Showing posts with label Seatrade Maritime News. Show all posts
Showing posts with label Seatrade Maritime News. Show all posts

Friday 23 August 2024

Red Sea Crisis Top Concern

In the most recent poll on Seatrade Maritime News, majority of readers said that attacks on commercial ships in the Red Sea was their top concern, likely to impact their business the most in the second half of 2024.

The attacks that started in late 2023 have seen a large number of vessels re-routing via the Cape of Good Hope, adding significantly to the length of voyages between Asia and Europe, the Mediterranean Sea and the Middle East.

Readers were given five options: Port congestion, Houthi attacks on ships in the Red Sea, cybersecurity, compliance with regulations, and availability of qualified seafarers.

A majority of readers, 52%, said that Houthi attacks on commercial ships in the Red Sea was their top concern.

Interestingly, diversions have in many cases proved beneficial to shipping markets but have also added to fuel costs and emissions.

For vessels that continue to transit the Red Sea the threat of attack from the Houthi continues with ships often subject to multiple attacks from both air and sea.

The second top concern among readers, some 27% was port congestion, an issue which in some cases can also be linked to the disruption caused by the Red Sea crisis.

Of the three other issues 10% put compliance with new regulations as their top concern, 6% the availability of qualified seafarers, and 5% cybersecurity.

 

Tuesday 28 May 2024

Tanker owners await OPEC Plus announcement

OPEC Plus is scheduled to hold its next meeting on Sunday and its decisions on production strategy will have far reaching implications for the tanker owners.

According to Seatrade Maritime News, sector analysts say the picture in far from clear. In its weekly report, Gibson suggests that there could be three possible outcomes.

1- OPEC Plus members could decide to continue with the production cuts in place today.

2- They could implement further cuts, allowing oil producers outside the cartel to boost their market share.

3- They could decide to ease voluntary production cuts to meet the wishes of members hoping to boost oil revenue streams. 

OPEC Plus member states account for more than 40% of global crude tanker trade where rising oil demand in China is likely to underpin crude oil growth of 2.2 million barrels per day this year, according to the projections.

Crude demand is also climbing in other non-OECD countries, notably India, and other countries in Asia, Middle East, and Latin America, Gibson said.

However, the broker notes that few analysts are as bullish about oil demand prospects.

The International Energy Agency (IEA), for example, reckons that likely growth could reach 1.1 million barrels per day, just half the OPEC Plus estimate. The IEA reckons that demand will grow more slowly now that the post-Covid surge has come to an end.

Meanwhile, declining oil demand in Europe is likely to reduce OECD demand which, the IEA suggests, could fall by 140,000 bpd this year. This is the result of the industrial downturn and a mild winter.

Gasoil demand in all three OECD regions over the first quarter fell by 330,000 bpd year-on-year.

Gibson points to lower oil prices, with Brent crude now trading at around US$81-83 a barrel, down from an average of US $89 in April.

These lower prices may suggest a current oversupply, a factor supported by weaker demand growth. These prevailing market fundamentals may deter OPEC Plus from loosening their production cuts too soon, Gibson said.  

Wednesday 7 February 2024

Ships continue to transit Red Sea

With the passage of time it is becoming evident that Houthis are targeting vessels with Israeli links or cargoes only. That is the reason ship owners are still sending vessels through the region.

The western media is portraying that Houthis attack any ship passing through the Southern Red Sea. Therefore, the ship operators are rerouting vessels via the Cape of Good Hope.

According to the most recent poll conducted by Seatrade Maritime News when the respondents were asked, are some ship owners and charterers right in risking continuing to transit the Red Sea given the threat of attack?

The response to the question was very evenly split with 53% voting ‘yes’ they were right to continue transiting the Red Sea, while 47% said ‘no’ they should not transit the Red Sea.

The results in many ways mirror the industry’s reaction which has varied significantly by sector. Around two-thirds of all container ships have diverted via the Cape of Good Hope, with CMA CGM joining other top lines in this decision over the weekend. Similarly, LNG carrier transits of the Suez Canal 73% in January 2024 compared to November 2023, according to figures published by Kpler.

However, when compared tanker and dry bulk ship transits of the Suez Canal between January 2024 and November 2023 these reduced by just 23% and 27% respectively over the same period.

There would appear no resolution to the attacks on commercial shipping in the near term as the conflict in Gaza continues and Houthi rebels vowing to continue to strike at vessels with either Israeli links or cargoes.

This leaves it down to individual ship owners, operators, and charterers to weigh the risk to vessels, crew and cargoes of continuing to transit the Red Sea

 

Friday 25 August 2023

Pests carried in containers and bulk cargoes can cause billions of dollars in crop damage

According to the Seatrade Maritime News shipping lines, shippers, and governments are working together to combat the global issue of pests carried in containers and bulk cargoes that can cause billions of dollars in crop damage.

The spread of invasive species via the containerized supply chains is becoming increasingly recognized as a major concern by governments and as Seatrade Maritime News reports Australia and NZ, which have strong bio-security concerns, already have seasonal measures in place to combat the importation of the brown marmorated stink bug.

Given the global concerns there are ongoing discussions between shipping lines, shippers and government representatives and other supply chain stakeholders to introduce measures that will mitigate the chances of costly infestations.

Any new measures are likely to have some slowing effect on the movement of freight through supply chains and will add to costs.

A specialist conference held in London last year, with a follow-up meeting in Brisbane in July this year, saw the Sea Containers Task Force, organized by the International Plant Protection Convention (IPPC) an arm of the UN’s Food and Agriculture Organization, look at possible measures to prevent the spread of invasive species on transport containers.

