiliation enables Finnlines to offer liner services to and from any destination in the Mediterranean, West Africa as well as the Atlantic coast of both North and SouthAmerica.

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BREAKING WAVES Conference

Keynote speech Mr Emanuele Grimaldi

The future of shipping, challenges and possibilities

Ladies and Gentlemen, Distinguished guests of the Breaking Waves Conference,

I am honoured to speak at this event, which is the maritime part of the most famous SLUSH conference.  I’ve been asked to speak about the future of shipping and its challenges. Shipping is a sort of circulatory system of the global economy, sharing with whole global society all its main challenges, from custom wars to terrorism, from digitalization to market concentration.

***

As many other sectors of the global economy, shipping is entering a new area of progress which is DIGITALIZATION with the abrupt entry of 5G, 4.0 and net-based technologies into the thousand year old art of navigating. An unmanned cargo vessel has been launched in Norway in 2018, and unmanned cranes and vehicles are operating in the iconic port of Rotterdam already. Fall out of this most probably epic change are still largely unknown, but anyone can understand that maritime work, cargo handling and navigation techniques, maintenance and safety onboard will never be the same again.

Old and obsolete ships, zero-investment “policies”, high fuel consumptions, are not an option anymore in today’s business environment. But necessary research, development and investments come with a cost, and that’s why more and more CONCENTRATION is seen in all shipping markets. The container sector is setting the trend, and during last two years only Alliances concentrated from 5 to 3, offering 90% of the container capacity of the market; almost all top ten players put a hand on the wallet to announce buy out of smaller competitors. This trend concerns also ro-ro and ro-pax sector (where my company operates), Cruise sector and others. Where there is not a tendency to buy out smaller companies, the alternative is normally the survival of somehow bigger and more equipped companies. Concentration in shipping is also a logical consequence of the capital intensity of the sector, as well as the necessity to have the sufficient internal diversification and financial stability to bridge such a cyclical sector. 

Meanwhile, in the wider logistics world, the wave of intelligent rationalization of traffics have taken the forms of a more advanced INTERMODALITY, cutting transit time and costs of the door to door deliveries with modern forwarding concept like trailerization and containerization.  

So to resume: decarbonization, digitalization and investment, concentration, intermodality. These are some of the main challenges and trends shaping today’s maritime world evolution. We get now to the biggest challenge. The environmental one.

Shipping is not only the most used way of moving goods cross border, but it is also the most efficient. Can you imagine the carbon emissions if we had to transport everything by plane?

Studies have shown that while containers ships emit about 3 grams of CO2 per tonne of product for each kilometre travelled - aircraft emit about 435 grams of CO2 per tonne per kilometre. That represents a 140 fold increase in CO2 emissions from airplanes over ships doing the same job. That to me is a staggering statistic.

An engineering consulting, D’Apollonia, recently made a comparison among social costs of transporting a group of trucks from North to Southern Italy. Result was that  moving them by ship was three times less costly than by road in terms of price, noise, Co2 emissions, congestion, accident. Ship transportation was also slightly better than train.

While shipping is already today the most efficient method of moving goods and people around the world, its green bar will be set higher and higher. In April last year the IMO concluded a ground-breaking agreement on CO2 emissions, “The Paris Agreement for Shipping”. IMO’s ambition is to reduce greenhouse gas emissions by at least 40% by 2030 and 50% by 2050 comparing to the 2008 level. Considering that the fleet capacity will have increased dramatically meanwhile, this means that we will have to reduce greenhouse emissions per ship by 80%. This means basically to aim for a zero-emission ship creation and diffusion.

The target set for our community is not small at all. It is more than a mere change in the way of navigating, it represents a fundamental transformation of business concept, something that we retain to be the 4th Propulsion Revolution of the history after sailing, steam and oil. It should be highlighted that fulfilling IMO’s target would decarbonize shipping at a faster pace than all the rest of the world economy, whose emissions are projected to continue increasing for the next 10 years.

