Are ships more polluting than Germany?

The shipping industry is meeting in London to formulate a plan to reduce greenhouse gas emissions.

By some estimates, the international shipping industry produces as much carbon dioxide (CO2) as Germany.

Reality Check looks at the data behind this comparison and from where all this pollution is coming.

Engines on the world’s biggest ships can be as tall as a four-storey house, and as wide as three London buses. So a lot of fuel is required, which in turn creates a large amount of CO2.

Carbon dioxide is an example of a greenhouse gas. The greenhouse gas effect is the process of gases like CO2 trapping warmth in the atmosphere and heating up the planet.

International shipping accounts for about 2.2% of all global greenhouse gas emissions and 2.1% of CO2 emissions, according to the UN International Maritime Organisation’s most recent data.

Germany’s CO2 and overall greenhouse emissions account for about 2.2% and 1.9% of the world’s total respectively, according to European Commission’s most up-to-date figures – about the same percentages as the international shipping industry.

A country by country comparison can also be used as a device to demonstrate the scale of pollution in the shipping industry.

According to the International Council on Clean Transportation (ICCT), an independent environmental research organisation, international shipping produced 812 million tonnes of carbon dioxide in 2015.

The ICCT said that if treated as a country, international shipping would be the sixth largest emitter of CO2 in 2015.

They pointed to a list of the top polluting countries compiled by the PBL Netherlands Environmental Assessment Agency, part of the Dutch Ministry of Infrastructure. Public Works and Water Management, which puts international shipping as the sixth largest emitter of CO2.

The ICCT and Environmental Assessment Agency research both focused on CO2 produced by energy use and the ICCT said it removed domestic and fishing vessels, which would be covered by a country’s own count of emissions.

The IMO is also addressing the amount of sulphur in fuel oil used on board ships. It says a reduction in sulphur oxides that emanate from a ship should have significant environmental health benefits.

The World Shipping Council, an industry body, also says it is engaged in efforts to reduce CO2 and is “working to secure a global agreement addressing CO2 emissions from ships through the International Maritime Organization”.

International shipping is a catch-all term for shipping between ports of different countries and so excludes domestic transportation. There are many different types of vessels and each produces different levels of CO2.

The largest producers according to the ICCT are the biggest vessels; container ships, followed by the bulk carrier and the oil tanker. Container ships account for about one fifth of all emissions.

However, modern ships are designed to slide through the water more efficiently than older ones or are built to operate at lower speeds to save fuel.

For example, the largest of the Maersk container ships are reported to be 35% more fuel efficient than older, smaller vessels, according to Marine Insight.

Battery power is already being used on some ferries in Scotland and Norway and there are more radical Japanese plans for hi-tech sails to power cargo ships, says the BBC’s science editor David Shukman.

It is common for a ship to be registered under the state flag of a country that is different to the country of the ship owner.

It’s a process called flags of convenience and allows ships to sail under the maritime regulations of the flag they are registered under. On offer is access to cheaper labour and low taxes.

Many of the world’s ships sail under the Panamanian flag and most of the world fleet sail under the flags of developing nations, according to the IMO.

The top five ship-owning countries are Greece, Japan, China, Germany and Singapore.
Source: BBC

Shanghai world’s busiest container port: report

Shanghai was the world’s busiest container port in 2017, according to a report by shipping consultancy service Alphaliner. Shanghai handled a total of 40 million Twenty-foot Equivalent Units (TEUs) last year, an 8.3 percent increase from the previous year.

Singapore took second place, followed by Shenzhen, which ranked third on the list with 25 million TEU. Ningbo and Hong Kong were another two ports in China that made it into the top 10.

The Alphaliner report also says that, thanks to the recovery in the global economy, the world’s busiest container ports enjoyed a 5 percent increase and recorded a total volume of 600 million TEU in 2017.
Source: ECNS

Shipping faces demands to cut CO2

Container shipImage copyrightGETTY IMAGES

A battle is under way to force the global shipping industry to play its part in tackling climate change.