Ahead of last year’s London conference IPPC secretary Dr. Osama El-Lissy said, “Invasive pests remain the main drivers of biodiversity loss. As the world becomes more globalised and interconnected, the increase in the movement of people and goods has been associated with the rise of the introduction and spread of plant pests across borders.”

According to El-Lissy every year as much as 40% of global crops, valued at around US$220 billion, are lost due to invasive pests.

This year the Task Force saw the Global Shipper’s Forum (GSF) chair Paul Zalai and Lars Kjaer of the World Shipping Council (WSC) tender proposals that will help container supply chain stakeholders to tackle the problem of invasive pests.

One of the longer-term proposals, is to transition from wooden floored containers to steel and composite floors.

GSF director James Hookham points out, “Wooden floored containers can harbour pests such as khapra beetles, whose larvae can lie dormant in wood for long periods of time.”

Such a move to steel and composite flooring in containers will take time so in the interim to stem the flow of invasive species the Brisbane Sea Container discussions centered around, custodial responsibility and other measures that can be used to cut the levels of hitchhiking bugs.

Anna Larsson, a spokeswoman for WSC, told Seatrade Maritime News, “The design of the containers, such as materials used, especially for flooring, and design details are an important aspect in preventing pest transfer.”

Indications show that newer container floor options like steel or floors with no cracks and crevices are less susceptible to enabling the spread of pests. More testing work needs to be done on this issue said Larsson.

Cleaning containers

Another issue raised in Brisbane has been custodial responsibility, which requires each stakeholder in the supply chain to inspect and clean the container before passing the box on to the next stakeholder.

Larsson said, “WSC has long been advocating the importance of all parties in the supply chain taking custodial responsibility for their part of the chain. Together with targeted inspection and treatment schemes for containers and cargoes this is an effective and efficient way of reducing the risk of hitchhiker pests.”

Additionally, there was advice that loading should take place with regard to minimizing the attraction of bugs to the container, so not under lights in the dark, and on hard standings rather than mud or grass.

Moreover, Zalai, proposed that shipping lines publish data on each container online, which can be accessed via a search using the boxes’ serial number.

That will allow shippers to look at the container’s history when the shipping line offers it as an empty box to ship cargo to its client. Data such as the recent history of where the box has travelled, what cargo was carried and when it was last cleaned and how, would assist shippers in deciding whether the container posed a higher or lower risk of contamination of their freight.

Shipping lines are on board with this view, said Larsson. “During the recent IPPC workshop, Australia again raised the idea of data on historic container movements, to assist in the risk assessment for targeting of inspections. WSC is very willing to work with regulators and others in developing such a considered system for historic container movements that is accepted globally. We are now awaiting feedback from regulators on key critical elements such as how long the period to be covered should be and what data elements they would like to include. “

The WSC concluded, “We are happy to be working together with GSF on the important topic of pest prevention. Shippers and carriers coming together around the importance of each party in the supply chain taking custodial responsibility for their containers and cargoes being pest free is great progress in reducing the risk of pest transfers.”

 

Wednesday 16 August 2023

First commercial ship leaves Ukraine port since February 2022

According to Seatrade Maritime News, Joseph Schulte is the first commercial ship to leave Odessa port of Ukraine’s Black Sea ports on Wednesday, since the beginning of the war in February 2022.

The 9,400 teu Joseph Schulte, owned by German company Bernard Schulte and had been operated by MSC, which has been docked in the war-torn port of Odessa since the conflict in Ukraine began left for Turkey, ostensibly under ballast.

In July the Russians refused to renew the agreement that allowed bulk vessels to operate the grain corridor, exporting foodstuff to maintain populations in the Middle East and Africa.

In bringing that agreement to an end Russia effectively renewed its blockade of Ukraine’s Black Sea ports for commercial as well as military shipping. The departure of the Hong Kong flagged Joseph Schulte from Odessa will test Russia’s resolve to maintain that blockade.

On 13 August a Russian Navy vessel, fired warning shots across the bow of the Palau-flagged Sukru Okan, with troops boarding and searching the bulk carrier.

Nevertheless, Daniil Melnychenko, an analyst at transport consultancy Informall, based in Odessa, told Seatrade Maritime News, “The expectations are that Türkiye flagged ships that were stuck here in Ukraine since the beginning of the war will also leave the big Odessa regional ports.”

According to Melnychenko many of the bulk carriers that have been docked in southern Ukraine are Turkish flagged vessels, so the departure of the container ship has heightened expectations that others will follow.

VesselsValue reports suggest that the Joseph Schulte vessel, which MSC has confirmed is no longer in its fleet, will first call at the Luk Sintez Oil Terminal to load bunkers. It will then sail to the Turkish port of Ambarli on the north shore of the Marmara Sea, on the European side of Istanbul, to offload the few containers on board and for inspection.

Melnychenko added that the vessel will likely be crewed by a mixture of Turkish and older Ukrainian men, over 60-years-old.

Thursday 29 June 2023

UECC, GoodFuels and NYK complete biofuel bunkering

According to Seatrade Maritime News, UECC has successfully completed the first biofuel bunkering of one of its chartered vessels in partnership with NYK and GoodFuels.

Emerald Leader received 470 tons of the B30 blend of biofuel and VLSFO at the port of Vlissingen, Netherlands, on 27 May, 2023. The fuel was delivered by Dutch biofuel company GoodFuels.

UECC joint-owner NYK offered technical support for the operation and will continue to monitor performance of the fuel with UECC. The vessel connects the Easter Mediterranean and Northern Europe on UECCs North South trade.

"This momentous delivery of next-generation biofuel represents another significant step forward in our sustainability journey," said Daniel Gent, Energy and Sustainability Manager for UECC.

