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Market Report 2016
City’s great maritime champion prepares to step down World shipping salutes Arthur Bowring
CONTENTS
THE LINEUP 3 Editor’s Comment 5 Economy
We will implement measures as necessary to spur the growth of Hong Kong’s maritime cluster
9 Government 11 Lines 15 Port 19 HKSOA 25 Insurance
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—Professor Anthony Cheung Bing-leung, the secretary for transport and housing,
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We intend to have enough funds on hand to be able to add an additional 10 vessels — Edward Buttery, founder, Taylor Maritime
The challenge for the next half decade is on the demand side — CC Tung, chairman, OOCL
26 Annual review 28 Opinion
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There is an urgent need for additional barge berths and backup land — Jessie Chung, chair, Hong Kong Container Terminal Operators Association
Arthur Bowring is very well respected and he has solidified HKSOA’s position in the global shipping industry as the voice of Asia — Sabrina Chao, chair of Wah Kwong and the Hong Kong Shipowners Association
For all the latest breaking shipping news from Hong Kong
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The city always bounces back and reinvents itself
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— Mandarin Shipping’s Tim Huxley
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Market Report 2016
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EDITORIAL DIRECTOR Sam Chambers sam@asiashippingmedia.com
CORRESPONDENT Jason Jiang jason@asiashippingmedia.com All editorial material should be sent to sam@asiashippingmedia.com COMMERCIAL DIRECTOR Grant Rowles grant@asiashippingmedia.com
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All commercial material should be sent to grant@asiashippingmedia.com or mailed to Asia Shipping Media Pte Ltd, 30 Cecil Street, #19-08 Prudential Tower, Singapore 049712 DESIGN Tigersoft Pte Lt d Printed in Hong Kong Copyright © Asia Shipping Media Pte Ltd (ASM), 2016. Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact grant@asiashippingmedia.com.
Tributes pour in for Hong Kong’s shipping champion
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s a cub reporter starting out covering the shipping industry 16 years ago in Hong Kong I knew next to nothing about the sector (insert reader jokes here!). Among many mentors who were kind enough to school me in the way shipping works was Arthur Bowring, the managing director of the Hong Kong Shipowners Association (HKSOA). Arthur has been a brilliant spokesperson for Hong Kong maritime for the past 20 years. Arguably no one has done more to champion the sector since the territory was handed back to China in 1997. Keen readers of Splash will know we don’t do awards ceremonies – quite the opposite in fact. Nevertheless, when we caught wind that Arthur will soon relinquish his post at the HKSOA later this year we quickly decided to rejig this magazine to make it as a tribute to the great man. We canvassed leading names from local and world shipping for their thoughts on Arthur’s contribution to the sector and fantastic accolades from far and wide poured in – do check page 18 for our tribute to Arthur. This magazine is being distributed across Hong Kong Maritime Industry Week, which has really taken off this year with more than 40 events on a wide range of topics ensuring the city’s shipping sector gets the attention it deserves. We’re putting on three events ourselves during a hectic few days in the Special Administrative Region. Speak it quietly, but I do feel that finally there is more joined up thinking about Hong Kong as a shipping hub – the merger to create the Hong Kong Maritime and Port Board was a smart move. Likewise, while not at all popular
with the local population, the territory’s political leader, C Y Leung has been the most pro-shipping top politician since reunification. Shipping will miss Leung when he steps down next year. The fact is we at Splash are hearing of more and more shipowners who are looking at boosting their presence in the former British colony. For too much of my shipping reporting career I’ve had to write about how this great maritime cluster was losing its status (despite champions such as Arthur ensuring it always has punched above its weight). Now however I am relieved to genuinely feel the tide has turned and world shipping is reassessing its opinion on Hong Kong.
