Published Date : 2016-06-13 08:32:58
Author : admin
In the late 13th century, a settlement known as Singapore was established on the north bank of the Singapore River around what was called the Old Harbour. It was the only port in the southern part of the Strait of Malacca and serviced ships and traders in the region, competing with other ports along the coast of the Malacca Strait such as Jambi, Kota Cina, Lambri, Semudra, Palembang, South Kedah and Tamiang. The port had two functions. First, it made available products that were in demand by international markets; these included top-quality hornbill casques, lakawood and cotton. Although these goods were also available from other Southeast Asian ports, those from Singapore were unique in terms of their quality. Secondly, Singapore acted as a gateway into the regional and international economic system for its immediate region. South Johor and the Riau Archipelago supplied products to Singapore for export elsewhere, while Singapore was the main source of foreign products to the region.
By the 15th century, Singapore had declined as an international trading port due to the ascendance of the Malacca Sultanate, such trade continued on the island. A map of Singapore by Portuguese mathematician Manuel Godinho d’Eredia showed the location of the office of a shabandar, the Malay official responsible for international trade, and shards of 15th-century Siam ceramics and late 16th – or early 17th-century Chinese blue and white porcelain have been found at the Singapore and Kallang Rivers. Singapore also provided other regional ports with local products demanded by international markets.
In the early 17th century, Singapore’s main settlement and its port were destroyed by a punitive force from Aceh. After this, there was no significant settlement or port at Singapore until 1819 when Sir Stamford Raffles, excited by the deep and sheltered waters in Keppel Harbour, established for Britain a new settlement and international port on the island.
Keen to attract Asian and European traders to the new port, Raffles directed that land along the banks of the Singapore River, particularly the south bank, be reclaimed where necessary and allocated to Chinese and English country traders to encourage them to establish a stake in the port-settlement. Chinese traders, because of their frequent commercial interactions with Southeast Asian traders throughout the year, set up their trading houses along the lower reaches of the river, while English country traders, who depended on the annual arrival of trade from India, set up warehouses along the upper reaches. The port relied on three main networks of trade that existed in Southeast Asia at that time: the Chinese network, which linked Southeast Asia with the southern Chinese ports of Fujian and Guangdong; the Southeast Asian network, which linked the islands of the Indonesian archipelago; and the European and Indian Ocean network, which linked Singapore to the markets of Europe and the Indian Ocean littoral. These networks were complementary, and positioned Singapore as the transshipment point of regional and international trade. By the 1830s, Singapore had overtaken Batavia (now Jakarta) as the centre of the Chinese junk trade, and also become the centre of English country trade, in Southeast Asia. This was because Southeast Asian traders preferred the free port of Singapore to other major regional ports which had cumbersome restrictions. Singapore had also supplanted Tanjung Pinang as the export gateway for the gambier and pepper industry of the Riau–Lingga Archipelago by the 1830s, and South Johor by the 1840s. It had also become the centre of the Teochew trade in marine produce and rice.
As the volume of its maritime trade increased in the 19th century, Singapore became a key port of call for sailing and steam vessels in their passage along Asian sea routes. From the 1840s, Singapore became an important coaling station for steam shipping networks that were beginning to form. Towards the late 19th century, Singapore became a staple port servicing the geographical hinterland of the Malay Peninsula. Following the institution of the British Forward Movement, Singapore became the administrative capital of British Malaya. Roads and railways were developed to transport primary materials such as crude oil, rubber and tin from the Malay Peninsula to Singapore to be processed into staple products, and then shipped to Britain and other international markets. During the colonial period, this was the most important role of the port of Singapore.
Singapore ceased to be part of the British Empire when it merged with Malaysia in 1963. Singapore lost its hinterland and was no longer the administrative or economic capital of the Malay Peninsula. The processing in Singapore of raw materials extracted in the Peninsula was drastically reduced due to the absence of a common market between Singapore and the Peninsular states.
Since Singapore’s full independence in 1965, it has had to compete with other ports in the region to attract shipping and trade at its port. It has done so by developing an export-oriented economy based on value-added manufacturing.
By the 1980s, maritime trading activity had ceased in the vicinity of the Singapore River except in the form of passenger transport, as other terminals and harbours took over this role. Keppel Harbour is now home to three container terminals. Other terminals were built in Jurong and Pasir Panjang as well as in Sembawang in the north. Today, the port operations in Singapore are handled by two players: PSA International (formerly the Port of Singapore Authority) and Jurong Port, which collectively operate six container terminals and three general-purpose terminals around Singapore.
In the 1990s the Port became more well-known and overtook Yokohama, and eventually became the busiest port in terms of shipping tonnage
The port is the world’s busiest port in terms of shipping tonnage handled, with 1.15 billion gross tons (GT) handled in 2005. In terms of cargo tonnage, Singapore is behind Shanghai with 423 million freight tons handled. The port retains its position as the world’s busiest hub for transshipment traffic since 2005, and is also the world’s biggest bunkering hub, with 25 million tonnes sold in the same year.
Published Date : 2016-06-06 08:32:45
Author : admin
By David Glass from Athens
Since the start of 2014 European shipowners have been in expansion mode, primarily driven by the Greeks.
Indeed, the sustained growth of the world fleet over the last decade saw owners based in the Asia – Pacific region taking market share from the Europeans until the flood of Greek newbuildings began delivering with the result that over the past 30 months of so all the lost market share has been regained.
Looking at market share, Clarksons Research notes that since the start of 2014, the European owned fleet has grown 49.4m gt, or 51.6% of global fleet growth. This has seen European owners retain a steady market share, accounting for 43.9% of global tonnage at the end of 2013 and 44.5% of the fleet at the start of May 2016. During the same period Asia – Pacific owners have experienced a 0.9% decline in fleet share.
However, European fleet growth has not been uniform across the region.
The Greek owned fleet has increased 31.9m gt since the start of 2014, the result of strong deliveries, 24m gt since the start of 2014, and significant s&p activity. In contrast the German fleet, Europe’s second largest, declined 4.2m gt during the same period.
Since the start of 2014, Greek fleet growth has been equivalent to 64.6% of total European growth, and 33.3% of global fleet expansion.
Historically European ownership has been dominated by private companies, which account for 71.4% of current tonnage. However, says Clarksons during the last few years public companies have seen a stronger rate of fleet growth, with the public listed European fleet growing 14.2m gt in 2015, double the privately owned fleet.
Although the strongest rate of growth amongst Greek owners has remained in the private sector, hardly surprising considering the strong traditional owner base, the public owned Greek fleet has still grown 28.5% in the last two and a half years.
There has also been particularly strong growth amongst public companies in the rest of Europe. Just now 17 Greek listed groups have ship on order, while listed Norwegian owners experienced fleet growth of 6.8m gt in 2015, whilst public listed Italian, Danish and Belgium based owners have also seen significant fleet growth since 2014. Overall, the European public owned fleet has grown 30.9m gt since the start of 2014, compared to 28.4m gt of growth in the privately owned fleet.
Despite recent trends, the orderbook highlights how future fleet development could return to former patterns. Asia – Pacific based owners hold the largest proportion of the orderbook, 45.7%, with 23.2m gt more on order than their European counterparts. This could reshape recent fleet developments, with Asia – Pacific owners getting back to the fore. Similarly, the European orderbook is dominated by private companies, holding 66.6% of the 65.4m gt on order. Consequently, public companies may see lower levels of annual fleet growth.
So, concludes Clarksons: “Reasons for recent changes in regional fleet development are complex. Whilst European owners have regained fleet share, and public owners have grown relatively rapidly, the orderbook indicates fleet growth patterns will continue to evolve over the coming years.”
Published Date : 2016-05-23 08:32:37
Author : admin
By Marcus Hand from Singapore
Back around 2002 – 2003 the fear of the rise of Chinese crewing was a very real one for many manning companies in the Philippines – the sheer size of the Chinese population suggested the number one supplier seafarers could easily be squeezed out by lower cost competition from across the South China Sea.
For a number of reasons though it has played out rather differently than the doomsayers expected.