A meeting of the International Maritime Organisation in London next week will face demands for shipping to radically reduce its CO2 emissions.

If shipping doesn’t clean up, it could contribute almost a fifth of the global total of CO2 by 2050.

A group of nations led by Brazil, Saudi Arabia, India, Panama and Argentina is resisting CO2 targets for shipping.

Their submission to the meeting says capping ships’ overall emissions would restrict world trade. It might also force goods on to less efficient forms of transport.

This argument is dismissed by other countries which believe shipping could actually benefit from a shift towards cleaner technology.

The UK’s Shipping Minister Nusrat Ghani told BBC News: “As other sectors take action on climate change, international shipping could be left behind.

“We are urging other members of the International Maritime Organisation (IMO) to help set an ambitious strategy to cut emissions from ships.”

Trade and prosperity

The UK is supported by other European nations in a proposal to shrink shipping emissions by 70%-100% of their 2008 levels by 2050.

Guy Platten from the UK Chamber of Shipping said: “We call on the global shipping industry to get behind these proposals – not just because it is in their interests to do so, but because it is the right thing to do.

“The public expects us all to take action, they understand that international trade brings prosperity, but they rightly demand it is conducted in a sustainable and environmentally friendly way. We must listen to those demands, and the time for action is now.”

ContainersImage copyrightGETTY IMAGES

The problem has developed over many years. As the shipping industry is international, it evades the carbon-cutting influence of the annual UN talks on climate change, which are conducted on a national basis.

Instead the decisions have been left to the IMO, a body recently criticised for its lack of accountability and transparency.

The IMO did agree a design standard in 2011 ensuring that new ships should be 30% more efficient by 2025. But there is no rule to reduce emissions from the existing fleet.

The Clean Shipping Coalition, a green group focusing on ships, said shipping should conform to agreement made in Paris to stabilise the global temperature increase as close as possible to 1.5C.

Tangible goals

A spokesman said: “The Paris temperature goals are absolute objectives. They are not conditional on whether the global economy thinks they are achievable or not.”

So the pressure is on the IMO to produce an ambitious policy. The EU has threatened that if the IMO doesn’t move far enough, the EU will take over regulating European shipping. That would see the IMO stripped of some of its authority.

A spokesman for the Panamanian government told BBC News his nation supports the Paris Agreement.

“But”, he said, “Panama, as a developing country that depends on the maritime sector for its progress, and aware that the welfare of its population relies on shipping, believes in the necessity of a well though-out and studied strategy that allows sustainable and efficient reduction of emissions.

“To haste into an uncalculated strategy that aims to reduce emissions to zero by the year 2050 does not take into account the current state of technology.”

A recent report from the International Transport Forum at the rich nations’ think tank the OECD said maximum deployment of currently known technologies could achieve almost complete decarbonisation of maritime shipping by 2035.

A spokesperson for another of the nations resisting targets told BBC News: “My country pushed very hard to get the deal in Paris. But you will notice that many of the countries opposing the restrictions on CO2 are developing countries that are distant from some of their markets.”

Campaigners say huge improvements in CO2 emissions from existing ships can be easily be made by obliging them to travel more slowly. They say a carbon pricing system is needed.

International shipping produces about 1,000 million tonnes of CO2 annually – that’s more than the entire German economy.

New Zealand says shipping vital in the process to halt climate change

New Zealand urges the IMO not to miss this opportunity to adopt a workable and effective strategy to bring rising greenhouse gas emissions from shipping under control.


Government Press Release 9 Apr 2018
  • “The IMO strategy also needs to recognise and protect the interests of Pacific Island countries and territories,” said Minister for Climate Change James Shaw. (Image Credit: Pixabay)

New Zealand today released a statement at the International Maritime Organization (IMO) Greenhouse Gas reduction strategy negotiations in London, urging IMO member states to work towards a meaningful and effective outcome in line with the Paris Agreement on Climate Change.

