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2018-08-24 14:35:16

A.P. Moller Maersk has always been an industry front runner when speaking about the exploration and adoption of innovative technologies and trends.

Therefore, it is safe to say that the Danish shipping major has dared to go places where others haven't, which is definitely the case with its latest test run through the Northern Sea Route.

Even though the trip is of exploratory nature, if a company like Maersk is exploring the commercial viability of the route, this could indicate a pick up in the route’s attractiveness for container shipping, as Arctic waters have so far been used mostly by tankers and, most recently, by passenger ships.

Taking into account that container shipping is currently looking into the ways of boosting profitability and cutting costs especially for fuel, the lane would be very attractive as it shortens the duration of the trip from Northeast Europe to Asia, by around 24 percent, when compared to the Suez Canal.

Hence, container shipping companies would be able to save time and money, assuming they had already invested in ice-class ships.

Nevertheless, there are numerous constraints to consider, including the shipping lane's availability and capacity.

The melting of the ice in the Arctic Sea makes the Northern Sea Route, which connects the Atlantic Ocean to the Pacific Ocean, partly free of ice during the summer months. Even though the frozen ice sheet is absent, there will still be broken off ice sheets in various sizes in the Arctic Sea during the ice-free periods. Therefore, ships using the Northern Sea Route require ice breaker support, which might prove to be costly.

Maersk's ship will also be escorted by an ice-breaker through the route.

However, various projections indicate that the ice-free periods are likely to increase in the upcoming years making the area longer available for commercial shipping. In the long-term, it could be something worth looking into for container shipping companies.

Capacity-wise, the route can be no alternative to the Suez Canal, as it can accommodate ships of up to 4,500 TEU, while the Suez Canal can accommodate much larger vessels, including ultra large container vessels.

As such, the industry agrees that for the time being the lane is more of a seasonal complement rather than a replacement to the Suez Canal.

Commercial drivers aside, the environmental aspect of the route is very important to consider, due to the lack of available infrastructure in the area because of its remoteness to deal with a potential oil spill and shipping incidents.

To that end, in April 2018, the International Maritime Organization's Marine Environment Protection Committee agreed to move forward on consideration of a Arctic ban on heavy fuel oil.

The meeting directed a sub-committee (PPR6) – which will meet in early 2019 – to develop a ban on heavy fuel oil use and carriage for use by ships in the Arctic, “on the basis of an assessment of the impacts" and "on an appropriate timescale”.

In view of the above, Maersk said it would use ultra-low sulphur fuel throughout the voyage.

"With this week's news that the Arctic's strongest sea ice has broken up twice this year, for the first time on record, using heavy fuel oil to power shipping in the Arctic not only increases the risk of oil spills, but also generates emissions of black carbon, which exacerbate the melting of both sea and glacier ice in the Arctic region. By taking the lead in the Arctic, Maersk could lead a vanguard of companies shipping commercial goods that move towards clean and renewable forms of propulsion for shipping worldwide," Clean Arctic Alliance Lead Advisor Sian Prior said.

Maersk's ice-class ship Venta Maersk departed Vladivostok earlier today heading for the Northern Sea Route. Maersk said earlier that the ship's trip would last for over a month. The ship is expected to pass the Bering Strait on or around September 1, 2018 and its planned arrival in Saint Petersburg is set for the end September.

2018-08-22 17:36:03

Market woes stemming from weak freight rates have pushed oil tanker shipping company Frontline into a loss of US$22.9 million in the second quarter of 2018. Frontline said that the average spot time charter rates for the three months ended June 30, 2018 were US$17,000 for ECO VLCCs and US$13,200 for VLCCs younger than 15 years. Nevertheless, Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS, believes better days are ahead for tanker rates.

"The factors supporting our expectation include continued scrapping ahead of 2020 offsetting new deliveries and increased demand for seaborne trade as a result of expected growth in both US exports and OPEC production of crude oil.  Additionally, crude oil demand remains strong, and the end of the inventory draw cycle seems increasingly inevitable,” he said.

The global crude oil tanker fleet was expected to grow by 8.3 pct in 2018, with 57 VLCCs scheduled for delivery. However, only 24 have been delivered so far, and it is likely that some deliveries will be delayed into 2019, Frontline said in its market outlook comment.

On the other hand, 25 VLCCs have been scrapped so far and an additional 14 VLCCs have been sold for near-term scrapping. The company believes that weak freight market and high scrapping prices will continue to entice owners to continue scrapping older vessels.

Taking into account that 20 percent of the existing VLCC fleet is over 15 years of age, which are likely candidates for scrapping, the fact that the current VLCC orderbook equals approximately 15.8 pct of the global VLCC fleet, is not worrying, the shipping company estimates.