The shipping boom from 2003 to 2008 suddenly made seafarers, in particular well-trained officers, a precious commodity. Companies in the Philippines responded to this by working with international shipowners and managers to train more officers, something that both helped shipping as a whole and was good for the long-term development of the industry in the Southeast Asian crewing capital.
There was also the fact that the driving force of the boom was China itself, whose shipowning sector expanded rapidly as a result. As it turns out much of the growth in Chinese seafaring has been to serve its own fleet, rather than the wider international on, which is the bread and butter of the Philippines crewing industry.
Certainly some major ship managers have a strong presence in China in terms of crewing, but again this is in major part to serve the Chinese market itself. Meanwhile the English language skills of the Philippines seafarer remains a strong attraction to owners and managers.
At the top end of the Philippines market the business has also diversified with a major presence in providing hotel personnel to the fast growing cruise ship market, and also into the BPO (business process outsourcing) sector, which now employs over a one million people in the country.
Looking ahead the fact that many owners and managers now have made major investments with local partners in the Philippines means they are not about run away quickly. Yes they invest in other relatively “new” locations as well such as Myanmar and Croatia, but they have a strong footprint in the Philippines.
One such company is Thome Group which has invested significantly in Manila in recent years. “As long as the Philippines can produce competent officers who can compete with other nationalities then it will continue to remain an important recruitment hub,” comments Claes Eek Thorstensen, president of the Thome Group.
The landscape has changed, and the Philippines crewing sector has adapted and grown significantly since 2002 – 2003, so the news that China has overtaken it absolute terms in the supply of global seafarers is not the apocalypse for the country’s manning industry that it was once imagined to be.
Published Date : 2016-05-09 07:48:19
Author : admin
Container shipping was 60 years old last week. From its origins in the first seaborne transportation of containers on board Malcolm McLean’s Ideal-X on 26 April 1956, containerized shipment has become the glue that holds together today’s globalised economy. This analysis takes a look at how the container sector exploded into the centre ground of the world’s shipping business.
Lighting The Candles
The man acknowledged to have been container shipping’s true pioneer, Malcolm McLean, a trucking magnate, used a converted tanker to move the first containerized cargo by sea from New Jersey to Houston, 60 years ago, back in 1956. Four years later, Sea-Land introduced the first Transatlantic service, and in 1969, in the UK, Overseas Container Lines launched its first service. Landmarks indeed, and the benefits have been widely felt ever since. Containerization enabled the standardization of port handling equipment, increased speed of cargo handling, and flexibility of location of stowage and unpacking which all changed the way that manufactured goods are shipped around the world. It also improved cargo security, and facilitated intermodal integration to provide an inter-connected transportation system.
Pass The Parcels
Today, containerized transport links up just about every corner of the world, even if cargo might need to be ‘transhipped’ from one vessel or service to another to reach its final destination. Reflecting this, the ‘liner network’ has seen rapid increases in volumes. Across the last 40 years the compound annual growth rate in global container trade volumes stands at 9%, and this year world box trade is projected to surpass 180m TEU. As the graph shows, following the first 20 years of container shipping history, the next 20, 1977-1996, saw the addition of an estimated 41m TEU of box trade per annum, and the most recent 20 years have seen the addition of a further massive 136m TEU of annual loaded container trade.
The network has also provided cheap ‘per unit’ shipping. With around 400 flat screen TV sets in one box, every $100/TEU of freight cost equates to just $25 cents per unit. Given the type of vessels introduced, per TEU costs of operating ships have dropped too. Across 1976-96, 3m TEU of capacity was delivered, with an average ship size of 1,673 TEU. In 1997-2016, 20m TEU was delivered with an average size of 4,363 TEU, taking today’s fleet capacity to 19.9m TEU.
Icing On The Cake
So, whilst growing up, container shipping has been busy connecting the world via the liner network for the movement of goods in a speedy and secure fashion. Whilst partially separating vessel ownership and operation, it has enabled cheap door-to-door transportation of manufactured goods, and the connection of consumers with the lowest cost production locations, facilitating the great outsourcing boom and enabling multi-location processing. Supply chains have been optimised and specialist port infrastructure has been established and connected to the distribution network. All in all, containerization has been one of the greatest facilitators of change in the world economy in the last century. Happy birthday to you, container shipping!
Source: Clarksons
Published Date : 2016-04-11 08:23:15
Author : admin
Shipping companies will in future have to adhere to strict international weight verification regulations for containers in an effort to prevent accidents.
As of July 1, cargo container forwarders will be subjected to stringent gross mass verification, which will be administered by the South African Maritime Safety Authority (Samsa), after noncompliance by some shippers.
The industry was notified of the requirement in June last year. Samsa said those who flouted the regulation would be liable for fines and face criminal conviction, which comes with imprisonment.
“Samsa has no resources to authorise or approve every ship in the country. We have opted to delegate some of our authority to a third party who would then act on our behalf to authorise shippers,” said Kirsty Goodwin, an occupational health and safety executive at the authority.
Samsa has appointed General Marine Surveyors to oversee the verification process.
Ms Goodwin told export industry members that there would be no extension on the regulation.
Shipping experts met in Durban on Tuesday to air concerns arising from the requirement, which is in line with International Maritime Organisation regulations.
The industry has been riddled with container weight misdeclarations that resulted in vessels tipping and getting damaged, posing a threat to lives.
Zeph Ndlovu, president of the Durban Chamber of Commerce and Industry and Transnet GM of operations in KwaZulu-Natal, said SA’s contribution to saving lives at sea was important.
SA is a member nation and signatory to the Maritime International Organisation.
Mr Ndlovu said there had been a number of accidents on international waters. “We want to lend a hand in making sure that the global trade … is beyond reproach as far as safety is concerned.
“We had to have this discussion and make sure that members are sensitised about readiness before the actual implementation date of July 1 2016,” said Mr Ndlovu.
The regulation will apply to all export containers and cargo manufactured in SA and destined for the export market.
Packing houses, shippers and road transporters have to comply, as do ports, which have to align their systems with the new requirements on container weight.
Mr Ndlovu said the majority of shippers had been adhering to the weight laws, but 5%-10% in the industry were not complying.
Sash Naidoo of Durban South Cold Storage, who packs citrus for export, said the new requirement would have cost implications. In order to comply, companies had no choice but to include a weighbridge in their facilities, he said.
Published Date : 2016-04-04 08:43:47
Author : admin
By Peter van den Boomgaard
Although the drop in oil price has led to a fall in operational cost of a vessel, bunker fuel – especially when the more expensive distillate is used in an Emission Control Area (ECA) – remains a significant component of operational cost. Even for heavy fuel oil there is a need to measure density because fuel is bought by weight but delivered by volume.
Hence, appointing a bunker surveyor for bunker deliveries is essential in making sure the right quantity is delivered and that the on board quantity of the vessel is measured and calculated in a correct way. Even when a mass flow meter (MFM) is used, quantity differences will continue to exist because the receiving vessel’s quantity is based on manual measurement and calibration whilst the bunker tanker’s delivered quantity will be based on a mass flow meter’s reading. Of course, a surveyor’s role is multifaceted and not confined to just measurement or calibration.
Experienced and well-equipped
The attending surveyor has to be experienced, well-trained and adequately equipped with professional and calibrated equipment, including a gauging tape and an electronic thermometer, water and oil indicating paste, a flash-light, sufficient seals, sample bottles, papers and a multi-gas detector for safety.
Apart from carrying out Bunker Quantity Survey (BQS) for the fuel quantities and grade(s) that will be bunkered, the surveyor will also advise and help the chief engineer with any safety checklist, custom papers and papers required by the supplier, such as bunker requisition and sample labels.
Proper measurements
After all relevant papers have been filled out and signed, the surveyor will need to focus on all the measurements. He starts with a thorough measurement of all the vessel’s nominated and non-nominated tanks including settling, services and overflow tanks and any tank space(s) related to the bunker receiving system.
At the same time he will also take temperatures from all tanks, unless access to a particular tank is not possible, in which case the temperature indication on the vessel’s computer or tank has to be taken. On the bunker tanker the surveyor together with a crew member and a representative from the bunker tanker will measure all nominated and non-nominated bunker tanks and take temperatures from each tank.