“With the end of the negotiations imminent, New Zealand urges the IMO not to miss this opportunity to adopt a workable and effective strategy to bring rising greenhouse gas emissions from shipping under control,” Associate Minister of Transport Julie Anne Genter said today.”

“The IMO strategy needs to be ambitious with appropriate measures implemented as soon as possible and it needs to apply to all IMO member states and all ships equally, regardless of which state a ship is registered in.”

“Halting climate change and achieving the goals of the Paris Agreement requires countries to work together for fair and ambitious outcomes.”

“New Zealand was proud to sign the Tony de Brum declaration at the One Planet Summit held in Paris last December, confirming that international shipping must play a part in global climate action.”

“Shipping is vital for Pacific countries, including New Zealand, and we all have a part to play ensuring that maritime trade happens in an environmentally friendly way,” said Ms Genter.

“The IMO strategy also needs to recognise and protect the interests of Pacific Island countries and territories,” said Minister for Climate Change James Shaw.

“In particular, this means helping to hold the increase in global average temperature to well below 2 degrees Celsius above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees.”

“A recent report by the OECD’s International Transport Forum shows that there are practical steps that can be taken now to reduce shipping emissions and shipping could be almost carbon-free by 2035.”

“We commend the leadership of Pacific Island states in encouraging ambitious outcomes from the IMO negotiations.”

“With very little time remaining before negotiations conclude, New Zealand joins with Pacific Island states in urging all countries to redouble their efforts to ensure the IMO achieves a credible and ambitious result,” said Mr Shaw.

Four-year high in shipping confidence levels

Shipping confidence reached a four-year high in the three months to end-February 2018, according to our latest Shipping Confidence Survey.

The average confidence level expressed by respondents was up from 6.2 out of 10.0 in November 2017 to 6.4 this time. Confidence on the part of owners was also at a four-year high, up from 6.4 to 6.6, while managers’ confidence was up too, from 6.1 to 6.4. The rating for charterers, however, continued its recent erratic performance – down to 5.0 from 7.7 in November 2017, but up on the 4.7 recorded in August 2017. Confidence on the part of brokers, meanwhile, was down from 6.3 to 6.1.

Confidence was up in Europe from 6.3 to 6.6, equalling the highest ever rating for this category of respondent in the life of the survey, which was launched in May 2008 with an average confidence rating across all respondents in all geographical areas of 6.8. Confidence was also up in Asia, from 5.7 to 6.3, and in North America, from 5.8 to 5.9.

The likelihood of respondents making a major investment or significant development over the next 12 months was down from 5.4 to 5.3 out of 10.0. Charterers’ confidence, however, was up from 4.0 to 6.2. Expectations on the part of owners and brokers were up from 5.8 to 5.9 and from 4.4 to 5.3 respectively, but down from 5.4 to 5.3 for managers. Asian respondents (down from 5.9 to 5.0) were less confident in this regard, but in North America the rating was up from 4.9 to 5.4. In Europe, expectations held steady at 5.2.

The likelihood of respondents making a major investment or significant development over the next 12 months was up on the previous survey from 5.3 to 5.5 out of a maximum possible score of 10.0, its highest level since May 2014. Of note was the increased confidence of charterers (up from 6.2 to 6.8) and of managers (up from 5.3 to 5.6). Geographically, increased expectations of major investment were highest in Asia (up from 5.0 to 5.8).

The number of respondents who expected finance costs to increase over the coming year was up from 59% last time to 64%, the highest figure since May 2008 (66%). One respondent said, “Starting next year, the industry looks set to benefit from capacity reductions at shipyards, but the cost of funding will rise for most market participants.”

Demand trends, meanwhile, were cited by 24% of respondents as the factor expected to influence performance most significantly over the coming 12 months, followed by competition (19%) and finance costs (15%). According to one respondent, “The supply and demand equation will balance out in line with industry growth rate over the coming years.”

