The Global Container Shipping Industry since the Hanjin Collapse

In August 2016, Hanjin Shipping Co., at the time the world’s seventh largest container carrier, sought bankruptcy protection. It was the largest bankruptcy in shipping industry history. On February 2, 2017, the Seoul Bankruptcy Court declared that Hanjin Shipping would be liquidated, as restructuring its debts would be “prohibitively expensive.” But just how big was this debt load?

Hanjin Shipping had originally admitted to the equivalent of $5 billion in debts. Once the bankruptcy court got to work, there were nearly weekly announcements that more debt had been found, tucked away in nooks and crannies of the once glistening edifice. In the end, it was determined that Hanjin, when it entered receivership, actually had $10.5 billion in debts.

Hanjin had been tripped up by, among other factors, a problem that plagues the container shipping industry: overcapacity. And despite Hanjin’s liquidation, that overcapacity is getting a whole lot worse.

As of June 2018, all of the top 13 container carriers bar one had added capacity compared to a year earlier. The lone contrarian was Hyundai Merchant Marine (HMM), which is presently exiting the Transatlantic market altogether and as such is eliminating capacity. But the other 12 big container carriers more than made up for it. Here are some standouts:

Zimm Integrated Shipping Services (Israel) increased its capacity by 24.5%.

Orient Overseas Container Line (Hong Kong) added 18.4%.

CMA-CGM (France) added 16.3%. It also ordered from two state-owned Chinese shipyards nine 22,000-TEU (Twenty-foot Equivalent Unit) container carriers that will be the world’s largest when deliveries start next year. Here is a current record holder at 18,000-TEU. Note the tiny 40-foot containers stacked on top (image via CMA-CGM):

COSCO, a state-owned product of China’s “command economy,” added 12.4%.

Maersk Line, the largest carrier by capacity, ahead of COSCO, added 10.8% in capacity.

ONE (Ocean Network Express), a brand-new company formed from the container divisions of Japan’s top three shipping companies (Mitsui-O.S.K., Nippon Yusen Kaisha and K-Line) added 7.9%, despite many promises to the contrary.

Including HMM, the average capacity increase for these 13 already huge shipping companies was 8.5%. Including all companies, big and small, container carrying capacity worldwide increased by a 9.3% year on year.

As a result, despite surging transportation inflation worldwide, the China Containerized Freight Index (CCFI), which tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world, at 821 on Friday, has not fully recovered from its brutal collapse that bottomed out at 636 in April 2016. Before the collapse, it had ranged consistently above 1,000 and periodically above 1,100:

Note that just like the Baltic Dry Index, the CCFI is not a measure of trade volume, but a measure of how expensive (or cheap) it is to ship goods by sea around the world.

Only part of the collapse of the containerized freight rates in 2015 and 2016 was due to overcapacity. Another major factor was the plunge of the price of oil, and therefore of bunker, the fuel for these giant container ships.

With the CCFI well below 1,000 since 2015, while bunker prices have been rising since 2016 along with the costs of emission compliance, profits are being eroded, and momentous changes are sweeping through the industry.

Above mentioned ONE can be considered one of the poster children for this “brave new world”: it started operations on April 1, 2018 (the beginning of the fiscal year in Japan), and during its first quarter of existence has already managed to lose $120 million.

Japanese shipping companies have a time-honored tradition of ignoring losses until they become too large to be ignored, and then there’s always a big scandal followed by an emergency bailout, merger or takeover. So a measly $120 million in losses in a single quarter is of no concern to them.

AP Moller-Maersk, the parent company of Maersk Line, bought Hamburg Süd from Dr Oetker KG of Germany for €4.3 billion. In 2013 Hamburg Süd had attempted a merger with Germany’s other shipping giant, Hapag-Lloyd, but Dr Oetker KG pulled out when a satisfactory financial package could not be agreed upon.

Hapag-Lloyd then merged with perpetually troubled Gulf carrier United Arab Shipping Company (UASC), resulting in a curious ownership situation. Due to previous mergers and share swaps, the largest shareholder of the “new” Hapag-Lloyd is Chile’s Grupo Luksic (20.7%), followed by three that each own 14%: Kuehne + Nagel AG (Germany, run through a shell company in Switzerland); the City of Hamburg; and Qatar’s national wealth fund, QIA. Saudi Arabia’s Public Investment Fund owns 10%. The rest is free float.