On both the vessel and bunker tanker, water indicating paste will have to be used for free water detection for distillates fuels unless local regulations require this for all grades.
Through proper, accurate measurements, the surveyor plays an important role in preventing the manipulation of bunker quantity.
Safety checks
The surveyor, often seen by the chief engineer as a valued helper, will also advise whether the bunker tanker is securely moored so that safe access can be provided from the vessel to the bunker tanker and vice versa, either by lowering a pilot ladder or by gangway. In some cases, a safety basket can also be used. The surveyor will check whether the hoses are in a good condition and whether they are well supported in accordance with relevant international standards, and whether the bunker tanker hose is safely connected with enough bolts.
As the bridge in effective communication between the bunker tanker and the vessel, the surveyor may even enable immediate shutdown of bunkering as soon as a problem or danger is detected.
Even when a MFM is used, the surveyor’s role is critical because the vessel may be short-handed, and the crew overworked and lacking in knowledge of the flow meter technology. As such, they will not be able to monitor or handle a MFM delivery correctly.
Sample collection and documentation
The surveyor is also responsible for taking representative samples. The objective of the sampling is to get all parties to agree on one common representative sample taken by drip method, preferably at the vessel’s manifold (point of custody transfer) provided a proper sampling device is available.
This sample has to be collected and witnessed during the entire bunker operation and should be properly mixed and poured into the bottles when the bunker operation is finished. The bottles have to be labelled, sealed and distributed to all parties concerned. This representative sample will be very important evidence in the event of a bunker dispute. The surveyor also provides an independent third party verification and protection for customers in legal matters.
After the bunker operation is completed the surveyor will again check all tanks on both the bunker tanker and the vessel. When all is in order the supplier’s Bunker Delivery Note (BDN) will be signed and the relevant papers distributed to all parties.
Reliable, real-time data
With a proper survey conducted by the surveyor, a ship owner or operator will have accurate, real-time data and can take prompt action, if required. At the same time, the surveyor can also help ensure compliance with port regulations on bunkering.
Stringent code of practice
The Veritas Petroleum Services (VPS) surveyors conduct their survey work according to the BQS Code of Practice. In Singapore the surveyors have to comply with the Singapore Standard Code of Practice for bunkering by bunker barges/tankers (SS600).
To ensure strict quality control, audits are regularly carried out by supervisors to find out whether the surveyors are adhering to procedures, using the right equipment and also if the vessel’s crew is “happy” or satisfied with the service provided by the attending surveyor. This sets out the best practice for documentation, equipment requirements and verification of procedures during a bunker operation.
Since bunkers are sold by weight but delivered in volume, the presence of a professional bunker surveyor is needed to ensure that the correct quantity is delivered. A experienced surveyor can prevent the supplier from employing “tricks-of-the-trade” to cheat buyers because an investigative remaining-on-board survey entails finding hidden bunkers as well as the investigation of shortages or alleged “cappuccino” during bunkering operations.
The surveyor will also offer a helping hand with inconsistencies or errors on the BDN and advise the vessel’s staff accordingly and assist in quantity dispute resolution.
Peter van den Boomgaard is Operations Manager, Bunker Quantity Survey for Europe at Veritas Petroleum Services.
Published Date : 2016-03-21 08:52:58
Author : admin
Piracy off the coast of Nigeria is estimated to cost over $7bn annually, with the bulk of costs affecting the oil industry. And over in Singapore, pirate groups can earn up to $1m for a successful tanker hijack.
But the data suggests that plummeting oil prices are driving a tactical shift by pirates, replacing oil theft with kidnap for ransom in Nigeria, and exposing anchored tankers in Singapore to greater hijack risks.
Piracy thrives in the Gulf of Guinea due to a lack of robust law enforcement, access to illegal markets and a target rich environment.
Between Jan 2012 and Feb 2016, VeriskMaplecroft recorded 62 separate piracy attacks relating to oil and gas platforms off the Nigerian coast, nearly half the country’s total number of incidents. This number has been falling though, from 22 in 2014, to 13 in 2015, to only two in 2016 so far.
Concurrently, the number of hostage taking events in Nigerian waters has risen from 4 in 2014, to 13 in 2015 and 4 already in 2016. While it’s too early to say if this is a direct result of falling oil prices, there is a strong correlation.
A less considered impact from the falling oil price is the surge in tankers anchoring for long periods in pirate hotspots, as they act as temporary storage facilities until oil prices stabilise.
Singapore is particularly at risk, with recent suggestions that a major commodities firm has anchored four tankers there for storage purposes.
Singaporean waters are already at high risk of pirate attacks, with 66 successful boardings recorded by VeriskMaplecroftbetween 2012-2016.
While the bulk of these attacks were ‘snatch and grab’ incidents, static tankers are a tempting hijack target as they allow pirate groups the time to monitor security routines, select suitable boarding points and organise complex operations.
Published Date : 2016-03-14 08:39:45
Author : admin
By Lee Hong Liang from Singapore
With the conclusion of the 2016 Chinese Lunar New Year and the start of the Year of the Monkey under the Chinese calendar, China has recently published the draft of its 13th Five-Year Plan (2016-2020), a blueprint for economic and social reforms and developments.
There are as many as 100 targets for China to achieve over the five-year period ahead, and naturally shipping and maritime related issues only account for a small number of them. In selecting what is relevant to shipping, there are a handful of goals such as developing “smart ports”, extending deepwater and subsea activities, constructing more ice-breaking vessels, and transforming the ship equipment industry.
In the area of ports development, the ports of Shanghai, Tianjin, Dalian, Xiamen, Shenzhen, Guangzhou, Qingdao and Ningbo-Zhoushan will go through some structural changes to promote them as shipping hubs to the world.
The idea of “smart ports” has been mooted as the plan outlines the wider use and application of various technology to greatly raise port productitivity and efficiency, while reducing manpower wastage through automation.
While not so much shipping related but ocean-related, China is looking at developing its deepwater activities via the deployment of drillships and engaging in more subsea geological research. China Shipbuilding Industry Corporation’s (CSIC) 702 Research Institute has introduced a so-called “deepwater space station’, a manned submersible type of deepsea unit to engage in complex, subsea work for scientific and research purposes.
Beijing buys the idea that having a greater grasp on deepsea R&D is an important milestone to achieve if China is to become a maritime powerhouse on the global stage.
The five-year plan also proposes for China to build more ice-breaking vessels to support polar expeditions. The country currently has only one ice-breaker in operation, and a second has recently passed the design stage.
China believes that only though extensive ocean surveys will it be able to enhance its understanding of the oceans, and thus help in environmental protection as well as giving the country a louder voice on the international maritime arena.
Under the ship equipment category, the five-year plan aims to complete ship-related R&D works, establish worldclass ship design and equipment manufacturing facilities, and have greater control over the design and production of ship engines and other operating systems. The ship equipment action plan also seeks to strengthen core technology R&D, carry out quality branding building exercise, and promote the demonstration and application of key components.
The five-year plan, meanwhile, also includes restructural reform of the industrial supply that is suffering from excessive capacity. The curb on such supply particularly in the steel-making and coal sectors is expected to increase commodity imports and hence boost activity for dry bulk shipping.
All in all, not an awful lot directly touches on shipping under the new five-year plan. But the ones listed will still help to consolidate China’s position as a growing maritime nation.
Published Date : 2016-03-07 08:35:41
Author : admin
Container shipping lines need to shrink or merge to weather one of the worst downturns in decades, industry experts say.
Marine carriers face “gale force headwinds” this year, with the global container fleet expected to grow at twice the rate of demand, consultants Alix Partners LLP said in a report. The expansion comes despite deep declines in revenues and profits at most major shipping lines, Alix Partners said.
The report recommended that carriers consolidate in order to remove excess capacity from the market, either through mergers or by forming more alliances. Larger carriers can also reduce expenses to lessen the impact of falling revenues.
“Fewer competitors controlling more vessels should lead to more effective management of existing capacity and future vessel orders that would be more in line with demand forecasts,” the report said.