The number of respondents expecting higher rates over the next 12 months in the tanker market was down by five percentage points on the previous survey to 39%, whilst those expecting lower rates were unchanged at 13%. Meanwhile, there was a four percentage-point increase, to 54%, in the numbers anticipating higher rates in the dry bulk sector, accompanied by a four percentage-point fall to 8% in the numbers anticipating lower rates. In the container ship sector, there was a two percentage-point increase to 38% in the numbers expecting higher rates, and a three percentage-point fall, to 12%, in those anticipating lower rates.

One respondent said, “The shipping market is still characterised by high volatility and excess tonnage in most sectors, particularly bulk carriers and tankers, but there is cause for slight optimism.”

When asked to predict where per-barrel crude oil prices would be in 12 months’ time, 36% of respondents opted for the $60-$69 range, as opposed to 29% when the same question was posed in February 2017. The 19% of respondents who opted for the $50-$59 range was just half the 38% who did so last year, while 28% of respondents favoured the $70-$79 price range, as opposed to just 10% 12 months ago.

The volatile nature of the shipping industry dictates that optimism should be tempered with caution. But a four-year high in confidence must be welcomed as extremely good news.

Shipping is more confident of making a major new investment over the next 12 months than at any time in almost four years, even though finance will probably be costlier to access in the year ahead. Net freight rate sentiment is positive in all main tonnage categories and, whilst slightly down in tankers, it increased both in the dry bulk and container ship trades.

Familiar problems persist. Excess tonnage in many trades and insufficient demolition levels continue to perpetuate uncertainty, and freight rates are not yet at the levels required to turn promise into reality. In the wider world, the impact on shipping of continuing political unrest in the Middle East, the US President’s proposal to impose tariffs on US steel imports, and the response of other countries to this, remains to be seen. All of this serves to underline how vulnerable shipping is to geopolitical influences. But the industry must take heart from its proven durability. Confidence breeds confidence, and confidence breeds success.
Source: Moore Stephens

Shipping Fears Trade War Escalation as China Hits Back at Trump’s Tariffs

Image Courtesy: Pixabay

The trade war between China and the United States is brewing with China announcing plans to impose duties on U.S. goods worth USD 3 billion.

The move is being taken as a response to the Donald Trump’s new duties on Chinese goods worth USD 60 billion.

Trump said the U.S. was resorting to the Section 301 action, after an investigation launched in August 2017 into China’s laws and policies found that China employs “unreasonable or discriminatory practices that burden or restrict U.S. commerce, and violate intellectual property rights.”

Trump added that talks with China are ongoing together with the EU and NAFTA deal.

Impact on the shipping industry

The latest restrictions come as new tariffs on steel and aluminum are set to enter into force in the United States.

On March 1, the U.S. President announced a plan to boost domestic manufacturing by imposing tariffs of 25 pct on imported steel and 10 pct on imported aluminum.

Even though Europe managed to dodge the tariffs, European shipping community, and the maritime industry, in general, is worried what the latest trade restrictions would mean for shipping.

“There is an urgent need for new diplomatic efforts to prevent an escalation,” says Danish Shipping, commenting on the latest trade tensions between the two countries.

The United States and China are the two largest markets for the Danish shipping sector with annual total exports amounting to DKK 38.5 billion. The two countries constitute approximately 23 pct. of the Danish shipping companies’ total export activity.

The organization, which represents the interests of the shipping industry in the country, said the new duties and countermeasures were concerning for the sector.

“A trade war between the Danish shipping companies’ two largest markets is deeply worrying. The shipping industry is among Denmark’s most globalized industries and therefore entirely dependent on continued open world trade,” Jacob K. Clasen, Executive Director at Danish Shipping, said.