This group of shareholders has recently started looking for a further merger, but recent negotiations with CMA-CGM broke off due to anti-trust concerns.

Everyone has been keeping an eye on COSCO. It announced last year to great fanfare the purchase of Orient Overseas (International) Limited (OOIL) of Hong Kong for the equivalent of US $6.3 billion.

OOIL has long been one of the most profitable shipping companies worldwide. The fact that it is majority-owned by the Tung family, one of Hong Kong’s most powerful and richest clans, surely doesn’t hurt.

OOIL’s container division, Orient Overseas Container Line (OOCL), ranked as the seventh largest container carrier by capacity when COSCO put forward its offer. Stock markets uncorked the champagne and the financial media went into the usual hyperbole to sell yet another “deal of the century.” As the purchase process made its way through anti-trust agencies around the world, it seemed like a done deal until April 2018, when it run into two snags.

The first snag is the Trump Administration. In 2011, OOCL struck a deal with the Port of Long Beach to finance a large-scale modernization and expansion of the Long Beach Container Terminal (LBCT) in return for majority ownership. At the time, OOCL was owned by a wealthy Hong Kong family, so nobody raised any objections.

Now things have changed: The Trump Administration has tasked the Committee on Foreign Investments (CFIUS), a panel of experts from 17 government agencies, with deciding if the LBCT constitutes a “strategic asset” and, if so, if it can be owned by a company directly controlled by a foreign government locked in a trade war with the US.

COSCO has already extended an olive branch, offering to sell the LBCT after the merger “at cost” if a buyer can be found. But until the CFIUS issues a ruling, the situation has stalled.

The second snag is the Chinese government itself. Despite being a state-owned enterprise, COSCO had to seek approval for the OOIL purchase from the Anti-Monopoly Bureau in Beijing. Initially it seemed little more than a formality, but deadline after deadline has passed without the Bureau issuing a ruling.

Neither COSCO nor the Chinese government have provided any explanation even after the last deadline, June 30, 2018, came and went. We’re left in the dark as to the motives, but China’s highly complicated power structure and the even more complicated relationships between Hong Kong and Macau “godfathers” and the Mainland government most likely have a hand in it.
Source: Wolf Street

Suez Canal Grinds to a Halt after Multi-Ship Groundings, Collisions

Suez canal
illustration; Image Courtesy: Wikimedia under CC BY-SA 3.0/AashayBaindur

The Suez Canal, Egypt’s busiest waterway, has been experiencing traffic mayhem over the past two days as multiple groundings and collisions brought the canal to a standstill.

The drama started with the grounding of a containership on July 15, which has been identified as Aeneas.

The 63,059 dwt containership grounded during its transit at about 1830 hours local time, GAC Egypt reported.

It was the 20th in the Southbound convoy of 27 vessels. Initial reports indicate that the ship suffered an engine failure that led to the grounding.

Suez Canal tugs towed the stricken boxship to Suez outer anchorage at 01.36 hours on July 16 and the canal was cleared, GAC reported citing Suez Canal Authority.

“Some of Southbound ships that had been behind the grounded vessel cleared the canal. Only four were detained and resumed their transit at 0300 hours today (July 17),” GAC said.

The incident was followed by the grounding bulk carrier of 39,929 dwt on July 16, identified as Panamax Alexander.

The 39,000 dwt bulker was behind the the stricken containership in the Southbound convoy and run aground having collided with another bulker right behind it.

Two bulkers, Sakizaya Kalon and Osios David, are also anchored in the canal area, today’s data from Marine Traffic shows.

Based on the latest information from the Suez Canal Authority, the grounded bulker was refloated on Monday afternoon and has arrived at the Great Better Lakes.

As of today, the Suez Canal is ready for convoys to resume transiting, the authority said, however, dozens of ships have been delayed.

The transit arrangement for delayed convoys from Monday and Tuesday have not yet been announced, GAC said.

The 18 ships whose transit was interrupted on July 16 resumed their voyage Southbound early this morning and are expected to start exiting the canal later today.

As for the Northbound convoy, only 6 ships entered the canal and they are waiting at Great Better Lakes. Around 12 ships remain waiting at Suez anchorages.

