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2017-12-15 13:20:08

European Community Shipowners’ Associations (ECSA), representing European shipowners, is pushing for rapid and positive progress to be made in the Brexit negotiations.

The move was made in view of the European Council deciding this week on whether the negotiations towards an EU/UK agreement can enter the next phase.

ECSA said that shipowners look forward to an agreement which preserves the economic benefits of existing EU/UK trade and trade flows, safeguards shipping services, the employment of seafarers and the value of the wider maritime cluster.

Shipowners sent their priorities to the Commission’s chief negotiator, Michel Barnier, regarding the next phase and discussed these with members of the European Commission Task Force on article 50 who joined the ECSA Board of Directors meeting held on December 13.

“We need an agreement which will ensure the continuation of trade volumes and unimpeded trade movements across our shared borders. This will require a legal framework which allows these vital trades to continue to flow without delay or dislocation. The industry should be kept informed about the progress in order to be able to prepare and get ready in time,” Niels Smedegaard, ECSA President, said:

In a separate announcement, ECSA said that Niels Smedegaard of Danish Shipping and CEO of DFDS handed over ECSA Presidency to Panagiotis Laskaridis, Member of the Board of the Union of Greek Shipowners and CEO of Laskaridis Shipping and CEO of Lavinia Corp.

Panagiotis is scheduled to start his two-year term as ECSA’s new President from January 2018, while Smedegaard will remain Board Member representing Danish Shipping.

2017-12-15 13:17:27

Shipping association BIMCO and association for the marine electronics industry CIRM have sent the industry’s first proposal for a standard for software maintenance to the International Maritime Organization (IMO) for consideration.

As explained by BIMCO and Comité International Radio-Maritime (CIRM), the goal of the Standard on Software Maintenance of Shipboard Equipment is to make sure software updates happen in a secure and systematic way.

This should increase the visibility of the software installed on board, ensure the effective planning of maintenance and ensure effective communication between the different parties involved in maintaining the software. Keeping software up to date is also necessary to minimize hacking and malware problems, according to BIMCO.

Without an industry-standard, BIMCO said it sees an increasing risk of severe incidents on ships, delays and costs to shipowners and cyber security problems.

“We hope the entire industry will adopt these standards, to make ships safer, to prevent cyber security problems and to save money,” Angus Frew, Secretary General and CEO at BIMCO, said.

“The industry has been living in a world of hardware. But software has been integrated into most physical equipment on the vessels, and the systems and procedures to manage the software has not kept up with technical developments, and it creates problems,” he added.

BIMCO has seen incidents, where ships for example, suffer complete blackouts and malfunctions in radar and other related systems, as a result of unforeseen difficulties with a software update.

The standard requires the user to have a complete list of what software versions are currently running on the ship’s equipment and ensures that all equipment can display the current software version. It also means that ships can do a complete roll-back to a previous software version, if an update goes wrong, which will enhance safety.

The proposed standard contains an identification of the various roles involved in maintaining software, a procedural flow for maintenance and an outline of the requirements and responsibilities of the five roles.

The industry standard was made over a four-year period in collaboration with several parties including BP Shipping, Maersk Line, Emarat Maritime, Kongsberg, Furuno, MAN Diesel & Turbo, Radio Holland, and Sperry Marine.

BIMCO and CIRM would like to see the standard become an ISO-standard as ISO has provisionally accepted the proposal. BIMCO expects a work group to complete the standard in 2021.

IMO is scheduled to consider the standard at the Sub-Committee on Navigation, Communications and Search and Rescue (NCSR) meeting in February 2018.

2017-12-15 13:11:46

Consolidation, whether through alliances or M&A, will continue apace in the container shipping industry into 2018, according to Moody’s ratings agency.

The companies are expected to opt for this solution in an effort to boost market share, improve efficiency, and handle intensifying competition and persistent oversupply,

“The trend toward consolidation among container shipping firms will continue into 2018 as larger companies look for opportunities to increase market share, while smaller companies seek to increase efficiency to maintain profitability,” Maria Maslovsky, Vice President-Senior Analyst at Moody’s, said.

Consolidation through slot purchases and alliances has helped improve efficiencies without the need for companies to take on extra debt. These strategies allow shipping companies to pool resources to increase efficiencies and customer reach without balance sheet impact and transaction risk.

