As the world looks to move on from fossil fuels, is there a future for economies like those of UAE that are built around oil? There are promising signs: the UAE non-oil trade posted an impressive 27 per cent rise in 2021, amounting to $1.9 trillion.
The shipping industry as a whole has been performing above expectation over the past couple of years, with the container industry at historic highs, thanks to increased demand. This is due to a combination of factors such as the excess of capital as a result of the government’s Covid relief funds and bottlenecks in the supply chain.
While there are expectations that there may be a correction in 2023-24, and uncertainty remains around how Russia’s actions will impact the industry, Amir Maghami, Chair and CEO at Global Feeder Shipping says that the sector is using the opportunity to invest in more sustainable technologies.
“There has been a lot of focus on green and more sustainable shipping, with many new regulations that the IMO has put in place for the industry, beginning with the low sulphur fuels earlier last year and emission controls that are coming in early next year. We are seeing a lot of new technologies and innovations focused on both older ships, as well as new ships in order to meet these regulatory needs. This will result in a cleaner, greener industry, which is something that we need and we definitely welcome. In addition to that, you have new innovations happening, new technologies being developed on alternative fuels.”
These changes are impacting a very traditional industry, but change has been something that every industry has had to deal with, and shipping is no exception: The Covid pandemic saw shipping volumes plummet as the world ground to a halt, with recovery being uneven as different countries have adopted different reopening measures, creating bottlenecks which in turn impact freight rates and shipping lines.
For Amir, the biggest challenge has been felt by those working on the ships:
“For almost two years, no seafarer could disembark the ship that they were working on. They used to do three to six months on board a ship, now they were stuck for almost two years, which had a huge, obviously psychological and financial effect on the seafarers. Thankfully countries slowly began to change their policies; the UAE was among the very first countries that allowed this disembarkation of the crew. That helped not only us but a lot of ship operators.”
Amir predicts that the industry will slowly return to normal as more ships come online to meet the historic high demand driven by excess liquidity in the market and pandemic restrictions are lifted. Meanwhile, technology is playing a part in shaping the future of the business:
“On the sea side, for decades the changes have been slow, and mainly focused on capacity, But the slew of regulations all aiming at making the shipping sector more green and environmentally conscious have really pushed a lot of new innovations and technologies coming into shipping and ship building, such as the scrubbers that clean the dirty fuel that we burn and new alternative fuels that are being developed to replace what we have been using for 50 years. Regulations that govern international shipping are one of the reasons you see a lot of investment into technologies related to alternative fuels, duel fuel vessels, and cleaner operations and emission controls.”
Although regulations are impacting fleets and businesses, innovation is being led by the larger companies in the industry, which are under the greatest scrutiny. Meanwhile, classification societies are proactively suggesting and promoting new technologies, resulting in cooperation to develop and adopt new ways of working within the industry as a whole.
Amir predicts that Global Feeder Shipping will expand its geographical coverage beyond its current trade routes.
“We are looking east, as this is an important manufacturing hub. We believe that the UAE will remain a very important hub going forward, and the region itself is growing parallel to the Asian economies. The UAE has been essential in our growth and its importance as a transshipment hub was and will remain an integral part of our strategy.”
With this growth underpinned by greener ships and cleaner fuels, Global Feeder Shipping looks set to attract further investment from financiers who have a remit to invest in sustainable industries and has the power to influence the industry as a whole towards a better, less polluting future.