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The Red Sea crisis and sanctions with Mike Salthouse from NorthStandard

In this episode of the Seatrade Maritime Podcast we focus on P&I risks and the Red Sea Crisis and navigating the complexities of international sanctions and shipping.

Join Gary Howard, Seatrade Maritime News Correspondent, in conversation with Mike Salthouse, Head of External Affairs for NorthStandard.

The discussion includes:

  • P&I considerations for transiting the Red Sea
  • Balance between risk and contractual obligations in transiting high risk areas
  • War risk insurance
  • Secondary sanctions concerns for shipping
  • The parallel fleet
  • Big tech’s influence on shippping

Listen now in the player above or the app of your choice to gain a deeper understanding of these critical issues 

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Episode transcript

Gary Howard 00:08

Welcome to the Seatrade Maritime Podcast. You're listening to Seatrade Maritime News correspondent Gary Howard, and on this episode I talk to Mike Salthouse, Head of External Affairs at NorthStandard.

We discuss the P&I and war risk implications of the situation in the Red Sea, there's a little touch on the parallel fleet and a dive into the impact of sanctions on the maritime industry. Without further ado, I'll leave it to Mike to introduce himself.

Mike Salthouse 00:34

My name is Mike Salthouse, I'm the Head of External Affairs at NorthStandard P&I. NorthStandard is a new P&I club formed by the merger of The North of England and The Standard Club. It is now the largest club in the UK, ensures just under 20% of the world's shipping for P&I liabilities, but also offers a suite of other specialty products.

Gary Howard 00:57

Great, thanks Mike, and being such a large P&I organisation, I guess there's a fair bit of exposure globally, the sort of hot topic at the moment,and I think it's worth mentioning we're recording on the 23 January because we're in quite a fast moving situation in the Red Sea, which is where we're going to touch on first.

I wonder if you could just outline what the P&I considerations are around transiting a region like the Red Sea, especially where there's that safety incentive perhaps to take an alternative route.

Mike Salthouse 01:26

That's a very good question. Actually, the P&I considerations are relatively low in the sense that P&I excludes liabilities for war risks in common with most other marine policies. So, our vanilla P&I product doesn't actually cover liabilities rising out of war risks, which means that we're really just looking at whether the trade is lawful or not, as to whether we provide cover for it. Because the great thing about P&I clubs is they exist to provide cover for all lawful trades. It's not really for us to determine whether a trade is lawful or not, that's left to governments.

So, the only things that would really impact upon that would be where, for example, it was so outrageously stupid to go through the Red Sea, that it would be deemed imprudent. And then it would be really for the directors to decide whether or not the claim arose as a result of the owner's imprudence. And I think we're quite a long way from that. The attacks that are happening, horrific as they are, are not of such a scale and intensity as to mean that you would categorise it as wholly imprudent to sail through the Red Sea.

The other thing that I suppose is relevant is if somebody generally doesn't want to go through the Red Sea and doesn't have a contractual right or some other right to deviate, then I think we get into slightly more difficult territory because that would be potentially an unlawful deviation and that would have consequences for the vessels P&I cover.

Gary Howard 02:50

Sure, and that leads to the next question really, which is one of the legal and operational factors you need to consider before a ship can just turn away from a route like the Red Sea and head for the Cape of Good Hope. Where does the power lie between the shipper and the charter in that circumstance, for instance?

Legal and operational factors to consider before switching routes

Mike Salthouse 03:07

Yeah, I think, it's a more nuanced issue, I think, in the sense that we're now several months into this crisis in the Red Sea, which means that ships that arrive at the Red Sea probably knew that there was a problem in it before they set sail.

