Supply chain issues aren’t the biggest threat to the maritime industry – BRINK – Conversations and Insights on Global Business

While keeping a close eye on issues related to COVID-19, the global shipping industry believes that environmental issues could have the greatest impact over the next decade, according to the Global Maritime Issues Monitor 2021 survey.

For the maritime sector, the main environmental risks involve the decarbonization of maritime transport, new environmental regulations and the failure of mitigation and adaptation to climate change. Each of them scored highly among survey participants for their perceived impact and likelihood – and worryingly in terms of preparedness.

Along with environmental concerns, industry leaders are seeing cyber attacks, sustainability and digitization among their top concerns, according to the annual report, a joint project of the Global Maritime Forum, the International Maritime Insurance Union and Marsh Specialty .

Interestingly, the industry has gained confidence in its ability to manage the risk of a pandemic – despite the disruption caused by COVID-19 in supply chains, shipping, and global economies. While the 2020 survey placed the ‘pandemic’ as the issue for which the industry was least prepared, in 2021 it was among the issues for which the industry was most prepared, likely a reflection of several months of ‘intense concentration.

The impact of environmental problems is increasing

For the first time in the four years of the survey, respondents ranked the decarbonization of shipping as the most impacting issue, followed by new environmental regulations. Much of this concern stems from increased pressure from investors, financial institutions and clients looking to tackle climate change and associated sustainability issues.

The maritime industry faces significant challenges in its efforts to prepare for decarbonization and new environmental regulations.

For example, the implications of decarbonization extend to increases in fuel prices, which the survey found to be of growing concern as it rose five places to 10th place in 2021 in terms of its impact.

Environmental issues are also affected by the vast societal demand for sustainability, which can be seen in increased consumer interest and expectations for everything from energy use to how goods are made and ultimately , transported.

As part of its role in global efforts to curb climate change, the maritime sector will need to reduce its carbon footprint – shipping emits around 3% of global greenhouse gas (GHG) emissions. Success will largely depend on implementing policy frameworks that enable industry to meet global climate goals on a large scale and with urgency.

The whole ecosystem of the movement of goods is changing.

The International Maritime Organization (IMO) adopted an initial GHG strategy in 2018, aimed at reducing emissions from maritime transport by at least 50% by 2050 from 2008 levels; the strategy is expected to be revised in 2023.

Some experts say that a potential IMO target of 100% by 2050 could have almost as much impact as a global price on GHG emissions; however, only 23% of survey respondents believe such a measure will be adopted.

Reducing emissions from current ships will not be enough to meet the targets; zero-emission ships are to start entering the global fleet by 2030 and dramatically increase their number in subsequent years.

Survey respondents also said that global policies and regulations would have more impact than regional regulations, but regional and national regulations are more likely to be implemented. Regulatory uncertainty – including pricing of GHG emissions and fuel mandates – is generally considered to be more likely to be used than incentives such as fuel and vessel subsidies.

Regarding pricing, some experts believe that a key step in climate policy will be to set a price on GHG emissions; it is also considered to be the step most likely to be implemented. Among survey participants, a world prize was considered the most impactful and ranked second for probability.

Yet agreeing on a global price for GHG emissions faces political challenges, prompting some regions to consider regulating shipping while global measures are developed. In July, for example, the European Commission proposed including shipping in the EU’s emissions trading system, while the US and China raised the possibility of similar measures.

Digital and cyber risks increase for senders

As in most other sectors, the maritime industry considers cyber attacks and data theft to be more impactful and more likely in 2021. Survey respondents raised a red flag, saying the industry is not fully prepared to tackle these issues.

In these days of endless cyberattacks, no organization in the maritime industry can afford to feel “isolated” from targeted attacks. Upgrades involving technology and digitization are the norm across the industry, including changes to ships, terminals, ports and other areas. While leading to vast improvements in shipping, these changes also open the door to an increase in attacks from bad actors – and raise the stakes.

As the industry continues to digitize and upgrade technology, organizations must simultaneously strengthen and improve their ability to resist the inevitable attacks. Training employees, being vigilant about computer protocols and other measures are necessary to improve cyber resilience.

The entire freight movement ecosystem is changing, and industry experts see big data and artificial intelligence risks as additional areas for which the shipping industry needs to be better prepared.

For example, the role of AI in logistics operations is increasing, while autonomous driving systems are expected to be ubiquitous in all means of transport, including maritime transport. For the maritime sector, impacts will include interoperability of cargo reservation and shipping systems, electronic bills of lading, etc.

Not only are these developments riddled with cyber risks, but they alter liability and lead to the need to purchase new and / or extended insurance programs that align with new laws.

The shipping industry continues to adapt to a number of issues brought on or exacerbated by COVID-19, including shipping delays and a crew change crisis. Beyond these immediate concerns, the industry is working to make the changes necessary to help meet the challenges of climate change and the increased cyber risks of a global technology-driven economy.