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Excellent conditions for shipping recovery

Date: 10/06/2015

The next few years need to be confronted with an open mind and without excessive worry apart from the prudence expected of a competent ship-owner. Emanuele Grimaldi Confitarma presendent and CEO of Grimaldi Group Naples took his cue from one of the 2015 Mare Forum sessions entitled Waiting for Godot to set out an exit strategy in the uncertain times for shipping today. Mr. Grimaldi reminded those present that the critic Vivian Mercier writing in the Irish Times about Beckett’s work spoke of “a comedy where nothing happens twice”. After waiting for years the time has come to take the initiative with renewed confidence in the full knowledge that instability is still about.

When asked about the current trend in shipping during an interview, Mr Grimaldi said that 2014 was a difficult year. Towards the end of the year, reduced bunker prices helped the business. Signs of recovery were noted in the oil business and the strengthening of the dollar could further reinforce traffic. “It is too early to say that we are out of the crisis but there are positive signs.” He said that this period of crisis has manifested what Schumpeter called ‘creative destruction’ with a process of natural selection which overwhelmed some operators and enabled the survival of others to take advantage of the coming opportunities.

According to Mr. Grimaldi, those owners who bought well in 2008 when the market was booming will survive. He referred to those who bought prudently at low interest rates. According to Mr. Grimaldi, sea transport is an indicator of the state of the health of the economy. “There was a drunken moment with momentous changes at the time of India and China coming into the market.”

Mr. Grimaldi pointed out that a healthy rapport with finance is a priority for overcoming the last hurdles. Paradoxical situations arouse in the pre=crisis years with the most indebted companies having more weight in the market, whereas financial instruments should make for efficiency and reward the best. This is especially true for Italy where companies are mainly family owned. He stressed that shipping needs banking support. Shutting of the oxygen supply could harm everyone.

When asked about factors needed for revival, Mr. Grimaldi said that the overall situation makes him cautiously optimistic. The US$ exchange rate favours European exports. The decisions of the BCE will reduce interest on the public debt of countries in difficulty and the injection of liquidity into the system will keep money costs down and favour recovery.

Regarding the port reforms, Mr. Grimaldi points out that all the costs of the logistics chain are dumped on ship-owners. He said that a new national port organisation needs to address competitivity. It must start with concessions and continue through investment decisions using common sense and creativity and look at a handful of themes from better logistics coordination, maximizing use of space, connections to port hinterland and bottlenecks.

Mr. Grimaldi said that the press is partially to blame, regarding the debate on ports which puts too much emphasis on containers. There are many port functions which are extremely important for the economy. He thinks that passengers and ro-ro traffic could become fundamental to their position in the Mediterranean. Apart from the Far East there are many developing economies on the south coast of the Mediterranean and wheeled traffic would become essential for the logistics in Italy just-in-time.

 Asked whether the immigration question is influencing shipping, Mr. Grimaldi answered that more than 40,000 human lives have been saved by ships which use these outer routes of desperation. It is a huge number and the ethics of the sea require intervention where necessary. However there are risks not to be undervalued, he continued. When a 15 crew vessel saves and takes on board 300 people the lack of adequate structure is a safety risk. “As Italy’s European representative I have received many declarations of appreciation for what Italy is doing but the time has arrived to increase the scope on the Triton mission.” Collaboration agreements are needed with the countries in the area and the rescue effort requires proper equipment.

In reply to the question of how Grimaldi Group Naples is bringing its fleet up to the new emissions regulations, Mr. Grimaldi said that the Group has invested more than €100 million in scrubbers plus a series of alternative technologies to reduce consumption and make their vessels more efficient. He concluded that however, not all owners are able to make such investment and this is the principal difficulty that shipping has to confront in the challenge of sustainable environment.

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