Some 124 ships out of 227 ships broken in the third quarter of 2017 ended up on beaches in South Asia for dirty and dangerous breaking, the latest report from NGO Shipbreaking Platform shows.
A total of 42 ships were sent for demolition to Turkey, 35 to China, and 26 were scrapped in the rest of the world.
Shipowners continue to sell their tonnage to infamous beaching yards in South Asia as it brings in more money. As explained by the Platform, there is little or no investments in proper infrastructure to contain pollutants and ensure safe working conditions, the proper disposal of hazardous wastes is overlooked, and migrant workers are exploited.
Moreover, the prices offered for ships this third quarter have been high in South Asia, especially when compared to the figures of the first half of the year. Monsoon rains caused a shortage of local product being available to the domestic steel mills and have, therefore, driven prices for end-of-life ships up, the report said.
Whilst a South Asian beaching yard can pay about USD 400/LDT, Turkish yards are currently paying slightly less than the USD 250/LDT offered by Chinese yards.
NGO Shipbreaking Platform said that Greek shipowners have sold the most ships to the beaching yards with 11 beached vessels this quarter, followed by South Korea and Singapore with 6 vessels each. Shipping companies from the United States sold 5 vessels.
"Singaporean Continental Shipping Line remains the worst corporate dumper, though it currently shares this position with the Greek Anangel Shipping Enterprises and the Iranian Iran Shipping Lines. In total, these companies had three vessels each beached in South Asia in this quarter," the Platform added.
According to the report, Bermuda-based Berge Bulk, Greek Costamare, Swedish Holy House Shipping, and American SEACOR are close runner-ups, with two ships each sold for beaching.
Brazilian-owned product tanker LOBATO, which was reportedly sold by Petrobras to Indian breakers, ended up on the shores of Chittagong instead. No tanker was sold to the Gadani yards in Pakistan following the ban on tankers due to the major explosion on the ship ACES on the 1st of November of last year.
Although 33 out of the 124 beached vessels this quarter were European-controlled, only three of these had a European flag when they arrived in South Asia. All ships sold to the beaching yards pass via the hands of scrap-dealers, also known as cash-buyers, that often re-register and re-flag the vessel on its last voyage.
Almost half of the ships sold to South Asia this quarter changed flag to the grey- and black-listed registries of Comoros, Niue, Palau, St. Kitts & Nevis, and Togo just weeks before hitting the beach.
Between July and September, one worker lost his life at a shipbreaking yard in Alang, India. Another worker was reported seriously injured in Chittagong, Bangladesh, the report finds.
Namely, in September, a worker named Ashok Yadav, was reported killed whilst at work at shipbreaking plot no. 14 in Alang, India. Following his death, a letter denouncing the unsafe working conditions at the shipbreaking yards in Alang was sent to Indian Government officials by Toxics Watch Alliance.
Around the same time, Md. Shohag – 21 years old – was hurt while torch-cutting a vessel at Zuma Enterprise in Chittagong, Bangladesh, when an iron plate hit him on the left foot and stomach, causing severe injury, the data from the report indicates.
Shipping firm Hartmann Group has secured the recapitalisation of an 11-strong fleet of anchor handling tug supply (AHTS) vessels.
The deal was concluded through a partnership with, and long-term investment from, Breakwater Capital and Hayfin Capital Management.
Although the financial terms of the agreement were not unveiled, the company said that the delivery of the 11 vessels is scheduled to be completed by the end of November.
Agreed on October 12, the deal provides the fleet with immediate stability and the potential for growth, Hartmann informed.
With this move, full ship management of the fleet will remain with the former owners, Hartmann Group, with Hartmann Offshore continuing the technical-nautical operations and UOS (United Offshore Support) managing the commercial side.
Hartmann informed that the fleet will operate under their current expedition names with the prefix changed from UOS to GH.
"We're delighted to have agreed this investment which secures a clean balance sheet and the long-term capital required to provide stability and the potential for growth in the future," Andre Groeneveld, Managing Director of UOS, said.
"With strong assets, long-term partners and experienced management, we feel well-positioned to deliver a reliable, competitive and technically advanced service to the market," he added.
