With the dry bulk industry faced with multiple challenges, a discussion with the head of Intercargo, the international maritime body representing dry bulk ship owners round the world, poses a great chance. Mr. Nikolas Pappadakis of AG Pappadakis &

Co Ltd, Chairman of Intercargo highlights in an interview with Hellenic Shipping News,
the issues that dry bulk owners are facing today, from environmental initiatives and safety at sea, to the challenges of the market with a potential tonnage oversupply, newbuilding cancellations, bankruptcies and piracy.
Recently, Intercargo held meetings of Technical Committee, Executive Committee and Annual General Meetings in Athens. They were attended by strong representation from Asia, North America and of course, Europe "“ with good participation from Intercargo's Greek Members. The meetings successfully set the strategy of the Association and its position within the Round Table of International Shipping Associations (BIMCO, ICS, Intercargo and Intertanko) for the coming six months, until the next meeting of the Executive Committee in March 29010 in Singapore.

With the climate debate heating up worldwide, could you highlight us the most important initiatives undertaken by the shipping industry during these past couple of years to counter fears that the sector is falling behind in the race to protect the environment?
Of course, Shipping is by far and away, the most environmentally friendly mode of transport although this does not mean that we are immune from tackling further action. The most important developments in recent times are: the agreement at IMO to introduce voluntary measures such as the design index and the Ship Energy Efficiency Management Plan.
But the important issues are yet to come as the Shipping Industry strives to reduce its carbon impact even further, whilst at the same time reminding ourselves that shipping is an adjunct to world trade which in turn is perceived as a wider societal good "“ raising living standards around the world which is ever hungry for an efficient supply chain for food, energy and consumer goods. We have also seen the Marpol developments setting exacting standards for the refining industry to reduce the Sulphur content of bunkers. The next big issue is in December this year when the UN looks to develop a successor treaty to Kyoto.

Lately, we've seen numerous organizations, both within the maritime industry, but also others, pushing forward with various solutions for implementation, in order to cut shipping's CO2 emissions. Consequently, the ship owning community is quite puzzled, as to what to expect. Which is InterCargo's view on the various initiatives currently on the table to curb shipping emissions?
In March 2010, Intercargo examined the facts and its Executive Committee in Hong Kong decided that of the then two options on the table, the levy based approach was the most eqyuitable and fitted into the structutral model of the typical world shipping industry "“ our sector of the industry has on average, 5 vessels managed by each company which is not conducive to the infrastructure required to operate an emissions trading scheme.
The recent Athens meeting went further to emphasise the role that technical measures would make on shipping's contribution to emissions generally and decided that although detail remained lacking in all currently tabled alternatives, there was a further vote of confidence in the IMO and a global solution to the question of emissions.
Members also looked more favourably on a slight refinement to the levy system "“ as characterised by a levy but with an small incentivised scheme for owners using efficient technical or operational systems (in conjunction with Charterers).
Intercargo has also been at the forefront of suggesting that we must not legislate for environmental matters which have an unintended consequence on safety "“ eg slower, less powerful engines which might have an adverse safety impact on bulk carriers.
Intercargo has also been at the forefront of suggesting that we must not legislate for environmental matters which have an unintended consequence on safety "“ eg slower, less powerful engines which might have an adverse safety impact on bulk carriers.

Many environmentalists and other policy makers are accusing the industry about serious delays into actual implementation of new policies within the IMO. In fact, this argument seems to attempt to overrule whatever measures, regardless of how important they are, in order to force the industry to abide with rules by other organizations like the EU. What's your comment on this?
We trust that those who have these competing approaches to a common problem appreciate a need for overall efficiency in delivering a solution (i.e. simplicity of approach and implementation without a complex monetary or administrative infrastructrure).
We also hope that full consideration is given to the overall structure of the worlds shipping industry "“ i.e. multi sectorial and essentially fragmented (unlike airlines where 230 airlines = 93% of the Industry. The situation in our opinion, must be global and must not lead to a modal shift to lesser environmentlly friendly modes of transport.

Are you afraid that shipping could become a "victim" of various unilateral environmental legislations, whether they derive from the US, the EU or other countries?
We have been bombarded with statistics and grim phrophecies for so long, that there is a real possibility that interested and proactive individuals could become disillusioned with parties who seek to influence our industry operations but who have no knowledge about the design and operation of ships.
Some of these individuals have virtually unlimited resources and broke no discussion about the inevitable change to social and commercial structures that have served us all so well in the past. Simplistic solutions have been proposed which have an obvious impact on safety "“ smaller engines or fuel changeovers to 0.1% Sulphur in regional areas being two of many examples..
Market instruments are proposed which have a direct relevance to a comparative few shipping companies who have trading floors or are horizontally linked to other sources of carbon emitters.
But our sector comprises of many small and medium sized companies and what works for a large company will not work in the Dry Bulk sector. We have demanded simplicity in any future Market Instrument and we have therefore become receptive to the idea of some sort of levy based system which is devoid of opaque processes which are ill-fitting to the atypical international shipping entity controlling small numbers of ships.

