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Interview

Martin Dorsman – Managing Director, Royal Association of Netherlands Shipowners (KVNR)

26.05.2015 / Energyboardroom

Martin Dorsman explains the role of the Royal Association of Netherlands Shipowners (KVNR) in the Netherlands and Europe, its ambitions for its members, and what Dutch shipowners need in order to remain competitive in today’s turbulent markets.  

With an extensive background in policymaking before arriving at the Royal Association of Netherlands Shipowners (KVNR), what changes have you implemented to the association and what current market challenges do you see for shipowners?

When I arrived at the KVNR in 2006 one of my first tasks was to write a strategy document, which only included the word sustainability one time. Recently, I wrote an updated copy and the word sustainability was used substantially in a pro active way. The KVNR and its members realize that being pro active is a prerequisite for being able to play a role in policy influencing and lobbying. Many shipowners are often accused of not being “green” enough, but thanks to an updated strategy that promotes ecofriendly policies we can also change the way that shipowners are perceived.

Currently, the main challenge is ensuring environmental regulations work in line with economic challenges in the market and that regulations are written so that innovation is stimulated and not hindered. Moreover, it is important that shipowners that use new technologies are not forced to remove or update these technologies within a few years when policies change. Shipowners need predictability in order to invest in new ships and equipments that meet the new standards.

How many members are part of the KVNR and from which market segments? How has the membership structure changed recently?

We have approximately 400 members that manage sea going vessels. Around 50 percent of our fleet is captain owned, which means that these shipowner members have around one to two vessels and sail on the ships themselves. The Dutch fleet is active in short sea shipping with many vessels that are multi purpose and thus very flexible. Besides that, we are specialized in heavy lift, reefers, smaller chemical and product tankers, salvage and towage.

With regards to energy, we have vessels working in the oil, gas, and wind industries, among others. Wind energy, in particular, is a growing market segment since countries as Germany and the United Kingdom invest heavily in offshore wind farms that require a lot of marine activity. The Netherlands’ offshore wind farm fleet is now the third largest , after the United Kingdom and Denmark. A lot of Dutch shipowners see these new market opportunities and invest in new vessels, as well as updating existing ones, in order to keep costs of installing and maintaining the wind farms down.

Furthermore, the line between traditional shipping and offshore is becoming very grey. For example, if you look at vessels that transport materials for windmills at sea, they also build the windmills by becoming an installation platforms. The number of vessels needed in the coming years to build and maintain the wind farms, and the decommissioning that is going to be needed in twenty years time represents a booming market industry.

What are the main strengths and competencies of the Dutch maritime industry?

The Dutch shipping industry is very focused on market developments that require flexibility, hands-on mentality, knowledge and creativity. The overall Dutch fleet represents a mere one percent of the world fleet, but the Dutch fleet is market leader in certain segments, such as heavy lift vessels and short sea shipping. We also play a large role in sustainable energy, such as offshore wind farms. The Dutch maritime industry is rich in history and plays a role in global decision-making and the association is proud to assist in creating a platform for decision makers to interact with shipowners.

The President of the KVNR, Tineke Netelenbos, stated in 2013 that “virtually every shipping company has managed to survive 2013. This may be said to be nothing short of a miracle.” What economic changes, if any, has the maritime shipping industry seen in the last two years?

Most of the shipowners are still struggling to stay afloat in the current markets that are characterized by overcapacity and depressed revenues. This is combined with the financial challenges of new environmental regulations, that require shipowners to make expensive changes to their vessels, thus increasing their financial hardship. The KVNR promotes the greening of the fleet but asks institutions at national, European and global level to have a holistic approach and take into account the investments needed to comply. Priorities must be set to fnd the right balance between the three p’s (people, profit and planet). For the short sea sector, we need policies that promote European economic growth. Special programs of the European Central Bank (ECB) and the European Investment Bank (EIB) can play a role in this respect. These policies need to promote social and environmental welfare, but also promote economic growth. An example could be the Junker Plan, though its exact details are not known yet.  The KVNR is working to ensure that shipowners are able to get funds from the EU programs to invest in environmental equipment. We see these as mutually beneficial for Europe and shipowners.

