international association of marine and shipping professionals …€“ 25feb 2018.pdf · point of...
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International Association of Marine and Shipping Professionals
NEWS BULLETIN 19 – 25 Feb 2018
CALL US ON +41 22 519 27 35
WWW.IAMSP.ORG
The International Association of Marine and Shipping Professionals (IAMSP) is the
professional body for Marine and Shipping professionals world-wide, formed in 2015. The
association is an independent, non-political organization aims to:
Contribute to the promotion and protection of maritime activities of the shipping
industry, the study of their development opportunities and more generally everything
concerning these activities.
Promote the development of occupations related to maritime and shipping; serve as a
point of contact and effective term for the business relationship with the shipping industry
(charter brokers, traders, shipping agents, Marine surveyors, ship inspectors, ship-managers,
sailors, and stevedores etc.).
Ensuring the representation of its members to the institutions, national and
international organizations as well as with governments, communities and professional
groups while promoting the exchange of information, skills and the exchange of
experience.
Develop the partnership relations sponsorship, collaboration between IAMSP and
other associations, companies, national and international organizations involved in
activities related to Maritimes and shipping.
Contribute to the update and improvement of professional knowledge of its members
and raise their skill levels to international standards.
Progress towards a comprehensive and integrated view of all marine areas and the
activities and resources related to the sea.
About I.A.M.S.P
Port development Vietnam: HCM City maps out plans for water transport expansion
18/02/2018
By Nisha Ramchandani
PSA's US$1.2 billion Bharat Mumbai Container Terminals (BMCT) was officially opened at Jawaharlal
Nehru Port (JNP) on Sunday.
BMCT - a subsidiary of PSA Bharat Investments - had signed the concession in May 2014 with Jawaharlal
Nehru Port Trust to develop the container terminal on a design, build, operate, finance and transfer basis in
Mumbai for 30 years. PSA Bharat Investments is, in turn, a subsidiary of PSA International.
One of the largest foreign direct investments in the Indian port sector, BMCT will have an annual container
handling capacity of 4.8 million twenty-foot equivalent units (TEUs) when Phase 2 of its development is
completed at the end of 2022. It is also one of PSA's largest investments outside Singapore.
PSA, which celebrates its 20th year in India this year, started in Tuticorin in 1998, and now also has
terminals in Chennai, Kolkata and Kakinada.
BMCT's Phase 1 development is currently operational with a quay length of 1,000 meters, six super post-
panamax cranes, the deepest berths and largest rail yard in Jawaharlal Nehru Port. It is capable of
accommodating some of the largest container vessels afloat. The gate complex has eight in-gates and eight
out-gates and provides paperless transactions, weighbridge and radiation detection facilities. In Phase 1, it
has an annual container handling capacity of 2.4 million TEUs.
[The Straits Times]
18/02/2018
HCM City agencies have unveiled plans to promote waterway transport on the 975km of riverways in the
city, according to the city‘s Department of Transport.
Ho Chi Minh City port. Credit: Splash 24/7
Terminal operators India: PSA officially launches US$1.2 billion Bharat Mumbai Container
Terminals
INTERNATIONAL news
For the last decade, the city has focused on land transport in an aim to tackle traffic congestion, especially
at the entrances to the city and its ports. A number of projects to expand road networks were completed, but
did not ease traffic congestion, especially at the northwest gateway and the entry to Cat Lai Port, transport
experts said.
Bui xuan Cuong, director of the Department of Transport, said the city last year built 106km of roads and
21 bridges. Vo Kim Cuong, former deputy architect of HCM City, said that rapid urbanisation was one of
the main causes behind the overloaded streets.
The inappropriate locations of ports have also caused pressure to existing road networks. Cuong said the
city‘s agencies should use the waterways to ease pressure on the city‘s roads. Ha Ngoc Truong, chairman of
the HCM City Association of Bridges–Roads–Ports, said the city‘s port network has not been fully
developed due to the lack of connections between ports and city infrastructure.
Government agencies have focused on the development of land transport while waterway transport received
meagre investments, said Truong. Nguyen Ngoc Tuong, deputy chief of HCM City Traffic Safety Board,
said the only way to reduce traffic congestions at roads and entries around ports is to improve waterway
transport.
Pham Sanh, a transportation expert from HCM City, said the waterway network was still not connected to
roads, railroads, and the port network. Moreover, the clearance height of most bridges in HCM City is too
low while canals are not frequently dredged and have low depth, making them inaccessible for large
vessels.
―To develop water transport in HCM City, agencies must build a suitable plan for infrastructure
development, especially for waterways connecting HCM City with the Mekong Delta region,‖ said Sanh.
HCM City agencies said that between 2018 and 2020 the city would mobilise investments from the private
sector into water transport infrastructure. For example, in 2018, upgrades of Binh Loi Bridge in Binh Thanh
District will be completed, paving the way for waterway transport from Tay Ninh and Binh Duong
provinces with ports in HCM City and Cai Mep ports in Ba Ria – Vung Tau Province.
Dredging of canals will help link the Sai Gon River with the Dong Nai River. Canals and rivers on Vam Co
Dong, Cho Dem, Ben Luc, Rach Doi and Kinh will be dredged, while Ong Nhieu, Rach Dia and Rach Gioi
bridges will be upgraded to facilitate passenger and cargo transport from HCM City to Long An and Tay
Ninh provinces.
Ports and piers along the Sai Gon River will be moved to suburban areas, while wharves along Dong Nai,
Nha Be and Thi Vai rivers will be completed and upgraded. Truong Tho ICD (Inland Container Depot) will
be relocated and upgraded. A 6ha river port, to be built in a hi-tech park, will be able to take 1,000 tonne
vessels.
City authorities will have plans to add new routes to connect Vam Co River with ports in Cai Mep-Thi Vai
area, and to link Dong Nai with Thi Vai rivers. More ICDs will be built to help reduce the pressure on land
transport facilities.
To meet the rising demand for passenger transport, the transport department has approved an 18ha
passenger port with a 600- pier at Den Do Cape in District 7, according to Pham Cong Bang, head of the
waterway transportation management division at the department. The developer is completing the pre-
feasibility study for the passenger port and will submit it to city agencies for approval, said Bang.
Where people are most and least likely to adhere to the law
[VietNamNet]
16/02/2018
By Niall McCarthy
Many factors influence how effectively a government is able to uphold the rule of law and some of them
include access to courts, lack of corruption, effective policing and institutional competence.
While some governments are able to combine these efficiently, resulting in strong adherence to the law,
others tend to struggle. Research from The World Justice Project‘s Rule of Law Index 2017–2018 measured
rule of law adherence in 113 countries around the world, focusing on eight factors: constraints on
government powers, absence of corruption, open government, fundamental rights, order and security,
regulatory enforcement, civil justice, and criminal justice.
Where people are most and least likely to adhere to the law
Since 2016, 34 percent of countries saw their rule of law decline, 20 percent improved and 37 percent
stayed the same. Western Europe dominates the top of the ranking with Scandinavia first in the world for
adherence to the law. Denmark and Norway were top with a score of 0.89, followed by Finland and Sweden
with 0.87 and 0.86 respectively. Outside Europe, New Zealand, Canada and Australia also made the top-10
while the U.S. came 19th with a score of 0.73.
Venezuela is rock bottom of the ranking with a score of 0.29. The bottom-five is rounded off by Cambodia,
Afghanistan, Egypt and Cameroon. Since 2016, The Philippines was the biggest mover, falling 19 places to
88th. The biggest improvers were Burkina Faso, Kazakhstan and Sri Lanka with each nation moving up
nine positions since the last edition of the index was published.
Marine pollution: High levels of microplastics found in Northwest Atlantic fish
Rule of law around the world by region
Source: World Justice Project: Rule of Law Index 2017–2018
[Statista / World Justice Project]
16/02/2018
A new study sheds light on the magnitude of microplastic pollution in our oceans. It found microplastics in
the stomachs of nearly three out of every four mesopelagic fish caught in the Northwest Atlantic -- one of the
highest levels globally.
The findings of the study Frequency of Microplastics in Mesopelagic Fishes from the Northwest Atlantic,
published today in open-access journal Frontiers in Marine Science, are worrying as the affected fish could
spread microplastics throughout the ocean. The fish are also prey for fish eaten by humans, meaning that
microplastics could indirectly contaminate our food supply through the transfer of associated microplastic
toxins.
"Microplastic pollution has been in the news recently, with several governments planning a ban on
microbeads used in cosmetics and detergents" says Alina Wieczorek from the National University of Ireland,
Galway and lead author of the study. "The high ingestion rate of microplastics by mesopelagic fish that we
observed has important consequences for the health of marine ecosystems and biogeochemical cycling in
general."
Microplastics are small plastic fragments that have accumulated in the marine environment following decades
of pollution. These fragments can cause significant issues for marine organisms that ingest them, including
inflammation, reduced feeding and weight-loss.
Terminal operators Europe: Consortium Goldman Sachs and Macquarie is front runner in
sale of bulk port operator HES
Microplastic contamination may also spread from organism to organism when prey is eaten by predators.
Since the fragments can bind to chemical pollutants, these associated toxins could accumulate in predator
species.
Mesopelagic fish serve as a food source for a large variety of marine animals, including tuna, swordfish,
dolphins, seals and sea birds. Typically living at depths of 200-1,000 meters, these fish swim to the surface at
night to feed then return to deeper waters during the day. Through these vertical movements, mesopelagic fish
play a key role in the cycling of carbon and nutrients from the surface to the deep sea -- a process known as
biogeochemical cycling. This means they could spread microplastic pollution throughout the marine
ecosystem, by carrying microplastics from the surface down to deeper waters, affecting deep-sea organisms.
Despite their important role in marine ecosystems, mesopelagic fish have been relatively understudied in the
context of microplastics. To investigate this further, Wieczorek and colleagues set out to catch fish in a
remote area of the Northwest Atlantic Ocean: an eddy (whirlpool) off the coast of Newfoundland.
"These fish inhabit a remote area, so theoretically they should be pretty isolated from human influences, such
as microplastics. However, as they regularly migrate to the surface, we thought that they may ingest
microplastics there," explains Wieczorek.
The researchers caught mesopelagic fish at varying depths, then examined their stomachs for microplastics
back in the lab. They used a specialized air filter so as not to introduce airborne plastic fibers from the lab
environment.
The team found a wide array of microplastics in the fish stomachs -- with a whopping 73% of the fish having
ingested the pollutants. "We recorded one of the highest frequencies of microplastics among fish species
globally," says Wieczorek. "In particular, we found high levels of plastic fibers such as those used in textiles."
As the researchers were extremely careful to exclude contamination with fibers from the air, they are
confident that the fish had ingested the fibers in the sea. Finding high levels of fibers in the fish is significant,
as some studies investigating microplastics in fish have dismissed such fibers as contaminants from the lab
environment, meaning their role as a pollutant may have been underestimated.
The researchers plan further studies to learn more about how these fish are ingesting and spreading
microplastics. "It will be particularly interesting to see whether the fish ingest these microplastics directly as
mistaken prey items, or whether they ingest them through eating prey species, which have previously ingested
the microplastics," says Wieczorek.
[Frontiers in Marine Science / ScienceDaily]
16/02/2018
By Dasha Afanasieva and Toby Sterling
A consortium of infrastructure funds at Goldman Sachs and Macquarie is seen as the front runner in the sale
of European bulk port terminal operator HES International, worth around 2 billion euros ($2.5 billion),
industry sources said.
:
Desarrollo portuario Colombia: En Buenaventura y Cartagena se levantarán nueve
terminales
Morgan Stanley is mandated to sell the asset, two sources, whose organizations had considered bidding for
it, said. They added that the expectation Goldman Sachs and Macquarie would win put off some
prospective bidders. The sources, both in the infrastructure investing industry, said the growth projections
provided by the company were too aggressive. Final bids and a winner were expected in mid-March.
Another source said ―less than a handful‖ of bidders remain, but none had emerged as a clear favorite.
HES, owned by energy and power-focused private investment firm Riverstone and private equity firm
Carlyle delivers around 100 million euros in earnings before interest tax, depreciation and amortization
(EBITDA), the two sources said, estimating it would achieve an enterprise multiple in the 20s times
EBITDA. Riverstone, Carlyle, Morgan Stanley, Macquarie and Goldman Sachs declined to comment.
HES provides transshipment, storage, blending and processing services of dry bulk and liquid bulk products
at 19 sites across eight countries, with more than 1,350 staff. A spokeswoman for the company could not
immediately comment.
Separately, Brookfield Asset Management, Antin Infrastructure Partners and Arcus Infrastructure Partners
are selling container port operator Euroports.
[Reuters]
16/02/2018
Por Melisa Echeverri
Hay 17 terminales portuarias que entrarían en operación en los próximos años. De estas, tres ya obtuvieron
una resolución de otorgamiento, ocho ya tienen condiciones otorgadas y seis están en evaluación o esperan
conceptos de las autoridades para fijar condiciones, según la Cámara Colombiana de la Infraestructura.
Fuente: Camera Colombiana de Infraestructura
Del total de puertos, tres son privados, los 14 restantes son públicos, y en su mayoría se definen como
multipropósito o tienen el fin de mover hidrocarburos. La mayoría de los nuevos terminales se ubicarán en
Buenaventura y Cartagena, que hoy son las principales ciudades portuarias si se tienen en cuenta que son
las que reciben y despachan todo tipo de carga.
Puerto de Cartagena. Fuente: La Republica
A diferencia de Ciénaga, la mercancía que llega y
sale de Cartagena es diversa, aunque gran parte es
hidrocarburos. Esta característica hizo que Oinsas
S.A.S planee tener un puerto privado para
desarrollar actividades pesqueras, un proyecto que
ya recibió conceptos dando viabilidad a la
concesión para embarcadero.
―Cartagena es un puerto muy importante porque no
solo llegan importaciones y exportaciones, sino
que se ha vuelto una terminal de transbordo. La
ciudad ha hecho una inversión importante en grúas
para mejorar la eficiencia‖, señaló Carlos Rosado,
director ejecutivo de la CCI Sección Norte.
En Buenaventura hay tres puertos con condiciones
acordadas y otros tres que han sido solicitados. Del
primer grupo, el que más recibirá inversión es el de
Delta del Río Dagua, con un total de US$246
millones, que se usarán para construir una terminal
de contenedores y carga general.
Entre los solicitados están las terminales de Pedro
Marquinez Cuero, cuya finalidad es el manejo de
madera, cemento y pesca; así como el Terminales
Turísticos del Pacífico, que busca hacer un
embarcadero sobre el muelle turístico; y Australian
Bunkers, que apunta al manejo de hidrocarburos.