There are 25 vessels that were scheduled to start their Northbound transit today and they are still waiting at Suez anchorages for SCA transit arrangements, GAC informed.

With regard to the Southbound voyage for today, only 11 ships from total 29 ships entered the canal and the rest of this convoy is still waiting at Port Said anchorage for further instructions.

World Maritime News Staff; Image Courtesy: Wikimedia/AashayBaindur under CC BY-SA 3.0 license

Fuelling the ships of the future

By 2020, the global shipping fleet will be required to reduce greenhouse gas emissions by 50% and switch to low-sulphur fuels, a move that is expected to radically improve air quality. The recent decision pushed through by the International Maritime Organisation, the United Nation’s leading shipping agency, is one of the biggest revolutions in maritime history. Its effects will be felt the world over, by refineries and ship owners as well as trading hubs and ordinary consumers at the gas pump.

This is good news for the environment. According to a recent report by the National Resources Defense Council, with ships allowed to burn fuel with sulphur levels that are up to 3,500 times higher than permitted in on-road diesel, one container ship cruising along the coast of China emits as much diesel pollution as half a million new Chinese trucks in a single day. The major overhaul shows that the industry is finally making the transition from thick, sulphur-rich bunker fuel to cleaner, more environmentally friendly maritime fuel.

But in order to make sure that these changes have a lasting impact that goes beyond the shipping industry we will need to embrace the full potential of marine fuels and liquefied natural gas (LNG) and create a new culture of transparency, although within the International Maritime Organisation (IMO) itself.

The IMO ruling to push the sulphur cap for bunker fuel down to 0.5% will affect 70,000 ships and will be a game changer for marine fuel. More broadly, the wider commodities industry, from coal to oil to sugar, is likely to face a price hike. No sector will be immune to these changes as the shipping industry carries almost 90 per cent of world trade. Airlines and travellers worldwide are also likely to be affected due to a knock-on effect creating higher fuel prices.

So where do we go from here? There is no silver bullet to the post-2020 scenario. Alternatives include using sulphur-rich fuel oils alongside so-called scrubber systems, exhaust gas cleaning systems, a technology which also has many drawbacks. The cost of investing in scrubbers can exceed US$10 million per ship. The low margins of the sector mean that ship owners are understandably reluctant to make these investments.

That is why the shipping sector must create a general consensus for post-2020 bunkering, one that will help cut costs and improve energy supply and security. Low sulphur fuel oil and liquefied natural gas are the way forward. They are credible solutions for energy stakeholders seeking an economic and environmentally sustainable option. LNG bunkering contains almost no sulphur, produces low greenhouse gas emissions and has a proven technological track-record.

Looking to the future, it is important that the shipping sector takes steps to harness the full potential of LNG as well as offset the potential consequences of the new regulations pushed through by the IMO. To do this, we first need to address the likely challenge of millions of barrels of high sulphur bunker fuel being displaced as a result of the new limits. This is because the marine market has traditionally been a major outlet for the refining industry.

Second, we will need to do the maths and work out the logistics of sourcing high volumes of LNG for bunkering in line with domestic and industrial needs. This will involve addressing the question of supply, mindful of the fact that in the short-term low-sulphur fuels will dominate until large scale consumption of LNG takes hold across the bunker sector.

Finally, a new culture of transparency has to take root in the shipping industry, encompassing all major players – including the IMO. A report published this month by Transparency International, the global corruption watchdog, highlighted several accountability shortcomings that are weighing down the Organisaton. These must be addressed if the IMO is to deliver on its ambitious and honourable goals.

The IMO’s ground-breaking changes are essentially a force for good. And they are no doubt the first of many steps aimed at making the shipping sector less of a menace to the environment. This is a unique opportunity for energy stakeholders, big and small, to stay ahead of the curve and rethink how we do business.
Source: New Europe

World’s largest container vessels under construction in Shanghai

Construction of two container ships with the carrying capacity of 22,000 TEUs, which would make them the largest container vessels in the world, began on Thursday, the paper.cn reported.

The two are among nine 22,000 TEU vessels deal signed by French container shipping operator CMA CGM and China State Shipbuilding Corporation (CSSC) in September last year.

