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International Association of Marine and Shipping Professionals
NEWS BULLETIN 06 – 12 Aug 2018
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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
Oil & gas shipping U.S.: Natural gas pipeline capacity to South Central region and export
markets increases in 2018
INTERNATIONAL news
10/08/2018
By Katie Dyl and Jim O’Sullivan
By the end of 2018, EIA expects natural gas pipeline capacity into the South Central region of the United
States to reach almost 19 billion cubic feet per day (Bcf/d).
Source: U.S. Energy Information Administration, U.S. natural gas pipeline state-to-state capacity
The region has shifted from being a source of natural gas supply to a source of growing demand, reversing
the historical flows of natural gas in the Lower 48 states. Natural gas pipeline projects scheduled to come
online in 2018 will bring additional supply to the Gulf Coast and support growing export markets.
Of the additional 6.4 Bcf/d of Northeast capacity planned to come online in 2018, more than 2.8 Bcf/d
reaches the South Central region directly through three projects that transport natural gas through the
Midwest and Southeast: Rayne Xpress, Gulf Xpress, and Atlantic Sunrise. Further west, Natural Gas
Pipeline of America’s Gulf Coast Southbound Phase 1 is scheduled to enter service in October 2018. This
pipeline will transport up to 0.46 Bcf/d of natural gas from Illinois into south Texas and Louisiana, where it
will supply the Corpus Christi LNG export facility and pipelines into Mexico.
Source: U.S. Energy Information Administration
The LNG export facilities scheduled to come online in 2018 and 2019 represent an additional 6.1 Bcf/d of
LNG export capacity, requiring infrastructure to connect them to the interstate pipeline network and deliver
large volumes of natural gas to the liquefaction terminals. The United States currently has two operational
LNG export facilities, which have a combined export capacity of 3.5 Bcf/d: Sabine Pass Trains 1-4 (2.8
Bcf/d) and Cove Point (0.8 Bcf/d). In addition to Train 5 at Sabine Pass, four new LNG export facilities are
under construction, three of which are located in the South Central region. All three of these facilities have
associated pipeline projects that are scheduled to be completed this year:
• Freeport LNG will be supplied in part by the Coastal Bend Header Project (1.5 Bcf/d)
• Cameron LNG will be supplied in part by Columbia Gulf Transmission’s Cameron Access Project (0.8
Bcf/d) and Tennessee Gas Pipeline’s Southwest Louisiana Supply Project (0.9 Bcf/d)
• Corpus Christi LNG will be supplied in part by the Cheniere Corpus Christi Pipeline Project (2.25 Bcf/d)
EIA expects exports of natural gas to Mexico by pipeline to rise in 2018 as several projects within Texas are
completed. U.S. natural gas pipeline exports to Mexico have grown from 0.9 Bcf/d in 2010 to more than 4.3
Bcf/d through April 2018. Over this timeframe, pipeline capacity from Texas into Mexico has more than
tripled, reaching 9.3 Bcf/d in 2017. This growth is likely to continue in 2018 with the completion of the 2.6
Bcf/d Valley Crossing Pipeline.
The complementary project under construction on the Mexican side of the border, the Sur de Texas
pipeline, is an underwater pipeline along the Gulf of Mexico coast terminating in Veracruz, Mexico. This
new pipeline system will be supplied, in part, by Texas Eastern Transmission Corporation’s (TETCO)
South Texas Expansion Project and Pomelo Connector Pipeline, which will increase north-to-south flow on
TETCO’s system in Texas by 0.4 Bcf/d and create an interconnect between the two pipelines. Increases in
natural gas exports to Mexico depend on when the facilities on both the U.S. and Mexican side of the border
begin service.
Analysis of liner shipping networks and transshipment flows of potential hub ports in
sub-Saharan Africa
Source: U.S. Energy Information Administration
EIA is tracking the development of more than 160 proposed natural gas pipeline projects. Of these projects,
37 have been recently completed or are currently under construction and scheduled to come into service by
the end of 2018. More information is available on EIA’s Natural Gas Pipeline Projects tracker, updated
quarterly, and EIA’s historical data for U.S. state-to-state pipeline capacities.
[EIA]
10/08/2018
Researchers of academic institutions in Asia have published the paper Analysis of liner shipping networks
and transshipment flows of potential hub ports in sub-Saharan Africa in Volume 69 of the Journal
Transport Policy.
Highlights
• Analyze potential trunk line routes and transshipment flows that could be captured by hub ports in sub-
Saharan Africa.
• Develop a model to determine container cargo flows, vessel routes, and the number of vessels per week.
• Conduct a variety of numerical experiments for the SSA-Europe and SSA-Asia trade routes.
• Draw practical implications through scenario analyses on effects of network evolution, different vessel
sizes and speeds.
Abstract
Container shipping: Lines should fear the low sulfur rule
Owing to growing economic growth in tandem with regional economic developments on the route
connecting Asia and sub-Saharan Africa (SSA), several countries in the SSA region such as South Africa
have been developing container ports.
This paper analyzes potential trunk line routes and transshipment flows that could be captured by potential
hub ports in the SSA region. To this end, integer programing models are developed to represent liner
shipping networks in the SSA region and a wide variety of numerical experiments based on realistic data
are conducted for the SSA-Europe and SSA-Asia trade routes.
This paper draws various meaningful policy and managerial implications through scenario analyses such as
the effects of network evolution, different vessel sizes and speeds, carbon taxes and insights in association
with the 21st Century Maritime Silk Road initiated by China.
[ScienceDirect]
10/08/2018
By Peter Tirschwell
With each passing day, the realization grows that the sulfur cap on bunker fuel will have a profound effect
on shipping. The rule, imposed by the International Maritime Organization, will reduce permissible sulfur
emissions from vessels to 0.5 percent from 3.5 percent beginning Jan. 1, 2020.
Container carriers, like other shipowners, almost certainly will face higher costs for low-sulfur fuel, but
unless they break with decades of cutthroat competition and change the paradigm on how they go to
market, they risk failing to pass the full cost increases along to customers.
Some of the increase inevitably will get passed along, and shippers are bracing for that. But for an industry
that is unable to generate sustainable profits, a huge cost increase could be so material that it would force
the industry into a fresh round of mega-ship ordering or another round of consolidation — this time
possibly involving mergers of the biggest carriers — raising questions about how many carriers, and how
much competition, would remain.
Knowledgeable people JOC has spoken to recently say carriers would have to implement radical changes in
how they go to market to be in a position to successfully pass along the cost increases that may result from
the sulfur cap. In other words, something has to change.
Today, carriers are unable to pass along increases in bunker fuel, and that is reflected in typically lower
earnings at times of rising bunker costs. This year is a case in point, with Maersk Line stating that its first
quarter results were “impacted by higher unit costs among others because of adverse developments in
bunker prices.” Maersk said average bunker prices were up 28 percent year over year in the second quarter.
The average cost of bunker fuel in July across the ports of Rotterdam, Shanghai, and New York-New Jersey
was $454.42 per metric ton ($500.91 per ton), up 51.6 percent from the same month last year, according to
data from IHS Markit, parent company of JOC.com.
Emergency bunker fuel surcharges sought by carriers show just how poor the container shipping industry is
at determining where energy prices will go. Granted, hedging has become more complicated because of
geopolitical tensions involving Iran, Venezuela, and Iraq, and the emergence of major producers such as
the United States, and, soon, Mexico. Asked in June why carriers weren’t able to forecast the jump in fuel
prices, Pascal Hirn, CMA CGM’s vice president of North American Lines, quipped, “We’re ship operators,
not energy experts.”
Container shipping’s core weakness: all-consuming cash flow quest
This goes straight to the core weakness of container shipping: the all-consuming quest for cash flow against
hard assets such as ships that lead carriers to load unprofitable cargo rather than no cargo at all. This has
undermined carriers’ ability to identify and pass along to customers objective costs, such as bunker fuel
spikes, leading to the spread of all-in rates that expose all aspects of pricing to the volatility of supply and
demand that, because of chronic overcapacity, rarely plays out in carriers’ favor.
“The players in the liner sector are going to have to make some pretty fundamental changes to how they
price to ensure that the increased cost is passed along,” one knowledgeable source told JOC.com. “The
alternative to an effective mechanism to recover the incremental cost will be pretty unpleasant.” Such
thoughts undoubtedly led MOL president Junichiro Ikeda to tell The Financial Times in June that because
of the sulfur cap, “We’re all going to go bust.”
How would carriers change their approach to pricing? The lack of a clear answer to that question is the
heart of the issue. The epochal industry consolidation over the past two years, which reduced the number of
east-west carriers from 17 to 10, has resulted in virtually no change in carrier behavior on pricing. The
run-up in trans-Pacific spot pricing in recent weeks is tied to market fundamentals, not a new approach by
carriers.
Dynamic pricing tools such as the New York Shipping Exchange, which would move the industry down the
airline route, are available, but more carriers need to take advantage of them. Strategically, carriers are
taking initial steps to reposition themselves as higher-value service providers, but that requires investment,
and that can be hard to justify when the track record indicates such investment doesn’t pay off.
That’s what makes the sulfur cap approach a potentially game-changing issue in the container sector
specifically. In the non-container trades such as tankers and bulk carriers, charterers pay for bunker fuel, so
owners aren’t on the hook for higher costs. That’s the same case for containers when a container line
charters a ship from a non-operating owner. But when it comes to passing along costs to container shippers,
the system breaks down, and there is nothing on the horizon to suggest that within roughly 16 months the
carriers will find a way to change the paradigm on pricing.
Container shipping: Yang Ming reports $129 million loss for second quarter 2018
Container shipping: Hapag-Lloyd reports $80 million loss for second quarter 2018
It could be that, like the hype over the Safety of Life at Sea container weight issue, no meaningful cost
increases will materialize. But that isn’t how it looks as shippers head into the autumn of 2018.
[JOC.com]
10/08/2018
Taiwanese ocean carrier Yang Ming Marine Transport Corporation (Yang Ming) registered a net loss of
NTD3.81 billion (USD 129.1 million) for Q2.
However, the Q2 consolidated revenues total NTD33.6 billion (USD1.14 billion) was up 1.12% from the
same period in the previous year. The business volume of 1.29 million TEUs rose 11.84% year-on-year.
In the meantime, for the first half of 2018, Yang Ming’s consolidated revenues totaled NTD64.6 billion
(USD2.19 billion), up 1.81% compared with the same period in the previous year. The first half 2018
business volume totaled 2.52 million TEUs, climbing 10.28% from the same period in the previous year.
The net loss for the first half 2018 was NTD 5.76 billion (USD 195.1 million).
Yang Ming continues its efforts to lower costs and increase revenue. Yang Ming vessels are taking
advantage of slow steaming to reduce bunker consumption and harmful emissions. Planning for the future,
Yang Ming has approved the construction of ten 2,800 TEU containerships, equipped with advanced eco-
friendly equipment which will comply with environmental regulations. These vessels will be deployed in
the Intra-Asia market.
[Maritime Professional]
10/08/2018
By Chris Dupin
Hapag-Lloyd had a loss of $80.1 million in the second quarter ending June 30 compared with a profit of
$17.2 million in the second quarter of 2017.
Revenue in the second quarter was $3.35 billion in the second quarter of 2018 compared with $2.63 billion
in the second quarter of 2017. The company noted that its performance this year can only be compared to a
limited degree with its performance in 2017 as the company had acquired United Arab Shipping Co.
(UASC) on May 24, 2017.
The German container carrier moved 2,987,000 TEUs in the second quarter compared with 2,287,000
TEUs in the same quarter in 2017. But the average freight rate in the second quarter of this year was $1,010
per TEU compared with $1,072 per TEU last year in the second quarter. Average fuel prices, including both
marine fuel oil and marine diesel oil, increased to $399 per tonne in the second quarter of this year
compared with $312 per tonne in the same period a year earlier.
Container shipping: World Container Index - 09 Aug 2018
:
The acquisition of UASC, higher costs for fuel, vessel charters and intermodal transport resulted in
expenses for raw materials and supplies in the first half of 2018 being 57.4 percent higher than in the first
half of 2017.
[American Shipper]
09/08/2018
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 $1691.88/40ft container.
Two-year spot freight rate trend for the World Container Index:
Our detailed assessment for Thursday, 9 August 2018
The composite index is down by 0.3% this week, 7.9% up as compared with same period of 2017.
• The average composite index of the WCI, assessed by Drewry for year-to-date, is US $1,404/40ft
container, which is $119 lower than the five-year average of $1,523/40ft container.
• With a marginal decrease in freight rates, Drewry’s composite World Container Index slipped 0.3% to
$1,691.88 per 40ft container. Rates from Rotterdam to Shanghai fell by $22 to $795 per 40ft box and rates
from Rotterdam to New York stood at $1,950 for a 40ft box – a decrease of $15. Similarly, rates from
Shanghai to New York dropped by $9 to $3,202 for a 40ft container. However, freight rates from Los
Angeles to Shanghai are up by $9 to $489 per feu. Drewry expects rates to remain stable next week.
Our latest freight rate assessments on eight major East-West trades:
Spot freight rates by route - assessed by Drewry
Container shipping: Maersk and IBM launch blockchain-based shipping platform
TradeLens
Container shipping: Struggling to chart equilibrium between demand and supply
Source: Drewry Supply Chain Advisors
[Drewry]
09/08/2018
By Christian Wienberg
A.P. Moller-Maersk A/S, the world’s largest container line, and International Business Machines Corp. have
launched a blockchain-based platform for sharing transaction information in real time, to speed up
shipments.
Maersk and IBM are targeting industry adoption of TradeLens, created as part of their technological
partnership, to exchange and store information including shipping data and documents, according to a
statement published Thursday. More than 90 organizations are already involved in or have agreed to
participate, Copenhagen-based Maersk said.
[Bloomberg]
09/08/2018
By Hailey Desormeaux
The one constant in the container shipping industry is the challenge of supply and demand.
Carriers have struggled with overcapacity for years, partly because they kept ordering bigger ships, but also
because constant competition for market share led carriers to undercut each other on price and end up with
non-compensatory rates and a whole lot of red ink.
Despite 2017 generally being a strong year for carriers, the outlook for the remainder of 2018 is becoming
increasingly clear — and it’s not looking good.
Consolidation among the largest carriers over the past few years allowed companies to eliminate back-office
redundancies and reduce costs, but did little to ease overcapacity, as their operating fleets and order books
generally remained the same.
Carriers have been aggressively slashing services in recent months, perhaps in fear of another tumultuous
year like 2016, which was so bad that it pushed Hanjin, South Korea’s largest carrier at the time, into
bankruptcy. Adding fuel to the fire, uncertainty over how much and when new tariffs will impact container
volumes is making it tough for carriers to navigate the supply-versus-demand dilemma.
