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Insight Conversation: Sadan Kaptanoglu, BIMCO

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Insight Conversation: Sadan Kaptanoglu, BIMCO

The president of BIMCO, the world's largest shipping industry organization, and managing director of Turkey-based Kaptanoglu Shipping, spoke to S&P Global Platts shipping associate editor, Charlotte Bucchioni, about the lessons of 2020 and the challenges facing the industry.

The shipping sector arguably proved more resilient than many others in 2020.

Only a few months after the start of the IMO 2020 regulations setting lower sulfur limits for fuel, shipping markets saw heightened volatility resulting from a COVID-19-related halt in economic activity and end-user demand destruction. While tanker rates saw record demand in April as producers put oil on ships amid a lack of onshore storage, markets saw a rapid downward correction as supply cuts curtailed demand.

Bulker rates did not see the lows observed in other shipping markets thanks to growing iron ore demand from China, although some routes were adversely affected by demand reduction in commodities such as coal. Container freight rates were under pressure throughout 2020 but spiked in December due to tightness in empty container boxes in Asia.

Globally, the coronavirus pandemic put extreme stress on global supply chains, but seafarers, under-recognized as essential workers, made great sacrifices in order to maintain trade flows. At the same time, the risks involved were extreme for some, owing to piracy. According to the International Maritime Bureau, seafarers reported 130 kidnappings in the Gulf of Guinea in 2020 from 22 incidents, above the prior high of 121 crew kidnapped in 2019.

Sadan Kaptanoglu, who was elected president of BIMCO in 2019 to serve for two years, spoke about the organization's efforts to protect the interests of all stakeholders in the value chain through the pandemic, and the transition towards greener shipping fuel solutions. She also discussed BIMCO's work on inclusion and the need to turn the spotlight on underrepresented groups in the shipping industry.

Sadan Kaptanoglu, president, BIMCO
Sadan Kaptanoglu, president, BIMCO

What actions has BIMCO taken to protect the interests of the people at sea given the impact of travel restrictions and quarantine requirements?

I should start by saying thank you to the whole shipping industry. During the whole pandemic, we did a great job. The supply chains never stopped; ports never stopped. No vessels stopped, and so all the necessary goods have been reaching consumers. It would have been a disaster if there had been breaks in the supply chain.

Of course, this was a very difficult and challenging thing, and it came with a cost. And the biggest cost is to our seafarers. They are certainly the hidden heroes of the pandemic. Still today, we have a bit less than 400,000 seafarers stranded on the sea, and this is not acceptable. They need to have the same privilege as airline workers, and it is proving a challenge. As governments work in crisis mode, only 52 IMO member states out of the 174 have recognized seafarers as key workers, and we will continue working towards this inclusion.

BIMCO is also very much involved in the relationships between the ship owners and the charterers. Our involvement comes from the contracts we have designed, and the contractual clauses we are producing, to allow contracts to account for these special difficulties.

Another thing we have been looking at that is related to the seafarers question as well, is piracy. The situation in Gulf of Guinea is not acceptable and we are raising awareness about this. This directly affects the quality of life of our people as their lives are under threat. Nigeria must start to fulfill all the promises it made and police the area as much as they should have. Somewhere around 24 [of the] seafarers kidnapped throughout 2020 [have still not been returned], and this is not acceptable.

The energy transition was a key point in your agenda when you became President of BIMCO – can you talk a little about that?

We have to rethink our place in the world and what is really important because, so far, we have acted as conquerors, ending up with the pandemic, pollution, and all sorts of things. This year, the world has shown that we can deal with these events and enact complex measures, and I hope that we can apply this spirit to climate as well. Right now, the biggest thing we must focus on is reducing emissions. Back in December 2019, we all were concerned regarding the upcoming IMO 2020 [shift to low-sulfur marine fuels], but we succeeded. This should give us hope and courage.

The first aim of the IMO in this coming year is laying out the short-term standards [on emissions]. They are already all there, but now we have to go into the details, see how we can develop these indicators to comply and keep the level playing field for all of our members and all for the shipping industry. BIMCO also has a working group on the topic to see how we can contractually keep up with these short-term measures while keeping the balance between operators and the charterers. Our strength comes from our members because they are so generously giving us their experts.

The European Parliament announced the inclusion of the shipping industry in the EU Emissions Trading System, and we will have more information towards the second quarter of 2021. What is BIMCO's opinion on this?

One of the biggest threats against shipping are regional regulations. The regionalization of regulations, regardless of what and where they are, will never improve environment protection. On the contrary, they will jeopardize the global effort of this very international industry. We were very disappointed when we heard that the European Union decided to take in the shipping industry, and for a very simple reason: shipping is international, and it should be internationally run.

Secondly, while I respect the idea to incentivize innovation by imposing regulations, the technology isn't there. Hence, it will end up as a tax only. Because this is a regional taxation, shipowners will never be able calculate the cost of running a ship given that it could load or discharge virtually anywhere. They will just see this as a tax and will not invest in innovation.

Are there any other lessons we should draw from this year?

One of the things that we have learned is how fragile our supply chains are, and we must tackle this. This ties in with the topic of seafarers and regulations, and we must work together with non-shipping organizations, governments, and the IMO, to make sure that the supply chains are strengthened.

You have been in the shipping industry for a long time, as your family was in the business. Shipping is not necessarily a career that a woman would consider. What's your advice for people who want to go into this sector, especially for people who are currently underrepresented?

I believe only a certain type of person can do shipping: whether a woman or man, it doesn't really matter, or any nationality, because this job is tough. Regardless of whether you are a shipowner, a captain, a broker, this is a highly competitive, 24-hour job, and it is for the ones who like to see the big picture and be internationally connected. I think, first, people should look at their character and see if they are up to this challenge.

When it comes to inclusion, I have to say that there are very successful females in our industry, maybe not as many as men in numbers, but they are damn successful. However, they are not in front of us, so we do not see them. One thing we do in BIMCO, and I was elected by men and I'm the first woman in this role, is try to set an example. At BIMCO, you will see more women on the board, more women in the secretary and executive levels. We also have 120 countries as our members, so in that sense, we have an inclusive culture.