"If the pace of scrapping continues, we estimate that the global VLCC fleet will see negative growth in 2018. (…) As we have stated previously, older vessels are less desirable to charterers and earn a discount compared to newer, more fuel-efficient vessels,” Frontline said.

In preparation for the new regulation coming into force in 2020, Frontline announced in June that it had inked a deal to acquire a 20 pct ownership interest in FMSI, a scrubber manufacturer. The move secures Frontline the capacity to source a large volume of scrubbers.

"We will continue to look for the right investment opportunities to further position the company for the expected recovery,”Macleod added.


2018-08-21 16:20:11

Dubai has been selected as one of the world's top five shipping centers in the International Shipping Centre Development Index (ISCD).

With a number of initiatives focused on the maritime sector, innovative free zones, infrastructure and high maritime and logistics capabilities, Dubai aims to become a major global maritime destination.

“We are working hard to create a vibrant maritime center to attract industry leaders and to promote Dubai's status as a global shipping center supported by a series of leading quality initiatives,” Sultan Ahmed bin Sulayem, Chairman of the Ports, Customs and Free Zone Corporation (PCFC) and Chairman of Dubai Maritime City Authority (DMCA), commented.

According to a recent report by the London-based Baltic Exchange and the Xinhua News Agency, Dubai has overtaken Hamburg, which fell from fourth to seventh place.

Reflecting on the new achievement, Bin Sulayem added, "This is in part the result of our fruitful partnership with the public and private sectors forged to enhance the confidence of regional and international investors in the competitiveness of the local maritime sector and promote its components based on the pillars of research and development, innovation, and smart transformation. The components include shipping and ports, engineering and training, maritime support services and ports, and the operation and maintenance of giant maritime vessels.”

Bin Sulayem also noted that the emirate was the first and the only Arabic city to become one of the world's five most competitive and attractive maritime clusters. Last year, Dubai ranked the fifth on the list of the world's top ten maritime capitals.

As explained, the emirate is on track to make more such achievements under the strategy envisioning a safe, integrated, and sustainable maritime sector. This is in support of the UAE's economic diversification policy in preparation for a post-oil future.

“We are working hard to create a vibrant maritime environment to attract industry leaders and to promote Dubai's status as a global shipping center supported by a series of leading quality initiatives, including the Dubai Maritime Virtual Cluster (DMVC), Dubai Maritime Cluster Office (DMCO), and Maritime Dubai. These initiatives would help pave the way for establishing Dubai and the UAE as an influential player within the global maritime economy,” Bin Sulayem concluded.

The International Shipping Centre Development Index used a methodology assessing the sector's competitiveness, ability to attract maritime businesses, development of efforts in relation to creativity and innovation, and key role in advancing growth of the global shipping sector.

2018-08-20 16:24:16

Dubai-based shipping company Gulf Navigation Holding (GulfNav) is upgrading its fleet with new technologies that will help cut the vessels' fuel consumption and prepare them for new environmental regulations.

The company revealed that two of its petrochemical tankers have entered the dry dock for the mandatory five-year maintenance that includes major upgrades to the two carriers and is in line with the group's short- and long-term plans to reduce the environmental footprint of its fleet and trans-sea operations.

As explained, the upgrades will also help the vessels meet the new environmental standards for gas emissions and ballast water treatment, enabling them to operate in markets such as the European Union and North America.

In addition, GulfNav has announced its financial results for the first half of this year which show that the group suffered a loss of AED 14,761 million (USD 4,018 million), compared to a profit of AED 19,029 million seen in the corresponding period a year earlier. What is more, losses for the second quarter of 2018 stood at AED 19,702 million, against profits of AED 10,199 million posted in Q2 2017.

Commenting on the results, Khamis Juma Buamim, Board Member, Managing Director and Group CEO of Gulf Navigation Holding said, "Although our financial records show losses in this quarter, it is a necessary step for achieving future gains (…) One of the most important achievements was to end the legal dispute with one of the Chinese companies that dates back to 2014. We managed to reach a settlement to reduce the claim to $8 million.”

“Another important investment expense, for which we have allocated a substantial amount of the company's revenues in this quarter, is the quality upgrade of our ships (…) We have installed gas exhaust pumps to reduce sulphur emissions and added advanced equipment to treat ballast water to prevent biological pollution,” Buamim added.

“We have also installed new advanced engine fans that reduce fuel consumption by 5%. Taking this step now helps us avoid having to use higher-priced, less-available low-sulphur fuels and thus risking higher operating costs and the possibility of our vessels to stop and not generate revenues while waiting for fuel,” he continued.