Moody’s expects shipping companies to continue to seek alliances and slot purchase agreements where possible. Any that do not participate will probably be at a competitive disadvantage as they are less likely to achieve the cost efficiencies needed to compete with peers in alliances. Exceptions would be regional firms like Wan Hai Lines that focus successfully on a specific market niche and do not compete with larger firms on the main trade lanes.

While recent mergers including Hapag-Lloyd AG (B2 stable) and CSAV, and CMA CGM S.A. (B1 positive) and NOL, have resulted in synergies, the success of future transactions will depend on strong operational execution.

The impact of debt-funded M&A on companies’ creditworthiness would depend on a number of factors, including the company’s ability and focus on restoring its metrics to within the rating agency’s guidance over a 12-18 month period, Moody’s said.

2017-12-15 13:09:14

Shipowners appear to be unfazed by the likelihood of low profits continuing into the next year, mainly driven by the continuing excess supply of tankers, as they have intensified their ordering in 2017.

Specifically, tanker newbuilding orders have increased year to date by 17 percent when compared to 2016, according to Intermodal’s Research Analyst George Panagopoulos.

The owners are likely to have been lured in by the attractive pricing of new tonnage offered by the yards, which are struggling to overcome the industry slump.

Sales and purchase activity of second-hand tonnage has also picked up somewhat when compared to last year’s figures, with 340 tanker transactions recorded against 333 reported in 2016, Intermodal’s data shows.

The ongoing market challenges have seen prices of tanker assets go down considerably, especially when considering tankers older than ten years.

Going forward, scrapping of older tonnage to combat tonnage oversupply is further hampered as the fleet keeps on getting younger.

“Indeed, taking into account the scheduled deliveries next year and the fairly young average age of the tanker fleet that sets a rather low ceiling to the number of potential demo candidates, we wouldn’t be surprised to see way more attractive second-hand prices next year and a consequent spike in SnP interest/activity,”  Panagopoulos said.

The third quarter of 2017 saw tanker fleet utilization drop to levels last seen in 2013, according to Clarksons, which indicated that Q3 2017 will represent the bottom or near bottom of the current market cycle.

However, shipping consultancy Drewry paints a gloomy picture for 2018, forecasting that freight rates will further drop in 2018 amid an expected slowdown in China’s crude stocking activity.

Although tonnage supply growth in the crude tanker market is expected to come down to 3.2 percent in 2018 after surging by close to 6 percent each year in 2016 and 2017, this will not be enough to push tonnage utilisation rates higher as demand growth is expected to be sluggish, Drewry said in November.

Fitch Ratings agrees with the forecast, as the glut of new vessel deliveries and limited scrapping of older ships means the global tanker market will remain oversupplied in the near term, keeping freight rates low and shipping company credit metrics under pressure in 2018.

The rating agency expects capacity to have increased by 5-6 percent by the end-2017 from a year earlier.

2017-12-14 13:12:33

Increased demand from Asia and Europe has seen US seaborne export of crude oil surpass the US seaborne export of oil products in terms of billion tonne miles in September and October 2017.

The development, which occurred less than two years after the US government lifted their restrictive policy on crude oil exports in December 2015, is due to US crude oil being exported twice the sailing distance of US oil products.

BIMCO informed that in October the seaborne exports of crude oil amounted to 46 billion tonne miles whereas the US export of oil products was equivalent to 43 billion tonne miles.

Despite the US seaborne exports of crude oil, being half the amount of seaborne oil product exports in October 2017 in terms of volume, it is now more important to the tanker shipping industry.

“The increased US crude oil exports during 2017 benefits the crude oil tanker shipping industry. The demand on that trade is up by 151% compared to last year. Not only are the volumes more than doubling, the sailing distances are increasing as well,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.

“US crude oil exports are now more important to shipping than US oil product exports. Asia and Europe are the importers demanding most US crude oil in 2017. With Asia in particular being responsible for the longer sailing distances,” Sand added.

For the first 10 months of 2017, the US seaborne export of crude oil has increased 151% compared to same period last year. This amounts to an additional 20 million tonnes of crude oil being available to the shipping market, equivalent to 7.5 VLCC cargoes being exported more per month compared to last year.

