South Korean shipbuilders could see a return to the container crane market, Yonhap News Agency cited industry sources as saying.
The announced move comes as the Busan Port Authority (BPA) is considering plans to order a number of gantry cranes from compatriot shipyards.
The cranes are reportedly intended for BPA's new container terminals. According to Yonhap, the estimated cost for the construction of ten cranes is KRW1tln (US$893m).
Moreover, the demand for replacements of older cranes at several South Korean ports might trigger the decision by the shipbuilders to return to the container crane manufacturing business.
The country's shipyards ceased the construction of cranes in 2006 as a consequence of cheap products from China.
However, the difference in price has changed to less than five percent, Yonhap quoted an official from the port authority.
In late-September 2016, South Korea revealed plans to invest some KRW14.7tln in the expansion of the country's ports.
The investment, scheduled to be undertaken in the period from 2016 until 2020, is aimed at preparing the country's ports for the era of mega ships.
Shipowners' interest is being diverted away from the recycling market with secondhand vessel values rising, according to Clarksons.
This causes new tonnage in the market to generate firm competition between cash buyers.
The number of Capesize bulk carriers sold for demolition in the year to date is down by around 66% compared to the same period in 2016.
A total of 40 Capesize bulkers were sold for demolition by this time in 2016, compared to only 13 so far this year, cash buyer GMS said in its weekly report. The reason for this is that charter values have improved significantly and owners are beginning to see better returns on their ships.
Additionally, the flow of containerships to the recycling market has also been slowed by opportunities for further trading.
"Containers from the German market especially seem to have slowed and it would certainly seem difficult to replicate the relentless pace with which vessels from this market were being concluded," GMS said.
Owners may try to get the last available income from their older vessels. However, it would be ideal time now to send those units to scrapping yards, according to GMS.
The ratification of the Ballast Water Management Convention is expected to have significant implications for the shipping industry. Thousands of ships will require costly technology and high levels of demolition are expected as compliance dates approach.
"With a rough assumption that ships of 20+ years will be recycled rather than retrofitted, BWMS retrofit demand falls to c.31,000 ships," Clarksons said.
Shipping consultant Moore Stephens presented in 2016 results of its survey where respondents forecast that "operating costs will rise for technical expenses such as maintenance and repair held over from previous years, while the cost of ballast water treatment plant will have to be taken into consideration in 2017 drydocking budgets."
Even with increased demolition, thousands of existing ships are still estimated to require ballast water management systems (BWMSs) and meeting this requirement will be challenging, Clarksons pointed out.
Excluding some 5,300 ships estimated to have BWMSs and around 43,000 ships engaged in "domestic" trading, as these are likely to be exempted from the convention because they operate within one body of water, approximately 46,000 ships require a BWMS, Clarkson's data shows.
The Australian Government is proposing a reform of the country's coastal shipping sector with the aim of reducing regulatory burden imposed on the sector.
The proposals were released in a discussion paper titled Coastal Shipping Reforms Discussion Paper and the government is seeking comment from ship operators, shipping companies, and other relevant stakeholders on proposed changes.
As disclosed, the Federal Government is proposing "greater flexibility for coastal shipping and new training opportunities…aimed at boosting coastal shipping activity."
"Currently, 15 per cent of Australia's domestic freight is moved by ship, but with Australia's extensive coastline and broad network of ports, there is the potential for shipping to play a larger role in the national freight task," said Minister for Infrastructure and Transport Darren Chester.
"However, it has become clear that limitations in the current regulatory system are working against that potential being realised.
"We need to address a range of administrative issues in the Coastal Trading (Revitalising Australian Shipping) Act 2012, which place unnecessary burdens on shipping companies and the Australian businesses that rely on coastal shipping.
"The intention of this discussion paper is to elicit views about how modifying the Act could help to redress this situation, without changing the basic structure of the current coastal trading regulatory regime," Chester said.
Written submissions to the discussion paper should be sent by Friday, 28 April 2017.