The rebound of dry bulk freight rates, as well as ships' values has resulted in the halt of demolition sales, triggering fresh concerns regarding the long term viability of the market’s rebound. In its latest weekly report, GMS, the world's leading cash buyer of ships said that "a shocking collapse in price and sentiments over the last few weeks resulted in a grinding halt to a lot of the offerings / ongoing negotiations with end Buyers in the various subcontinent locations this week. Most sub-continent recyclers are entering the dreaded wait and-watch mode to see where prices are headed, before committing themselves on new units".
GMS added that "depending on which report you rely on, prices have declined anywhere between USD 30/LDT to about USD 50/LDT since the peak seen during August / September. Much of this can be attributed to the fact that local steel plate prices have been rather volatile, resulting in recycled material not moving quick enough from local yards. This has in turn left Recyclers increasingly reluctant to take in new inventory. In China, the Communist Party Conference has seen a halt to virtually all ship recycling activity and the lack of any meaningful negotiations and acquisitions is having a knock on effect throughout the Indian sub-continent and Turkish markets. As local steel plate prices cooled (significantly) over the last few weeks and currencies (in both Turkey and India) depreciated overall as well, a perfect storm of declining prices and negative sentiments sweeps across the industry. Moreover, upcoming Diwali holidays will likely ensure that the lull in activity and sales will continue for at least another week".
According to GMS, "as such, most cash buyers remain unwilling to commit their unsold tonnage at some of the exploitative numbers currently being tabled by end users. Not all however, is doom and gloom. There has been a noticeable slowdown in potential tonnage for sale as freight rates (in the dry bulk and container sectors) push on. Although down overall, steel prices in China and Turkey too improved marginally this week, in the first green shoots of a possible upcoming recovery and the industry could see a sustained recovery once Diwali and the Communist Party Conference in China conclude from the end of next week onwards, leading into November".
In a separate report, shipbroker Intermodal noted that "the first cracks that appeared in the demolition market at the end of last month have been slowly transforming into full on pressure on prices, with average bids across the most popular demo destinations moving down for a third week in a row. The shaky Chinese market has been greatly impacting sentiment and lately prices as well in the Indian subcontinent where softer local currencies have brought about additional pressure on the markets there. As a result, activity has been slowly softening, with the number of cash buyers who feel comfortable enough to commit themselves amidst a falling market seriously limited at the moment. The Diwali holidays that will kick off tomorrow are also expected to affect activity in the following days as well, while the one silver lining at the moment is the supply of demo candidates that has been substantially softening amidst improving freight markets in all of the more conventional sectors during the past weeks. Average prices this week for tankers were at around $255-415/ldt and dry bulk units received about 245-395 $/ldt", said Intermodal.
Similarly, Allied Shipbroking noted that "despite the fact that we continue to see fairly firm prices being quoted by breakers and with appetite holding at firm levels across most of the Indian Sub-Continent, activity has remained relatively slow, compared to the average levels noted in the year so far. The considerable improvement in the dry bulk freight market and the sharp increase in asset prices that have emerged as a consequence has limited the supply of demo candidates from this vital sector. We have seen a fair rise in the volume of tanker vessels being sent to be beached but nothing extra-ordinary, given that the overall tanker fleet has a very limited number of vessels that can be considered overage. This general lack in demo candidates is likely to keep the competition amongst cash buyers at firm levels, helping to support the current highs being noted in terms of prices for scrap for a at least a little while longer", the shipbroker concluded.
Greenhouse gas emissions from three ship types – containerships, bulkers and tankers – could be reduced by a third, on average, by reducing their speed, according to a new study that will be presented to the International Maritime Organisation (IMO) next week.
The cumulative savings from reducing the speed of these ships alone could, by 2030, be as much as 12% of shipping's total remaining carbon budget if the world is to stay under the 1.5ºC global temperature rise, the CE Delft study for NGOs Seas At Risk and Transport & Environment, founding members of the Clean Shipping Coalition (CSC), found.
Reducing operational speed would also provide a boost to jobs and growth in shipbuilding nations, where the study concludes production would have to grow by over 30% in order to maintain transport capacity for global trade. The study also finds that the additional costs of slow steaming on exports such as oilcake and beef from Latin America would be marginal, and this without accounting for lower transport fuel costs.
