The Summary of the SeaFocus 2009

SeaFocus 2009 - article was published in "Changing Winds" - UnitedLog Consulting yearbook 2010

The goal of the seminar was to discuss how to face and turn to our benefit the different challenges that the environmental issues, growing need for energy efficiency and the current financial crisis have created in the sector. In September 2009 experts in sea trade from Finland and abroad gathered in Helsinki for the third annual Sea Focus Seminar organized by UnitedLog Consulting Finland in collaboration with Finnlines Oyj and Nurminen Logistics Oyj.

When opening the seminar, Martin Saarikangas, the Chair of the Seminar and the founder of the shipbuilding company Masa-Yards, stated that he is feeling positive about the future with signs of both the European and the US markets picking up. In Saarikangas’ opinion it is only a matter of time before the Russian market will start to rise again and it would be important to Finnish companies to use this time to prepare and nurture our relationship with our major trade partner and neighbouring country to gain competitive advantage in relation to the other countries interested about Russian trade.

Environment

The organiser, UnitedLog Consulting contributed with a simulation case of possible accidents in the Gulf of Finland, which is one of the most sensitive maritime environments in the world. The simulation was based on statistics of previous accidents, traffic volumes and published growth scenarios. With dynamic simulation probabilities and random patterns of occurances can be illustrated much better and in a much more visual manner than using static models.

UnitedLog Finland’s CEO Johan Hackman and Simulation Expert Markus Thulin from UnitedLog’s simulation office in Helsingborg described the model and run a visual presentation of traffic flows in the Gulf of Finland over the next 25 years. Based on the number and types of accidents predicted to occur some conclusions were made.

The very random occurance but quite large impact of accidents related to oil tankers would suggest proactive action to be much more effective than reactive measures. Also very different accident patterns were identified in different scenarios based on whether the frequency of occurance or the size of accident was altered. Based on this it became quite clear that measures only in technology (reducing the size of the spill) would be much less efficient

than action aiming at improving navigation and vessel technology and processes. The combined effect based on the simulation would be several times better than improvements in only one of the areas. To illustrate the effects of a hypothetical severe accident, the John Nurminen Foundation had prepared and presented a multimedia show of possible effects of a tanker accident.

Markku Mylly, Director General from the Finnish Maritime Administration, presented different ongoing maritime safety projects in the Baltic Sea-region. Traffic in the Baltic Sea is growing at a fast pace. It is estimated that for example oil transportation in the Gulf of Finland area is going to develop from about 150 million tons, to 200-250 million tons in the year 2015. Several measures have been taken to limit the risk of accidents on the Baltic Sea, for example the use of VTS (various monitoring systems) centres and GOFREP (Gulf of Finland mandatory ship reporting system).

Juha Nurminen, Chairman of the Board of John Nurminen Foundation and Nurminen Logistics Oyj, talked about the current state of the Baltic Sea and how the sea can be saved with proper action. Nurminen also illustrated the work done by John Nurminen Foundation to help preserving the Baltic Sea.

The Foundation goes from words to action with a target to help reducing the amount of phosphorus getting into the Baltic Sea by 2500 tons with their waste water treatment plant projects in St Petersburg, Poland and other Baltic states. Nurminen had a message to the politicians calling for new more stringent norms to be set for the phosphorus emissions in the Baltic Sea area. He continued saying the current EU requirements may be sufficient for the Mediterranean and the Atlantic ocean, but are insufficient for the shallow Baltic Sea.

Nurminen also talked about the Foundation’s Oil Tanker Safety project in the Gulf of Finland, which aims to increase marine safety of oil tankers by focusing on prevention by planning and actions in navigation and safety management practices.

Continuing on the issues of environment, Jarno Hellman, Director at Lassila & Tikanoja Oyj talked about the importance of the environmental image of a company. Mr Hellman explained that there are no shortcuts to building a good environmental image. Analysing the current stage of the company’s image, the importance of setting goals and a proper strategy, competent monitoring and feedback are all important parts of the process. For the Environmental Image to have a positive effect, it needs to be credible and based on concrete actions; generally known and communicated in an effective and professional manner and constantly developed.

Energy

In his presentation, Mikael Lilius from Fortum Oyj explained that though global recession has temporarily lowered the energy demands and use, the future will see growth in both the demand and the price of energy. Lilius sees no dramatic new solutions in the horizon for the curbing of emissions and fossil fuels will continue to play a key role in the way energy is produced. Current predictions are for a huge growth in Energy demand; by 2030 45% in energy and 80% in electricity (Source: IEA World Energy Outlook 2008 (The Reference Scenario)). Fossil fuel based energy will most likely continue to cover around 80% of the global need for energy in 2030.