So, a number of the contracts which govern which way the vessel should go, or at least have a say in which way the vessel should go, will have been completed with that in mind. And that's really the starting point, is to look at the contract. The contract may require you to go through the Red Sea at one end of the extreme. It may have been concluded at a time when the facts in the situation were known and they said, nevertheless, you will go through the Red Sea. And, when there would be, that would be very unusual, but where there was that sort of express contractual commitment then you'd have very little option but to proceed with it unless things changed so much that you were performing a different contractual obligation to that which you had entered a week or so ago. Alternatively, you may contract to go around the Cape of Good Hope right at the start, in which case, the question doesn't arise.

You're interested, I think we're all interested in the bit sort of in the middle. We're helped by the fact that there is a suite of very well used war risk clauses which, in certain circumstances, would allow you to deviate. I think it's important to emphasise with those clauses, and the contract as a whole, that it has to be considered in light of the events that are actually happening at a particular time. In other words, well, just last night, obviously we had additional attacks by coalition forces principally the UK and the US against Houthi rebels. That, is an action that has probably changed the calculus in some way. It may have reduced the risk if it hit its targets. It may have increased the risk if it prompts some form of retaliation. And everybody just has really to evaluate what the factual situation is on the ground, when considering really whether there is a right to go round by an alternative route, given the circumstances that the vessel is actually facing at a particular time.

It's not a straightforward answer, is it? And I think that's probably the point I would like to get across is you have to judge it by what your contract says and what the factual situation is at the time that decision is being made. What I would say is that arbitrators, if the master's decision is ever called into question, really rarely or are always minded to try and uphold a master who is behaving reasonably on the basis of information before him.

Gary Howard 05:44

Yeah, I guess it's very difficult to draw a line of, where the line of reasonable is when it comes to entering an area where there are missiles flying backwards and forwards.

Mike Salthouse 05:53

And it depends what ship, I mean, there are some ships which have characteristics which the Houthis are particularly seeking out. Now, their information is not perfect. They targeted a vessel carrying Russian oil the other day, which they probably didn't intend to, but equally, vessels that are trading directly to Israel is ones that they have publicly stated they are interested or intending on attacking. And that, again, means that all plays into the reasonableness of the decision within the context of the contractual framework under which the vessel is actually operating at the time.

Gary Howard 06:27

And then increasingly vessels with ties to the US, and I expect to the UK as well, will increasingly come into the firing line.

Mike Salthouse 06:34

Yeah, it's possible. I mean, there are some very good risk companies around and, I was speaking to one of them yesterday, and I think I wouldn't underestimate the amount of additional information they have. And if you are in the predicament of having to make that decision, certainly getting an opinion from them which is supportive or otherwise of the decision that you make, I think would certainly support you in justifying the reasonableness of your decision.

In other words, if you sat there and you contracted with a risk management company, and they say, well, vessels of your type, characteristics and trading pattern are now being targeted directly by the Houthis, that's rather different, puts a different context on your risk, to a vessel that has been told, well, vessels of your type, characteristics are not being actively targeted by the Houthis. And actually there haven't been any instance where one of them has been struck by a missile yet. So, whilst we can't remove that possibility because their targeting isn't particularly good, the risks are much lower for your vessel than one there that is actively trading to Israel where the stakes at risk are much higher.

War risk insurance

Gary Howard 07:43

Just to bring it back to the insurance, we mentioned at the top, war risk insurance is a product that NorthStandard offers and many other insurers as well. For those that perhaps aren't familiar, could you just outline what war risk insurance is and how it interacts with P&I insurance, if it does at all?

Mike Salthouse 07:59

Yeah, I mean the starting point is that most of the marine policies exclude liabilities arising out of war risks. So, whether it's a hull policy or a P&I policy and therefore an additional form of insurance has to be purchased and that can be bought as part of the whole policy or a sort of standalone policy altogether.

