Living in uncertain times -

Living in uncertain times

01 Feb 2021

Interview with George Procopiou, Founder of Sea Traders SA, Dynacom Tankers Management Ltd, and Dynagas Ltd

We live in difficult and strange times where there is effectively no ‘present’. It is difficult to make predictions. Much depends on the eventual vaccine or treatment discovery. After 9 months, we are more experienced in dealing with pandemic related problems. We have faced anomalies with crew changes, inspections, and entering ports. Despite this difficult time, we took delivery of two vessels. 

The uncertain times we are going through present both threats and opportunities. Container trading volumes have increased because of e-commerce, for example. The tanker industry had a pleasant surprise, as the competition between the oil producing states and companies paired with the drop in demand created a need for transport and storage. This resulted in very high rates for a period, which now have dropped again considerably. It is uncertain what will happen tomorrow. 

It is my belief that the discrepancies between the production and the budgets of oil producers and nations create unwanted friction and eventually oil production will increase. I believe that oil is overpriced, and I expect that its price will adjust downwards. 

Natural gas is the big competitor. To put things into perspective, for an equivalent energy content, the price of LNG is almost half the price of oil. Either the gas price has to go up or the oil price to go down.  My feeling is that the oil price will go down as the production of gas is increasing everywhere in the world, with many new installations. 

A very important question for the industry is: what is the fuel of the future? This is another mystery. We hear about ammonia, hydrogen, batteries, some sort of combination but I do believe that for the time being oil is the dominant fuel and it will remain so. 

LNG is the second-best alternative, especially for fixed trading routes. 

The trends in the shipping industry always seem to centre around environmental issues which we take very seriously. We have to protect the environment in a realistic manner. However, the desirable and the doable are far apart. We have to proceed with the doable and not the desirable. 

We should envision the desirable, but we have to be realistic and focus on what is actually doable when making regulations or issuing rules. For the time being, the most effective and doable way of reducing greenhouse gas emissions is the reduction of speed. 

By reducing speed, you have a huge reduction in fuel consumption and therefore, emissions of SOx, NOx, CO2, and particulates. I can understand the need for sensitive cargo to be transported at higher speeds. However it is hard to understand why finished goods like TVs and dishwashers need to be transported in container ships running at a speed of 20-23 knots when two container ships operating at 11 knots consume, on aggregate, less than half the fuel consumed by one container ship operating at 23 knots. 

Why should iron ore, crude oil, grains, coal, alumina etc. need to be transported by vessels built according to designs optimised to operate at a speed of 15 knots and create twice the pollution compared to the aggregate pollution created if the same transportation work was carried out at a speed of 10 knots (this, also accounting for the 1.5 additional vessels needed!). 

I don’t believe in scrubbers and polluting the sea instead of going through the natural cycle. I don’t blame my colleagues who have installed scrubbers. They made a financial bet. As you hedge on various currencies, they have hedged the differential of the price of low sulphur content VLSFO and high sulphur content HSFO. 

This bet was initially seen as favourable because of the price differential at $350 per ton. In reality, this differential is close to $50 as I predicted and will soon be reversed. The high sulphur HSFO will be more expensive than the low sulphur VLSFO. This will happen because 95% of the volume that is traded is on vessels that consume low sulphur fuel rather than high sulphur fuel and thus the suppliers and refineries will keep catering to the 95% and not the 5%. 

Additionally, I believe that it is the governments’ obligation to ban the production of high sulphur fuel as they did with gasoline a few years ago. This would be an obvious solution, as ships are not refineries, nor is it the truck drivers’ (ship owners’) obligation to improve their engines and do things that are not their business. The IMO has to set the permissible emission levels per ton-mile of cargo transported for the various types of vessels. 

The engine builders and shipyards should be the parties with the responsibility to meet the new standards, coming up with new ship designs, more efficient engines with lower installed horsepower, and hull forms and propellers optimised for lower speeds in order to drastically reduce their fuel consumption rather than forcing ship owners to adopt doubtful methods in order to comply in an unrealistic time frame. 

I hope that at the end of the day major stakeholders could show the IMO the obvious, which they pretend not to see. I don’t believe we will see ammonia fuelled ships - at least not in my and my daughters’ lifetimes - and we don’t believe in hydrogen or battery ships either. Their wide adoption in the near future is fiction, in the sphere of the desirable and not the doable. 

Environmental regulations should focus on the doable and realistic. The fiasco of water ballast treatment or scrubbers should never be repeated. Now, they are talking about scrapping scrubbers only 9 months after having them installed! This entails a huge waste of energy and additional creation of pollution all over the place, without any results. 

I would suggest to the classification societies and owners to focus on the doable and to take the necessary measures where we can, when we order a new ship. 

If you were to ask me what ship to order tomorrow, I don’t know. This is partly why the shipyards currently have no business. That may be good news for us as an owner, but it is not good for humanity. We will see the pendulum swing from one extreme to the other and back again. 

Shipping is a global business; we go wherever transportation is needed. Exporting nations are located in the Far East and importing nations are mostly in the West but, depending on the kind of export, this trend is reversing. There are energy-related cargos like coal, crude oil, fuel oil, clean petroleum products, LNG, LPG, then minerals, grains, steel products, containers, which are in need of transportation all over the world. 

In terms of classification, RINA is becoming an increasingly important society and, as Greeks and Italians are always very close, we believe there will be more opportunities where RINA’s expertise and capabilities that can be used. Dynacom is satisfied with, and continuously increasing, its collaboration with RINA. 



Mr. George Procopiou is the founder of Sea Traders SA, Dynacom Tankers Management Ltd, and Dynagas Ltd. Holding a degree in civil engineering from the National Technical University of Athens, Mr. Procopiou has managed over the years a shipping fleet in excess of 500 vessels since first entering the shipping business in 1971 by purchasing one third of a vessel. He has served as Chairman of the North of England P&I Association and is currently Chairman of the Hellenic Committee of Bureau Veritas, Chairman of CCS Mediterranean Committee, as well as a member of the Greek committees of DNV GL, Lloyd’s Register, ABS and RINA.