***

It is no secret that a great deal of work is being done by a number of shipowner associations including ICS, where I have the honour to serve as Vice-President. In order to find the most appropriate solutions to meet the 4th Propulsion Revolution challenge, virtuous shipowners recently set themselves a dense agenda of targets and “to do’s” in order to tackle this historical undertaking.

After all this work, what we can say is that the acceleration of R&D will be the key and that discussions are currently at a critical decisional stage. Based on empirical evidence, we can say that first short term results can be achieved by consuming less and switching to cleaner fuels. In the short run indeed economies of scale, hydrodynamic, speed control, trim, exhaust gas cleaning systems, and switching to alternative fuels such as biofuels, LNG, Marine Diesel Oil can drive Co2 emissions up to 30% points down, and abate some types of emissions even more. In Finnlines for instance, thanks to the a 2bln€ investment in newbuildings and green measures in the last ten years we reduced our Co2 emissions by 30%, and sulphur emissions by 93%.

But what has to be clear in mind is that all mentioned measures will be not enough to create a “zero” or even a “near-to-zero” emission ship. To meet this long term target, which IMO and public opinion are now asking us, we have to work out much more radical changes. Here the question marks are many more, as no effective toolbox exist yet on how to get there, but only myriad of hypothesis where anyone has to make up his own idea.

If I was asked what are the good technologies who could be the winner in the future, I would say a mix among renewable energies, fuel cells, hydrogen, ammonia. Those technologies, when developed and combined, allow for getting – out of basic elements such as wind, light, air, water – all the propulsion we need onboard our ships. Through eolic and solar plants, you get the clean electricity you need to break air and water molecules and produce ammonia. The thermochemical technology to produce ammonia this way has been already successfully tested in Australia and it is working, although some improvements are still awaited to get the scale and sustainability of the industrial process. Once and when the ammonia production will be mature, ammonia can be pumped up in ship tanks as clean fuel, with due engine adaptation. Several automotive producers already produced beta version of ammonia engines and cars, they are functional and they all emit zero Co2. There is no reason why ammonia fuelled ship engine shouldn’t follow. Transportation of ammonia for fuelling ship should neither be a problem in the long run, considering that it has better transportability and risk profile than hydrogen for example, and that already today the world produce around 140mln tons/year of ammonia for fertilizing, To make a comparison, all shipbunker burnt in the world in a year amount to just the double of such amount.

Despite the good perspective of ammonia, none can assure today that the mix of technology just described will be the best and definitive technology chosen at world scale. Will there be alternatives?  How the future fuel mix might look like in the future and how can we as shipowners make the right investment decisions today?

Moreover, which way can we team up and share the cost of R&D among the supply chain in order to get valuable results? Here again size matters. Is there any market mechanisms to support and catalyse the shipping sectors transformation, like a worldwide carbon tax for shipping or emission trading scheme? Shipowner associations have been recently discussing a proposal for a common scheme but nothing has been decided yet. Even if authorities decide for it, how shall the eventual carbon tax be distributed among suppliers and clients in the transportation chain?

Can we do more with scrubber technology, for example clean the oceans and filter water from heavy metals and microplastics?

And finally, a ship lasts normally at least 30 years. Even if brilliant technological solutions will be found to get a zero-emission ship and we get in let’s say 10 years to a zero-emission large ship prototype, how can we push this model into massive production and let him quickly significantly replace existing fleet, in order to get the ambitious 2030 and 2050 targets?

These are just some of the questions that we shall address ourselves if we want to be leaders and winning part in the future of shipping, and – let me stress this concept again – we have to work on them now.

***

The reality is that companies are going to need to place orders in the first half of the next decade in a context of uncertainty about the future. We are the leaders of a truly fascinating and important sector for the global economy. The decisions we take will have implications beyond our own board rooms. Finland has a network of extremely innovative and competitive industries in digital, technological and environmental fields with whom can play a key role in this historical transition. The 4th Propulsion Revolution is an opportunity for us all to power the global economy and our businesses in an even more profitable and sustainable way.

I hope you all enjoy the conference and will engage fully with the dialogue that Breaking Waves Team will be leading.