The shipping industry is faced with other challenges as well, such as safety of ships and seafarers. What measures ahs Intercargo undertaken within the context of international organizations?
If nothing else, Intercargo's long abiding concern is with the safety of ships and seafarers "“ irrespective of any short term market fluctuations.
The Owners we represent are passionately committed to safety and the high standards that are necessary to stand out in an Industry of over 1,200 individual owners and Managers.
During the last year, we have worked quietly and assiduously behind the scenes at IMO and elsewhere, to put safety above all else.Β  A clear demonstration of this came from our involvement in the regulation of Difficult and Dangerous cargoes "“ especially Direct Reduced Iron, where we were successful in lobbying for change which will reduce risk for all concerned and I believe, proving conclusively that Intercargo and its Round Table partners can deal with issues that protect seafarers and reduce the immense financial burden of being involved in a maritime accident.

Piracy is also a major issue, but with Somali pirates constantly posing a threat, it seems that the problem remains on the agenda.
Twelve months ago, we had little knowledge about the effect that Piracy would have on our sector. With 222 Bulk Carrier seafarers held hostage at some point during 2009, our immediate concern is for the safety of the seafarer.
We are immensely appreciative of the role of Navies in assisting world shipping maintain its freedom of the seas and we have nothing but admiration for the enormous professionalism of Ships Masters in carrying out evasion techniques preventing the pirates from disrupting world trade even more than they are doing at the moment.Β  We thank those Intercargo members "“ especially those involved in humanitarian relief in the World Food Programme, for their input to the Intercargo Piracy Correspondence Group.

Representing Intercargo, you are also speaking on behalf of the backbone of the world industry, since dry bulk carriers are carrying raw materials and commodities internationally. This market showed two faces during 2008, one positive with record-breaking rates during the first half and the exact opposite during the second half. Are you afraid that the consequences of this crisis will lead to company bankruptcies?
With the caveat that Intercargo does not have a commercial remit, we note that in numerical terms that there have actually been very few company failures on a global scale but individual companies have suffered badly in the downturn.
Unpleasant though it is to be fighting for survival as an individual owner, it is doubly so for an entire industry to be weaning itself on to the temporary charms of state aid. In this respect, we consider that State Aid for shipyards and domestic owners in China and the Republic of Korea to offer nothing but short term expediency in an Industry requiring long term investment cycles and equally long term partnerships from Governments and Charterers. State Aid offers little to long term stability and the Industry at large must be very wary of its superficial charms.

Recently, shipping analysts have encouraged dry bulk owners to cancel up to 50% of the global orderbook, in order to avert potential oversupply issues, which will seriously affect the market's recovery. Do you think that the trend of cancellations will continue and what are your estimates as to the percentage of new buildings which will actually be cancelled eventually?
Forecasting is fortunately not within the remit of the Intercargo Chairman fiunction, so we cannot really anticipate what the coming months will bring in terms of economic activity. We see some welcome signs that the stimulus packages within China and other Asian economies have created better market conditions than we could have even hoped for in the depths of the recession, but the demand equation is matched equally with a supply equation and the Dry Bulk sector must face the reality that is over-tonnaging head-on.
These are the "New Reality" facts as we see them at Intercargo.
An order-book with an enormous over-hang which will make the recovery process slow and difficult for many members. We believe that 2009 will see delivery of around 400 Bulk Carriers which although far removed from the 584 ordered at the peak of the market, suggests that delaying delivery means exactly that "“ that most of the "missing" ships for 2009 will nevertheless enter the market at some future point.
Individual owners and shipyards must continue to work together to recognise the advantages of a delivery schedule that best meets the demands of consumers of the world's shipping services.
Where it suits the internal needs of their Boards and also of their customers, we need to promote the advantages of Recycling, which has enjoyed something of a resurgence in 2009 with around 137 Bulk Carriers to date ending their trading careers although ominously, this seems to have diminished again at the very point that the dry bulk market appears to have improved.

Do you think that 2010 will prove a better year, in terms of earnings for dry bulk companies, compared to 2009, when one considers that as things are today, almost 5 new building bulkers will be delivered on a daily basis?
In all honesty, Intercargo and most major analysts can only make cursorary assumptions about the delivery of newbuilds. We think (in round numbers) that of the expected 2009 delivery schedule of over 600 vessels, something in the region of 400 will be delivered. The bulk of the remainder will be delivered (we feel) but when and at what stage of a hopefully recovering market, we do not know.
It seems a bizarre comment to make on behalf of some owners struggling to meet punishing financial commitments and with Operating Expenses up by 18.6% according to Moore Stephens latest report, but the position for the Dry Bulk sector could have been a lot worse.Β  It has been a struggle for all, but many responsible owners have done everything possible to keep crews together during the down-turn : even if vessels have been laid up and otherwise under-employed.
There have been very few shipping companies which have actually ceased operations "“ in fact there are three more Dry Bulk Managers (1274) today, then there were at the start of 2009.
The growth prospects for the world's economies seem somewhat brighter now than they have been for some time with a growing demand for food, power and sustainable consumer consumption "“ ultimately the three staples carried by Bulk Carriers, still meaning that we have a job of work to do at Intercargo representing Bulk Carrier owners.

Nikos Roussanoglou, Hellenic Shipping News Worldwide