The recent cold weather in Texas was certainly an attention-grabber for me; happily- folks I know in Houston and Austin were inconvenienced- but that’s about it. Happily, nothing catastrophic impacting any of my pepes. In trying to delve into what happened, or rather- did not happen, I tried to think about what the role of maritime shipping interests is, in relation to settling policies on energy. The answer seems to be “not too much”- it struck me that the loading flange is way at the terminal end of all manner of pipelines. But Texas is the epicenter (or it was, up until about a year ago) of the burgeoning crude oil export business. Exports of LNG will take longer to be built out, but, again, gas pipelines end someplace- and liquefaction is the last stop, in some cases. Economists who look at the structure of energy distribution (and especially the distribution of electricity) have talked about “natural monopolies”, “centralized planning”, and “managing capacity”- words and phrases which could cause shipping market professionals (trying to get their heads around “market-based measures”) to cringe.
One of the big themes for 2021 is going to be the infusion of “digitalization”; my big headscratcher one night when I was watching the news broadcasts is how frequently shipping seems to be on the receiving end of supply disruptions. And, again, as the mind is prone to do around news time, with the assistance of a delicious Chardonnay, I was wondering how the maritime business could be getting better information earlier on- about upcoming moves of cargo. There have been some data gathering efforts, mainly on the tanker side. Usually, these are shrouded in mystery due to a mixture of proprietary secrets and hype- but, anecdotally, short term decision making has been enhanced, with positive results.
On the various conferences and presentations on the “decarbonization” circuit, now a mainstay of any discussion of finance, it is abundantly clear that slow steaming and altering vessel speed will be a big part of shipping’s strategies to lower its carbon output. Certainly, this is true for the next decade, out to 2030, or until some real alternative fuel and supporting infrastructure comes along. So again, I get back to centralized solutions. I know that it would be impossible to put some “speed czar” behind a curtain, a la the Wizard of Oz. But in listening to some of the Texas energy experts talking about improving coordination in transmission networks, I could not help but think about my “optimizer” friends each handling different pieces of a very fragmented jig-saw puzzle that is shipping.
In listening to the finance discussions, there are different views on who will pay. Again, from my Texas energy experts, it sounds like there is some capacity management, with private interests paying and recouping all or part through the rates they receive. In the Lone Star State, the industry (not the government) makes the investments. There are lessons here where alternative fuels are concerned- on the path we are on, the innovations- including alternative fuels, will come from the industry. That’s very clear, and it’s happening now. But, not wanting to cringe, I recognize the challenges in bringing big solutions to a fragmented business. In the meantime, the data scientists have a lot to offer.
For now, and maybe for quite a while- vessels will slow down, without a central Wizard to coordinate all the voyages. Happily, the temperatures in Texas have warmed up, but the all digitizers should be thinking about the different shades of “capacity management,”- putting information to work, and getting out ahead of disruptions, and all those dramas on the evening news.