Beijing is clamping down further on ship emissions in rulings that could change the shipping industry forever. The Chinese government has come under pressure to act over the dire state of the environment and has already taken sweeping measures against many industries, including shipping with the creation of the nation's first ECAs (emission control areas). It is now going a step further, issuing its first ever set of national standards to curb harmful emissions from the shipping industry.
The standards issued jointly by the Ministry of Environment (MEP) and the country's quality watchdog – the General Administration of Quality Supervision, Inspection and Quarantine – aim to cut emissions of greenhouse gasses and other particulate matter from ships with an engine capacity of over 37 kilowatts.
MEP data claims that the shipping industry contributed 8.4% of the total sulphur dioxide emissions and more than 11% of nitrogen oxide released in 2013.
In the first stage of the new standards, the shipping industry is required to cut emissions of PM10 and PM2.5 by about 70% from the levels in 2016 over the next three years. 20% of the current nitrogen oxide emissions must also be slashed over the same period.
The second stage will see ship operators need to cut another 40% of PM10 and PM2.5 emissions from levels in 2019 and reduce nitrogen oxide emissions by a further 20% from 2020 to 2022, according to the document.
On Aug. 1, 2016, the European Commission adopted a decision granting recognition to the Indian Register of Shipping (IRS) in accordance with Regulation (EC) No. 391/2009 of the European Parliament.
The Deputy Director General MOVE, Mr. Fotis Karamitsos in a letter dated Aug. 5, 2016 conveyed this decision and has extended his compliments to the Indian Register of Shipping.
With this, IRClass joins the elite group of classification societies recognized by the EU.
This recognition confirms IRClass meeting the stringent EU requirements and having a "performant and well-established quality system in place, certified as compliant with relevant statutory and industry standards, currently implemented throughout the organisation."
The approval paves the way for IRClass to now access the very important European market.
Malaysia's Ministry of International Trade and Industry has introduced new tax incentives for shipbuilders and ship repair yards.
The ministry said in a statement that new companies can either opt for pioneer status which comes with a 70% of income tax exemption on statutory income for five years or an investment tax allowance of 60% on the first qualifying capital expenditure incurred within five years.
Malaysia has 100 shipyards, of which six are deemed large. Shipbuilders' heavy focus on offshore-related construction has seen orders dry up in the past couple of years. Within Southeast Asia, Malaysia faces great competition when it comes to shipbuilding with neighbours in Indonesia, Singapore, Vietnam and the Philippines all having significant yard facilities.
Indian seafarers could well start to price themselves out of the market with shock news that the income tax department will now tax them up to 30% of their salaries whether working on local or foreign flagged ships.
Until this month, Indian crew who spent more than six months at sea had enjoyed similar benefits to non-resident Indians, but now following an income tax tribunal in Kolkata that could all change. Tax authorities are also looking at taking tax income from the previous six years.
India is one of the world's largest suppliers of crews to the world's merchant fleet.
Two seafarers associations, the Maritime Union of India (MUI) and the National Union of Seafarers of India (NUSI), are set to challenge the tax tribunal decision.
Global Shippers' Forum (GSF) has developed a plan to end container shipping surcharges within five years, GSF said during its Annual Meeting in Colombo, Sri Lanka.
GSF is looking to end "the imposition of surcharges on shippers by 2020" through a series of actions "that will expose the scale and injustice of the practice to world trade bodies," said Chris Welsh, Secretary General of the Global Shippers' Forum.
The reasons given for applying a surcharge and the scale of charges are growing, but shippers claim they are not related to the true costs of the service being provided.
Examples of surcharges amounting to US$250 per container, were given by GSF members using Asia-Europe trade routes. The cost can sometimes exceed the contracted price for shipments making the management of total shipping costs unpredictable for cargo owners, GSF said.
"Our campaign will expose the extent of surcharging and make it an issue in future trading agreements," said Welsh.
He added that GSF "is determined to end these practices and restore visibility to shipping rates and confidence to shippers."
The Italian government led by the prime minister Matteo Renzi is shaking up the national law on ports and ships. The latest Council of Ministers has just approved some important changes dealing with port authorities and the so called motorways of the seas.
Starting with the ports law, the Cabinet said yes to a new regulation aiming at cutting bureaucracy, reviewing a system regulated by a 1994 law and assigning to port authority presidents more managerial tasks. The two main points of the new law are: decrease from 25 port authorities to 15 regional Port System Authorities and transformation of the former Port Committee (which included representatives also of the private stakeholders) into a lighter Management Committee (where the new members will be named only by local political institutions). As for the bureaucratic simplification, the new law establishes that all the administrative port-related procedures will be united in a new Customs and control single window.
Some big changes regard the Italian local cabotage rules too. Following a fierce competition between Grimaldi Naples (on one side) and Tirrenia, Moby and Snav (on the other side) on the motorways of the seas market where some extra-EU seafarers were embarked thanks to tailor-made agreements with labour unions, the minister of transport decided to limit the access to the Italian international registry's fiscal benefits only for the Italy flagged ro-ro and ro-pax ships with 100% Italian or EU crew members onboard on the routes linking two national (continental or insular) ports.