Most of the world’s largest container shipping lines are organized into operating alliances that allow them to share space on large vessels and keep costs low. Last week, France’s CMA CGM SA, the third-largest carrier globally said it was considering leaving the Ocean Three alliance when its contract runs out at the end of this year. Consolidation is also picking up, with CMA CGM close to completing its acquisition of Singapore’s Neptune Orient Lines Ltd., and two Chinese container lines merging earlier this month.
In the meantime, conditions continue to worsen. Utilization of ships along the world’s busiest shipping routes fell to 87% in 2015, from 93% a year earlier, according to Drewry Shipping Consultants Ltd. With a glut of ships available, rates on Asia-to-Europe voyages fell 42% last year, the consultants said.
To help curb the plummeting shipping rates, carriers have continued to “slow-steam” their vessels, or sail them at less-than-maximum speeds in order to save money on fuel. They have also started “void sailings,” where ships continue to sail but do not load or discharge containers at ports.
In 2015, void sailings reduced total capacity on the Asia-North Europe trades by nearly 1 million TEU, a common measure of shipping container volume, or 8% of the total volume on that route. Those efforts, however, were not enough to halt the slide in rates, Drewry said. The firm said rates will come under more pressure as new ships enter the market this year.
“Despite carriers’ best efforts to curb the supply-side growth, it wasn’t enough and spot market freight rates plummeted,” Drewry wrote. “The even worse news for lines is that they will have to go deeper again in 2016. With only minimal demand growth anticipated, carriers will need to be even more creative at hiding the 1.3 million TEU worth of newbuilds scheduled for delivery in 2016.”
Published Date : 2016-02-29 08:19:25
Author : admin
The Baltic Dry Index, traditionally a leading indicator of world economic growth, hit an all-time low, dipping under 290 points recently. The index has been falling steadily since August 2015, when it peaked at just over 1200. The sharp drop is the result of several factors, including increased freighter construction in China and falling commodity prices, particularly oil.
The BDI has historically been linked to overall global economic health because it tracks the price of shipping raw materials like coal, iron, or grain via cargo ship and is therefore closely association with the global demand for raw materials. Analysts believe that higher demand for raw goods directly correlates with higher demand for shipping capacity, driving up shipping costs as a result.
But while the index has continued to freefall, some are questioning whether the index is still a reliable indicator of economic growth. Because the index tracks the price of shipping, not volume, it may not be an accurate reflection of how much shipping is actually taking place. As one astute LinkedIn commenter pointed out, the global shipping industry has continued to build bigger and bigger ships for the last few years while the price of oil to power those ships has dropped. And while the ships themselves have grown, the global marketplace to generate proportionate increases in volumes of goods requiring shipping has not.
It’s true that the Baltic Dry Index has fallen by 75% in six months and is now lower than ever before, but perhaps that is not deserving of panic.
We saw the BDI fall sharply during the global economic recession in 2008, but current conditions don’t reflect the same dire outlook. The BDI is simply a price index that reflects the balance of supply and demand, and right now supply is far ahead of demand. Stronger global economic growth, a surge in trade in response to lower shipping rates and rising commodity prices will all potentially be factors in boosting demand. On the supply side, low transport prices may force many shippers to scrap their older vessels, which will help to alleviate some of the glut. It may take some time for supply and demand factors to get back in sync, but the current low levels of the Baltic Dry Index do not signal that the sky is falling.
Source: Value Walk
Published Date : 2016-02-22 08:42:45
Author : admin
By Marcus Hand from Singapore
When it comes to alternative fuel for ships LNG and batteries have received the most public attention, but GoodFuels is pushing another alternative – biofuels – which it believes will become a significant part of the fuel mix for shipping in the future
Rotterdam headquartered GoodFuels has developed what it describes as a “drop-in” marine bio-fuel, which can be used on existing vessels without the need for retro-fitting.
Speaking to Seatrade Maritime News Michael Schaap, commercial director of GoodFuels Marine, explains, “Our biofuels are a ‘drop in’ fuel – put simply, they blend seamlessly with traditional fossil fuels. This means that biofuels have a low barrier to entry, as they require no infrastructure investment and current power and propulsion systems can remain in place.”
All that is required is a standard fuel tank and ex-pipe facility at the berth or a bunker barge.
As with LNG biofuels offer a 100% reduction SOx emissions, but they can also provide up to a 90% reduction in CO2 emissions compared to fossil fuels, an area in which shipping is facing increasing pressure.
Schaap also stresses the sustainability of its biofuels and says it, “assures customers that no biofuel streams that are in competition with food sources or that are otherwise unethical will be used in the final product”.
Not surprisingly GoodFuels initial focus is on areas where the environment and emissions from a shipping are already in focus such as Northern Europe, the Nordic region and West Coast US. The company is also looking at Asia and recently visited Singapore, which is home to the world’s largest biofuel plant.
In terms of pricing Schaap says, “At present the price of biofuels is just over the price of MGO – how much over depends on volume, logistics and geographical deployment – but Phase 2 and Phase 3 biofuels coming on-stream over the next few years are envisaged to be cheaper than MGO.” As with other alternative fuels subsidies and reduced port dues are also a factor.
He says that premium MGO replacement biofuels are already available in Amsterdam and Rotterdam and that there has been “considerable uptake” but does not exactly how many vessels are using biofuels.
“GoodFuels Marine’s recent collaboration with the Dutch coastguard to supply biofuels for use in their vessels is a tangible example of the constantly increasing demand for biofuels. We are working with Boskalis, our launch customer, to have biofuels available in other locations as well soon.”
Dredgers are a vessel type the company sees as suited to biofuels working on government contracts close to sure where environmental credentials can be key. It also a market in vessels that operate in ports such as workboats and tugboats, shortsea shipping in Europe, and ferries and cruiseships.
Asked about how he sees the market developing Schaap says: Over the next five years, we believe that the market will trend towards greater adoption of biofuels as a real part of the marine fuel mix.” Longer-term estimates have put biofuels at 5% to 10% of the marine fuel mix.
This is a significant volume and brings the question as whether there is the capacity supply the quantities of biofuels that would be required by the shipping industry.
“There are a number of streams that readily offer themselves up as a feedstock, some only a small step away from full-scale commercial use. Large industrial residues from the paper and pulp industry are already being converted into fuel for other sectors; the shipping industry could initially start with these.
“By the careful management of blending and supply, and by keeping hold of the reins on quality and quantity, biofuels can be refined in enough amounts for the fuel to become a wide-scale alternative marine fuel.”
Published Date : 2016-02-15 08:38:02
Author : admin
Rice Smuggling has reached frightening levels, with hundreds of trailers ferrying tonnes of the staple food from neighbouring countries.
The nation’s supply gap was estimated at around 3 million tonnes by United States Department of Agriculture (USDA) and half that number by the Federal Government earlier last year.
However, legal importers paying full tariff of 70 per cent have not been able to compete with smugglers who enjoy a free ride into the market, aided by negligible tariffs in neighbouring countries of Cameroon and Republic of Benin, taking advantage of porous borders.
Another pertinent problem hamstringing rice investors is the Central Bank of Nigeria (CBN) ban of foreign exchange for rice imports, among other products, choking the importation supply chain.
The resultant shortage in the market is now being exploited by smugglers, who prospered significantly in 2013 when they were able to move in around 2.5 million tonnes through the borders, without paying a single kobo as import duty.
That year, the Federal Government increased import tariff to 110 per cent as against zero duty regime administered in Benin and Cameroon.
As Nigeria Customs Service (NCS) struggles to check the smugglers, the market is flooded with cheap quality rice. Besides, commercial agriculture by key investors in the rice value chain is frustrated.
Multinationals, including Olam, Stallion Group and Dangote, have announced large scale investments in the value chain that are crucial in Nigeria’s quest to meeting a growing annual demand of 6.5 million tonnes. Stallion Group is expanding its capacities to produce 1.5 million tonnes in Nigeria. Dangote plans to farm 100,000 hectares. Effective curbing of rice smuggling is essential to get these projects to fruition and encourage millions of farmers to get back intensively to rice farming.
The National Rice Millers Association of Nigeria (NRMAN) said recently that the NCS erred in its decision to lift the ban on importation of rice through the land borders. Its Chairman, Mohammed Abubakar, said the NCS overreached its statutory mandate as an enforcement agency in taking such a policy decision. Besides, Mr. Abubakar said, if the NCS succeeded in its decision, it would destroy Nigeria’s rice value chain attained by the previous administration.