What policy shifts are you currently seeing in the industry and what are the consequences of these measures?

Over the last decade the main policy shift I have seen is the requirement to lower air emissions, such as sulphur, nitrogen and carbon. Although this puts an economic strain on shipowners it pushes the industry forward in a favorable light. At regional European level, I now see a shift to concrete action in order to reduce the administrative burden the shipping industry is faced with. But the pressure for new regulations, written and implemented as quickly as possible, remains. For example, the IMO is discussing caps on black carbon emissions at a time when the exact definition of black carbon is still not clear. I encourage all policymakers and international organizations, like the IMO, to thoroughly think about the implications of policies before being decided upon. Thorough impact assessments, in close cooperation with the industry, has to be executed. This will ensure both economic growth within the industry and promote a greener agenda.

 

What is the main role of KVNR with regards to policy making?

Advocating on behalf of our members is an important part of our role as an association. In order to be successful the KVNR is pro-active and not only saying ‘no’ to new proposals. The KVNR and its members realize they have to take their responsibility. Combining this with the need to remain competitive on the world’s markets is the real challenge. The strong ties that KVNR has with the government and international institutions is essential to promoting our agenda and ensuring policies are made that benefit shipowners and society as a whole at the same time.

With sustainable business practices being given great importance in international regulations and with hopes to achieve a 2050 carbon reductions of 50% compared to 2020. What is the association doing to guide and encourage shipowners to invest in innovative and sustainable business practices?

The first thing is to have policies made which promote innovation, stimulate the economy, and encourage shipowners to invest in new technologies by rewarding them. There are still many shipowners who are unable to take on the economic burden to update their ships with new technologies because of the steep prices and lack of available knowledge. The association assists in this matter by providing information to our members via different platforms. Providing information to our members improves the methods in which shipowners receive and interpret information relating to sustainability. For example, we work with shipyards and institutions in order to disseminate knowledge regarding various pressing market niches, such as Liquified Natural Gas (LNG), by hosting seminars and promoting awareness for our members and government officials. We engage policymakers by reaching out to them, so they can introduce new safety measures and regulations to create regulation and overall awareness. For example, whether ships are allowed in a port to bunker LNG or whether ships are allowed to bunker when there are passengers on board. Creating a streamline communication method between shipowners and government officials will ensure successful implementation of new technologies and promote sustainable business practices.

What do you see as the growing role of LNG and other alternative fuels in the Netherlands?

LNG is very high on the agenda, but I argue that the Netherlands should also look at other alternative fuels. If you only look at LNG, you close yourself out of other potential markets at perhaps more reasonable economic costs. Other prime examples of clean energy fuels that can hold huge market potential are methanol and Gas to Liquid (GTL). GTL is a very clean fuel and can be used in current engines without retrofitting. Shipowners need to have access to cleaner energy sources available to them, but at reasonable economic costs. For example, most sailing vessels cannot retrofit LNG because it is too expensive to change the machinery; LNG is the option for new vessels. GTL on the other hand can be used for existing vessels, although it is currently more expensive than the low sulphur marine gas oil (MGO).

What aspirations do you have for members of your association within the next five years?

The association hopes that the economic recovery that is now predicted for Europe comes true and will lead to a broad recovery of the shipping markets. Global, European and Dutch shipping policy can contribute to this by finding the right balance between the sustainable, social and economic challenges of the shiping industry that is the enabler of the world’s prosperity. The KVNR itself hopes to grow in non-traditional market segments and gain new members by continuing to deliver high quality services to its members and ensuring that the needs of our members are met.

 

Click here to read more articles and interviews from the Netherlands, and to download the latest free oil and gas report on the country. 

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