Shipping lead
Through a series of initiatives and infrastructure projects, Dubai has strengthened its position as an influential player in the local and global maritime communities Image Credit: Courtesy Dubai Maritime City Authority

As the world’s two largest economies duke it out, everyone else is watching on, nervously.

The latest Bloomberg Economics report estimates the US-China trade war will sap 0.6 per cent from global GDP, amounting to a staggering loss of $585 billion (Dh2.148 trillion). This standoff has created significant challenges — as also fresh opportunities — for the shipping industry, which handles around 80 per cent of global trade by volume.

However, Jonathan Bygrave, CEO of Kanoo Shipping Division, feels it is important not to get hung up on the US-China trade war. The major impact is on container lines on the trans-Pacific trade route, and the Middle East is unlikely to be directly affected.

“Increased tariffs do not necessarily mean we should be negative. In fact, in some cases trade wars have had a positive impact — assuming that there is still demand for the product — by increasing the ton/mile ratio,” he explains, adding that the bigger concern is a global economic downturn, which would suppress freight demand.

Nitin Mehta, CEO of Tomini Group, concurs, observing that the impact of the trade war could be positive for shipping and may lead to a repositioning of certain trades.

“But, the key here is early resolution and clarity,” he says.

Besides, the maritime sector in the UAE has weathered many changes over the years, maintaining its strength.

Commenting on the challenges concerning the local maritime sector, Nikolai Norman, Chief Commercial Officer, Kanoo Shipping, says, “We would like to see more alignment among the ports in the UAE in terms of local immigration, custom formalities and port authorities,” adding, “Without compromising on the security, a closer cooperation on the federal level may result in more aligned local formalities, helping ship agents in the UAE serve an international market efficiently.”

Challenges and responses

Trade has constantly evolved and the maritime sector is used to responding to changes, whether they are due to technological advancements, environmental concerns or political issues, says Rania Tadros, Managing Partner at the Dubai office of Ince & Co.

Currently, tensions in the straits of Hormuz is also a cause of concern for the industry as this has lead to an increase insurance costs for shipowners trading via this route, she explains.

And yes, the IMO 2020 regulations on sulphur content in fuels remains a big issue for the global shipping sector.

Mehta, however, believes the UAE’s maritime industry is now better prepared to deal with this issue than it was six months ago.

“We seem to be ready. The main implication is the increased cost of transportation and therefore inflation, but I am confident that in the long run this will benefit the environment.”

Looking ahead, most industry insiders are optimistic about the future of the UAE’s maritime sector.

Tadros sees a huge opportunity for growth through investments in technological advances such as AI, autonomous shipping and blockchain.

Similarly, Daniel Vikstrom, Vice-President, Marine Services — Middle East at Inchcape Shipping Services, observes that with growing cost pressure and stricter regulatory controls, vessel operators will be looking for new ways to optimise their operations.

“It is technology that is set to drive the most differentiation amongst shipping agents as it provides principals with unprecedented transparency across their shipping activities,” he says.

For Mehta, the UAE remains an “ideal fit” due to infrastructure, the time zone and taxation. But he feels banks can do more for ship finance.

Norman at Kanoo Shipping expects the authorities to ease certain processes around the UAE flag and offer incentives to carry the flag.

“The UAE as whole has a great opportunity to excel further as a maritime centre to support local GDP and growth of the nation.”


​​​​​Cyber threats: The next big attack

In its report on cybersecurity on board ships, BIMCO, the world’s largest shipping association, narrates an incident where a computer virus made its way into a ship’s power management system and then spread to every connected computer. The surprising bit, though, was that the virus spent 875 days in the system before it was discovered and eliminated.

Risk identification

As control and communication systems increasingly go online, expect the inevitable surge in cyberattacks to hound the maritime industry. The fallout could range from data theft and loss of business to accidents and ships being grounded for expensive repairs.

“Cybersecurity just isn’t getting any easier,” says Harish Chib, Vice-President, Middle East and Africa at cybersecurity firm Sophos. “The biggest cybersecurity threat that the maritime sector is facing right now is the deluge of attacks and associated incident alert data.”

He notes that, so far, cyberattacks on the maritime sector have mostly been low profile, well targeted, and more likely to be about making cash than creating chaos.

Apparently, the solution is for the maritime sector to think more about synchronised security than layered security by leveraging the latest deep learning technologies to deal with the threats faster than an IT manager ever could. And there is no room for complacency. “Whoever has valuable data is at risk,” says Chib.

— D.K.