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2018-08-09 17:46:38

South Korean shipyards have been grabbing orders by virtue of low prices since last year. In this context, Chinese peers have been losing their long-time price advantage, dragged by the weight of their empty vessels.

Generally speaking, the difference in lightweight between the two countries ranges from 5 percent to 10 percent. If the total lightweight reduces by 5 percent, Chinese shipyards can cut back on the costs of materials and processing by as high as CNY5 billion annually, according to an analysis. It is worth noting that they recorded less than CNY5 billion in operating profit last year.

Why Chinese shipyards cannot reduce the lightship weight? To answer this question, we need to see the practices of their South Korean counterparts first. The latters constantly optimize a ship's structure, which has become a routine of their designers. For example, Daewoo Shipbuilding & Marine Engineering, one of Korea's top three yards, set a goal in 2004 of a 10 percent reduction in VLCC's structural weight and a 20 percent decrease in the number of structural parts. What's more, at the end of 2016, the shipbuilding giant made a further improvement, and a VLCC's lightweight dropped by a further 2 percent.

The two major reasons of the failure of Chinese shipyards to realize a better lightweight are as follows. Firstly, the design capability is basically in the hands of design institutes which lacks the full knowledge of shipbuilders' production characteristics. Secondly, shipyards have not enough experience in structural optimization. Therefore, it is advisable for them to collaborate with their overseas peers to improve the capabilities amid climbing prices of raw materials.

2018-08-09 13:20:58

In the first half of this year, shipbuilders based in Jingjiang, county-level city in Jiangsu Province of China led the nation's industry with the record-high construction indicators. Their completion volume grew by 44.4 percent on an annual basis, new orders by a significant 384.9 percent year-on-year, and orderbook by 67 percent from a year earlier, according to authoritative data.

The shipbuilding industry is Jingjiang's pillar sector with China's three shipbuilding leaders there. New Times Shipbuilding, Yangzijiang Shipbuilding, and Jiangmen Nanyang Ship Engineering completed the construction of 49 vessels in the first six months whose capacity totals 5.329 million deadweight tons, close to the volume throughout last year. In terms of new orders, they received an aggregate of 61 ships whose capacity hits 8.894 million, which occupies 39.2 percent of the nationwide volume. Besides, the total orderbook stood at 174 units with a combined 19.535 million deadweight tons, an increase of 67 percent from a year ago.

According to statistical data released by Clarksons, the first two private yards ranked among the top 20 builders worldwide in terms of new orders and orderbook in the first semester.

At present, Jingjiang's shipbuilders are marching into high value-added sectors, such as chemical tankers and LNG carriers, amid financing difficulties and low profitability in the industry.

2018-08-08 15:21:05

A.P. Møller – Mærsk A/S has lowered its profit forecast for 2018 due to increasing uncertainties on the market, such as geopolitical risks, climbing bunker prices, and trade tensions, which are likely to weigh on freight rates.

Specifically, Maersk forecasts its EBITDA to range from US$3.5 billion to US$4.2 billion. The previous expectation was from US$4 billion to US$5 billion.  

The Danish transport and logistics giant said that the conglomerate's revenue came at US$9.5 billion in the second quarter of 2018 and EBITDA at US$0.9 billion. For the first semester of the year, the revenue stood at US$18.8 billion and EBITDA at US$1.6 billion.

Maersk pointed out that its profitability was hit by an average bunker price rise of 28 percent year-on-year.

2018-08-01 13:47:08

Japanese shipping giants K Line, NYK Line and MOL registered losses for the first quarter of 2018 fiscal year covering the period from April 1 to June 30.

K Line's net loss stood at JP¥19.2 billion for the period compared with a profit of JP¥8.5 billion in the same quarter of 2017. Besides, the company's operating revenues for the period came at JP¥212.1 billion, down compared with JP¥287.4 billion for the same period of a year earlier.

NYK Line recorded a net loss of JP¥4.59 billion for the period from a profit of JP¥5.39 billion in the same period of 2017. In addition, the company's consolidated revenues totaled JP¥464.8 billion, a huge drop from JP¥521.7 billion for the same period of the previous fiscal year.

Additionally, MOL booked a net loss of JP¥1.6 billion against a net income of JP¥5.2 billion a year ago. Its revenue of JP¥304.4 billion was also lower when compared to the JP¥403 billion revenue from last year.

All the three companies ascribed their losses to the launching of Ocean Network Express (ONE) in April and the rise in oil prices. As disclosed, the costs related to ONE's launching were higher than expected.

2018-07-31 16:50:59

After last week's cyber attack, COSCO Shipping Lines announced that its network applications in the Americas have been totally recovered.

“All communication channels including telephone, email, and electronic data exchange have been restored. There has been a further increase in our service response. We are working at full stretch to process all the service requests received previously, and the service response is expected to be back on track within this week.

“Global networks of COSCO Shipping Lines are safe and stable, and our global business operations are steady and orderly,” the company said in an update.

At the beginning, it was reported that the customer service platform at COSCO's terminal at the Port of Long Beach was targeted by hackers. Nevertheless, the company later said that the network breakdown affected offices across the American continent.