As of today, Italy's government did not amend yet its tonnage tax scheme in order to allow other EU flag ships to access the regime that basically allows for the determination of presumptive income based on the net tonnage of the qualifying ships apportioned to the effective shipping days (tonnage income).
US Customs and Border Protection (CBP), the largest agency within the Department of Homeland Security, has created the National Jones Act Division of Enforcement to enhance implementation of the Jones Act.
The new division, to be known by the acronym JADE, will be dedicated to making sure that the 1920 Act is observed. The Act has been focus of some controversy in recent times.
It requires all cargo vessels on internal US routes – meaning the nation's inland waterways or on routes between US ports (including ones beyond the contiguous 48 states) – must be US-built, US-flagged, US-owned and crewed by US citizens or resident aliens.
Calls for the requirements to be loosened have come from Hawaii, Alaska and territories such as Puerto Rico and Guam, their main claim being that the Act unfairly inflates the cost of imported goods to those states and territories.
But security hawks and US maritime industry representatives say that now more than ever the Act must be preserved in light of the global terrorism threat.
The European Community Shipowners' Associations (ECSA) has supported the European Commission's newly published communication on a European Strategy for low-emission mobility which points out that all transport sectors, including maritime shipping, need to contribute towards reducing the EU's greenhouse gas emissions and air pollutants.
The communication calls for further work on the introduction of an "Energy Efficiency Design Index" for new ships engaged in international shipping.
The EU also affirmed its commitment to securing a mandatory global agreement for the collection and reporting of greenhouse gas emissions from international shipping in the International Maritime Organisation later this year.
The measures need to be complemented soon by an international agreement on an emission reduction objective for the shipping sector, according to the communication, which should be followed by measures to mitigate emissions in the international maritime sector.
The EU already has in place legislation that will, as from 2018, require ships that use EU ports to monitor, report and verify emissions. The EU may align this legislation in the event of an international agreement on a global system.
In relation to air pollutants, the Commission supports further measures by the International Maritime Organisation to reduce these emissions, such as the designation of additional Emission Control Areas and the implementation of a global cap on sulphur in fuel in 2020.
"We believe that shipping obviously must be part of the global solutions to limit the increase in the global temperature as we clearly are also a global contributor to the carbon emissions," said ECSA Secretary General Patrick Verhoeven.
"We fully agree with the aim of the EU to secure a robust and mandatory global agreement for the collection and reporting of greenhouse gas emissions from international shipping in the International Maritime Organisation as mentioned in the Commission's communication. We also look forward to seeing a proposal to align the EU MRV Regulation with the global system. Finally, we support the Commission in ensuring that IMO timely delivers on the next steps. We believe that a global agreement is both needed and possible."
Hong-Kong listed shipping and logistics company China COSCO Holdings Co (CCHC) received on July 18 a subsidy amounting to CNY189m (USD28.3m) from China COSCO Corporation, the indirect controlling shareholder of the company, for the decommissioning and upgrading of its vessels.
The company said the subsidy will be recognized as a non-operating income and will be included in the profit and loss for this year.
China COSCO Holdings reported in April a major rise in its net loss from CNY1bn (USD154.1m) seen in the quarter ended March 31, 2015, to CNY4.5bn (USD690m) in the corresponding period this year.
The loss was mainly attributed to a weak demand in the container shipping market as the company's container shipping business recorded a loss of approximately CNY1.4bn. The loss was also assigned to the disposal of 100 percent equity interests in China COSCO Bulk Shipping Co., and 100 percent equity interests in Florens Container Holdings Limited, as well as to an imbalance of supply and demand in the dry bulk shipping market and low levels of freight rates, which affected the company's profit.
The South Korean shipping company Hyundai Merchant Marine (HMM) has signed a Memorandum of Understanding (MOU) to join the 2M Vessel Sharing Agreement (2M VSA) starting from April 2017, upon finalizing negotiations and approval procedures in each country.
The company signed the MOU following agreements with bond-holders to adjust debt and shipowners to adjust charter-hire.
Signed between HMM and the 2M carriers, Maersk Line and Mediterranean Shipping Company (MSC), the MOU is a binding agreement regarding HMM's entry to the 2M VSA.
"By accessing 2M VSA network, HMM will be able to strengthen its service offering and achieve improved cost competitiveness. The 2M carriers will benefit from a reinforced service competency in Asia and improved network cover in the trans-pacific area," said the company.
HMM has now completed all conditions set out in the voluntary agreement with creditors from March 2016 and in accordance with the completion of such preconditions, "the planned debt-for-equity swap by creditors will be executed as planned."
"Based on the company's sound financial structure, HMM will put its utmost efforts into improving our service offering to clients and to continue increasing operational competency in the second half of this year to continue improving profitability of our company," HMM's spokesperson said.
HMM started discussions to join the world's largest alliance 2M in June after the company reached agreements with containership owners on 20 percent charter rate cuts and with owners of bulk carriers for 25 percent charter rate reductions, which are expected to take effect over the next three and a half years.