Al tercer trimestre de 2017, Buenaventura registró
un tráfico de 13,6 millones de toneladas, de las
cuales 7,1 millones fueron importaciones, lo cual
convirtió a esta ciudad en la principal entrada de
productos extranjeros.
La Guajira, Córdoba y Antioquia también son
ubicaciones estratégicas. De hecho, la carbonera
CCX invertirá US$386 millones en un muelle de
servicio privado para cargue de carbón en La
Guajira. A eso se suma el proyecto de Delcop
Colombia S.A.S en Manaure para el manejo de sal,
que está en solicitud.
San Antero, en Córdoba, será la sede de dos
nuevos puertos: uno es de Graneles del Golfo,
cuyo fin es movilizar graneles sólidos minerales,
para lo cual se destinarán US$22,6 millones. El
otro es una terminal de contenedores y carga
general de San Antero S.A., que recibirá US$275
millones.
En Turbo, Antioquia, se harán dos terminales multipropósito, uno de ellos será el proyecto de Puerto Bahía
Colombia de Urabá, que recibirá una inversión de US$246 millones; el otro es de Pisisí S.A., al cual se
destinarán US$93 millones.
Esta zona es atractiva para la comercialización de mercancías desde el centro del país, pues ciudades como
Bogotá y Cartagena están a 1.101 kilómetros de distancia, mientras que entre Bogotá y Turbo hay 739
kilómetros, es decir, que los transportadores ahorran 362 kilómetros de trayecto, lo que se traduce en menos
tiempo y costos de envío.
Dimitri Zaninovich, presidente de la Agencia Nacional de Infraestructura, aseguró que ―los puertos es de
los sectores que más inversión han tenido, y en los últimos años han generado una gran transformación al
Container shipping: Boxship fleet stuck around 5,000 units since 2011
país. Prueba del gran avance es que en el 2010 existía una capacidad instalada de 286 millones de toneladas
y vamos a tener en el 2021 unas 514 millones de toneladas‖.
Obras internas incentivarán el comercio exterior
Los puertos internos jugarán un papel fundamental en términos de comercio. Carlos Rosado, director de la
CCI Sección Norte, señaló que el factor más importante para el desarrollo de los puertos del Caribe es la
navegabilidad del Río Magdalena. ―En la medida en que tengamos un río con las condiciones adecuadas
para la navegación hacia el interior del país, va a ser posible despachar desde Barrancabermeja hacia el
exterior y viceversa‖. Según el experto, Gamarra y Puerto Salgar también son zonas con potencial para
puertos internos.
[La República]
16/02/2018
By Trevor Crowe
One of the great stories of the Bible‘s New Testament centres on the feeding of a multitude of 5,000 with just
five loaves and two small fish. Shipping also has a notable 5,000 to feed in the form of the containership fleet.
In this case, the feat has not only been continually finding enough cargo for the fleet to carry but also
generating more capacity across a similar number of ships as time has gone by.
5,192 strong
Today the containership fleet stands at 5,192 units, a pretty impressive number considering that it stood just
2,617-strong at the start of the millennium. It passed the 4,000-vessel mark during 2007 and the 5,000-vessel
barrier soon after in 2011. However, the containership fleet has been stuck around 5,000 units for some time
now. 2017 saw just 8 vessels added in net terms to the fleet. In fact, compared to the boxship fleet at the start
of 2012, the fleet today is only 109 vessels larger, even though an overall total of 5.6 million TEU (nominal)
capacity has been added to the fleet over the same period. During that time, vessel numbers have grown by
2% whilst capacity has grown by 37%.
Container shipping: Asia-Europe box ship utilisation fell to 75% in fourth quarter 2017
A major feat
Of course, even if the numbers haven‘t grown much, the 5,000 ships still need to be fed with plenty of cargo.
A global trade volume that totalled 67m TEU back in 2000 hit 192m TEU in 2017 (a CAGR of 6.4% in that
period) and has grown quickly enough to allow the fleet to get that large. Meanwhile, in recent years, ‗The
5,000‘ has pulled off the trick of moving more and more cargo each year. The 5,083 ships at start 2012 moved
155m TEU that year but then, in 2017, a figure of 5,159 ships moved a global volume 24% larger. That‘s an
impressive feat. Of course, it couldn‘t happen without an increase in capacity; that‘s crucial. Capacity, if not
the actual number of ships, has grown rapidly, and the constancy of ‗The 5,000‘ is of course in part illusory.
Within the fleet there have been major dynamics with bigger new ships (as large as c.21,000 TEU) joining the
fleet and older, smaller ships exiting.
How it was done
This dynamic has become extremely pronounced in recent years with deliveries over 1m TEU in 9 of the last
10 years (average size in 2017: 7,731 TEU) and record levels of recycling in 2016 followed by 0.4m TEU in
2017 (average size: 2,822 TEU). Despite a static fleet in unit terms, that‘s where the capacity has come from,
along with the ‗fungibility‘ of boxships allowing the ‗cascade‘ of larger ships down onto trades previously
served by smaller vessels in many cases.
More to go around?
In the near-term, box shipping might be able to repeat the trick. There are 383 units (2.7m TEU) on order and
in the last two years 335 were recycled, so ship numbers might not change too much, even as capacity grows
further. The wider debate surrounds the future of the current big ship-led model; new trades have opened up
to larger ships but maybe the next big efficiency gains in liner shipping (especially considering 3D printing
and potential changes in manufacturing locations) might necessitate a network that has to rethink the role of
smaller ships too. Time for another modern miracle.
[Clarksons Research]
16/02/2018
By Mike King
The formation of alliances has reduced container lines‘ willingness to cut capacity in order to maintain freight
rate levels, rather than improved the ability of carriers to effectively manage supply and demand, according to
the latest analysis by SeaIntel.
The analyst said that in the fourth quarter of last year, excess capacity − the difference between the nominal
TEU offered by lines and the volume of containers moved − reached 1.1 million TEU on the transpacific
trade and 1.3 million TEU on Asia-Europe. As a result, vessel utilisation was down, year on year, on both
trades in the quarter, while rate levels were at or near the lowest fourth quarter levels in the 2012 to 2017
period.
―Throughout the second half of 2017, we have been raising concerns over the lack of capacity reductions on
the transpacific and Asia-Europe trades, and the detrimental effect it was going to have on the freight rates at
Container shipping: Yang Ming to invest in 20 new ships
the back end of last year,‖ said SeaIntel CEO Alan Murphy. ―Looking at the demand and freight rate data for
2017 Q4, we can see that those concerns were fully justified.
―Since the launch of the ‗new‘ alliances in April 2017, the carriers have been reluctant to blank capacity at the
same level as in previous years, which has resulted in a weak freight rate environment, despite healthy
demand growth.‖
SeaIntel said nominal vessel utilisation on the transpacific was 80.9% in Q4 2017, significantly below the
87.7% recorded in Q4 2016. Monthly utilisation dropped steadily from 88.4% in August 2017 to 75.9% in
November 2017, rebounding to 81.9% in December. ―As a consequence, SCFI spot rates on Asia to North
America West Coast declined from $1,426/FEU in August to $1,240/FEU in December,‖ said the analyst.
Q4 2017 demand on Asia-Europe dropped by 10.5%, quarter on quarter, while capacity was only reduced by
4.8%, resulting in excess capacity of 1.2 million TEU, with utilisation dropping each quarter throughout
2017, reaching just 74.7% in Q4 2017, the second-lowest Q4 since 2012.
―Monthly utilisation dropped steadily from 83.3% in July 2017 to just 68.1% in October 2017, with SCFI spot
rates to North Europe dropping from $927/TEU to $658 in October,‖ said SeaIntel. ―Nominal utilisation then
improved back to 81.7% in December, with spot rates to North Europe rebounding a little to $786/TEU in
December 2017.‖
The analysis of capacity and rates by SeaIntel supports the view, as expressed to Lloyd‘s Loading List by
Drewry, that consolidation of the liner industry via M&A activity and the formation of alliances is currently
capping freight rate rises rather than supporting pricing because lines are putting the maintenance of market
share ahead of short-term profits.
Murphy said that with more capacity due to be added to mainline trades in the coming months, the current
strategy of lines could negatively impact their transpacific trade contact negotiations with shippers. ―With
considerable amounts of new capacity coming on stream in 2018, carriers will either have to start blanking
capacity − as in the past years − or risk the current freight rate malaise extends into the upcoming contracting
season,‖ he said.
[Lloyd‘s loading List]
16/02/2017
Taiwanese carrier Yang Ming will invest in 20 new containerships after receiving a green light from its board
to move forward with the fleet renewal plan it announced late last year. It will order ten 11,000 TEU vessels
and ten 2,800 TEU vessels, according to Fairplay.
Although indebted and currently 45% owned by the Taiwanese government, Yang Ming needs to replace
vessels which are being off-hired or retired. In November 2017, Yang Ming was recapitalized and issued 500
million new shares worth $200 million, resulting in the Taiwanese government raising its stake in the
company from 33% to 45.07%. The carrier then stated in the same month that it was preparing to launch its
second private placement sale, targeting a figure of around US $87 million.
Yang Ming‘s first private placement was announced in February 2017 when the company sought to collect
$54.8 million to strengthen its finances during the rollout of its recovery plan. It also secured a cash injection
worth $200 million from a rights offering the same year.
Port development EU: Rotterdam and Antwerp brace for financial impact of a hard Brexit
Port development Netherlands: Port of Rotterdam Authority reports net profit of 187 million
euros for 2017
Yang Ming said the 2,800 TEU ships would be directly owned by the company, while the 11,000 TEU ships
would be contracted through tonnage providers.
According to the IHS Markit Maritime Portal, Yang Ming operates 16 Neopanamax ships, which are all on
long-term bareboat or time charter from tonnage providers such as Seaspan Corporation and Danaos Shipping.
The Portal also shows that Yang Ming operates 38 feeder ships that were built from the 1980s to late 2000s.
Of these, 18 vessels are owned by the company itself.
[Port Technology International]
16/02/2018
By Janny Kok
The ports of Rotterdam and Antwerp are bracing for the worst effects of Brexit: the huge cost of adjusting
customs and inspection procedures and new infrastructure investment to avoid serous supply chain delays
after next March.
―It is negotiate for the best, and prepare for the worst,‖ Port of Rotterdam Authority chief executive Allard
Castelein said. His counterparts in Antwerp decided to appoint a full-time representative in London to
monitor the latest Brexit developments, but Rotterdam has chosen to work in close collaboration with the
Dutch government to mitigate potential delays to UK exports and any subsequent financial impact.
A recent survey by KPMG concluded that a ―hard‖ Brexit would result in a need for hundreds of additional
customs officials and veterinary inspectors, and cargo dwell times could increase substantially because of
additional customs formalities.
Mr Castelein told The Loadstar the port authority had no influence on the negotiations between the EU and
UK government, but Antwerp has chosen its own diplomatic path by appointing a full-time representative to
the UK, who is also tasked with attracting additional sources of trade and cargo.
UK under-secretary of state Robin Walker recently visited Belgium and said: ―Our trading and political ties
with Belgium are deep and longstanding, and we know they will continue and strengthen as we leave the EU.
―We are well under way in our discussions with the EU on the terms of an implementation period and hope to
secure an agreement swiftly.‖
But Mr Castelein added that Brexit could pose a further challenge to the port‘s 31% market share of the
Hamburg-Le Havre range traffic. ―It remains speculation, but trades between our port [and the UK] could be
diverted to Calais if the UK decides to conclude an agreement with the French government.‖
[The Loadstar]
15/02/2018
Total cargo throughput at the port of Rotterdam increased by 1.3% to 476 (461) million tons with the port
returning to the growth trend seen before 2016.
Container shipping: World Container Index - 15 Feb 2018
As a company, the Port of Rotterdam Authority registered revenues of 712 million euros ($890 million) in
2017, up 4.6% from a year earlier. Net profit of 187 million euros was down 17% as the port was subject to
corporate tax for the first time. Investments rose by 18.9% to 213.8 million euros
The City of Rotterdam owns 70.8% of the port; the Dutch State the remaining 29.2%.
[DutchNews / Reuters]
15/02/2018
The World Container Index assessed by Drewry, a composite of container freight rates on 8 major routes
to/from the US, Europe and Asia, is down by 0.3% to $1507.53/40ft container.
Two-year spot freight rate trend for the World Container Index:
Our detailed assessment for Thursday, 15 February 2018
• The composite index is down by 0.3% this week and down by 6.7% from the same period of 2017.
• The average composite index of the WCI, assessed by Drewry for year-to-date, is US $1,469/40ft container,
which is $101 lower than the five-year average of $1,570/40ft container.
• The final cargo rush before the Chinese New Year holidays led to stable rates on Asia-North Europe trade
and a marginal drop on Transpacific. The Composite Index edged down by $4 to reach $1,508 per feu this
week. Rates on Shanghai-New York and Shanghai-Los Angeles fell by $22 each per feu to reach $2,834 and
$1,497 per feu, respectively. Rates on Shanghai-Rotterdam stabilised at $1,772 for a 40ft box. Similarly, rates
on Rotterdam-New York stood at $2,067 for a 40ft box. We expect freight rates to decline on account of a
demand slump.
Our latest freight rate assessments on eight major East-West trades:
Shifting energy demand to impact shipping
Source: Drewry Supply Chain Advisors
[Drewry]
15/02/2018
Over the next thirty years, the global transition to more renewable energy sources will change how ships are
fuelled as well as the resources that they carry. A recent report by class society DNV GL presents one
perspective on that shift.
Source: DNV GL
Surging demand for cleaner energy will lead to sustained growth in LNG shipping beyond 2050, according to
Energy Transition Outlook 2017: Maritime Forecast to 2050 (or the Maritime ETO), a forecast published by
DNV GL late last year.
The report projects that transport of other energy sources will slow after 2030, with natural gas (as LNG and
liquefied petroleum gas) becoming the largest energy source as use of coal and oil declines. Gas consumption
will peak globally by 2035. But gas shipping will grow beyond this because of developing demand in regions
without domestic gas, as well as the discovery of new gas sources that cannot be connected to pipelines.
By contrast, global seaborne volumes of coal and oil will peak by 2030 despite projected growth in oil
imports in some regions. Trade in energy commodities will decline as their use slows, starting with coal,
followed crude oil and oil products.
Remi Eriksen, group president and CEO of DNV GL, said: ―Our Energy Transition Outlook shows that by
mid-century, the energy supply mix is likely to split equally between fossil and renewables. Advances in
energy efficiency will also see the world‘s demand for energy flattening after 2030. These trends will impact
all players in the maritime sector.‖
The crude oil fleet will decline by approximately 20% (in dwt) by 2050, with the decline beginning after
2030. The product tankers fleet is expected to remain stable. The greatest increase comes in the gas segment,
where fleet tonnage rises almost 150% by 2050 because of increased trade.