"A new regulation to reduce ship speed will be key to the success of the IMO GHG strategy. Only reduced speed can give the fast, deep short-term emissions reductions that are needed for shipping to meet its Paris Agreement obligations. Significant early emissions savings are essential for the long-term decarbonisation of the sector as they preserve shipping's carbon budget and buy the industry time to develop longer-term decarbonisation solutions. Recent suggestions by industry that no new short-term measures are needed is misguided and reckless, and threatens to undermine the IMO strategy right from the start," John Maggs of Seas At Risk and President of Clean Shipping Coalition, said.
The analysed ship types cumulatively account for around 52% of global shipping's carbon footprint. Substantial additional savings will be made when the speed of the remainder of the fleet is also reduced, the NGOs said.
As informed, the findings will be discussed by the IMO next week when it meets for the second time to develop its initial 2018 greenhouse gas reduction strategy. The UN discussions in London will concentrate on a global emissions reduction target and potential measures for the sector.
"Regulating ship speed is one of the short-term measures on the table that can be implemented immediately. The IMO is under huge pressure to deliver an effective and adequate response to the Paris agreement and global climate efforts," Seas At Risk said.
"Shipping is the only international sector that has yet to commit to a global emissions reduction target or measures. Talks at the IMO are expected to be challenging as the industry body, ICS, is on record as opposing every reduction measure so far put forward – including binding reduction targets, the need to tighten design standards or have operational efficiency measures. But industry itself showed clearly that slow steaming works. It proved effective in weathering the economic crisis, so the IMO should now agree mandatory speed measures to achieve substantial emissions reductions needed to start decarbonisation," Bill Hemmings of T&E said.
A total of 121 incidents of piracy and armed robbery against ships were reported in the first nine months of 2017, according to the International Chamber of Commerce's (ICC) International Maritime Bureau's (IMB) latest quarterly report on maritime piracy.
In total, 92 vessels were boarded, 13 were fired upon, there were 11 attempted attacks and five vessels were hijacked in the first nine months of 2017.
The flagship global report notes that, while piracy rates were down compared to the same period in 2016, there is continuing concern over attacks in the Gulf of Guinea and in South East Asia. The increase in attacks off the coast of Venezuela and other security incidents against vessels off Libya – including an attempted boarding in the last quarter – highlights the need for vigilance in other areas.
While only three low-level incidents took place in Venezuela during the same period in 2016, the number this year racked up to 11. All vessels were successfully boarded by robbers armed with guns or knives and mostly took place at anchorage. Four crewmembers were taken hostage during these incidents, with two assaulted and one injured.
No incidents were reported off the coast of Somalia in this quarter, though the successful attacks from earlier in the year suggest that pirates in the area retain the capacity to target merchant shipping at distances from the coastline, the report said.
Nigeria remains risky, as there were 20 reports received against all vessel types for Nigeria, 16 of which occurred off the coast of Brass, Bonny and Bayelsa. Guns were reportedly used in 18 of the incidents and vessels were underway in 17 of 20 reports. 39 of the 49 crewmembers kidnapped globally occurred off Nigerian waters in seven separate incidents. Other crew kidnappings in 2017 have been reported 60 nautical miles off the coast of Nigeria.
"In general, all waters in and off Nigeria remain risky, despite intervention in some cases by the Nigerian Navy. We advise vessels to be vigilant," said Pottengal Mukundan, Director of IMB.
"The number of attacks in the Gulf of Guinea could be even higher than our figures as many incidents continue to be unreported."
The multipurpose shipping fleet is set to see a rise in market share and a recovery in freight rates in 2018, amid recovering demand and improved market conditions, shipping consultancy Drewry said.
Although China's plans to curb steel production in an attempt to clean-up the air pollution may well slow steel exports over the short term, the longer term outlook is still positive for the multipurpose and heavy lift sector.
The clean-up campaign has resulted in a decision to cut some 50 million tons of steel production from the fourth quarter of 2017. Drewry expects that Chinese exports will become less competitive for their South East Asian customers, compared to the Middle East or Turkey, and trade volumes will shift accordingly.
Meanwhile, there are also signs that the longer term health of the competing sectors is improving. Freight rate forecasts for both the container and handybulk carrier sector are showing upward movement in 2017 and 2018. This has already led one container line to announce that it is less interested in project cargo than previously, due to the extra time needed to stow this type of cargo, according to Drewry.
Although there is still a significant level of overage tonnage in the multipurpose fleet, the majority of newbuilding deliveries over the last five years have been heavylift capable.