Buamim explained that choosing this particular time for the upgrade has two advantages for the company. The first advantage is increasing the return on investment allocated to owning the vessels by increasing their operating lifespan through the comprehensive maintenance, while the second is to get long-term contracts from producers of petrochemical derivatives which will look for environmentally-friendly ships that will not be banned from entering the markets that are bound by the new standards.

As stressed by the group, reducing the fuel consumption of Gulf Navigation's vessels adds a competitive advantage that allows it to achieve higher profits and offer better prices than its competitors. Moreover, Gulf Navigation said it will be ready to commit to reducing greenhouse gas emissions and contribute to achieving the UAE's goals in this regard for 2020, 2025 and 2030.

2018-08-20 15:45:19

LPG carriers are specially used to carry liquefied petroleum gas which can be obtained by means of low temperature or high pressure. They are characterized by high construction techniques and high prices. At present, there are only 82 LPG carriers in China.

Data

According to data collected by Eshiptrading.com, 64 LPG carriers in China operate on domestic routes, composed of 40-plus units sailing along the coast and 20-plus units in inland rivers. Their operating time averages 12 years with six in operation for over 20 years, so it is time for these oldies to be gradually phased out.

Stricter Regulations Raise Shipowners' Costs

In recent years, various regulatory policies have been coming one after another amid our growing awareness of the shipping safety of dangerous chemicals, shipping pollution, and crew's rights and interests. As far as Eshiptrading.com knows, LPG carriers in China are mainly owned and operated by private companies. The increasingly severe market is posing increasingly big challenges to them.

The stricter seventh version of the Vessel Inspection Questionnaire (VIQ7) will take effect on Sept. 17, 2018. VIQ is part of Ship Inspection Report Programme introduced by the Oil Companies International Marine Forum (OCIMF).

Most oil terminals are under the control of oil giants, so LPG carriers are subject to the questionnaire. If a shipowner fails the questionnaire, its image will be tarnished, and it will lose the trust from its clients.

In addition, the Maritime Labour Convention, 2006, launched by the International Labour Organization (ILO), started to take effect in China on Nov. 12, 2016. Under the convention, crew working aboard China-flagged vessels enjoy the same rights and interests as those in other countries. Therefore, China's shipping companies need to spend more on this aspect.

Capacity Limiting Policy

Last July, China's Ministry of Transport introduced the assessment method of shipping companies' application for adding new carrying capacities to their LPG carriers, and it announced the list of the successful applicants in the same year.

Yin Hai, secretary-general of Liquefied Gas Transportation Committee under China Shipowners' Association, pointed out in 2010 that the country's LPG shipping sector was struggling with severe overcapacity. Not long afterwards, the ministry released two announcements on the enhancement of capacity control in the LPG shipping market. The above-mentioned assessment method is the result of these two announcements.

Therefore, it is very clear that in order to meet the current market demand, China's LPG carrier operators need to rejuvenate and upgrade their fleets soon.

2018-08-14 13:40:32

Greece-based product tanker company Pyxis Tankers recorded a net loss of US$1.3 million in Q2 2018, a surge from a net loss of US$0.8 million booked in the same period a year earlier due to lower MR charter rates.

"Weaker demand for MRs was caused by temporary market disruptions in the Atlantic basin, led by lower activity in the Gulf of Mexico, continued drawdown of inventories of refined petroleum products in storage and intrusion of larger ships, mainly newbuild crude carriers, which transported clean products on their maiden voyages. Three out of four of our MR tankers are currently in the spot market, which we hope will improve by this fall," the company's CEO Valentios Valentis said.

"As for our small tankers, we experienced a nice improvement in trading activity compared to the first quarter of 2018. We have continued to focus on our costs during this challenging period. The success of our efforts was clearly demonstrated during the second quarter as our total operational costs (…) improved," Valentis continued.  

The company's CEO further said that chartering activity is expected to be challenging, however, with a modest upward trend when moving into the fourth quarter. In addition, a long-term improvement in charter rates is anticipated due to attractive market fundamentals.

Valentis is optimistic about the fundamentals of the product tanker market, specifically for MRs, and believe that the Greek company has the platform and position to take advantage of them.

At present, Pyxis Tankers owns a fleet of four MRs and two small tankers.

2018-08-14 13:33:37

Greek shipowners, that dominate Iranian exports, are most likely to be affected by the upcoming US sanctions on Iranian ports, shipping and energy sectors.

A significant increase in trade volumes with a seasonal pattern in ton-mile exports were witnessed following the lifting of US sanctions in January 2016, as total volumes kept rising in the autumn months in preparation for higher winter demand.