Fleet development 2015 – 2050 by segment
Source: DNV GL: Energy Transition Outlook 2017: Maritime Forecast to 2050
Gas fuel grows
DNV GL predicts that only 47% of energy for shipping will be from oil-based fuels by 2050. The share of gas
in the fuel mix will rise to 32%. More than a fifth will be provided by carbon-neutral energy sources, such as
biofuel and electricity.
Knut Ørbeck-Nilssen, CEO, DNV GL Maritime, said: "The fuel mix that we see beginning to shift today will
be much more diverse in 2050. Oil will no longer be the overwhelming fuel of choice for trading vessels.
Natural gas will step up to become the second-most widely used fuel and new low-carbon alternatives will
proliferate."
Improved energy efficiency due to technical and operational improvement (including speed reduction) will
see fuel use per tonne-mile reduce by 35–40% over the forecast period, with the largest reductions coming in
the segments container, natural gas and other cargo.
Energy use for international shipping will increase from 10.7EJ in 2015 to 12.0EJ in 2050. Emissions of CO2
will decline by a quarter, from 800 million tonnes today to around 600 million tonnes in 2050. Despite this,
shipping‘s share of overall energy-related CO2 emissions is expected to grow from 2.6% to 3.5% over the
forecast period as other sectors cut emissions faster. This will inevitably lead to further pressure on the sector
to reduce emissions.
DNV GL forecasts that trade measured as tonne-miles will experience 2.2% annual growth over the period
2015–2030 and 0.6% per year thereafter, driven mostly by non-energy commodities. Digitalization and
improved utilisation of vessels will mean that the global fleet will grow slightly more slowly than trade.
Asian focus
Today, four-fifths (81%) of ship traffic is located in the northern hemisphere. More than 60% of the traffic is
in the Indian and Pacific Oceans, highlighting the importance of Asian trade. Seaborne trade growth to 2050
will be strongest in the Asian regions. DNV GL‘s expects gas, non-coal bulk, and container trades to grow
across most regions, with above-average growth rates in China, the Indian Subcontinent, South East Asia, and
Sub-Saharan Africa.
Offering such a long-term perspective is always difficult, and DNV GL has admitted the limitations of its
forecasts by highlighting some factors it cannot account for at this stage. These include short-term movements
in rates, overcapacity, or policy. But there are two issues in particular that could alter predictions
significantly.
Decarbonization will challenge the way ships are designed and operated. Several developments with
potentially great impact, but involving high uncertainty, could influence technology uptake and future fleet
projections. The need for emissions reductions drives energy efficiency and the development and use of
alternative fuels. Fleet-growth assumptions may be challenged by future regulations that require significant
investment to ensure compliance.
Other technologies and policies could cause major shifts in transport demand. Additive manufacturing (3D
printing), robotization, and automation could enable relocation of production back to developed countries,
thereby shortening global value chains and potentially reducing demand for seaborne transport. There is also
rising interest in, and action to establish, circular economies to reduce consumption of virgin materials and
waste generation, trends that can shift and reduce transport demand.
China‘s Belt and Road initiative, which aims to reshape intercontinental trade through a new network of
maritime and landside links between Africa, Asia, and Europe, is another potential gamechanger for the
shipping industry. It could work in both directions: rail and road transport might capture market share from
shipping, but trade growth could also favour shipping companies.
Guessing games
Trade patterns are another factor that is hard to predict. Liberalisation over the past decades has generally
benefitted international trade and maritime transport. Recent years have brought renewed focus and debate on
this ideology. Protectionist trade policies would pose a potential downside risk to maritime transport. The
authors‘ base assumption is that prevailing trade regulations and relevant governance institutions continue
unchanged so that, at least in the medium term, the risk to trade will be less than from the energy transition
and manufacturing‘s decreasing share in advanced economies.
Oceans: Satellite data confirms sea level rise is accelerating
Digitalisation in shipping is set to enable reduced downtime, predictive maintenance, performance
forecasting, real-time risk management, and energy efficiency. Operators will generate cost savings through
advanced data analytics, process digitalization, robotic process automation, and connecting and sensing
technology. In the report‘s findings, DNV GL assumes that digitalisation will boost shipping efficiency and
improve related energy use, increase utilization of the current fleet by improving logistics and planning, boost
port development, and enhance voyage performance through better weather routing and autopilot.
Indirectly, digitalization can enable new business models and better ship operation, with a positive impact on
energy use. Autonomous ships can sail at very low speeds without incurring high crew costs, allowing greater
use of batteries and other fuel types.
Innovative ship concepts may also emerge to create a leap forward in performance. Examples include ballast-
free ships, and low- and zero-emission hybrid ships, incorporating various advances such as novel hull forms
above and below the water, innovative light materials, alternative powering (including from shore) and
energy-storage modules.
Indeed, many factors could derail DNV GL‘s view of the future fleet, it‘s fuel requirements and trading
patterns. But one thing the class society is particularly certain. At some stage in the future, the pressure on the
industry to demonstrate decarbonisation will become unavoidable.
Carbon credibility
Ørbeck-Nilssen notes: ―Because of the long lifespan of a maritime asset, sooner rather than later the industry
will have to look to creating vessels and a global fleet that are ―carbon robust‖. A ―carbon-robust‖ asset is one
that can remain competitive under shifting energy, weather, demand, and regulatory scenarios. It will have a
lower operating and lifecycle cost than other vessels on the market. As part of the Maritime ETO, we have
worked to define a framework that could help maritime stakeholders enhance the carbon robustness of their
vessels and fleet.‖
Based on DNV GL‘s forecast of the most likely energy future, the world is destined to fail to achieve the
Paris Agreement‘s target of limiting average global warming to well below 2°C above pre-industrial levels.
Success in that goal will not be achieved without a steeper reduction in the use, and therefore transport, of
fossil fuels. A low-carbon future would also require more energy-efficient ship designs and operations, and
carbon-neutral fuels. Future regulations and stakeholder expectations might imply significant investments to
upgrade and renew ships.
DNV GL describes a three-step approach to evaluate and improve the carbon robustness of vessels and fleets.
The approach stress-tests how well a ship, fleet, and company will perform under different energy transition
scenarios.
With the IMO progressing towards a decarbonisation strategy, and other stakeholders taking a keen interest in
shipping, it is easy to see how such a requirement to prove (and to improve) the carbon efficiency of ships
could emerge rather quickly. If and when that happens, it will be just one of several far-reaching
consequences exacted on the marine market by the global energy transition.
[The Motorship]
15/02/2018
Shipping finance: Hedge funds hook shipping stocks grappling for recovery
By Jennifer Johnson
Global sea level rise is accelerating every year, rather than increasing steadily, according to a new study of
25 years of NASA and European satellite data.
This acceleration has the potential to double the total sea level rise projected by 2100 when compared to
models that assume a constant rate of change, says the study‘s lead author Steve Nerem, a professor of
Aerospace Engineering Sciences at the University of Colorado Boulder. "Our extrapolation assumes that
sea level continues to change in the future as it has over the last 25 years,‖ Nerem exaplains. ―Given the
large changes we are seeing in the ice sheets today, that's not likely."
The team, driven to understand and better predict Earth‘s response to a warming world, published their
work Feb. 12 in the journal Proceedings of the National Academy of Sciences (PNAS): Climate-change–
driven accelerated sea-level rise detected in the altimeter era.
Rising levels of greenhouse gases in the atmosphere increase the temperature of both water and air, which
drives sea level rise in two ways. Firstly, melting land ice from across the planet flows into the ocean and
increases sea levels. Warmer water also expands — and this ―thermal expansion‖ of the oceans is
responsible for roughly half of the 7cm of mean sea level rise that has occurred in the last 25 years. If
oceans continue to rise this rapidly, sea levels will be up 65cm by the end of the century, causing serious
issues for the world‘s coastal cities.
To uncover the rate of sea level rise, Nerem and his team used models that factored in El Niño and La Niña
climate patterns, as well as the potential impact of volcanic eruptions. Acceleration, they discovered, has
largely been driven by increased ice melting in Greenland and Antarctica.
[The Marine Professional / NASA / PNAS]
15/02/2018
Shipping stocks may still be in the doldrums in the view of many investors, but hedge funds have bet at
Shipping finance: Investors and banks urge shipping to improve its governance
least $675 million on signs of renewed buoyancy in the industry.
Hedge funds made initial forays into shipping stocks in the third quarter of 2017, but significantly stepped
up their bets in the final three months of the year, U.S. Securities and Exchange Commission filings
compiled by Symmetric show.
―Shipping has been in a terrible trough for a number of years,‖ Chris Walvoord, global head of hedge fund
research at investment consultant Aon Hewitt, said. ―Hedge funds are starting to see opportunity … and are
calling the bottom on these companies and there are at least a couple out there getting into this space.‖
The move by hedge funds comes as signs of a fragile recovery in segments of the global industry are
appearing, after a near-decade long slump caused in part by a glut of ships ordered.
―You‘re looking, over the next two years, for these stocks (in shipping) to rise 50 to 100 percent,‖ said
William Homan-Russell, head of shipping at $1.5 billion hedge fund and shipping investor Tufton Oceanic.
―When adjusting for our estimated shipyard costs, share prices are at the lowest prices they‘ve been since
1999.‖
High and dry
Dry bulk shipping – one of the hardest hit parts of the industry – is expected to see better prospects as fleet
growth slows and an expected pick up in demand for commodities such as coal, iron ore and grains bolster
employment for bulker vessels.
By contrast, oil tankers are likely to see tougher times for now with weak freight rates hitting bottom lines
of operators. Hedge fund ownership of Nordic American Tanker, which ships oil, for example, rose to 27
percent at year-end, from 2.4 percent at end-September, according to the data from Symmetric, which
tracks investment funds. Data for earlier periods was not immediately available.
And ownership by hedge funds of Dryships Inc, which is active in dry bulk, tanker and offshore shipping
markets, meanwhile, rose to 80 percent, from 10.3 percent. Hedge funds had invested $308 million in Kirby
Corp, $26 million in Nordic American Tanker and $9 million in Dryships.
Dry bulk firm Golden Ocean and oil transporter Teekay Tankers were also popular as well as Ship Finance
International, which has a diversified fleet, the data showed. Funds had also invested $35 million to their
holdings of Golden Ocean and $77 million in Ship Finance International. Blue Mountain Capital
Management and Greywolf Capital Management were among the hedge funds to invest $39 million in
Teekay Tankers. A spokesman for Blue Mountain declined to comment, while Greywolf could not
immediately be reached.
Some hedge funds have started moving into liquefied natural gas (LNG) tanker stocks, investing $4 million
in Dynagas LNG Partners, and $62 million in Golar LNG Partners after pulling back from the sector in the
preceding three months. Although other investors pulled back from LNG stocks, a pick up in transport
demand has helped the outlook for vessel owners in the LNG sector.
[Reuters]
14/02/2018
By Niklas Krigslund
Shipping companies face stricter ethical requirements than in the past. Investors call for better corporate
management, while several banks focus on the environment. Major Dutch bank ranks shipping customers
and has rejected certain loans.
Ship owners increasingly face a broad range of ethical requirements from their investors in a development
which could make it more difficult for the bad eggs to raise money. After several years in which the
shipping sector has more or less escaped the world's growing focus on corporate governance and
environmental considerations, a new trend is now emerging in the capital markets.
More investors are setting requirements that shipping companies must be run according to the principles of
corporate governance, as well as requirements for compliance with environmental regulations and human
rights. This pressure comes partly from private investors, who are particularly focused on curbing poor
corporate governance and a lack of respect for shareholders.
But the pressure also comes from banks and top investors, such as the Norwegian Global Pension Fund and
the world's biggest investment company, Blackrock, which both recently introduced new requirements
concerning social responsibility.
In shipping, it caused a stir when the Norwegian Global Pension Fund, which invests the country's income
from the Norwegian oil sector, decided to ditch its investments in four carriers, including Evergreen, due to
them having scrapped vessels on beaches in South Asia.
Deterring investors
One of the critical voices that has previously lashed out at shipping for placing management's interests
above those of shareholders is Deutsche Bank's Lead Analyst for U.S. Transporation & Shipping, Amit
Mehrotra.
He notes that a new critical consciousness has spread among investors. ―I have zero tolerance for bad
governance. Most people I talk to from the institutional investor base have zero tolerance for it as well," he
tells ShippingWatch, describing the change as "signifant."
As examples of bad governance, he mentions non-transparent transactions involving management's private
companies and payments to the executive team for buying and selling ships. This has deterred investors
from placing money in shipping, and it is therefore time to correct this, says Mehrotra. He points out that
the worst-governed companies have lost 90-95 percent of their stock market value over the past five years.
On the other hand, companies such as Eagle Bulk, Euronav and Ardmore have found it easier to raise
money, as they are transparent and aligned with their shareholders.
"The evidence clearly shows that there is a tangible result in terms of performance. I am not saying
shipping companies should have good governance, because it is the right thing to do, although it is, but
because at the end of the day it translates to more money," he says.
Does that mean you advise your clients not to invest in companies that have bad corporate governance?
"Going forward, yes that is the case. I do not care what the upside is anymore, if you have bad corporate
governance, I am not going to be recommending investing in your company from a research standpoint,"
says Mehrotra, adding that he believes things are slowly starting to change.
Major bank has refused loans
At the major shipping banks, a new focus on proper governance in shipping has also emerged.
Martin Lunder, Managing Director of Shipping, Offshore & Oil Services at Nordea in New York,
participated Tuesday in the Hellenic/Norwegian-American Chambers' Shipping Conference in Manhattan,
Shipping finance: The next battleground
and proper corporate governance featured as a theme in several of the discussions. He stressed that the
matter plays a bigger role today than in the past when Nordea issues loans.
"If we look at how to select customers, we look at the good old concepts like owner, management and
reputation. But then we also have things we probably didn't focus that much on before. That's good
corporate governance and transparency. These are very important things for us," he said.
Bad governance
Amit Mehrota of Deutsche Bank lists five watch items for investors that are indicative of bad governance:
• related party transactions
• sales and purchase fees
• using mostly "other people's money"
• return of capital masked as "dividends"
• non-amortizing loans
The shipping banks have also in recent years increased their focus on whether carriers are socially
responsible and look out for the environment. This applies not least to Dutch ABN Amro, which also
participated in the conference Tuesday.
Francis Birkeland, the bank's Head of Transport & Logistics for the Americas, explained that ABN Amro
rates all its customers according to a series of social and environmental criteria – for instance how carriers
scrap their vessels.
"This is all part of a bigger picture we create to better understand how our clients are behaving. And if they
behave sub-standard they will simply not get anything," he said, noting that the bank has been a standard
bearer behind a series of guidelines for responsible shipbreaking, guidelines onto which Nordea has signed.