Sam Chambers Editor Splash
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ECONOMY
Staying stable Hong Kong’s fortunes, whether it likes it or not, are indelibly linked to the motherland
F
rom outside of course it’s always been easy to believe that all is rosy with Hong Kong’s economy. Political troubles, umbrella protests, parliamentarians brawling in the Legislative Council (LegCo), typhoons, all come and go but the economy seems, with the odd blip, to remain robustly healthy. Last month the US think tank, the Heritage Foundation ranked Hong Kong as the world’s freest economy - for the 22nd consecutive year. At the same time Hong Kong’s Institute of Human Resource Management (HKIHRM) announced that a survey of its members revealed that wage rises for those surveyed would be approximately 3.5% this year. However, a closer study of the economic innards of the Special Administrative Region (SAR) tell a much more mixed story. A 3.5% pay rise may sound great to those overseas, but in Hong Kong that’s an average down from 4.3% last year. It is also the case that retail sales are suffering a downturn with
decreased spending by the important mainland Chinese tourists visiting the SAR for their much beloved luxury goods. This has had knock-on effects on related industries – hotels and lodgings, food and beverage, advertising and marketing, for instance. Hong Kong’s advertising industry is looking at its worst year in more than a decade, as spending on campaigns fell for the third consecutive quarter at the end of September. The best that can be said about Hong Kong’s economy at the end of 2016 is that it is stable.
Retail sales are suffering a downturn Stability, of course, is no bad thing for most people and businesses. However, Hong Kong remains economically wedded to mainland China whether it likes it or not (and many, admittedly, do not). China’s slowing growth rate is well known and
so it is not surprising that demand from China has seen further moderations over the second half of 2016.
Being an entrepôt requires constant upgrades Hong Kong’s role as an entrepôt economy - a port to which goods are brought for import and export, and for collection and distribution – remains crucial, especially as just about all manufacturing industriesy in the SAR have now relocated over the border to mainland China. For nearly two decades now the argument has been about whether Hong Kong can maintain its entrepôt status as mainland China has significantly invested in and revamped its own transportation infrastructure. When China had few and universally ill-equipped ports, slow trains, airports were few and far between, Hong Kong was an obvious answer. But times have most certainly changed across the border.
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ECONOMY
It is worrying to some economists then that Hong Kong appears mired in arguments that are delaying the commissioning and installation of a much needed new air traffic control system. At present there appears to be no immediate resolution to the problem and flight delays and cancellations are at record highs. Meanwhile, the maritime and port business account for nearly 1.5% of Hong Kong’s GDP (and 2.5% of the working population). Many had predicted falling shipments to and from Hong Kong, and that has been the case, but in the second half of 2016 the port appears to be retaining its position. Traffic declines at Hong Kong slowed to their lowest level in two years in September, according to the Shanghai Shipping Exchange. Hong Kong’s 0.7% drop in teu in September over August was the smallest monthly decline booked by the port since August of 2014. Stability once again, it seems for Hong Kong. However, there is still a longer-term trend at work. Mainland ports including Shanghai, Guangzhou, Qingdao, Dalian, and Xiamen ports all grew throughput in September. The need to maintain and increase investment in cutting edge port, transportation and logistics infrastructure – both soft and hard – remains crucial for the SAR.
But being an entrepôt is still profitable Hong Kong’s census and statistics department (HKC&SD) announced at
How goes the PRC is ultimately how goes the Hong Kong SAR the end of October that the value of the SAR’s total exports and imports of goods were up by 3.6% and 4.1% respectively year-on- year. It was pretty much a good picture all-round, according to the HKC&SD. Details showed the value of total exports of goods (comprising re-exports and domestic exports) increased to HK$328bn of which the value of re-exports increased by 3.6%to HK$324.3bn, while the value of domestic exports increased by 2.9% to HK$3.7bn. The value of imports of goods increased to HK$367.7bn bringing the September trade deficit to HK$39.7bn, equivalent to 10.8% of the value of imports of goods. Economic stability remains a theme.
However, the statistics do show signs of an overall slide over time. Still, Hong Kong remains regionally crucial and exports to Taiwan (+27.9%), India (+20.8%), Singapore (+7.8%), mainland China (+5.1%) and South Korea (+3.4%) were all healthy. However, exports to major inter-continental destinations were decidedly weaker, indeed negative Germany (-16.3%), the US (-1.2%) and the United Kingdom (-0.8%). The Hong Kong government gave a fairly predictable range of excuses for these numbers – Brexit in the UK, uncertainty in the EU for Germany and the impending presidential elections in the US. However, these are all declining export markets for mainland China and demand for Chinese-made goods from the EU (including the UK still) and US is weak. The fact is that, whether Hong Kong likes it or not, how goes the PRC is ultimately how goes the Hong Kong SAR.
