Shaping a better world

REMI ERIKSEN

Welcome to Trust and Transformations - Leaders navigating change, a DNV podcast. I'm Remi Eriksen, DNV’s group president and CEO. 

In this series, myself and our business area CEOs sit down with other global leaders to talk about how they tackle transformations, build trust in their business and people, and what they think is coming next for their industry. Right now, they are experiencing a series of historically significant transformations, making trust more important than ever. 

This episode is hosted by Knut Ørbeck-Nilssen, CEO of Maritime at DNV. 

KNUT ØRBECK-NILSSEN

Hello and welcome to Trust and transformations, leaders navigating change. I'm very pleased to welcome Mr. Nikolaus Schües, CEO and owner of shipping company F. Laeisz to the podcast. Niko, welcome to Trust and transformations.

NIKOLAUS SCHÜES

Good morning Knut, thank you very much for having me.

KNUT ØRBECK-NILSSEN

It's a pleasure. Niko, let us just set the frame a bit. So, you oversee one of the leading shipping companies in Germany with a fleet of about 60 vessels from pure car and truck carriers to research vessels. And in fact, in the same year as DNV marks it’s 160 year anniversary, F.Laeisz is celebrating an awesome 200 year anniversary. Congratulations on that achievement.

 NIKOLAUS SCHÜES

Thank you very much and congratulations to the 160 years.

KNUT ØRBECK-NILSSEN

Thank you. Now, while shipping-related activities have been the backbone of your company since the start, your longevity is also an accomplishment built on diversification and continuous change. Perhaps it is connected to that Hanseatic spirit, I don't know. Being able to adjust to constantly changing markets and trades, all the while taking on new opportunities and facing challenges head on, it's quite a remarkable history. And in short, you have seen your fair share of transformations. So, let's touch on this topic first.

Now, as we all know, decarbonisation is a huge challenge across the globe and shipping accounts for roughly 90% of world trade, 90%, and is responsible for less than 3% of the world's carbon dioxide emissions. This means that the decarbonization of our industry matters in the global energy transition and is certainly a key topic overall. So, let's focus a bit on decarbonization.

What do you believe is your company's role in the decarbonisation the industry is currently undergoing, please?

NIKOLAUS SCHÜES

Well, Knut, first of all, thank you again very much for having me and congratulations again for 160 years. We are a long-term customer of DNV. Formerly, we were customers of GL. But I'm not only sitting here as a medium-sized shipping owner, but also as president of BIMCO (Baltic and International Maritime Council). So, please allow me as we go along throughout the discussion to swap hats while answering.

As a tonnage provider, I think the humbleness forces us to let the big steps with the big fish, meaning the large charterers and the logistic providers. We as Laeisz, we have experience in the transport of ammonia, and we have vast experience in the car carrier business. The ammonia, of course, will play a vital role when it comes to future fuels. And the car carrier people have very great interest in decarbonizing due to their customer base. But as I said, the big steps depend on the charterers. To reach 2030, we need efficiency gains and there are also the medium-sized smaller companies like ours that can and must participate and what we try at Laeisz is to stay at the forefront of operational and technical efficiency gains, participating in the small continuous steps.

KNUT ØRBECK-NILSSEN

Great. You mentioned the charterers Niko, and a lot of factors are naturally driving decarbonization, including regulations, as we know, but also investor and end consumer demands and charter demands. What would you say is the biggest driver and why?

NIKOLAUS SCHÜES

If I would have to decide who is the biggest driver, I would think it is the consumer. They have changed the mind of politicians over the years and they decide by their buying habits which product they would like to have. Well that of course only goes for democracies. Then the government's influence, the second most important part, and that is the regulators.

Autocracies like China may surprise us in the decarbonization path based on scientific acknowledgement. But as far as the regulators are concerned and their influence, in the very end, I feel the consumer is responsible. If we look more specifically at the shipping industry, the regulator is the number one. There, the number one is the IMO (International Maritime Organization) and we see that happening as we speak. We see that with all regulation coming up. We need nevertheless the commitment from industry players. We need the conviction that this is an opportunity and not only a threat and we need the collaboration via the organizations to ensure that the regulation that is coming up will be practical and implementable. If you ask me in shipping, the single most important initiator of change has to be the regulator.

 KNUT ØRBECK-NILSSEN

We are very fortunate in shipping naturally to have a global regulator in the IMO.

There is so much talk these days about the future fuels, if I may call it that, but let's focus a bit on what are the actionable steps that you and we can take to reduce emissions now, rather than talking about the fuels of the future. What do you think are the most crucial ways for the industry to cut emissions in the short term?

 NIKOLAUS SCHÜES

Well, BIMCO strongly promotes efficiency gains and there are three different types that we can look at. There are the technical ones, such as air lubrication, wind support devices, silicon paint, ducts and spoilers. There are operational ones, such as speed optimization, the Blue Visby initiative, just to name a few. Then we have the digital ones for example e-bills of lading, IT based optimization of the engine and weather routing. So, there are things that every ship owner can do and everybody should do and you should do it today.