Reports emerge that the huge rice influx has been noticed in the market from November 2015, the worst affected being Lagos and Southwest.
Rice arrives in big trailers with between 1200 and 1500 50KG bags from Cotonou. There is substantial under-declaration and non-payment aspects in these shipments, making it non-viable for legal importers and local producers to compete with these shipments.
Several long trailers are noticed during the night directly plying from Cotonou bearing Benin number plates (RB) into Daleko and G Cappa markets. Apart from these big trailers, smaller J5 Buses which carry 200 bags each are also used by these unscrupulous smugglers to ship products during the day time.
The affected states are Lagos, Ogun, Osun, Oyo, Kwarra, Ondo and Ekiti. Other states adversely impacted are Sokoto, Katsina, Kaduna, Kano, Abuja, Niger and Plateau – all coming in from Cotonou and Niger Republic.
Rice from Cameroon through Northern Nigeria is flooding Adamawa, Borno, Yobe, Taraba, Benue and Enugu. Affected states from the Southeast and Southsouth are Cross River, Akwa Ibom, Abia and Enugu.
Published Date : 2016-02-08 08:30:03
Author : admin
By Peter Shaw-Smith from Dubai
Dry bulk is still a smart move if you have equity in your pocket, but buy existing tonnage, rather than newbuilds, a leading global dry-bulk analyst told the recent Mare Forum conference in Abu Dhabi.
“Liquidity should survive over the next two-three years,” said Francesco Fuselli, of Banchero Costa, Genoa, Italy. “Access to credit is very difficult, but not impossible.”
During 2015, 612 bulk carriers in excess of 20,000 dwt were delivered, 63% of the orderbook at the beginning of the year. Last year, dry-bulk deliveries totalled 47.4m dwt.
By breakdown, this amount included 155 handysize, 246 ultramax, 112 panamax, 16 post‐panamax, 74 capesize and 9 VLOCs, the bank’s data show.
The dry-bulk fleet grew at 3% during 2015, the lowest rate this century. Its growth is expected to accelerate again to 5% during 2016 and then slow considerably in 2017. If no new orders are placed in the near future, 2018 should see the fleet’s size shrinking by 1%, Fuselli believes.
“Freight rates and secondhand prices are at historically low levels and are expected to remain under pressure in 2016,” he said.
The orderbook is huge for 2016 and then drops to pre‐boom levels. It stands at 87.6m dwt, an increase of 85%.
“However, during 2015 only 63% of the orderbook as originally scheduled at the beginning of the year was delivered on time, while 32% of the orders were postponed and 5% was cancelled.”
Assuming just 30% of postponements, Fuselli believes “only” around 61m dwt will be delivered, still excessive, but in line with 2013, which was a year of tepid recovery.
“Fleet growth is expected to accelerate in 2016 because of the number of orders that were placed between 2013 and 2014 when the market was showing signs of recovery and the fashion for ‘Eco-Ships’ began.”
According to Banchero Costa’s analysis, three vessel categories will be broadly positive in the next three years: VLCCs, aframaxes and product tankers. Conversely, ultramaxes, panamaxes and capesizes will see negative cashflows.
He calculates VLCCs on time charter will see cashflows of $9.3m over the period, aframaxes $4.9m and product tankers $991,250. Ultramaxes will lose $4.2m, panamaxes $5.4m and capesizes $9.7m.
Newbuild VLCCs cost $89.9m, while five-year-old vessels go for $95m. Capesizes are $47.2m new, but drop to $37m in the secondhand market.
In a positive sign for owners, the gap between newbuild and secondhand prices keeps growing.
Prices for five-year-old vessels are at around 60% of newbuild cost, and new orders are not expected in the near future.
JPMorgan added its views a recent report on dry bulk. “We expect 2016 to be worse than 2015, with the demand outlook continuing to deteriorate and the remainder of the orderbook still to be delivered. However, we believe a case can be made that 2016 will be the trough in this structural downturn,” it said.
“Paradoxically, it’ll be better for the medium-term outlook the worse things are now as more owners hopefully throw in the towel and choose to scrap their vessels. Scrapping in 2016 is the major supply variable as the remainder of the orderbook is delivered.”
With the Baltic Dry Index continuing to hit fresh all-time lows, can the dry-bulk market players finally see some hope on the horizon?
Published Date : 2016-02-01 08:31:54
Author : admin
By Michael Grey, London
“From rock and tempest, fire and foe, protect them where so ever they go” is an all-encompassing list of maritime hazards which is usefully encapsulated in the seafarers’ favourite hymn –”Eternal Father”. A very 21st century addition to these timeless risks of maritime commerce might now be that of cyber attack, which conceivably could be as serious and damaging as any of those on this list.
Ships are no different to any other facet of modern life and have become, in recent years, horribly vulnerable to malicious or criminal external interference, with all the sophisticated electronics that keeps them operating efficiently. The fact that nothing really terrible has happened (at least that which has been made public) probably owes more to the general ignorance of marine technology and the plethora of other tempting targets, than the efficacy of shipping’s own defences.
We have seen at least some of the writing on the wall. We know, because experiments have confirmed the fears, that even the most rudimentary electronic jamming equipment can make mincemeat out of a ship’s navigation, communication, engine management and other systems dependent on satellite signals. We have learned about a number of cyber attacks that have been made public, such as the near capsize of a semi-submersible oil rig, after external interference with its ballasting system, or a determined effort by drug smugglers to insinuate themselves into a major port’s cargo control systems.
But we have also been warned by experts that, perhaps because shipping has hitherto been “over the horizon”, that the industry’s defences are lagging far behind that which they would recommend, in view of the reality of risks. There is, we are told, a degree of complacency that is really very worrying, due in part to the false alarm of the Millennium Bug which has tended to lodge itself in maritime consciousness.
Nevertheless, cyber experts who manage to get afloat report worrying signs of general defencelessness. At a recent conference, an expert noted that after every visit, he would routinely destroy his laptop, such was the level of “contamination” by viruses and the like in the systems he saw afloat. Pirated software is routinely reported in ships’ navigational systems and devices brought aboard by crew or contractors are often badly contaminated.
So there will be some enthusiasm in the industry surrounding the launch this month of “The Guidelines on Cyber Security Onboard Ships”, produced by Bimco, CLIA, ICS, Intercargo and Intertanko, with expert external assistance from other knowledgeable stakeholders. This primarily tells people who have limited experience in this field what they are up against, who the enemy might be among the activists, criminals, opportunists, the state-sponsored and terrorists, and what they can practically do to harden their defences.
It is produced in a seamanlike fashion, showing people how to understand the cyber threat, how to assess vulnerabilities and the reality of risk, implement its reasonable reduction and develop contingency plans, along with a lot else besides. It shows what measures can be taken, and how company and ship-specific risk-based systems can be developed.
Will it work, if the enemy starts to target the maritime world in a serious fashion? That depends, firstly upon the threats being taken more seriously by those at the top of senior management and by what they are willing to invest in defence. It is worrying, however, when the vulnerability of maritime systems is considered alongside the lack of what we might describe as old-fashioned manual systems and procedures that can swing into use, in the event of a cyber attack. That, and the difficulty of maintaining adequate defences on the average merchant ship, where there is no electronic or IT specialist routinely carried as a crew member. Maybe this needs to change.
Published Date : 2016-01-25 08:28:23
Author : admin
By Lee Hong Liang from Singapore
The year 2015 rounded out with not much good news for China’s shipbuilding sector, which is gripped by a protracted slowdown since the onset of the 2008 global financial crisis. How will the Chinese shipbuilding market fare in 2016? Maybe both good and bad.
The bad news is that more Chinese shipyards, in particular privately-owned enterprises, are expected to go bankrupt or shut down due to debts or simply having no new orders to sustain operations.
With more than 3,000 shipbuilding enterprises, mostly speculative yards, counted at the start of 2010, that number has drastically dwindled to only around 300 today, and only a little more than 100 yards have active day-to-day operations.
