Dimitris Fafalios and Karin Orsel on shipping’s future

Feb 25 2021

Dimitris Fafalios, president of Fafalios Shipping, and Karin Orsel, CEO of MF Shipping Group, shared thoughts on where the maritime industry is going, in an ICS webinar “The recovery in the aftermath of COVID”.

Dimitris Fafalios, president of Fafalios Shipping, said that although the industry could be considered low tech, “we're actually very efficient.


The dry bulk busines is probably up there amongst the most efficient in the world. We transport the basic products needed for everyday life.”


Mr Fafalios was elected as chairman of Intercargo in Jan 2019 and chaired its technical committee since 2009.


As of June 1, 2018, the latest information available on its website, Fafalios Shipping SA fleet consists of 5 dry bulk vessels with an aggregate capacity of more than 320,000 dwt, mainly consisting of Supramax and Panamax vessels.


There is actually quite a lot which other industries could learn from shipping, including how it manages to stay agile and resilient in the face of enormous change, he said.


“Shipping and shipping operations is management of change. We manage change every single time. That's what distinguishes us from a highly automated supply chain.”


“We go through Panama Canal five times - every single time its different for A or B reason.


“We developed risk management structures to counter that.”


“If you ask us - what is our revenue going to be in October we simply don't know.”


“The shipping business has been relatively resilient to COVID.”


“Therefore our economic model and management model is robust. It should actually be taken onboard more in land based industries. We could give some economic professors and finance professors some very good tips from the shipping industry about resilience.”


The system for working with a port is very simple. “You load cargo, you are sent to a port, told to go at a particular speed, to arrive at a particular time, then stay in a queue until the terminal selects you, and then discharge the cargo. It is very very simple.”


“Shipyards of the world can produce new vessels and relatively latest technology vessels within 18 months of placing an order.”


When it comes to digitalisation, Mr Fafalios believes that it must “keep the people onboard fully in the loop.”


“It is no use developing a fantastic vessel where everything can be monitored from the shore, and people onboard feel as if they are simply there to tick boxes. We must discourage this.”


“The people onboard must retain their skills as navigators and engineers.


They must know what it means to go around the engine room, feel, see and hear problems.”


The dry sector is seeing demand for steam coal reducing, as companies find “more environmental methods of power generation.”


Covid has brought big problems with crew changes, particularly in the Far East. “They want the ship but don't care about the crew,” he said. “This is extremely challenging for us. We've had to change trade routes, divert the vessel to the most convenient port in order to make crew changes.” Then there are problems with the lack of flights.



For shipping to be included in the European Union Emission Trading Scheme (EU ETS) is an example of “politicians not understanding fully what shipping is,” he said.


“To many politicians, shipping is a container ship, ferry or ro-ro, which has got a far higher profile.”


“The regulations we're going to have to face with ETS will be very negative to the industry, very negative to Europe, and will increase emissions.”


Consider how large bulk carriers are transhipped into smaller vessels in Rotterdam. This task does not need to be done in Rotterdam, and having to pay for emission credits would push the task outside the EU, which could also lengthen voyages.


The shipping industry has proposed a tax on every tonne of fuel burned or consumed globally, he said.



In terms of establishing virus testing requirements onboard, Mr Fafalios said that the Maritime Labour Convention could be the right place for requirements, making it a generic procedure.


“On our vessels we take everybody's temperature several times a day every single day,” he said. “We have adapted.”


A weakness has emerged where IMO is good at influencing maritime authorities, but we are facing rules coming from health and immigration authorities, and national leaders, who don’t understand shipping, he said.


Karin Orsel, MF Shipping

Karin Orsel, CEO of MF Shipping Group, said that the industry suffers from a poor public image. “The general public thinks a seafarer is a tough gentleman smoking a cigarette having a beer. That's not how our industry is working today.”


“The industry has picked up several initiatives, they are unknown to the general public. We raised the standards quite high in the tanker segment and cruise industry. There's a high level of governance we want to fulfil.”


MF Shipping, based in the Netherlands, manages 52 vessels, including product tankers, chemical tankers, multipurpose ships and cement carriers. It employs 1000 seafarers.


Ms Orsel is co-president of the Royal Association of Netherlands Shipowners and member of the executive committee of Intertanko.


“I think our industry is very fragmented, especially if I look at a part of Europe where you see a lot of vessel owners who have one or maybe a dozen [vessels], in comparison to big shipowners.”


“Maersk is a name familiar with the general public. But we as an industry have been invisible for a long time.”


“The other challenge is decarbonisation. The big question mark is - will a vessel [find cargo]? Say a dry cargo vessel, in 25 years, tankers shorter?”


“That's another challenge we all have to deal with, what is the lifecycle of vessels.”


“Does it mean freight rates have to be completely different to make [low carbon ships] a valid investment?”


“We say we are quite proactive as an industry, also on digitalisation,” she said.


“There is where our opportunity lies, to attract the next generation.”


In terms of establishing virus testing requirements onboard, she said there should be “multiple testing to avoid a possible outbreak, no discussion whatsoever. I am not sure if we should make it a regulation.”


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