While the average distance per exported tonne of US crude oil for the first 10 months of 2016 was 4,277 nautical miles, it has been 7,090 nautical miles for the same period in 2017.

China, being the main importer of US crude in 2017 is not only due to rising Chinese crude oil demand. China imported 55% from the Middle East in 2015, whilst importing 45% from the Middle East during the first 10 months of 2017.

“China is diversifying their crude oil supplier portfolio by shifting away from being too dependent on Middle Eastern crude oil,” Sand said, adding that the sailing distance to China is double the distance of Middle Eastern export to China and thereby tonnage is tied up for longer periods, benefitting crude oil tanker demand.

2017-12-14 13:05:47

Trade and employer organisation Danish Shipping has presented a new strategy to focus on competencies, digitization and technological development as catalysts for continued growth in the coming years.

Danish Shipping’s “Ahead of the Curve” strategy for 2018-2021, launched on December 7, is based on an ambition to grow the Danish-flagged fleet with more than 10 percent measured in tonnage, and minimum 10 percent measured in the number of ships, during the strategy period.

Furthermore, it is the ambition to increase onshore employment to 7000 employees, while maintaining at least a constant number of Danish seafarers.

“Danish shipping companies must continue to create value for customers, partners and locally, while also acting as responsible industry leaders. This requires framework conditions that are best in class and an approach where we as an organisation actively influence the development of the shipping industry, thus paving the way for global shipping to grow with a minimal footprint on our surroundings,” Claus V. Hemmingsen, Chairman of Danish Shipping, said.

The strategy identifies five strategic objectives for Danish Shipping for the coming four years.

In addition to a further development of already competitive framework conditions, it is the objective to support the IMO as an effective governing body that delivers timely responses to global issues such as the regulation of the shipping industry’s impact on the climate and the environment.

Other objectives are a greater focus on competencies and new technology and maritime innovation, which has the potential to change the shipping industry.

“Education, digitization and maritime innovation and research will take up even more of our agenda in the coming years,” Hemmingsen said, adding that the country needs to further develop its maritime competencies.

As a consequence of the strategy, Danish Shipping’s organisation was reshuffled in November. With a new organisation and a larger management team, more organisational resources have been devoted to delivering on the objectives that are prioritized with the new strategy.  

2017-12-14 11:46:44

Chinese shipbuilders have beaten their Korean counterparts this year having snapped up the biggest share of orders, totaling in 290 vessels, data from VesselsValue shows.

The country’s orderbook has hit USD 10.2 billion mark.

South Korean builders are lagging behind considerably behind their Chinese competitors having collected orders for 170 ships. However, the ships ordered at Korean yards have attracted an investment of USD 11.8 billion, due to the fact that the Big Three builders- DSME, HHI, and SHI- specialize in constructing more technologically advanced ships.

Korean shipbuilders have held the top spot on the global shipbuilding scene for years, in particular during the 2011-2015 period.

Attractive pricing has been one of the key strategic advantages employed by the Chinese shipbuilders, who have also made strides in acquiring the required know-how for the construction of ultra-large containerships.

A testament to this is CMA CGM’s decision to order nine 22,000 TEU giants at China’s  Hudong-Zhonghua Shipbuilding and Shanghai Waigaoqiao Shipbuilding (SWS), which raised many eyebrows in the market, including that of the Korean yards.

What is more, these will be the largest containerships to be powered by liquefied natural gas, a major technological undertaking for Chinese shipbuilders as well.

Japan has secured the third place in the ranking, having received newbuildings orders for 97 ships, worth USD 2.6 billion.

The Philippine and Vietnamese shipbuilders are ranked as the fourth and fifth shipbuilding nations respectively based on their newbuilding tally for this year.

Owners have placed orders for a total of 27 ships with Philippine shipyards, while their Vietnamese counterparts won orders for 13 ships, totaling in USD 370 million, according to VesselsValue.

2017-12-13 13:04:41

Zero emission vessels (ZEVs) are central to achieving the aim of decarbonisation, a new study of Loyd’s Register (LR) and University Maritime Advisory Services (UMAS) finds.

The study, entitled ‘Zero Emission Vessels 2030’, aims to demonstrate the viability of ZEVs – identifying what needs to be in place to make them a competitive solution for decarbonisation.

