Safety fears over 2700 truck trips from giant container ship in Northland to Auckland

There are safety and congestion fears for the road north of Auckland, after news a container ship diverted to Northland will result in nearly 2700 more truck trips before Christmas.

Whangārei’s Northport has agreed to unload 1340 containers off the ship Constantinos P, after congestion at Ports of Auckland meant they could not be unloaded there in time for Christmas.

The ship, run by ANL Container Lines, was originally scheduled to stop at Auckland’s port on December 5 but congestion relating to the Covid-19 impact globally and a lack of staff meant the date was delayed to December 22.

The diversion of Constantinos P from Ports of Auckland to Northport will result in 2700 extra container truck trips, National Road Carriers says. (File photo)
KIRK HARGREAVES/STUFFThe diversion of Constantinos P from Ports of Auckland to Northport will result in 2700 extra container truck trips, National Road Carriers says. (File photo)

Northport agreed to step-up to help, even though the 261m ship will be the largest berthed at the port and it is not fully equipped to unload it, chief executive Jon Moore said in a statement.

Constantinos P will berth at Northport on Sunday and cargo will be unloaded by mobile crane, ready to be carted by road from Thursday.

Northport has handled container ships before but the 261m Constantinos P will be its largest.
NORTHPORT/SUPPLIEDNorthport has handled container ships before but the 261m Constantinos P will be its largest.

But the plan has raised serious safety concerns for the 140km road between Marsden Point and Auckland, according to National Road Carriers chief executive David Aitken.

There will be 2680 extra truck trips on the road due to the ship’s diversion – with trucks having to travel from Auckland to Northport, and then back.

“There is poor roading infrastructure between Auckland and Northport, including two accident black spots at Dome Valley and the Brynderwyns,” he said.

This 2014 crash in the Dome Valley resulted in no injuries, but the road is notorious for crashes. (File photo)
SUPPLIEDThis 2014 crash in the Dome Valley resulted in no injuries, but the road is notorious for crashes. (File photo)

Truck drivers are already at capacity due to the Christmas rush, and they will be interacting with holiday traffic, Aitken said.

“The road is not perfect, and they are going to be sending guys [truck drivers], used to driving metro, on the open road.”

Aitken said there was a lack of alternatives to the road, with the North Auckland rail line currently closed by a $110 million redevelopment.

It is not due to reopen until January 11, although a link to the port’s location at Marsden Point has not been built.

While Northport said coastal shipping was being considered, Aitken did not know what ships would be available to take the containers.

ANL had found a solution to suit themselves, without thinking of the wider consequences, he said, and more work needed to be done to improve the supply chain in the North Island.

Northport has focused on log exports until now, but it wants to have a bigger involvement in the North Island supply chain. (File photo)
NORTHPORT/SUPPLIEDNorthport has focused on log exports until now, but it wants to have a bigger involvement in the North Island supply chain. (File photo)

Moore agreed, saying there was a need for continued central government investment in road, rail and coastal shipping infrastructure.

“While current supply-chain issues impacting the country might be unprecedented, they demonstrate clearly the need for a resilient and geographically-astute Upper North Island Supply Chain strategy that makes best use of the three existing ports.”

ANL has been contacted for comment about the road concerns.

In a statement, the company said it was taking a proactive solution to support retail and the economy.

“We are confident in the capabilities of Northport and glad that we have found this solution with them. Furthermore, we believe Northport will be a suitable alternative gateway for North Island customers.”

Transport and food two keys to reduce our carbon footprint

Transport is responsible for an average of 37 per cent of a Kiwi household's emissions.
DAVID WHITE/STUFFTransport is responsible for an average of 37 per cent of a Kiwi household’s emissions.

OPINION: Momentum is gathering in New Zealand’s efforts to cut greenhouse gas emissions and slow climate change.

Chair of the Climate Change Commission Dr Rod Carr is tasked with advising the Government on policy directions which, in his words, “support the transition to a climate-resilient, low emission Aotearoa” and include all regions and sectors.

Carr has encouraged community support and action to nudge Government to make ambitious and binding policy changes.

We can add to this momentum by calculating and reducing our own household emissions. The average New Zealand household’s biggest emitters are transport (37 per cent) and food (25 per cent).

READ MORE:
Flying to LA might cost more – so be it, says climate chief
Climate chief wants a road safety-style campaign to get us out of cars 
The climate cost of super-sizing snacks after exercise
How a city dweller slashed his carbon emissions
How to cut your contribution to climate change by offsetting your emissions

A useful tool is a carbon footprint calculator, https://www.carbonneutraltrust.org.nz/household-entry, developed by Carbon Neutral New Zealand Trust. It measures both greenhouse gas emissions and sequestration (storing carbon).

So if you get cracking to store CO2 by planting trees then the calculator will reward you by reducing the size of your overall footprint.

Transport

Cycling, particularly for short daily trips, can make a big dent in household emissions.
SCOTT HAMMOND/STUFFCycling, particularly for short daily trips, can make a big dent in household emissions.

New Zealand’s travel sector is highly dependent on imported fossil fuel so driving and flying less are among the most effective choices we can make to reduce our carbon footprint.

On the plus side over 80 per cent of our electricity comes from renewable sources and New Zealand is in a strong position to move on decarbonising the economy through 100 per cent electrification.

In the meantime Government and local authorities will need to both provide low emission public transport options and incentivise the uptake of electric vehicles supported by a wide network of EV charging stations.

Transport emissions can be reduced by:

  • Choosing to walk or cycle for short trips (a third of our trips are 2km or less).
  • Planning your car trips so you combine multiple errands into one.
  • Car sharing or using public transport for longer trips.
  • Switching your fossil-fuel car to an electric car or an electric bike.
  • Working from home and holding meetings and conferences online.
  • Lobbying your council to adapt urban design to prioritise safe walking and cycling and low emission public transport.
  • Managing with one less car in your household.