Ren Yuanlin, executive chairman of Yangzijiang Shipbuilding, which remains profitable despite the challenging market, has predicted that China will eventually be left with 20 to 30 shipbuilding companies after the severe consolidation period for the industry is over, and it could still be a few years away.
China’s shipbuilding statistics reveal an ominous sign that Ren could be right. In the first 11 months of 2015, China Association of the National Shipbuilding Industry (Cansi) reported that 54 of the country’s leading shipyards received 92.5% market share the country’s newbuilding tonnage, meaning that easily a few hundred other yards from among the estimated 300 have gotten zero new orders for the entire year.
Last year alone, Seatrade Maritime News reported that four Chinese shipyards filed for restructuring, namely Jiangsu Eastern Heavy Industries (JEHI), Zhejiang Judger Shipbuilding, Wenzhou Yuandong Shipyard, and Zhenghe Shipbuilding. In addition, Nantong Mingde Heavy Industry and government-backed Wuzhou Shipyard were declared bankrupt, STX Dalian Shipbuilding was liquidated, and Rongsheng Heavy Industries now renamed China Huarong Energy is hanging on by a thread from bankruptcy.
Another yard Sainty Marine is also on the verge of bankruptcy, and only a miracle could save it going by its problems of order cancellations, frozen bank accounts, resignation of key executives, lawsuits, unpaid debts, and suspension of shares trading.
The outlook for China’s shipbuilders is further shadowed by the Baltic Dry Index (BDI) consistently setting new lows since the start of this year. And with bulk carriers accounting for 41.6% of Chinese shipyards’ $26.6bn orderbook as of 1 December 2015, according to Clarkson’s data, their exposure to this particularly weak shipping sector will have a negative knock-on effect.
But what of the good news? With industry observers always citing that shipping, including shipbuilding, is a cyclical market, the upturn for China’s shipbuilders when it eventually comes, is anticipated to see a reformed, leaner and more competitive shipbuilding industry.
China’s state-owned shipbuilders and China State Shipbuilding Corporation (CSSC), for instance, have responded to the declining new orders by consolidating its various yard subsidiaries so as to streamline operations and maximise facility utilisation.
With state-owned corporations undergoing reform to tighten operations and the weeding out of speculative yards and the bottom-rung private enterprises, the survival of the handful of shipyards is not by chance.
Owners, who are themselves cash-strapped and cautious with placing new orders, are not about to approach unknown and less reputable yards to construct their new ships, and they would also require the vessels to be more technologically advanced and energy efficient. This goes back to answer why more than 90% of new orders are concentrated in the handful of supposedly better Chinese yards.
It is easy to see the obvious woes for Chinese shipyards, but there is always two sides to a story. And when the unforgiving consolidation is over possibly leaving less than 30 shipyards in China, the country could well be a shipbuilding powerhouse boasting of price competitiveness and quality.
Published Date : 2016-01-18 08:34:42
Author : admin
By Navy Capt. Sunday Daniel Atakpa
The reference to Nigeria’s jurisdictional sea area has always been on the basis of a 420 nm coastline and 200 nm Exclusive Economic Zone (EEZ) limit. A total sea area of 840,000 sq nm is generated using a Length x Breadth formula meant for establishing the Area of a regular solid rectangular body – a case of a correct mathematical formula wrongly applied. This is because while the application of the formula used may hold sway for any rectangular body, it cannot be true for an irregular and ambulatory body such as Nigeria’s indented coastline. This error, which may amount to claiming more or less space than Nigeria’s entitled sea area, has been spread through lectures, presentations and discussions from as far back as cognitive Service memory can recall.
According to sources, Nigeria’s coastline stretches 420 nm along its concavities. To apply the straightforward regular solid body formula to establish the sea area claim would mean stretching Nigeria’s indented coastline to achieve a straight line. Although 420 nm is an absolute number, it would nonetheless be longer than Nigeria’s eastern and western coastal boundaries when laid out as a straight line. The implication of this is that Nigeria’s maritime East and West limits would stretch into Cameroon and Republic of Benin’s maritime territories respectively. It is also possible that it may stretch beyond Republic of Benin’s comparatively smaller coastline of 65 nm depending on the eastern limit used. Furthermore, such a straight line would have its tangent at the outermost edge of the Niger Delta fan – actually, from the low water line determined as the Lowest Astronomical Tide (LAT) in accordance with Article 5 of the 1982 United Nations Convention on the Law of the Sea (UNCLOS). The breadth of the 200 nm EEZ limit would thus be determined from this tangent (outermost edge) seaward. Another implication of this is that all the indented sea area from the tangent (outermost edge) landward, left and right of it, would be unaccounted for.
The afore stated criteria may present a seemingly logical argument that the maritime space, after all, is an approximated space. This perhaps must have accounted for the use of ‘about’ in the establishment of the sea area by its proponents based on the wrong formula use. However, from a mathematical and scientific standpoint, an approximation made on the basis of a wrong formula principle is illogical and wrong. This is because mathematical approximations, wherever and whenever applied, are to be made on correctly applied formulae. Hence, the formula must first be correct and applicable to the problem before the approximation can hold. Therefore, the use of ‘about’ in the Nigerian sea space claim would have been appropriate if used to account for the errors inherent in the tortuous scoping of the coastal concavities. Not on wrong formula as has been the practice over the years. To do otherwise would be to beg the question and portray whosoever is asserting as mathematically inept before any discerning audience.
To establish a credible sea area for Nigeria, the correct mathematical operation must be applied. For such an irregular and ambulatory coastline, the sea area has to be derived through a complex string of differential calculus which will accurately account for the coastal concavities and produce a credible sea area that can stand the test of mathematical accuracy. There can be no shortcut to it. The starting point would be to re-evaluate the 420 nm coastline claim in the light of the boundary delimitations effectuated with Cameroon in the Bakassi area, if it has impacted the coastline in any way.
The need to have an accurate sea area claim could not have come at a better time than now for 2 reasons. Firstly, Nigeria recently submitted its information on the limits of the continental shelf beyond 200 nm to the Commission on the Limits of the Continental Shelf (CLCS) in line with the provision of Article 76 of UNCLOS. The intent is to claim more sea space up to a maximum of 350 nm limit from the coastline. For Nigeria to be able to establish how much sea space it would have gained on the basis of CLCS recommendations, she must have an accurate extant sea area data on which to benchmark the gain.
Secondly, the International Tribunal on the Law of the Sea (ITLOS) in its 2012 operative judgement in the Bangladesh/Myanmar case, proved that concavities play critical role in the determination of national sea space. While Myanmar advocated the use of equidistance line over a coastline whose concavities were ignored, Bangladesh advanced its argument for the use of angular bisector line which accurately accounted for the peculiar concavities of the Bay of Bengal. ITLOS applied both criteria. However, the outcome was a sea claim largely in favour of Bangladesh having due regard to the Bay of Bengal concavities.
In order to properly account for every mile of Nigeria’s maritime space, it is important that Nigeria’s coastline should be accurately determined and the sea space correctly established through the appropriate calculus. This is the only means by which the skewed sea area claim currently bandied would be corrected.
Atakpa is the Chief Instructor, Joint Warfare Division, Depratment of Joint Studies, Armed Forces Command and Staff College, Jaji.
Published Date : 2016-01-11 08:21:32
Author : admin
By Marcus Hand from Singapore
As we sail into 2016 it is fair to say that 2015 is a year that many in shipping, excluding tanker owners, would be happy to forget. So dusting off our crystal ball Seatrade Maritime News looks at what lies ahead for the industry and are there any better prospects ahead in the coming year?
If one believes Junichero Ikeda, ceo of Mitsui OSK Lines, one of the world’s largest shipowners, the answer to that question is clearly no. He stated in his New Year message that there were “few prospects for recovery”. It is a less than cheery prospect for the coming 12 months.
One of the defining factors of 2015 was the sharp drop in the oil price falling to an almost 11 year low towards the end of the year. While the first day of trading this year political tensions in the Middle East saw Brent crude move up 1.9% to $37.99 per barrel, most commentators are not expecting a sustained rise in the oil price in 2016.