"This modern fleet of project carriers is well placed to take advantage of an upturn in this sector."
"The improvements in many other key drivers for this market mean we remain optimistic about its future. The expectations for global GDP, coupled with those for global PMI and the rising oil price, are likely to lead to improved investment and therefore increased demand for breakbulk and project cargo," Susan Oatway, lead analyst for multipurpose shipping at Drewry, said.
China received the largest number of shipbuilding deals during the first three quarters of 2017.
Data from UK consulting film Clarksons shows that Chinese shipyards agreed contracts totalling 5.09m Compensated Gross Tonnage (CGT) between January and September.
South Korea's 4.05m CGT placed it in second place, with Japan (1.47m CGT) a distant third. The combined global total during the first three quarters soared to 15.93m CGT, compared to 9.79m CGT in 2016.
In August, the China State Shipbuilding Corporation signed a US$1.44bn deal with French containership giant CMA CGM to build six of the world's largest container ships (22,000 Twenty-foot Equivalent Units).
Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries, the top shipbuilders in the country, are struggling from lack of work caused by falling demand for new vessels.
According to recent industry data, however, that could change in the not-too-distant future thanks to a projected rise in demand for LNG carriers, which would transform the trio's current troubles from what seems like a death knell into a painful yet relatively brief dry spell.
On October 15, British Petroleum in its Energy Outlook 2017 report suggested that global LNG (liquefied natural gas) trade through maritime routes would grow rapidly, eventually composing half of all trade after 20 years.
The report reads that maritime trade comprises 32 percent of all LNG commerce in 2017. BP's market analysis reveals that maritime trade growth is seven times that of land-based pipelines, culminating in a 50 percent share of all commerce by 2035.
The surge in LNG trade outlined in the Energy Outlook 2017 report can be explained by a previous BP study, which stated that LNG would replace coal as the second most commonly used energy source by 2030.
BP proposed that if market trends remained unchanged, LNG could take the number one spot from petroleum within 30 to 40 years.
More demand, in particular more demand for maritime transport of LNG, naturally calls for LNG carriers; something the three South Korean shipbuilders, having obtained orders for 46 of 59 15,000 CBM LNG carriers in 2014 per U.K. shipbroker Clarksons, are well positioned to take advantage of.
The move towards the more environmentally friendly LNG has likely gained momentum as the IMO (International Maritime Organization) has beefed up policies which require vessels to be fueled with LNG or setting lower ceilings of sulfur oxides composition (MGO) by 2020.
At the London International Shipping Week last month, Braemar laid out its expectation that the recovery in shipbuilding orders would be slow at first, with less than 17 next year, but would gain steam by 2020, with a projection of 20 by 2019.
Besides LNG carriers and LNG-fueled vessels, FSRUs (Floating Storage Regasification Units) and FLNG (Floating liquefied natural gas) – facilities in development to tap underwater LNG reserves – are also expected to increase in number, targeting the waters surrounding Australia and off the eastern coast of Africa.
All 18 FSRUs in operation worldwide were constructed at South Korean shipyards.
Emissions of greenhouse gases (GHGs) from global shipping are on the rise again, according to a study released today by the International Council on Clean Transportation (ICCT). This finding increases pressure on policymakers gathering at the International Maritime Organization (IMO) headquarters next week to take action on climate change.
The new study combines state of the art global ship operations (AIS) data with detailed vessel characteristics for more than half a million ships to estimate GHG emissions and air pollution from shipping at high resolution on an hourly basis for the years 2013 to 2015. Overall, maritime fuel consumption increased from 291 to 298 million tonnes (+2.4%) from 2013 to 2015, compared to a 7% increase in shipping transport work. Accordingly, carbon dioxide (CO2) emissions from global shipping (oceangoing vessels, domestic ships, and fishing vessels) increased from 910 to 932 million tonnes over the same period.
The study highlights that three ship classes and six flag states (country of registration) are responsible for the majority of emissions (Figure). Container ships (23%), bulk carriers (19%) and oil tankers (13%) accounted for more than half of CO2 emissions. In terms of flag states, ships registered to Panama (15%), China (11%), Liberia (9%), Marshall Islands (7%), Singapore (6%), and Malta (5%) were the largest emitters. These flags account for 66% of the global shipping fleet's deadweight tonnage.
