Last week’s Tanker Shipping & Trade Conference, Exhibition and Awards in London covered a range of operational and regulatory issues. But a simple truth puts the industry in perspective.
The ILEC Conference Centre in London hosted last week’s Tanker Shipping & Trade Conference, Exhibition and Awards and some of the issues, such as environmental issues, late payments, scrapping, earnings, and predictions for 2019 have already been reported.
More will follow, but some of the regulatory issues came as a surprise. One takeaway I want to share this week came from Euronav chief executive Paddy Rodgers, and it was not about the forthcoming IMO 2020 global sulphur cap.
The takeaway is that tanker shipping in one of the few industries where the cargo provider is also the supplier of the fuel required for production. Of course, we are all aware that shipping is a derived demand – without cargo there is no demand for ships, but the dual relationship between oil companies and tanker owners is potentially unhealthy.
This may be a unique situation in business. I cannot think of any direct parallels in other industries. For instance, shipping is often compared (unfavourably) to the airline trade. The avgas is refined and logistically supplied by oil companies, but rarely is avgas flown from airport to airport.
There are similarities to trucking, in that the fuel for the gas stations is transported by trucks that are burning fuel that could have been supplied by the cargo owner. However, the price of the fuel is closely controlled by governments through taxation. In France 60% of the price of diesel is taxation, and the Macron Government is raising a carbon tax on top. Hence, the ‘gilets jaunes’ protest currently taking place in France.
Tanker operators have few outlets to protest the situation other than withdraw from the industry and invest elsewhere. But then they would no longer be called a shipowner, and for some that is too high a price to pay.