The low oil price has mixed blessing for shipowners. Certainly it means lower operating costs with the bunker fuel price currently at around $170 – $180 per tonne, a level not seen for nearly a decade.
It has also clearly benefitted the tanker sector, which in 2015 enjoyed its best year since 2008 and VLCC rates at the end of the year were just shy of $100,000 per day. How long the tanker boom can last is the question, with alarm bells ringing for some over the growing newbuilding orderbook. At present though the market remains strong even if there concerns that it may not last much beyond the first or second quarter of 2016.
While the tanker sector has become the current golden boy of the industry, offshore marine has been hit hard by the low oil price. Vessel and rig rates have plunged, contracts have been cancelled, and some companies have already bitten the dust. The year ahead promises very little in the way of cheer for the sector as oil companies slash E&P budgets for 2016 and beyond reducing further the demand for rigs and offshore vessels. Cashflow will be a key issue for companies in this sector and more casualties can be expected.
The picture does not look any brighter on the dry bulk commodities side of the equation. With the bursting of the commodities bubble and lower demand from China the dry bulk shipping market has taken a hammering. Last year saw records being broken that no-one wanted to see with repeated all time lows for the Baltic Dry Index, which ended the year at 478 points, just seven points above its lowest ever level registered in mid-December.
Looking into 2016 a combination of weak demand growth and a continued oversupply of vessels gives very little reason for optimism. It is symptomatic of the state of the sector Scorpio Bulkers, not so many moons ago aiming to be the largest dry bulk shipowner in the world, closed out 2015 by exiting the capesize sector selling five vessels for just $167m.
Container shipping having enjoyed a good first half to 2015 has again found itself in rough seas. Weaker than expected demand growth has combined with a surge in new tonnage, particularly in the ultra-large containership segment putting sharp pressure of freight rates which have become increasingly volatile. Scale is becoming a key feature of container shipping both in ship and company size and 2016 could see further consolidation following CMA CGM’s planned takeover of Neptune Orient Lines (NOL) and Cosco and China Shipping Container Line as part of a wider merger of the two Chinese shipowning giants.
Consolidation is also a feature that can be expected to continue across various different spaces in shipping in the coming year as companies battle with difficult markets and those with deep pockets see opportunities to grow.
On the operational front in the Mediterranean the issue of migrants pouring into Southern Europe, often onboard highly overcrowded and unseaworthy vessels, will remain an issue which shipping finds itself unhappily caught in the front line of. Last year saw a million migrants seeking refuge in Europe and with continued conflict in the Middle East the crisis is set to continue in 2016 even as European countries tighten their borders.
On the regulatory side of things the Ballast Water Management Convention could come into force by November 2016 if the threshold of ratification by the nations controlling 35% or more of the world’s fleet is confirmed. This would be very welcome news for equipment manufacturers in this sector with shipowners no longer able to put off the decision to install treatment systems.
All in all 2016 promises to be an interesting, if not an easy year ahead for shipping and maritime.
Published Date : 2015-12-14 08:30:27
Author : admin
By Charles Penty
In 1708, the Spanish flagship San Jose was sunk by a British squadron near the port of Cartagena, in what is modern-day Colombia, taking down with it about 600 souls and a treasure that a U.S. salvage group says may be worth as much as $17 billion.
More than three centuries after the broadside from a Royal Navy ship sent the San Jose to the bottom of the Caribbean, Colombia’s announcement this month of the discovery of the vessel has sparked a battle for the spoils, pitting Spain against its former colony and the bounty-hunting salvage company.
Spain is pressing its claims to the gold after the Colombian government said it meant to hold on to the treasure. The fight has implications for Spain beyond this case. At stake are its potential rights to the spoils in hundreds of shipwrecks on ocean floors dating from the days of its colonial empire.
“The legend that has grown up around San Jose and its treasure means it has become one of the most famous of all shipwrecks,” said Miguel San Claudio, the director of Archeonauta SL, a firm of underwater archaeologists based in La Coruna, Spain. “Spain is one of the countries with one of the greatest underwater historical legacies and it does have rights.”
Spain’s Foreign Affairs Minister Jose Manuel Garcia- Margallo has said he hopes any dispute with Colombia over the San Jose could be resolved in a friendly way with both governments respecting each other’s right to defend their interests.
Coins, jewels
Still, the galleon “belonged to the state, was the result of war and was not a private boat,” he told reporters on Dec. 7. Spain’s Navy archivists have documented about 1,600 wrecks with more than a third traced to the Americas and a quarter, like the San Jose, dating from the 18th century.
Sea Search Armada, a Bellevue, Washington-based marine salvage group, says the galleon was carrying coins and precious metals mined and smelted in Peru. The San Jose with its 64 guns fell prey to the British squadron led by Commodore Charles Wager as it sought the safety of the Caribbean port of Cartagena , according to an account of the events on the Facebook page of Sea Search Armada.
The galleon’s gunpowder exploded before the British could board it, causing a wall of water that swamped the gun ports of the Wager’s ship, the Expedition. The San Jose quickly sank, taking down with it a cargo of bullion, coins, jewels and trade goods that may have exceeded Spain’s annual national income from all sources at the time, according to the account.
Spain’s rights
“Spain does not need or have an interest in getting the treasure for its monetary value but it does have rights in the case,” said Archeonauta’s San Claudio. “There were many Spaniards from both Spanish and American shores on board.”
Spain is a signatory to a 2001 United Nations Educational, Scientific and Cultural Organization convention aimed at protecting underwater archaeological sites that are coming under increased threat as improving diving technology means more wrecks surface. There may be more than 3 million undiscovered shipwrecks spread across ocean floors around the planet, according to Unesco.
The convention prevents the commercial exploitation and dispersion of underwater cultural heritage and in the San Jose’s case would mean its treasures could not be sold off for profit, said San Claudio.
Colombia, however, still hasn’t signed the convention.
Earlier victory
Spain scored a notable victory in defense of its sunken galleons in 2012 when it won the return of 594,000 silver coins after a U.S. Federal Court tussle with Odyssey Marine Exploration Inc., a deep-sea treasure-hunting company based in Florida.
The Spanish government said Odyssey had taken the coins, as well as some artifacts, from the remains of the Nuestra Señora de las Mercedes, a 34-gun frigate that was attacked and sunk by the British navy off the coast of Portugal in 1804. Spain repatriated 17 tons of the coins, which could be worth up to $500 million, packed into 551 white plastic buckets on board two Hercules military transport planes.
It may be harder for Spain to win the San Jose case, said Henry Kamen, a Barcelona-based historian who examined the episode as part of his studies of the War of the Spanish Succession. In addition to the fact that the Colombian navy found the wreck in their own territorial waters, it doesn’t necessarily follow that the Spanish government of the day was the actual owner of the cargo, he said.
Tough fight
“For political reasons, the Spanish government automatically lays claim to all Spanish wrecks anywhere in the world,” Kamen said. “In the end the decision of who has rights to the cargo will be political.”
Spain doesn’t have much of a case, Rodolfo Segovia, a former Colombian public works minister and historian, said in an interview with the country’s Caracol radio. “The position of Spain is weak,” he said.
Another claimant to San Jose’s treasures is Sea Search Armada, which says it discovered the wreck site after mounting a salvage operation with the permission and participation of the Colombian government. It alleges the Colombian government then reneged on an agreement to share the proceeds of any recovered treasure.
For now, Colombia is laying claim to the spoils. President Juan Manuel Santos said artifacts from the galleon will be housed in a new museum to be built in Cartagena. While Colombia is willing to share the historic treasure with the rest of the world, there’s no question who its rightful owner is, the president said on Dec. 8.
“Many owners are now appearing,” Santos said. “No sir — this is the patrimony of Colombians.”
Source: Bloomberg
Published Date : 2015-12-07 08:29:37
Author : admin
By Lee Hong Liang from Singapore
Following the unveiling by Beijing of the names of 60 shipyards literally called the ‘white list’, the communist government has recently announced another batch of names – just seven of them this time – for offshore shipyards.
The ‘white list’ of conventional shipyards was announced back in September 2014, and the status would allow the shipbuilders to benefit from prioritised policy support and access to domestic bank loans, giving a much-needed boost to running their operations. With an estimated 300 shipyards with day-to-day active operations, it would seem that the 60 ‘white list’ yards are placed in a more advantageous position over the rest.