GoodFuels claims its biofuels can reduce CO₂ emissions by up to 90% as compared to fossil fuels, and that it sources sustainable feedstocks that do not compete with food production, do no cause deforestation and are 100% waste or residue.

"We are proud to partner with GoodFuels and NYK to bring this innovative and environmentally friendly solution to our customers.”

Bernard van Haeringen, Commercial Manager at GoodFuels said, "We are thrilled to partner with UECC and NYK to deliver our advanced sustainable biofuel for the first time to m/v Emerald Leader. This collaboration showcases the commitment of all parties involved to combating climate change and accelerating the energy transition in the shipping industry. We are confident that biofuels will play a crucial role in decarburizing the maritime sector."

 

Monday 15 May 2023

Iran seizes third tanker

According to Seatrade Maritime News, Iran has detained a third tanker within 19 days, as the confrontation over the control of maritime assets in the Persian Gulf heats up.

"An Iranian oil tanker, which was seized by a foreign company five years ago, has been returned to the Islamic country in an operation by the Islamic Revolution Guards Corps (IRGC)," reports news agency IRNA.

On Saturday, the Tehran Times cited reports from Iranian news agency Tasnim to say that the 10,000-ton oil tanker Purity had returned to Iranian territorial waters as a result of a court order and a joint operation by the IRGC Navy and Intelligence Ministry, according to Mojtaba Qahremani, head of the justice department in Iran’s southern province of Hormozgan.

“The seized 10,000-ton oil tanker Purity had been illegally leased to a foreigner by falsifying documents since 2018 and its Iranian owners were deprived of the benefits of the oil tanker,” Qahremani was quoted as saying.

In contrast to earlier seizures by Iran, which appeared to have been limited to disputes over the cargoes on board vessels, the Islamic Republic implied the capture of the Purity involved the restitution of Iranian property to its rightful owners.

"The US Department of Defense will be making a series of moves to bolster our defensive posture in the Arabian Gulf," White House spokesperson John Kirby told a news briefing on Friday, according to Reuters.

In the past two years, Iran has harassed, attacked or interfered with the navigational rights of 15 internationally flagged commercial vessels, US officials were quoted as saying.

“Following a judicial order and close cooperation between the IRGC Navy and Intelligence Ministry, the oil tanker was finally identified and confiscated in the Persian Gulf waters earlier this month,” Qahremani added.

The Tehran Times said the ship docked in Iran’s Assaluyeh Port on the Persian Gulf’s westernmost coast to have its fuel consignments unloaded.

Late in October 2022, forces from the IRGC’s first naval zone captured a foreign tanker ship carrying 11 million gallons of illegal fuel in the Persian Gulf, the publication said. “The Islamic Republic has said unequivocally that the Persian Gulf would never be a safe haven for smugglers.”

In 1986, a series of missile and other attacks on Gulf-bound tanker shipping led to a surge in insurance rates for tanker owners, and the creation of a new bunkering hub in Fujairah, as the UAE cashed in on the agglomeration of shipping at anchor outside the Strait of Hormuz in order to avoid the conflict.

 

Wednesday 18 January 2023

Five reasons for tankers owners to be cheerful

According to Seatrade Maritime News, New York broker Poten & Partners has identified five reasons why tanker owners should be cheerful this year.

The firm’s projections come with a health warning. Nobody forecast Covid-19 or Russia’s invasion of Ukraine – developments in 2023 are equally uncertain. The year ahead could be a prosperous one, but it could also be a bumpy ride, Poten warns.

However, if the broker’s views on key tanker market drivers prove to be correct, it’s good news for tanker owners.

The first plus point is China. The country’s zero-Covid policy constrained growth and led to 400,000 barrels per day (bpd) decline oil demand in 2022. The International Energy Agency (IEA) now expects demand to climb by 800,000 bpd this year – to 15.8 million bpd. Almost all of the extra volume will be shipped by sea, Poten believes, mostly on VLCCs, which are likely to command premiums over smaller tankers.

Second - Owners are likely to focus on new buildings as the volume of secondhand deals slows down. After tankers were crowded out by container ships and LNG carriers, strong earnings and a small orderbook is likely to rekindle interest in new ships.

Third - Product tankers are set to benefit most from the outcomes of the European Union’s (EU) February 05, 2023 ban on Russian refined products.

Long-haul movements (exports from Russia and imports into Europe) will drive ton-mile demand, notably for larger LR1s and LR2s to and from Asia.

MRs will get a boost from higher transatlantic volumes. Product carriers are therefore likely to outperform crude tankers.

Fourth - US oil exports could well set new records. The 2022 export figure of 3.5 million barrel per day – itself a record – was supported by major releases from the US Strategic Petroleum Reserve.

More of these are unlikely this year, Poten says, but oil production will rise by about 500,000 b/d, according to the IEA, and higher US exports will benefit all tanker segments.

Fifth and finally - Although Russia’s war diverted attention away from new IMO and EU environmental regulations, a new focus on carbon intensity means that many owners will need to adopt measures to remain compliant provided the new regulations are enforced, Poten believes.

The steady tightening of the IMO’s carbon intensity indicator (CII) framework will mean that today’s rules become stricter over time and all shipping sectors, tankers included, will be affected.  

Thursday 12 January 2023

Su-Nav committed to having cadets on every ship

Su-Nav is a relatively new name to the world of third-party ship management but has a strong commitment to training for the future including having cadets on board all vessels it manages.

Founded in 2019 Su-Nav is headquartered in Chennai, India with another office in Singapore, and new office opening in Dubai. Su-Nav, CEO, Sachit Sahoonja comes a lengthy career both at sea and ashore with the world’s largest ship manager V.Ships before striking out his own with a couple of former colleagues in July 2019.