The study shows that improvements in ship efficiency were outpaced by increases in transport supply over the period studied, driving GHGs and air pollution higher. One contributing factor to this trend is that the biggest ships are speeding up and emitting more. While average speeds remained largely flat between 2013 and 2015 for most ships, the largest oil tankers and container ships sped up nearly 4% and more than 11%, respectively. The study also identifies black carbon as the second most important climate pollutant after CO2, representing between 7 and 21% of the total climate impact of shipping.
"When IMO last looked at this in 2014, shipping emissions had dropped after the Great Recession," said Naya Olmer, the lead author on the report. "We now know that the pendulum has swung back, with emissions again on the rise as global trade expands." "This study shows that business as usual improvements in shipping efficiency will not be enough to reduce GHG emissions from ships," said Dan Rutherford, the ICCT's program director for marine and one of the paper's coauthors. "Concerted action is needed from IMO to promote low and even zero carbon technologies if the shipping industry is to pull its weight in protecting the global climate," he added.
The shipping industry is a major emitter of climate pollution. If it were a country, the global marine transportation sector would have ranked 6th in terms of carbon dioxide (CO2) emissions in 2015, just below Germany and well above Korea. Marine CO2 emissions are projected to double by 2050 as international trade expands unless effective policies are developed to constrain emissions growth. Countries, industry representatives, and non-governmental organizations will gather the week of October 23rd in London to develop IMO's comprehensive GHG strategy for ships, which could include a cap on ship GHG emissions. International shipping was not included in the landmark 2015 Paris climate agreement.
While much has been said about the oversupply which plagued the dry bulk market for years, ship owners have once again jumped on the bandwagon of purchases, as freight rates have improved sentiment. Over the past few weeks, newbuilding ordering activity and secondhand investments have been dominated by demand for dry bulk tonnage.
In its latest weekly report, shipbroker Allied Shipbroking said that "after a week of limited activity in the newbuilding market, this week things returned with a sense of spark, with a notable flow of fresh orders being reported and overall dominated by the dry bulk sector. This drive in activity has likely been driven by the wake of both the positive momentum being seen in terms of sentiment and the considerable improvement in terms of earnings coming from the freight market rally. On the tanker front, things remained relatively quiet, with uncertainty still holding most investors back and keeping a cap on any push for new projects. Even though there is some vividness and fresh interest in the right now for dry bulk vessels, this is followed by a sense of hesitation among market participants for when it comes to new ordering, given the fragile balance being noted in terms of tonnage supply and the amount of owners in the market which hold TIER III designs out of favor right now. Most are still focusing on the secondhand market for buying opportunities, thinking that asset prices are not yet high enough to turn their sights towards newbuildings. In any case, there is a sense now that this flow of new orders will continue strong till the closing of the year".
In a separate shipbuilding report, shipbroker Clarkson Platou Hellas said that it was “another quiet week in the Newbuilding market with only one order to report. In the Passenger / Cruise market, Austal have announced winning an order for two firm approx. 7,500 GT Passenger / Car Trimaran Ferries from Lineas Fred Olsen. The two vessels are set for delivery in 1Q and 4Q 2020 and will be able to carry 1,100 passengers and up to 276 cars when delivered. The Owner already has two Passenger/Car Ferries in its fleet built by Austal”, the shipbroker concluded.
Meanwhile, on the S&P market this past week, "on the dry bulk side, there continues to be a steady stream of deals that are coming to market, with activity this week being mainly focused on the Supramax size segment and a fair amount involving relatively modern tonnage. On the Price aspect of these deals, it seems as though further gains are made inch by inch with limited appetite for any significant price rises despite the still strong amount of competition amongst buyers and the sharp improvement in earnings. It seems as though most still feel that there is limited room for further price gains to be had right now. On the tanker side, the market still remains relatively quiet, with only two Aframaxes (one of which is an old sale concluded in August) and two MR vessels changing hands. There seems to be a considerable mismatch between the price ideas expressed by sellers and those expressed by buyers right now, especially in the larger crude oil carriers, where buyers are only in search of bargain deals", Allied said.
Similarly, ship valuations' expert VesselsValue pointed out this week that Mid Age Supramax values have firmed. "The Tenmyo Maru (58,700 DWT, Nov 2008, Tsuneishi Zhoushan) sold to Pavimar for USD 13.8 mil, VV value USD 13.3 million" said VV.