[ShippingWatch]
14/02/2018
By Basil M. Karatzas, chief executive of Karatzas Marine Advisors & Co
Though the shipping market appears to be getting back on track after tough times, challenges remain for the
world of shipping finance.
A decade after the crisis in the shipping industry started, it seems that the market now is slowly moving to a
favourable equilibrium, with the worst behind us. Freight rates have stabilised and hover in positive
territory, while the outstanding orderbook is low-to-manageable in most asset classes in shipping. With the
hope that there will be no rushed stampedes in any direction, the next few years look, at the very least,
stable for an industry still in pain.
There is a notable dearth of financing available for this capital-intensive industry, and, to the extent that
capital is available, the cost of obtaining it has moved to significantly-high levels
There is a notable dearth of financing available for this capital-intensive industry, and, to the extent that
capital is available, the cost of obtaining it has moved to significantly-high levels
While supply and demand for ships slowly seems to have found its natural path, there is still a major
concern in respect to shipping finance. In short, there is a notable dearth of financing available for this
capital-intensive industry, and, to the extent that capital is available, the cost of obtaining it has moved to
significantly-high levels, as compared to the financing-costs of the last decade and also in respect to what a
still-weak industry can afford.
Challenges remain
For starters, private equity funds and institutional investors have effectively lost any interest in shipping.
Many of these funds were ―sucked‖ into investing in newbuildings in 2013 in the hope of a pre-mature
market recovery and they ended up losing billions of dollars. Not only was the timing wrong, but many
mistakes were made in terms of operations, strategy, execution and sharing risk. At this stage, there is
minimal interest in investment in shipping, unless there is a special ―angle‖ to it, preferably involving
cargo-movement. And equity investors in the public markets, where the best of the shipping companies are
listed, still do not see a ―catalyst‖ in order to invest.
The other major leg of the shipping financing-stool — that is, shipping banks — also stands anaemic and
unable to support the industry. Several major shipping banks have already stopped lending in the shipping
industry (i.e. RBS, Lloyds TSB, etc.), while a great deal more shipping banks have limited their activities to
a handful of clients. Despite the low-interest-rate-environment in the last few years, shipping banks could
not live with the risk embedded in the shipping industry and preferred to have huge cash reserves rather
than lend in a risky shipping industry. Additionally, the regulatory environment has not really been helpful
to shipping banks, as ship mortgages are asset-backed loans (as compared to corporate loans), and thus
costly for the bank in terms of capital they have to keep in reserve. Accordingly, for most of the shipping
banks and the average shipowner, only a handful of lending takes place.
On the other hand, for a few big shipowners who have critical mass and have been proactive enough to
build their balance sheet to be attractive to the banks, they have been taking the lion‘s share of the shipping
loans available. In short, in a rather-subdued shipping-lending market, a handful of big shipowners are
getting for themselves the crashing majority of the liquidity available — and that at extremely competitive
terms (i.e. L+200 basis points or even less) — while the vast majority of shipowners remain undesired by
the banks. It‘s clear that the trend is towards a market where ―the big get bigger‖ and the smaller owners
have to fend for themselves.
And how to get financing in a market that has little respect for the smaller shipowners?
Several credit funds and alternative capital funds have been set in the US and the UK that aim at filling the
funding gap in the shipping industry. At a price. Several of these funds lend (or provide leasing) at 8%
interest or more, whether expressed in absolute numbers or in terms of spread over Libor. In quantitative
terms, for every $10m borrowed, just the daily interest payment alone is $2,300, and this is on top of
operating expenses and amortisation of the loan. There is great demand for such financing, given the lack of
alternative options, and indeed, it‘s high-cost financing. There are already a few shipowners who are
buckling under such a usurious debt burden and already sweating to save their vessels from arrest. Such is
the state of the market.
Of course, there is still Japanese and Chinese leasing, and to a certain extent, the Norwegian bond market
— all of which have been rather active, and at rather competitive terms and cost of capital (ranging from
4% to 8%). But again, these venues for shipping finance are available only to shipowners who have certain
critical mass (at least twenty vessels, etc.) and a viable business plan to support.
Silver linings
Shipping finance is the ―bottleneck‖ at present in shipping as it‘s a dislocation in the market. On the bright
side of things, lack of shipping finance has been one of the reasons that the outstanding orderbook has been
Shipbreaking: Ex-editor of Lloyd’s List is blatantly lobbying for unsafe and unsustainable
scrapping
coming down, leading to a more-balanced market. And lack of cheap shipping finance has taken lots of
speculation out of the market. No one can be displeased with these ―side-effects‖ — unless, of course, one
is a shipbuilder or a speculator betting that ships‘ prices will strongly appreciate.
Looking forward, shipping finance is likely to be the new battleground of the shipping industry. Shipping is
a capital-intensive industry, and having a competitively-financed fleet will always be a differentiating factor
for successful shipowners. We deem credit funds and alternative capital to only be a very opportunistic
source of financing in the short-term next few years, and never really a strategic, long-term partner to the
industry. Attempting to buy ships and build a fleet with 8% or more cost of debt at the prevailing terms is
an accident waiting to happen (we are not necessarily arguing that a risky industry such as shipping is
entitled to much-cheaper debt-financing, but now the cost and prevailing terms is a compact with the devil,
in our opinion).
One thing is clear: shipping finance is a sieve separating the chaff from the wheat. Shipowning seems to be
moving to an ―institutionalised‖ state where big shipowners will get to access competitively-priced capital
and grow while smaller shipowners will have strategic decisions to make. It does not seem that shipping
finance is a transient problem for one to wait out. Active planning and a solid strategy is required for one to
succeed, working with the right partners and advisors.
[Baltic Briefing]
14/02/2018
On 8 February, Michael Grey, Lloyd‘s List maritime editor and editor in chief between 1978 and 2009,
published his unique opinion on ship scrapping in Lloyd‘s List. The article was republished on 14 February
in SteelGuru.
Image Source: informa.com
The Shame Game - Michael Grey of Lloyd’s List
There is a new and nasty disease around this winter. Not the various strains of influenza, but more of a
social phenomenon, that is both unpleasant and reprehensible. It is facilitated by social media, the
technology that enables a small number of driven people to cause a great deal of noise and commotion
when they perceive something with which they disagree. To your average nose ringed activists, it is as if all
their birthdays have come at once, as they swarm around their prey.
It also spills into bullying and what is euphemistically called ―direct action‖ which is not far short of
violence, a modern derivation of the strategies employed in the 1930s, in certain parts of Europe. And
sadly, it seems to be working, with even big corporations, quasi-governmental organisations and people you
might think would have a stiffer backbone, cowed into submission by the noisy and persistent minority.
When the cause of the activists seems to be derailed by science, evidence or reason, that won‘t stop them as
they will just shriek the louder, take to the streets and the various media platforms, to silence those who
might disagree with them. Whether it is militant vegans persecuting pig farmers, the hunt saboteurs,
organised anarchists terrifying small retailers, right through to the climatologists against oil, who seemed to
have frightened the World Bank, it is collectively a testament to the powers of unreason and rage.
You might dispute the process, but I thought that the recent announcement by the Norges Bank and the
Council of Ethics of the Norwegian Government Pension Fund Global to the effect that they would
discriminate against shipping companies that had chosen to scrap ships in places they disapproved of, was a
classic example of this nasty disease showing itself in northern climes. Norwegians like to regard
themselves as terribly proper, happy to emphasise their environmental credibility (much of which is
facilitated by their oil and gas riches) and offering an example to us all.
But in this case, it would seem that the proprietors of all this money have allowed themselves to be unduly
influenced by activists who will stop at nothing to prevent ships being recycled on the beaches of Asia, who
care nothing about the livelihoods of those that work in this industry and who refuse to accept the
improving situation in many of these yards. In short, the fund managers have been bullied, persuaded by
what has become known as ―fake news‖, repeated ad infinitum by the activists of the NGO Shipbreaking
Platform, which is doing its damnedest to discredit the Hong Kong Convention.
You might suggest that the fund is free to do with its money as it wishes, but it is clearly acting out of
ignorance in respect to the status of the Hong Kong Convention, which effectively deals with the ships,
their materiel and the subsequent treatment of the land-based waste generated from this product. It deals
with the environment and the working conditions of those in the recycling yards.
There is also no shortage of objective evidence of the incremental improvements that have been taking
place in the three recycling nations of Asia. If they are trying so hard, is the discrimination of this fund
against potential users of these yards either fair or just? Is it based on any real evidence, or merely the
prejudiced views of an activist organisation, whose sole purpose is to prevent ships being recycled in places
of which they disapprove?
I merely ask the question of this fund chairman, who seems to have been influenced without properly
considering the situation on the ground. Is this action helping, or discouraging those yards which are
working hard and spending a lot of money, to bring their facilities into a state of compliance? Or is this just
―virtue signalling‖, which is another modern phenomenon that is related to the above.
Of course, matters would surely be helped by a little more encouragement by flag states to bring the Hong
Kong Convention into effect. Governments have all sorts of priorities, but if they have any sort of shipping
industry, they have a vested interest in this convention and it surely would not be too much trouble. There
may well be improvements that could be made, once the convention is up and running, but for goodness‘
sake give it a fair trial.
Shipping emissions: Scrubbers are not the perfect solution – for the Arctic or anywhere
We need to show the world‘s biggest recyclers that we care and will encourage their improvements, not
constantly bleat about their residual deficiencies. It is also time we started to see the loud noises made by
the one-dimensioned as what they are, and weigh the evidence in a more mature fashion. Which is quite
obviously what the Norwegian chairman failed to do, before issuing this ill-found edict. But the Fund is by
no means the first to be influenced by the mob, in an era of shame.
[Steel Guru / Lloyd‘s List]
14/02/2018
With the 2020 cap on the sulphur content of marine fuel oil looming on the horizon, the global shipping
industry is starting to show signs of action and in many cases, anxiety. A recent increase in media articles
on the issue suggests that many shipowners have yet to decide which route they will take in order to meet
the regulation: install scrubbers or move to low sulphur fuels.
A number of shipping companies, including Maersk, Hapag Lloyd and Klaveness, have indicated that they
will likely move to low sulphur fuels, and some fuel companies are quietly happy to sell a more expensive,
0.5% sulphur product, while hoping for low numbers of scrubber installation. Yet some bunker fuel
industry players are somewhat cynically claiming that installing scrubbers is the cheapest option. The new
year had barely dawned before it was reported that due to alleged ―low interest‖ from carriers with regard to
retrofitting scrubbers, some bunker suppliers actually want to pay for carriers to install scrubbers, provided
of course that the carriers continue buying the suppliers‘ fuel.
Scrubbers, however, are far from a perfect solution. From 2020, in order to reduce sulphur oxide (SOx)
emissions from shipping, IMO regulations dictate that fuel must have a maximum of 0.5% sulphur content.
Ship operators will need to either switch to low sulphur fuel, or use a scrubber to remove the SOx from the
exhaust gas. While switching to low-sulphur fuel
tackles the problem of air emissions at source, scrubbers are an end-of-pipe technology, which produces a
residue (sludge and wash-water) from the cleaning process that needs to be disposed of – and there is
concern that scrubber residue and wash-water could end up being dumped in the ocean.
Maersk, the world‘s largest container ship operator, has identified commercial, technical and operational
challenges as its reasons for not investing in scrubbers to meet the new sulphur cap in 2020. Some
international shipowner associations are now openly supporting a ban on the carriage of fuels containing
more than 0.5% sulphur on vessels which are not equipped with scrubbers, in order to simplify enforcement
of the sulphur cap.
Emissions from shipping pose an acute and substantial risk to human health. Pollutants such as particulate
matter, black carbon and sulphur oxide have been linked to an increased risk of heart and lung disease as
well as premature death. A study on the health benefits of the global sulphur cap, carried out by the Finnish
Meteorological Institute (FMI) and Energy and Environmental Research Associates, LLC (EERA), along
with related research concludes that globally 200,000 premature deaths will be prevented by 2025 as a
consequence of introducing the 0.5% sulphur cap in 2020.
Concerns have been raised about the availability of low sulphur fuels; however, according to the official
IMO fuel availability study and the IMO secretariat, the required volumes of low-sulphur fuel will be
available for the world fleet from 2020. Importantly, Mr Hughes of the IMO also reminds readers of why
the measure is being introduced in 2020 and not delayed to a later date: the need for a ―better, healthier
environment‖.
A.P. Møller - Mærsk makes waves with decision to offload energy units
As well as reducing SOx emissions, a switch by all ships from residual or heavy fuels to lighter or distillate
fuels can be expected to reduce black carbon (BC) by more than half, though the reductions will be lower if
ships switch from residual fuels to blends of residual and lighter fuels. Between 2013 and 2015, global
shipping emitted on average 77 kilo-tonnes of BC annually. BC is a potent, relatively short-lived, climate
forcing agent with a Global Warming Potential 3200 times stronger than CO2. When emitted and deposited
on Arctic snow or ice, the climate warming effect of BC is at least five times more than when emitted over
open ocean in temperate latitudes. In recognition of the serious impact of BC emissions from global
shipping on the Arctic environment, the IMO began a work process to address the threat in 2011. Having
agreed on a definition of black carbon, and identified ways to measures emissions accurately, the IMO will
now have to decide on BC abatement options by 2019.
By switching from HFO to distillate fuel, ship operators would incur minimal or no technical intervention
on ships, so switching fuels can be readily undertaken by the existing fleet. Enforcement of the sulphur
regulation would also be simpler when using low-sulphur fuel, since ships would have no need to carry
fuels with a higher sulphur content than 0.5%.
Ahead of a meeting of IMO member governments in early February which will consider measures to
implement the sulphur cap on fuel oil in 2020, the Clean Arctic Alliance is urging Arctic shipping operators
against the installation of scrubbers. The best protection for the
Arctic will be delivered by a move by shipping industry away from heavy fuel oils and towards low sulphur
diesel or distillate fuels. Not only will this remove the HFO spill risk, it will reduce emissions of both SOx
and black carbon.
[Clean Arctic Alliance]
14/02/2018
By Richard Milne
Danish group A.P. Møller - Mærsk stands by strategy to focus on container shipping and logistics
Breaking up is all the rage. It may seem an odd message around Valentine‘s Day but in the corporate world,
splitting up conglomerates has never been hotter.
Siemens and General Electric, perhaps the leading industrial conglomerates, are the most visible examples,
pursuing strategies that only a few years ago would have been considered too radical to contemplate. The
break-ups are egged on by activist investors such as Cevian Capital, which has even touted this era as the
―end of conglomerates‖.
However, sometimes it is worth stepping back and considering the rationale for breaking up again. Take
Mærsk.