Balancing act
Although the container shipping industry remains oversupplied, there are various ways in which capacity
can be managed, ranging from slow steaming, blanking voyages, removing entire loops, demolishing or
ordering fewer vessels.
When slow steaming, a vessel will operate at a lower speed, completing a rotation in a longer period of time
than normal. This method leads to lower fuel-consumption costs, but longer transits can result in angry
shippers.
In a blanked voyage, a carrier will cancel one voyage on a service, ranging from the entire voyage to just one
port call. Carriers prefer this method when they need a short-term fix in reducing capacity, such as around
Chinese New Year or Golden Week, when demand for space on vessels is low.
Removing loops altogether is a more concrete way to cut capacity and also can be done through suspending
one loop for a certain period of time or merging two loops. However, removing loops leads to idle ships,
which does not bring in any revenue for carriers.
In general, slow steaming, blanked voyages and removing loops result in shippers having fewer options,
which in turn, lead to higher costs for shippers. Perhaps the most extreme and long-term option is for carriers
to order fewer vessels and send more to the scrapyards. However, this is not a short-term cure, since with so
many new, larger vessels ordered in recent years, capacity cannot be phased out overnight.
Hua Joo Tan, a consultant at Alphaliner, told American Shipper that service withdrawals are the only
effective way of managing capacity. “Skipped sailings result in temporary reductions but do not provide a
sustainable solution in the longer term,” he said. “Slow steaming only removes surplus ships, but capacity
remains unchanged if the number of services is maintained.”
Darron Wadey, senior shipping analyst and consultant at Dynamar, said that in the short term, removing
services would bring the supply-demand situation closer to equilibrium, thus improving rates.
“In fact, it may even encourage cascading as shipowners and operators try to find employment for those
ships once deployed on the cut services,” he said in a recent interview. “Ironically, this could actually feed
overcapacity in other, albeit smaller trades. Even if this cascading does not happen, owners who cannot find
even cost-covering employment will idle them, which costs money too.”
Ultimately, Wadey believes carriers should take an approach that involves moderate ordering with
somewhat more aggressive scrapping. Pointing to DynaLiners Trade Review 2018 — A Delicate Balance,
Wadey said cargo demand in 2017 grew 5 percent year-over-year while global capacity grew 4 percent, due
to fewer deliveries and reasonable scrapping, thus leading to profitability. However, for the first quarter of
2018, global volumes increased 5 percent year-over-year while capacity increased 6 percent due to plenty of
deliveries and virtually no scrapping, leading to struggles and losses.
Although the container shipping industry remains oversupplied, when it comes to establishing a capacity-
management strategy, carriers must remember that the supply-demand balance varies quite dramatically
from trade to trade, Simon Heaney, senior manager of container research at Drewry, told American
Shipper.
“There’s little point removing tonnage from one weak trade to a stronger market only to disrupt the
supply-demand balance of the healthier one,” he said. “Carriers are effectively having to spin multiple plates
and will continue to utilize all of the capacity levers available to them. The lowest utilization trades will
require the greatest remedial action in terms of service suspensions, whereas in healthier lanes, the option to
skip a few sailings during temporary demand lulls will be more appropriate.”
Stacking up
Global contaitner capacity has grown at a faster rate than merchandise trade volumes for each year from
2012 to 2017, as illustrated in the chart below, which was built using data from BlueWater Reporting’s
Capacity Report and the World Trade Organization.
During this time period, BlueWater Reporting shows total container capacity grew the fastest between 2013
and 2014, rising 8.5 percent year-over-year. World merchandise trade volumes grew the fastest between
2016 and 2017, rising 4.7 percent year-over-year, according to the World Trade Organization. The WTO
expects merchandise trade volumes will grow 4.4 percent for 2018.
Source: American Shipper
Drewry projects that for 2018, global container port throughput will total 794 million TEUs, a 6.5 percent
increase from 2017, while fleet growth will reach 5.4 percent, according to the London-based maritime
research and consulting firm’s latest Container Forecaster Report, which was published at the end of June.
In terms of demand, Drewry projects the Middle East and North America will experience the smallest
container volumes increase in 2018 with year-over-year growth of 2 percent to 3 percent. Asia, which
accounts for just over half of all world throughput, as well as Europe, Oceania and Latin America all are
projected to see year-over-year container volumes growth ranging from 6 percent to 8 percent in 2018.
Africa is expected to see growth of around 10 percent compared to 2017, while South Asia is expected to see
growth of about 11 percent.
Regarding supply, scrapping during the first quarter of 2018 was well below expectations at only 26,000
TEUs, and Drewry projects only 100,000 TEUs will be scrapped for the full year, Heaney said during a July
webinar on the outlook for container shipping and freight rates.
“We’re seeing the shipowners are preferring to squeeze as much life out of their assets as possible by taking
advantage of the rising charter prices rather than sending old ships to the scrapyards,” Heaney said. As long
as charter rates remain buoyant, Drewry doesn’t anticipate a significant prospect for more scrapping, he
said.
However, demolition might increase in 2019, Heaney said, pointing out that a lot of ships were delivered
this year and the cascading of larger ships into new trades could make the incumbent ships less viable. He
also said the higher bunker prices could speed up the demolition process.
Looking farther ahead, Drewry expects greater scrapping as a result of stricter low-sulfur fuel and ballast
water laws, Heaney said.
The International Maritime Organization’s Maritime Environmental Protection Committee will lower the
global cap on the amount of sulfur in marine fuel from 3.5 percent to 0.5 percent on Jan. 1, 2020, meaning
that ocean carriers will have to use marine oil with less than 0.5 percent sulfur emission, install scrubbers to
old or new ships, or begin using ships powered by alternative fuels like liquefied natural gas.
The Ballast Water Management Convention, which entered into force on Sept. 8, 2017, is designed to
prevent the spread of harmful aquatic organisms from one region to another by establishing standards and
procedures for the management and control of ships’ ballast water and sediments, according to the IMO.
And as with the low-sulfur fuel regulations, older non-compliant vessels will need to be retrofitted with new
equipment or taken out of service under these rules.
Red flags
Despite Drewry’s projection that scrapping could pick up from 2019 onward and thus aid the supply-
demand balance, numerous red flags shadow the container industry, with carriers across the board facing
headwinds from lower spot rates and trade tensions.
Heaney said during the webinar that Drewry would likely downgrade its outlook for demand growth, but
probably less so for 2018 since it will take some time to feel the impact of the United States’ so-called trade
war with China and other close trading partners like the European Union, Canada and Mexico.
The east-west spot rate year-to-date average for the first six months of 2018 fell 11 percent year-over-year,
Martin Dixon, director of research products at Drewry, said during the webinar. This is according to
Drewry’s World Container Index, which measures spot container rates on eight major routes to and from the
United States, Europe and Asia.
As of Aug. 2, the average composite index of the WCI year-to-date totaled $1,395 per 40-foot container, 8.5
percent below the five-year average. Drewry also believes carriers will struggle to recover much of the
increase in higher bunker costs from the emergency bunker surcharges, Dixon added.
Oil has gone up in price this year after hitting extreme lows, and because carriers didn’t expect it, they’re
now trying to pass on the added cost of bunker fuel to shippers via “emergency” surcharges. Shippers aren’t
very happy about it, so it remains to be seen whether they will really pay more for the same space they
contracted for at the start of the year. If they won’t, that could encourage carriers to scrap more to bring
down available supply, thus driving up spot market rates.
In addition, carriers such as Hapag-Lloyd of Germany and Japan’s NYK have issued profit warnings, while
numerous prominent carriers have been slashing services on various trades in recent months.
Hapag-Lloyd in June downgraded its 2018 profit forecast due to “an unexpectedly significant and
continuing increase in the operational costs since the beginning of the year, especially with regard to fuel-
related costs and charter rates, combined with a slower-than-expected recovery of freight rates.”
In July, NYK issued a profit warning for its current fiscal year, which began April 1 and runs through March
31, 2019, citing costs related to changes within its container shipping business, problems with its Nippon
Cargo Airlines subsidiary and higher fuel costs.
Several of the top carriers reported losses for the quarter ending March 31, while results for the quarter
ending June 30 are beginning to surface, with the Ocean Network Express posting a loss of $120 million.
Meanwhile, the 2M Alliance of Maersk Line and Mediterranean Shipping Co. (MSC), the world’s two
largest carriers, suspended its transpacific TP1/New Eagle loop at the beginning of July until further notice,
with MSC citing a “challenging operating environment for business on the transpacific trade.”
At the end of July, the OCEAN Alliance merged two of its loops on the Asia-Mideast trade. In the first week
of August, THE Alliance combined two of its transpacific loops. The 2M Alliance will seasonally will close
one of its Asia-Europe loops in late Q3 or early Q4, and in early September, the 2M Alliance and ZIM will
consolidate operations on the Asia-U.S. East Coast trade, cooperating on five loops together. Additionally,
the 2M Alliance will continue to offer its Lone Star Express service on the trade outside the new
arrangement with ZIM.
Tariff uncertainty
The general consensus appears to be that the U.S.-China trade war will have a significant, but not huge,
impact on the container shipping market, but when exactly the tariffs will impact trade flows is still unclear.
“Retailers cannot easily or quickly change their global supply chains, so imports from China and elsewhere
are expected to continue to grow for the foreseeable future,” NRF Vice President for Supply Chain and
Customs Policy Jonathan Gold said. “As tariffs begin to hit imported consumer goods or the parts and
equipment needed to produce U.S. goods, these hidden taxes will mean higher prices for Americans, rather
than significant changes to international trade.”
Container shipping: Big Spike in lay-ups mid-peak season a worry for owners
In the worst-case scenario, Drewry believes that up to 1.8 million TEUs — or about 10 percent of the total
eastbound transpacific market based on 2017 figures — could be lost to the market over a period of time,
according to the firm’s July 8 Container Insight Weekly. “We should stress that this analysis is a rough guide
and won’t happen overnight as tariff policies take months to put together and the impact often lags by a
couple of quarters,” Drewry said.
“The main beneficiaries of any trade diversion from China would be Japan, Germany, South Korea and
Malaysia (as well as Mexico and Canada),” Drewry added. “They would likely see increased exports to the
U.S. by container (transpacific eastbound and transatlantic westbound) and by overland transport in the case
of the two NAFTA countries.”
In mid-July, the Port of Oakland said it was too soon to project the impact of 2018 tariff increases on cargo
from China. However, it said the increases would have affected about $225 million of China’s imports had
they been in place last year. In Southern California, Port of Los Angeles Executive Director Gene Seroka
said, “A continued shuffling of alliance services in the San Pedro Bay, coupled with potential impacts from
recently imposed tariffs, provide a level of uncertainty and potentially softened trade flows through our port
during the second half of 2018.”
Although 2018 may end up to be a rocky year for carriers, there are signs that overcapacity potentially could
be less of a threat in 2019. Clarksons Research’s June Container Intelligence Monthly, for example,
estimated containership deliveries will decline between 2018 and 2019 and demolition will rise. It projected
that containership deliveries will fall 26 percent between 2018 and 2019, from an aggregate capacity of 1.25
million TEUs to an aggregate capacity of 924,600 TEUs, while containership demolitions will rise 37
percent, from 137,000 TEUs to 187,900 TEUs.
Regardless of what happens next, carriers must stay on top of the current set of challenges presented by
overcapacity and pay special attention to demand levels by trade lane, particularly the transpacific trade as it
begins to feel the effects from the U.S.-China trade war in the coming months in order to bring the supply-
and-demand balance closer to equilibrium.
[American Shipper]
09/08/2018
By Mike Wackett
Alphaliner’s bellwether containership idle tonnage data has recorded a big spike in vessels being consigned
to lay-up, shifting the supply-demand balance back in favour of the charterer.
The consultant said the capacity of the idle tonnage fleet had risen to 341,000 teu by the end of July,
representing 1.6% of the total global cellular fleet. This is a worrying increase for shipowners, not least
because this has happened in the middle of the peak season. Indeed, with the slack season not normally
expected until October, Alphaliner said the amount of unemployed tonnage could reach 750,000 teu, or
more, by the end of the year.
The town already has oil and gas loading terminals, built since 2013, that feed pipelines transporting the fuel
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“Capacity rationalisation moves on the Far East-Middle East and Far East-North America routes are
expected to further drive down the active fleet in the coming two months, although this will be partly offset
by new service launches on the Australia routes,” said Alphaliner.
With ocean carriers carrying forward some $1.2bn of red ink from the first quarter, and many likely to post
even worse losses for Q2, the container lines have been under significant pressure to ‘stop the rot’. But with
fuel prices still rising and freight rate increases not sufficiently compensating for extra costs, the lines have
adopted a ‘slash and burn’ strategy of pulling services, cutting capacity and postponing planned new
services. And this means the carriers have not taken up options for charter extensions on ships and instead
returned as much tonnage as possible to owners.
The impact has been for brokers of the redundant ships to try to fix cargo on the spot market for as long as
possible, but due to a low level of new enquiries, several owners have opted to tie their ships up and try to
ride out the period of slow demand. Consequently, the surplus tonnage is having a negative impact on charter
rates and has put the carriers back in the driving seat, able to dictate terms and conditions for any urgent
requirements.
Non-urgent, or less-commercially sensitive business, is being left on the quayside for oncarriage via an
alliance vessel, which could be weeks later. One carrier source told The Loadstar this week that new stricter
compliance had been introduced within his company, requiring that any charters had to be signed off at a
very senior level. He added that a strong business case had to be made before the carrier would even consider
chartering an additional ship.
And with demand suddenly drying up, the asset values of ships, which are linked to the market level of
charter rates, is beginning to fall again. For example, the value of a 2005-built 4,250 teu panamax ship, as
recorded by vesselsvalue.com, has fallen in the past month to $7.25m from $7.65, having recovered from a
low of $5m in September 2016.
Currently scrap values are at roughly the same level as asset values, which in the current climate could
encourage owners to recommence a policy of recycling, thereby rekindling the containership demolition
market and slowing the growth of the idle fleet.
[The Loadstar]
09/08/2018
According to the Rosario grain exchange, ships loading at Argentina's biggest grain export hub are departing
light because of abnormally low water levels on the Parana River, a consequence of an ongoing drought.
Dry bulk shipping: Soybeans are stranded at sea in the US-China trade war
Grain terminal at Rosario. Credit: Antares
Argentina's soybean crop has already taken a hard hit from the dry spell, and forecasts predict a drop of 31
percent relative to last year. It is the worst harvest in a decade, and exports are expected to fall to eight
million tons for the season. Now producers face challenges getting raw soybeans and soybean oil products to
market due to the same water shortage: the Parana is at a 10-year low, about 1.5 feet below the reference
level, and more than 60 vessels have been affected by draft restrictions at Rosario over the past two weeks.