I think probably the best way to see war is because it's a sort of fully comprehensive insurance for losses that arise out of an act of war most obviously being struck by a missile, being attacked by a nation state. And it's slightly unusual because it also picks up both the third-party liabilities conventionally covered by your P&I policy and also the whole policy, the physical damage to the vessel. So, if you're looking at it purely from the P&I perspective, you'd find that P&I is excluded. You would be expected to take out a war risk policy if you wanted to cover liabilities that might arise out of being struck by a missile. That only operates up to a certain limit, sometimes the vessel’s value. You can then get your war risk cover, third-party liability war risk cover from your P&I provider up to a fixed limit. There will be exclusions and terms and they will vary depending on the particular conflict in which the accident has actually arisen.

Gary Howard 09:20

I was going to say, I'd noticed the word "nation state" jumped out at me there and I wondered how that would work in relation to the Houthis who perhaps not viewed as such.

Mike Salthouse 09:27

Yeah, I mean, they're still using weapons of war, and obviously the most obvious one is the St. Nicholas, which has been taken I believe by Iran and is lying somewhere off the coast of Iran. So, it's the weapon really that is, I think, the determinant factor. And it also deals with acts of terrorism too. I think the Houthis have just been sanctioned by the United States,  so that would almost certainly bring it within the terms of your war risk policy.

Gary Howard 09:56

Sure. And I think November 19th was when these attacks started in the Red Sea. I wondered what the trend has been for war risk premium since that has happened.

Mike Salthouse 10:04

Well, perhaps unsurprisingly, I mean, the war risk is a very reactive market, and I also think it's a very well-informed market. They have access to very good intelligence to the level of the risk under which ships are operating. So, they will respond as that risk escalates.

I haven't checked the rates today, I don't believe it’s at the same levels as it is in the Black Sea. But certainly, the rates have gone up quite significantly since the crisis started and nor do I think for most vessels it would make economic sense to go around the Cape of Good Hope as opposed to paying the additional war risk premium at the current moment. But clearly, as the premiums go up, there may well come a point where it makes more sense to go around Africa rather than going through the Red Sea.

A reaction in war risk premiums to the lastest attacks

Gary Howard 10:57

And just out of curiosity, we've mentioned already the US and the UK military intervention in the region. There were some last night and on the 12th of January as well. Was there a reaction in the war risk premiums to those attacks?

Mike Salthouse 11:11

I don't know because I haven't checked the rates. I'd be surprised if there wasn't but it may be so I'm speculating here, but I would suggest it's probably quite muted because it's not a new activity.

One analysis you would say, well, that may actually suppress the risk because if the US and the UK are correct, they're actually taking missiles out of circulation that might otherwise hit ships. Alternatively, the other construction might be that it's actually increased risk because it's made the risk of retaliation more likely.

Personally, as I say, I haven't heard what the rates are doing today because our underwriters in Lloyds is not actually in the office. But I would be surprised if they moved too dramatically just on the basis of that attack last night simply because it's already happened and I don't think there's any greater likelihood of an attack by the Houthis simply as a result of that raid last night.

Gary Howard 12:05

Sure, do you recall if those initial attacks by the US and UK in January 12th, caused any movement on the war risk premiums?

Mike Salthouse 12:12

I believe they did, but I'm not a war risk underwriter but I believe there was a reaction because obviously that was something which escalated the situation.

Secondary sanctions – what are they and how they impact the trade

Gary Howard 12:22

Moving on, but not too far away,I think a lot of our listeners would probably know you for your work on sanctions. Certainly, I've interviewed you on sanctions before and I remember an interview that I heard with you last year about the rise of secondary sanctions, this was specifically between the US and Iran and how they affected shipping. Could you outline what a secondary sanction is to start off with and then why they're in position as perhaps a worry for trade and for shipping?

Mike Salthouse 12:50

Yeah, so secondary sanctions are sanctions which affect those who are not subject to the primary jurisdiction of the issuing state. So, they're most heavily used by the United States and they're used specifically, most obviously in relation to Iran, but also to a lesser extent in relation to Venezuela and Syria, less so in Ukraine.