The Danish group four years ago had its fingers in many pies from wholly-owned businesses in container
shipping, oil and gas and drilling rigs as well as being the main shareholders in Denmark‘s biggest bank and
supermarket chain. So some greater focus seemed necessary.
The stakes in Danske Bank and Danske Supermarked were the first to go. But the biggest step came 18
months ago when Mærsk announced it would sell off all its energy businesses, leaving it to concentrate
purely on shipping and logistics.
The break-up reflected internal frustration that the energy businesses had not worked as a ―natural hedge‖
Oil & gas shipping: Asia’s soaring gas demand opens window for new LNG projects
to the shipping unit. The idea had been that when the oil price was high, Mærsk would earn additional
money from energy while suffering from high fuel prices for its gigantic container vessels. Conversely, low
oil prices should have proved a boon for shipping.
In recent times, it failed to work out like that as container shipping remained bedeviled by overcapacity and
weak global trade in the aftermath of the 2008 financial crisis. On the day Mærsk announced its break-up,
Brent crude was trading at about $47 a barrel.
Today, however, Brent crude is trading closer to $70 a barrel. That helped Mærsk‘s oil business, which it
has agreed to sell to France‘s Total for about $7.5bn, almost triple its profits from 2016 to last year,
consolidating its position as the conglomerate‘s most profitable unit. At the same time, some of the old
worries about container shipping have returned, with Mærsk‘s share price falling more than a quarter in the
past six months.
Some investors query just how well the break-up is going. ―Obviously, we would prefer to allocate capital
ourselves,‖ says one Danish investor. ―But to get rid of a business that was your main source of profits and
where you could use its cash flow in the rest of the company, well, that‘s brave. I still worry that the
container shipping industry will not be as rational as they think.‖
Soren Skou, Mærsk‘s chief executive, is having none of it. He argues that having a pure focus on shipping
and logistics is still the right strategy. Mærsk remains exposed to the rising oil price, he adds, through a 3.8
per cent stake in Total that it is due to receive when the deal goes through later this quarter.
His vision is of making a container as easy to order and deliver from one side of the world to the other as a
parcel, using Mærsk Line for shipping, its APM Terminals unit for ports, and Damco for freight
forwarding. But while Mærsk Line is undoubtedly the big beast of its industry, carrying almost a fifth of
seaborne freight, it lacks scale in other parts of the supply chain.
It remains exposed to the oil price — higher bunker prices caused Mærsk Line‘s fuel bill to increase by
more than 50 per cent last year. A similar increase of $100 a tonne in fuel costs would hurt earnings by
$500m, it warned.
Mærsk‘s streamlining is also a bet that the container shipping industry will not repeat its own mistakes.
Deep-pocketed unlisted family and government-controlled companies have long behaved irrationally,
ordering vessels even when demand slows. Many remain sceptical that the industry can change its thinking,
but Mr Skou argues that increasing consolidation means the biggest players have a growing interest in
doing the right thing.
Still, the market seems skeptical. Mr Skou is under pressure to show that breaking up is not hard to do.
[Financial Times]
14/02/2018
By Jessica Jaganathan and Henning Gloystein
Soaring gas demand from China, India and Southeast Asia is sucking up an LNG supply glut previously
expected to last for years, opening opportunity for new production from East Africa to North America that
had been deemed part of the overhang.
Trade flows in Eikon show global liquefied natural gas (LNG) imports have risen 40 percent since 2015, to
almost 40 billion cubic meters (bcm) a month. Growth accelerated in 2017, with imports up by a fifth,
largely due to China, but also South Korea and Japan.
Asia‘s LNG market has been glutted since 2015, following massive development that began in the early
2000s. But a gasification program in China last year and strong economic growth across Asia pushed up
demand, contributing – along with a cold winter – to a doubling of LNG spot prices from mid-2017.
The market is expected to remain relatively tight for the remainder of 2018, with China‘s gas program
continuing and delays at several export projects. ―The tight market is going to continue simply because
demand is growing and expected projects have been delayed,‖ said Jun Nishizawa, senior vice president at
the energy division of Japan‘s Mitsubishi Corp‗s.
Nishizawa cited delays in projects at Cameron LNG export terminal in Louisiana, in which Mitsubishi has a
stake, and Freeport LNG in Texas. Freeport‘s first LNG train is scheduled to be completed in November
2018 and no delays have been announced. ―I don‘t think substantial LNG will be produced by these two
projects by end of the year,‖ Nishizawa said, speaking at an LNG industry conference last week in Bali,
Indonesia.
In Australia, the Ichthys project developed by Japan‘s Inpex and France‘s Total has seen several delays and
cost blowouts. Total‘s CEO said first exports now may not come until the second quarter.
The LNG tanker market is also tight, with few ships ordered in recent years. ―The global LNG tanker
market looks increasingly bullish for 2018 and 2019, as strong demand growth and a thinning order-book
pressure the available supply,‖ BMI Research said this week.
Chance for new projects
This unexpected tightening potentially opens the way for new projects for the first time in several years.
Many projects were delayed or axed when oil and gas prices started tumbling in mid-2014. Now energy
companies are returning to health as prices have improved. ―The entire Asian LNG market will increase. It
will stimulate more producers to take the risk to develop projects to get into Asia,‖ said Jarand Rystad,
chief executive of consultancy Rystad Energy.
In East Africa, U.S. energy firm Anadarko Petroleum is getting closer to a final investment decision (FiD)
as it lines up potential buyers for its Mozambique gas field. Tokyo Gas is the latest to near an offtake
agreement, according to three sources with direct knowledge of the matter, who asked not to be named as
they could not talk about ongoing contractual negotiations.
Anadarko‘s Mozambique concession holds an estimated 75 trillion cubic feet (2.1 trillion cubic meters) of
gas, its website says, four times 2017‘s globally imported LNG volumes.
Several export projects in North America also hope for FiD this year. They include LNG Canada, or
Kitimat, a $40 billion, 6.5 million-tonnes-a-year venture involving Royal Dutch Shell, PetroChina, Korea
Gas Corporation and Japan‘s Mitsubishi. In the United States, Cheniere Energy plans to expand, and
Pembina Pipeline hopes for FiD on its 7.8 million-tonne-a-year Jordan Cove plant in Oregon.
Also, top LNG exporter Qatar plans to expand output to over 100 million tonnes a year by 2024, from 77
million tonnes now.
Other projects and expansions are planned from West Africa to Papua New Guinea. Just a few of these
projects would lift specialist LNG firms like Norway‘s Hoegh LNG. ―Now that they (China) are setting up
(import) terminals, more demand could emerge,‖ said Parth Jindal, managing director of Hoegh LNG Asia.
One risk to new projects, though, are emerging price disputes between buyers and sellers, with importers
demanding cheaper and more flexible terms. Poten and Partners, an energy brokerage and consultancy, said
this week a ―dearth of commitments‖ from buyers to long-term contracts would make it hard for developers
Oil & gas shipping: LNG tanker sets record with Arctic crossing
to finance new capacity.
New demand
North Asia has been anchoring demand for the past decade – Japan, China and South Korea being the top
three LNG importers – with China accounting for most of the growth. South and Southeast Asia are now
providing new demand.
India is starting a gas development program that could match China‘s, planning to add 11 LNG import
terminals to an existing four. Pakistan started importing LNG in 2015 and has ambitious expansion plans.
Bangladesh and Myanmar also plan to develop import terminals.
Thailand expects its LNG imports to climb nearly sevenfold, to 35 million tonnes a year by 2036, and
Indonesia, the world‘s fifth-biggest LNG exporter, is expected to become a net importer as domestic
production stalls. By 2030, Thailand and Indonesia together could import nearly 70 million tonnes of LNG
a year, said Azam Mohammad of consultancy McKinsey, comparable to all the gas China imported in 2017.
[Reuters]
14/02/2018
By Jennifer Johnson
The LNG tanker Eduard Toll has become the first commercial ship to ever complete an east-west crossing
of the Arctic‘s northern sea route in the winter.
The Eduard Toll is named after a Russian geologist and explorer. Credit: Teekay
Oil & gas shipping U.S.: Louisiana Offshore Oil Port set to export oil for the first time
The vessel, owned by Bermuda-based marine energy firm Teekay, set out from South Korea in December
for the Sabetta LNG plant in northern Russia. It completed the passage last month with the delivery of its
cargo to Montoir, France.
The Toll is the fourth of six icebreaking LNG carriers being produced by Teekay to serve Russia‘s $27bn
Yamal LNG plant, which began commercial operations in December 2017. The
vessels can operate independently of icebreaking escorts, and will reduce the shipping time between Yamal
and its Asian customers by almost one month.
Without the help of icebreaking ships, gas from Yamal would have to be shipped to Asia by transiting
around Europe and across the Indian Ocean via the Suez Canal. The Arctic‘s melting ice means that
crossing the northern sea route has become increasingly manageable for commercial ships.
Late last month, China released its own plan for developing a ―Polar Silk Road‖ that will take advantage of
new shipping routes opened up by lower ice levels. China‘s state-owned investment fund holds a 10% stake
in the Yamal LNG project.
[The Marine Professional]
14/02/2018
The flood of crude leaving the U.S. could be about to get a major boost: the nation‘s top imports terminal is
testing one of the industry‘s biggest tankers to load an export cargo for the first time.
If the trial run signals the start of regular exports from Louisiana Offshore Oil Port (LOOP), it will be a step
change in America‘s capacity to export the burgeoning production that‘s roiled global oil markets. The
ability to load very large crude carriers, the industry term for giant ships able to carry two million barrels,
will significantly cut the cost of shipping cargoes overseas.
On its website, the terminal said it‘s testing a supertanker following modifications last year to allow crude
exports. Shipping data compiled by Bloomberg and cargo tracking firm Kpler show the tanker is the Saudi
Arabian-owned Shaden, chartered by China‘s largest oil trader last month.
LOOP has been a vital piece of U.S. energy infrastructure for more than 30 years, handling imports from
across the world as well as gathering crude pumped from deepwater deposits in the Gulf of Mexico.
LOOP LLC moored the supertanker and ―initiated its detailed test and checkout procedure,‖ the operator
said on its website, without elaborating. The company said in July that it would seek customer interest in
loading services, modifying its facilities to allow the port to operate ―bi-directionally‖ to handle exports.
Infrastructure such as pipelines and ports has become the biggest bottleneck in U.S. oil exports, with traders
at times engineering logistically complex chains combining railways, trucks, pipelines, barges, and a ship-
to-ship transfers to get the crude out of the country. As U.S. output surpasses the record high of 10 million
barrels a day set in 1970, trading houses, pipeline owners and ports are investing in new infrastructure to
ship more American crude overseas.
While U.S. crude has already been exported using supertankers, other ports are too shallow to allow full
loadings, meaning smaller ships must shuttle multiple cargoes to the giant vessels as they wait to load
offshore. LOOP, because of the depth of the waters around it, would allow the industry‘s largest tankers to
load in one go.
Container shipping: Carriers hit by costlier fuel, now face spike in charter hire rates
The tanker Shaden is owned by the National Shipping Co. of Saudi Arabia, according to data from IHS
Maritime. It left the Middle East country‘s biggest export terminal on about Dec. 20, delivering its cargo to
the U.S. Gulf of Mexico earlier this month.
The carrier was booked last month by Unipec, China‘s biggest trader, charter data compiled by Bloomberg
show. Unipec is a unit of China Petroleum & Chemical Corp., or Sinopec, China‘s largest oil refiner. A
Sinopec spokesman declined to comment. It‘s unclear which grade of crude Shaden will load. LOOP is
connected by a 48 inch pipeline to a storage hub at Clovelly, 25 miles inland, which normally feeds U.S.
refineries.
Washington lifted a 40-year ban on most oil exports in late 2015, in the process reshaping the world‘s
energy map with U.S. crude being sent to locations including Switzerland, China, Israel and even Arab oil
rich nations such as the United Arab Emirates. The de facto export ban, which only allowed a few
exceptions, was imposed in the aftermath of a 1973 to 1974 oil embargo led by Saudi Arabia.
Since the ban was lifted, U.S. crude oil exports have surged to a record high of 2.1 million barrels, up from
a trickle a decade ago. China and other Asian nations have become big buyers of U.S. crude.
[Bloomberg]
14/02/2018
By Mike Wackett
Already facing higher fuel costs, ocean carriers could now be hit by a rise in charter hire rates. Container
shipping lines are being obliged to pay higher daily hire rates for chartered vessels as the availability of
tonnage falls to a new low.
Speaking during Maersk Group‘s 2017 Q4 earnings call last week, Maersk Line COO Soren Toft conceded
that shipowners were finally beginning to regain the upper hand in charter party negotiations. ―We are
seeing some pressure on the time charter rates, mainly as a result of the idle fleet being low,‖ he said.
Indeed, according to the most recent survey by Alphaliner, idle container capacity has shrunk to 191,441
teu, representing just 0.9% of the global fleet. ―The idle fleet has dropped sharply in the past fortnight as
carriers rushed to add capacity to take advantage of the high pre-lunar new year holiday demand in the Far
East,‖ said Alphaliner.
―Container vessel owners are confident that the charter market will maintain its positive momentum after
the lunar new year, with an expected push in demand, which, considering the low availability of spot
tonnage, should result in strengthening charter rates.‖
It noted that supply was ―getting tight in the VLCS segment‖ of 7,500-11,000 teu ships, and that there were
regions, such as the Atlantic, where there are ―no ships available‖. And, according to one broker source The
Loadstar spoke to this week, if you can find a VLCS, ―rates are high and conditions tough‖. He said owners
were ―starting to get their revenge on carriers‖ that had ―squeezed them‖ for so long.
Higher charter rates, and particularly less-flexible terms such as options and off-hire redeliveries, is bad
news for Maersk Line‘s operating costs in particular, as it charters 48.8% of its 4.3m teu capacity.
However, the bottom line of its top-ranking peers could be even harder hit by the scarcity of prompt
tonnage and rising charter hire rates. For example, MSC charters 65.4% of its 3.2m teu capacity, CMA
CGM 62.6% of 2.5m teu and COSCO 69.9% of 1.9m teu.
Container shipping: Hyundai Merchant Marine books 1.1 billion net loss for 2017, but still
plans to order more megaships
Fifth in the carrier rankings, Hapag-Lloyd charters just 31.9% of its 1.5m teu capacity, thus if the market
continues to rise, the German carrier will develop a cost-base advantage over its larger rivals.
Meanwhile, containership owners are deferring scrapping their older tonnage to take advantage of the
market conditions. One of the biggest, Athens-based Danaos, reported an $84m profit for 2017, compared
with a loss of $366m the year before, when it had been hit by impairments and the aftermath of the Hanjin
bankruptcy.
Moreover, although Danaos has several ships with charters expiring this year, in the current climate it
should not have too many problems in either extending these or finding new charterers.
