As year 2022 draws to a close it is pertinent to look back
at some of the biggest stories that have been covered by Seatrade Maritime News
over the last 12 months. For the readers interest we have chosen six major
themes.
Tanker market boom
A geopolitical Black Swan supercharged the tanker market. The
risk of a major confrontation between Russia, Europe and the United States completely
redefined oil trade. Assessing the impact of a possible oil embargo on Russia
is a near impossible task. But undoubtedly global oil trade and prices were
severely impacted.
By the end of October it was an extremely different picture.
As the cliché goes, the tanker sector was on fire. Charter hires reached
stratospheric levels on the back of longer voyages for crude oil and for
refined products, as well as small and large gas carriers.
As the latest phase of sanctions against Russian oil exports
came into force in early December things continue to look extremely good for
the tanker sector.
Impact
of war in Ukraine
Much of what caused the boom in the tanker market has been
the war in Ukraine, which of course has impacted more than shipping. But the
invasion by Russia also left over a thousand seafarers stranded on vessels at Ukrainian
ports.
Over the coming months seafarers were gradually evacuated
from stranded vessels. However, a blockade of Ukrainian ports quickly started
to have a serious impact on global food markets and prices as the country is
major exporter of wheat and grain. Over a period of months much work was done
to create an international corridor for grain exports from Ukraine with a
humanitarian corridor and was up and running by the end of July.
“Inchcape Shipping Services (ISS) reported the ports of
Odessa, Chornomorsk and Pivdennyi opened as of July 27. ‘We can expect the
first vessel sailing by the end of the week, as it’s critical to release the
vessels which are still blocked in ports,’ said ISS. Once blocked vessels are
cleared, activity will continue via convoy, accompanied by a lead vessel.”
The humanitarian corridor has continued to provide a vital
lifeline for grain exports, on occasion it has been threatened with closure.
Meanwhile the war continues to have other impacts on shipping such as the
growing dark fleet of tankers aimed at busting sanctions against Russian oil
exports.
P&O
Ferries mass firing
Switching gears
considerably and at the start of 2022 the name Peter Hebblethwaite would have
meant little to most, but he was in few short months to hit global headlines.
Peter Hebblethwaite is of course the CEO of P&O Ferries who was to be
branded Britain’s most hated boss.
The branding of P&O Ferries boss as the most hated was a
result of the mass firing of 800 seafarers over Zoom on March 17. “Video
circulated online of the moment P&O notified some of its staff by Zoom
call that their employment was ending the same day.”
Somewhat ambitiously P&O Ferries had planned to have its
fleet back in service with agency crew within seven to ten days of the mass
seafarer sackings. However, the return to service of P&O Ferries did not go
remotely to plan and by the end of May it was still struggling to get it all
its vessels back into service.
On May 26 it was reported the UK Maritime & Coastguard
Agency clearing the Pride of Canterbury in a Port State Control inspection. One
vessel in the P&O Ferries fleet still needed a Port State Control
inspection before it can return to service. The whole fleet of 10 ships
required inspection after P&O Ferries sacked 800 of its seafarers without
warning by Zoom call on March 17.
The fleet did all get back into service, but the backlash continued
and in October Hebblethwaite was forced to drop off a panel at the annual
Interferry conference and in November voted the world’s worst boss by the
International Trade Union Confederation.
Container
shipping mega-profits
Container shipping enjoyed unprecedented earnings
in 2021 and 2022 but as this year has progressed it has become clear that this
is not going to last. We started out 2022 reporting that analysts Drewry had
upped their annual forecast for container shipping’s EBIT in 2021 to US$150 billion
to US$190 billion. As 2022 continued the profits reported by lines were to get
even more staggering and in August we reported on the results of Maersk in Q2
just as they were hitting their peak.
Maersk reported an underlying EBIT of US$8.9 billion for the
second quarter but behind the 15th consecutive quarter of on-year earnings
improvements, there were signs of change. Profitability in the group’s ocean
segment rose ‘significantly’ compared to Q2 2021, as softening volumes and short-term
rates were comfortably offset by higher contract rates.”