Built by Shanghai-based Jiangnan Shipyard and Hudong-Zhonghua Shipbuilding, the two container vessels measure 400 meters in length, 61.3 meters in breadth and 33.5 meters in depth. The deadweight of the box ship is 220,000 DWT, which can contain 1,000,000,000 iPhoneX (with standard packing box). Moreover, it can still hold 2,200 4-foot refrigerated containers, accounting 20 percent of the whole TEU.

Besides, they are also the world’s first giant container ships propelling with engines burning liquefied natural gas, a technology breakthrough for environmental protection. They have distinctive advantages compared to the current ships using heavy fuel oil: Up to 25 percent less CO2, 99 percent less sulphur emissions, 99 percent less fine particles and 85 percent nitrogen oxides emissions.

The two vessels are expected to be delivered in 2019.
Source: ChinaDaily

Shipping is delivering on climate change

The international shipping sector is doing its part to contribute to global climate change efforts, writes Violeta Bulc.

Violeta Bulc

Photo credit: The Parliament Magazine/Bea Uhart


In April, more than 100 countries agreed on an initial strategy to reduce greenhouse gas (GHG) emissions from shipping at the International Maritime Organisation (IMO).

This was a significant achievement for the EU and its member states, which played an instrumental role in brokering and securing the agreement with international partners.

The agreement is another example of the EU becoming a stronger global actor to spur substantive and credible climate action. By defining an objective of at least 50 per cent GHG reductions by 2050, compared with 2008 levels, international shipping has become the first industry sector to agree globally on an absolute emission reduction aim.

The agreement also comes with a comprehensive list of potential reduction measures, including short-term measures. Undoubtedly, the IMO and the shipping sector were indispensable in setting this precedent. Yet reaching this agreement was no easy feat.

I had the opportunity to be part of the discussions and to interact with some of the key parties during the first day of the negotiations that led to this remarkable outcome. I met with EU member states representatives, who, despite some initial divergence on negotiating tactics back in Brussels, entered the discussions on solid and ambitious grounds.

I am proud to say that, following EU coordination and throughout the negotiations, the member states remained united and played a pivotal role in gathering the required political support during the negotiations.

Four MEPs – José Ignacio Faria , Dubravka Šuica, Jytte Guteland and Bas Eickhout – who engaged in many side meetings at the IMO, also supported the EU delegation.

“The International Maritime Organisation (IMO) agreement is another example of the EU becoming a stronger global actor to spur substantive and credible climate action”

The outcome was also aided by good cooperation of many EU member states with other like-minded partners including several Pacific Islands States, Canada, New Zealand, Australia and Mexico. The Marshall Islands for instance – one of the world’s biggest flag states and a remote small island state – are heavily impacted by climate change.

Their population is facing increasing difficulties in growing crops and drilling for drinking water, as increased floods increase salinity. Bridging the gap between positions on key issues such as emission reduction objectives and guiding principles of the strategy required a negotiation effort.

Several major flag states questioned whether it was appropriate to set a number for the emission reduction objective before data on fuel consumption and emissions become available. Their reticence was dispelled by the industry representatives, who publicly voiced the sector’s readiness to accept numbers as indicative targets for reductions in the future.

Many developing countries expressed concerns over the possible impacts of new emission reduction measures, for example, on their trade. To address such concerns, the Commission, the EU member states and MEPs present reaffirmed, in their outreach meetings that the EU is willing to consider further capacity building and technical cooperation to assist implementing future measures.

“I am proud to say that, following EU coordination and throughout the negotiations, the member states remained united and played a pivotal role in gathering the required political support during the negotiations”

Therefore I am pleased to see that the EU-funded, IMO-managed project which led to the establishment of the maritime technologies cooperation centres network was expressly acknowledged in the strategy as a capacity building project.

This is an example to others, including international financial institutions. Crucial factors in brokering the deal were the tireless efforts of IMO Secretary General, Kitack Lim, in encouraging inclusiveness and consensus in the discussions.

With this support in the background, the resolute chairmanships of Sveinung Oftedal of Norway, the Chair of the working group on reduction of GHG emissions from ships, along with Hideaki Saito, the Chair of the marine environment protection committee, made it possible to draw a line and build upon the support of the overwhelming majority of the IMO States present.

Not everyone was fully on board with the text of the adopted IMO strategy. The US, following on their recently announced plans to withdraw from the Paris agreement, and Saudi Arabia, given what the prospect of decarbonisation may mean for their main export product. Both expressed formal reservations to the adoption of the IMO strategy.