According to the latest demolition report from London-based broker Braemar ACM, so far this year only
five ships, for 13,000 teu, have been scrapped. This compares with 41 vessels, for 127,000 teu, at the same
time in 2017.
[The Loadstar]
13/02/2018
By Mike Wackett
Hyundai Merchant Marine (HMM) slumped to a KRW1.2trn ($1.1bn) net loss in 2017. And this follows a
KRW484bn loss the year before, bucking the industry trend of improved profitability.
However, seemingly undaunted by the magnitude of its continued losses, the South Korean carrier is to
invest $95m in 30,000 new containers and is reported to be on the verge of an order for a dozen 22,000 teu
vessels and eight of 13,000 teu.
HMM‘s revenue increased 10% year on year, to KRW5.028trn, from a 30% surge in volumes, to 4.03m teu,
but the EBIT loss was KRW407bn ($375m), compared with KRW833bn the year before. Then HMM was
forced into a painful restructuring as a consequence of a prolonged industry malaise that resulted in the
bankruptcy of compatriot Hanjin Shipping.
HMM attributed the worsening net figure to a KRW479bn book loss on the sale and lease-back of 10
vessels in March last year to state-owned Korea Shipping and Maritime Transportation (KSMART), a
tonnage bank initiative of the South Korean government set up the previous January to support the nation‘s
maritime industry.
During a company strategy meeting in December, HMM‘s president and chief executive, CK Yoo,
commented on rumours that the carrier was looking to place an order for 22,000 teu ultra-large ships.
―This will be the mega-shipbuilding project in accordance with the national expectation for being a leading
shipping nation,‖ said Mr Yoo. ―HMM is now in the good position to be a world-class, leading shipping
company by overcoming new environmental regulations starting from 2020.‖
Mr Yoo was referring to the global ship fuel 0.50% sulphur cap in IMO regulations coming into force on 1
January 2020 that could see carriers‘ bunker costs double and further tilt industry competitiveness in favour
of bigger, more fuel-efficient vessels.
Assuming that these ship orders are confirmed, the funds will be provided by KSMART. However, how
HMM would deploy the 22,000 teu behemoths has so far not been explained by the company. They would
Dangerous goods: Call to take action
only be suitable for operation on the Asia-Europe tradelane, where currently HMM is restricted to just a slot
charter agreement with the 2M alliance.
The 2M is unlikely to allow HMM to deploy its own vessels on the route – not least because Maersk Line
and MSC‘s customers are said to have been unhappy at the exposure of their cargo to a financially weaker
carrier.
Meanwhile, Maersk Line last week reported a net profit of $521m for 2017, following a loss of $384m the
year before, and most other carriers are expected to also report improved earnings. According to recent
analysis by maritime consultant Drewry, container lines are on course to achieve some $7bn in consolidated
profit for 2017 trading.
[The Loadstar]
13/02/2018
Most supply chain practitioners will be familiar with the fact that international dangerous goods regulation
follows a biennial cycle of review and development that is initiated by the UNECE (United Nations
Economic Commission for Europe) ―Committee of Experts on the Transport of Dangerous Goods and on
the Globally Harmonized Classification and Labelling of Chemicals‖.
This snappily-named committee has two primary
responsibilities (handled through respective sub-
committees) – firstly, to ensure harmonisation of
hazard classification of chemicals (GHS) and,
secondly, to develop recommendations relating
to transporting such chemicals by any mode
(TDG).
Formulation of international regulation
Once these technical foundations have been
established, in particular the UN Model
Regulations, those responsible for the
development of regulation for the different
transport modes – air, sea, road, rail and inland
waterway – apply the detail as appropriate for
the mode concerned. There are differing
transitional arrangements for each version or
amendment of the resultant regulation, allowing
early voluntary application of the forthcoming
regulation as well as clear finality as to when
any given version is no longer valid.
Thus, in relation to the carriage of packaged dangerous goods by sea, Amendment 38-16 of the IMDG
(International Maritime Dangerous Goods) Code came into force on 1 January 2017 on a voluntary basis
and became mandatory from 1 January 2018 for a period of two years until 31 December 2019. The
previous Amendment, 37-14, valid until 31 December 2017, must no longer be used. Further details can be
found on the IMO website. All stakeholders involved in the international carriage of dangerous goods by
sea need to ensure that all versions (whether held in paper or electronic form) prior to Amendment 38-16
are destroyed and any reliant corporate procedures are updated as appropriate.
“All stakeholders need to ensure that all versions of the IMDG Code prior to Amendment
38-16 are destroyed and any reliant corporate procedures are updated as appropriate”
As would be expected in a world of changing risks and mitigations, the latest amendment of the IMDG
Code takes account of a number of developments, often responding to incidents that have occurred. While
the IMO website provides information on some of the key changes, additional explanation may be found in
various reports, such as our own assessment in January 2017 when the amendment entered its transitional
year.
Combatting crime
TT Club has repeatedly highlighted the problems that have arisen relating to dangerous goods – including,
for example, the fact that most significant ship fires, which occur roughly every two months, are
attributable to such cargoes, often exacerbated by criminal misdeclaration or fraud. Shipping lines have,
inevitably been in the vanguard of those seeking to ensure that dangerous goods are appropriately
classified, packaged, packed and declared through the supply chain. One, the ‗Cargo Patrol‘ initiative
created by Hapag-Lloyd, was awarded the TT Club Innovation in Safety Award in 2017 by ICHCA
International. This award reflected not only the efficacy of the search engine capability to identify
erroneous shipments but also the open-handed decision to pass the software to IBM for further development
and to make the solution widely available to other shipping lines.
TT Club has also collaborated with Exis Technologies for many years and sought to promote their
Hazcheck systems as a highly valuable portfolio of solutions in relation to the source material (the IMDG
Code itself), cost-effective e-learning and practical support applications to assist practitioners with every
aspect of achieving compliance with the regulations, through the booking, packing, marking,
documentation and ship stowage processes.
Overcoming complexity
The latest addition to this portfolio of risk mitigation tools in relation to dangerous goods was highlighted in
TT Talk last October. The Hazcheck Restrictions Portal has the aspiration and potential to reduce incidents
further, primarily by ironing out confusion and error in the necessarily complex operational processes
involved in navigating today‘s supply chains with such goods.
“The Hazcheck Restrictions Portal has the aspiration and potential to reduce incidents
further”
The initiative was birthed in the growing awareness that each carrier has been collating its own record of
restrictions in relation to house policies, ship owner policies, ship constraints (eg. number of available
reefer points), and restrictions applied at the applicable ports/terminals of loading, transit, transhipment and
discharge. This listing of checks itself demonstrates the complexity, possibility for error or failure to
update, and pure inefficiency – all in an area that is intended to achieve compliance and safety, but is
hugely burdensome and delivers zero competitive advantage.
Shipbreaking: Dutch prosecutors press criminal charges against Seatrade for illegal sale of
end-of-life ships
Not only does individual collation smack of inefficiency, but simple comparisons demonstrate that there are
material differences in understanding and interpretation about the way that, in particular, port/terminal
prohibitions, restrictions and additional requirements operate. The business case to engage with a different
process is clear; while container carriers clearly can benefit from improving clarity on the ship-board side,
the most urgent need is for the port/terminal community to upload and maintain the relevant data. TT Club
repeats the call for all such stakeholders to take action and contact Exis Technologies.
“TT Club repeats the call to take action”
[TT Club]
13/02/2018
For the first time in Europe, Public Prosecutors are bringing criminal charges against a ship owner –
Seatrade – for having sold vessels to scrap yards in countries ―where current ship dismantling methods
endangers the lives and health of workers and pollutes the environment‖.
The case is being heard in a Rotterdam Court this week, and the Dutch Public Prosecutor calls for a hefty
fine (2.55 million EUR) and confiscation of the profits Seatrade made on the illegal sale of four ships, as
well as a six-month prison sentence for three of Seatrade‘s top executives. Seatrade is based in Groningen,
the Netherlands, and is the largest reefer operator in the world.
In 2013, the NGO Shipbreaking Platform had revealed Seatrade‘s sale of the SPRING BEAR and SPRING
BOB to Indian and Bangladeshi breakers respectively. The heavy charges pressed by the Dutch Prosecutor
additionally involve the scrapping of the SPRING PANDA and SPRING DELI in Turkey, and are based on
international laws governing the export of hazardous waste and the EU Waste Shipment Regulation. The
Regulation prohibits EU Member States from exporting hazardous waste [1] to countries outside the
OECD, as well as requiring a prior
[1] Ships contain many substances that are toxic within their structure, including asbestos, heavy metals and
residue oils. Since Seatrade specializes in transporting refrigerated goods, all the vessels additionally
contained chlorofluorocarbon (CFCs), a substance which is known to cause ozone depletion in the upper
atmosphere. The Montreal Protocol (on Substances that Deplete the Ozone Layer), which entered into force
in 1989, has since its adoption phased out and prohibited the use of CFCs.
informed consent for such exports. All four vessels departed on their last voyage to the breaking yards from
the ports of Rotterdam and Hamburg in the spring of 2012.
The Prosecutor presented evidence that Seatrade was planning on selling the ships via a cash-buyer in order
to maximize financial gain. In e-mail exchanges between Seatrade and Baltic Union Shipbrokers, cash
buyer GMS offered the highest price for special parts of at least one of the vessels. The end-sale was not to
GMS, but another undisclosed cash buyer. According to the Prosecutor, Seatrade opted for using a cash
buyer, rather than recycling the ships in a safe and clean manner, for purely financial reasons. Cash buyers,
such as GMS, are infamous scrap-dealers specialized in bringing ships to the beaches of South Asia, where
the price of end-of-life vessels is higher due to the exploitation of migrant laborers and to weak, or no,
enforcement of safety and environmental standards. According to the Prosecutor, that Seatrade knowingly
sold the vessels for dirty and dangerous breaking in order to maximize profits further aggravates the charge
[2].
Seatrade sold the ships, via the company Baltic Union Shipbrokers, to cash-buyer GMS. According to the
Port development Chile: Criticized new $3.3 billion container terminal at San Antonio to
facilitate growth
Prosecutor, Seatrade opted for using a cash buyer, rather than recycling the ships in a safe and clean
manner, for purely financial reasons. GMS is an infamous scrap-dealer specialized in bringing ships to the
beaches of South Asia, where the price of end-of-life vessels is higher due to the exploitation of migrant
laborers and to weak, or no, enforcement of safety and environmental standards. According to the
Prosecutor, that Seatrade knowingly sold the vessels for dirty and dangerous breaking in order to maximize
profits further aggravates the charge [2].
―Despite ongoing criminal investigations, Seatrade sold two more ships – the SINA and ELLAN – for dirty
and dangerous breaking on the beach in Alang, India, in August 2017‖, says Ingvild Jenssen, director of the
NGO Shipbreaking Platform. ―This case adds itself to the growing demand, including from investors and
major shipping banks, for better ship recycling practices‖, she adds.
Authorities in Norway, Belgium, and the UK will be paying close attention to the verdict of the case.
Similar cases are currently being investigated there, involving shipping companies such as Maersk and
CMB, as well as the world‘s largest cash-buyers GMS and Wirana.
[NGO Shipbreaking Platform]
13/02/2018
A controversial new $3.3bn Outer Port in the Port of San Antonio, 100 km from Santiago de Chile, will be
financed through port tariffs.
Artist view of outer port at San Antonio. Credit: Dredging Today
Port development U.S.: Charleston Harbor deepening on track despite lack of funding in
Trump's proposed budget
With an annual throughput capacity of 6m teu, the San Antonio Outer Port is anticipated to allow the
country to meet the growing demand for maritime and port services, but critics have previously said the
facility is not needed, citing economic downturn as a risk.
Chilean President Michelle Bachelet has already announced the that the Outer Port, which will see a total
investment of $3.3bn, will be constructed to the south of San Antonio‘s current port facilities. Construction
will be phased in line with increases in demand and is expected to begin in 2020.
The Outer Port will have two quays of 1,730m each, offering the ability to receive up to 8 E class vessels
(397m in length) simultaneously. Each terminal will have a support area of 96 hectares for handling
containers.
A 3,900m long breakwater will be constructed to protect the new quays and inner navigation areas by
guaranteeing the entry and departure of ships in adverse conditions. Spanish
engineering firm SENER will undertake the design of the breakwater, as well as the physical modelling of
the outer port, which has already involved HR Wallingford.
A new four-lane road access has been designed that will connect the two outer port terminals with the
current port access route, which will be extended from four to six lanes. Rail access from Santiago will be
provided via the existing route to Llolleo station in San Antonio. Here, a depot will be provided with four
railroads. From this point, two new railways will be constructed to connect to the outer port. This is
anticipated to enable up to 40% of the port‘s total cargo to be handled by train.
[Port Strategy]
12/02/2018
By David Wren
President Donald Trump did not include any money for the Charleston Harbor deepening in his proposed
budget for the coming federal fiscal year, but the lack of funding won't keep dredges from starting to dig the
waterway later this month.
Charleston Harbor. Credit: US Army Corps of Engineers Civil Works Review Board (CWRB]
China wants to turn the Indian Ocean into the China Ocean
The U.S. government allocated $17 million in a previous budget to begin the dredging and another $300
million already set aside by South Carolina officials will keep the project going while federal dollars trickle
in over the coming years.
"This project is not alone, as there are many very important and worthy civil works projects around the
nation that are justified for construction that are not funded" in next year's budget, Glenn Jeffries,
spokeswoman for the Army Corps of Engineers in Charleston, said of harbor deepening. "In an era of
constrained resources, hard decisions have to be made with available resources."
Jim Newsome, president and CEO of the State Ports Authority, said the deepening project will start on time
this month "thanks to the work of our (state) legislature in proactively setting aside $300 million in 2012."
Newsome said South Carolina politicians as well as the SPA's board and management continue to push for
federal funding.
"Clearly, top 10 U.S. container ports achieving harbor depths of 50 feet or more are deserving of such
funding in the big container ship era," Newsome said. He added an infrastructure plan Trump announced
Monday, which leverages federal dollars with local contributions, "will give further impetus to funding
essential container port infrastructure in the U.S."
The Army Corps last fall awarded two contracts to Great Lakes Dredge & Dock to start digging Charleston
Harbor to a 52-foot depth, giving the Port of Charleston the deepest waterway on the East Coast.
The first contract, for $47 million, is to remove 6 million cubic yards of material from the harbor's entrance
channel. The second contract — at $213 million the largest awarded by the local Army Corps office — is to
remove nearly 8 million cubic yards of material from the entrance channel. Work under those contracts is
expected to take between 40 and 76 months. Additional dredging of the upper and lower harbors has not
been finalized.