The extent of the plunge in container spot rates to come was
to take even the most pessimistic by surprise. In mid-October we
reported: “In a research note entitled ‘Fast and furious’ HSBC noted spot
rates reported by the Shanghai Containerized Freight Index (SCFI) had fallen by
51% since the end of July – a decline of 7.5% per week. It was also highlighted
that spot rates were now well below the levels of contract rates entered
into at the start of 2022, especially on the Transpacific trade.
“In fact, at this pace of a 7.5% week-on-week decline, spot
rates may hit the average spot rates of 2019 by the end of 2022, a level
where we expect capacity discipline to meaningfully emerge, especially when
rates go below cash costs.”
As spot rates head back down to 2019 levels this is
particularly concerning for container lines as they negotiate long term
contracts for 2023, and there can be little doubt that earnings will be
considerably impacted.
Decarburization
in focus
It's hard to talk about
2022 without mentioning decarburization and emissions. The industry’s
ambitions, regulation and IMO targets have gone well beyond their traditional
realms of the trade press. Watching the mainstream press trying to cover
week-long bureaucratic meetings at the lumbering beast that is the IMO is not
something we ever expected to see.
While the focus has more often than not been on regulation
it is moves the industry itself is taking in terms of investing in alternative
fuels that are the single most concrete actions. Over the last year we’ve seen
growing traction around ammonia and methanol as a marine fuel, the latter
attracting significant ship orders. However, while ships are on order the availability
of green fuels is another matter. In July we covered an interesting story on
potential source of cheap sustainable methanol.
In a September episode of the Seatrade Maritime Podcast it
talked to Chris Chatterton of the Methanol Institute. Amid all the talk on
regulation and targets the most significant change is the coming into force of
the IMO’s EEXI and CII regulations, latter for carbon intensity proving
particularly controversial.
These were covered in depth by correspondent Paul Bartlett
in a November In Focus episode and as Paul commented, “The pressure is already
on however, as ship-owners and operators should have drawn up new ship energy
efficiency management plans (SEEMP by the end of this year.”
The December meeting of the IMO’s Marine Environment
Protection Committee (MEPC) saw some long-awaited progress on a revision of the
IMO’s GHG strategy. IMO Secretary-General Kitack Lim said at the
close of the meeting, “It cannot be stressed enough how crucial it is that we
keep the momentum and deliver an ambitious and fair, revised IMO GHG Strategy
at MEPC 80 next year.”
The
return of live events
Moving into the final topic
for year-end review without a doubt 2022 was the year the of the in-person
event with a huge bounce back in conferences, exhibitions, seminars and
cocktail parties.
Winding back to March and CMA Shipping in Connecticut was
one of the first larger gatherings followed Singapore Maritime Week in April
although the latter was still restricted to some extent by Covid measures.
But revving it up a whole different level was the return of Posidonia
in Greece in June. As noted at the time in monthly Maritime in Minutes podcast,
“If anyone had any doubts about the appetite for inputs and events post
pandemic Posidonia clearly spelled these, the exhibition halls packed with
visitors from around the globe. There were huge traffic jams against the venue.
And of course, there were the parties.”
It was quickly nicknamed Partydonia and it wasn’t hard to
see why. But there was plenty of serious stuff going on as well including for
ourselves at the Seatrade Maritime News with a raft of live event coverage as
well as recording episodes podcasts with Stealthgas CEO Harry Vafias and
Vassilios Demetriades the Shipping Deputy Minister of the Republic of Cyprus.
September saw the massive SMM event in Hamburg back on the
calendar. The event was hugely well attended and had strong theme of decarburization
running across both the exhibition and conference content. Our Europe Editor Gary
Howard summed up the whole event in a piece entitled Drowning in Decarburization.
It drowned out every other topic at SMM 2022, but most of the maritime industry
still awaits direction.