Food

Compost is one key to the highly productive vegetable garden here.
JULIET NICHOLAS/STUFFCompost is one key to the highly productive vegetable garden here.

What you choose to eat and drink also has a huge impact on the planet. An average New Zealand household in 2017 emitted 10,875 kg of CO2 through the food and non-alcoholic beverages consumed.

Beef, lamb and processed meat were, by far, the largest contributors to heating the planet, emitting 21.17 and 12 kg of CO2 equivalent per kilogram, respectively. Eating these frequently also has adverse health impacts by increasing the risk of heart diseases, cancer and diabetes.

Hundreds of millions of taxpayer dollars have been spent on treating these preventable diseases each year. By contrast, international research has highlighted the climate and health co-benefits of consuming a plant based diet such as fruit, vegetables, whole grains and legumes.

This diet is shown to be substantially less climate polluting, emitting only 1.2-1.8kg of CO2 equivalent per kilogram.

So, gradually swapping meat for more vegetables will not only benefit your wallet and family’s health but also help save the planet.

Another way of reducing your emissions is by planting trees in your backyard or on a local re-afforestation project. As trees grow they absorb more CO2 from the atmosphere. This of course applies to fruit and nut trees which will reduce your grocery bill as well.

Food emissions can be reduced by:

  • Reducing the amount and frequency of red meat and dairy consumed.
  • Planting fruit and nut trees.
  • Setting up a vege and herb garden.
  • Supporting locally produced food eg from farmers markets, box subscription schemes.
  • Joining a food matching community to share surplus and reduce food waste.

For more information on New Zealand emission estimates for common food items, visit Climate Change: a Quick Guide for Kiwis website.

Dr Yuki Fukuda and Carolyn Hughes are from Zero Carbon Nelson Tasman

Making shipping cleaner – is LNG the answer?

in International Shipping News 01/12/2020

As the global maritime sector tries to switch to liquified natural gas (LNG) as an alternative fuel source, there have been questions about how clean it really is and what else can be done to reduce the industry’s pollutive impact on the environment.

Since Jan 1, rules by the International Maritime Organization (IMO) – a United Nations body that governs shipping – came into force, capping the sulphur content of ships’ fuel at 0.5 per cent, down from 3.5 per cent previously.

This has driven the industry towards LNG, which emits virtually no sulphur.

“LNG has significant environmental advantages over traditional bunker fuels which are heavy fuel oils,” said Dr Victor Nian, a senior research fellow with the National University of Singapore’s Energy Studies Institute.

“LNG typically produces lower emissions of CO2 and virtually no nitrogen oxides (NOx), particulate matter (PM) or sulphur oxides (SOx),” he explained.

The natural gas has also become a more cost-competitive choice compared to conventional marine fuels, noted maritime expert Yap Wei Yim from the Singapore University of Social Sciences.

Dr Nian added that since LNG is a cleaner fuel, it could lead to the need for less maintenance as well as possibly longer lifespans for engines and other equipment in the long term.

He noted, however, that it would cost several million dollars per ship to adapt existing vessels to use LNG instead of heavy fuel oil, so retrofitting ships remains a barrier.

Not many ships currently run on LNG.

Singapore, the world’s largest marine refuelling hub selling about 50 million tonnes of bunker fuel per year, has been developing the infrastructure to support the use of LNG.

The Maritime and Port Authority of Singapore (MPA) licensed two LNG bunker suppliers – Pavilion Gas, which is a subsidiary of Pavilion Energy, and FueLNG, a joint venture between Shell and Keppel Offshore and Marine – and is expected to issue more of such licences in future.

“This has to be seen in the context of Singapore’s role as a major hub port in the world. While Singapore is well known as the world’s busiest container transhipment port as well as major port in terms of cargo tonnage, a significant proportion of port calls made at Singapore involves bunkering operations,” said Dr Yap, previously the head of strategic planning at MPA.

“In fact, more than 70 per cent of vessel arrivals measured by tonnage involved taking bunker in Singapore,” he noted.

Dr Yap also pointed to the “multiplier effects” brought about by the bunkering sector which contributes to other activities in the maritime cluster as well as the wider Singapore economy.

“It is thus important to remain relevant and responsive to the needs of shipping lines and making LNG fuel available in the world’s busiest port-of-call by vessel arrivals becomes crucial,” he said.

JUST HOW CLEAN IS LNG?

Yet questions have been raised about how clean LNG truly is.

The life cycle of greenhouse gas (GHG) emissions would take into account upstream activities such as production, liquefaction and transport, said Dr Nian.

“In a typical well-to-wake approach, there are studies suggesting that LNG’s advantages in terms of air pollution are not as great when compared with other fuels with regard to overall GHG emissions,” he said.

He noted that there might only be a difference of about 12 per cent when comparing life cycle greenhouse gas emissions between LNG and other marine fuels.

Dr Nian attributes this to methane slip – or the emission of unburned methane gas – when adapting engines from heavy fuel oils to LNG, although he suggests that engines designed specifically for the natural gas could improve this.

According to the IMO’s fourth greenhouse gas study released in August, there was a 150 per cent increase in methane emissions between 2012 and 2018, attributed to leaky engines on an increasing number of LNG-driven vessels.

Methane is 30 times more potent than carbon dioxide as a greenhouse gas.

The IMO does not currently regulate methane emissions, although bodies such as the International Council on Clean Transportation (ICCT) have called on it to do so.

There are uncertainties over what the “best” long-term option is in terms ensuring cleaner marine fuel, said Dr Nian.

He added that a viable short-term solution is the use of scrubbers – or exhaust gas cleaning systems which remove particulate matter as well as sulphur oxides and nitrogen oxides.

The cost of installation, however, could go up to US$4 million per vessel. Maintenance costs are also a challenge, in addition to the problem of waste disposal, he said.