Earlier in February, the country's industry body Shipping Australia Limited called for unleashing of the the country's coastal shipping's potential.
"It's now time for some sensible bi-partisan changes that will allow international shipping to carry coastal cargo efficiently and sustainably for the benefit of Australian manufacturers, primary producers, and consumers," said Shipping Australia's CEO Rod Nairn.
"Efficient coastal shipping will create jobs in Australia by reducing import substitution. It will reduce the amount of greenhouse gas produced by inefficient overland transport. It will reduce the demand for road infrastructure spending and reduce road congestion and accidents."
Among the changes to current regime offered by Nairn are: getting rid of the "five-voyage" requirement and the volume variation restrictions from the temporary licensing regime, providing a blanket exemption under Ministerial determination (like for cruise ships greater than 5,000 GT) for non-competitive cargoes on the coast, such as break bulk, heavy lift, and container ships with TEU capacity exceeding 2,500, and removing the application of the Fair Work Act to coastal freight.
Chinese domestic container shipping company Zhonggu Shipping has announced a plan to terminate its listing on National Equities Exchange and Quotations (NEEQ).
The decision comes only eight months after the company listed on NEEQ in June 2016.
Zhonggu Shipping said it has had negotiations with the shareholders of the company regarding the proposal and all of them have reached preliminary consensus. However, the company didn't reveal specific reasons for the termination of listing.
In January, Zhonggu Shipping announced a plan to raise RMB600m ($87m) via issuing new shares to fund the construction of ten 2,500teu containerships and the acquisition of 65,000 containers. The vessels are now under construction at Shanghai Shipyard and Jinling Shipyard.
When contacted by Splash, an official of Zhonggu Shipping said the move is to meet the company's strategic development needs and termination of the listing will not affect the company's newbuild orders.
According to Alphaliner, Zhonggu Shipping currently operates 45 vessels with total capacity of 60,240teu and 22 vessels are self-owned.
The shipping industry is looking for ways to return to faster expansion in volumes as the slowdown in volume growth since the financial crisis focussed the industry's thoughts on potential barriers to healthy long-term trade growth, according to Clarksons.
From 1988 to 2008, growth in world seaborne trade averaged an estimated 4.2% pa, a fairly robust level underpinning long-term demand for ships. The markets at times felt the impact of oversupply but sustained weakness of demand growth wasn't generally the problem.
However, since 2009, the growth rate has slowed, averaging 3.2%, and just 2.8% since 2013. This still equates to significant additional volumes – 1.8% growth in 2015 added 194 million tons – but it's still enough to get market players worrying, Clarksons said.
The current cycle certainly feels like it has dragged on as it's now more than eight years since the onset of the financial crisis, Clarksons noted.
However, there are interesting historical comparisons. Between 1929 (the year of the Wall Street Crash) and 1932, the value of global trade dropped by 62% and didn't get back to the same level until the post-war years.
Today perhaps some of the anxiety is amplified by the seemingly wide range of factors that look threatening to seaborne trade's supportive historical record. Protectionist tendencies, whether they be from the Trump presidency or the UK's Brexit vote, slowing growth in China, "peak trade", robotics and 3D printing – nobody really knows how things will pan out but everyone’s watching closely for anything to allay at least some of the fears, Clarksons explained.
Six months ago, Clarksons reported that seaborne trade appeared to be showing a pick-up and this time round things are still looking positive. The 3-month moving average shows a generally upward trend since autumn 2015 with an average of 4% in the second half of 2016, hinting that the bottom of the demand cycle may finally have been passed. The current projection for overall seaborne trade in 2017 is still less than 3% with plenty of scenarios possible, but both market sentiment and the momentum right now feel a little more positive than that.
While it's quite right to try to assess the range of factors which appear to be lining up against a return to more robust levels of trade growth, it's also far from incorrect to look for signs of a turn in the trend.
"Cycles in shipping can be long and sometimes it can take a while to identify them," Clarksons pointed out.
