On September 25th, 2008, the vessel FAINA entered the Gulf of Aden, one of the most notorious pirate hotspots in the world, where the ship was hijacked, and the crew was taken hostage. FAINA carried military hardware that included tanks, military vehicles, aircraft artillery, rocket batteries, machine guns, RPG, etc. Given their sensitive cargo, it was expected that best efforts would be placed, and the vessel would be freed soon. However, only after five months, a Ukrainian Billionaire paid the negotiated ransom of 3.2 million dollars, FAINA was freed .
Pirates have often been portrayed as swashbuckling adventurers, but that is something miles away from reality. In today’s world, pirates pose an immediate threat to seafarers and cost hundreds of millions of dollars to the global economy. Let’s understand how this piracy affects global trade, what risks it poses to the maritime industry, and how we, sitting miles away in our homes, are indirectly affected by it.
It comes as no surprise that the war on Ukraine is unraveling the fabric of the global supply chain. It is causing a cascading effect on the world, which is already distraught from the pandemic, climate change, and geopolitical tensions. The throttling of exports from Russia and Ukraine is driving up prices and leading to fear of food and energy security in prosperous European nations and poor developing nations alike. The immense human suffering continues as the power play of securing new independent supply lines remains at the fore. All the while, sanctions choke even those who are issuing them.
One out of every 5 container ships worldwide is waiting outside a Chinese port due to heavy congestion brought in by covid lockdown in China . This could mean that another supply chain crisis is looming large on the horizon, waiting to crumble the global supply chain. The first signs became visible in March 2022, when the volume of goods being shipped by sea out of Shanghai dropped by 26%. It was seen that between March 12, when the targeted lockdown was introduced, and April 4, the volume of goods leaving the Shanghai ports by trucks fell by 19% . The scale of the problem hanging over our heads can be sensed by the AIS data of the ships around China, which depicts 300 container ships and 500 bulk ships waiting off the coast of China .
The story begins with the outbreak of the omicron variant in China, following which the Chinese Government resorted to its tried and tested method of initiating its zero covid policy. China’s zero covid policy is directly responsible for such a steep drop in cargo movement. There are enormous backlogs of cargo to be shipped and to be received. At this point, even if the lockdown were to be magically removed, it would be cold comfort to the supply chain professionals as it only opens the floodgates for the crisis to progress.
The latest report of the IPCC (Intergovernmental Panel on Climate Change) woke the world from blindly following the economic frenzy at the expense of the environment. IPCC forecasts read that the global temperature could rise as much as 10F over the next decade.
In this environmental disaster, the maritime industry happens to be a significant contributor. The 4th IMO GHG study states that ships worldwide emitted 1076 million tons of greenhouse gases in 2018, which accounts for nearly 3% of the global greenhouse emissions . The IMO has been pulling its weight to put a damper on this unchecked emission growth and limit the damage. IMO has come up with its ambitious goal of achieving a 40% reduction in CO2 emission from the 2008 level by 2030 and a massive 70% reduction by 2050 . Pursuing its goal, IMO introduced mechanisms such as EEDI (Energy Efficiency Design Index ), EEXI (Efficiency Existing Ship Index) and now the latest is the Carbon Intensity Indicator (CII).
What exactly is the CII ?
In essence, CII measures how efficiently a ship transports its goods or passengers in terms of CO2 emitted. More precisely the CII is the grams of CO2 emitted per ton of cargo transported across every nautical mile. It was one of the regulations adopted by IMO in June 2021 and will come into force from 1st January 2023, covering all cargo, RO Pax, and cruise ships above 5000 GT .
The CII value of a vessel will be evaluated annually and compared to the reference CII values determined by IMO. The emission data of 2019 sets the reference line. Based upon this comparison, the performance of every ship will be rated on a scale of A to E, with A being the best. Achieving the CII rating equivalent to the reference line will land a ship squarely in the middle of the C rating, with better and poorer performances progressively leading to higher or lower ranks. For the start in 2023, the reference line will be set at 5% emission reduction concerning the 2019 level and then gradually move up to 11% reduction by 2027 .
How will CII impact the shipping industry?
With the adoption of guidelines and tools such as the CII, EEXI, SEEMP, etc., IMO is working on reducing the carbon footprint of the maritime industry. However, some industry experts believe that IMO might have been overzealous in reducing emissions. An analysis conducted by ABS using EU-MRV 2019 data suggests, that to 92% of the current container ship fleet, 86% of bulk carriers, 74% of tankers, 80% of gas carriers, and 59% of LNG carriers would require modification and operational changes of some kind to achieve A, B or C energy efficiency rating .