Certain types of scrubbers release pollutants back into the sea after turning the sulphur dioxide into sulphuric acid, raising the ire of groups such as the ICCT.

The MPA has banned the use of such “open-loop” scrubbers within Singapore waters, and deemed their residues as toxic industrial waste.

ALTERNATIVES

Still, LNG looks to be the most competitive option right now in terms of price and environmental impact, said Dr Nian, although he noted that few ships today are able to run on LNG.

If major liners were to convert their ships or buy new ones that run on LNG, this could drive up its price, he said.

It also raises the question of whether there is enough natural gas to power the world’s shipping fleets, as well as the life cycle environmental impact of a wide-scale use of LNG.

There are other clean fuels in the works for shipping, including electrification, said Dr Nian, pointing to a seven-company Japanese consortium which earlier this year announced plans to develop zero-emissions electric tanker, as well as other alternatives such as biofuels.

Dr Yap pointed to other efforts aimed at making the maritime sector greener, such as the use of green building standards and eco-friendly construction methods in the development of new ports, as well as the use of monitoring systems to track greenhouse gas emissions and the quality of water and air.

Next year, MPA will launch its Maritime Singapore Decarbonisation Blueprint 2050, which will lay out plans on establishing the country as a sustainable maritime centre.

MPA and its partners will also set aside S$40 million under the Maritime GreenFuture Fund to be used for the research, test-bedding and adoption of low-carbon technologies.

Other observers said that LNG can be made even more eco-friendly.

In a blog post, energy research consultancy Wood Mackenzie pointed to “carbon-neutral” LNG, where carbon emissions associated with the upstream production liquefaction and transportation of the gas is offset through the purchase and use of carbon credits, which support reforestation or other renewable projects.

The firm noted that Pavilion Energy had issued a tender in March for 2 million metric tonnes per annum of LNG with specific criteria regarding its carbon footprint, which was won by Qatar Petroleum.

Ultimately, Singapore needs to evaluate whether the shipping industry here – including shipbuilding, maintenance, as well as the policy and regulatory infrastructure – can cope with a shift to LNG, said Dr Nian.

“Likewise, we also need to be aligned with the global industry movement towards LNG or other marine fuel to remain relevant as a major shipping hub,” he added.
Source: CNA

Shipping industry should consider nuclear option for decarbonizing: experts

in International Shipping News 06/11/2020

Stakeholders in the maritime industry are considering an increased uptake of nuclear power as one of its choices as it strives to meet decarbonization targets that the International Maritime Organization has mandated, according to industry observers and participants.

Nuclear power has been shunned because of safety, geopolitical security, and economic reasons, but it is an established technology in which new frontiers are being developed and should be considered as an option in the debate on how to cut greenhouse gas emissions from shipping, Edmund Hughes of consultancy Green Marine Associates and the former head of Air Pollution and Energy Efficiency at the IMO, told S&P Global Platts Nov. 4.

There are some inquiries from companies about the further uptake of nuclear power within the shipping industry and its impact on the sector could be significant, Andreas Sohmen-Pao, chairman of shipping company BW Group said Oct. 28 during a webinar on decarbonization that Norwegian Business Association Singapore organized.

Over 160 ships are powered by more than 200 small nuclear reactors, according to the World Nuclear Association. Military vessels in the US and Russian navies, and ships that Russia’s Sovcomflot owns and operates are some examples.

This source of power confers some advantages. “You will have ships going maybe 50% faster because the fuel is essentially free once you have made the upfront capex investment,” Sohmen-Pao said.

This has obvious implications for the supply side of the bunker industry.

There is existing IMO legislation for nuclear-powered ships. Chapter VIII of the International Convention for the Safety of Life at Sea 1974 gives basic requirements for nuclear-powered ships that are particularly concerned with radiation hazards. This set of rules refers to a detailed and comprehensive Code of Safety for nuclear merchant ships, which the IMO Assembly adopted in 1981, according to IMO material.

IMO legislation would need to be updated to take into account more recent developments, the existing legislation was developed with military applications in mind, Hughes said. One example is the small-scale molten salt reactor, Hughes said.

London-based CORE POWER is working with Advanced Reactor Developers to meet the demand for disruptive energy technology in ocean transportation. On Nov. 2, it announced its participation with Southern Company, TerraPower, and Orano USA to develop Molten Salt Reactor atomic technology in the US.

The IMO is targeting a reduction in the carbon intensity of international shipping by at least 40% by 2030 compared with 2008 levels and by 70% by 2050. It is also targeting cuts of annual GHGs from international shipping by 50% by 2050, compared with 2008 levels.

Shipping industry players are considering a range of long-term zero-carbon solutions, such as ammonia and hydrogen.

These options are not risk free and present the problem of low energy density, Hughes said.
Source: Platts

Wallenius Marine develops world’s largest wind-powered vessel to slash shipping emissions

Swedish shipping company Wallenius Marine is developing a ship called Oceanbird, which could transport 7,000 cars and trucks across the Atlantic propelled only by the wind.

The concept, which is essentially an outsized sailboat, would be twice as high as the largest comparable vessel due to the five 80-metre-tall sails that protrude from its hull.

These purportedly would make it the world’s largest wind-powered vessel, capable of travelling across the ocean to the US at a speed of 10 knots and with a total journey time of 12 days.

Oceanbird will be the world's largest wind-powered vessel
Wallenius Marine claims that Oceanbird will be the world’s largest wind-powered vessel

According to Wallenius Marine, this is only four days longer than a carrier powered by fossil fuel while emitting 90 per cent less CO2 in the process.

Developed in collaboration with Sweden’s KTH Royal Institute of Technology and naval research institute SSPA, the Oceanbird project hopes to mitigate the environmental impact of maritime freight transport, which accounts for all but 10 per cent of trade in the whole world.