But the effect of a secondary sanction is that it targets people who are not necessarily US citizens but who nonetheless are conducting activity which may well be lawful under the laws that regulate them. So you could be, for example, I don't know, a British shipowner that's not subject to American jurisdiction or a British insurer that's not subject to American jurisdiction. But if you conduct a trade activity that runs contrary to US law, then you may be subject to some form of penalty. That penalty could take the form of designation or it could take the form of a direction to US banks and other financial institutions not to conduct certain types of activities with you.

And because the US dollar is the currency that all shipping uses, they are very effective. I'm subject to UK jurisdiction, I'm a UK citizen,the UK can put me in prison and it can find the company that I work for. The United States can direct US banks to stop dealing with us. And you can see what the effect is because if we were designated, US banks could not deal with us. So NorthStandard wouldn't be able to receive premium in US dollars and it wouldn't be able to pay claims in US dollars. We would simply go out of business. So that's what secondary sanctions are and that's why everybody's very nervous about them.

I think the other point I'd make about secondary sanctions is that if the UK was going to prosecute me with a view to sending me to prison because I've been breaking sanctions, they would have to go through a formal court process. There is no real equivalent when it comes to secondary sanctions for the obvious reason that the target of those secondary sanctions isn't within the jurisdiction. It's not submitted to the courts of that jurisdiction. So, it's much more based on probably an intelligence led assessment as to whether a particular vessel, company or whatever has been conducting activities which run contrary to whatever US law it happens to be. And that, I think, is,p one of the less satisfactory aspects about that form of sanction.

Gary Howard 15:24

And then what are the recent trends in secondary sanctions? And do you suppose that the renewed focus on Iran as a proxy player in the Red Sea, does that increase the chance of more targeted sanctions to try and affect outcomes in the Red Sea?

Mike Salthouse 15:39

That's a really good question. I don't know and I suspect the people who actually have the power to make those decisions probably don't know either yet, and I'll explain why.

We all know that we've started 2024 with a raft of conflicts and problems, starting most obviously with the war in Ukraine then the war in Gaza and the resultant sort of discord and disruption that that has caused. Now, I suspect that the war in Ukraine remains for much of the West the sort of dominant foreign policy issue. And restricting Russia's earnings from oil is probably one of the number one priorities. If you started to target through secondary sanctions Iranian oil, again aggressively, that may push the price of oil up, that may allow Russia to earn more for its own oil than it has otherwise been doing.

I say this simply because the law hasn't changed in relation to Iran. And there is no way that people who are subject to the EU, UK, United States can really lawfully engage in the Iranian oil trade. The US targets it directly. UK and EU have significant terrorist designations around the people who are involved with much of it. So, the fact that it's increased and there hasn't been a sort of concerted effort to sort of shut it down puzzles me, somewhat. And I can only assume that it's because it's in the overall interest to ensure that there's a stable supply of oil to markets. At the moment, I'm well out of my comfort zone in that but we're seeing more exports of oil from Iran than any time since modern day sanctions against Iran were introduced back in 2010. The last time I looked was about 1.1 million barrels per day. If states started to turn their attention to that I'm sure there's more that they could do. But at the moment that just seems to be being mildly tolerated for want of a better word, whilst the primary focus appears to be on Russian oil exports.

The rise of the parallel fleet

Gary Howard 17:56

And those Iranian exports, I'm guessing are mostly by ship.

Mike Salthouse 18:01

Yeah, I think the majority probably are, yes.

Gary Howard 18:03

Which must, as an insurer, raise its own issues.

Mike Salthouse 18:06

It depends if they're going on our ships or not.

And one of the things that we're starting to see increasingly is the rise of what we would call the parallel fleet. There are other phrases for it, dark fleet, shadow fleet, grey fleet, but I prefer the term parallel fleet because that more accurately reflects what it is and that is the growth in the number of ships that are owned, serviced and traded beyond the reach of Western EU G7 economic sanctions. And if Iran wants to ship oil on a vessel that is not subject to US law that doesn't access the US dollar, there's no real reason why it wouldn't be able to do that.