Clasen called on the world’s major trading blocks to strengthen dialogue and diplomacy in order to prevent any further escalation of the conflict.

“Trade between China and the USA accounts for roughly 4 percent of global trade, so a dispute between the two countries will harm trade patterns globally. In addition, increased tariffs will send a very wrong signal to the world that more market restrictions may be a plausible way forward. This is the wrong way to go and will ultimately harm consumers all over the world,” he added.

“All parties – the EU, the US and China – must look for solutions through dialogue and do everything possible to avoid a harmful trade war. It is crucial that all parties make every effort to avoid an escalation of the conflict.”

BIMCO’s Chief Analyst Peter Sand said that should the tensions escalate on a larger scale there would lasting consequences for everyone involved in global industries like shipping.

“All trade-restrictive measures are in principle bad for shipping,” Sand said.

“Overall we are seeing more trade-restrictive measures introduced. Some more high profile than others. This is a worrying trend that limits demand for shipping globally.”

Impact on the U.S.

President of the U.S. retail federation Matthew Shay said the administration’s plans to impose broad tariffs on consumer products from China would punish ordinary Americans for China’s violations.

“Middle and working-class Americans are just starting to see the benefits of tax reform in the form of bigger paychecks and higher wages. Engaging in a trade war will erase those gains and result in higher prices for a wide range of consumer products and basic household goods. And the tariffs will create uncertainty for retailers and other businesses who are prepared to reinvest savings from the tax cut in capital investments, wage increases, workforce training and new jobs in communities across the country. “

The U.S. ports, including Port Houston, Port of New Orleans and the Northwest Seaport Alliance, also expressed concern about the impact of the steel and aluminum tariffs, stressing that they would negatively affect the amount of cargo being handled by the ports.

World Maritime News Staff

Enhancing Maritime Security

With 90 percent of the world’s trade carried by sea, maritime security is a key lever of the global economy. “No shipping, no shopping,” is how Africa Center Adjunct Professor Ian Ralby sums it up. “If we don’t secure the maritime domain, our entire way of life will change.”

The Seychelles, a 115-island archipelago in the Indian Ocean, has been at the vanguard of protecting the maritime domain and prosecuting maritime crimes, not only in its territorial waters, but along much of Africa’s east coast. Since 2010 when the first trial of 11 pirates was staged in Victoria, Seychelles has mounted 17 trials and processed a total of 142 pirates, the largest number of pirates tried by any nation in the region.

Seychelles locationFrom March 19–23, the Africa Center for Strategic Studies held the latest in its long series of maritime security programs, Enhancing Maritime Security, in the Seychelles to see firsthand the country’s approach to combatting criminality on the seas and discussing common challenges and lessons learned. More than 50 maritime security officials from 34 countries and regional organizations attended.

Participants highlighted the value of a whole-of-Africa maritime dialogue; the importance of keeping pace with the dynamic nature of maritime crime beyond piracy; the challenge of legal finish (successful prosecution, conviction, and detention) to deter these crimes; and the importance of the blue economy as an economic growth engine not just for littoral states, but landlocked ones as well who must rely on their coastal neighbors for shipping and trade.

Relatedly, participants recognized that African states have a challenge with maritime wealth blindness in addition to overall marine domain awareness but were greatly inspired by Seychellois’ efforts to adopt innovative approaches on both fronts.

After his keynote address on adjudicating and penalizing maritime crimes, Judge Anthony Fernando, who serves on the Seychelles Court of Appeals and has presided over 66 maritime cases, led participants on a tour of the main courthouse and piracy court. He was joined by Supreme Court Chief Justice Mathilda Twomey and President of the Court of Appeals Francis MacGregor, who explained how cases are processed through the court system.

Program participants also had the opportunity to visit an Iranian dhow captured by the Seychelles Coast Guard in the largest ever drug seizure in the country’s territorial waters. Officials at the Regional Center for Operations Coordination—an information-sharing union including the Seychelles, Comoros, Réunion (France), Madagascar, and Mauritius—explained how cooperative operations and technology have improved the region’s ability to track criminal vessels in the Indian Ocean.