As the first milestone in the IMO greenhouse gas (GHG) Roadmap is approaching – MEPC 72 in April 2018 – the world is watching to see if an ambitious reduction strategy in line with the Paris Agreement can be delivered. To achieve this ambition, ZEVs will need to be entering the fleet in 2030 and form a significant proportion of newbuilds from then on, according to the study.

Although none of the ZEVs are estimated to be more competitive than conventional shipping by 2030, the technology options are evolving rapidly and it’s possible that over the next 10 years the gap could reduce even further than the study estimates. If this gap does not close then there may be a need for regulatory intervention in the near future, to drive the viability compared to conventional fossil fuels.

The new report assesses seven technology options for ZEVs, applied to five different case study ship types across three different regulatory and economic scenarios. These options consist of various combinations of battery, synthetic fuels and biofuel for the onboard storage of energy, coupled with either a fuel cell and motor, internal combustion engine, or a motor for the conversion of that energy store into the mechanical and electrical energy required for propulsion and auxiliary services.

As concluded is the study, advanced biofuels appear the most attractive ZEV solution currently available due to their low capital cost implications for machinery and storage, and low fuel and voyage costs.

The costs of some of the components considered – fuel cells, batteries and hydrogen storage – could all reduce significantly, especially if they become important components of another sector’s decarbonisation, or if action taken during shipping’s transition assists with the technology’s development.

For those in shipping with niche access to a low-cost supply of zero-emission fuel or energy sources or an ability to pass on a voyage cost premium to a supply chain that values zero-emission services, the gap may already be closed.

From preliminary conversations with shipowners, it was determined that the key considerations would be around wanting options that were viable at a moderate carbon price – USD 50/tonne CO2 – and without too great an increase to the capital cost of the ship. It was also concluded that the impact of the CO2 emissions must not just be moved upstream, to the electricity generation or fuel production process.

None of the zero-emission options in their current specifications completely satisfy the shipowner requirements, with the most significant gap identified being on voyage (fuel) costs.

“There is no doubt that decarbonisation is a huge challenge for our sector and that we all have a clear responsibility to ensure actions are taken to drive our operational emissions to zero at a pace matching actions taken across the rest of the world and other industry sectors,” Katharine Palmer, LR’s Global Sustainability Manager, said.

“By assessing different decarbonisation options for different ship types, we identify the drivers that need to be in place to make them a competitive solution and we aim to show the opportunity for a successful and low-cost decarbonisation pathway for shipping,” Palmer added.

“This report demonstrates the potential solutions for shipping’s zero emissions transition. By sharing the findings, we hope it can provide inspiration and focus for shipping’s collective efforts to ensure zero emissions happen swiftly and with minimal cost and disruption to trade,” Tristan Smith, Reader at UCL, noted.

2017-12-13 11:29:07

Chinese shipbuilders have secured the majority of last week’s reported orders, bolstering further China’s status as a top shipbuilding nation.

New Times Shipbuilding has won a contract for the construction of eight 63,000 dwt bulkers from Cyprus-based Frontmarine, according to Allied Shipping Research.

The ships are slated for delivery in 2020 and are valued at USD 26.5 million apiece, pushing the total value of the deal to USD 212 million. The deal is said to include additional options.

Qingdao Wuchuan Heavy Industries has been tied to an order for up to eight 86,000 dwt bulkers. Chinese owner Fujian Guohang Ocean is said to be behind the contract, which includes three firm ships and options for five newbuilds, Asiasis said.

The trio is scheduled for completion in 2019 and is estimated to have fetched around USD 90 million in investment.

South Korean counterpart Hyundai Heavy Industries has reportedly won an order for two 400,000 dwt bulkers from compatriot Hyundai Glovis, while Japanese yards, including Tsuneishi, Sasebo Heavy Industries, and Mitsui Engineering nabbed orders for one small bulker each.

Separately, Chinese Chengxi Shipyard has been linked to an order for up to four 56,000 dwt tankers, placed by HK Kai Sheng International Shipping, data from Allied Shipping shows.

Under the terms of the deal, the Chinese yard will build two tankers, scheduled for completion in 2019 and 2020 respectively. Two additional units are optional.

The newbuildings are priced at around USD 30 million apiece.