The harbor deepening is part of roughly $2 billion the authority will spend over the next few years to
accommodate large container ships traveling to the East Coast through the expanded Panama Canal. Other
projects include a new container terminal, strengthening the wharf at the port's Wando Welch Terminal and
purchasing new cranes and other equipment.
While no money was set aside in Trump's budget for Charleston, the president did allocate $49 million
toward dredging the Port of Savannah's shipping channel. That $973 million project needs roughly $100
million a year to avoid construction delays.
The president's budget for fiscal 2019 also included about $29 million for Army Corps projects in South
Carolina, with $20.6 million of that going toward Charleston Harbor maintenance dredging. The federal
allocation also provides money for routine operation and maintenance of the Cooper River Rediversion
Project, the Atlantic Intracoastal Waterway and various environmental surveys and inspections.
Trump's $4.4 trillion budget also includes money to hire 2,000 federal agents to help arrest undocumented
immigrants and $1.6 billion to build a portion of his promised wall along the Mexican border while making
deep cuts to health care, education grants, environmental programs and community development. The
budget now moves to Congress, which is likely to rewrite much of the spending plan.
[The Post and Courier]
12/02/2018
By Panos Mourdoukoutas
China wants to turn the vast Indian Ocean into the China Ocean—when it comes to investment and
commerce, that is.
To execute this grand plan, Beijing is investing heavily in several infrastructure projects. Like Sri Lanka‘s
ports of Colombo and Hambantota, which give Beijing a trade outpost into the Indian Ocean. And the
China–Pakistan Economic Corridor (CPEC), a colossal infrastructure project, which connects China‘s
western territories to the Indian Ocean.
But that‘s the old news. The new news is that China is turning Maldives into another trading outpost with
the acquisition of land there, and the signing of a free trade agreement.
China’s Maritime Silk Road
Source: Merics
These developments have irked India, for a couple of reasons. One of them is economic. Sri Lanka and
Maldives can serve as a base for China to flood the Indian market with its products. Malvides, for instance,
has a free trade agreement with both India and China. This means that Beijing can send products to
Maldives first, and then re-export them to India.
The other reason is geopolitical. China wants to encircle India by turning trade outposts into military
outposts. To be fair, China has repeatedly asserted that it doesn‘t plan to use the port for military purposes.
The trouble is that history proves otherwise. In the past four years, Chinese submarines have begun
suddenly and repeatedly showing up in the Chinese-operated South Container Terminal in the port of
Colombo. And that‘s in spite of India‘s high-profile protests, which included join naval exercises with
America, Japan and Australia.
While it is unclear whether China will succeed in turning the Indian Ocean into the China Ocean, one thing
is clear: antagonism between China on the one side and India and its allies on the other will intensify, as
China rises economically. And that raises geopolitical risks, something investors should be concerned.
Port state control: Ship detentions at Chinese ports soar
Marine pollution East China Sea: A nearly invisible oil spill threatens rich fisheries
[Forbes]
12/02/2018
By David Glass
With greater numbers of ships calling in Chinese ports daily, it is perhaps not surprising more ships are
being inspected and more and more ships are being detained.
But in step with the increase in traffic, the Beijing government "has become very strict" on matters of
safety, security, and the environment, "putting big pressure on owners" the Greek Shipping Forum was told,
8 February.
"The rate of detentions is very high in China compared with the Paris and Tokyo Port State Control
regimes," Terence Zhao, president of Singhai Mariner Services, told the Capital Link forum. "The number
of inspections being carried out is also much higher, with one ship in 10 inspected in some ports being
detained," he said.
Zhao also warned the ship‘s flag state is a big factοr, rather the PSC records when it comes to inspections.
Last year, 6,707 ships were inspected, with 5,771 booked for deficiencies, "some 85%" he said. Of the
inspected ships, 358 were detained, 5.23%, considerably higher than the Paris and Tokyo PSC detentions.
Chinese inspectors found an average of 3.5 deficiencies per ship.
Zhao said detentions can lead to a ship being detained from one to 15 days, and ―sometimes longer‖.
There are some 55 ports with inspection centers in China, employing about 3,000 inspectors, many of them
young and English speaking. And Zhao warned "owners should advise their crew to show respect towards
them". Further, owners should take special attention to being prepared when they are sailing for China for
as well as documentation and equipment inspections, part of the process is drills and indeed, the owners
"should arrange special drill training for crew and officers prior to sailing to China‖.
However, Zhao had some better news, saying the Chinese authorities sometimes, are ready to listen to
explanations, and in some cases reconsider their inspection findings.
Still, he warned that "because of the time differences between China and other parts of the world, for
example six hours in the case of Greece, China's port state inspection regime can be an owners nightmare,
as they are causing a lot of lost sleep".
[Seatrade Maritime News]
12/02/2018
By Steven Lee Myers And Javier C. Hernández
A fiery collision that sank an Iranian tanker in the East China Sea a month ago has resulted in an
environmental threat that experts say is unlike any before: An almost invisible type of petroleum has begun
to contaminate some of the most important fishing grounds in Asia, from China to Japan and beyond.
It is the largest oil spill in decades, but the disaster has unfolded outside the glare of international attention
that big spills have previously attracted. That is because of its remote location on the high seas and also the
type of petroleum involved: condensate, a toxic, liquid byproduct of natural gas production.
Unlike the crude oil in better-known disasters like the Exxon Valdez and the Deepwater Horizon,
condensate does not clump into black globules that can be easily spotted or produce heart-wrenching
images of animals mired in muck. There‘s no visible slick that can be pumped out. Experts said the only
real solution is to let it evaporate or dissolve. Absorbed into the water, it will remain toxic for a time,
though it will also disperse more quickly into the ocean than crude oil.
Experts say there has never been so large a spill of condensate; up to 111,000 metric tons has poured into
the ocean. It has almost certainly already invaded an ecosystem that includes some of the world‘s most
bountiful fisheries off Zhoushan, the archipelago that rises where the Yangtze River flows into the East
China Sea.
Continue reading the main story
The area produced five million tons of seafood of up to four dozen species for China alone last year,
according to Greenpeace, including crab, squid, yellow croaker, mackerel and a local favorite, hairtail. If
projections are correct, the toxins could soon make their way into equally abundant Japanese fisheries.
Exposure to condensate is extremely unhealthy to humans and potentially fatal. The effects of eating fish
contaminated with it remain essentially untested, but experts strongly advise against doing so.
―This is an oil spill of a type we haven‘t seen before,‖ said Paul Johnston, a scientist at Greenpeace
Research Laboratories at the University of Exeter in England. ―Working out the impact is actually a huge
task — probably next to impossible.‖
For China, the disaster has become a test of its ambitions as a global and regional steward of the seas,
especially at a time when it is reinforcing its territorial claims, including disputed territories with Japan in
these waters. Given its proximity, China has taken the lead in investigating the disaster and monitoring the
spill, but it has faced some criticism for what some see as a slow and inadequate response thus far.
Officials in Beijing announced on Feb. 1 that samples of fish taken within four to five nautical miles of the
sunken ship contained traces of petroleum hydrocarbons, suggesting possible condensate contamination;
they pledged to expand the range of testing to 90 miles, and closely monitor fish coming into markets.
The threat of contamination has raised anxiety in the ports that cling to the rugged coastlines of Zhoushan‘s
islands, though such fears are usually expressed with quiet resignation lest one offend the government.
―The quality will go down because of the oil in the water,‖ Hai Tao, a fish wholesaler at the International
Aquatic Product City in Putuo, a district on Zhoushan‘s biggest island, said as he watched a ship unload
hundreds of crates of mantis shrimp, a delicacy headed to restaurants across China.
The spill began on the evening of Jan. 6, when the Sanchi, a Panamanian-flagged, Iranian-owned tanker,
collided with a cargo ship in waters roughly 160 nautical miles east of Shanghai. The Sanchi exploded and
burned for more than a week before sinking. All 32 crew members are presumed dead.
Katya Popova, a senior research scientist at the National Oceanography Center in England, said there had
not been a sufficiently coordinated international operation, and that was exacerbating the scale of the
disaster. The lack of visible devastation has almost certainly dampened public reaction that might have
galvanized a more vigorous response. ―A much larger-scale operation is needed,‖ she said. ―It hasn‘t been
monitored. It‘s a mystery.‖
In Beijing, officials have been eager to demonstrate that the government was doing everything possible first
to respond to the disaster and then to protect the health of its economically and politically sensitive fishing
industry, which employs 14 million people.
They have issued regular statements and held briefings, showing video of efforts to clean up the condensate
and to monitor the sunken wreck, which was located at a depth of 115 meters, or about 377 feet. It is
believed to still be leaking condensate and other fuels.
Han Xu, deputy director of the fisheries administration bureau of the Ministry of Agriculture, told reporters
at a news conference in Beijing late last month that the accident had ―a certain impact on the density of
fishery resources‖ in the area, but that the government did not yet know the extent of the threat.
―At present, the investigation and monitoring are still ongoing and we are awaiting results of investigations
into pollution and successive fishery resource investigations,‖ he said.
In the meantime, the authorities have ordered a ban on fishing in the areas affected. In the East River Fish
Market in Putuo, one seller brusquely dismissed questions about the spill as she stood beside a stall full of
fish, including a tuna selling for roughly $100. ―Our fish are not from out there,‖ she said, though some of
them very likely were.
The size of the area affected by the disaster has expanded and contracted. At one point in January, there
were three different spills spotted on the surface, covering an area that measured more than 128 square
miles. Complicating the calculations is uncertainty about the amount of condensate that ended up in the
water.
China‘s Ministry of Transportation initially played down the possibility of a spill, then said 136,000 metric
tons had been lost. Later, it revised the figure downward to 111,000 tons — still enough to make it the
worst tanker spill at sea since 1991.
Some of the condensate may have burned off in the fires, sparing the sea, but contaminating the air.
Officials said they were testing air samples in the provinces around Shanghai. If any fuel washes ashore,
there may be ways to limit the damage in the immediate vicinity, with machines or by hand. But the biggest
issue now seems to be that nobody knows the scale of the problem or which parts of the high seas are
affected.
The spill is already drifting east toward Japan, but winds and currents can be unpredictable. The
contamination could even reach waters as far off as Tokyo. The Japanese Coast Guard has announced that
black globules had been found on at least nine islands along the chain between Okinawa and the main
Japanese islands. Those would not be from the condensate, though they could be other oil from the Sanchi
wreck.
A flotilla of fishing boats in one of Zhoushan‘s harbors. China‘s fishing industry employs 14 million
people, making the spill a sensitive topic. Credit Gilles Sabrié for The New York Times
In any case, the discoveries suggested the condensate may have already reach Japan‘s third most important
fishery, teeming with bonito and yellowfin tuna. A dead sea turtle, evidently choked by oil, washed ashore
on one island, Amami Oshima.
Hiroshi Takahashi, a fishery official in Kagoshima, said that the impacts of the spill on seafood were ―the
biggest concern right now.‖
The cause of the disaster remains a mystery. The Sanchi was nearing the end of its voyage to South Korea
through one of the most heavily traversed parts of the world‘s oceans when it collided with the CF Crystal,
a bulk carrier flagged in Hong Kong that was delivering grain to China from the United States.
As the Sanchi erupted into flames, the Crystal managed to make harbor — and is now in one of Zhoushan‘s
many ports. At least five Chinese Coast Guard ships, aided by fishing boats, led the rescue efforts and the
Container shipping: Industry has 'destroyed $110 billion of shareholder value' during the
last 20 years
long struggle to extinguish the blaze that consumed the tanker for eight days before it sank on Jan. 14.
Japan and South Korea each sent one ship, and the United States Navy sent a P-8A Poseidon aircraft from
Kadena Air Base on Okinawa.
A Chinese emergency team in flame-resistant suits at one point boarded the burning ship, recovering the
bodies of two crewmen and the ―black box‖ data recorder before the intensity of the heat drove them off.
One other body was pulled from the sea.
On the Shengsi islands, the part of the Zhoushan archipelago that was closest to the accident, the spill could
threaten an industry already strained by polluted runoff from the Yangtze and by overfishing.
[The New York Times]
12/02/2018
By Mike Wackett
A new report estimates that over the past 20 years the container industry has ―destroyed‖ about $110bn of
shareholder value. Its author, McKinsey & Company, said this had mainly been due to continuous
overcapacity in the sector.
The management consultant said bulk shipping was the only transport sector with a worse performance than
liner shipping‘s average of less than 2% return on invested capital. The profitability league table is headed
by the cruise line industry, with a return of over 12%.
Market leader Maersk Line‘s ROIC last year was 2.9% on sales of $23.8bn, but in the fourth quarter this
slid to just 1.8% as the carrier‘s services came under renewed rate pressure. The previous year, 2016, saw
Maersk Line produce a negative 1.9% ROIC for its shareholders from $20.7bn of revenue.
McKinsey‘s report, Container shipping: More mergers, better mergers, warns that the overcapacity problem
is set to continue into the next decade, ―even with conservative assumptions on new ordering‖.
It says: ―With overcapacity, container lines often accept any cargo, even if it barely covers marginal cost;
after all, carrying something extra on today‘s ship is usually better that carrying air.‖
The negative environment in the liner shipping sector had prompted ―unprecedented consolidation‖ said
McKinsey, noting that the combined fleet capacity of the top five carriers will have jumped from 35% to
67% after the takeover of OOCL by COSCO, and that ten of the top 20 carriers in 2013 no longer existed as
standalone companies.
Nevertheless, McKinsey said, further consolidation would be required in the liner sector and argued that the
M&A activity to date was ―not yet enough to turn the industry around‖.
Notwithstanding synergies from M&A deals – Hapag-Lloyd expects annual savings of $435m from its
integration of UASC and Maersk $350m-$400m a year from its takeover of Hamburg Süd – McKinsey
cautions that container line mergers ―come with a risk of revenue loss‖.
It lists four key reasons for such an impact on revenue, the first two relate to customer overlap in terms of
volume and price, the third that customers could be ―scared off‖ by the integration and lastly there is ―actual
service failure driving customers away‖.
To support this argument, McKinsey tables the revenue a year a after Maersk‘s 2005 acquisition of P&O
Nedlloyd and Hapag-Lloyd‘s purchase of CP Ships. In the former, ebit revenue dilution from the combined
operating revenue collapsed by 14.7%, while Hapag-Lloyd and CP‘s revenue shrank by 8.2%.
Speaking during Maersk Group‘s 2017 results presentation last week, chief executive Soren Skou conceded
Vehicle shipping: EU antitrust regulators to fine several car carriers for rigging bids
that there would be ―some retention loss‖ from the merging of Hamburg Süd‘s business into Maersk Line.
He added that growth in the trades where services were integrating would be ―slightly below the industry
level‖.
