The Impact of Growing Local Regulation in Shipping
By Jacob Damgaard, Head of Loss Prevention, Britannia P&I Club
In recent years, the shipping industry has witnessed a significant increase in local legislation coming into force. This trend is particularly evident within environmental regulation, where many countries have adopted stricter air and water quality standards than those agreed upon at the international level. While the transition to green energy and achieving net zero emissions is a necessary and commendable goal, the proliferation of local legislation adds complexity to the already challenging task of operating ships internationally.
A good example of this is the regulation surrounding Exhaust Gas Cleaning Systems (EGCS), more commonly known as scrubbers. These systems are permitted under the MARPOL Convention as an alternative means of complying with low sulphur emission limits. To meet the requirements introduced in 2020, many shipowners made significant investments in installing open-loop scrubber systems on board their vessels. However, there has been an ongoing debate about the environmental impact of open-loop scrubbers, which discharge wash water directly into the sea. This has led to an increasing number of port states banning the use of open-loop scrubbers within their jurisdictions.
As a result, shipowners are being forced to either use more expensive low sulphur fuels, which they had hoped to avoid by installing scrubbers, or invest further to retrofit their systems into closed-loop configurations. This constantly evolving regulatory landscape makes long term planning difficult, as there is a persistent uncertainty about whether today's investments may become obsolete tomorrow, potentially resulting in financial losses.
Beyond the financial implications, the rise in local regulations also increases the administrative burden on the shipping industry. Keeping track of varying and frequently changing regulations, and understanding how they are enforced, presents an ongoing challenge. In some jurisdictions, a lack of transparency makes it particularly difficult for shipowners to interpret the regulations accurately and understand how they apply to vessels calling at their ports. While shipowners often rely on appointed agents or correspondents for guidance, even these professionals may sometimes struggle to maintain a complete and up to date overview.
Additionally, the growing number of local regulations can place added pressure on the master and crew, who must interact directly with local authorities during port calls. Non-compliance with local requirements can lead to costly fines, and in some instances, legal action against the master and crew. Such situations can be highly stressful and unpleasant for the individuals involved. Therefore, it is essential that Members have robust systems in place to ensure the master is provided with all relevant information before entering a port. This should also include necessary training and clear work instructions so that the crew is properly informed about the regulations and knows how to comply.
At Britannia P&I, we aim to support our Members in navigating this complex regulatory environment. With the help of our global network of local correspondents, we strive to stay informed about upcoming regulations. However, we acknowledge that we can only cover a fraction of the everchanging regulatory landscape, and local legislation can change at short notice. For this reason, it is crucial that Members closely monitor the current situation and always consult their local agent or representative before arrival.
Therefore, as the shipping industry continues to operate on a global scale, a regulatory framework that balances national priorities with the need for international harmonisation would be highly beneficial. Such an approach would help safeguard global trade and promote a safe and efficient shipping environment.