While the strenuous negotiations at MEPC 72 delivered a result that kept the IMO in the driving seat for defining an emissions agenda for international shipping, the real work, developing and adopting reduction measures, starts only now.

The full cooperation of both the EU and also all IMO member states is needed to agree on short-term measures with immediate emission reduction effects before 2023. Preparations on longer term actions should also begin.

I am optimistic that shipping is delivering its share to the global climate change efforts under the Paris agreement and the EU institutions are determined to strive for ambitious objectives, and continue the effective cooperation with our partners.

About the author

Violeta Bulc is European mobility and transport Commissioner

Towards Zero Emissions: Environmental Outlook

While the world is struggling to live up to its commitment to limit climate emissions, new data indicate that climate change may be more severe and occur more rapidly than anticipated earlier. The IMO is looking for ways to make shipping climate-neutral over the next decades. DNV GL gives an overview of the status of the discussion and potential future measures.

When the Paris Agreement was adopted in 2015 in response to the increasing signs of global climate change, shipping and aviation were not included. Instead, the IMO and ICAO were asked to come up with greenhouse gas (GHG) emission reduction schemes of their own. At MEPC 72 the IMO has now adopted a strategy to reduce emissions from shipping. This aims to reduce total emissions from shipping by at least 50 per cent by 2050, and to reduce the average carbon intensity by at least 40 per cent by 2030 while aiming for 70 per cent in 2050, all figures compared to 2008. The ultimate vision of the IMO is to phase out greenhouse gas emissions entirely at the earliest time possible within this century. This initial strategy will be reviewed in 2023 based on information gathered from the IMO Data Collection System (DCS) as well as a fourth IMO GHG study to be undertaken in 2019.

As it must be assumed that the global shipping activity will continue to grow towards 2050, the 50 per cent emission reduction target is quite ambitious and will most likely require widespread uptake of zero-carbon fuels in addition to other energy efficiency measures. However, there are no zero-carbon fuels available today. A concerted research and development effort is needed not only to develop such fuels but also to make them available in the required volumes..

To implement its ambitious strategy the IMO must develop new policy measures and regulations. The strategy contains a long list of options, such as strengthening the EEDI, applying operational indicators, reducing speeds, rolling out market-based measures, or developing zerocarbon fuels. Work on an action plan to kick-start the development of appropriate measures will start this fall.

While limited immediate impact on ships is to be expected, the efforts required to reach the long-term goals will have to build over the coming years, with a real impact starting to materialize in the 2020s. In a long-term perspective, DNV GL expects this strategy to fundamentally change the way ships are designed and operated.

CO2 data collection in the EU and at the IMO

In the EU, regulations for monitoring, reporting and verification (MRV) of CO2 emissions have entered into force, requiring all ships above 5,000 GT sailing to or from European ports to report CO2 emissions, cargo data and average energy efficiency. 2018 is the first year of reporting, with data being published annually by the EU as of mid-2019.

One purpose behind the EU MRV regulations was to encourage the IMO to work on a similar mechanism with global coverage. The EU regulation itself contains a provision for a review aimed at alignment with a future international system, if in place. It is therefore significant that the IMO has adopted a global mechanism for mandatory monitoring, reporting and verification of fuel consumption data for all ships 5,000 GT and above. The scheme, known as the IMO Data Collection System (DCS) on fuel consumption, will have 2019 as its first year of operation.

The IMO DCS differs from the EU MRV in several important aspects, including the confidentiality of data, the calculation of efficiency metrics, and the requirements for data verification. While these are all issues where the EU has a strong preference for the requirements of its own system, the European Commission has nevertheless initiated a formal review process aimed at aligning the EU MRV with the IMO DCS. There are encouraging signs of a legislative proposal to be published in May 2018, though it is expected to be challenging and likely time-consuming for the commission, the parliament and the council to come to an agreement. DNV GL believes that full alignment is unlikely, and that the industry may have to cater to both reporting regimes for the foreseeable future.

SOX regulations

IMO has agreed that the 0.5% global sulphur cap will be implemented from 1 January 2020. The decision is final and will not be subject to renegotiation, which gives certainty to the maritime and bunker industries. There were intense discussions on both the practicalities of implementation and on how to ensure robust enforcement and a level playing field. IMO is continuing to discuss implementation and supporting measures on a priority basis and is holding an intersessional meeting dedicated to the topic in July. The meeting is expected to provide robust guidelines for industry and authorities; these will be finalized at MEPC 73 in October and then circulated.