To stop the acceleration of global warming fast action is needed, Lilius stated. The Baltic Sea region faces all the same global challenges with the additional challenge of cold weather and need for heating. High efficiency combined heat and power (CHP), production, increased use of biofuels and nuclear-CHP, together with energy efficiency, are all excellent, climate benign solutions in the Baltic Sea region.

Lilius continued that nuclear is one of the key technologies for climate change and mitigation nuclear power is a cost-competitive power production method which in a life-cycle comparison has CO2 emissions just as low as the renewable energies wind, hydro and solar power. These renewable options are also needed in building a sustainable energy future although current high costs and lack of policy harmonisation hinder their development. He reminded that we have to face the fact that demand will grow and need to act now with common direction and targets, but not necessarily with common solutions. He called for common rules for a common market. The target should be a harmonized market oriented support scheme in the whole EU.

Branch director Heli Antila from Pöyry Oyj, talked about the Carbon footprint as part of a global business strategy. Antila emphasised that the importance of environmental issues is constantly growing as an influencing factor of consumer behaviour.

She also advocated for transparency in communicating the information of a company’s carbon footprint and warned that if not done correctly it could turn against the company. Climate strategy should support the companies overall business strategy. The climate and energy issues of businesses have in many cases become the cornerstones of internal and external communications. Antila also added that effective tools for reducing the carbon footprint and becoming more energy efficient already exist; they just need to be implemented.

Erkki Kotiranta, Director, Neste Oil Oyj presented important factors in building a competitive and dynamic shipping industry are the know how and organization. Since all businesses are bound by the same regulations, the individual knowledge base and skills are where one can stand out. More hardware can always be purchased, but human skills and a talented workforce is a valuable investment. He also stressed the importance of the current research to support innovation and the needs of the business sector not only research for research sake.

Economy

Finnlines CEO Uwe Bakosch presented Finnlines’ operations, and shipping as an economical and environment friendly transport mode. He pointed out that the global transport sector stands for 27% of CO2 emissions. Out of that 27% shipping, however, only represents 12%. Bakosch also showed through a practical example the cost benefit of the shipping mode versus land transport. Additionally he described some major challenges within Baltic short sea shipping, the dramatic fuel sulphur restrictions in the near future and the ongoing structural change in cargo flow balances.

The Managing director of Aker Arctic Oy, Mikko Niini, reminded that some of the world largest reserves of natural resources can be found in our backyard in the Arctic Ocean and these days the off-shore oil and gas platforms form the backbone of their business. There are still a lot of basic things to be done to improve energy efficiency in shipping. In some cases the environmental issues are starting to have influence over the commercial interests. The fear of an oil catastrophe could lead to the return of nuclear powered ships in the protected, sensitive arctic areas in the future.

Ole Johansson, President and CEO of Wärtsilä Oyj Abp stated in his presentation that though sea fright still is the most efficient way of transport it is important to strive for technological development. There are no conflicts between emission regulations, economy and technological development.

 

Johansson spoke for the importance of omptimized systme integration which would provide significant efficiency improvements. Successful introduction of new technologies could happen only with the support of ship owners through early adoption and testing of innovationsHe also provided some examples for cutting fuel consumption: In ship design the use of air lubrication would lead to savings in fuel consumption of up to 15% for a tanker. In propulsion, wind power using Flettner rotors could provide up to 30% annual savings in fuel consumption. In machinery waste heat recovery of the exhaust fumes can provide up to 15% of the engine power with the potential of new designs saving up to 20%. In operations the shipping industry should learn from the aviation industry: effective voyage planning and weather routing could save up to 10% annually in fuel consumption.

 

 

 

 

Johan Hultkrantz, Managing Director of Hultkrantz Placeringsmäkleri Ab Oy, has been an independent financial adviser since 2002. Hultkrantz started his presentation with two "test questions" to the audience. 1) What do you think that the return per year in % has been for the general shipping sector? 2) How many per cent of the whole world's market value in stocks can be connected to shipping? The spread of the answers from the audience was big but one answer was close to the correct + 2,3 % p.a. The answer for question number two was 0,18 %, considering what keeps the world business running, the number is astonishing, isn’t it.

Sam Olin, Managing Director of Odin Rahastot presented the maritime industry being an interesting branch for investing. Odin Fund Management manages the only maritime fund in the world, Odin Maritim. Odin has been investing in the maritime industry since the early 1990’s. The maritime industry has not been one with a large interest among global investors due to the fact that maritime companies only stand for 0,18% of the MSCI world index. Sam Olin felt that this along with other factors makes the industry one with good opportunities for niche managers like ODIN.

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