However, given the volatile nature of the Iran-US relations after President Donald Trump announced intention to amend and then abolish the Iranian nuclear deal, it can be observed that there is a significant drop in total ton mile exports towards the end of 2017, below that of the same period in the previous year, VesselsValue explained.

Within 2018, the seasonality pattern is not repeated and Iranian total ton-miles exports reach a peak by May 2018 in line with President Trump announcing his decision to cease the participation of the USA in the Iran deal and to begin re-imposing sanctions following a wind-down period.

"This may indicate the market is anticipating significant deterioration ahead, which falls in line with the ending of the 90 days grace period that expired on August 6, 2018 and the upcoming November deadline by which time US sanctions would apply to Iranian ports, shipping and energy sectors, as well as the provision of financial services, including insurance," according to VesselsValue.

The largest export volumes from Iran have consistently been going to China, yet a significant drop off was observed in December 2017, despite this Chinese imports rebounded thereafter and have been largely stable which falls in line with China's declaration that it will ignore US sanctions and continue doing business with Iran.

Greek owners still dominate exports, with 81 Greek tankers moving Iranian exports since January 1, 2018. The Iranian owner NITC, that supplies the most tonnage for Iranian exports for now, is likely to see a drop after the last grace period ends in early November this year.

"The draw of higher freight premiums for Iranian business appears to be quite attractive thus far, particularly in relation to more conventional voyages out of the Middle East. However, it remains to be seen how much risk appetite remains as the sanction regime picks up speed midway through the fourth quarter of this year," VesselsValue concluded.

2018-08-14 13:27:18

Taiwanese shipping company Yang Ming Marine Transport Corporation (Yang Ming) recorded an expanded net loss in the second quarter of 2018 due to climbing fuel prices and excess capacity so far this year. The company pointed out that high fuel prices pushed up its operating costs in the first six months of this year, noting that the average fuel price for the period grew approximately 25 percent year-on-year.

The company's net loss in the second quarter stood at NT$3.81 billion (US$123.5 million), a huge jump from a net loss of NT$445 million (US$14.4 million) in the same period of last year.

For the first half of 2018, Yang Ming's net loss rose to NT$5.76 billion from a net loss of NT$1.34 billion registered a year earlier.

However, Yang Ming expects a better market in the second half of this year, citing the peak season demand and fewer deliveries as the two major reasons.

2018-08-10 15:55:19

The tanker market has been in the doldrums for some time now, and times have been extremely tough for the crude carriers.

However, industry major DHT Holdings expects the times to take a turn for the better due to four key reasons.

Firstly, global demand looks healthy and steady with 1.3 million barrels per day expected for the remainder of the year and 1.2 million barrels per day for 2019.

Secondly, the inventory drawdown gain in the second half and likely in the last quarter.

Thirdly, the fleet growth has been negative so far this year.

Fourthly, the orderbook stands at 14 percent of the total fleet, and this should be compared with 24 percent of the fleet in excess of 15 years of age.

Speaking on the geopolitical situation and tensions between China and the United States and their potential impact on the freight markets, Harfjeld said that some 375,000 barrels per day of U.S. shale might be lost from this trade.

"Whereas this sounds as a negative, we see signs of the North Sea and South America stepping into fill the void, and these trades are also VLCC trades," he added.

As these trades are of similar length as the U.S. export trades, the impact on VLCCs is predicted to be neutral.

The U.S. has made a stronger grasp of other markets such as South Korea, with refiners increasing import of U.S. shale that has resulted in 4 to 5 VLCC cargoes per month.  India is also increasing U.S. shale purchases, reported to be about 10 million barrels for August.

What is more, the U.S. shale could also divert sales to Europe to partly replace loss of Iranian barrels and likely in smaller ships.

"And China is expanding its refining capacity this year and a total of 1.2 million barrels per day of new capacity is due to come on stream later this year. Combined with the domestic production in decline, we expect imports to bounce back once the maintenance season ends later this quarter,” he pointed out.

"And lastly, there has been further consolidation in the freight markets. And we welcome stronger and well behaved players."

DHT Holdings reported a net loss for the second quarter of 2018 worth US$28.2 million and a net loss of US$37.4 million for the first half of the year.

2018-08-10 15:50:04

Ocean carriers' schedule reliability jumped 6.6% month-on-month to 69.3% this June, showed a report from intelligence provider CargoSmart.

Among all the 13 trades, the Europe-Africa trade experienced the largest dip in reliability, decreasing 15.6% from 60% in May to 44.4% in June while the Europe-Oceania trade witnessed the biggest boost, climbing 24.2% from 47.4% in May to 71.6% in June.

In terms of carriers, 21 raised their schedule reliability in June on a monthly basis with MCC, OOCL, Safmarine, CMA CGM, and ANL being the five most reliable carriers.

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