I mean, the difficulty I suppose, when that oil finds its way either deliberately, in which case the owner is deliberately breaking sanctions, or more likely inadvertently finds its way onto a vessel that is subject to the EU G7 sanctions regimes and that's where the risk lies to businesses like ours and western ship owners.

Gary Howard 19:06

Insuring is absolutely the wrong word in that context. The way to mitigate that risk, I suppose, is just due diligence.

Mike Salthouse 19:26

Yeah, I like the way you said that, just due diligence. I wouldn't underestimate the parties that shipping is having to deal with now. These are extraordinarily sophisticated state operators. The Iranians have been smuggling oils for the last 13 years. The Russians have probably been to an extent involved with that and certainly are now devoting considerable resources to being able to do that. And I think it's very challenging for industry to sit there and try and outthink and check documents, materials and deliberate deceptions that are being perpetrated by sophisticated state operators. It’s very difficult.

Gary Howard 20:11

I think the most recent targeted shipping sanctions out of OFAC were to do with the Russian price cap and picking up on a company in Dubai that was operating about 18 vessels. And that was within the past few days, I think, wasn’t it?

Mike Salthouse 20:28

Yeah, I mean there's a large number of these businesses that have been set up to avoid the impact of western sanctions and the US has started to designate some of these entities. I haven't actually read the basis for the I think it's the Hennessy designations. But, up till this point it had been because the people who had carried that oil had engaged in some part with western service providers, I guess most obviously, maybe they conducted the trade in dollars, even though they weren't subject directly to the jurisdiction of the EU or the G7.

I think it's going to be quite interesting to see the direction in which the EU G7 coalition go, because if they really want to clamp down on the parallel seat, they're going to have to accept that they'll need a secondary sanctions program which can target entities that are otherwise beyond their primary jurisdiction.

Can you operate parallel fleet safely?

Gary Howard 21:30

I guess that invites a question,and then this might be speculation as by their nature, that's beyond your P&I Club and beyond the reach of the G7. But is it possible to operate a quality fleet, a quality parallel fleet, that is I guess safe to operate and is obeying the laws of the sea? Or are we talking about generally junker tankers that are at the end of their lifespan?

Mike Salthouse 21:58

That is an excellent question. Of course it's possible, there is absolutely no reason why you couldn't operate, if the intent is there, why shouldn't you operate a first class well run, well managed, properly insured fleet outside the reach of western EU G7 sanctions.

I think there are a number of practical difficulties to it. For example, if you had ships or you've bought ships with engines supplied by a western engine manufacturer, then it may be difficult to get the spare part, for example. And in our own industry for many years the international group of P&I clubs has been the sort of dominant provider to oil tankers of P&I insurance.

But there's no reason why if properly resourced, if you had the intent, that you couldn't construct an alternative product which would match the range of cover and ultimately the expertise within the group. It would be very difficult to do, but if there's a will, I don't see why you can’t apply your mind to it.

But I think that sort of rather misses the point of all this. These ships do exist for one purpose and that is to move oil in a manner that is beyond the reach of EU G7 sanctions, therefore, publicly owned companies who have a reputation to protect,for example, many oil tankers are on charter to oil majors., oil majors are owned by shareholders, if they were seen to be chartering substandard tonnage, then their shareholders would be rightly very aggrieved by that.

But if the whole purpose is to move oil from Russia to India or China, and you're not subject to those sort of market controls, and the incentives to ship your cargoes to the sort of highest environmental and safety standards probably aren't as strong as they might be for sort of conventional oil trades in the west.

Gary Howard 23:47

Yeah, I think I'd probably agree that the incentive is really the issue, isn't it?

Mike Salthouse

Yes. The purpose of the trade, the purpose of conventional oil trades pre-wars would be to move oil in a safe and environmentally sustainable fashion to power western economies that is not the dominant purpose for moving oil under the parallel fleet.