"The probability is that the ships will have to load two feet less than the usual," said the Rosario exchange in
a statement. "The largest ships will lose loads between 3,200 and 4,300 tons."
The problems facing the soy crop are of national significance, as soy accounts for over one third of
Argentina's exports overall. They also have international implications, as Chinese buyers will not be able to
turn to Argentinian suppliers to offset the impact of tariffs on American soy. China has imposed a 25 percent
tax on imported American soybeans in retaliation for the Trump administration's recent trade measures, and
without an alternative source, Chinese mills will have to pay the tariff and buy American supplies in order to
meet demand.
[Maritime Executive]
09/08/2018
By Aisha Hassan
Cargo ship Peak Pegasus became a bit player in the US-China trade drama on July 6 when it raced against
the clock to deliver US soybeans to China before retaliatory tariffs kicked in.
Port development Horn of Africa: Djibouti could face new competition
Users on the social media site Weibo cheered Pegasus and its cargo on, with one user writing, “You are no
ordinary soybean!” Alas, the ship arrived 30 minutes too late to the port of Dalian, and has been sailing in
circles ever since.
The 299-metre bulk carrier is carrying 70,000 tons of soybeans, worth about $20 million. Michael
Magdovitz, an analyst at Rabobank, told The Guardian that Pegasus’ soybeans aren’t the only ones adrift;
another carrier named Star Jennifer has also been waiting for a fortnight.
The Amsterdam-based trading company Louis Dreyfus is reportedly paying about $12,500 per day, to keep
Pegasus afloat in an attempt to wait out the trade war. But commodities experts actually think this is a smart
move, and keeping the carrier at sea for months might even make financial sense. Offloading the cargo in
China would incur a 25% tariff, adding another $6 million in costs, and diverting the vessel to another port
might be even more expensive.
China is the world’s biggest soybean importer and America’s largest customer, with trade totaling $14
billion last year. But the soybean saga might end soon. Due to strong demand for the commodity, which is
used in biodiesel, oil, and feed for livestock—hog feed in China is 20% soybean meal—Pegasus might soon
get a break. China has been relying on Brazil’s produce, but its soybeans supply will soon start falling just as
US harvests pick up. Just last week, the first US shipment of soybeans in three weeks set sail for Shanghai,
though whether it reaches its destination remains to be seen.
[Quartz]
09/08/2018
Djibouti has invested heavily in making itself a hub for deep-sea shipping in the Horn of Africa, and much
of its business depends upon its status as the sole seaport for landlocked Ethiopia. However, its port
revenues could be challenged by the re-emergence of neighboring Eritrea, a longtime pariah state that could
soon regain access to global commerce.
Eritrea won its independence from Ethiopia in 1991, and it remained in a permanent "state of war" with its
former occupier until this July, when Ethiopian Prime Minister and Eritrean President Isaias Afwerki
signed a landmark peace agreement. The deal opens the path to resumed commercial ties, explicitly
including the possibility for joint seaport development - much to the consternation of Djibouti, which has a
cold relationship with Eritrea and would not benefit from a neighboring competitor.
Credit: United Nations Department of Peacekeeping Operations
An Eritrean port development plan could have foreign backers. The United Arab Emirates has longstanding
ties with Eritrea, and in 2015 it built a naval base at the Eritrean port of Assab to support its military
operations in Yemen, just across the Red Sea. Emirati diplomats helped to broker the peace agreement
between Ethiopia and Eritrea this July - after Djibouti took control of the Doraleh container terminal from
UAE-owned DP World, sparking protests from the UAE. Analysts note that the Emirates could underwrite
the expansion of competing port facilities in Eritrea to handle Ethiopian cargo. DP World has already made
similar moves in Berbera, Somaliland, where it is investing $440 million in a new multipurpose port to
serve the Ethiopian market - potentially drawing business away from Doraleh.
Human rights concerns
Eritrean President Afwerki has been in power since 1993, and rights groups consider his dictatorship to be
one of the most abusive goverments in the world. Freedom House ranks it on par with North Korea for the
rights of the individual, and a UN Commission of Inquiry determined in 2016 that the Eritrean government
has a "wholesale disregard for the liberty" of its people.
Government conscription, or "national service," is required of all citizens, and since 1998 the term of
enrollment has been indefinite. Many Ethiopians flee the country in order to escape a life of involuntary
military service, driving up the maritime migration numbers on the Libya-Italy and Morocco-Spain routes
to Europe. Rights groups have called on nations that engage with the Eritrean government to demand
improvements in human rights as a condition for doing business.
[The Maritime Executive]
Port development Canada: Transfer of four port facilities to the Government of Quebec
09/08/2018
Agricultural exporters will save US $500 per container once the improvements to the multipurpose port of
Salaverry are ready, said the CEO of the Salaverry Transporter Consortium (Consorcio Transportadora
Salaverry), Diego Cassinelli.
In May of this year, the contract for the modernization of infrastructure and the development of the
Salaverry Port Terminal, located in the La Libertad region, was awarded for US $229 million.
The dredging work in the port to bring the depth to 12.5 meters is scheduled to begin in December; as well
as the implementation of a Shore Tension system, which will reduce the port closing time from 90 to 30
days.
"With these improvements, the port will be ready for the recapitalization of container shipping lines and it
will be the natural exit gate for the agroindustrial cargo of the region. In fact, we have already held
conversations with three lines that would be interested in joining Salaverry. This will involve savings of
US $500 per container for agricultural exporters," said Cassinelli.
The company winner of the concession will sign a contract with the State on August 20 and plans to start
operations on September 20. This was stated by Cassinelli in the framework of the third extraordinary
meeting of the Regional Export Executive Committee of the region of La Libertad. In this event, the
Salaverry Transporter Consortium gave answer to the concerns of port users, Sunat officials,
representatives of agricultural exporters, and other people participating in the event.
[Fresh Plaza]
08/08/2018
Today, an agreement in principle has been announced for the transfer, as of March 30, 2020, of the ports of
Matane, Gaspé, Rimouski and Gros-Cacouna to the Government of Quebec under the Port Facility
Transfer Program.
In addition to the commercial docks, the transfer includes buildings and storage areas, breakwaters at the
Matane and Gros-Cacouna ports and a spur pier at the Port of Rimouski.
The Government of Canada will provide $163 M for the four ports. This includes a $148.8M grant to the
Province to support the future costs of operating and maintaining the ports, the balance representing
investments in specific projects and other costs to be incurred by Transport Canada prior to their transfer.
This change will contribute to the sustainability of these facilities, which contribute to economic prosperity
and job creation in the communities and regions they serve. It will also allow a better valorization of their
potential according to the needs of current users, the development of new activities and the involvement of
users and local partners in the management of these ports.
Quick facts
• Since the introduction of the National Marine Policy in 1995, the Government of Canada has transferred
Port development Peru: Improvements at Salaverry will save exporters $500 per container
Container shipping: Reefer trade expansion to support freight rates
the ownership and operation of 500 port facilities to interested parties across the country.
• The Ports Asset Transfer Program, launched in April 2015, is aimed at facilitating the transfer of the 50
remaining port facilities from Transport Canada's inventory to other entities. The Program aims to sell or
transfer Transport Canada-administered port facilities to interested parties, including crown corporations
and other federal departments, provincial and municipal governments, non-profit organizations, the
general public and indigenous groups.
• The Maritime Strategy, the first such strategy in Quebec's history, presents a perspective up to 2030 and
sets out an action plan for the 2015–2020 period. With this vision, the government is unveiling what the
Quebec maritime sector will be in the next fifteen years. It establishes the foundation so that everyone can
work together to make Quebec a prosperous maritime nation, looking to the future.
• •Thanks to the Maritime Strategy, in Quebec, more than 327 projects were launched in Quebec, for a total
investment of more than $2.26 billion. More than 10,531 jobs were created and consolidated.
[Transport Canada]
08/08/2018
Despite moderating perishable seaborne trade growth, continued modal shift will sustain expansion in the
containerised reefer trade and so support freight rate development, according to Drewry’s latest Reefer
Shipping Annual Review and Forecast 2018/19 report, by global shipping consultancy Drewry.
Global seaborne reefer trade continues to expand, posting a gain of over 5% in 2017 to 124 million tonnes,
a big improvement on trend growth over the past 10 years of 3.6% a year. Underpinning this progress was
strong growth in banana, meat and fish trades. Drewry estimates that containerised reefer traffic expanded
by 8% in 2017, outpacing the growth in overall seaborne reefer trade. Driving this acceleration has been
the continued shift of cargo from the declining specialised reefer fleet to the container mode.
“This modal shift in favour of container shipping lines is expected to continue as the specialised fleet
shrinks further,” said Drewry’s director of research products Martin Dixon. “Indeed the specialised
sector’s share of total seaborne reefer trade is forecast to fall from 20% today to just 14% for 2022, with
container lines picking up the slack.”
Source: Drewry Maritime Research
However, container equipment availability remains an issue, particularly in hinterland locations where
carriers have been reluctant to reposition empty reefer boxes. Production of new refrigerated container
equipment recovered in 2017 and the fleet is forecast to continue growing ahead of cargo demand, but
despite this tight supply conditions are expected to remain.
“Buoyant trade development and tight availability of container equipment in certain regions have enabled
some strengthening in reefer container freight rates relative to dry freight pricing,” continued Dixon.
“These dynamics are expected to further support reefer container freight pricing over the next few years.”
Drewry estimates that average containerised reefer freight rates rose 3% in the six quarters to 2Q18, while
average dry freight box rates fell 14% (see chart above). This demonstrates that despite broader weakness
in the container shipping market, reefer rates have held up, rewarding those carriers that have chosen to
invest in the cargo segment. Meanwhile, time charter rates for specialist reefer vessels recovered in 2017
from the previous year’s lows but have since come under pressure and are expected to remain so.
However, Drewry forecasts that the growth in seaborne perishable reefer trade will moderate slightly over
the next five years to nearer 3% a year. This is due in part to an anticipated correction in banana and exotic
fruit trades in 2018 following inclement weather conditions in the final months of 2017, as well as a
looming trade war between US and China that will affect the reefer dominant westbound transpacific trade
in particular.
[Drewry]
Oceans: The nations that kill small cetaceans
08/08/2018
Por Xóchitl Bárcenas
La empresa será la primera en operar en el nuevo recinto con una terminal de última generación para el
manejo de contenedores y atraer a las navieras más importantes del mundo.
Un barco que no navega no gana; de hecho, el costo de una hora de espera en altamar está entre 12 mil y 15
mil dólares, lo que repercute en el precio al consumidor final. Así lo señaló Sergio Aguilar López, gerente
de ingeniería y desarrollo de Hutchison Ports Icave, la empresa que ya opera en el viejo puerto de Veracruz
y que ganó la licitación para construir y operar próximamente la terminal de contenedores en el nuevo
recinto.
“Este puerto se hace precisamente para evitar esas líneas de espera innecesarias para los barcos; es una
regla comercial. Si somos más eficientes esos costos se reducen”, precisó el directivo de la empresa que
pertenece al mayor inversionista y desarrollador de puertos con presencia en 52 terminales de 26 países.
Hutchison invierte 400 millones de dólares en su terminal de contenedores del nuevo puerto, una de las
cinco que operarán (para mover además fluidos, granos, minerales y carga mixta) y que busca responder
precisamente a la saturación del actual recinto, en donde moviliza cada año 900 mil TEU (contenedores de
carga con una capacidad de 20 pies o unos seis metros).
De acuerdo con las previsiones, en la primera etapa de operación en el nuevo recinto, es decir a partir de
2019, su terminal de contenedores podrá movilizar cada año 1.4 millones de TEU. Al finalizar la segunda
etapa, podrá mover un volumen de carga equivalente a 2.5 millones de TEU.
[El Sol de Zacatecas]
07/08/2018
Over 100,000 dolphins, small whales and porpoises (small cetaceans) are slaughtered globally in hunts
each year - many to be used as fishing bait in shark, tuna and other fisheries.
Operadores de terminales México: Hutchison invierte 400 millones de dólares en Veracruz
para evitar filas
Credit: AWI / WDC: Small Cetaceans, Big Problems [Jul 2018]
That's according to a new report, Small Cetaceans, Big Problems, by the Animal Welfare Institute (AWI),
Pro Wildlife and Whale and Dolphin Conservation (WDC).
Harpooned dusky dolphin, to be used as bait in Peruvian fisheries. Credit: AWI / WDC: Small Cetaceans,
Big Problems [Jul 2018]
Sandra Altherr, biologist for the Germany-based charity Pro Wildlife, says that most people think of Japan
and the Faroe Islands when talking about dolphin hunts but, numerically, the Faroe Islands are not in the
top 10 of small cetacean-killing nations and Japan is only ranked 10th. That is because countries such as
Peru, Nigeria and Madagascar kill small cetaceans not only for food but also for bait.
Peruvian fishermen currently kill up to 15,000 dolphins a year for shark bait, according to the report’s
findings. Other countries where direct takes of more than 1,000 individuals annually occur are Brazil,
Canada, Greenland, Ghana, Guatemala, India, Indonesia, Japan, Madagascar, Malaysia, Nigeria, Republic
of Korea, Solomon Islands, Sri Lanka, Venezuela and Taiwan. Up to several hundred small cetaceans are
hunted each year in the U.S. (Alaska), Cameroon, Colombia, Faroe Islands, Guinea Bissau, Kiribati,
Myanmar, Pakistan, Philippines, Papua New Guinea, Senegal, St. Lucia, St. Vincent and the Grenadines,
Vietnam and Tanzania.
Small cetaceans hunted in Japan, based on Annual Progress Reports
(Japan Fisheries Agency 2000–2016)
Credit: AWI / WDC: Small Cetaceans, Big Problems [Jul 2018]
The report identifies the cruelty associated with many hunts due to the use of rudimentary methods
including harpoons, knives, machetes, nets, spears and dynamite. “Death does not come quickly or
painlessly,” according to Nicola Hodgins, who leads small cetacean work at WDC.
Small cetaceans also have very high levels of pollutants in their meat and blubber, meaning they are
inappropriate and unsafe for human consumption, the report states. In 2004, a report for the Convention on
the Conservation of Migratory Species of Wild Animals (CMS) listed 45 small cetacean species as
threatened by directed catches, while the report identifies 56 species that are actively hunted.
Shipping emissions U.S.: EPA to study financial implications of 2020 IMO sulfur cap
“In many regions, the killing of small cetaceans has evolved from incidental bycatch to a commercial hunt
where animals are directly targeted for profit,” said DJ Schubert, wildlife biologist for AWI. “It is
outrageous that many countries have laws protecting these species, yet enforcement is weak to nonexistent.
That has allowed a black market in small cetacean meat and parts to develop and flourish.”
In compiling the report, the authors analyzed more than 300 field studies, local media reports and
eyewitness accounts.