The second step of course has to be the economic incentives coming to promote new fuels to close the price gap. As we know, the IMO is working on both fronts, the efficiency gains as well as the economic incentives to close the gap. At MEPC (Marine Environment Protection Committee) in April, they discussed the midterm measures. They will be approved in Spring 2025 and they will have an extraordinary meeting in Autumn 2025 and Arsenio Dominguez, the new Secretary General of IMO, really means it and we support that very much. So, we need that regulation because in the end, of course, these guidelines will offer investment security for investment decisions to be taken.

KNUT ØRBECK-NILSSEN

We are very optimistic about the progress on the regulatory side and you referred to quite a big toolbox Niko, on what can be done on efficiency gains and coming back to you, you have a big variety of vessels in your fleet and naturally it's interesting to sound out with you whether you are using the same approaches for the different types of vessels that you have or are you more targeting and some are more suitable than others please?

NIKOLAUS SCHÜES

Well, as you rightly say, it is a fairly mixed bag of ships that we ended up with at the moment, but many of the technical improvements that we are testing, or the industry is testing, are optimizing hull behaviour in the water such as silicon paint or the duct. That goes for any ship type to improve the forward move in the water. The same goes for some operational efficiency gains and options that you have in the engine room, but the big steps that are coming up, they depend on the vessel. For example, ammonia will be easier to combust on ammonia carriers to start with because you have access to the knowledge, you have access to the fuel, to the infrastructure.

Car carriers, for example, will have great progress in new fuels simply because the charterers are so demanding to transport their electric cars also on decombusted ships. Basically, at BIMCO we are technologically agnostic. There will be many, many ways, including carbon capture, depending on distance travelled, on the trading area, on ship type of course, on cargo carried. So, there will be many, many ways to roam, so to say.

KNUT ØRBECK-NILSSEN

Yes, indeed. You mentioned the IMO on a couple of occasions already, Niko, and also BIMCO, and that leads me to the next topic around collaboration and trust. I think we both agree that collaboration is crucial to reach both the Paris Agreement but certainly also the IMO ambitions.

As a member of multiple maritime organizations, you're well placed to work with other CEOs and senior leaders of shipping companies to share ideas. How does this work in reality? Is everyone keen to collaborate and pool resources?

NIKOLAUS SCHÜES

Well Knut, in a way that is two questions. Collaborating, I think many are prepared to do that. Pooling resources requires some pricing mechanism. That is a bit more difficult. But, I totally agree that to reach the checkpoints, the greenhouse gas strategy of the IMO is requiring, collaboration is absolutely key.

We are doing reasonably good. If you look, for example, at the round table, consisting of the ICS (International Chamber of Shipping), INTERTANKO (International Association of Independent Tanker Owners), INTERCARGO (International Association of Dry Cargo Shipowners) and BIMCO, the secretariats work closer together than ever before and all acting presidents of these four organizations - and you may at the World Shipping Council then talk about five presidents - they all know each other well and they have a very friendly relationship. Why is that? I think it's because everybody understands the necessity to speak with one voice. The story is old that shipping has to speak with one voice, but the necessity to do so is more urgent today than it has been before. We have to give unified information to the regulator to achieve practical and implementable regulation. In the old days, you could almost feel a vanity of organizations when these presidents spoke to each other. That has long gone now and everybody sees collaboration to be key to reach the common goal.

KNUT ØRBECK-NILSSEN

Great insights. As we know, to release the potential collaboration, trust is naturally an important ingredient and maybe even a catalyst for innovation and collaboration in your business as well as in the wider industry. Do you have any sort of reflections on that, Niko?

NIKOLAUS SCHÜES

Well, as always, Knut, trust is absolutely crucial. It's very, very difficult to earn. It's very easy to lose. I think we can look at DNV, it's a perfect example. The trust, apart probably from your expert team, is the biggest asset that you have, and the industry only works because everybody can believe your certificates and trust what you say. BIMCO to some extent is fairly similar and it also enjoys a lot of trust by issuing reliable contracts and clauses by being an information provider to the IMO. We are not lobbying, we are more supplying information about what this or that regulation may imply for the industry. We have 400 volunteers and these 400 volunteers form the basis of what we call being the practical voice of shipping and the industry and the regulators trust us so there we are fairly aligned and trust is, as a famous commercial of old days once phrased it, the basis for everything.

KNUT ØRBECK-NILSSEN

You said that trust needs to be earned, I actually totally agree with that.It's also an issue for the maritime industry to earn the trust of the public and this is naturally extremely vital for our license to operate and for attracting and retaining new talent to our industry. How do you suggest that we better position ourselves to achieve this?

NIKOLAUS SCHÜES

Yeah, it is a long walk to achieve the trust of the public and as you know, the shipping industry as a whole has some reputational issues. Although we are moving forward, albeit slowly, but we are moving forward.

Corona illustrated to many in the public the importance of shipping and the importance of logistics. We are supplying everything, food, fuel, medicine, cars, you name it. So, the acknowledgment of the importance of our industry has increased substantially throughout the last couple of years.