Carriers in the Asia to West Africa container trade could be dragged through another woeful demand story as the container traffic on the route continues decreasing in 2017, according to shipping consultancy Drewry.
The traffic in the trade dropped by around one-fifth since 2014. After southbound container flows into West Africa dropped by 10% in 2015 to 1.3 million TEU, the number further decreased by 12% in 2016 to 1.2 million TEU, and early 2017 numbers "are even worse".
Drewry said that the figures for January 2017 "do not suggest that trend is going to reverse any time soon." Southbound volumes for the month were down by 18% year-on-year, which has lowered the rolling 12-month average to 95,600 TEU/per month, down by 12.5% year-on-year.
With no immediate expectation of a demand recovery, carriers are trying to restrict the amount of capacity available through void sailings, although the cascade of bigger ships from other trades continues to undermine the effectiveness of that practise.
Despite the weak demand, spot rates along this route made a surprising upturn at the end of last year although some of the momentum dissipated in February. Average Asia to West Africa rates fell by around 12% month-on-month in February to reside at around USD 1,600 per 40ft container.
"With ships barely half-full on the southbound voyage it does not seem likely that carriers will be able to arrest the decline in the next few months," Drewry said.
There are numerous risks of technical nature not being considered when opting to construct the ever bigger containerships that are being overshadowed by the luring economies of scale, the Nordic Association of Marine Insurers warns.
According to the association, apart from the commercial challenges in operating these vessels such as upgrade of port facilities and fairway infrastructure, the Cefor Technical Forum has identified a number of technical risk elements "that are of particular concern from an insurer's perspective and that should have more focus when ULVCs are being designed and brought into service."
"Our concern is further accentuated by industrial rumors talking about 24,000 TEU vessels, although such vessels have, as far as we know, not yet been ordered," the association said.
There are 69 Ultra Large Container Vessels (ULCVs) now sailing featuring bigger tonnage than 14,501 TEU and including all known newbuildings, the sum adds up to 148 vessels.
The concerns are being voiced just two days after South Korean Samsung Heavy Industries (SHI) held a naming ceremony for the largest containership built so far, the 20,150 TEU MOL Triumph.
The growing popularity of these giants of the seas due to their cost-efficiency has downplayed various concerns, the association stressed, including dangers of fire incidents and groundings which are very challenging, if not impossible to handle at the moment.
"Box-cargoes often contain a wide range of hazardous and toxic substances, and it can take time to identify and locate dangerous cargoes that are particularly vulnerable to fire. Because of wrong declaration of dangerous goods, crew may end up applying an incorrect strategy for handling a specific fire scenario on board," the association said.
In particular, if the fire is burning within a container, it is often allowed to burn out in a controlled manner, leaving more or less all containers in hold with heat and smoke damage as there are no other methods of fighting a container ship fire below deck.
And as vessels increase in size, cargo holds and the number of containers accommodated in each hold are equally increasing, subsequently endangering more containers to damage in the event of fire, Cefor added.
In the event of a grounding involving a larger container vessel, equipment to lightering such a vessel can hardly be found. The size of the container vessels overtook years ago the salvage capacity.
An illustration is the 3,351 TEU Rena grounding near Tauranga, New Zealand on 5 October 2011 carrying 1,368 containers. After heavy weather in January 2012, the stern section sank completely on 10 January 2012. By June 2014, 77% of the initial carried containers had been salvaged.
"It was not that efforts were not done to save at least the containers, but the coast was simply too exposed and the equipment available for the salvage operations far from sufficient. Imagine if a similar accident had happened to a vessel carrying 10 to 15 times the number of containers that was loaded on board Rena," the association pointed out.
Additionally, the number of repair yards worldwide that are able to accommodate the ultra large container vessels in dry dock facilities are very limited. This is not a concern in the event of scheduled dry-docking, but could pose a problem if one of these vessels experience a damage or general average situation far away from repair facilities, Cefor further noted.