The report’s findings come ahead of the September 10 meeting of the International Whaling Commission
in Florianopolis, Brazil. In the report, the groups call on the Commission, as well as other international
conventions and governments, to strengthen protections for small cetaceans.
[The Maritime Executive]
07/08/2018
The U.S. Environmental Protection Agency (EPA) has launched a study of the potential economic impact
forthcoming regulations that require shipping vessels to burn cleaner fuel might have on other
transportation sectors, including trucking.
Credit: Getty Images
“There is a land-based link for just about everything transported by ship,” said EPA researcher Jean-Marie
Revelt during a July 30 meeting held to announce the launch of the study. “It’s very rare that the source of
the material — and the user of the material — are right on a body of water. They’re going to need a link by
truck, or by rail to get the stuff to the port and from the port when it gets there.”
Beginning Jan. 1, 2020, the vessels coming into those ports will likely shift from the fuel they now burn to
ultra-low sulfur fuels like diesel currently used in trucks. That date was set by the International Maritime
Organization, which has decreed that cargo and cruise ships in certain stretches of open water must either
switch away from so-called “No. 6” fuel oil — commonly called bunker fuel — or use “scrubbers” that
clean up the fuel. Scrubbers are pollution control systems that use a wet slurry of limestone and other
chemicals to reduce the amount of sulfur in fuel.
The international maritime industry uses an estimated 4 million barrels of fuel a day, the vast majority of it
bunker fuel, said Tom Kloza, Global head of Energy Analysis with the Oil Price Information Service,
citing U.S. Department of Energy figures.
The new IMO directive applies to shipping vessels operating within 200 nautical miles in what is called the
North American Emission Control Area. Along the Atlantic and Pacific Ocean coastlines the ECA is
thousands of miles in length, and encompasses areas off the United States — including Hawaii — as well
as Canada and the French majorities of Saint Pierre and Miquelon.
At 200 miles out those ships are in international waters and subject to IMO rules. The United States,
Canada and France have agreed to follow the regulations since these ships often dock in their ports.
This latest move follows earlier IMO efforts to clean up cargo ships’ emissions; in 2015, it directed all
oceangoing ships operating in the ECA to begin using fuel that contained 1,000 parts per-million or less of
sulfur content. Scrubbers were sufficient to bring bunker fuel into compliance, but for this next round of
enforcement, scrubbers become cost-prohibitive, said Kloza.
EPA said that earlier move helped reduce air pollution from particulate matter and sulfur emissions by
more than 85%, and said adoption of the 2020 standards would do more. However, in 2016, the Senate
Appropriations Committee directed EPA to study the possibility of loosening the air quality limits for ships
entering the United States over concerns the IMO’s tougher regulations could harm the cargo shipping
industry’s economic competitiveness. The agency’s just-launched study is the response to that directive.
Specifically, the committee wants EPA to consider an exemption from the ECA restrictions for vessels that
have engines that generate less than 32,000 horsepower and operate more than 50 miles from the U.S.
coastline. The world’s largest containerships have engines capable of more than 100,000 horsepower.
For the study, the EPA will for the next several months seek input from transportation stakeholders to learn
more about how the looming shift might impact their industries.
For trucking, the key issue is how the change will affect the marketplace for diesel fuel, said Glen Kedzie,
Energy and Environmental Counsel for American Trucking Associations. “The big factor here is the cost
of fuel — that’s the biggest input you’re going to be looking at here,” he told Transport Topics.
OPIS predicted last month that diesel could be as much as a dollar a gallon more expensive by the end of
2019 or early 2020. However, EPA’s Revelt cautioned against getting overly concerned today about how
the change might affect diesel prices tomorrow.
“We don’t know about the price of 2020 fuel and right now again, we are going to make a conservative
assumption for our first pass at this,” she said, referring to the cost difference between bunker fuel and
diesel. “I’m not clairvoyant, I can’t see into the future, I don’t know what those prices will be, I’m not sure
anybody knows what those prices will be.”
EPA expects to complete its report by September 2020.
[Transport Topics]
07/08/2018
By Joe Baker
Following the adoption of the IMO’s Ballast Water Management Convention in 2017, ship operators have
come under increasing pressure to improve the efficiency of their ballast water systems. But, could an
increased focus on ballast-free shipping remove the need for these systems altogether?
Since steel-hulled vessels were first introduced, ballast water has been vital for improving their stability,
propulsion, manoeuvrability, and reducing stress on ship hulls during transit. But while ballast water is
essential to safe and efficient shipping operations, the practice of taking up and discharging ballast water
can have serious ecological and economic ramifications.
These issues stem largely from ballast water’s contribution to the spread of invasive aquatic species (IAS).
Bacteria, microbes and small invertebrates are taken up with ballast water during loading, and dispensed in
new locations. If they survive, IAS could establish a population in their new environment, and compete
with existing species. In some locations, this has contributed to diminishing fish stocks and coastal erosion.
Pressure is growing on ship operators to implement effective ballast water treatment systems on-board to
stem the surge of invasive aquatic species. On 8 September 2017, the International Maritime Organization
(IMO) officially adopted its Ballast Water Management Convention, under which ships in participating
nations must manage their ballast water so that aquatic organisms and pathogens are removed or rendered
harmless before ballast water is released into a new location.
Ballast water: Could ballast-free shipping be the best route to IMO compliance?
DISC and GTT recently collaborated to develop the B-Free LNG Carrier. Credit: DSIC
But while ship operators scramble to comply with the new IMO rules, the move poses another question:
why not cut out the middle man and replace ballast tanks altogether? A number of projects have explored
the possibility of providing new-build vessels that achieve stability without requiring ballast water.
Various ideas have been coming together since the late 1990s, but these have rarely taken hold. However,
with new regulatory pressure causing operators to take stock, could this be about to change?
Ballast tank alternatives
Creating ships with an alternative non-ballast solution means that they are no longer bound by regulations
surrounding ballast water treatment. Getting rid of pumps, pipes and valves associated with ballast water
tanks could reduce costs related to maintenance, free up electrical power usually required for de-ballasting,
and make ballast water treatment systems redundant, making it the cheapest way to comply with IMO
rules.
In the past, these concepts have often relied on
nifty design innovation to provide the same
stability as ballast water, without the associated
economic and environmental impacts. The
ultimate goal is to increase the ship’s draught –
the vertical distance between the waterline and
the bottom of the hull – and prevent it from rising
too high out of the water when it unloads its
heavy cargo.
One concept has been to widen ship beams and use unique hull designs to displace water from the vessel’s
centreline in a bid to increase stability. In the early 2000s, the Delft University of Technology proposed a
‘Monomaran’ design, which would apply a catamaran-like hull to container vessels.
Elsewhere, Daewoo Shipbuilding & Marine Engineering pitched a ‘Solid Ballast Ship’, which would keep
its conventional displacement hull and replicate ballast water with a number of 25-tonne containers.
According to an IMO report, the use of these ‘solid ballast TEUs’ on container ships could provide unladen
stability and trim (i.e. the difference between the forward and aft draft), without the need for ballast water.
For over a decade, scientists at the University of Michigan have been exploring ‘continuous flow’ methods
for keeping ships stable. In lieu of ballast tanks, ships could be equipped with a variable buoyancy system
comprising a network of trunks running from the bow to the stern, below the waterline. Water passing
through these channels would reduce the ship’s buoyancy, instead of weighing it down.
“We’re opening part of the hull to the sea, creating a very slow flow through the trunks from bow to stern,”
University of Michigan professor Michael Parsons told Michigan News. “You’re continuously sweeping
water through the ship and out. So you’re always filled with local sea water, not hauling water from one
part of the world to the other.”
Reluctance to change
However, ballast-free and continuous flow concepts have faced a number of hurdles in the past. Despite
negating the costs involved with ballast water, ballast-free hull designs have resulted in higher hull build
costs and operational costs from increased hull drag.
“Many vessels have dimensional restrictions,” says Lorenz Claes, senior naval architect at maritime
engineering company and LNG specialist GTT. “In that case, it is very difficult to propose a ballast-free
solution.”
Bunkering: Refinery upgrades and works to ramp up ahead of 2020 IMO sulfur cap
“Typically, a ballast-free tanker or bulker would have to be increased in beam to carry the same amount of
cargo as a conventional vessel because generally at least draft and length are limited. This is at least a more
costly vessel, if not incompatible with beam restrictions.”
Claes says that along with a lack of regulatory
pressure, strong conservatism in the shipping
industry has also held back ballast-free shipping.
Operators may worry about being the first to
introduce a new vessel type; particularly if they
are concerned it won’t be seaworthy.
A number of solutions have therefore been introduced that minimise ballast discharge, without eliminating
tanks altogether. One example is storm ballast designs, which feature a v-hull design and a few tanks for
temporary ballast that can be taken up to increase draught during bad weather. Another option has been
cleaning water externally (i.e. at ports) before it is added to ballast tanks.
Nevertheless, Claes says that these ‘half-way’ options still require on-board ballast systems, limiting their
benefits. Despite apprehension in the past, he says, the advantages for the creation of a ballast-free vessel
far exceed the disadvantages.
A ballast-free future?
Aside from the cost of regulatory benefit, ballast-free vessels could have an extended service life without
the threat of corrosion caused by sediment build-up in ballast tanks. Eliminating this would also cut
inspection and cleaning times, making life easier for crew members. Claes says that the vessel’s course-
keeping capabilities would also be improved, and travelling without heavy ballast tanks would reduce
slamming impacts in heavy weather.
Currently, the prospect of ballast-free shipping is being explored in the liquefied natural gas (LNG) space.
Hyundai Mipo Dockyard and Bernhard Schulte Shipmanagement are working to create the world’s first
ballast-free LNG vessel. Dalian Shipbuilding Industry Corporation (DSIC), GTT and Belgian shipping
company Exmar have also embarked on a project to develop a new ballast-free LNG carrier.
Claes says that the GTT project, and the overall movement towards ballast-free shipping, will face
challenges. Harbour and quays could need to be updated to accommodate a higher draft difference between
loaded and empty conditions than on conventional carriers, and designs will need a high level precision to
make adequate adjustments for trim. Nevertheless, he says that if the project works, it could lead to more
new-build vessels going ballast-free in the future.
“If a breakthrough is achieved, other gas carrier types may come, too,” he says. “We at GTT know that
ship-designers are investigating other ship types such as small-medium size tankers. This is encouraging.”
[Ship Technology]
07/08/2018
As the International Maritime Organizations 2020 0.5% global marine sulfur cap edges closer, refinery
upgrades are expected to pick-up through H2 2018 and early 2019 and the entire refined products market
could see a tighter supply complex as refining capacity is taken offline.
“Planned refinery maintenance periods in the run-up to 2020 may take longer than usual as conversion
units are added and/or as refiners skew product yields of existing capacity in favor of distillates,” Harry
Tchilinguirian, Global Head of Commodity Markets Strategy at BNP Paribas told S&P Global Platts.
This year, among others, ExxonMobil aims to complete construction of the new delayed coker at Antwerp
while in Rotterdam Shell is to complete a solvent deasphalter at the Pernis refinery. Typically the launch of
new units is accompanied by refinery works until they are connected with the rest of the refinery.
Refinery maintenance for H2, 2018 and 2019 is higher than previous years, JP Morgan Analysts said in
their weekly report.
“We also expect maintenance to pick up either during this fall or spring next year in preparation for the
IMO 2020 as refineries might want to carry out extensive maintenance well ahead of the change in
specification as they might be incentivized to prices at elevated levels due to incremental demand for gasoil
and higher margins on that back of that,” the JP Morgan analysts said.
Products benefit
Product cracks have already surged this summer and are expected to hold some strength with maintenance
on the horizon. The fuel oil paper market paints a picture for a strong end of year as the 3.5% FOB
Rotterdam barge intermonth spreads currently are priced in backwardation as refinery upgrade programs
are expected to tighten the fuel oil complex.
Typically, the fuel oil market declines at the end of the year and take on a contango structure from
November through to February, as market players begin to destock for end of year accounting purposes
and the market does not benefit from the additional power generation requirements from the Middle East
seen during the summer months. But the 3.5% FOB Rotterdam barge intermonth spreads are currently
pricing in backwardation, as the fuel oil complex is expected to tighten as refinery upgrades come online
and also with lower exports from Russia.
Further out, the distillate market will be getting increased support. “Distillates will do very well after 2020.
Not making fuel oil will be a huge margin boost, and distillates will strengthen on strong demand,” Stephen
George, chief economist at energy consulting group KBC, said.
The expected higher demand would also mean more imports. “Currently Europe imports around 1 million
b/d of diesel and in the short term imports of gasoil could increase because of the IMO 2020 changes,”
George added. Rising demand for distillates will also provide an impetus for further upgrades.
“Additions to global conversion capacity continue well into 2022 and beyond. Eventually the industry will
catch up with the incremental distillate demand generated by the IMO mandate,” Tchilinguirian said.
Upgrades go ahead
Not all refiners will be in a position to meet the bunker requirements in 2020 as vast capital and time is
required to install hydrocrackers to maximize diesel output and limit fuel oil output. “In our latest
medium-term forecast released in March, we do not expect that the refining industry can bring online the
required capacity upgrades on time,” the International Energy Agency said.
The spec change could create “unfavourable refinery margin dynamics for the less complex refineries,
especially for those constrained in terms of desulphurisation capacity,” the IEA added in its latest monthly
report.
Terminal operators Italy: Port authority accepts Yilport’s proposal to operate Taranto
Container Terminal
Terminal operators Europe: Smaller container ports provide less fuss and muss for harried
shippers
But upgraded refineries are on track to produce the lower sulfur fuel. For instance Italian refiner Saras will
start producing 500,000 mt of the new type of fuel annually and ramp output up to between 900,000 mt to
1 million mt, “once we gain confidence in the product and in the sales process as it is a new territory, both
for us and for the market,” CEO Dario Scaffardi said when presenting the H1 2018 company results. He
said he expected the 500,000 mt target to be reached in 2020, as production will initially be limited by the
maintenance constraints of the year.
According to IMO data, presented at a conference last year, coking capacity is expected to grow by 35%
and hydrocracking by 37% from the 2012 level, which should ensure sufficient quantities of compliant
marine fuels.
[Platts]
07/08/2018
Port Network Authority of the Ionian Sea (PNAIS) has accepted Yilport’s proposal regarding the
concession of the container terminal at the Port of Taranto in the south of Italy.
PNAIS is the managing authority of the Port of Taranto, which is situated in Italy and has a total area of
3,250m². Following the receipt of the concession, Yilport will be able to add the 21st marine terminal to its
global portfolio and the first terminal in Italy.
The Taranto Container Terminal is equipped with a 16.5m quayside draft and is currently capable of
handling about two million twenty-foot equivalent units (TEUs) of containers annually. Yilport plans to
expand the terminal’s current annual handling capacity to over four million TEUs by investing in
infrastructure, equipment and technology over the next ten years.