Ship operators will have to choose their preferred compliance strategy, a decision with far-reaching operational and financial implications. There is no one-size-fits-all solution on the table; scrubbers, LNG, and “hybrid” fuels are all realistic options, but most vessels are expected to default to using 0.5% marine gas oil (MGO) and blends, at least initially. Local availability issues and price volatility are expected to result from the dramatic change of the fuel demand situation as of 1 January 2020, and the number of non-compliance cases, especially because of insufficient tank cleaning at bunker facilities and on board ships, is likely to be rather high during a transitional period.

Enforcement remains a critical concern, especially on the high seas. Contrary to emission control areas (ECAs), where enforcement is up to the respective port state, monitoring of operations on the high seas is the responsibility of the flag state. Legitimate questions are being asked about the readiness of all flag states to provide uniform and robust enforcement to ensure a level playing field around the globe. To alleviate the enforcement issue to some extent, the IMO at MEPC 72 agreed to establish a ban on carriage of non-compliant fuels for all ships without scrubbers. This ban is likely to be adopted at MEPC 73 and will then take effect in March 2020. Ships without scrubbers will still be allowed to carry noncompliant fuel as cargo.

Moving to regional and domestic matters, it should be noted that in the EU the Water Framework Directive is imposing restrictions on the discharge of scrubber water. Belgium and Germany have prohibited the discharge of scrubber water in most areas, thereby limiting the operability of open-loop scrubbers. Similar restrictions apply in some US coastal waters, e.g. off Connecticut.

In Asia China’s regulations for domestic SECA-like requirements are being rolled out in the sea areas outside Hong Kong/ Guangzhou and Shanghai as well as in the Bohai Sea. China is taking a staged approach, initially requiring a 0.5% maximum sulphur content in fuel burned in key ports in these areas, gradually expanding the coverage to finally apply fully to all fuels used in these sea areas from 2019 onwards. Conceivably the allowable sulphur content will be tightened to 0.1% by 2020, and China may eventually submit a formal ECA application to the IMO. In our view there is a real possibility of these zones being extended to include further Chinese sea areas.

NOX regulations

The NOX tier III requirements have entered into force in the North American ECAs for ships constructed on or after 1 January 2016. Anyone constructing a ship today needs to consider whether operation in the North American ECAs will be part of the operational pattern, whether upon delivery or at any time in the future. If so, NOX control technology will be required on board. When choosing an NOX control technology operators should consider how they intend to ensure compliance with the 2020 sulphur cap to avoid system integration issues.

With respect to upcoming regulations, IMO has agreed to apply NOX Tier III requirements to ships constructed on or after 1 January 2021 when operating in the North Sea and Baltic Sea ECAs. There are presently no indications of plans for additional NOX Tier III areas.

Ballast water management

The Ballast Water Management (BWM) Convention entered into force on 8 September 2017, more than 27 years after the start of negotiations, and 13 years after its adoption in 2004. The implementation schedules was revised at MEPC 71 in July 2017. Briefly put, every ship in international trade will be obliged to comply at some point between 8 September 2017 and 8 September 2024. For ships from 400 GT upwards, the compliance date is linked to the renewal of the International Oil Pollution Prevention certificate, while ships below 400 GT must comply by 8 September 2024. By that date the entire world fleet must be in compliance.

In the US, the domestic ballast water management regulations entered into force in 2013. New ships must comply upon delivery, while existing ships must comply by the first scheduled dry-docking after 1 January 2014 or 2016, depending on ballast water capacity. USCG type approval is required for ballast water treatment systems; six such approvals have been granted so far, with eleven more in the approval pipeline. The USCG’s previously liberal extension policy granting deferred installation dates to more than 12,500 ships due to the unavailability of approved systems has changed since the first type approvals were issued. Presently the USCG is very restrictive on granting extensions and this policy is likely to tighten further. In practical terms, operators should now plan their installation dates based on the compliance dates in the regulation and not gamble on receiving an extension.