Long term risks associated with breaking sanctions

Gary Howard 24:11

Coming back to the Red Sea for a moment but still on the topic of sanctions, we mentioned the St. Nicholas earlier and it has a history as a sanction breaking vessel formerly the Suez Rajan. Does its hijacking raise sort of new questions about the potential longer-term risks associated with breaking international sanctions? Do you think there was a particular reason that vessel was targeted?

Mike Salthouse 24:39

I don't know, I suspect possibly, but I think it's quite difficult to know exactly what the reasons were, why the Iranians chose to target that vessel. Most of what's out in the press is simply speculation that links it to the fact that it was seized or that had been subject of a cargo confiscation by the United States previously.

What I would say is that the way modern compliance works is if you're unfortunate enough to be involved in a high profile or even a low profile sanctions breach, then that information is captured and will be sort of carried around by that vessel for some time to come. And we saw that with the very unfortunate grey lists that the United States used to use, whereby a vessel that had been named on a grey list, became in some way tainted. Its market value was less, people tended not to charter it simply because it had been identified often simply because it had had the misfortune to be incidentally involved in some sort of activity in the past. And unlike designation, it's very difficult to sort of have that sort of grey listing removed. So, the identification of a ship or a party with unlawful conduct relating to sanctions will be captured and will probably show up on an awful lot of the compliance checks that come forward. It's sort of something that you're going to have to carry around with you for quite a period of time.

How Taiwan is a different problem to Ukraine and the Red Sea

Gary Howard 26:03

Now zooming out, Ukraine and the Red Sea were both potential geopolitical flashpoints long before the war and the attacks on shipping broke out. And we have another long standing and arguably growing threat to the geopolitical stability as the situation in Taiwan. Do you think there are lessons for shipping to learn from the Ukraine and Red Sea to better prepare for a potential situation in Taiwan? Or are these incidents so large and specific that they need to be approached on an individual basis?

Mike Salthouse 26:33

I think Taiwan, China and the possibility of conflict or an increase in friction between those two states is simply a different problem to that which we're seeing in Ukraine and that which we're seeing in the Red Sea.

There is an awful lot more trade between China and the West than is either involving Israel or involving Ukraine and Russia. By that I mean that if the West, the EU G7 were to apply the same level of sanctions against China because it had started an invasion of Taiwan, that would have absolutely catastrophic consequences for the world economy. By that I mean also that if the US under Biden has publicly committed, I believe to using force to protect Taiwan if Taiwan was subject to an invasion by China that would be a war between two extremely well-armed nuclear powers.

So, the point I'm trying to make is that I think that is a very specific problem. It is not in anybody's interest, China, the West, to have a military conflict or an economic war arising out of tension with Taiwan.

What you might therefore see is something different to the all-out invasion. You may see China trying to restrict trade to Taiwan and you may see it trying to blockade it economically or physically. And I think the question then would be how would the rest of the world respond to that? Through sanctions, through diplomatic overtures or whatever and I think it's just very, very difficult to predict.

So, in terms of lessons learned, well, we know what big sanctions programs look like in terms of wars. Well, we've seen what a war in Ukraine looks like, but there will be specifics between any frictional conflict involving China and Taiwan, which I think would be very, very different to anything that we've seen before and how shipping adjusts to that would have to be tailored to how it actually manifests itself in due course. What I'm trying to say is we would have to react to a situation on the ground. I don't think there's much we can do to prepare for it.

Gary Howard 28:55

Yeah, sort of as I expected really, a conflict that would have the potential to sort of turn off a lot of world trade at the blink of an eye.

Mike Salthouse 29:04

I wouldn't underestimate. It would be catastrophic from an economic point of view from this country's economy, the world economy, if we had sort of widespread sanctions and restrictions of trade, no more iPhones, no more televisions, it would be quite extraordinary.

US elections impact on international sanctions

Gary Howard 29:20

A final specific question on sanctions and risk. We've mentioned Joe Biden's popped up a couple of times. There must be an eye forward to the end of this year and looking at a potential change in leadership within the US. Are there any thoughts on how the US elections might impact things like international sanctions? We saw quite a big change in foreign policy when Donald Trump took office, for instance.