In addition, Philippe Michaud, senior fisheries advisor to the Seychelles’ vice president, gave a presentation on illegal, unreported, and unregulated fishing. Other program sessions discussed maritime security initiatives around Africa, legal harmonization, and current best practices in prosecuting maritime crimes.
Source: African Center for Strategic Studies

SMM 2018: Green Shipping Makes Headway

The countdown is on: The new 0.5 per cent sulphur limit for ship fuels will take effect on 1 January 2020. “There is no turning back. The lower sulphur limit will have a significant positive impact on the environment and on human health, especially for people living in port cities and coastal regions,” said IMO Secretary-General Kitack Lim on occasion of the meeting of the IMO’s Sub-committee on Pollution Prevention and Response in early February. LNG is one possible way to comply with this regulation: According to the SMM Maritime Industry Report (MIR), as many as 44 per cent of shipowners are considering liquefied natural gas propulsion for their newbuilds. At SMM 2018, the leading international maritime trade fair in Hamburg, industry stakeholders will be able to discuss other compliance options, as well.

LNG a clean alternative

Around the world shipowners are facing the challenge of having to make far-reaching decisions: Will low-sulphur fuel be available in sufficient quantities at reasonable prices? Are exhaust gas scrubbers a smart investment? Or would it be better to opt for LNG right away? Questions like these will be discussed at the Global Maritime Environmental Congress (gmec) which is held on 5 September as part of the SMM conference programme. Speakers such as Katharine Palmer, Global Sustainability Manager at the classification society Lloyd’s Register, will advise the industry on how to best comply with current regulations and prepare for future ones. In exhibition hall A5, which will be dedicated to the Green Propulsion theme with a special focus on LNG, decision-makers will be able to meet up with experts to get advice and study technical solutions hands-on.

As for ballast water management (BWM), the IMO is granting shipowners a transitional period before they must comply fully. Meanwhile the industry is working full speed on implementing the BWM Convention which took effect in 2017. This necessitates investments in the order of billions. In a study of the global ballast water management market between now and the year 2026, the US market research firm Stratistics MRC forecasts a growth rate of nearly 40 per cent – per year.

Understanding which types of BWM system are suitable for a specific ship type, and which of these systems meet both the IMO rules and the stricter requirements of the US Coast Guard is challenging. A gmec expert panel including Debra DiCianna of the US consulting firm Choice Ballast Systems, Tim Wilkins, Environment Director at Intertanko, the International Association of Independent Tanker Owners, Stamatis Fradelos, Principal Engineer, Operational Environmental Performance (OEP) Team, ABS and others will provide valuable insights. SMM visitors will be able to familiarise themselves first-hand with the technologies offered by relevant manufacturers from around the world. “Numerous manufacturers are reporting record numbers of incoming orders,” says Claus Ulrich Selbach, Business Unit Director – Maritime and Technology Fairs & Exhibitions at Hamburg Messe und Congress GmbH.

This year’s fair will again feature various theme-based routes to help visitors find the exhibition highlights they are looking for. “We have added a Cruise & Ferry Route to our programme,” says Selbach. “From the engine room to the bridge through to passenger cabins, this route spreads out the entire value chain before our visitors.”

Cruise industry: Pioneering sustainability

When it comes to eco-friendly ship operation, the cruise industry is one step ahead of most other shipping segments, not only in response to increased environmental awareness among passengers but also because the many highly sensitive waters visited by these ships must be protected. It is the segment’s explicit goal to minimise the effects of every trip on the marine environment and on coastal regions. Here again, LNG ship fuel plays a key role. For example, AIDA Cruises ordered their third LNG-ready cruise vessel from Meyer Werft just a few weeks ago. The Japanese NGO Peace Boat’s Ecoship concept likewise favours LNG power. Apart from its dual-fuel engine, the vessel will feature ten retractable, rigid sails doubling as photovoltaic panels as well as wind turbines, and an additional 6,000 square metres of on-deck solar panels. Further information on what may will be the ‘greenest’ cruise ship yet will be available in Hall A5.