In 2018 alone, the shipping industry emitted 937 million tonnes of CO2, which is more than all of Germany. If it were a country, the sector would be the sixth-largest emitter in the world, just behind Japan.Related storyRolls-Royce touts remote-controlled cargo ship as “future of the maritime industry”

“We only have one planet and it’s important that we take responsibility and ensure that this planet will be a good place to live for future generations,” said Wallenius Marine’s COO Per Tunell.

“Shipping plays a very important role in today’s society but it’s also a large contributor to harmful emissions and that cannot continue, so we need to act.”

In order to try and rival the speed of an engine-powered ship, the Oceanbird would make use of wingsails rather than traditional fabric sails. These resemble solid fins made of steel and various composites, much like the wings of an airplane.

Wallenius Marine develops Oceanbird as world's largest wind-powered vessel
The ship is propelled forwards by five wingsails

“Airplane wings are asymmetrical in profile because they should only produce a lift upwards,” explained the ship’s naval architect Carl-Johan Söder.

“But our wings are symmetrical because we should be able to produce lift regardless of if you have wind coming in from the port tack [left side] or the starboard tack [right side of the ship]. The wings can rotate 360 degrees so you can optimise the angle depending on the wind direction relative to the ship.”

They are also telescopic, meaning they could be retracted to 60 metres in order to pass under bridges and mitigate turbulence caused by strong winds.

Wallenius Marine develops Oceanbird as world's largest wind-powered vessel
It could transport 7,000 vehicles

When the sails are at their tallest and propped up on the ship’s hull, they would reach up to 105 metres above the waterline. In comparison, a regular sailboat reaches only up to 30 to 35 metres into the air.

“No part of our sail is lower than 30 metres so we are using a piece of the atmospheric boundary layer above the ocean, where basically people have not been before,” said Jakob Kuttenkeuler, a professor in naval architecture at KTH.

“Airplanes are above and boats are below. So we’ve put quite a lot of effort into measuring the atmospheric boundary layer.”

Wallenius Marine develops Oceanbird as world's largest wind-powered vessel
Wallenius Marine hopes to build a fully functioning Oceanbird by 2024

Wallenius Marine attached sensors to its existing vessels in order to measure how the wind direction and velocity changes at such heights, in order to optimise both the wingsails as well as the fins at the bottom of the hull.

These can be moved against the direction of the wind, in order to prevent the boat from drifting off course.

For emergencies and manoeuvring in and out of ports, the ship would also be equipped with an auxiliary motor, which Wallenius Marine claim runs on clean energy.

Oceanbird will be the world's largest wind-powered vessel
Unlike the wings of an airplane, the wingsails are symmetrical

At the moment, the ship is still in the prototyping stage, with a seven-metre tall model set to be trialled in Stockholm’s harbour to gather data and optimise its performance and aerodynamics.

But the company says it could be taking orders from 2021 with the aim to deliver the first, complete vessel by the end of 2024.

Wallenius Marine develops Oceanbird as world's largest wind-powered vessel
The sails reach up to 80 metres high

Ireland’s B9 Shipping and French start-up Neoline have developed similar designs for cargo ships, which make use of tall fabric sails to harness wind power.

Neoline is already planning to establish a new shipping route between Saint-Nazaire in western France and the East Coast of the US by 2022 and has signed a development deal with Renault to look at using its ships to transport the manufacturer’s cars.

Another Swedish company, X Shore, has recently released an electric boat for private passenger travel in the hopes of bringing emission-free maritime travel to a broader market.

New Zealand urgently needs to focus on supply chain

The global effects of Covid-19 are putting real pressure on the New Zealand supply chain, economist Cameron Bagrie told the road freight transport industry this week.

Covid-19 meant no industry conference this year, so the Road Transport Forum invited Cameron to give us one of his popular industry updates via Zoom.

There was good news and bad news, and Cameron is pretty good at looking at how you can turn the bad news into good news. But there is no escaping there is pain ahead as we watch parts of Europe and the UK shut down again for a second autumn/winter wave of Covid.

What Cameron told us is what we are hearing across the board, and we are trying to get Government to listen. If for example, there is a Covid-19 vaccine and New Zealand is able to secure some, the supply chain is not in place to get it here and distribute it.

While exports are still working for New Zealand, imports are going down and sourcing goods is becoming a problem.

Cameron says people are talking about demand when they should be talking about supply – Covid is not supply friendly and “the Reserve Bank can’t fix supply chains”.

New Zealand is a small market to service and so is never going to be at the top of the queue. And while we can do a lot for ourselves, we are reliant on all manner of goods coming into the country to let us do that. When securing essential items becomes impossible, what’s the plan?

Some urgent thinking needs to go into managing this growing and critical risk and looking at how New Zealand can boost capability locally and fast.

Unfortunately, this doesn’t apply to goods only. Migration numbers have gone from booming to collapse which creates another point of vulnerability for New Zealand. There have been years of underinvestment in key skills and capability because we could always import them from overseas, Cameron says. But to get the economy moving in areas such as infrastructure, or to manufacture locally what we can no longer source from off shore, we are woefully short of expertise.

In the spirit of never letting a good disaster go to waste, Covid-19 presents opportunities for some.

“Think small to stand tall,” Cameron says. While the macro-economy is beyond the control of individual businesses, focus with a ruthless obsession on all the little business levers. Get up every day and make a small improvement and over a couple of months, the dial will start to move in the right direction.

While human instinct may be to hunker down in bad economic times, the people being rewarded in the Covid world are those taking risks and there is a growing wedge between firms that are adaptive and those that are not.

Covid-19 is a bit of a lightning rod for rapid changes that were already occurring. People working from home, for example, was starting to happen but became the only option during lockdown. The changes that have come with that means distribution moving from city centres to suburban areas as people start to buy in the suburbs where they are working, rather than the central business district where their company may have been located.

