Sustainability for the tanker sector is a key concern for the Blue MBA*

By Irene Rosberg,  Programme Director, Executive MBA in Shipping and Logistics (The Blue MBA), Programme Director, Blue Board Leadership Programme   (BBLP), Copenhagen Business School

When Yemen’s Ansar Allah movement, commonly in the West called the Houthis, began in late 2023 firing missiles at merchant ships in the Red Sea, maritime analysts did not immediately reach for the keyword “sustainability.” Before long, though, the financial, operational, and environmental costs of ship diversions drove sustainability impacts high up the agenda.

Anyone involved in global shipping, trading and associated services needs sharp visual acuity to read the markets, but more so be equipped with an intellectual toolbox to read the underlying – and long-term — challenges of their sector. It goes without saying that the tanker market with its fluctuating relationship with global fuel needs, is always in the forefront of the whirlwind of unexpected changes.

This is why sustainability is at the heart of the renowned Blue MBA – the Executive MBA in Shipping & Logistics at Copenhagen Business School, a two-year part-time course setting the highest standards for senior managers. Sustainability is the prism through which a holistic approach to tackling the issues of today – and those that may spring up tomorrow – is inculcated.

The industry needs people in leadership to come up with clear and practical strategies to deal with the economic tensions and regulatory challenges, and with the reverberations of geopolitical conflict.

Just look at the volatile tensions that are ruffling the tanker market right now. There are upsets in two key theatres of operation: the Russia-Ukraine conflict with its continuing shocks and physical risks, and the Red Sea crisis which has meant average additional costs of nearly $1m per voyage for re-routing via South Africa, with the doubling of transit times between Asia and northwest Europe. Ships that increase speed to compensate for the deviation consume more fuel and emit more CO2. The uncertainties are threatening to upend indications just a short time ago that both crude tanker and product tanker demand would rise in 2024. Crude oil supply is now expected to go down.

The world’s second largest economy, China, is forecast to slow in 2024. A perhaps longer-term worry is that any outbreak of piracy or military hostility affecting the Strait of Malacca would threaten the flow of oil imports into China.

At the same time, everyone in the market needs to be alert that trading patterns will be affected by regulations which have been in force for just over a year to apply the Energy Efficiency Existing Ship Index (EEXI), a carbon design/technical efficiency indicator to ships of 400gt and above and require carbon intensity reduction through the Carbon Intensity Indicator (CII). Vessels that cannot show compliance may be unable to trade internationally.

The push comes at a time of growing influence of investors declaring support for Environmental, Social, and Governance (ESG) principles with their strong message of sustainability.

The conclusion is that today’s leaders need to grasp the basic skillsets centring on the above tests, plus digitalisation, marketing, and IT if they and their organisations are to thrive – indeed to survive.

All this is not to mention natural disasters such as hurricanes, flooding and wildfires that may cause prolonged disruption to the ability of ports to handle ship calls.

The Blue MBA, which since 2001 has established a strong track record, is deeply aligned with the industry at large, and prides itself on its diversity of nationalities and its top-level coaches and lecturers. Modules are made relevant to the specialities of candidates, and there is what is known as a final Integrated Strategy Project for which each person writes an in-depth study that defines a strategy for addressing a concern within their organisation. And of special value are the trusted networks of present and former Blue MBA participants.

For more information please contact: Irene Rosberg, ir.mba@cbs.dk

Website: www.cbs.dk/bluemba

*First published in Tanker Shipping & Trade, February-March Edition