Under the chairmanship of Andreas Chrysostomou, acting Secretary General of the European chapter of CLIA, the Cruise Lines International Association, a gmec expert panel will focus on the cruise industry’s pioneering role in environment protection. The panel will include Bud Darr, Executive Vice President, Maritime Policy and Government Affairs at MSC Cruises; Lex Nijsen, Vice President and Head of Four-Stroke Marine, MAN Diesel & Turbo; Rolf Sandvik, CEO, The Fjords and Jan-Erik Rasanen, Head of New Technologies at the Finnish engineering firm Foreship, among other experts.

This year’s gmec conference will take place on 5 September. The conference team will again be supported by its cooperation partner Seatrade. “Once again we have been able to recruit some top-level experts from all around the world for SMM,” says Mary Bond, Managing Director Publishing and Content at Seatrade. “Attendees can expect a series of fascinating discussions and an array of innovative solutions that will make shipping cleaner step by step.”
Source: SMM

Shipping into a changing world

The International Shipping Industry still remains the only way to move the majority of minerals, energy products and manufactured goods between the nations of the world.

Indeed it is still estimated that shipping carries 90% of World Physical Trade.

However given the huge changes that have occurred in many countries there is concern that the demand for shipping services may not grow but in fact decline.

As the various conferences that meet annually at this time of year discuss the economics and operational issues of the shipping industry it is concerning that the shipping companies that are publically traded in a few stock markets represent the worst performing sector in those markets.

Furthermore the banks that have historically financed shipping have mostly withdrawn and a few of the remaining German banks are showing billions of dollars of losses and provisions.

Private equity and hedge funds looking to buy these banks are not showing support for shipping but the ability to liquidate the portfolios over the next few years at a profit.

Meanwhile the biggest financiers of shipping today are the huge Chinese Leasing companies which together with the Chinese and Korean Exim banks are financing new ships being built in China and Korea with the objective of keeping freight rates down for the benefit of Chinese and Korean industries that rely on ships for the import of raw materials and export of manufactured goods.

The arrival of the speculative equity and hedge funds at the beginning of this decade changed the way shipping companies had traditionally operated, namely as the service industry to world trade. The security of longterm time charters with major cargo interests whose own credit standing supported the cash flow was discarded in favor of the spot markets enabling the ships to be sold as soon as their values generated a profit.

The longer this speculative period went so the cash flow problems worsened as the spot markets failed to produce constant income while the operating and financing costs continued.

Furthermore the major charterers became reluctant to charter these speculative ships or allow their charters to be included in any sale. This was clear evidence of the importance of the relationships between shipowners and charterers which have always been important given the issues that always exist in operating ships in the oceans of the world.

Shipowners and particularly those that appeared in the equity markets, were encouraged to order new ships in the false belief that the Chinese would continue to pay high freight rates as their manufacturing economy continued to expand.

It took some 5 years for the cargo interests to react to the high freight rates which for instance had caused the shipping cost of a ton of iron ore from Brazil to China to reach 60% of the landed price of the cargo.

The cargo interests understood that by encouraging more newbuildings in both the raw material imports and the finished goods so the freight costs could be minimized. Thus the Chinese have got the shipping cost of iron ore from Brazil down to 10% of the landed price.

The same applies to the container sector with the giant ships pushing rates lower and the owners facing huge operating losses

Add to this the Korean and Chinese Exim bank financing and the involvement of huge Chinese leasing companies and we continue to see the orderbook grow while few shipowners show any profits.

False optimism that “dry bulk markets look positive” or that “the USA exporting crude oil will be good for the VLCC markets” simply encourage new orders for ships and will not improve the operating profits for these sectors.