There is also pressure in an economic downturn to cut prices but if items are in short supply, or can’t be sourced, no sensible business is going to do that. The reverse is more likely.

Cameron wants to see both the Government and businesses take more risks and embrace technology and change. He would prefer the Government out there spending on critical infrastructure and the Reserve Bank doing a lot less. He is critical of the Reserve Bank driving down interest rates and says all this will do is widen the gaps between the “haves” and the “have-nots” in our society by making housing affordability worse.

He had some strong advice for the RTF too and that was to keep making some noise on the government front as there is not enough representation for small and medium sized businesses.

“You are going to be getting into a bit of a dog fight, but it will be needed,” he said.

As we wait for the new Government to be formed, we are certainly gearing up to represent our essential part of the supply chain that is going to keep New Zealand moving in any kind of Covid-19 response and recovery.

We recorded Cameron Bagrie’s presentation and as this is just a snapshot, it is well worth viewing here.

– Nick Leggett, CEO, Road Transport Forum

Can green shipping scheme lick ‘herding cats’ dilemma?

in International Shipping News 12/10/2020

Momentum to decarbonize ocean shipping emissions is building. Consequences for future newbuilding orders and freight rates could be game-changing.

First came the landmark 2018 decision by the International Maritime Organization (IMO) to halve greenhouse-gas emissions by 2050. Then came the Poseidon Principles from shipping banks in 2019, with lenders vowing to publicly disclose portfolio carbon emissions.

Now, some of the world’s largest bulk cargo shippers have launched Sea Cargo Charter (SCC), which will publish emissions data on chartered ships.

“A global mutual understanding that reporting emissions is a must — that’s a big first step,” affirmed Rasmus Bach Nielsen, global head of fuel decarbonization at trading giant Trafigura, during Wednesday’s SCC launch event.

A big first step, but still just the first step.

Ocean shipping faces a classic “herding cats” dilemma. When it comes to greenhouse gases, different stakeholders want to go in different directions. The challenge is to corral them behind a single common plan.

The industry wants a global regulatory regime under the IMO. But the EU is moving ahead with a regional regime. And not all IMO member countries may be on board with a global scheme. Some shipowners favor carbon taxes and speed limits. Others don’t. The banks will use one way to measure emissions, the charterers another. Container shipping is pursuing a different path than bulk shipping. The banks and charterers that are signatories to the Poseidon Principles and SCC are overwhelmingly Western. Yet ship finance and chartering are increasingly Eastern.

What do charterer, bank schemes change?

Neither the SCC nor the Poseidon Principles require signatories to do business with owners of more fuel-efficient ships — although they can opt to do so unilaterally. The agreements merely require participants to publicly disclose, on an annual basis, how the carbon intensity of their portfolios aligns with the IMO target trajectory. The SCC will report each June, the Poseidon Principles each December.

Annual self-reporting by charterers and banks should compel signatories to improve their public scores over time. What investors want to know is: How will this change vessel supply and rates?

Among the possible consequences: higher charter premiums earned by eco-design ships over non-eco-design ships; higher charter costs for SCC signatories, offset by better access to ESG (Environmental, Social, Governance)-centric investors and lenders; lower capital access for buyers of older secondhand ships leading to higher scrapping; increased ordering of newbuilds with alternate fuel such as liquefied natural gas, with these orders backed by long-term charters from SCC signatories and debt from Poseidon Principles signatories; and consequently, a higher mix of long-term charters versus spot employment in the future.

‘Rebirth of 21st century ship finance’

The grand plan is to ultimately replace the entire world fleet with lower-carbon-emitting or zero-emission ships.

According to Michael Parker, global head of shipping at Citigroup (NYSE: C) and Poseidon Principles chairman, “Modern shipping finance was born after the war. Aristotle Onassis needed to build new ships. He got Texaco to agree to a 10-year time charter. He took that document to Citi and Chase and said, ‘Will you finance the ships if I have them chartered to Texaco?’

“After that we went from crisis to crisis,” Parker recounted, pointing to “unnecessary capacity” ordered on spec without long-term-charter backing.

He predicted that the SCC and Poseidon Principles will precipitate “what I call the rebirth of 21st century shipping finance.”

“This is going to come through responsible charterers helping to finance responsible shipowners who will borrow from responsible lenders to build the new ships. The [new] ships that charterers will charter will be low-emission and ultimately zero-emission ships.

“This will produce the capacity we need for growth but will prevent the building of unnecessary vessels,” opined Parker. That, in turn, will lead to a future in which capital markets feel confident that “investing in shipping is investing in a clean part of the supply chain and not speculating and taking the unnecessary risks that society will no longer tolerate.”

Charterers, banks hunt for more allies

The 17 founding SCC signatories include dry bulk chartering majors such as ADM (NYSE: ADM), Anglo-American, Bunge (NYSE: BG), Cargill and COFCO; major trading houses Guvnor and Trafigura; and tanker shippers including Occidental (NYSE: OXY), Shell and Total.

The signatories’ share of oceangoing cargo appears much higher on the dry than wet bulk side. Poten & Partners’ rankings of the top 10 dirty cargo charterers of the first half of 2020 include only two signatories (Shell in third, Total in ninth).

“The next step is clearly to get the group bigger. There are still a lot of people chewing on it,” said Cargill Ocean Transportation President Jan Dieleman, chairman of SCC.

The banking footprint of the Poseidon Principles is similar to the SCC’s in that it is material, but not yet big enough.

In June 2019, the 11 founding signatories of the Poseidon Principles — including ABN AMRO, Citi, Crédit Agricole, DNB, Société Générale and Nordea — provided just over 20% of the industry’s senior debt. Three banks have since joined, bringing signatories to 14. The all-important Chinese lenders and leasing houses have yet to come into the fold.

‘Like twins born 16 months apart’

“We did start together and the banks, charterers and others tried to come up with something together,” recalled Parker.