Akin to the ‘white list’ status for conventional shipyards, the new ‘enterprise list’, as it is literally called, for offshore shipyards mean they can expect similar benefits. In looking at the timing of the announcements for the ‘white list’ and the ‘enterprise list’, they have come at a time when their respective industry segments are in a downcycle.
The conventional shipbuilding recession has been ongoing since the post-global financial crisis of 2008. But the offshore shipyard downturn started only towards the end of the third quarter of last year, when global oil prices crashed, prompting oil and gas firms to delay offshore projects and magnifying the already oversupplied OSV market.
More than one year on, China followed up by announcing the ‘enterprise list’ for offshore Chinese yards, amid the industry slump. It begs the question of the timing of Beijing’s announcement for the two ‘lists’, and what exactly does the government wants to achieve? It is already widely known that China wants to see a consolidated, tighter shipping and shipbuilding markets, which are currently haunted by their own successes when the sectors boomed and attracted the establishment of new many enterprises, particularly the speculators.
Today, the global economic slowdown has hit the shipbuilding segment hard, with China’s shipbuilding market going through a severe consolidation, and the 60 ‘white list’ shipyards are not spared. Even with the ‘white list’ status, there is no guarantee of survival, and certainly no guarantee of bank support. A quick glance at the list shows that six out of the 60 have met with, or are, facing problems, making them highly likely to soon exit the business.
Glaringly, China Huarong Energy, formerly known as China Rongsheng Heavy Industries, is now literally a ghost yard, and hanging by a thread above the abyss of bankruptcy. Nantong Mingde Heavy Industry has declared bankrupt; Zhenghe Shipbuilding is defunct; Jiangsu New East Marine Equipment’s parent firm has ceased operations; Sainty Marine is in a mess; Yangzhou Dayang Shipbuilding’s parent Sinopacific Shipbuilding is facing cash flow problems.
Two other ‘white list’ yards named as Guangzhou International Shipyard (GSI) and Huangpu Wenchong are now operating as one entity under the restructured CSSC Offshore & Marine Engineering Company (COMEC), former GSI, after a consolidation push by their parent firm CSSC.
In view of the above, it would be optimistic to say the least that others on the ‘white list’ are doing fine. With close to half of the 60 ‘white list’ yards being subsidiaries of state-owned shipbuilders, it is without doubt that a good portion of them might merge and further bring down the ‘white list’ numbers, if the merger of China State Shipbuilding Corp (CSSC) and China Shipbuilding Industry Corp (CSIC) materialises.
This brings us back to China’s goal of streamlining the shipbuilding segment. With hundreds of yards not on the ‘white list’ and the listed yards themselves continuing to consolidate, it is fair to conclude that the ‘white list’ is a clear move by Beijing to drastically deflate the number of shipbuilding enterprises in the country.
The observation made by shrewd businessman Ren Yuanlin, executive chairman of Yangzijiang Shipbuilding, is interesting and could well be true – only 30 shipbuilding enterprises will be left in China after another three years or so.
Now, the announcement of the ‘enterprise list’ for offshore shipyards could very well hold the same meaning of a push by Beijing to significantly amalgamate the offshore yards. In other words, the release of the ‘enterprise list’ is an ominous sign to start the shut down of offshore yards that are struggling, as those not on the list would find it even harder to secure the loans they need for the highly capital intensive operations.
The first batch of seven offshore yards in the ‘enterprise list’ are all state-run yards. It is unclear if more will be added to the list, like how it turned out for the conventional shipbuilding list, or if applications from any privately-owned offshore yard were rejected.
The days unfolding ahead are likely to be a game of survival for Chinese offshore yards, and the ‘enterprise list’ will certainly be kept lean.
Published Date : 2015-11-30 07:57:08
Author : admin
With shares of SGX-listed shipping firm Neptune Orient Lines surging again today on rumours that a formal bid from French shipping behemoth CMA CGM was imminent, the focus has turned to why European players are so eager to grab an Asian firm like NOL and just how big a premium they might pay to boost their footprint in the region.
NOL whose stock tanked 87% from its 2007 peak to its trough in August has soared 37% over the past three months in anticipation of a distressed sale to Danish conglomerate AP Moeller-Maersk or the Paris based CMA CGM.
But low valuations are not the only thing the European buyers see in NOL.
Amid the dark clouds in the container shipping business, there is clearly a very visible silver lining. Container shipping business has already seen the bottom or is very close to a bottom says Philipp Gamper, an analyst for Bank J. Safra Sarasin in Geneva.
“The (container) shipping industry could present interesting investment opportunities for risk -aware investors over the next year,” Gamper, notes in a report published on Nov 16. “These will be companies that have been nimble at identifying opportunities arising from challenges and that have an integrated business model geared to sustainability.”
Container shipping industry has been plagued with overcapacity over the past few years in the face of reduced demand due to sluggish global trade which has helped forced shipping rates down. Slower growth in China and sluggish demand in developed economies as capacity came on stream in the aftermath of the global financial crisis weighed heavily on the container shipping rates.
Bank J. Safra Sarasin report notes that due to dynamic growth rates achieved from the mid-1960s through to 2008, substantial number of new ships were ordered. Over the past couple of years those ships have been coming on stream and more are likely to enter service in the near future. “With shipping companies reluctant to scrap old ships that have already been written off, excess capacity will persist up to early 2016,” Gamper notes.
That yawning imbalance between supply and demand has helped pushed down container freight rates. The significant drop in Chinese exports to Europe — China’s largest trading partner — as well as the slowing of China’s economy, which triggered a decline in import volumes, is one of the main reasons for the plunging freight rates. Gamer says rates are not likely to improve before 2016, and indeed may only improve next year if there is a sustained stabilisation of the Chinese economy.
The container shipping industry has also been confronted with the standardisation of the sea-based transportation which has meant that shipping lines find it hard to differentiate themselves which in turn has put more pressure on pricing. This is in contrast to freight and logistic companies, such as Kuhne + Nagel or Deutsche Post DHL, which have global footprints.
But the Bank J. Safra Sarasin analysts says if container capacity declines as expected over the next year, and demand starts to picks up in response to a recovering Chinese economy and recovery in Europe, investors could find some interesting investment opportunities in the shipping sector.
Because the container shipping sector faces a challenging market with overcapacity on the supply side, low and very volatile demand and depressed freight volumes, efficiency optimiasation is increasingly important, steering the industry to greater sustainability purely due to commercial reasons. Market winners will also gain cost advantages through global alliances, Bank Sarasin says.
The way Gamper sees it, “cost flexibility is becoming increasingly important, driving alliances which allow firms to optimise load quotas collectively while reducing the number of journeys.” A prime example, he notes, is the G6 Alliance, which includes the German Hapag-Lloyd group and five Asian shipping companies: APL, a wholly-owned subsidiary of NOL; Hyundai Merchant Marine; Mitsui O.S.K. Lines; Japan’s NYK ; and Hong Kong-listed OOCL, Orient Overseas Container Line.
Yet Bank Sarasin analyst argues that strict anti-trust regulation prevent price agreements among shipping companies. “Alliances through mergers and acquisitions are difficult due to the negative synergy effects on revenue and the inflexibility of owners,” he says. “Since operating on a global scale is essential, companies must invest in bigger ships and seek selective alliances with rival firms.”
Left with few alternatives, container firms like Maersk and CMA CGM are trying to slash costs through economies of scale, commissioning ultra-large container ships since sheer size plays a key role in the race for cost leadership, he notes.” Larger ships operating at reduced speeds matched to the ship’s construction can reduce fuel costs by up to 50%,” he writes in his report. An example is profitable global market leader Maersk, which has a 10% cost advantage over the sector.
Bolt-on mergers like CMA CGM’s pending bid for NOL are one of few ways global container shipping firms can grow, cut costs and stay profitable.
NOL stock price was hovering around $1.12 late Tuesday afternoon or 5.12% up over Monday’s close. Given the dynamics of the shipping industry it won’t be surprising if rival bids emerged.
Source: The Edge Markets