INTERVIEW: ICS chief laments the 'erosion' of international shipping regulations

International regulatory frameworks have become less effective in governing maritime transportation over recent years, a worrisome development for global seaborne trades, according to International Chamber of Shipping Secretary-General Thomas Kazakos.

In an interview with Platts, part of S&P Global Energy, Kazakos highlighted the difficulties shipping companies face amid the weakening enforcement of international laws.

"One of the most important issues that affects our industry is the erosion of the international regulatory framework that we have experienced in the last few years," said Kazakos, whose organization represents over 80% of the world's merchant fleet via national shipowner associations.

Shipping, as a cross-border industry, has been traditionally governed by UN and International Maritime Organization conventions and other kinds of international treaties, but national and regional governments have been increasingly targeting ships amid geopolitical conflicts while enacting trade policies that would affect shipping companies and cargo flows.

"We have so many challenges from regional measures, national measures, tariffs, port fees, the shadow fleet ... all these things that indicate that international regulatory frameworks are not as strong or as powerful as they should be," Kazakos said.

During their on-and-off trade disagreements, China and the US have threatened to impose port fees on ships linked to each other before reaching a one-year truce that will last until this November.

The US, UK and EU had sanctioned nearly 1,200 ships they deemed to be in illicit Russian, Iranian and Venezuelan trades as of the end of April, according to S&P Global Energy's CERA. The countries have established a large shadow fleet for sanctioned shipments outside of mainstream regulatory regimes, leading to what the IMO and many industry officials described as substandard shipping that poses environmental risks.

"We still remain committed to one global framework. And definitely, that must come from our international regulator, which is none other than the IMO," Kazakos said.

Choke points

After the war with the US began on Feb. 28, Iran set up a toll system for transits through the Strait of Hormuz before suspending it under a preliminary peace deal. But the country has floated the idea to charge service fees, including some related to mandatory insurance, for future passage following a 60-day truce period.

Kazakos said he is concerned about "any measure that limits the capability of our industry to trade globally on basic principles of freedom of navigation, clarity on the international legal regime and the enforceability of already approved international standards through conventions and regulations."

"That, in effect, will have a negative impact on the efficiency of our industry to meet the main mission, which is to carry more than 90% of the world trade," Kazakos added.

The ICS's official position is that no tolls or transit fees should be imposed on Hormuz transits, which the London-based industry association said could encourage similar measures elsewhere.

Hormuz waters are Iranian and Omani territories according to international law. Iran has not ratified the UN Convention on the Law of the Sea, which guarantees freedom of navigation, but Oman has.

Among other choke points, Turkey has been charging transit fees for ships passing the Bosphorus and Dardanelles straits based on the 1936 Montreux Convention, which have been rising in recent years. Denmark has not charged any fees for passing the Danish straits in compliance with the Copenhagen Convention of 1857.

The Straits of Malacca and Singapore are managed by Singapore, Malaysia and Indonesia, all of which have ratified the UNCLOS. A voluntary Aids to Navigation Fund was established in 2007 to finance some essential facilities, backed by Japan's private sector.

Consensus

In recent years, the ICS has presented various proposals to the IMO during the discussions over global decarbonization regulations, including a carbon levy.

The UN agency has approved the Net-Zero Framework, designed to place a cost on greenhouse gas emissions from ship operations from 2028. But the framework wasn't adopted last October amid US opposition.

When asked about the ICS' latest position on the regulation, Kazakos said it remains "very much committed to the process that has been initiated for the decarbonization of our industry."

The ICS would hope the final regulation would achieve the IMO's stated goal of cutting lifecycle GHG from international shipping by 20%-30% by 2030 from 2008 levels, 70%-80% by 2040, and achieving net-zero emissions around 2050, according to Kazakos.

Amond the ICS' membership, some, like the UK Chamber of Shipping and the Norwegian Shipowners' Association, have supported the framework. But the Union of Greek Shipowners has called for its revision due to concerns about green fuel supply.

Kazakos said he is confident ICS members will eventually form a uniform view through the exchange of opinions. "We're not unfamiliar with having associations having different views," he said. "ICS is a consensus-based organization ... this [forming consensus] is what we've been doing."