FleetMon in Research & Development: EmissionSEA – Extrapolation of emissions from ships
The ship owner’s struggle
From the above ABS data, it is obvious that a vast number of ships would require retrofitting to achieve favorable CII ratings. Securing finance for such retrofitting will be a challenge for small shipowners who often have older ships as ship finance is rapidly moving towards Environment, Sustainability, and Governance (ESG) goals. The Poseidon principles and the Sea Cargo Charters are essentially frameworks for integrating climate considerations in shipping’s financial decisions. Financing a poorly CII rated ship would increase the risk of the financer as a D-rated vessel today might slip to an E rating tomorrow when CII becomes stringent in coming years .
2020 should be a record year for the cruise industry with 32 million expected passengers, almost double the 2009 numbers of 17.8 million. But unfortunately, the world was hit by the novel coronavirus, and things went downhill, putting the cruise industry in an unprecedented crisis.
As per research: 54 reported infected ships and 2.592 ill crew members and passengers worldwide. 65 people died aboard cruise ships as matters spiraled out of control. Following this, ships were placed on stasis one by one, crewed by minimum possible staff. The now superfluous staff members were sent home on chartered planes, mass bookings, and even aboard cruise ships while the world struggled with convoluted and sometimes closed border crossings.
The cruise industry is remarkably resilient and has endured and overcome many challenges. The new coronavirus, however, has been different. Governments issued advisories against the cruise industry, with some experts calling ships viral incubators and that the industry needs to be shut down. Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, issued a direct statement of avoiding cruises on an NBC telecast. There have been indicative signs of industry slowdown, from the prediction of industry experts to shipbreaking yards receiving an increasing number of cruise ships.
Building up of the storm
On March 4th, 2020, the German Federal Government stated an increased risk of infection aboard cruise ships. On March 14th, the CDC of the US issued a no sail order for 30 days. Ships were left fully staffed by the liners, with the intent of salvaging the remaining summer season. On April 9th, 2020, the CDC extended this order for 100 days, prompting drastic and quick revaluation by the shipping industries to survive, leading to loitering ships with minimal staff. The Foreign Commonwealth Office of Britain also recommended no traveling on cruises on July 9th, 2020.
Spreader events aboard the ships started to surface, such as the infamous DIAMOND PRINCESS. Crew unpreparedness led to the mingling of infected and healthy passengers, resulting in more than 700 crew and passengers testing positive and the death of 8. Another case, the RUBY PRINCESS, where 2.700 passengers were released without quarantine or tests, later resulted in more than 900 infected and 28 dead. Such events saturated the media, causing an effect similar to what the 9/11 attacks had on the airline industry; causing unpleasant associations with ships in the minds of people.
National governments around the world put the safety of their citizens above foreign nationals. Ports refused to accept cruise ships. Australia banned cruise ships from arriving on March 15th, 2020, and on March 27th, the country directed all foreign vessels to leave the ports.
In the vast ocean, the Automatic Identification System (AIS) provides the identification of the ships. Under AIS, there are transceivers installed on ships that provide information such as unique identification of vessel, speed, course, position, true bearing, radio call sign, ETA, etc. on the electronic chart display and information system (ECDIS). This set of information is used to track ships and monitor their movement for better navigation, avoiding collision, grounding, managing traffic in congested areas, and even identifying ships in distress.
The maritime folklore of ghost ship, “Flying Dutchman” happens to be very popular and it has inspired hundreds of paintings, books, operas and movies. Are ghost ships only limited to the folklores and Halloween stories? In the world of modern maritime, the term ghost ship has a much more practical meaning.
Ghost ships are vessels floating with no living crew onboard. These abandoned vessels drift in the ocean and appear suddenly at some coast or are spotted midsea giving rise to a series of questions about ownership, crew safety, environmental hazard, security of state, etc. These vessels could have been abandoned under any unknown circumstances. Later these ships become subject to horror stories as these abandoned vessels have many unanswered questions, such as: What happened to the crew? From where did the vessel arrive? and many more attached to them. It is interesting to learn the reasons behind the abandonment of vessels which later turn up as ghost ships.
AI or Artificial Intelligence is a blanket term that refers to many computer systems having “intelligence” in some form or another; even if the program is highly overseen by humans. Nevertheless, “Narrow AI’s” (AI’s that do not have general autonomy), while far less interesting constitute far more of what the society today perceives as AI.
To date, IMO is the only organization worldwide that has adopted energy efficiency measures that are legally binding across the world. IMO also regulates the emission standards for ships, which are more strict in areas designated as Emission Control Areas (ECAS). As the MARPOL Annex 6 regulations restricting air pollution, another of IMO’s measures, is progressively setting more exacting standards, the shipping industry is looking for alternatives; such as ships powered by distillate fuels, using scrubbers, alternate fuels such as LNG, Hydrogen, or ammonia, even nuclear powered or completely battery-powered ships are a possibility. However one of the most feasible possibilities in the short to mid future is LNG.