Taking this step Sahoonja says he believes there was a space for smaller, alternative manager that would stick to the basics.

The company’s name SuNav reflects this back-to-basics approach and means good ship in Sanskrit. “We want a good ship and that's all I think every owner is wanting is just a good ship,” he tells Seatrade Maritime News in a recent interview.

Despite enduring the difficulties of the pandemic and the company’s offices being closed for six months early in its existence Su-Nav has today grown its fleet to 33 ships under management. Something that certainly marks Su-Nav out from the crowd in the third-party management business is that it has a policy of having cadets on all the vessels it manages.

It is a common complaint from managers that they want to have cadets onboard vessels but principals don’t want to pay for having trainees on their ships, so how has Su-Nav been able to achieve this?

Sahoonja explains that all the ships under its management have two cadets onboard equating to around 60 – 70 trainees at one time. To date 75 have completed their training and nine who are now officers on board its ships and over the next two years the manager will have 60 more junior officers.  

“So, you can imagine we have 60 – 70 cadets all the time on our ships and these people will come back and work for us,” he explains.

By doing this he says there are trying to provide a future solution for their owners that they are not hunting in the market for seafarers.

In terms of persuading owners of the requirement to have cadets on board the disruption brought about to the crewing sector by the Covid pandemic and more recently the war in Ukraine helped Su-Nav’s cause in convincing them that need their own cadets for the future.

“Now the owners are getting used to this idea that anything can happen. You need your own crew, you need people who have been with you, you need people who know your culture,” he explains.

As result Su-Nav has been able to convince owners that in 3-year time they will have officers for their ships, and be paying first year wages, rather than second or third year wages if sourcing crew from the market. In the longer-term he believes these officers will stay with the company becoming chief officers and captains.

Sahoonja says that seafarers will be the people who allow them to continue expanding the company in the future so are most important building block at this time.

Speaking of expansion Su-Nav plans to have its Dubai office up and running by the first quarter of this year a location that Sahoonja believes managers cannot be ignore at this time.

“Whoever was in Singapore and Hong Kong will definitely be in Dubai as well,” he says.

 

Tuesday 10 January 2023

2022 a remarkable year of shipping history

According to Seatrade Maritime News, shipbroker Clarkson's ClarkSea index covering about 80% of shipping capacity soared by almost a third to record levels in 2022. Container shipping underpinned the gains but other sectors including car carriers, tankers and LNGs were also star performers.

Shipping’s stellar performance last year was the result of many factors but overall growth in energy shipping of around 4% was one of the fundamentals driving the ClarkSea index to a record US$37,253 per day for the year.

Average earnings for tankers rose by more than 470%, with VLCCs scoring a record rise of 642%YoY. Medium-range product tankers scored well too, notching up a 370% increase in rates for a typical 12 year old vessel – up from US$6,740 a day in 2021 to an average of US$31,775 in 2022.

In contrast, container rates underwent a sharp correction over the second half of 2022, down from record levels at the start. Market reports suggest that rates are likely to weaken further and Clarkson notes that this will coincide with a rise in delivery volumes.

Everything is relative, however, the box market is still firm in historic terms and the reopening of China could have a positive impact, Clarkson suggests.

The container and dry bulk sectors are the most vulnerable to risks from the world economy but uncertainties prevail in other sectors too.

The uncertainties include low orderbooks, the impact of new environmental regulations from January, as well as other ‘inefficiencies’ and geopolitical factors, according to Clarksons Research.

The cross-sector ClarkSea Index stood at US$31,539 per day in early November 2022, significantly below the last year’s average of US$37,548 per day and well down on the 18 successive weeks between March and July when it exceeded $40,000 per day, levels last seen at the height of the 2000s‘supercycle.

During the first half of the year 2022, the container market was exceptionally strong and bulker markets were generally firm, the research firm noted in its most recent market report.

Since then market fundamentals have shifted again. Container markets softened sharply during September and October 2022, partly due to faltering demand and lower port congestion. Bulk carrier earnings, meanwhile, are down by 27% over the second half of the year 2022 as compared to the first-half average.

On the other hand, energy-related shipping markets strengthened, with average tanker earning breaking through US$50,000 per day in October 2022, double the March average.

Ton-mile demand, meanwhile, continues to strengthen as a result of the Ukraine conflict. The war has also had a dramatic impact on gas carrier markets, with VLGC earnings at year-to-date highs and LNG carrier rates at record levels.

The ClarkSea Index rose 3% last week to US$32,482 per day, up 35% year-on-year, and 134% above the t-year trend. Crude tanker rates continued to strength, with average VLCC earnings reaching US$86,860 per day, Clarkson said, the highest level since April 2020. Product tanker rates eased, meanwhile, but MR earnings still remain firm at an average of US$32,047 per day.

Bulk carrier rates remain relatively soft, although the steady decline in Capesize earnings came to a halt, with spot rates rising 41% week-on-week to US$11,657 per day. Panamax and handy vessels are firmer than other bulk segments at present but are still only about half of the mid-May figure of more than US$30,000 per day.

Container rates are also continuing to ease. The Shanghai Containerized Freight Index (SCFI) slipped 9% week-on-week to 1,443 points, below end-2020 levels and only 14% above the 2020 average.

 

 

Tuesday 8 November 2022

Increasing risk of tanker accidents

Brokers Poten highlighted the risk in its weekly report with the dark or shadow fleet expected to grow substantially when the EU import and G7 price cap for Russian oil are implemented. The illicit trades generally involve older vessels that would otherwise be recycled, with the bare minimum of repairs or maintenance, reported Seatrade Maritime News.