The charterers ultimately went their own way under a plan with the code name “The Charterer’s Charter” because they thought “the banks were going to be too prescriptive and impinge on [the charterers’] commercial freedom,” he said.

“We’re sort of like twins born 16 months apart,” said Parker of the Poseidon Principles and SCC. “Our mother, the Global Maritime Forum, can now feel more comfortable than it has for the last 16 months.”

But the twins have opted for different ways to measure emissions. The Poseidon Principles uses the Annual Efficiency Ratio (AER), even though it concedes that other measures such as the Energy Efficiency Operational Indicator (EEOI) provide a more accurate estimate of carbon intensity.

The SCC platform is using EEOI. It will be more time-consuming for shipowners to give the charterers what they need versus the banks. The AER information sought by the banks is already provided through the IMO Data Collection System. For SCC signatories to get the EEOI data, owners of chartered ships must agree to provide voyage-level fuel consumption data within seven days of the end of each voyage.

Operational versus technical efficiency

“The key element for me is that the Sea Sea Cargo Charter goes down to the granularities of individual vessels and individual voyages,” said Tristan Smith, a researcher and lecturer at the UCL Energy Institute.

“Because of that, you have a tool to diagnose what drove one voyage to have a particular cargo intensity relative to another.

“Was it operational decisions? The fact that they demanded utmost dispatch at 15 knots? Was it that they hired a ship with a technical efficiency that was inferior to other ships on the market? All of that is now in a common language with a common ability to monitor it and make decisions differently [for SCC signatories and owner counterparties].

“We’ve had IMO negotiations in the last couple of days where the level of ambition was not as high as it needs to be,” revealed Smith.

“I asked in that forum, ‘Why can’t we regulate the operational carbon intensity of shipping [i.e., the SCC model using EEOI]? Why do you believe the only tool is technical efficiency, which is about the design of the vessel and not the operation of the vessel?’

“And the answer I received, both from a leading government and from a leading shipowner NGO [nongovernmental organization], is that it would be unfair for us to regulate [shipowners] on something that is about luck. What those answers embody for me is the concern that they [owners] are out of control of the ships’ carbon intensity because it is driven by factors beyond what they can manage: It is driven by the charterers.”

In other words, shipowners don’t want to pay the regulatory price for the operational decisions of the charterers. And the SCC initiative, should it gain more traction, can help resolve that concern.

Bulk shipping versus container shipping

Yet another example of the “herding cats” dilemma involves the different segments of ocean shipping. Container shipping is a major contributor to industry carbon emissions but has a totally different business model than bulk shipping.

“The container sector currently has a scheme called the Clean Cargo Working Group,” said Smith. “The Sea Cargo Charter does not cover container vessels. And there’s a crucial difference. The level of transparency, the accountability to a target system and the granularity of Sea Cargo Charter — none of those features are represented in the Clean Cargo Working Group.”

According to Smith, “The container sector is now behind the bulk sector in having a private-sector initiative that is effective, and hopefully this [SCC] can inspire that group or spawn a new group that can push the container sector to the much higher standard that it needs to be at. They’re not there today.”

Global versus regional regulation

And then there’s the pivotal conflict between global and regional regulation.

“It is urgent to have an IMO-led comprehensive shipping decarbonization program,” said Nielsen of Trafigura. “We embrace global measures, but not regional measures. If regional measures are implemented, it becomes a lot harder for the IMO to implement a global system.”

One major regional measure is already in motion. In September, the European Parliament voted to include ocean shipping under the EU Emission Trading System (ETS). The next step — which is far from guaranteed — is to secure approval of EU member states.

A decade ago, the EU tried to force international airlines to buy carbon permits for portions of their flights outside of EU territory. It didn’t work. The ETS only covers intra-European flights.

The World Bank working paper, “Regional Carbon Pricing for International Transport,” published in January 2018, addressed the challenges of an EU-only carbon-pricing system for shipping.

That paper noted that a regional levy would have to be implemented port states and would seek to charge for emissions beyond the port state’s territorial waters. “The scope of port-state jurisdiction with regard to activities that take place beyond the state’s territorial waters is a debated issue,” said the paper.

Assuming the EU could win the legal jurisdictional argument, the next challenge would be to prevent shipping interests from gaming the system. If the carbon pricing applied to the time at sea between the arrival of the cargo and its departure from the previous port, shippers could use transshipment at a nearby hub to minimize the time covered by EU carbon pricing.

Shipping carbon tax

A global solution via the IMO could take the form of a global carbon tax.

Global Maritime Forum members have voiced support for a tax for several years. Last December, leading shipping industry associations submitted an IMO proposal for a $2-per-ton-of-fuel tax to support research and development. The proposal seemed designed to lay the groundwork for a future collection system for a much higher tax. This September, Trafigura proposed a carbon tax of $250-$300 per ton of CO2 equivalent.

The challenge will be corralling the support of countries whose economies depend on imports and exports. They could view a global shipping carbon tax as a levy on their economies.

“Don’t expect the IMO to ever set numbers at levels that are as high as they need to be,” warned Smith. “That is a multilateral process. A lot of governments have concerns that their economic development will be negatively impacted.”
Source: Freight Waves by Greg Miller, https://www.freightwaves.com/news/can-green-shipping-scheme-lick-herding-cats-dilemma

Top global traders push to cut shipping emissions

in International Shipping News 08/10/2020

Some of the world’s biggest commodities and energy players on Wednesday launched an initiative to cut and track emissions from the ships they charter as efforts intensify to reduce the maritime industry’s carbon footprint.

About 90% of world trade is transported by sea, and the UN shipping agency – the International Maritime Organization (IMO) – aims to reduce overall greenhouse gas emissions by 50% from 2008 levels by 2050.