Among the issues to be taken into account are also the material availability of steel plates which are normally only produced on demand, along with damage due to bank effects in canals.
The members of Cefor engage in hull and machinery insurance, protection and indemnity insurance (P&I), cargo insurance, legal defence, war risks insurance, energy and offshore insurance.
The dry bulk shipping industry remains well on target for profitable freight rates in 2019 if the projected fleet supply growth rate of 0% in 2017 continues, according to international shipping association BIMCO.
In 2016, the supply side grew by 3% and the demand side grew by 2.4%, which resulted in a worsening of the fundamental market balance.
The handymax segment may even see profits in 2018 as demand may go beyond 2% in 2017, before reverting to 2% in 2018 onwards.
However, as the original "Road to Recovery" in May 2016 projected an even worse fundamental deterioration in 2016 – we are today, in a relatively better position than anticipated nine months ago.
"Estimating a return to profitability in the dry bulk industry remains a moving target, and one that differs from one company to the next. But by projecting a course for profitability, everyone in the industry can use it as a reference," said Peter Sand, BIMCO's Chief Shipping Analyst.
"The fact that the first half of February 2017 was a troublesome period came as no surprise and it makes the strong comeback in the following month stand out as even more remarkable. During that time, the BDI went from 688 to 1,147," added Sand.
BIMCO said that this lift in freight rates is positive, but added that there is still work to be done on the supply side, coupled with a significant level of demolition activity.
"In total, freight rates will be slightly higher than originally projected for the coming years. Combining the relatively better freight market, with a 10-year-low OPEX level in 2016 – the dry bulk industry remains on the road to recovery," BIMCO informed.
Amid the current muted shipbuilding market the Japanese orderbook has shown its endurance and recently surpassed its South Korean counterpart in size for the first time since 1999, according to Clarksons.
While the orderbook is shrinking for all of the Big Three builder countries, the Japanese orderbook is undergoing the slowest rate of decline. This month's Shipbuilding Focus takes a look at the development of the Japanese orderbook.
As of start March 2017, the orderbook at Japanese yards stood at 775 ships of a combined 18.9 million CGT, the second largest globally. This was its lowest monthly level since January 2014 in CGT terms.
However, the Japanese orderbook has experienced the smallest year-on-year decline amongst the top three builder nations, 23% in CGT terms compared to a 28% and 36% decline in China and Korea, respectively.
In addition, Japanese yards' forward cover is currently at 2.7 years in CGT terms, surpassing 2.5 years at Chinese yards and much higher than Korean yards' 1.5 years.
"Japanese yards are backed by a strong domestic owner base and the orderbook is becoming more diversified across the major vessel sectors, with orders for larger vessels securing a longer backlog of work," said Clarksons.
"Whilst the fortunes of Japanese yards will depend on the changing shipbuilding environment, they currently have the second largest orderbook globally in CGT terms and in today's tough newbuild contracting market, this appea rs to be relatively resilient."
The heads of Maersk Line, Mediterranean Shipping Company (MSC) and Hyundai Merchant Marine (HMM) signed an agreement on March 15 thereby officially launching the parties' strategic cooperation on East-West trades.
This strategic cooperation between 2M and HMM, has a length of three years with an extension option, includes a series of slot exchanges and slot purchases on East-West routes, as well as Maersk Line and MSC taking over a number of charters and operations of vessels currently chartered to HMM.
"We are very proud of our strategic cooperation with Hyundai Merchant Marine, Korea's leading container shipping company," said Robbert van Trooijen, Maersk Line's Asia-Pacific Chief Executive.
"We believe this strategic cooperation to be a win-win for all parties. Maersk Line's customers will have greater options on Trans-Pacific trades and HMM's customers will be able to leverage Maersk Line's strong Asia-Europe products," added van Trooijen.
The deal was signed some three months after the parties agreed to enter the strategic cooperation.
The strategic cooperation will enable the company "to enhance our 2M network and presence in the important Transpacific trade, " said Søren Toft, Chief Operating Officer, Maersk Line.