No doubt learning from the troubled purchase of P&O Nedlloyd, Maersk has opted to keep the iconic
Hamburg Süd brand, promising a ―light touch‖ they have said would only concern operational aspects.
Meanwhile, the much younger UASC brand will disappear as Hapag-Lloyd completes its incorporation of
the Middle-East based carrier.
―Lines need to decide on their strategy as well as their potential role in the consolidation, and they must
build on the experience of others to ensure successful integration while avoiding the mistakes of the past,‖
says the report.
[The Loadstar / McKinsey & Company]
05/02/2018
By Julie Gordon
The liquefied natural gas market is growing every year, but the LNG terminals that ship and receive the fuel
are shrinking.
contracts. LNG export terminals, where the gas is liquefied and put on vessels for shipping, have
traditionally been massive, custom-built facilities that cost tens of billions of dollars. And so to justify the
investment, they have typically required equally massive, long-term supply deals, often lasting a decade or
more.
Numerous terminal projects on the horizon, by contrast, are new modular-style designs built to snap
together like Legos, allowing for small to mid-scale liquefaction or regasification plants that can be
expanded if and when demand grows. The first next-generation liquefaction plant is under construction in
the U.S. state of Georgia and is expected to begin operating mid-year. These facilities, with far smaller
liquefaction units – known as trains – are ―more consistent with market conditions,‖ said John Baguley,
chief operating officer of Australia-based LNG Ltd, which has proposed mid-scale LNG plants in the
United States and Canada.
The new designs reflect a maturing market with a more diverse base of customers that will drive future
growth. In 2008, the average contract was for 18 years and more than 2 million tonnes per annum (Mtpa).
By 2016, it had dropped to less than eight years and less than 1 Mtpa, with new buyers in emerging markets
like China, India and Pakistan seeking flexibility due to market uncertainty.
These new buyers are fueling small utilities and industrial users such as fertilizer plants and factories, said
Alfred Moujaes, Houston President for Atlantic, Gulf and Pacific Company. The firm is building small,
modular plants for LNG buyers, who need to convert the liquefied fuel back to a gas form after shipping.
Typically, such markets will be small at first, but the hope is that demand will grow as additional customers
convert to LNG, Moujaes said. The modular plants allow terminals to grow with the market.
Demand for liquefied natural gas, or LNG, has taken off in recent years as it is a cleaner fuel than oil or
coal, and abundant supply has driven its price sharply lower. Overall global consumption of LNG rose to
33.1 billion cubic feet per day in 2016, about 10 percent of total natural gas usage; it is expected to grow by
75 percent by 2027, according to the U.S. Energy Information Administration.
Oil & gas exploration Norway: Greenpeace appeals after losing Arctic drilling lawsuit
The United States, with its abundant supply of pipeline gas and well-developed energy hubs such as the
U.S. Gulf Coast, is emerging as a dominant global producer. U.S. export capacity has shot up from less than
2 million tonnes per annum (Mtpa) in 2015 to 18 Mtpa in 2017, and is projected to top 77 Mtpa by 2022,
transforming the United States into the world‘s No. 2 exporter behind Australia.
In 2005, just 15 countries imported LNG; now there are 39, with another eight expected to hit the market by
2022, according to the International Energy Agency.
Tiny trains
The new style of North American liquefaction projects will be built in Asia before being shipped to the
United States for assembly. At the heart of these new terminals are modular trains which produce just a
fraction of the LNG of a traditional train. LNG Ltd has proposed four 2-Mtpa trains at its Magnolia project
in Louisiana, while Tellurian Inc is planning up to 20 1.38-Mtpa trains at its Driftwood project, also in
Louisiana. That compares to Cheniere Energy‘s four 4.5-Mtpa trains now operating at its 18-Mtpa terminal
in Sabine Pass.
With modular trains, companies hope to avoid the delays and cost overruns that have dogged custom mega-
projects like Chevron Corp‘s Wheatstone and Gorgon projects in Australia. Another large terminal, Sempra
Energy‘s Cameron LNG project in Louisiana with three 4.5-Mtpa trains, has been delayed to 2019 after
originally targeting a launch this year.
While modular designs allow more flexibility, some experts question whether they will ultimately cost less
to build and be as easy to expand as promised, noting the technology is unproven. ―The issue that
everybody is wrestling with is, does that really save you money?‖ said Jason Feer, head of business
intelligence at shipbroker Poten and Partners.
The first such facility in the U.S. will provide a test case. The $2 billion Elba Island project, being built in
Georgia‘s Chatham County by Kinder Morgan, will have 10 trains and export capacity of just 2.5 Mtpa.
The technology is attractive enough that Cheniere has proposed a cluster of seven 1.36-Mtpa trains for a
project being constructed in Corpus Christi, Texas, in addition to other, much larger liquefaction units.
Michael Wortley, Cheniere‘s CFO, said in an interview that the company still believes traditional large-
train designs work well. But it wanted to explore smaller-train technology, he said, to make sure ―we
weren‘t missing anything.‖
[Reuters]
12/02/2017
By Foo Yun Chee
EU antitrust regulators are set to fine Nippon Yusen KK (NYK) and several other Japanese carriers as well as
Norwegian Wallenius Wilhelmsen Logistics ASA (WWL) in the coming weeks for rigging bids for shipping
cars.
The EU sanctions follow a near six-year investigation which started with dawn raids by the European
Commission in September 2012 in coordination with Japanese and U.S. antitrust authorities. Competition
regulators around the world have penalized a number of carriers in recent years for fixing prices and dividing
the markets for shipping cars and other products on various routes.
Vehicle shipping: NYK China unit could be hit with $18.6 million fraud
Breakbulk shipping: Top 10 companies
Norwegian shipping company Wilh. Wilhelmsen ASA confirmed at the time the raids at its 50 percent-owned
Wallenius Wilhelmsen unit and EUKOR, in which it has a 40 percent stake. Other carriers involved in the
case include K Line (Kawasaki Kisen Kaisha Ltd) and Mitsui O.S.K Lines, the people said.
The Commission, which can penalize companies up to 10 percent of their global turnover for breaching EU
antitrust rules, said at the time that the services under investigation included shipping cars, construction
materials and agricultural machinery. It did not name the companies.
Japan‘s No. 1 container shipper NYK, K Line and Mitsui in their 2017 annual reports said they were being
investigated by competition authorities in Europe.
The EU competition authority and WWL declined to comment. European subsidiaries of the Japanese
shippers did not immediately respond to requests for comment. Their parent companies were not immediately
available to comment outside office hours.
WWL took a $200 million provision for all its antitrust cases in the third quarter of 2015, of which $98.5
million was for a U.S. fine, $34 million for a Japanese sanction and $7 million for a Chinese penalty. EUKOR
was fined $44 million in the Chinese case.
Australia fined and convicted NYK last year for operating a cartel over vehicle transport to the country. The
Japan Fair Trade Commission in March 2014 handed down fines to NYK, K Line, WWL and Nissan Motor
Car Carrier for fixing prices of auto shipments from Japan to North America, Europe and the Middle East
while Mitsui escaped a sanction.
[Reuters]
12/02/2018
Japanese shipping company Nippon Yusen KK said it had set up an investigation committee after finding
that former managers at a Chinese subsidiary may have committed embezzlement or made unlawful
expenditures.
Nippon Yusen said in a statement late on Tuesday it estimated a 2 billion yen ($18.6 million) charge related
to the conduct at the Shanghai-based unit, which is engaged in the finished-car logistics business.
The company said it was considering applying for an extension of a Feb. 14 deadline to file its third-quarter
earnings.
[Reuters]
12/02/2018
As of early January 2018, the 10 largest breakbulk operators by deadweight of multipurpose/project/heavy-
lift tonnage combined deployed a fleet of 460 ships, says industry analyst Dynamar. The fleet has a total
deadweight of 8,136,000 million tons and an aggregate lifting capability of 147,000 tons. The ships‘
average age is eight years.
Although some operators have reduced tonnage, overall capacity has remained the same as the previous
year in terms of ships (460 units both years) while capacity is just two percent higher.
The analysis is based on the number of general cargo/multipurpose ships, with or without crane capacity,
operated by the 10 operators. Such ships form the core of the breakbulk trades. The following vessels types
have not been considered: OHGC, RoRo, vehicle carriers and specialist heavy load and open deck ships, as
well as semi-submersible vessels.
Source: Dynamar
COSCO Shipping Specialized Carriers (COSCOSSC) of Guangzhou has taken over, not for the first time,
from BBC Chartering as the world‘s largest multipurpose operator by deadweight. The growth of its fleet
by six units is due to newbuilding delivery. In 2013, the Chinese launched a newbuilding program
comprising 12x 29,500-dwt/700 tons heavy-lift units, plus 11x 38,000-dwt/200 tons crane capacity. The last
one of 38,000-dwt (among the largest multipurpose ships in the world) is due for delivery in the first half of
2018.
Having reduced its fleet by 13 to 146 ships/1,675,000 TEU, BBC Chartering of Leer has returned to the
second place in the ranking. ―Because BBC, through its parent Briese, has relative easy and quick access to
tonnage, it may certainly not be excluded that it will be the other way round again, next year, taking over
from the aforementioned Chinese again,‖ says Dynamar analyst Dirk Visser. ―Most certainly so if the
expected, at least hoped for, improvement of the breakbulk market in 2018 comes true.‖
Dutch Spliethoff has meanwhile sold off its entire eight-unit strong 1990/2-built 12,000-dwt A-type fleet.
Pending the delivery of six 118,000-dwt R-type ships currently being built, it has taken five 13,000-dwt
vessels on time charter. These latter ships have helped the Amsterdam-based company to rise to the third
spot in the current ranking although it still deploys, overall, the oldest fleet (2005-built). (Ships operated by
Spliethoff‘s subsidiaries BigLift, Bore, Sevenstar, Transfennica and Wijnne Barends are not included in
their parent‘s fleet.)
Compared to a year ago, Thorco has seen the largest fleet reduction, with the number of ships falling by 23
units/287,000-dwt to 48 vessels/754,000-dwt, relegating the Danish company to the fourth place, down one.
New in the ranking is Zeaborn of Bremen. In early February 2017, this still relatively young company
acquired, against rather special conditions, Rickmers Linie including NPC Projects from Bertram Rickmers.
In 2016, it had already taken over the commercial management of part of the Carisbrooke (UK) fleet and
the chartering activities of the HC Group of Hamburg, among others. Altogether Zeaborne currently
Oil & gas shipping: Cheniere signs first long-term LNG deal with China
operates 42 multipurpose ships: Rickmers Linie‘s core fleet of nine 30,000-dwt/640 tons heavy-lift ships,
eight 10,000-dwt/120-160 tons crane capacity vessels through HC Chartering and 25 11,500-dwt/120-300
tons geared vessels as Zeaborn Chartering.
Last May, AAL and Doehle put a stop to their short-lived alliance for breakbulk heavy lift services. To fill
the gap left behind by its former partner, Singapore-based AAL has been increasing its fleet numbers,
currently amounting to 14 owned vessels with each 700 tons heavy lift capability, plus seven 33,000-dwt
chartered ships with 110 tons crane capacity each. Despite this three-vessel capacity expansion compared to
a year ago, AAL remained the number six while its fleet is still the youngest, average six years.
Chinese/Polish Chipolbrok fell to the seventh place in the Top 10 ranking. The 20-unit-fleet includes four
37,000-dwt vessels deployed by the company‘s subsidiary Shanghai Hongfa Shipping, operating between
the Far East and the East Coast of South America. Chipolbrok‘s longstanding main routes are, unchanged,
the Europe-Asia and North Amerika-Asia corridors.
Although this company‘s fleet has increased by three units, Intermarine USA is listed, unchanged, at
position eight by deadweight. The Americans‘ existing fleet increased from 40 to 43 units at present.
Unchanged as well is that, with 11,300-dwt average, it has the smallest ships of the pack and: the largest
orderbook of them all. The latter now counts 14 vessels, of which eight will have a heavy-lift capability of
900 tons each.
The 2018 breakbulk market and a bit beyond
Beyond doubt, the global economy is improving, says Visser. ―The outlook for the coming five years in
terms of GDP development and the growth of imports and exports have probably not been better ever since
2008. The breakbulk industry should undoubtedly benefit from this global recovery and enjoy an uptick in
volumes.
―Both will be hard to get started, but maintenance to existing oil and gas installations can no longer be
ignored; increasing oil prices should induce investment in new installations. Investments in shale gas,
alternative energy, offshore wind turbines (in particular), and large-scale solar projects are expected to grow
as well.‖
[Maritime Executive]
12/02/2018
Cheniere Energy said on Friday that it has signed a deal to sell LNG to China National Petroleum Corp
(CNPC). Although Cheniere has sold LNG to China on spot-based contracts since 2016, the deal is China's
first long-term contract to import U.S. LNG.
The companies signed an MOU during a visit to China by Cheniere executives in November last year with
U.S. President Donald Trump.
Two sale and purchase agreements will see CNPC subsidiary PetroChina purchase about 1.2 million tons of
LNG per year with a portion of the supply beginning in 2018 and the balance beginning in 2023. The term
of each agreement continues through to 2043.
Cheniere is currently operating and constructing its Sabine Pass LNG facility in Louisiana and is
constructing a second liquefaction facility near Corpus Christi, Texas. When both projects are complete,
Cheniere is expected to be a top-five global supplier of LNG. To date, approximately 300 cumulative LNG
cargoes have been exported from the Sabine Pass LNG facility.The company said that it will ship the LNG
for China from its Corpus Christ export terminal.
Jack Fusco, Cheniere‘s President and CEO, said: ―These long-term sale and purchase agreements build
upon the Memorandum of Understanding we signed in November, and we look forward to a successful
long-term partnership with CNPC. We expect these agreements to support the development of Corpus
Christi Train 3, and we are now focused on completing the remaining necessary steps to reach a final
investment decision later this year.‖
In January, Cheniere entered into an LNG sale and purchase agreement with Trafigura for approximately
one million tonnes per year of LNG for 15 years beginning in 2019. Founded in 1993, Trafigura is one of
the largest physical commodities trading groups in the world:
[Maritime Executive]
Advance your career by gaining Professional Recognition. Professional recognition is a visible mark of
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PROFESSIONAL MEMBERSHIP
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Brazil
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India
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February SW England Branch - Corporation of Trinity House
13
Royal Plymouth Corinthian Yacht Club, Madeira Rd, Plymouth PL1 2NY
February
SW England Branch - Decommissioning Offshore Oil Platforms,
14 6:45 pm | Roland Levinsky Lecture Theatre No 2,Plymouth University
February
12th Arctic Shipping Summit – Montreal
22
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Wellness at Sea 2018 Conference (NI members click on 'login here' below for 10% discount)
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Singapore Maritime Week 2018
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