Thus it is the cargo interests that control the economics of the shipping industry today and ship values will continue to depreciate if they continue to trade in the spot markets.

Consolidation of shipping companies will have no effect unless it enables the shipowners to secure period charters and improve their income streams, fully maintain the ships, employ quality crews and afford the new costs of ballast water treatment and cleaning up the engine exhausts.

Stink bugs discovered on board fourth ship destined for NZ

The Sepang Express vehicle transport vessel, with red hull, docked at Ports of Auckland.

The Sepang Express vehicle transport vessel, with red hull, docked at Ports of Auckland.
 Stink bugs have been found on a fourth ship bound for New Zealand.

Two types of stink bug were found on the car carrier Glovis Caravel, operated by Japanese shipping company Mitsui OSK Lines, on the weekend.

The ship, bound for the Ports of Auckland, was redirected on Wednesday after a check conducted at sea, the company’s pure car carrier (PCC) manager Malcolm Jackson said.

“We decided not to risk bringing that bug to New Zealand.”

Jackson said the company was now looking for ports in Australia where the ship could be fumigated of its brown marmorated and yellow-spotted stink bugs.

The brown marmorated stink bug poses a risk to apples, kiwifruit, corn, tomatoes, cherries and wheat.

The brown marmorated stink bug poses a risk to apples, kiwifruit, corn, tomatoes, cherries and wheat.
 Three car carriers have already reached New Zealand’s shores with stink bug infestations this month: Armacup​’s Tokyo Car, Mitsui OSK Line’s Courageous Ace, and Toyofuji’s Sepang Express.

All three were turned away.

The port was largely empty of cars on Wednesday.

There are concerns the bug could destroy fruit and vegetable industries.

There are concerns the bug could destroy fruit and vegetable industries.
 “It’s had a huge effect. Just about every manufacturer has been affected into New Zealand,” Jackson said.

“Japan is high-risk and there are some meetings being held very soon to discuss the whole car industry at the moment.”

Jackson said Mitsui OSK had conducted a check of all ships bound for New Zealand after bugs were discovered on the Courageous Ace.

An MPI spokeswoman was unable to confirm stink bugs had been found on the Caravel, but a spokesman said earlier in the day that the third ship, the Sepang Express, was found to have 30 dead brown marmorated stink bugs on board and was treated with a knock down spray.

“After this treatment, a further 19 of the bugs were found on the vessel along with other insects.”

The spokesman said the cargo would need to be fully treated before it returned to New Zealand waters.

MPI would hold a meeting with involved parties to discuss the situation and ways to manage the risk, he said.

Ports of Auckland spokesman Matt Ball said there was no impact on the Auckland Council-owned company or its employees, “except for the fact that our vehicle-handling wharves are a bit quieter than usual”.

About 6000 cars and heavy vehicles were unable to be unloaded, but they were expected back once approved for import, he said.

“We may end up having a quiet February and a really busy month when they all come back.”

The noxious pest could cause hundreds of millions of dollars of damage to the New Zealand economy if it made it ashore.

Threatened foods included apples, kiwifruit, corn, tomatoes, cherries and wheat.

It could also invade properties and affect gardens.

Kiwifruit Vine Health (KVH) and Federated Farmers have both expressed concerns over the recent discoveries of stink bugs.

KVH chief executive Barry O’Neil said the brown stink bug could destroy fruit and vegetable industries.

“These are ships that have had hundreds of stink bugs on them and it is nothing like we have seen before.”

Federated Farmers biosecurity spokesman Guy Wigley earlier said the stink bug would have a huge financial impact on farmers if found here.

“I am worried. MPI have had this pest on their radar for a number of years.”

Stink bugs are native insects in Japan and hibernate in contained spaces during the northern hemisphere winter.

The insect releases a chemical when threatened, emitting a pungent odour.