Carbon emissions from shipping rose in the six-year period to 2018 and accounted for 2.89% of the world’s CO2, the latest IMO-commissioned study showed, mounting pressure on the industry to bring levels down.

Under the Sea Cargo Charter, 17 companies, including agrigroups Cargill, ADM and Bunge, oil majors Royal Dutch Shell and Total and mining group Anglo American will publicly disclose annually whether their overall ship chartering activities are aligned with IMO 2050 goals.

“People buying voyage freight will start asking the question what emissions were actually tagged to this voyage and that is a question that was really not asked before,” Jan Dieleman, president of Cargill’s ocean transportation division, told Reuters.

“By creating the transparency, it becomes a topic in chartering decisions.”

Peter Lye, global head of shipping with Anglo American, said charterers signed up will be able to analyse the emissions associated with ocean freight in a methodical way.

Grahaeme Henderson, global head of Shell Shipping & Maritime, added: “Collaboration such as this, from across the sector, is vital to scale-up customer demand for low- or zero-emissions shipping.”

The initiative follows a parallel project, known as the Poseidon Principles, launched in 2019, where 18 of the world’s biggest industry lenders agreed to link the provision of shipping finance to cuts in CO2.

The other companies involved in the latest initiative, launched by the non-profit Global Maritime Forum, are COFCO International, Dow, Equinor, Gunvor Group, Klaveness Combination Carriers, Louis Dreyfus Company, Norden, Occidental, Torvald Klaveness, Trafigura and Ørsted.
Source: Reuters (Editing by Bernadette Baum)

Beirut explosion casts harsh light on international shipping rules

Murky story of a ship called the Rhosus, which began life as a Japanese dredger

Andrew North – August 10, 2020 18:00 JST – Nikkei Asian Review

Boris Prokoshev, right, captain of the cargo vessel Rhosus, and boatswain Boris Musinchak, pose next to a freight hold loaded with ammonium nitrate in the port of Beirut, in a summer 2014 photograph.    © Reuters

Andrew North has reported widely from across the Middle East, South Asia, and Central Asia. He is a regular commentator on Asian affairs.

This is the story of a ship that was built in Japan in 1986.

Named the “Daifuku Maru No. 8,” maritime records show that it began life as a humble dredger, scooping up mud and rock from Japanese shipping lanes so that bigger craft wouldn’t hit the bottom. Then, in 2002, it was sold to South Korea and renamed. So began a journey around the world, during which the ship’s name, owner and the flag flying from its mast changed every few years.

What are known as “flags of convenience” (FoCs) provide a legal way for a shipping company from one country to reduce costs down by “renting” the flag of another country that has lighter labor rules and lower taxes. Many of these flags are run by smaller, and often poorer countries, ranging from Liberia to North Korea, even landlocked Mongolia and Bolivia. It earns these states valuable revenue, but it also provides a way for unscrupulous owners to conceal their identities while running substandard and polluting ships, as well as dodging the law and cheating their crews.

Between 2005 and 2007, the Japanese-built ship was passed between two Hong Kong companies who called it the “Zheng Long” but flagged it to Belize and then Panama, the tiny Central American state that has nearly 9,000 ships sailing under its flag. That’s around 16% of global shipping tonnage, more than any other country.

Once notorious for its lax rules, Panama now keeps closer tabs on who can fly its colors. So it was telling that when a Panamanian company bought the ship and converted it into a cargo freighter, it was reflagged to the Black Sea nation of Georgia — another country known for running a low-cost FoC regime.

There were still more identity changes to come. First, a Cyprus-based Russian business owner bought the freighter. But when it was sent to pick up a shipment from the Georgian port of Batumi in 2013, the Georgian flag had been replaced with the colors of Moldova, a country with no seaside coast but a reputation at the time for allowing its flag to be used for smuggling by Iranian vessels.

Showing its age, the now 30-year old ship had defects that included a hole in its hull requiring water to be pumped out to stop it sinking, but it set sail nonetheless. When the Russian owner didn’t pay wages, the crew walked out, forcing him to find another crew before sending the vessel out to Beirut to earn extra cash by taking on heavy machinery. When the ship’s decks buckled under the weight, inspectors were alerted and it was declared “unseaworthy.”

The former Japanese dredger was by then named the “Rhosus,” which the world now knows as the ship that carried the 2,700 tons of Georgian-made ammonium nitrate that exploded in Beirut port on August 4 with such deadly effect.A former Japanese dredger named the “Rhosus,” carried the 2,700 tons of Georgian-made ammonium nitrate that exploded in Beirut port on August 4, killing up to 158 people, and injuring more than 6,000.    © Reuters

In the aftermath of the disaster, the focus has rightly been on the failings of Lebanon’s dysfunctional government, as the explosive cargo was its responsibility once offloaded. But the murky story of the Rhosus also raises questions as to why an international system almost designed to avoid accountability is allowed to continue.

The International Transport Workers’ Federation (ITF) has been campaigning for an end to FoCs for decades. It lists 35 countries running flags of convenience, blaming the practice for low wages and abusive conditions among merchant navies, as well as the “floating coffins” on the world’s seas.

Some maritime experts argue that the story of the Rhosus shows that controls worked because the ship was eventually stopped in Beirut. According to Natasha Brown, spokesperson for the International Maritime Organization, the UN’s shipping regulation body, more and better inspections have led to a decline in serious incidents in the last seven years.

Japan, the US and Europe all operate a system of white, gray and black lists to classify flags by their record, with frequent inspections for poorer performers. “That makes it more difficult for an owner to keep using a blacklisted flag,” argues Luc Smulders, Secretary-General of the Paris MoU, the organization that oversees European inspections.

But such measures still don’t go far enough. Blacklisting doesn’t stop a ship from sailing, and there are plenty of ports beyond the reach of organized inspectors. Groups such as the ITF say that until there is a “genuine link between the flag a ship flies and the nationality or residence of its owners,” abuses will continue.