BIMCO has produced four movies showing exactly that, the role in world economics of shipping, the importance of seamen and the path to decarbonize. What harms our reputation is accidents, pollution and underpaid seamen and stories around that. So, we have to do everything to avoid that and it will be important to have the trust of the public also to attract talent.

KNUT ØRBECK-NILSSEN

Excellent and I've seen the movies that BIMCO has launched and I must say they do a great job in promoting the importance and the attractiveness of the industry, so congratulations to BIMCO for that. Now, moving over also to digitalization. As a BIMCO president in 2023, you emphasized that digitalization is a key priority and it's a very important force in driving the transformation, as you have already mentioned. Could you share any progress made in this area and your vision for future developments, please?

NIKOLAUS SCHÜES

Yes, certainly. One issue that I emphasized as being important when I started my presidency, was to unite the round table more than before and there we have made some progress. So I think I just wanted to add that because digitalization is another subject but the unification of the shipping industry was really the headline of the term.

 I can give you two examples with regards to digitalization. One is sounding small, but quite impactful. That is the Declaration of Electronic Bills of Lading by which, by the year 2025, 25% of the bills of lading should be electronic. There we are not talking about the saving of the trees for not using the paper, although that is a lot of trees, but we are avoiding sending the bills of lading around by airlines, by mail, etc. We avoid losing them, which leads to a lot of disruption, delays, issuing LOIs, which then in turn leads to a lot of legal disputes, which over time take tremendous capacity out of the industry. So, it sounds like a small step. It's fairly impactful. Another example would be the Blue Vispy Consortium, which is including all related parties, ports, cargo owners, vessel owners, charterer, etc, to optimize arrival times in destination and that can save up to 15%.

So, electronically or digitally improved efficiency is good for the planet and it's good for the wallet. I think that is what you can call a low-hanging fruit.

KNUT ØRBECK-NILSSEN

We talked about the seafarers a little bit but I think it's also close to your heart to spend a little bit more time on the seafarers and how central they are to achieving the transformative changes that we talk about safely, and that embraces from decarbonisation to the emerging technologies.

Ensuring they receive necessary training and a safe working environment is naturally paramount. How can we ensure their involvement and well-being amid all of these changes?

NIKOLAUS SCHÜES

Knut, that is a very, very essential point that you are raising there. The Seafarer Workforce Report, which is issued every couple of years by ICS and BIMCO together, shows that we need 17,902 officers joining the industry every year. That is a lot and we expect a big shortage coming up and also, we believe that this is an underestimated problem of the industry.

There is increasing competition for talent globally. There is increasing skills required with the transformation and the digitalization of ships, and the global war areas etc distract a lot of people from joining our industry. So, we believe that we really as an industry have to take the right steps to attract seamen and what they are, well I think it still starts with fair payment, they have to have a safe and secure environment, they have to have on board good living standards and access to social media. They have, over time, to receive a key worker status. Corona showed that they are key workers but still not every nation has acknowledged that. Maybe most important of all, they need the respect of the public for what they do.

If you look at an airline pilot, everybody respects him and nobody would ever arrest an airline pilot for having found drugs on his plane. If you have a ship crew with drugs on their ship in some countries, they get arrested over years, and that is not what we should allow to happen. So, BIMCO continues to help seafarers receive the visibility and appreciation that they deserve.

KNUT ØRBECK-NILSSEN

Absolutely, they deserve that and thank you to you and BIMCO for raising that issue so high on the agenda. Now, I will turn to my closing question.

We talked about collaboration, we talked about the requirement that transformation really needs an effort from multiple players like shipowners, politicians, financiers, business people, scientists, and as you mentioned also the end consumers. What advice would you give to executives embarking on the first significant step towards decarbonization please?

NIKOLAUS SCHÜES

Well, first of all, let me say that if the executive you are referring to is a ship owner, I hope that he has taken his first steps already. But more generally speaking, you can compare the decarbonization path with a mountain that you climb and you don't climb it because you volunteer, you climb it because you must climb it. Then, the advice would be plan it well, be optimistic, check the weather, which of course is in this analogy the market, and most importantly ask someone who knows the area. Normally, I would now say come to BIMCO and ask the secretariat, but as this is your interview Knut, I'm very pleased to say go ask DNV and I thought you’d like that as a final statement.

KNUT ØRBECK-NILSSEN

What a great way to end this podcast Niko. Thank you so much for taking part in our podcast and sharing your insights and not least, you know, again, congratulations on your 200 year anniversary, which is remarkable.

NIKOLAUS SCHÜES

Congratulations to 160 years, Knut.

KNUT ØRBECK-NILSSEN

Thanks for joining us, Nico. Great to have you. Thank you.

NIKOLAUS SCHÜES

Thank you. Bye bye.

REMI ERIKSEN

You've been listening to Trust and Transformations - Leaders navigating change, a DNV podcast. Head to DNV.com to hear more episodes of Trust and transformations or subscribe on your favourite podcast platform so you'll never miss an episode. Thanks for listening.