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Q&A with Lars Robert Pedersen, Deputy Secretary General, BIMCO

In a nutshell, how would you describe the main role of BIMCO?

BIMCO is a direct entry membership association spanning 130 countries. Owner members control around 60% of the global merchant fleet by deadweight. Membership furthermore comprises brokers, agents, P&I Clubs, national shipowner associations, classification societies, equipment makers and other entities with a vested interest in shipping.

The role of BIMCO is to provide practical solutions in an ever more complicated world. BIMCO is the practical voice of shipping. Implementation of rules and regulation is often complicated and requires dedicated contractual solutions to work. Helping our members doing their business is central to the purpose of BIMCO, while maintaining open access to markets and fair business practices.

 

What is the biggest challenge facing BIMCO today? A clever person said that you have to disrupt yourself before someone else disrupts you. That is in many ways true as the world around us changes in an ever more rapid pace. Digitalisation is entering the world of shipping and the business models and practices are not immune to this changing world. BIMCO is working hard to facilitate the changes which are upon us as an industry. Not changes for the sake of change but change which means improvement to efficiency in terms of how business is conducted.

Staying relevant for our members is our top priority.

 

What do you see as the biggest issues currently emerging in shipping?

No doubt the challenge of our lifetime is tackling climate change. This goes for shipping as well and being a hard-to-abate industry, the challenges are not easily overcome.

This does not mean that we have no idea on how to decarbonise the industry. Rather to the contrary, we have many ideas on how it could potentially be done. To some extent, many options make it harder because each of the options require some dedicated infrastructures to be established and lacking a clear winner on the technology or fuel side makes it difficult and risky for shipowners to bet their fortunes on any one of these.

There is an increasing understanding in the shipping industry that some kind of power-to-X fuel (or e-fuel) will be the solution. These types of fuels do not come cheap and require vast amounts of electricity. This is another enabling factor in our industry’s path to decarbonisation – the sustainability of the electricity going into producing the new fuels. The carbon efficiency of the electricity has to be high for e-fuels to make sense. Actually, the carbon efficiency to produce an e-fuel which is on par with the oil we now burn has to be significantly higher than the average grid efficiency in most parts of the world.

Decarbonisation of the shipping industry is thus not only about availability of the right technology and availability of production and distribution capacity for the new fuels. It is also about decarbonisation of the electric grid ashore. Taking renewable electricity to produce e-fuels for shipping is worse for the climate than using the same renewable electricity to replace coal burning power plants.

Who said it should be easy?

 

BIMCO is renowned for its widely used contracts such as charter parties, bills of lading, etc. How have these changed, or not changed, during the evolution of shipping over the years? 

Shipping contracts have evolved over time. BIMCO started drafting standard charter party contracts already in 1913 and several of our most used contracts have undergone revisions periodically since. The changes may however be small for the untrained eye. The way business is conducted in the shipping industry has remained largely unchanged for centuries. This is because it works and allows business parties across the world to do business with one another on well understood terms.

The modern era is about to change this. Increasingly, the freedom of operating a ship enjoyed by e.g. a time charterer, is being constrained by regulatory operational requirements placed on the ship (and thus the owner). Operational requirement constraining charterers’ ability to conduct their business freely is the legacy right.

This means new terms have to be developed and this is where BIMCO plays a crucial role in shipping. The International Maritime Organization (IMO) short term measure to reduce greenhouse gas (GHG) emissions, the so-called carbon intensity indicator (CII) is causing such change. Literally, as you read this piece, a specialist working group is developing a standard clause for time charter parties to incorporate CII. This is about agreeing to a standard distribution of rights, obligations and liabilities between the contracting parties to allow a ship to comply with this new regulation - upsetting the legacy.

The CII is not a one-time change and we foresee this type of change increasingly becoming the norm.

 

If you could wave a magic wand and change one thing in the shipping industry what would it be?

The shipping industry is so diverse and fragmented that changing one thing in the industry would likely have little impact. However, changing one thing beyond the shipping industry could have a lasting effect for the shipping industry also. That one thing could be how to capture efficiently CO2 from the atmosphere.

 

How did you get to your current role today?

Life never turns out as planned, and luckily I never planned much of my career anyway. Somehow, being born out of a farming family, I chose seafaring. Do not ask me why – it was merely because I had to do something in life, and marine engineering sounded interesting – and it was. After becoming Chief Engineer, the Superintendent job ashore sounded interesting – and it was. So was the regulatory work at IMO, which after 26 years with the largest shipping company in Denmark led to my current job as Deputy Secretary General at BIMCO. In a way a carefully chosen path looking from the outside, but every step was unplanned.

 

If you were not in your current role what would be your ideal job?

I think about that from time to time and most jobs have some attraction to me. Likely because I am curious by nature. I like to be able to do anything. Probably not for long, because I also get bored easily when something becomes routine.

This did not answer the question, and it is likely because my current job is my ideal job. Being able to fuse the technical and practical knowledge for my seagoing career with the skills from the office managing many different ships with imagination and creativity to craft future regulation for ships.

 

What do you like doing when not working?  

As I said, most things in life are interesting and I like doing stuff. Cooking, welding, horse riding, driving machines of all kinds, you name it. I am so privileged to own a small farm where my selection of tools come to good use. This is where I spend most of my time not at work. And, hopefully soon getting back on my snowboard.

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