Emerging issues

There are a number of new environmental regulations under consideration at the IMO as well as in various countries. They cover a broad range of topics, such as plastic pollution from ships, the impact of noise on cetaceans, particle emissions, hull biofouling, and a ban on heavy fuel oil in the Arctic. The discussions are at various stages; New Zealand, for example, has introduced biofouling regulations in May this year. The noise issue is primarily a concern of a few isolated stakeholders, while plastics and an Arctic HFO ban are under consideration at the IMO. Nevertheless, most if not all of these topics are likely to be the subject of further domestic or international regulations sooner or later during the next decade.
Source: DNV GL, Bulk Carrier Update

As Trump Punishes Trade Allies, Europe Expands Global Alliances

Europe is building new alliances to counter an increasingly isolationist America as President Donald Trump recasts the U.S.’s economic relationship with the world.

The European Union opened free-trade negotiations with Australia this week, representing one of more than a dozen deliberations currently being conducted by the bloc. This comes on the heels of the U.S. slapping tariffs on imports from some of its most solid allies — including the EU, Canada, Mexico and Japan — in the name of national security.

But Trump’s aggressive foreign-policy stance, which has included leaving the Trans-Pacific Partnership and the Iran nuclear deal, has offended some of the U.S.’s closest partners, with EU President Donald Tusk vowing to stand up to the White House’s “capricious assertiveness.” This has raised the prospect of a shift in alliances among world powers as they seek to preserve the global trade system.

All the trade deals being concluded are sending a message that “the EU and its partners are coming together,” European Trade Commissioner Cecilia Malmstrom said in a speech in Canberra on June 18, adding they were shaping globalization and standing up for open trade. “And we need many allies to help us in pursuing these goals.”

Doubling Down
Trump doubled down on his efforts to recast Washington’s trade relationships this week, threatening tariffs on another $200 billion in Chinese imports after already identifying $50 billion in products to hit with levies. The U.S. measures have created unlikely allies among nations, with both China and the EU calling for adherence to the multilateral trade system.

This comes after Trump threw a Group of Seven meeting into chaos, rejecting a joint statement upon hearing Prime Minister Justin Trudeau say Canada would be forced to respond to the U.S. decision setting tariffs on Canadian steel and aluminum. Leaders have criticized Trump, with French President Emmanuel Macron’s office saying “international cooperation cannot be dictated by fits of anger and insults,” and Norway’s prime minister saying “the U.S. isn’t the same driving force as it used to be.”

“The Atlantic has gotten wider under President Trump,” German Foreign Minister Heiko Maas said in a June 13 speech in Berlin. “Trump’s isolationist policy has opened a huge worldwide vacuum. Therefore our common response today to ‘America First’ must be ‘Europe United’.”

The EU is already Australia’s second-largest trading partner after China, and an accord including New Zealand could boost the bloc’s gross domestic product by 4.9 billion euros ($5.7 billion) by 2030, according to European Commission estimates. Sectors likely to be included in discussions will be machinery, cars, electronic equipment, chemicals and metals.

‘Like-Minded Partners’
The talks with Australia come a year after the EU inked accords with Mexico and Japan and the provisional passage of a trade agreement with Canada, which took seven years to complete.

“I look forward to adding Australia to our ever-expanding circle of like-minded trade partners,” Malmstrom said in a statement. “In challenging times, it is heartening to see that Australia shares our commitment to a positive trade agenda, and to the idea that good trade agreements are a win for both sides.”

Despite the historical relationship the U.S. has with Europe, and the American role in developing the trans-Atlantic partnership, EU leaders are concerned that Trump’s actions may undermine the global system.

“What worries me most, however, is the fact that the rules-based international order is being challenged,” Tusk said during the G-7 summit in Charlevoix, Canada. “Quite surprisingly, not by the usual suspects, but by its main architect and guarantor: the U.S.”
Source: Bloomberg

Posidonia 2018: 5 Most Exciting Things to Watch Out for in Shipping Industry

This is an extremely exciting time for the shipping industry which is expected to undergo a major transformation over the next decade.

A number of variables are likely to play their role in the shaping of the industry’s future way of doing business ranging from the third industrial revolution to electric cars and the switch to renewable energy and digitalization.

However, being such a resilient sector shipping tends to find opportunities in disruption.

Speaking at today’s Power Panel, organized by BIMCO within the Posidonia 2018 trade show, industry representatives from various branches shared their views on the most exciting things in the industry at the moment.