2017-12-12 11:43:10

The VLCC market sentiment was firmly in negative territory this week as fundamentals continued to sour said shipbroker Charles R. Weber in its latest weekly report. “In the Middle East market, cargo volumes during the first two decades of the December program have come in below expectations, raising concerns that the final decade will not be much better and that the month will conclude with total volume at its lowest level in a number of months. Meanwhile, draws from Middle East positions to service demand in the Atlantic basin has declined markedly in recent weeks; comparing the last four weeks to the preceding four weeks, VLCC fixtures from the USG are off 88% and those from West Africa are off 26%.

According to CR Weber, “the direction of demand in these areas paints an equally somber picture, as there were no USG fixtures reported this week and the West Africa fixture count this week was at its lowest level since early August. This week’s Middle East fixture tally was off by one from last week to 24 – and COA coverage thereof was very high.  Net of COAs, the number of fixtures openly worked was just 14, or the fewest in three months. On the back of the souring demand profile, available tonnage levels continued to rise this week, dragging up surplus tonnage.   We project that there will be 22 surplus units at the conclusion of the December Middle East program, representing a 57% m/m gain.

The shipbroker added that “based on historical performance, our models guide a base‐case AG‐FEAST TCE of about $18,600/day for the current supply/demand position.    The low case estimate is $11,500/day while the high case estimate of $20,000/day is unlikely given the absence of positive momentum ahead of the holidays‐fractured working environment of the balance of month.   AG‐FEAST TCEs presently stand at an average of ~$15,301/day, at which level fundamentals are already largely priced‐in and, as such, we envision only modest rate fluctuations accompanying changes to the immediate demand environment on a day‐to‐day basis during the coming week. Middle East Rates on the AG‐JPN route shed five points to conclude at ws49.  Corresponding TCEs fell 12% to ~$15,626/day.  Rates to the USG via the Cape were off by three points to ws23. Triangulated AG‐USG/CBS‐SPORE/AG earnings were down 9% to ~$24,389/day.    Atlantic Basin The West Africa market saw rates decline in line with those in the Middle East.  Rates on the WAFR‐FEAST route shed nine points to conclude at ws53.5 with corresponding TCEs declining by 23% to ~$17,870/day. Rates in the Caribbean market remained soft on sluggish demand amid an absence of ex‐USG fixtures and rising regional arrivals.   A small number of units were seen ballasting from the region in a reversal of the trend observed during Q3 when units were speculatively ballasting to the region from Asia.    The CBS‐SPORE route shed $100k to conclude at $4.0m lump sum.  Round‐trip CBS‐SPORE TCEs, were off 3% to ~$24,668/day”, CR Weber concluded.

In the Suezmax market, in West Africa “rates were firm this week on declining availability replenishment and expectations of above‐average remaining Suezmax cargo availability for the December program, as VLCC coverage has been light.  Rates on the WAFR‐UKC route added 5 points to conclude at ws92.5.    Rates are likely to remain on a positive trend during the upcoming week as the remaining December cargoes are worked and charterers progress into January dates. Rates in the Caribbean/USG market were also strong this week on sustained demand, and particularly for intraregional voyages from the USG.    Rising Aframax rates helped by reducing charterer interest in narrowing cargo stems to capture the smaller class’ $/mt discount.    Rates on the CBS‐USG route added five points to conclude at 150 x ws95 and the USG‐UKC route added 7.5 points to conclude at 130 x ws77.5.  The USG‐SPORE route was unchanged at $2.90m lump sum”, said the shipbroker.

Meanwhile, “the Caribbean Aframax market remained firm on ongoing delays on Mexico’s east coast and the combination of both sustained demand regional demand and rates for alternative Suezmax tonnage at a strong $/mt premium.    Last month’s Keystone Pipeline issues do not appear to be a factor in the gains; since throughputs were halted on November 17th due to a leak (the line was restarted on November 28th with reduced volumes), Aframax fixtures from Venezuela have been at half the average weekly volume as that observed during the year up to mid‐November.  Rates on the CBS‐USG route added 10 points to conclude at ws175.    Although owners are expected to maintain that fundamentals remain in their favor at the start of the upcoming week, there are a number of inbound ballasts, including some which are likely to accept below market rates to secure quick employment, which will likely weigh on rates once their impact is fully realized.  Losses could accelerate thereafter as weather delays in Mexico subside”, the shipbroker concluded.

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