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What does decarbonisation mean for the shipping industry?

Yee Yang Chien, MISC President and Group Chief Executive Officer, talks about turning words into action as part of the company’s pragmatic approach to perpetuation.

The attention of shipping is firmly locked on sustainability. Not only did the International Maritime Organization declare “Sustainable shipping for a sustainable planet” as its world maritime theme for 2020, but everywhere you look, headlines and conference agendas are focused on the industry’s need to decarbonise and how this drive will shape vessel and infrastructure investments in the decades ahead. But what does this really mean in practice?

The man at the helm of MISC Berhad, Yee Yang Chien (pictured right), is quick to point out that sustainability means different things to different people. He stresses that the Malaysian group’s leadership see decarbonisation as a subset of sustainability with the latter being inextricably tied to its operational philosophy.

“For us, it’s about trying to perpetuate our very existence as a commercial entity. It’s how we derive our commercial livelihood and assure our place within the entire maritime ecosystem,” he says, referencing the many stakeholders that this encompasses – from shipowners, ports, financiers, shipyards and engine makers, among others.

“The challenge is how do we perpetuate this ecosystem? We need to make sure we can replace whatever we take from the ecosystem. If we keep taking and don’t put back, the ecosystem will die. This drives what we do for the environment and the decisions we make when it comes to our investments, as well as the way we treat our people, partners, vendors and customers. It’s all about keeping things going – perpetuation – but hopefully doing so in such a way that we leave things for the next generation in a better state than we found them.”

Words into action 

The MISC President and Chief Executive acknowledges that there are many ways to tackle decarbonisation within the maritime industry, but it requires “putting beliefs into action”. “It’s more than just agreeing that something should be done and then sitting back and waiting for someone else to drive the bandwagon. We don’t believe in that.”

The need to show leadership and work with like-minded people is behind MISC’s long-standing membership of the Global Maritime Forum (GMF), which launched the Getting to Zero Coalition last September, and has spurred the creation of the Poseidon Principles that will apply climate change criteria to ship finance.

The GMF “is not a regulatory body. It’s not meant to be political. It’s meant to be a gathering of leaders from across the entire maritime ecosystem so they can share ideas and find common ground,” says Yee, who has been in his current role since the start of 2015. “It’s a place where we can talk about our concerns on certain topics and show leadership on the way forward for the industry.

“We are trying to create a movement. Instead of people saying, ‘Hey, I’m tired of waiting for the regulators to say we must do something’, or ‘I’m tired of being told what to do by the regulators’, we are trying to encourage the industry to take the initiative as we all know it will be to the benefit of maritime in the long-term.”

Referencing the joint development project where MISC is working on an ammonia-fuelled tanker with partners that include LR, Samsung Heavy Industries and MAN Energy Solutions, Yee stresses that the key motive for initiatives like this is to encourage others to follow suit.

“It’s like dropping a pebble and waiting for the ripples. The industry is beset with competition and fragmentation and this is accompanied with all sorts of challenges. At times like this, others benefit from examples of leadership. That is what we are trying to do and, given the IMO’s targets on greenhouse gases (GHG), we believe we have to start this now.”

LNG has a role to play

The Malaysian group has a fleet of more than 100 owned and in-chartered Liquefied Natural Gas (LNG), petroleum and product tankers, 14 Floating Production Systems (FPS), as well as two LNG Floating Storage Units (FSUs), so there can be no denying it has maritime muscle and its decisions around fleet investment are closely watched.

Yee admits he is a major supporter of LNG as a bunker fuel and points to how MISC took a lead with its LNG-fuelled Aframax tankers at a time when there was still much scepticism about whether LNG was the right choice of fuel, given some of the concerns about supply and infrastructure.

“We moved ahead because we see LNG as a transitional fuel on the journey to the net zero carbon solutions,” he says. “Do you wait for 2030 or do you do something now? We decided to put words into action and you can see from the number of yard enquiries and orders of LNG-fuelled tonnage that many big industry names are supportive of it.

“LNG will be the future for now. If I have to justify the investment, I do this on the basis of a 25-year ship life. Surely LNG is relevant for some portion of this life? You will get your payback from using it as a transition fuel. Every ship we order now will be LNG-fuelled – it comes at extra cost, but it is an important step to getting to net zero.”

Building scale, capacity and capability 

The quest for sustainability has also shaped decisions around the group’s core focus and governs its approach to partnerships. A drive to “build scale, capacity and capability” within specific segments, saw the group exit from dry bulk and containers more than a decade ago and home in on the energy sector.

Yee believes that the needs of both sides must always be recognised during business negotiations. In all partnerships, if one side is winning, one side is losing, and such an imbalance can compromise the existence of a partner as well as safety across the industry, he says.

“Negotiate hard, but always make sure there is something left on the table for the other party. If you are happy with what you have got, don’t squeeze the other side for the sake of it because that could compromise the partners ability to do business. It is our duty to perpetuate safety in the industry and this requires financial sustainability, he explains, pointing to how maritime has been asked to do more for less in recent years and take on more risk. “This is not healthy – it is a one-way passing of risk. Risk needs to be balanced,” he adds.

Yee’s background may be in finance – he has double-degrees in Financial Accounting/Management and Economics, from the University of Sheffield in the UK – but for him having impact doesn’t always have to be numerically measured. Rather it is a question of how you make those around you feel.

“Our people make us who we are, and they will take us where we haven’t been before. You need to ignite passion in people as this promotes energy and drive. My biggest joy is when someone comes up to me and says you have changed my life – either because I pointed to an opportunity, shared some advice or simply spent some time with them. Success is about your legacy and the little footprints you leave behind.”

Horizons March 2020

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