The company is also expected to install a number of new ship-to-shore cranes (STS), rail-mounted gantry
cranes (RMG), and the Navis terminal operating system at the Taranto Container Terminal.
Yilport chairman Robert Yuksel Yildirim said: “At Yilport, we are planning at the end of the publication to
meet with local authorities, trade unions, logistics companies, exporters, and importers, with particular
attention to the agri-food sector. We will explain our business plan for Taranto, and deliver Yilport’s vision
to improve Taranto Container Terminal as both a gateway terminal and also a transhipment hub of
tomorrow.”
“We will prepare the terminal for the future of container shipping industry.”
Yilport also plans to begin talks with major global container shipping lines and feeder services to gain their
commitment to the expansion of the Taranto Container Terminal. Yilport is expected to work together with
public and private stakeholders, as well as partner with local operators to develop breakbulk, project cargo
and ro-ro traffic to serve the terminal.
[Ship Technology]
Oil & gas shipping: Venezuela dodges oil asset seizures with export transfers at sea
02/08/2018
By Ruma Paul
A vessel that arrived in Bangladesh in April to offload its maiden cargo of liquefied natural gas and moor
permanently as an import terminal should begin operations “within a week” after bad weather hampered its
start-up, an official said on Thursday.
The floating storage and regasification unit (FSRU) will allow Bangladesh to import LNG for the first time
as its domestic gas production falls and will boost several power projects in a nation where 30 percent go
without electricity.
Since its arrival at Moheshkhali, near Cox’s Bazar in southeast Bangladesh, bad weather has hampered the
FSRU’s efforts to dock properly, connect to the import infrastructure and offload its first cargo of Qatari
LNG, officials have said. “The delay was basically the rough sea. It (the project) will succeed very soon …
hopefully within a week,” a director at state-run energy firm Petrobangla’s LNG division said.
The Excellence FSRU is operated by privately owned U.S. company Excelerate, which launched the first
FSRU in the world in 2005 and still dominates the industry alongside Golar LNG, Hoegh and BW Group’s
LNG arm.
Two senior Petrobangla officials said the state-run firm would contest Excelerate’s declaration of force
majeure on the project due to the weather-related delays. Declaring force majeure absolves a company
from responsibility for delays to fulfilling contracts due to circumstances beyond its control.
“They have claimed force majeure for bad weather but we haven’t accepted it,” one of the officials said.
“Petrobangla doesn’t have any obligation to pay any money before the gas flow starts. Excelerate will pay
demurrage as per contract.” That official said technical experts from International Finance Corp, an arm of
the World Bank which lent to the $180 million project, were on site monitoring progress.
The country of 165 million people relies on its gas resources for 70 percent of its energy production but as
demand has risen its falling supply has struggled to keep up, prompting it to consider a host of LNG
projects.
Aside from the Moheshkhali project, several others are being considered, usually combining LNG imports
with onshore power plants that would use the regasified fuel as feedstock or with fertiliser complexes that
are heavily gas-reliant. Most recently, two projects costing a combined $5.8 billion were announced
involving U.S. firm General Electric. Energy trading houses Gunvor, Vitol and Trafigura have also chased
projects in Bangladesh.
Bangladesh is seen as an ideal LNG importer because it has the legacy of using gas and therefore much of
the onshore infrastructure already, unlike some other countries that have struggled to get LNG projects off
the ground.
[Reuters]
07/08/2018
By Marianna Parraga and Mircely Guanipa
Venezuela’s state-run oil company PDVSA has limited the damage from an unprecedented slump in crude
exports by transferring oil between tankers at sea and loading vessels in neighboring Cuba to avoid asset
seizures.
But the OPEC member nation is still fulfilling less than 60 percent of its obligations under supply deals
with customers. Venezuela has been pumping oil this year at the lowest rate in three decades after years of
underinvestment and a mass exodus of workers. The state-run firm’s collapse has left the country short of
cash to fund its embattled socialist government and triggered an economic crisis.
PDVSA’s problems were compounded in May when U.S. oil firm ConocoPhillips began seizing PDVSA
assets in the Caribbean as payment for a $2 billion arbitration award. An arbitration panel at the
International Chamber of Commerce (ICC) ordered PDVSA to pay the cash to compensate Conoco for
expropriating the firm’s Venezuelan assets in 2007. The seizures left PDVSA without access to facilities
such as Isla refinery in Curacao and BOPEC terminal in Bonaire that accounted for almost a quarter of the
company’s oil exports.
Conoco’s actions also forced PDVSA to stop shipping oil on its own vessels to terminals in the Caribbean,
and then onto refineries worldwide, to avoid the risk the cargoes would be seized in international waters or
foreign ports. Instead, PDVSA asked customers to charter tankers to Venezuelan waters and load from the
company’s own terminals or from anchored PDVSA vessels acting as floating storage units.
The state-run company told some clients in early June it might impose force majeure, a temporary
suspension of export contracts, unless they agreed to such ship-to-ship transfers. PDVSA also requested
the customers stop sending vessels to its terminals until it could load those that were already clogging
Venezuela’s coastline.
Initially, customers were reluctant to undertake the transfers because of costs, safety concerns and the need
for specialist equipment and experienced crew. But PDVSA has managed to export about 1.3 million
barrels per day (bpd) of oil since early July, up from just 765,000 bpd in the first half of June, according to
Thomson Reuters data and internal PDVSA shipping data seen by Reuters. That was still 59 percent of the
country’s 2.19 million bpd in contractual obligations to customers for that period, and some vessels are still
waiting for weeks in Venezuelan waters to load oil.
There were about two dozen tankers waiting this week to load over 22 million barrels of crude and refined
products at the country’s largest ports, according to Reuters data.
“We are not tied to one option or a single loading terminal,” PDVSA President Manuel Quevedo said on
Tuesday of the company’s exports. “We have several (terminals) in our country and we have some in the
Caribbean, which of course facilitate crude shipping to fulfill our supply contracts.”
Cuban connection
PDVSA has also used a route through Cuba to ease the impact of the Conoco seizures. That route is for fuel
rather than crude. The Venezuelan company has used a terminal at the port of Matanzas as a conduit mostly
for exporting fuel oil, according to two people familiar with the operations and Thomson Reuters shipping
data. Venezuela’s fuel oil is burned in some countries to generate electricity.
Two tankers set sail from the Matanzas terminal for Singapore between mid-May and early July, Reuters
data showed. Each ship carried around 500,000 barrels of Venezuelan fuel, Reuters data shows. In recent
months, Venezuela has been shipping fuel to Matanzas in small batches, according to the data.
PDVSA and Cuba’s state-run oil firm Cupet have used Matanzas to store Venezuelan crude and fuel in the
past but exports from the terminal to Asian destinations are rare. That is in part because vessels that use
Cuban ports cannot subsequently dock in the United States due to the U.S. commercial embargo on Cuba.
Cupet did not respond to requests for comment.
Oil & gas exploration: Harvey Gulf offer their $836 million fleet for merger with GulfMark
PDVSA has also used ship-to-ship transfers to fulfill an unusual supply contract it has with Cuba’s
Cienfuegos refinery. The refinery dates from the 1980s – when Cuba was a close ally of the Soviet Union
during the Cold War – and the facility was built to process Russian crude.
PDVSA typically uses its own or leased tankers to bring Russian crude from storage in the nearby Dutch
Caribbean island of Curacao to Cienfuegos. But it is now discharging the imported Russian oil at sea in
Cayman Islands’ waters via these seaborne transfers.
ConocoPhillips last month ratcheted up its collection efforts by moving to depose officials from Citgo
Petroleum, PDVSA’s U.S. refining arm, arguing it had improperly claimed ownership of some PDVSA
cargoes. ConocoPhillips is also preparing new legal actions to get Caribbean courts to recognize its
International Chamber of Commerce arbitration award. If it succeeds in those efforts, it would be able to
sell the assets to help satisfy the ruling.
[Reuters]
07/08/2018
Harvey Gulf this week announced in the media that they have offered a rival deal to merge with
Gulfmark. This comes hot off the heels of July’s announcement of a deal between Tidewater and
Gulfmark.
Matthew Freeman, VesselsValue Director, states “With a combined fleet size of 274 vessels, a merger
between GulfMark & Tidewater would lead to one of the largest OSV fleets in terms of overall size with
an average age 10.7 years old.
If a merger would materialise between Harvey Gulf and GulfMark, it would mean a smaller overall fleet
size of 129 vessels but with an average age of 9.2 years old. The Harvey Gulf fleet consists of 57 OSV’s
and 6 OCV’s (a sector that GulfMark does not currently have a presence in) so the main questions here
are size over speciality and what the future holds.”
Oil & gas exploration Timor-Leste and Australia: A new chapter or a stalemate?
[American Journal of Transportation]
07/08/2018
By Bec Strating
Last week, an Australian leader visited Dili for the first time in five years. Foreign Minister Julie Bishop
spent 36 hours in Timor-Leste as part of a four-country diplomatic trip around Southeast Asia.
For many commentators, this visit signalled an improvement in bilateral ties since the signing of the maritime
boundary treaty. Australia is evidently more willing to engage with its neighbour now that the controversial
issue has been resolved. Yet tensions remain between the two states over the prosecutions of Witness K and
Bernard Collaery, and the ongoing contest for the development of the Greater Sunrise complex of gas fields.
The latter dispute, over whether a pipeline should be built to transfer Greater Sunrise gas to the South Coast
of Timor-Leste for processing, is the most pressing for Timor-Leste’s economic future.
What is often overlooked is that the maritime boundary did not provide Timor-Leste with “control” or
“ownership” of Greater Sunrise, as it remains subject to joint development. Further, the maritime boundary
resolution has enabled Australia to deal itself out of that dispute while presenting itself through this example
as committed to the “rules-based order”.
Sophie Raynor rightly pointed out that Australia has effectively washed its hands of the Greater Sunrise
gridlock (Julie Bishop’s new Timor-Leste chapter). It now presents itself as “pipeline neutral”, and as a
mediator between Timor-Leste and the venture corporations led by Woodside. Certainly, Australia would be
hoping that this diplomatic visit would provide ballast to its claims that Australia and Timor-Leste have
reached a “new chapter” in bilateral relations, even though the most materially substantive aspects of the
Timor Sea dispute remain ongoing.
Yet Timor-Leste’s leaders also have a role to play in this gridlock. During the United Nations Compulsory
Conciliation, lead negotiator Xanana Gusmão was insistent that the pipeline was “non-negotiable”. The
report produced by the Commission engaged an independent expert to assess two models for development:
one that employed the existing Darwin plant, the other based on a pipeline to Timor-Leste. It found that
Timor-Leste would need a subsidy of US$5.6 billion to make their project feasible. This is around four times
its normal yearly national budget.
Oil & gas shipping: Oil pipeline inspection industry ‘going wrong’ after surveys fail to
prevent spills
Energy writer Damon Evans argues that Timorese leaders have been misleading the public about the viability
of the pipeline. Reports written by energy consultants that have cast doubt on the viability of Timor-Leste’s
plans have either been criticised or buried by Timorese leaders. A recent report suggests that Timor-Leste is
seeking to use its sovereign wealth fund to buy out ConocoPhillips’ and Shell’s billion-dollar interests in the
Greater Sunrise gas complex.
Why are Timor-Leste’s leaders so wedded to this development plan? There are other options available that
would increase the nation’s share of downstream revenue. If Timor-Leste does not get its pipeline, it will
receive 80% rather than 70% of the asset, a difference of around US$3.1–3.5 billion (nearly half the subsidy
required for the pipeline).
Is this devotion to the pipeline due to a genuine belief that oil industrialisation would enable Timor-Leste to
become the next Singapore? (Let’s not forget that when Singapore developed its economy, it was not
competing with itself in Southeast Asia.) Or is it due to personal and/or political motivations?
What we do know is that publically, both states have provided little detail on the status of the Greater Sunrise
negotiations. The joint communiqué produced in Dili only stated: “[a]s part of a revitalised economic
partnership, Ministers agreed to continue constructive discussions on the development of the Greater Sunrise
resource, noting its importance for Timor-Leste’s prosperity.”
At the press conference, journalists were unable to get more than a vague statement of continuing talks.
Foreign Minister Bishop was quoted as saying: “[w]e want to work and collaborate with Timor Leste and the
joint venture companies to find a pathway to develop the Greater Sunrise gas field.”
It is the development of Greater Sunrise that is most pressing for Timor-Leste’s future as an independent
sovereign state. Yet, it appears – at least on the surface – that this remains at a stalemate.
If, as Timor-Leste’s negotiators have reportedly suggested, they will seek to engage China’s Belt and Road
Initiative for the pipeline subsidy, we could see this “new chapter” in bilateral relations turn sour very
quickly.
[The Interpreter]
07/08/2018
By Annemarie Botzki
Three separate companies inspected the San Pablo Bay pipeline for faults during a series of spills that
dumped 900 barrels of crude onto farmland in California.
In September 2015, Shell’s San Pablo Bay oil pipeline burst near the Californian town of Tracy,
contaminating the surrounding soil with 900 barrels of crude. Two months later, in November, Shell was
conducting tests to fix the problem when the pipeline spilled again.
Pipelines fail: it’s a widely understood risk when liquids are pumped at pressure across land and sea. Since
1986 there have been nearly 8,000 oil and gas pipeline incidents in the US, spilling 76,000 barrels per year,
resulting in more than 500 deaths, 2,300 injuries and nearly $7 billion in damage, according to the Center for
Biological Diversity.
Hazardous materials responders work to clean up oil at the San Pablo Bay pipeline spill near Tracy,
California. In the background, containers of contaminated soil sit among wind turbines. Photo: Noah
Berger/Greenpeace
Tiny cracks, often invisible to the eye, appear as infrastructure ages. Detecting them before they cause spills
is a multi-billion dollar global business. But according to industry insiders and a prominent accident
investigator, oil pipeline inspection companies may be overstating their ability to find these defects.
A California state fire marshal report, accessed through a records request by Climate Home News, said three
separate inspection companies assessed the San Pablo Bay pipeline during a series of accidents between
September 2015 and May 2016. All of them failed to detect anomalies in the areas that burst.
After the two 2015 spills, Shell hired Rosen Group, an international inspection company, headquartered in
Switzerland, to replace T.D. Williamson, another global company.
The state fire marshal reported that Rosen tested the pipeline in December 2015. The company found more
than 20 abnormalities, which were repaired. Later, more abnormalities were identified, of which some were
also repaired. After that round of maintenance Rosen told Shell there were no “actionable defects” on the
line, the fire marshal said.