The trades though for less reputable owners willing to take the risk are extremely lucrative and Poten noted that estimates from knowledgeable observers suggest that shipping rates for Venezuelan or Iranian barrels can be two or three times the market rate for legitimate voyages.

“The illegal nature of the business makes it impossible to use reputable crew managers and arranging proper insurance is difficult as well. To conceal the illicit nature of their employment, owners of these tankers frequently change the vessel’s name and ownership and flag them in jurisdictions that are known to be less strict,” Poten said.

“As a result of these factors, the risk that these vessels are involved in accidents is elevated and so is the potential harm that could be inflicted on the crews and the environment, in case of an oil spill.”

This risk has been highlighted in two recent incidents. The 21-year old, Djibouti-flagged, VLCC Young Yong which ran aground in Indonesia waters in the Singapore Strait was reported to be carrying a crude oil cargo from Malaysia to China.

“The VLCC in question was recently blacklisted by the US Treasury’s Office of Foreign Asset Control (OFAC) because it was part of the so-called ‘Dark Fleet’, involved in the illicit transportation of Iranian oil,” Poten said. 

Meanwhile a 20-year old Aframax loaded with Russian crude was briefly adrift off the Spanish coast.

The dark fleet has grown dramatically over the last two years from 70 vessels in November 2020 to 257 currently. The latest sanctions on Russian oil could result in further substantial growth and Poten noted the brisk sales of secondhand tanker tonnage despite rising prices for older tonnage. It said least 60 VLCCs, 42 Suezmaxes and 93 Aframaxes, of over 15-years of age had changed hands year-to-date.

“So far, Russian exports have only been impacted by limited sanctions. However, the average age of the Aframaxes tankers, which carry the vast majority of Russia’s exports has already increased markedly. If Russia will start utilizing more vessels from the Dark Fleet, the average age of their export tankers will rise dramatically and unfortunately, so will the risk of incidents,” Poten concluded.

 

 

Friday 23 September 2022

Container spot rates plunge 58% since January

According to Seatrade Maritime News, container spot rates have fallen by 10% for the fourth week running as increasingly looks like the sector could be in for a hard landing.

The bell weather Shanghai Containerized Freight Index (SCFI) has lost another 10.4% over the last week to be recorded at 2072.04 some 240.61 points lower than week earlier.

The SCFI is now 59% lower than it was in January this year when it stood at all time high of 5,051 points.

It was a similar picture for the Drewry World Container Index (WCI) which reported a 10%WoW decline on Thursday to $4,471.99 per feu. It the 30th week in a row that the WCI has fallen and the index is now 57% lower than the same period last year.

According to Drewry spot rates on Shanghai – Los Angeles fell 11% or $473 to US$3,779 per feu last week, while rates on Shanghai – Rotterdam dropped by 10% to US$ 6,027 per feu.

Rates are expected to continue falling and Drewry said it expects the index to decrease in over the next few weeks.

As Seatrade Maritime News reported earlier lines have responded by aggressively pulling capacity from major trades ahead of the Golden Week in China, but still rates continue to fall. According to Xeneta capacity on the trade between Asia and the US West Coast is 13% lower than it was in the same period in 2021 – the equivalent of 21 ships of 8,000 teu – the average vessel size on the trade.

“And still, the spot rates are falling… which is bound to impact on the long-term contracted agreements in the near-to-mid-term. Are we beginning to see a wakeup call for carriers after such a prolonged period of growth?” said Peter Sand, Xeneta’s Chief Analyst.

Container line profits could come under pressure in the coming months as their customers look to renegotiate long term contracts fixed at the market’s peak.

Supply chain software company Shifl said there had been a recent acceleration in the drop in spot rates and carriers are attempting to renegotiate long term contracts secured when rates were higher.

High longterm contract rates are expected to support container line earnings well into next year, stretching the financial benefits to lines of the congestion-backed peak in rates last year.

Both Hapag-Lloyd and Yang Ming said shippers have asked to renegotiate deals, the former saying it is standing firm and the latter open to hearing customers’ requests.

 “With the increasing pressure from shippers, shipping lines may not have a choice but to accede to customer demands as contract holders are known to simply shift their volumes to the spot market,” said Shabsie Levy, CEO and Founder of Shifl.

The pressure on lines and shippers alike comes from a steep drop in spot rates. Shifl’s forwarded-driven rate index Shifex recorded its lowest rate for two years on the Shanghai-LA route; at US$3,500 per feu, the rate is down 80% on-year.

On the China-New York route, rates have held up slightly better but are still down 59% on-year at US$7,950 per feu compare to a high of US$19,600 in September 2021.

“While in July, there was a relatively steady decline in spot rates, the pace has definitely picked up as a milieu of factors continue to soften the market for containerized goods between China and the rest of the world.

Tightening monetary policy, a shift in consumer spending, bloated inventories in the US, and growing geopolitical tensions between the US and China continue to play a role in the movement of rates,” said Levy.

“With the latest dramatic slump in rates, the market is closer than ever to the pre-pandemic rate levels, especially to the largest entry ports in the USA - Los Angeles and Long Beach,” said Levy.

Shifl also noted a drop in transit times on Asia-US routes as congestion—one of the factors that supported high freight rates over the past two years—begins to clear.

Transit times on the main China - LA/ Long Beach route fell by 25% in August to 24 days, levels last seen in July 2021 and moving closer to pre-pandemic levels of 16 days.

That reduction is partly fuelled by a movement of cargoes from the West to East coast, however, and China-New York transit times edged up from 46 to 50 days in August.

