Dr Loukas N. Barmparis: "The global shipping industry is at a stage of transformation"

"To meet the challenges of sustainability and innovation, the global shipping industry is at a stage of transformation, embracing technological and data-driven solutions, towards a more sustainable maritime sector," Dr Loukas N. Barmparis, President of Safe Bulkers, Inc. notes.

He was speaking to GOLD magazine, amid the global drive for decarbonisation and the shifting tides of geopolitical tensions.

Below, Barmparis explores how the company is leading the way with sustainability at its core: championing fleet renewal, integrating cutting-edge green technologies and making bold strategic investments to navigate the challenges and opportunities of an evolving industry.

How has the global shift towards decarbonisation affected the dry bulk shipping sector? What initiatives is Safe Bulkers undertaking to address these environmental challenges effectively?

Climate change is already transforming the global shipping industry. To ensure compliance with increasingly stringent environmental standards and regulations, we at Safe Bulkers took early action, investing in environmental upgrades, greener technologies and innovative vessel design to enhance our fleet’s performance, efficiency and sustainability.

As of today, 24 existing vessels have been upgraded. We believe that embracing suitable eco-friendly tech solutions and modernising our fleet and operations will allow us not only to achieve further emission reductions but will also contribute to lower carbon taxes and operating costs. In 2023, we made significant progress in improving our fleet’s emissions profile, achieving a 7.42% annual reduction of its carbon intensity based on Annual Efficiency Ratio (AER) compared to 2022. As part of our extensive fleet renewal programme, we signed contracts for the acquisition of two new dual-fuel Kamsarmax dry-bulk vessels, capable of operating with methanol and fuel.

When powered by green methanol, these vessels can produce close to zero GHG emissions based on the life cycle assessment (LCA) methodology well-to-propeller (WTP). Like all our newbuilds, these dual-fuel vessels are designed to meet the future requirements of the IMO regulations and especially those relating to the reduction of greenhouse gas emissions (EEDI - Phase 3), as well as those related to nitrogen oxide emissions (NOx-Tier III).

Following the recent deliveries of our first eleven Phase 3 newbuilds, Safe Bulkers has an outstanding orderbook for seven newbuild dry bulk vessels (EEDI - Phase 3, NOx-Tier III), including the aforementioned dual-fuel vessels, with prompt scheduled delivery dates, one in 2025, four in 2026 and two in the first quarter of 2027. All the newbuilds will fly the quality Cyprus flag, enhancing the Cypriot Registry with the most advanced green ships of the global market.

In terms of sustainability and innovation, how do the strategies employed by European shipping companies differ from those of their counterparts in Asia and the Americas?

Shipping is an international industry and shipping companies operate on a global scale subject to international competitiveness and global market-based regulations. To meet the challenges of sustainability and innovation, the global shipping industry is at a stage of transformation, embracing technological and data-driven solutions, towards a more sustainable maritime sector.

As a frontrunner in sustainability and innovation, the European shipping sector is leading the way by implementing a series of bold measures, green initiatives and financial incentives to reach net-zero by 2050 and ensure the industry’s future competitiveness.

Many European shipping companies are already executing robust Environmental, Social and Governance (ESG) strategies, investing heavily in ESG-related initiatives and policies while rating and disclosing their sustainability performance in integrated reports. Every year since 2020, Safe Bulkers has published its annual Sustainability Report in order to better inform its stakeholders on the company’s approach and performance on ESG matters.

What are the highlights of the latest Sustainability Report?

It describes in detail actions in all three ESG aspects, noting the previously mentioned 7.42% annual reduction of our fleet’s carbon intensity, the return of a fair share to society through scholarships (including 10 annual scholarships for maritime studies abroad and five annual scholarships to students enrolled in the four-year Nautical Science programme at the Cyprus Maritime Academy), donations, such as a special speedboat for Cyprus’ search and rescue operations in the broader region, and other initiatives including the continuous upgrade of our governance framework, the capstone of which is the formation of an ESG committee at the level of the Board of Directors.

At the same time, we have been working actively to improve our operational efficiency by investing in the latest environmental technologies and ship designs to further reduce our environmental footprint.

How important are new technologies to Safe Bulkers?

We stay informed about emerging technologies while continuously assessing, testing and implementing tech solutions for better operations, more efficient decision-making and increased cost-efficiency within our company. Our ongoing installation of data collection and analysis systems is a significant asset in our company’s digital transition.

However, to successfully implement these digital tools, we recognise that cybersecurity is essential to safeguard and secure our operations and data. We have placed control systems on board our ships and in our offices to ensure the safety, efficiency and continuity of our businesses and we are continuously alert and educating crew members and shore personnel through continuous training to ensure that cyber risks are properly identified, assessed, monitored and reported.

How is the global imbalance of supply and demand for dry bulk commodities affecting shipping routes and strategies?

The dry bulk shipping industry is inherently cyclical with attendant volatility in charter rates, vessel values and profitability. While for a large part of 2024, the dry bulk market remained firm, driven by strong cargo demand in certain vessel segments and commodity trades and longer sailing distances due to the rerouting of vessels from the Red Sea and the Panama Canal, in recent months the charter market has weakened, mainly driven by geopolitical uncertainties and potentially increased restrictions in trade through tariff implementation. However, on the supply side, the fundamentals remain supportive to freight rates.

The restrained fleet growth, the slowdown in scrapping of older vessels and the healthy orderbook may lead to tighter supply dynamics that favour the fundamental balance. While in the short run there might be some uncertainties, in the medium and long run, we remain optimistic about the market outlook and the performance of our stock on the New York Stock Exchange (NYSE). In the meantime, we believe that the resolution of the ongoing geopolitical tensions, along with the normalisation of trade flows, may be positive for the long-term balance of the market.

How is Safe Bulkers positioning itself to remain at the forefront of this ever-evolving industry?

As we continue to grow, we are confident about the future prospects of our company. Safe Bulkers has a strong foundation, which combines a great team of people, a modern fleet with high specifications and long-lasting world-class partnerships, as well as a solid corporate strategy, on which we can build further and evolve, capitalising on new opportunities and delivering profitability even in volatile markets.

Safe Bulkers has invested – and will continue to invest – in its environmental agenda, taking sustainable long-term investment decisions that will help us to ensure our business resilience and competitiveness for decades to come. To deliver on this, we are focusing on our comprehensive fleet renewal programme – ordering new modern vessels or acquiring younger secondhand vessels and selling older ones – and on our continuous efforts to assess new technological solutions leading to the further environmental upgrade of our fleet or to explore innovative solutions for further reducing CO2 emissions through carbon capture technologies.

At the same time, we aim to maintain a comfortable leveraged balance sheet with strong liquidity, directing our free cash flows partially to our investment programme and partially to reward our shareholders. From a position of stability with low leverage, substantial liquidity and hands-on operational efficiency, we are prepared even for uncertain future market conditions, ready not only to address any future challenges but to try and capitalise on new opportunities that may arise.

This interview first appeared in the December edition of GOLD magazine. Click here to view it.