The network failures affected areas included the United States, Canada, Panama, Argentina, Brazil, Peru, Chile and Uruguay. However, the company's ships were not affected and continued operating as normal.

Commenting on the cyber attack, Naval Dome CEO Itai Sela said that the incident was very worrying.

“While COSCO shut down its connections as a precautionary measure, we have to emphasize that ships are not islands, they are not self-contained units. This is a mistaken belief. Shore- and ship-operations are cyber-connected,” he said.

“If shore-based and ship-based IT systems are linked, it could open a gateway to the COSCO ships, leaving them highly susceptible to an attack. Vessels do not need to be attacked directly but an attack can arrive via the company's shore-based IT systems and very easily penetrate the ships' critical OT systems.

Although COSCO has been quick to respond to this hack, the virus may have been dormant for some time, so I would not be surprised if other systems – shore- and ship-based systems – have been breached.

2018-07-31 16:47:01

The container shipping companies are facing great challenges. Specifically, their profit will be cut amid stricter environmental regulations and soaring oil prices.

The performance of shipping companies in the next 18 months will depend on their asset quality, size and diversification, said German rating agency Scope Ratings, explaining that they are likely to become profitable in 2018 only with the biggest and most efficient fleets.

One of the major issues faced by liner majors is the high oil price which has seen carriers introduce emergency bunker surcharges as a means of recovering costs.

Scope expects a surge of around 25% in bunker prices this year compared with last year, squeezing thin profit margins despite robust global economic growth and active trade, notably in Asia.

Scope analyst Denis Kuhn pointed out that the market's excessive capacity is pushing down freight rates, but the analyst expects the shipbreaking activities to speed up in the second semester of 2018 and 2019 because of the new environmental regulations.

The trade disputes between the US and its major trading partners are another factor weighing on the container shipping market. However, Scope said that the world's overall trade volumes might see slight impacts, noting that those with large and diverse fleets which can adapt themselves to new trading patterns will have more opportunities for making profits.

2018-07-30 17:24:16

Italian shipyard Fincantieri saw its orderbook reach 109 units this July thanks to orders for cruise ships and naval vessels.

According to the shipbuilder's CEO Giuseppe Bono, the orderbook amount has exceeded EU€32 billion (US$37.2 billion) , which displays its capability of building and delivering high value-added vessels on time.

In the first half of this year, the builder's profit came at EU€15 million, an increase of EU€4 million year-on-year. In addition, its revenue during the same period standed at EU€2.52 billion, jumping by 10 percent compared with EU€2.29 billion recorded at June 30, 2017.

What's more, Giuseppe Bono expects the builder's revenues, profits, and margins to further climb in the second semester of this year.

During the first six months of the year, FIncantieri delivered six newbuilds consisting of four cruise ships, namely Carnival Horizon, Seabourn Ovation, MSC Seaview, and Viking Orion, and two naval vessels.

2018-07-27 15:34:11

Japan-based shipping company NYK Line has downgraded its forecast for the interim and full year consolidated financial results.

Based on the previous forecast for the interim results covering April-September 2018 period, NYK Line said that its anticipated revenue was JPY 905 billion and a profit of JPY 8 billion (around USD 72 million). However, these figures have been cut to JPY 890 billion worth revenues and a profit of JPY 3 billion, down by 62.5 percent.

For the full year ending March 31, 2019, the revenue has been downgraded from JPY 1.805 trillion to JPY 1.260 trillion, while the full year profit forecast was cut from JPY 29 billion to JPY 12 billion, down by 58.6 percent.

NYK Line ascribed the revision to, among other things, higher than expected one-off costs related to the launch of the Ocean Network Express with K line and MOL. The JV signaled the termination of NYK Line's liner business.

2018-07-26 14:53:22

COSCO Shipping Lines confirmed it has been hit by a cyber attack on July 24 impacting its internet connection within its offices in America.

According to the information unveiled, the Chinese shipping giant was attacked by a ransomware.

The company said that its vessels were not impacted and that its main business operation systems were performing stably. However, COSCO's terminal at the Port of Long Beach was affected.

The company said it has taken effective measures and it will try its best to make a full and quick recovery. Besides, it added it will keep all the people updated of the latest progress via various channels.

The latest attack shows that we have to further improve the cyber security in the maritime industry which is becoming increasingly dependent on digital technology.

2018-07-26 14:48:04

The South Korean government has approved a major investment in the recently launched state entity, Korean Ocean Business Corporation. In detail, the country's finance ministry has recently said that KRW1.35 trillion (US$1.2 billion) in-kind investment would be made into the new company through stock contribution.

The ministry's statement shows that 12.7 percent stakes in South Korea's four port authorities would be contributed to the Korea Ocean Business Corporation.

The state entity, established earlier in July, was aimed at supporting the local shipping industry. Specifically, the entity would focus on supporting the country's five-year plan for the revitalization of its struggling shipping industry with the construction of about 200 ships in the next three years.

The entity was officially launched in Busan with an initial capital worth KRW3.1 trillion. In addition, the country's government plans to invest KRW200 billion into the agency.

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