“The ripple effect of the shift in cargoes from West Coast to East Coast is taking its biggest toll now in New York with an overflow of empties and shortage of chassis. We expect this to improve soon as lower volume forecasts will ease the pressure off the system,” said Levy.

 

 

 


Wednesday 14 September 2022

Emerging massive stimulus for oil tankers

Tankers generally, but VLCCs in particular, will benefit spectacularly as Europe’s energy trades transform and the ban on Russian crude oil imports comes into effect in December 2022.

According to New York broker, Poten & Partners, the ton-mile demand generated by European imports rose by 32% as a result of reducing Russian imports to 2.0 million barrels per day (bpd) from 2.5 million bpd.

“Finding alternative sources of supply for another 2.0 million bpd will provide another massive stimulus to ton-mile demand and tanker rates,” the broker declared.

Over the five-year period from January 2017 to January 2022, Europe imported at an average of 2.7 million bpd of Russian crude oil by sea, 26% of the seaborne total but only 14% in terms of ton-miles.

Most of the oil imported into Europe was carried on smaller tankers running short-haul trades across the Baltic and Black Seas. Between March and August, however, crude oil imported by sea from Russia fell to 19% and, in ton-mile terms, shed two percentage points to 12%.

Since the start of the war, Europe has pivoted away from Russian crude, replacing supplies with imports from the US Gulf, South America (Brazil, Guyana), West Africa, and the Middle East. Imports from the US Gulf have doubled from 6% to 12%. This has led to a significant increase in ton-mile demand, and is a welcome shot in the arm for the recently weak large tanker sector.

The broker also noted that Russia will look for other customers for its displaced two million barrels of crude, most likely in Asia, China and India in particular. This will provide a further boost for ton-mile demand. “The tanker market is in for a wild ride,” Poten predicted.

MOL orders first VLCC

Dalian Cosco KHI Ship Engineering has announced a contract to build two dual-fuel VLCCs for Mitsui O.S.K Lines (MOL).

This is the first LNG-fueled VLCC ordered from a Japanese tanker operator, and the first VLCC newbuild order from global market since July last year, said Dalian Cosco KHI Ship Engineering. 

According to brokers Poten & Partners in a recent report the last VLCC newbuilding was ordered in June 2021, while there have been no contracts for Suezmaxes since July last year. Tanker markets have endured a torrid couple of years which has seen owners refrain from ordering new tonnage.

This VLCC pair for MOL, measuring 339.5 metres in length and 60 metres breadth, meeting the Phase 3 regulation of EEDI, will be able to reduce 25-30% carbon emission as compared to the traditional vessel. 

The newbuild VLCCs are scheduled for delivery from 2025 through 2026.

World must adapt Russian sanctions new norm


According to Seatrade Maritime News, the joint statement by the G-7 Finance Ministers for the month of September confirmed as much when they said, “We underscore our shared commitment to our determined and coordinated sanctions imposed in response to Russia’s war of aggression.”

Russia now faces the highest number of sanctions in the world. The figure stood at 5,581 in March, some way ahead of Iran and Syria. By August 7,750 individuals faced sanctions along with 1,452 entities, 91 vessels and six aircraft.

Even if a ceasefire in the current Ukraine war were agreed tomorrow, the sanctions would continue since it would take so long for Russia to be accepted as a normal trading partner by the G7 countries and their allies.

The important point is that everyone engaged in international trade must accept the semi-permanence of anti-Russian sanctions and ensure they take every step possible to adhere to them. Carriers, forwarders, charterers, insurers, importers and exporters and port authorities, all need to know who they are dealing with more than ever and be fully alert to the possibility of Russian proxies masquerading as legitimate entities.  

From now on, due diligence means screening all vessels and trade transactions to pick up suspicious activity by shell companies or front organizations that link back to Russia, which is capable of highly sophisticated workarounds when it comes to sanctions?

While Iran has been increasingly cunning in side-stepping sanctions, Russia is a larger economy with many more established contacts beyond its vast borders. For all organizations engaging in trade, monitoring for sanctions or trade-based money laundering is more of a necessity than ever.

In Britain, the urgency for organizations to screen and monitor for illegal Russian trading activity has increased with the introduction by OFSI (The Office of Financial Sanctions Management) of a strict liability test for sanctions breach investigations.

But around the world, more countries are taking different aspects of sanctions seriously, especially in relation to cargo-carrying vessels.

In Asia it was the Monetary Authority of Singapore that took the strongest line on such matters.

In April, in a sign that times are changing, the Central Bank of Bangladesh mandated the country’s banks to implement vessel-tracking to cut down on money laundering.

All legitimate organizations involved in trade need to increase the scope of routine and ongoing activity such as KYC and TBML monitoring and screening. They must have the ability to spot the indicators of illicit Russian activity or illegal trade with “Russian owned or affiliated” entities.

There are several areas that need close attention, which include:

Complex or changed ownership structures in companies supplying vessels for transactions: While there are often valid reasons for complex ownership, organizations need to watch out for shell companies, and questions of registration, domicile and control. This is more than simply looking at public details. Technology drawing on many sources can now see more deeply into ownership structures, which is an important first step.

Histories: Organizations need to avoid use of vessels or carriers with records of infringement or “going dark” by switching off AIS beacons, or which have a history of visits to areas or ports known for sanctions-flouting. Switches to flags of convenience or sudden changes of ownership should be warning lights in the current climate.   

Obscure supply chains: It is important to know which banks are financing transactions and who the parties and beneficiaries are. In the physical supply chain, anyone financing or participating in a transaction needs to know where the goods or commodities are coming from and where they are going. Just looking at vessels listed is not enough.