Mike Salthouse 29:45

Yes, I think we're all looking forward to it. I think the American people will make their choice and everybody else will have to respond to that. The previous Trump administration had a very aggressive Iran-focused sanctions program. I would imagine that there would be certainly a pivot back against Iran under any new Trump or republican administration. But their policies, I guess, will be developed in response to the crises that are before them when they come to power, which is a year away and a lot can happen in a year.

We, in the international group, because at that stage I was chairing the international group Sanctions Committee, had to work with that Trump administration and it was a challenging relationship. But I think whilst at the beginning there was not a huge amount of understanding as to the role people like us played in terms of ensuring trade and the efforts we made in terms of complying with the law there was a much better understanding at the end of it.

And I think the challenge for our industry and I think all industries will be to really just to sort of build on whatever level of understanding they built up the last time we had a republican administration, make sure that the good work that both sides did in those days is not forgotten and to adjust to the circumstances and the foreign policy priorities of that administration in, I guess, 2025.

Gary Howard 31:26

And is there any sign that a greater focus on Iran could lead to a softening on Russia, perhaps?

Mike Salthouse 31:37

It's speculation, isn't it? But certainly, from public utterances that might be a conclusion you reach. And I think the risk there for the UK and the EU is that we still have a difference in approach towards Iran and it would be unfortunate if industry got caught between a US approach and UK, European Union approach. So, I'd urge legislators to sort of reconcile the differences and as far as possible ensure that policies are aligned.

Three big topic industry needs to address: geopolitics, decarbonisation and big tech

Gary Howard 31:10

Yeah, that is a potentially very interesting wrinkle if things do go that way.

We've covered topics related to the current news headlines that I'm aware I've drawn you into a bit of speculation as well. Your remit at North Standard is quite broad, are there any risk or sanctioned topics in the shipping market that you think deserve a little bit more attention?

Mike Salthouse 32:33

Yes, I'm very lucky. I've got a very interesting brief and I'm one year into it. Going around talking to owners, talking to industry, I think there's three big topics that our industry is having to address. One is obviously geopolitics and sanctions are a manifestation of those geopolitics, but they spread more broadly than that. It restricts the sorts of cargoes you can carry, the sort of people you can do business with, the routes you go. And then of course there's the sort of formal compliance burden that follows from aggressive use of sanctions by states.

The other big thing of course is decarbonisation. I think that is an absolutely fascinating and challenging topic for our industry. I think we're all under, maybe that's not quite true, but the amount of work that needs to be done to transition the industry to fuels other than oil is enormous, and I think that's going to be challenging the generation of shipping people well after mine. And that will again very much affect the way in which we trade the cargoes, in which we carry and insure and so on.

The elephant in the room is sort of point number three, which really is the advent of big tech and how that's going to impact our industry. It'll certainly affect the insurance industry, the way we do business, the processes we use, the way we quantify and price risk. And I think also from a ship owner's point of view, the way in which ships are operated, the oversight of vessels, the efficient management of ships, there's a lot of potential for that. And certainly coming back again to the sort of cargoes to carry, the way in which you crew those ships. There's a lot of changes, I think, going to come in a very short space of time from technology. I describe it as the elephant in the room because I think we all know it's there but none of us yet are really capable of understanding quite what the impacts will be on our respective industries within the sort of broader shipping industry.

Gary Howard 34:34

Well, there's plenty more for us to talk about next time you join us on the maritime podcast in that case, unless we're both replaced by AIs that just do the job for us I guess.

Mike Salthouse: 34:41

Impossible, Gary. Absolutely impossible.

Gary Howard 34:45

Mike, thanks so much for your time today. It's been great chatting with you.

Mike Salthouse 34:47

Yeah, thank you. Really enjoyed it. Thank you.