After receiving the Rosen analysis, Shell increased the pressure in the pipeline on 17 May, 2016. Three days
later, it ruptured again. This time 500 barrels spilled. The soil had to be scraped up and held in containers on
a nearby wind farm. Texan firm Kinder Morgan Energy Partners was called in by Shell to re-examine
Rosen’s findings and confirmed the data had showed no obvious problems, the fire marshal said.
Inspection companies make no guarantees that their inspections will find every fault. But according to
Richard Kuprewic, a pipeline incident investigator with 40 years in the industry and president of safety-
consulting firm AccuFacts, services are less reliable than the vendors admit to their clients.
“The ability of inline inspectors to identify such features is, in my opinion, being way overstated,” Kuprewic
said. Kuprewic said the problem runs through the pipeline industry. CHN spoke to two former employees of
an internationally operating inspection company. Both recently resigned over practices they said included
misleading pipeline operators about inspectors’ ability to identify certain weaknesses in order to win
contracts. They asked to remain anonymous.
One of the former employees told CHN: “I joined the business to help prevent environmental disaster and in
the end I had to lie to clients that actually wanted to accurately inspect their pipelines.
“The pipeline inspection business in general is going wrong. Some pipeline operators do strive to ensure
security, but they are being misinformed by inspection companies that overstate their abilities,” said the
former inspector.
A spokesperson for Rosen said the company could not answer questions about its analysis of Shell’s pipeline
because of confidentiality. T.D. Williamson did not respond to emails. Kinder Morgan chose not to
comment.
The websites of these and other inspection companies promote their services as reliable and accurate.
US industry standards, developed by the National Association of Corrosion Engineers, charge both operator
and service vendor with analysing the capabilities of inspection tools. But Kuprewic said inspection
companies must know that they exaggerate the reliability of the tools. “No one sells [in-line inspections]
claiming they don’t work,” he said.
Time to bring inspection products to market is often more important to companies than the quality of their
surveys, said another former inspection company employee. The quality depends on the tools – called pigs –
that run through the pipelines to scan them; as well as the software, which is developed in-house; and the size
and experience of the team that analyses the data sets produced by the tools.
Operators are liable for pipeline safety, so inspection companies have no legal incentive to improve their
tools, said Kuprewic. “The operator is responsible for identifying the various types of threats that may be on
segments of their pipeline. And guess who will be responsible if a pipeline blows up either from running or
Container shipping: Tips to prepare for an uncertain future
using an in-line inspection pig unwisely?” he said.
Particularly problematic are a type of pipelines that are commonly used in oil and infrastructure around the
world, both onshore and offshore: Double Submerged Arc Weld (DSAW).
“This welding type is hard to inspect and cracks are very hard to find, this can lead to serious analytical
mistakes,” a second former inspector told CHN.
This is the type of weld that binds the sections along Shell’s 285km San Pablo Bay Pipeline. There is no
evidence the three inspection companies misled Shell in the case of the 2015-16 spills. But the fire marshal
found that problems were missed. Rosen and Kinder Morgan both concluded incorrectly that their survey
data did not report any problematic features at the location of the May 2016 failure.
According to the state fire marshal, a subsequent internal report by Shell found Rosen software had
discovered a crack-like feature at the location of the failure. But during the manual review, a Rosen analyst
had selected an incorrect setting and the depth of the anomaly was miscalculated.
A Shell spokeswoman told CHN the company continues to use Rosen for in-line inspection and has filed no
legal action over the Tracy spills. “Further, Shell will not publicly comment on the internal evaluation of
contractor performance,” she added. She told CHN that Shell had sought to improve its inspection methods
after the incidents.
“We will continue to use the most appropriate assessment methodology on our pipeline systems as warranted
and will decide best approach, given all the information available – this includes both in-line investigation as
well as hydro tests,” the company spokeswoman said in a written response.
She noted the incident report prepared by the California State Fire Marshal Pipeline Safety Division had
found one of the contributing factors to the spill had been fluctuating pressures of oil in the line. This was
now being remedied, she said.
Shell is also replacing 19.3km of the pipeline after the fire marshal’s strong recommendation to do so.
Kuprewic said the Pipeline and Hazardous Materials Safety Administration (PHMSA) was aware of the
issues with pipeline inspections and was “trying to introduce detailed safety regulation to avoid
miscalculation”. The PHMSA did not respond to a request for comment.
Industry experts are asking for inspection firms to make their results public for peer review to verify
assertions and environmental advocates are calling for stricter rules on pipeline inspections and higher
penalties after incidents.
But Kuprewic warned that US federal government imperatives to cut, rather than strengthen, regulation was
hampering those efforts. “These are dangerous times concerning deregulation. Expect more high-profile
pipeline rupture failures as deregulation takes place,” Kuprewic said.
[Climate Home]
07/08/2018
Studying the landscape of container transport sector over the next 25 years, TT Club insurer and McKinsey
consultant presented a four-step roadmap for the industry to prepare in a rapidly changing environment
where the longstanding formula for value-creation will have to change as well.
The directors of TT Club were polled in late 2017 about this future and the following conclusions were made:
• The future is digital: every one of the respondents thought the most likely scenario would be either Digital
Reinvention or Digital Disruption, with a modest lean towards the former.
• Many would prefer a world in which the demand side continues to drive the industry forward, as described
in Third Wave of Globalisation, but no one saw this scenario as likely.
• While only 11% of respondents preferred it, 41% thought Digital Disruption was most likely – perhaps a
sign of resignation to trends that may seem inexorable.
'Preparing for an uncertain future' tips
➢ Focus on the real end-customer: the consumer
Container industry has historically focused on serving its immediate customers – beneficial cargo owners,
however, the report suggests, the real ‘customer’ is the everyday consumer, who increasingly enjoys the
speed, flexibility, convenience and low cost associated with online shopping.
One shift would be to measure success not only by how well or inexpensively players have delivered their
own services, but also by how much they contribute towards optimising the end-to-end supply chain to the
consumer’s benefit.
➢ Monitor the “trigger points”
The authors identified a number of ‘trigger points’ that a foresighted company might carefully monitor:
Container shipping: DP World acquires Unifeeder for $765 million euros
• infrastructure investment and unit-labour costs in major economies;
• the number of SMEs selling globally on e-commerce platforms;
• 3D printing adoption venture-capital funding for container transport start-ups; the latest order for the
next-largest ship; and
• the speed of adoption of digital platforms, among many others.
Stress-testing your company’s financials against a range of market and industry outcomes can help build
resilience and ensure risks are appropriately mitigated.
➢ Digitise radically
The potential for value-creation through digital data and analystics is enormous, and the costs of not doing
anything at all are very high. The battle for the customer relationship should not be ceded lightly by any
player.
54
Port & Shipping News 32/18 (06 – 12 Aug 2018)
Uwe Breitling - Port, Transport & Training Consultant
• Use cases for step-changes in efficiency and performance should be piloted, refined, and quickly scaled.
• Predictive maintenance, ‘smart’ stowage, seamless document flow, and omniscient cargo tracking are some
of the vital areas to be explored.
• Players should actively form partnerships to build the industry-standard platform and ecosystem.
➢ Automate and innovate
Leading companies will continue to reduce their cost bases, improve productivity and enhance safety.
Autonomous technologies available today and in the not-too-distant future are extremely promising for the
industry. But challenges remain in adopting these technologies and maximising their value. Other
innovations – including propulsion technologies, advanced materials, Internet of Things solutions and
modularised shipping concepts – could change the game unexpectedly. The first-movers or fastest-followers
are likely to be the biggest winners.
[SAFETY4SEA]
07/08/2018
By Ben Meyer
The global port terminal operator’s $765.4 million acquisition is part of a larger industry shift toward vertical
integration.
Dubai-based global port terminal operator DP World has acquired 100 percent of Unifeeder Group, a feeder
and shortsea container carrier headquartered in Aarhus, Denmark, from current owner Nordic Capital, the
Container shipping: Weak demand threatens recovery
companies confirmed in separate statements.
The 660 million euro (U.S. $765.4 million) purchase will “further enhance DP World’s presence in the global
supply chain and broaden our product offering to our customers — the shipping lines and cargo owners —
with a view to ultimately reduce inefficiencies and improve the competitiveness of global trade,” DP World
said. More specifically, the integration of Unifeeder gives DP World an entirely new line of business within
the global supply chain.
Founded in 1977, Unifeeder is the largest feeder vessel operator in Europe, carrying roughly 3.2 million
TEUs annually to and from European cargo hubs and regional ports on its fleet of 60 short-term chartered
vessels. According to maritime research firm Alphaliner, Unifeeder ranks as the 30th-largest container
carrier in the world by operating fleet capacity.
Unifeeder also offers multimodal shortsea services that combine maritime transport with overland solutions
for door-to-door cargo delivery. With about 400 employees spread across 25 countries, Unifeeder reported
annual revenues of 510 million euros in 2017, with earnings before interest and tax (EBIT) margins that are
“in line with other asset-light logistics operators,” according to DP World.
Although still subject to the relevant regulatory approvals, DP World expects the acquisition to close in the
fourth quarter and to be earnings accretive within the first full year after completion.
According to Unifeeder, the takeover will allow it to benefit from DP World’s much greater size and scope
while continuing to operate on a fully independent basis under existing management. From a broader
perspective, the tie-up is part of a larger industry shift toward vertical integration of supply chain services.
Maersk Line, the world’s largest container carrier, has been on the forefront of this movement, announcing
plans early this year to provide end-to-end transportation services that will make it possible to arrange
transportation by just dealing with Maersk, including inland transport, customs brokerage, financing,
insurance and consolidation, among other services. In this way, Maersk aims to emulate UPS, FedEx, DHL
and other express package companies that offer shippers the opportunity to deal with a single company.
Although several of the top ocean carriers also own terminal operators — Maersk, for example, has its APM
Terminals subsidiary — few terminal operators own container lines outside of China, where it is more
common to have a terminal operator running its own much smaller feeder line, making DP World’s purchase
of Unifeeder that much more interesting.
“In an environment where main carriers are attempting to integrate deeper into the supply chain on the land
side of the business, one of the largest terminal operators is making a move into the supply chain as well,
once more showing that the entire industry is in the midst of a fundamental transformation,” Lars Jensen,
CEO of SeaIntelligence Consulting, said of the deal.
[American Shipper]
07/08/2018
By James Baker
Weak consumer confidence in the UK and sluggish retail demand in Germany have dragged down freight
volumes between Asia and Europe during the first half of the year, despite a generally bright picture for
demand elsewhere, according to a new report from Drewry.
Container shipping: China-US spot rates rise over 20% - but can they last?
Figures from Container Trades Statistics show mainlane Asia-northern Europe volumes during the first six
months of this year were virtually identical to those recorded in the corresponding period in 2017, holding at
4.9m teu. Moreover, in the second quarter of the year, westbound volumes declined by 1.6% compared with
the second quarter of last year.
“Much of the problem with this trade stems from weaker demand in the two largest inbound markets of the
UK and Germany, which account for approximately two-fifths of westbound flows,” Drewry said. “Retail
sales in Germany remain sluggish despite more optimistic consumer confidence surveys, while in the UK
despite an improved outlook for wage growth and employment, consumer confidence appears to be stuck in
the doldrums.”
It added that a lack of clarity regarding what Brexit would mean for Britain’s economic health had prompted
the nation’s households to take a more cautious approach to spending.
The slowdown occurs as yet more ultra large tonnage is being deployed on the Asia-Europe trade.
Westbound slots in July were up by 10% compared with last year’s figures, Drewry said.
“The addition of big new ships at a time of weak demand proved to be a toxic combination for carriers in the
early months of the year and westbound spot rates were heading below the psychologically important barrier
of $1,000 per 40 ft container,” Drewy said. “Not only was this rate erosion causing spot prices to undercut
annual contract rates, but it came at a time when lines were facing a sharp spike in fuel costs.”
In an analysis of the wider market, SeaIntel warned that continued weakness in demand growth threatened
“the optimistic outlook of structural market balance in 2020”.
“Demand growth in both the first and second quarters has fallen short of the capacity which the carriers have
taken delivery of, and subsequently injected into the market,” SeaIntel said.
“Structurally, this is problematic for the carriers. They continue to take delivery of scores of mega-sized
vessels which they have no choice but to inject into the key deepsea trades.”
The slowdown in demand growth “virtually guarantees” a worsening of overcapacity, SeaIntel added. This
would leave container lines with the choice of operating at low levels of utilisation, shifting vessels into
trades for which they essentially are too big, redelivering charter vessels or laying up tonnage temporarily.
“For shippers, this should not be seen as a sign that there will be ample capacity available on all trades,”
SeaIntel said. “It should instead be a clear and present warning that the existing services on deepsea trades are
likely to become quite volatile in terms of blank sailings, service changes and service cancellations.”
[Lloyd’s Loading List]
06/08/2018
Spot freight rates between China and the United States have risen by over 20% in the past 2 weeks, driven by
the peak season, some frontloading of cargo shipments in anticipation of further tariff hikes and freight rate
increases and the carriers’ capacity rationalization.
Container shipping companies that are most leveraged to the Transpacific trade lane are Zim, Ocean Network
Express (comprising of NYK, MOL and K-Line) and COSCO SHIPPING-OOIL; they will be the key
beneficiaries if this Transpacific freight rate improvement can be sustained.
Spot freight rates increase by over US$450/FEU on the China-US trade lane
Container shipping spot freight rates have risen by over US$450/FEU or 28% and 17% on the China-US
West Coast and China-US East Coast trade lanes respectively in the past 2 weeks. Spot freight rates are now
25% and 16% higher than last year’s levels. This ranks well ahead of the spot freight rates in the other major
trade lanes which have generally risen only marginally in the past two weeks.
What’s driving this?
Notwithstanding the China-US trade tensions, the broader Transpacific container shipping demand is
holding up so far. Asia-US container shipping volume has grown 6% y/y in 1H18.
We believe the risk of escalating trade tensions and potential for additional tariffs have driven importers to
restock more ahead of further tariff hikes. In addition, the carriers have announced significant freight rate
hikes with effect from September 2018 so some customers are shipping more ahead of these planned freight
rate increases.
More importantly, most carriers incurred financial losses during 1H18 due to the depressed freight rates and
higher bunker fuel costs. This has led the major carriers to increase their focus on improving profitability,
driving them to rationalize their capacity and some services have been cancelled on the Transpacific trade
lane. This has helped to lift load factors to mid-to-high 90% levels, boosting the carriers’ pricing power.
Is this sustainable?
We are now past the peak of newbuild containership deliveries for this year. Newbuild vessel deliveries are
expected to drop 10% y/y in 3Q18 after surging 50% y/y in 1H18 which put significant pressure on freight
rates during 1H18.
Overall, we forecast global container shipping demand to grow 4.2% in 2018, moderating from 5.2% demand
growth in 2017. This will fall short of the container shipping industry’s capacity expansion this year. We
forecast global container shipping net capacity to grow 5.1% y/y in 2018 after considering vessel scrapping
and delivery slippage.