Vessel monitoring: Organizations need the end-to-end visibility to see ports of origin and ports of loading in any transaction. But they also must track vessels carrying the cargo across the oceans and be aware when they linger in areas known for illegal ship-to-ship transfers, or visit ports recognized as high-risk for sanctions flouting. Having the technology to check certificates of origin, bills of lading, consignees and so forth is vital, especially for banks financing or facilitating thousands of trade deals and shipments every day.

Vague drafting of sanctions: Knowing who or what is “Russian-owned and affiliated” can be difficult to nail down. It is understandable that port authorities, for example, do not want to make wrong moves that prove to be costly, such as impounding vessels where lawyers can make a strong case for legitimacy, or where ownership and responsibility are difficult to establish. Many ports lack sufficient screening technology, which is a deficit they need to address.

With thousands of transactions underway at any moment, the burden of ensuring continuing compliance with a mounting body of sanctions is immense.

Success will only be achievable through technology that can pull in all the relevant data at scale and analyses it in near-real time as part of an integrated monitoring and compliance solution.

Many financial organizations, for example, already have compliance technology into which they could integrate advanced sanctions-screening solutions.

Sanctions are unlikely to become any less complex and those against Russia are here to stay for years. For any organization participating in cross-border trade, it is surely worth avoiding any failure in screening or monitoring that could result in hefty fines and significant long-term reputational damage.

 

Tuesday 6 September 2022

Container spot rates start receding

According to Seatrade Maritime News, there is no longer fundamental support for the very high container spot rates seen in the market over the last 18 months as vessel utilization numbers start to normalize.

Container spot rates are starting to decline sharply from their highs and last week the Shanghai Containerized Freight Index (SCFI) dropped 9.7%WoW down 306.56 points to 2846.42 points on 2 September and is down 32%QoQ. The SCFI stood at a record high of 5,051 points in January this year.

The record high spot rates seen over the last 18 months have been driven by exceptionally high utilization rates, very close to 100%, on the main deep-sea trades, at which point Lars Jensen, CEO of Vespucci Maritime said the pricing curve become almost vertical.

 “This is the point where there is physically no more capacity at all whilst there is excess demand in the market. The data shows that it is at this point spot rates go to the historical highs we have seen over the past 18 months,” he said in report published by the Baltic Exchange.

Utilization rates on the Transpacific trade have dropped to 90% or below over the last three months, below what Jensen says is the 91 – 95% threshold on the trade that drove record high spot rate levels.

Similarly on Asia – Europe utilization has dropped to 81% or below over the last five months while the threshold is around 85% to drive a near vertical pricing curve.

 “This means that there is no structural support for the pricing dynamic where insufficient demand leads customers to overbid on pricing to ensure available space on the vessels,” Jensen said. Further weakening of spot rates going forward is expected.

A similar conclusion is drawn by Parash Jain, Head of Shipping & Ports & Asia Transport Research, HSBC Global Research. “As vessel utilization declines from 95-100%, skyrocketed spot freight rates could lose support quickly and revert back to a more normalized level,” he said in a note sent on Monday.

HSBC forecasts spot rates could fall another 58% in 2023 and 37% in 2024 on average before reaching the bottom.

Jensen noted that bottlenecks in global container trades had decreased with 9.8% of the global fleet unavailable due to delays in July compared to 13.8% in January.

Current levels are still well above the 2% seen in normal market conditions, does in effect release more capacity into the market at a time when global container volumes are falling.

What the sharp falls in spot rates will mean for long-term contract rates and container line profitability is a point of contention.

Last week HSBC’s Jain forecast an 80% drop in profitability for container lines in 2023-24.

While Blue Alpha Capital founder John McCown believes too much emphasis is being placed on spot at that while container lines maybe at or near their peak of profitability, a collapse is not imminent.

Thursday 11 August 2022

Lots of gas but no ships to carry

As the world’s energy crunch worsens, a shortage of shipping capacity will limit the role of Liquefied natural gas (LNG) to plug the gap.

This was the warning from Lloyd’s Register (LR) gas guru, Panos Mitrou, who said that LNG shipbuilders are full until well into the second half of the decade, this was reported by Seatrade Maritime News.

Recent contracts have closed at prices around US$250 million, up by about US$60 million on last deals done at the start of the year. Clarkson figures reveal that more LNG carriers were ordered over the first half of the year than in any full year to date.

In an opinion piece on the LR website, Mitrou cites estimates by the classification society that the half dozen specialist builders in South Korea and China have an annual production capacity of 70-80 ships. But liquefaction and transport demand over the second half of the decade could require twice this number of new vessels.

Mitrou notes that the four long-established LNG construction yards – Daewoo, Hyundai and Samsung in South Korea, and Hudong in China – have recently been joined by newcomers, Dalian and Jiangnan, also in China. A seventh yard, Yangzijiang, is also set to join the group.

But some LNG producers, who are ramping up exports, have been caught out by constraints on ship supply. Mitrou believes that the world will lack the LNG shipping capacity to meet transport demand by 2025, possibly before.

Meanwhile, floating gas plants can provide a relatively quick way of boosting energy imports in some power-hungry countries. But conversions of existing ships would take more tonnage out of the transport system, Mitrou noted.

To make matters worse, he cited estimates by the classification society that about 400 existing LNG carriers in the 640-ship fleet are likely to fall into categories ‘D’ or ‘E’ of the IMO’s carbon intensity indicator, therefore requiring remedial action. This is partly because of relatively fuel-inefficient steam turbine and early diesel propulsion, but also a lack of effective boil-off management systems.

Mitrou concludes by warning that a perfect storm is brewing. LNG is the cleanest hydrocarbon energy by far, he declares, and offers significant potential as a transitional source of energy. But we cannot have an energy transition without energy security and there is very little of that in many import-reliant countries right now. 