Moldova is a case in point. Seven years after the Moldovan-flagged Rhosus was stopped in Beirut, the country is on the official flag performance blacklist. But it continues to run a lightly-regulated shipping registry for all comers. You can do it all online with no mention of any physical checks. (The country’s ship registration agency did not respond to several requests for comment.)

With all that has since emerged about the Rhosus and its past, many have wondered how it was ever allowed to sail with so much explosive material on board. But as things stand, there is little to stop another ship with a shady past from setting sail today.

Firth of Thames best home for a new port for 100-plus years: Auckland Business Chamber (and Cubic agrees)

The suggestion of the Firth of Thames is a
The suggestion of the Firth of Thames is a “brave, big call”. Photo/ Google

By: Andrea Fox Herald business writer andrea.fox@nzme.co.nz

Just when you thought not another report could be wrung out of Auckland’s port future debate, the Auckland Business Chamber is urging all Kiwis to completely “re-imagine” a port for 100-150 years – and it’s pick is in the Firth of Thames.

After staying pretty quiet during a flurry of reports over shifting the Auckland port, the chamber is launching its own take, “A Port for the Future”, which invites the community to use an accepted timeline that the existing port will do for another 25 or so years, to carefully plan another to last more than another century.

And for port observers feeling reported-out, Chamber chief executive Michael Barnett assures “this is not another report”.

“It is an effort by the chamber to get people to re-imagine where a port might be and what would be the best for New Zealand and New Zealand business – not a competition between Auckland and North or Tauranga but an informed discussion of what could be.”

Barnett said the chamber represents the voice of Auckland business without bias, and in this neutral position has stepped back to analyse all the discussion around the relocation of the port from Waitemata Harbour.

“The chamber … now realises that the issue is not just an Auckland problem, but is one that, if done correctly, will bring benefits right across New Zealand.”

The chamber had concluded the existing port was fully sustainable for another 25 to 30 years and that a solution is required beyond that. To provide a port solution beyond the generation after next required vision and a willingness to go beyond the familiar.

Ports of Auckland has 25-30 years of life left in it, says Auckland Business Chamber. Photo / Michael Craig
Ports of Auckland has 25-30 years of life left in it, says Auckland Business Chamber. Photo / Michael Craig

The chamber’s offering makes a case for a man-made island ship exchange terminal in the Firth of Thames, connected by broad gauge rail to a container terminal facility in the vicinity of Pokeno/Meremere.

The island terminal would be “a whole-of-New Zealand” terminal servicing large foreign trade ships handling all import and export containers. The report does not discuss costs but points to several overseas examples to underline there is nothing in the paper that is not tried and proven elsewhere in the world.

“What is running out (for the existing port) is social licence and that’s what’s motivating us to try to accelerate the debate and re-imagine what a port could look like”, Barnett told the Herald.

“What’s been uncomfortable has been the apparent political nature of the discussion so far, it tends to have been personality-driven from the north – almost an anti-Auckland thing. Yet this isn’t about either of those things, it’s about a nation down in the South Pacific dependent on its ability to import and export.

“We need something for the next 100 years and the people of New Zealand should make that choice. It’s not up to a politician or a government.

“(So far) we have re-imagined the port simply by saying ‘let’s pick up Auckland port and take it north (to Northport)’. I’m saying we can do it another way.”

The chamber will widely distribute its paper within the freight, transport and shipping sector and invite comment and discussion directly to the chamber.

The chamber’s analysis concluded there would always be a need for a port in Auckland – “just not as we know it”.

Auckland Business Chamber chief executive Michael Barnett.
Auckland Business Chamber chief executive Michael Barnett.

Social licence issues arising at New Zealand ports were “but the tip of the iceberg and demonstrate that the focus being purely on relocation of the Port of Auckland is extremely narrow and has the potential to lead to a flawed conclusion”, said the paper.

“Ports of Auckland is clearly approaching a sunset phase, however, it is the chamber’s view that the present facility will be capable of handling existing throughput plus growth for several years to come … (but) it is inevitable and acknowledged by the chamber, that the port’s container facilities will be shifted from the present location to another site.”

The paper said volume growth and investment required at the Port of Tauranga, along with “other issues starting to emerge” made it “pretty safe to assume that the Tauranga terminal will also be looking for a new location in future”. In four weeks the Tauranga port handled as many containers as Wellington’s port in a year.

Current modelling showed that with the construction of the future city of Drury South, the Auckland-Hamilton-Tauranga triangle would encompass four of New Zealand’s six largest cities.

Over the next 30 years the population in the area between greater Auckland and Taupo was forecast to grow by 7.8 per cent a year. During this time the rest of New Zealand’s population was predicted to grow by 2 per cent a year and by 3.6 per cent north of Auckland.

The option of developing a new port at Manukau Harbour raised in earlier reports was indeed an option when considered just in the context of Auckland, the paper said.

“However it is not compatible with the chamber’s objective of providing a future solution that will benefit NZ Inc. Throughout … the chamber has avoided introducing untested or yet to be implemented technology as will be required to overcome the hazardous conditions presented by the Manukau Harbour entrance.”

The Firth of Thames had been looked at in studies over the past 25 years.

“Unfortunately the concept appears to be too far out of the mainstream for people to understand, especially as it has only been viewed as a solution solely for Auckland and suggest constructions methods based on the traditional.”

The paper details modern construction methods used overseas.

Barnett concedes the chamber’s suggestion of the Firth of Thames is a “brave, big call” given the environmental, wildlife and iwi concerns that are likely to be raised against it.

But with time on New Zealand’s side for consultation, research, innovation and planning, problems could be properly addressed and hopefully overcome.

Barnett, a veteran of port group discussions over the years, worked with ports consultant Tony Boyle to produce the paper. The project cost did not exceed $10,000, he said.

“But I like to think it is rich in intention.”