We expect the global container shipping sector’s operating outlook to improve from 2019 as capacity growth
moderates based on the current vessel orderbook and delivery schedules.
Therefore, the sustainability of the recent freight rate hikes will depend on how tightly the global container
shipping industry manages the operating capacity given that the global fleet growth outpaces demand growth
this year. The key risk is that once freight rates become lucrative again, the carriers will be tempted to
increase capacity and the recovery in freight rates will be short-lived.
Container shipping: Taiwan's top lines in the market for 50 feeder vessels
Intermodal transport Europe: Shippers face surcharges on boxes by barge as summer heat
hits Rhine water level
Which carriers are the key beneficiaries?
If the spot freight rates can be sustained, it will help to improve the carriers’ earnings in 2H18 as their annual
contract rates were largely locked in at low levels back in May.
Container shipping companies that are most exposed to the Transpacific trade lane are Zim, Ocean Network
Express (comprising of Nippon Yusen Kaisha, Mitsui OSK and K-Line) and COSCO SHIPPING-Orient
Overseas; they will be the key beneficiaries of any sustained Transpacific freight rate increase.
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• Independent Research Declaration: Crucial Perspective does not own any position in the equities featured in
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[Crucial Perspective]
06/08/2018
The top three container lines in Taiwan - Evergreen, Yang Ming and Wan Hai - are close to contracting for up
to 50 feeder vessels, according to Alphaliner and Braemar ACM.
The world's seventh largest boxline, Evergreen, is tendering for two series of 12 vessels of 1,800 and 2,700
TEU.
Evergreen recently received the Ever Bloom, the last of ten 2,926 TEU wide-beam containerships contracted
in July 2015 from the carrier's compatriot shipbuilder CSBC. The ships are part of Evergreen's 20 unit 'B-
class' newbuilding programme, which comprises 10 ships from CSBC and another 10 similar vessels, but
not identical in design, from Japan's Imabari Group.
Meanwhile, Yang Ming, the world's eighth largest container line, is currently negotiating with unspecified
yards for a series of ten 2,800 TEU vessels, with options for additional ships, reports Singapore's Splash 247.
Finally, Guangzhou Wenchong shipyard has been tipped by Braemar ACM as the frontrunner for a
mammoth order from Wan Hai Lines. The shipping line has put out a tender process for eight firm plus four
options of 1,900 TEU ships, with Braemar ACM claiming Wenchong is likely to win the deal.
[Hong Kong Shipping Gazette]
06/08/2018
By Alexander Whiteman
Intermodal transport Europe: Fixed barge times cut Rotterdam congestion
Shippers are facing increased costs and delays on Europe’s inland waterways as soaring summer
temperatures have led to declining water levels on the Rhine.
The news is unwelcome to an industry that has had to contend with almost two years of severe congestion at
Antwerp and Rotterdam. According to Hapag-Lloyd, low water levels have forced barge operators to either
cut capacity by up to two-thirds or suspend operations completely. The carrier has warned customers to
expect delays in Austria, France, southern Germany and Switzerland as water levels in the upper Rhine are at
a “critical point”.
It added: “These extreme conditions will also affect the mid and lower Rhine, where similar measures are be
expected. Cargo flows from barges will be moved to other modes of transportation, such as rail and truck,
resulting in scarce capacity there.” Furthermore, it said, it was unable to accept “any new transport” orders on
some lanes, but neither specified these nor responded to requests for comment from The Loadstar.
Barge operator Contargo said it would be imposing surcharges on the stretch of the Rhine that runs past Kaub
should water levels fall below 0.71 metres. “According to forecasts, in the next few days the Kaub Gauge
level is expected to fall below the 0.71 metre mark, which will further reduce the loading capacities of
barges,” said Contargo.
“Unfortunately, there is already a shortage of available capacity and no substantial rainfall is forecast, so no
improvement in the situation can be expected in the short term,” it added. “We are extending our low water
surcharge table to include a further surcharge rate.”
With water depth currently between 0.7 and 0.8 metres, shippers must pay an additional €175 per 20ft
container and €225 per 40ft. Should the forecasts prove accurate and levels fall to between 0.7 and 0.61
metres, these costs will increase to €240 and €300.
“The surcharge is only made for full containers, and the provision will apply until further notice,” the
operator added. “We shall continue to make every effort to transport containers punctually and in good time,
but please stay in close contact with the operational points at the inland terminals.”
The hot summer being experienced in Europe has resulted in Rhine levels dropping to their lowest in four
years and for those using the inland water network, the problems will only add to the strain of inadequate
infrastructure at Antwerp and Rotterdam. The Benelux ports have faced severe, sometimes even week-long,
delays over the past two years, and while efforts have been made many are still experiencing delays of up to
72 hours.
Containers by barge accounts for around 35% of incoming and outgoing cargo at the port of Antwerp and
some 50% for Rotterdam. And Antwerp has greater ambitions: its website states it wants to grow barge share
to 42% by 2020.
[The Loadstar]
06/08/2018
Inland terminal operator BCTN has cut congestion from the Port of Rotterdam after starting fixed windows of
service for its barges almost a month ago.
Operadores de terminales Panamá: Avanza expansión de PSA Panamá International
Terminal
More of BCTN’s 600-plus transport customers from three terminals in Belgium and five in The Netherlands
have started to use the barge service. The three-month pilot bundles containers to create 250-plus TEU
interchanges on its barges, which then travel to and from Rotterdam’s deep-sea terminals.
BCTN has found that the handling of over 1,000 truck moves through its terminals every day is now much
easier as it no longer has to rely on the ports to provide sailing times — a process that would take three days to
a week to take place because of congestion. As a result, its inland terminals are much better connected to the
deep-sea ports in Antwerp and Rotterdam.
Larger ships are causing container traffic congestion at the ports as ocean carriers are producing larger vessels
to reduce the cost of using more ships for the same capacity. Bert de Groot, Deputy Director at BCTN,
commented: “In the past year congestion became so bad that we had to tell our customers that we didn’t know
when the container would arrive or whether containers would get to Rotterdam on time for a large sea call.
“There was such uncertainty that a lot of the customers decided to move to truck instead of going over the
water as they didn’t know whether the containers would come or be delivered on time.”
However, de Groot has identified this issue as an opportunity. He added: “If you look 10 years ago, the
average ship would give a relatedly small volume on the terminal, but these days with the 20,000-plus TEU
vessels, very large shots are going in and out at one time through the deep sea ports in Rotterdam.”
“To connect with these large calls, you also have to scale up in the hinterland, which is why we say to handle
the large call sizes by increasing the barge call size so that the deep sea terminals can perform better.”
[Port Technology International]
06/08/2018
La segunda fase de la terminal se estima que se inaugure para el último trimestre del año.
Terminal operators Philippines: Davao International Container Terminal to add another berth
PSA está ubicado en el Pacífico panameño. Fuente: PSA
La ampliación de la terminal PSA Panamá International Terminal en su segunda fase registra un 95% de
avance. La ampliación de la terminal portuaria consiste en 800 metros lineales de muelle, 2 estructuras de
atraque para megabuques y la expansión de su patio de contenedores a 2 millones de TEU de capacidad anual.
De acuerdo con los objetivos de la empresa, esta ampliación se basa en poder optimizar los servicios tras la
ampliación del Canal de Panamá y su aumento de tráfico de buques neopanamax. La inversión de este proyecto
es por más de 450 millones de dólares y ha generado alrededor de mil empleos locales. La segunda fase de la
terminal se estima que se inaugure para el último trimestre del año.
PSA instaló ocho nuevas grúas pórticas superpospanamax y 12 grúas tipo RTG de alta tecnología, lo que reduce
los tiempos de carga y descarga de grandes buques portacontenedores, según informa la terminal.
[Panamá América]
06/08/2018
By Gilford A. Doquila
The Davao International Container Terminal (DICT), a subsidiary of Anflo Management and Investment
Corp. (Anflocor), is eyeing to add another berth in their container terminal to cater to more ships at the
terminal.
Terminal operators U.S.: Long Beach Container Terminal finalizes green redevelopment
project
Credit: DICT
“We have different planned expansions for DICT. As one of the shipping terminals here in Mindanao and in
the country, we have geared ourselves to improve our facilities in order to deliver cargos and the like well and
efficiently,” DICT vice president Bonifacio Licayan said during the 2018 Mindanao Shipping Conference on
Friday, August 3, at Waterfront Insular Hotel, Davao City.
Licayan said they are preparing for the construction of Berth 4, which will measure 150 meters. The
expansion will allow DICT to increase its handling capacity from the current 300,000 twenty-foot equivalent
units (TEUs) to 800,000 TEUs.
In 2016, when the P1.8 billion Berth 2 started its operation, DICT’s annual capacity doubled to 700,000
TEUs. Upon its establishment, new shipping lines were added to the port of DICT. These new lines are
Mariana Express Lines Pte. Ltd., SITC, and China Shipping Container Lines, all operating on a weekly basis
on a fixed berthing window. Wan Hai, a regular DICT caller, has also added a new service.
Licayan said DICT is also proposing for the establishment a ten-hectare on-dock container yard (CY) to
accommodate more shipping cargos in the future years to come.
[Sun Star Davao]
06/08/2018
The US Port of Long Beach has begun work on the last phase of its Middle Harbor terminal redevelopment
project with an emphasis on efficiency and clean cargo equipment.
The Middle Harbor development aims to be a feat of engineering and a model of sustainability. Credit: Port
of Long Beach
When finished, the facility operated by Long Beach Container Terminal (LBCT) will boast handling
equipment which runs on electricity or alternative fuels and be serviced by electric-powered cranes and
container transport vehicles.
“Middle Harbor is a feat of engineering and a model of sustainability,” said Mario Cordero, port executive
director. “Once the final phase is built and operating at full capacity, the Middle Harbor Terminal alone will
rank as the nation’s sixth-busiest container port.”
Green investment
To date, LBCT has invested more than US$650 million in technology and equipment. This includes
alternative fuel vehicles to move containers from the container yard to the rail yard. Like the first two phases,
Phase 3 components will be designed to maximise energy efficiency, resource conservation and recycling of
materials from demolished structures.
Environmental highlights of the final phase include the reuse approximately 1.4 million cubic yards of
dredge sediments as fill to support the construction of the last segments of wharf and container yard. The
project will also recycle demolished concrete and asphalt from the previous structures and paved areas to use
as crushed base material for the foundation of the new yard.
As part of Phase 1, the port built a battery-exchange building for charging, storing and exchanging batteries
to support the zero-emissions container transport vehicles at the terminal. Phase 3 will see the port construct
a second battery-exchange building as a backup support facility to ensure resiliency and reliability of
terminal operations.
As the port completes the Middle Harbor Terminal Redevelopment Project, it will embark on its next major
capital project, the Pier B On-Dock Rail Support Facility, which aims to reduce emissions throughout the
port by moving 35% or more of container cargo by rail instead of by truck.
[GreenPort]
06/08/2018
“Djibouti does not recognise the international rule of law,” protests Dubai port operator DP World.
Relations between the tiny-but-strategic Republic of Djibouti and the United Arab Emirates (UAE) hit a new
low on Saturday (4 August) when the Djiboutian government dismissed a ruling by the London Court of
International Arbitration that its seizure of the Doraleh container terminal from Dubai-based port operator DP
World was illegal.
In response, DP World has protested that Djibouti “does not have sovereignty over a contract governed by
English law”, and that its decision demonstrates that it “does not recognise the international rule of law”.
The Djiboutian government nationalised the facility in February on the grounds that DP World’s ownership
violated Djibouti’s national sovereignty, and passed legislation, which it called Law 202, to end the 30-year
concession agreement that was signed in 2006. It is presently being run by the state owned Doraleh Container
Terminal Management Company.
On 2 August the London tribunal found that Doraleh Container Terminal’s concession agreement “remains
valid and binding notwithstanding Law 202 and the 2018 Decrees”. But on 4 August, the Presidency of
Djibouti issued a statement saying, “The Republic of Djibouti does not accept this sentence, which has ruled
that the law of a sovereign state cannot be enforced by that state," reports UAE newspaper The National.
DP World reacted on the same day. “Today’s statement by the Djibouti government states that it does not
acknowledge the decision of the London Court of International Arbitration demonstrates that Djibouti does
not recognise the international rule of law,” it said in a statement sent to GCR.
“The Court’s decision upholding the continuing validity of the Concession is based on recognised principles
of international law and is internationally binding both on the Djibouti government and so far as third parties
are concerned. As the Court has held, Djibouti does not have sovereignty over a contract governed by English
law. It is well established that, in the absence of an express term to that effect, an English law contract cannot
be unilaterally terminated at will. The contract therefore remains in full force and effect.” DP World did not
indicate what action it would take in response.
The tribunal, which is based in Fleet Street, was led by Professor Zachary Douglas. It applies the law of
England and Wales to the concession agreement. Relations between DP World and the Djiboutian state
soured after the latter refused to allow the UAE to build a military base on its soil. The emirates then opened
a base in the breakaway state of Somaliland and began investing in its Berbera port, which is a rival to
Djibouti.
Under the original agreement the 1.2 million teu-capacity terminal, which was built by DP World and opened
in 2009, was 67% owned by the government of Djibouti and 33% by DP World. The terminal is Djibouti’s
single biggest employer and DP World claims that it has consistently contributed 12% of the country’s GDP.
The 2 August finding follows a 2017 ruling by the tribunal that found that the terms of the concession were
“fair and reasonable”.
Terminal operators Djibouti: Government rejects London tribunal ruling over Doraleh
terminal
Maritime security: Shipping industry launches new resources for world fleet
Dry bulk shipping Russia: Development of new bulk port starts in Novaya Zemlya
[Global Construction Review]
06/08/2018
A new website provides security-related guidance produced by the industry as well as links to other useful
maritime and military security resources.
“In a world of increasingly complex security risks, it is essential that mariners and ships are protected. The
new website will be a freely available facility where companies and mariners can access essential guidance
and information to help them comprehensively prepare for voyages through areas of security risk,” the
authors said.
The aim of Maritime Global Security is to ease access for companies and seafarers to maritime security
related information and guidance. Central to the website are new best practice guides to help companies and
mariners risk assess voyages and mitigate against external threats to their safety.
These are covered in three publications:
• Global Counter Piracy Guidance for Companies, Masters and Seafarers is a new publication containing
guidance on piracy and armed robbery that can be used by mariners around the world.
• BMP5: Best Management Practices to Deter Piracy and Enhance Maritime Safety in the Red Sea, Gulf of
Aden, Indian Ocean and the Arabian Sea contains guidance for region-specific threats in this region.
• The third edition of the Guidelines for Owners, Operators and Masters for Protection Against Piracy and
Armed Robbery in the Gulf of Guinea Region is also provided.