Basil Karatzas, CEO of Karatzas Marine Advisors, said that the most exciting thing on the market was the freight perspective.

“It makes the market return to the fundamentals and give it more thought. What is more, it keeps away speculative investments,” he said, adding that most of newbuildings orders placed so far were for the purpose of renewing fleet or ensured cargo for vessels.

Among the five things to watch out for in the medium to long-term are digitalization and the use of advanced analytics which have already started to transform the shipping industry, according to Henriette Brent-Petersen from DVB Bank.

“We are on the verge of the beginning of a revolution of our industry. It is not only that the business model changes, but all levels of the supply chain,” she explained.

One of the examples to support this argument is the rise of the smart-yards, Brent-Petersen said, which are forecast to automate their manufacturing process and start producing ships copying the Volkswagen model of building cars. This will ultimately put a permanent pressure on the newbuilding prices, she went on to say.

“The most exciting thing at the moment in shipping is Posidonia,” Simon Ward from Ursa Shipbroking said, stressing that shipping boils down to relationships.

“This interaction of people from various areas of the industry is where the new ideas come from and where relationships are forged. Conferences like this one are the places where exchange of technology and innovation takes place: through people. If we lose that we will lose the nature of shipping itself.”

BIMCO POWER PANEL

For Valentina Vignoli, from Peninsula Petroleum, a bunker supplier, the most exciting thing at the moment is the 2020 sulphur cap.

“It is the first step for the industry to move into an era of greener fuels. In the medium term we might even see new types of fuels being developed to comply with the new regulations, which is exciting and challenging at the same time,” she said.

Finally, James Leake, analyst at N.S. Lemos, believes a very close eye should be put on the developments in India, and specifically its teenage population as the source of emerging households.

“Given the shape of Indian population pyramid it is the place to watch out for in the five to ten years. I’m not going to claim that it would set the market on fire, but if we are looking for optimism that is the only place growth can come from speaking from a structural perspective; population-wise.”

In conclusion, as stressed by Karatzas, it has become ever more difficult to predict the future and these are very uncertain times for the industry.

Nevertheless, there are at least five things to closely monitor as the industry steams ahead into the uncharted waters.

Reported by Jasmina Ovcina Mandra

Swire Shipping upgrades services from North Asia to the Pacific


 

 

From July 2018, Swire Shipping will upgrade its multipurpose liner services between North Asia and the Pacific.

Under this enhancement, Swire Shipping will be adding direct calls at the Chinese ports of Nansha and Ningbo and aligning its North Asia services to provide a 10-day service frequency between North Asia and Papua New Guinea (PNG).

Swire Shipping’s multipurpose vessel in Papua New Guinea (PNG)

Other markets served by Swire Shipping’s North Asia services such as Townsville, Noumea, the Solomon Islands, Vanuatu and New Zealand will also benefit from access to more ports in China. 4 Donald Fraser, Swire Shipping’s General Manager for Liner Trades said, “Swire Shipping is committed to developing and upgrading our services and are delighted to provide our customers with this latest set of improvements. In particular, there will be a sailing every 10 days from China to PNG, complementing our 10-day Southeast Asia-PNG and AustraliaPNG services. We’re very excited to be offering our customers this comprehensive import and export network coverage.”
Source: Swire Shipping

Ship loses 80 containers off NSW coast in wild weather

YM Efficiency, a Liberian-registered cargo ship, was making its way from Kaohsiung in Taiwan to Sydney’s Port Botany on Thursday night when large swells knocked 83 containers into the water off Newcastle.

Roads and Maritime Services was alerted to the lost cargo on Friday.

Spokesman Angus Mitchell said the contents of the containers was unknown, but they’re not believed to contain dangerous goods.

“A full manifest of the cargo on board the vessel, and the condition of the vessel, is being sought,” Mr Mitchell said in a statement.

A further 30 containers on board are severely damaged.

The department said two had been spotted about 100 metres off Fingal Head and Boondelbah Island, near Port Stephens.

It’s now the vessel operator’s responsibility to recover and remove the 40-foot containers and boaters were alerted to the potential hazards on marine radio.

Members of the public can report any sightings to the Australian Maritime Safety Authority on 1800 641 792.

The ship was reportedly refused entry to Port Botany on Friday due to the risk of more cargo coming loose.