Wednesday 25 May 2022

Suez Canal revenues to rise by 27% for financial year ending June 30, 2022

According to Finance Minister Mohamed Maait of Egypt, Suez Canal revenues are expected to rise to US$7 billion for the financial year 2021-22 ending on June 30, 2022, up 27% from US$5.5 billion for the last year.

Calendar year 2021 saw canal revenues hit a record US$6.3 billion, up 13% from US$5.6 billion seen in 2020.

The canal is the fastest route between Europe and Asia, and despite a 10% increase in toll rates implemented in March 2022, still saves shipping lines potentially hundreds of thousands of dollars in time and fuel, compared to sailings around the Cape of Good Hope.

Asian ship owners have been among the most vocal to complain about the toll hike, in addition to tariff increases introduced at the beginning of February this year.

Seatrade Maritime News calculates a 9.4% rise in fees for a southbound transit by a standard dry bulk vessel, as well as a similar increase in rebate, as of today, as compared to rates in November 2020.suez_canal_table.JPG

Egypt mobilized public support for a widely subscribed national public debt program to finance a US$8.5 billion canal expansion, finished in 2015. Completion of further works is expected next year.

With container shipping lines reporting profits of around US$190 billion last year, US$60 billion in the first quarter of 2022, Egypt can be expected to maintain the pressure on toll rates for some time to come.

Despite the fact that tourism flows to Egypt declined by 35% due to the Russian invitation of Ukraine, Maait expects tourism revenues to hover around US$12 billion by the end of the financial year.

The canal, as well as tourism receipts are important to Egypt’s GDP, which the International Monetary Fund expects to reach US$435.6 billion in nominal terms in 2022.

The Asian Shipowners’ Association (ASA) member hit out at recent proposed toll changes at both the Panama Canal and Suez Canal.

At a meeting on April 18, 2022, ASA delegates noted the significance of the Suez and Panama canals as critical global infrastructure and called for the canals to avoid “sudden and significant” changes in tolls and charges.

“Delegates expressed their confusion against new surcharges introduced on March 01, 2022 with only 48 hours prior notice, then to be revised on May 01, 2022 by the Suez Canal Authority (SCA), which resulted in roughly a 7% to 20% toll increase for many types of vessels, in addition to a 6% tariff hike for most types of vessels, implemented on February 01, 2022,” said ASA.

Uncertainty around how surcharges operate could undermine the stability of the Canal, said the committee, calling for the industry to express its concerns to SCA.

ASA delegates some positives in the Panama Canal’s new toll system proposed earlier in April 2022 by the Panama Canal Authority (ACP). Delegates said the ACP had given sufficient notice and a formal consultation period, but were concerned that significant toll hikes could affect the long-term viability of the canal, “as the mark-up for some types of vessels may exceed 100% in 2025, compared with the current toll.”

The ASA meeting also discussed the review of anti-trust exemptions for carriers on the US, a policy delegates said was “indispensable for the healthy development of the liner shipping industry and the maintenance of a reliable service to the entire trading community.” ASA will continue its efforts to maintain anti-trust exemptions for liner shipping agreements.

 

Monday 18 April 2022

Safeen Feeders inks agreement with Saif Powertec of Bangladesh

According to Seatrade Maritime News, UAE-based Safeen Feeders has inked an agreement with Bangladesh’s Saif Powertec for the delivery of bulk cargoes from Fujairah to Chattogram and Mongla. 

The new bulk shipping offering will also oversee cargo operations to the Indian subcontinent, South-East Asia, and other global destinations, Abu Dhabi’s AD Ports Group, which owns Safeen Feeders, said.

 “Leveraging Safeen Feeders’ expertise as a leading maritime service provider, as well as the advanced capabilities of its modernized fleet, Saif is well-positioned to accelerate the trade of dry construction materials between the UAE and Bangladesh, along with other dry cargo goods to key markets across the region and beyond,” Capt. Maktoum Al Houqani, CEO Maritime Cluster, AD Ports Group, said.

The International Monetary Fund forecasts real GDP growth of 6.5% for Dhaka in 2022. With a population of 168 million people, Bangladesh’s economy was booming until the coronavirus pandemic hit, after witnessing real growth of 8.2% in 2019, and is now preparing for a new burst of development. Platts said that Bangladesh was the world’s fifth-biggest wheat importer in 2019.

Set up in 2020 in a tie-up with Singapore’s Bengal Tiger Line, Safeen Feeders has launched two main container services. The weekly UAE Indian Sub-Continent Gulf (UIG) service is a “pendulum” service of three 1,700 teu vessels on a 21-day rotation calling at Khalifa Port, Sharjah, Bahrain, Dammam, Umm Qasr, Karachi, Mundra, Kandla, and Nhava Sheva. Its weekly UAE Coast & Oman (UCO) service offers a 1,000 teu vessel calling at Khalifa Port, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Sohar.

In a fact sheet shared with Seatrade Maritime News, Safeen Feeders said that, as of March, its container fleet consisted of nine container ships, eight owned and one chartered in.

“We are pleased to announce the start of our close partnership with AD Ports Group’s Safeen Feeders, which has greatly enhanced our capabilities as Bangladesh’s sole terminal operator to facilitate the movement of dry cargo at the international level,” Tarafder MD Ruhul Amin, Managing Director Saif Powertec, said.

According to Safeen Feeders’ own website, in addition to 18 tugs, its fleet also includes seven pilot boats, seven speedboats, one buoy maintenance vessel, one diving supply vessel and two oil spill response boats. Safeen Feeders’ bulk carriers will be offered on a bareboat or time charter basis.