[MARPRO News / BIMCO]
06/08/2018
By Atle Staalesen
It will be owned by nuclear power company Rosatom and serve the northernmost zinc and lead mine in the
world.
Engineers have arrived in the Bezimyannaya Bay in the Russian Arctic archipelago to start preparations for
what will become a major new infrastructure object. A drilling rig in July started collection of sea bottom
samples and assessments of the projected land-based parts of the terminal are made in August, Rosatom
informs.
Oil & gas shipping: Handful of tanker owners profiting from dwindling Iran-Europe trade
The new port will cost up to 6 billion rubles (€81.5 million) and have key importance for the development of
the Pavlovsky zinc and lead mine. Construction is due to start in year 2020 and production launch in 2023.
The Pavlovsky holds an estimated 2,48 million tons of zink and 549,000 tons of lead. It is developed by
ARMZ, the mining subsidiary of Rosatom
The port will include universal quays and a sea
coast coast defense wall, warehouses, buildings
for service repair and an administrative and
housing quarter. Up to 500 people will be
employed in the mine. They will live in housing
modules located near the mine, about 20 km
from the coast. The Pavlovskoye will be the
northernmost mine in the world and have an
annual output of 220 thousand tons of zink, 50
thousand tons of lead and 16 tons of silver.
Rosatom originally planned to start production
already in 2019. Also costs are being revised.
The company first planned to invest 37,5 billion
rubles (€543 million) in the project. However,
Arkhangelsk Governor Igor Orlov in December
2017 confirmed that investments now are
estimated to about 100 billion (€1.45 billion).
Between 1973 and 1975, the southern island of Novaya Zemlya was used for larger underground nuclear
tests. Of the seven detonations that took place in the area, several ventilated radioactive gases to the
atmosphere because the explosions were not deep enough in the ground.
From 1976 to 1990, all underground nuclear tests took place at the northern test-range in the Matochin
Straight. Since 1990, only so-called sub-critical nuclear tests have been conducted at Novaya Zemlya.
[The Barents Observer]
06/08/2018
By Eklavya Gupte, Peter Farrell and Gillian Carr
Some shipowners are making huge margins transporting Iranian crude into Europe as the threat of falling foul
of US sanctions scares off rivals with less nerve.
In an era of paltry earnings for shippers, some owners are benefitting from a large freight premium over
normal Middle East to Europe voyages even as crude flows from Iran to Europe are starting to drop.
Freight rates for Suezmaxes -- which carry up to 140,000 mt or 1-million barrels of crude -- on a Middle East
to Mediterranean voyage have recently been around Worldscale 30 or $6.94/ mt, according to Platts data. But
shipowners willing to take crude from Kharg Island, Iran's export terminal in the Persian Gulf, to the
Mediterranean are getting rates as high as Worldscale 65 or $15/mt.
Iranian cargoes to the Mediterranean were seeing a Worldscale 10 premium over the normal the Persian
Gulf-Med route before the US withdrew from the Iran nuclear deal on May 8. Regardless of the premiums on
offer, these so-called back-haul stems are a good way for shipowners to relocate their vessels from the East
into the Mediterranean, which is a strong loading area, and avoid paying for the ballast.
The bulk of Iranian crude exports travel on tankers owned by Iran's state-run shipping company, the National
Iranian Tanker Company, with the remaining loadings transported by a number of Greek and Turkish
shipowners. Sources said there are at least four such shipowners in Europe who are still busy carrying Iranian
crude.
Some of these shipowners told S&P Global Platts that as long as they do not breach covenants in their pre-
agreed insurance contracts then there should be no problem with their vessels' insurance cover.
Insurance caution
Insurance companies already have a Sanction Limitation and Exclusion Clause, or SLEC, which exempts
them from providing any payments or cover in contravention of international sanctions.
Underwriters must not be seen to be insuring something they are not supposed to do and charterers are taking
a very cautious line, assuming that only crude cargoes agreed before May 8 are risk-free from the new
sanctions, sources said.
"Shipowners do need a warrant from the charterer
to say that the cargo you are transporting is for a
contract agreed pre-May 8 and will be delivered
to a specific refiner," said one shipowner still
operating on the Kharg Island to Mediterranean
route. "So you can't take a stem from any old
charterer and send it wherever they want."
Key buyers of Iranian crude in Europe are
starting to cease imports of Iranian crude for
September-loading cargoes as the first round of
new US sanctions on Iran begin in a few days.
The US sanctions specifically targeting Iran's oil sector come into effect on November 4. But the first set of
sanctions aimed at Iran's financial sector starts on August 6. "I see some Europeans trying to find vessels. But
I think September is the last month. Even in August, people have reduced further," said one crude trader.
Exports falling
Iranian crude exports to Europe are beginning to fall sharply ahead of US sanctions but those refiners that
have term deals with Iran are still honoring their contracts, sources said. As a result of these term deals,
shipowners have said it is easier to obtain shipping insurance to transport Iranian crude, and they are not
worried about flouting US sanctions.
Eni was reported to have taken a vessel on subjects at w65 to cover a stem loading ex-Kharg with August
14-16 loading dates for delivery to the Mediterranean. There have been many more cargoes covered since
May 8 under existing contracts of affreightment, supply contract to provide a number of vessels in a defined
period, with other charterers, sources said.
Eni representatives were unavailable for comment. Trading sources have said that while shipping and
insurance has imposed a higher burden on lifters still willing to take Iranian crude, the strong refinery margins
on sour barrels have still made it worthwhile. This is likely to change as the November deadline approaches,
which is when the full weight of US sanctions kicks in.
Europe is an important outlet for the OPEC member, taking around 600,000-700,000 b/d, or one-third, of
Iranian crude exports. Key buyers include Turkey, France, Italy, Spain and Greece. Flows to Turkey and Italy
remain quite high, but demand from France, Greece and Spain has begun to fall steadily.
Iranian crude exports to Europe in June and July have fallen to 400,000-500,000 b/d, according to Platts
estimates. Iran, the third largest oil producer in OPEC after Saudi Arabia and Iraq, is producing around 3.70-
3.74 million b/d of crude oil, according to Platts estimates.
[Platts]
06/08/2018
By Julia Payne
Global commodities trader Trafigura has applied to build a deep-water terminal in Texas, United States, that
would be able to load supertankers, the company said on Monday, supplying badly needed oil export
infrastructure to the country.
The company said it had applied for a permit on July 9 via its subsidiary Texas Gulf Terminals.
The U.S. began exporting crude oil in 2016 after the ban on exports was lifted but while its production and
therefore exports keep hitting new highs, its infrastructure has not kept up. The U.S. exports over 2 million
barrels per day of crude while output hit 11 million bpd for the first time last month, making the country the
biggest producer in the world after Russia.
There are no inland ports that can fully load Very Large Crude Carriers - vessels capable of holding 2 million
barrels of oil - leaving it to be done via ship-to-ship transfers.
“The Texas Gulf ... will allow VLCCs and other tankers to load cargo safely, directly and fully via a single-
point mooring buoy system (SPM). Using SPMs eliminates unnecessary ship traffic in inland ports as well
as the ‘double handling’ of the same crude oil,” the company said in a statement.
Oil & gas shipping U.S.: Trafigura looks to build deep water oil terminal in Texas
Oil & gas shipping: Saudi Arabia resumes oil exports through Red Sea shipping lane
Archeology: Amundsen’s Maud returns to Norway
A spokeswoman added the infrastructure would include a new onshore terminal that will be fed via a pipeline
and close to Corpus Christi. The SPM will have a capacity of around 500,000 barrels per day, the
spokeswoman said. While monthly data can vary, Swiss-based Trafigura was overall the largest U.S. crude
and condensate exporter last year.
[Reuters]
06/08/2018
By Maha El Dahan and Rania El Gamal
Top oil exporter Saudi Arabia said on Saturday it has resumed all oil shipments through the strategic Red Sea
shipping lane of Bab al-Mandeb.
Saudi Arabia halted temporarily oil shipments through the lane on July 25 after attacks on two oil tankers by
Yemen’s Iran-aligned Houthi movement. A statement by the Energy Ministry said shipments had resumed on
Saturday.
“The decision to resume oil shipment through the strait of Bab al-Mandeb was made after the leadership of
the coalition has taken necessary measures to protect the coalition states’ ships,” Energy Minister Khalid al-
Falih said in the ministry statement.
Saudi Aramco confirmed that shipping had resumed effective immediately. “The company is careful to
continue monitoring and evaluating the current situation in coordination with the relevant bodies and take all
necessary procedures to ensure safety,” Aramco said in a statement.
Yemen, where a Saudi-led coalition has been battling the Houthis in a three-year war, lies along the southern
end of the Red Sea, one of the most important trade routes in the world for oil tankers. The tankers pass near
Yemen’s shores while heading from the Middle East through the Suez Canal to Europe.
The Bab al-Mandeb strait, where the Red Sea meets the Gulf of Aden in the Arabian Sea, is only 20 km (12
miles) wide, making hundreds of ships potentially easy targets. After Saudi’s decision to halt shipments,
Yemen’s Houthi group said on July 31 it would halt attacks in the Red Sea for two weeks to support peace
efforts.
The Saudi coalition intervened in Yemen’s civil war in 2015 to restore the internationally recognized
government of exiled president Abd-Rabbu Mansour Hadi. Saudi Arabia accuses regional foe Iran of
supplying missiles to the Houthis, which both Tehran and the Houthis deny.
[Reuters]
06/08/2018
Maud, the ship that Norwegian explorer Roald Amundsen tried to reach the North Pole with, returned to
Norway on Monday after nearly a century.
The Maud in Cambridge Bay, just before being raised into the transport barge. Photo: MRH / Jan Wanggard
Credit: Maud Returns Home
The vessel arrived in Bergen, where she spent two days back in July 1918 on her way to the high Arctic.
Maud was raised from the seabed in Cambridge Bay, Canada, over the summer of 2016 by the Maud Returns
Home project.
Named for Queen Maud of Norway, she was built for Amundsen's second expedition to the Arctic and
launched in June 1916. In the summer of 1918, Amundsen departed Norway. His ambition was to sail into the
high north and deliberately get stuck in the ice so the ship could function as a floating scientific research
station as she drifted across the North Pole. Maud spent several years in the Arctic ice without reaching the
North Pole.
Credit: Maud Returns Home
After two winters and three summers in the Northeast Passage, the Maud expedition arrived at Nome, Alaska,
in July 1920. A new attempt to sail further north from the Bering Strait resulted in yet another wintering in the
ice without the Maud having reached far enough north into the east-west current. She returned to Seattle in
August 1921 where Amundsen left the expedition.
The Maud expedition continued for three more years under the command of Oscar Wisting, still without
reaching the current across the Arctic Ocean. When they again arrived at Nome in August 1925, they were
met by creditors whom Amundsen was unable to pay. Wisting managed to get the ship away, but when they
arrived in Seattle in October 1925 the ship was again seized by creditors. Maud was sold to Hudson Bay
Company and ended up as a floating warehouse and a wireless radio station. She sank on her mooring in
1931.
Jan Wangaard, who led the Maud Returns Home project, said: “It brings joy to our hearts to see Maud, still
proud after all these years, see her old homeland once again.”
Amundsen’s other polar vessels Gjoa and Fram are on display at the Norwegian Maritime Museum in Oslo.
Wangaard hopes Maud will be displayed a new museum at Vollen, the port where she was built.
Maud will now be towed along the Norwegian coast and is expected to arrive in Vollen on August 18.
[The Maritime Executive]
PROFESSIONAL MEMBERSHIP
Advance your career by gaining Professional Recognition.Professional recognition is a visible mark of
quality, competence and commitment, and can give you a significant advantage in today’s competitive
environment.
All who have the relevant qualifications and the required level of experience can apply for Professional
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individual’s professional training, experience and qualifications. You can apply for Student Membership as
per following :
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To be elected as a fellow, the candidate must satisfy the council that he/she:
Has held for at least eight (8) years consecutively a high position of responsibility in shipping or related
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Is a principal in a firm or a director of a company in the business or profession.
Members in this grade are entitle to use the initials FIAMSP After their names.
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Individuals holding an internationally recognised marine qualification, or who can prove that they have
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Individuals who, by producing written reports can demonstrate that they have practiced marine surveying or
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Individuals whose qualifications or experience shall be considered appropriate by the Professional
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Members may use the initials FMIAMSP after their names.
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Associate Membership shall be open to any person, partnership, company, firm or other corporate that does
not own a Ship but is engaged in ship operating or ship management. Associate Members can nominate one
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and to participate in discussion at such meetings but shall not vote or stand for election to the Board of
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Individuals holding a recognised qualification, for example Inspector level 2 or higher (NACE, FROSIO,
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surveyors with at least three years full time practical experience in a marine related field. Technician
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Graduates who do not meet the criteria for Full or Associate Membership and are continuing to train and gain
experience prior to applying for Associate Membership
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Individuals who are enrolled in training programs related to the maritime or shipping will be appointed as
student members of the Association for the duration of their course.
LAST MEMBERSHIP
Fellow (FIAMSP)
Mr.Adolfo omar Cortes
Spain
Mr. MELARAYIL
GANGADHARAN SIBIN
India
Mr. ESNAL Pedro
Spain
Full Member (MIAMSP)
Mr. MARTINS Jorge
Brazil
Capt. Jasim Aqeel
Iraq
M. Subbiah Thiyagarajah
Malaysia
Affiliate (AFFIAMSP)
M. Kirton Christopher
Singapore
M. Hubert Louis-philippe
France
Mrs. HELENA ISABEL
CAMPOS LANÇA PALMA
Portugal
UPCOMING EVENTS SUMMARY
September
OSV CHARTERING CONTRACT MANAGEMENT SEMINAR 13
America Square (Cavendish Venues), London
September
DECODING TRADE CONTROLS, SANCTIONS AND REGULATIONS ON DUAL-USE GOODS
18 The Hatton, London
September
MEETING THE COMMERCIAL, INSURANCE AND LEGAL CHALLENGES OF TODAY'S SALVAGE AND WRECK REMOVAL OPERATIONS
24 Novotel Clarke Quay, Singapore
September
MEETING THE COMMERCIAL, INSURANCE AND LEGAL CHALLENGES OF TODAY'S SALVAGE AND
26 WRECK REMOVAL OPERATIONS
Novotel Clarke Quay, Singapore
September
GLOBAL LINER SHIPPING ASIA
26
Novotel Clarke Quay, Singapore
September ARE YOU READY FOR 2019
27
Bahia Mar Fort Lauderdale Beach, Florida
October LIQUEFACTION OF BULK CARGOES SEMINAR
18
America Square (Cavendish Venues), London
February 2019
12th Arctic Shipping Summit – Montreal
21
Montreal - venue TBC