Signs of slippage?: Hong Kong’s trade with mainland China, 2015-2016 2015 Jan-Aug 2016 Value decline value decline $m % $m % Exports 248,277 -2.1 154,860 -3.7 Imports 254,365 -0.1 154,252 -5.0 Total Trade 502,636 -1.1 309,111 -4.3 Source: HKTDC
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GOVERNMENT
New board promises to spur growth of Hong Kong’s maritime cluster The government has merged the maritime and port councils to create a more unified Hong Kong Maritime and Port Board
T
he local shipping industry has widely applauded the move by government to merge the city’s maritime and port councils into one more cohesive body. The new Hong Kong Maritime and Port Board (HKMPB) came into being this April and is yet another sign of the pro-shipping stance of the current administration led by C Y Leung. The board, chaired by the secretary for transport and housing, Professor Anthony Cheung Bing-leung, has a wide representation from the industry, academia and relevant statutory bodies. It comprises 19 non-official members, eight institutional members, and three exofficio members. The setting up of the HKMPB was described in a government release as a “major milestone of maritime development” in Hong Kong. “It is a high-level platform for the government to work closely with the industry to set the direction for the long-term development of Hong Kong’s port and maritime services, foster the development of maritime manpower, and devise strategies and initiatives to enhance Hong Kong’s status as an international maritime centre,” Professor Cheung said when it was founded on April 1. “We are confident that the board members, with their profound expertise and
diverse backgrounds, will make valuable contributions to the work of the HKMPB.” The board was created by merging the Hong Kong Maritime Industry Council and the Hong Kong Port Development Council. Three functional committees are formed under the HKMPB, namely the Maritime and Port Development Committee, the Manpower Development Committee and the Promotion and External Relations Committee. They are chaired by industry figures to strengthen the trade’s involvement in the strategy and policy formulation process. For instance, the CEO of containerline OOCL, Andy Tung, chairs the Maritime and Port Development Committee. The government decided to set up the HKMPB having taken on board the findings and recommendations of a business case study commissioned in mid-2014 to look into the feasibility of setting up a new maritime body, as well
Hong Kong’s role as a super-connector in overseas and mainland markets will be promoted
as views and suggestions received from stakeholders during the study period. Speaking after the board’s first meeting in May, Cheung said: “The government attaches great importance to the development of the maritime and port industries. We will work closely with the trade to create a maritime businessfriendly environment, and join hands with education institutions and training providers to foster the development of manpower resources. We will also support and promote our maritime services, so as to enhance Hong Kong’s status as an international maritime centre.” Cheung admitted the Special Administrative Region faces “keen competition” from other major ports in the region. He said Hong Kong should make full use of its soft power and build on its existing foundation to develop further through what he described as “a multi-pronged approach”. “We will implement measures as necessary,” Cheung said, “to spur the growth of Hong Kong’s maritime cluster and to create a business-friendly environment for the maritime industry on the one hand, and nurture new blood and build up a talent pool on the other. At the same time, we will engage the industry actively to step up efforts to promote Hong Kong’s role as a super-connector in overseas and mainland markets.”
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LINES
Downturn specialists Hong Kong owners know when to snap up a bargain
H
ong Kong shipowners know better than most how to take advantage of a recession. Splash well recalls former Hong Kong Shipowners Association (HKSOA) chairman Peter Cremers saying, “During this downturn I can’t think of anywhere better in the world to be than Hong Kong.” He said that eight years ago, almost to the day, and arguably those words are truer than ever. At the end of October this year, Pacific Basin, Hong Kong’s largest owner by fleet size, revealed clever plans to hand out new shares to ten owners in return for getting lower charter rates on ships it has taken in. “The directors consider that the issue enhances the company’s cash balances and its ability to maintain its balance sheet strength in the protracted weak dry bulk market,” Pacific Basin said. Pacific Basin is one of the world’s largest owners and operators of handysize and supramax bulkers and currently operates more than 200 dry bulk ships of which 89 are owned and about 130 are chartered.
Earlier in the year Pacific Basin said it was building a war chest to buy secondhand handy and supramax ships which are “at historically depressed prices”. These new acquisitions, Pacific Basin maintained, “would be able to generate an earnings premium compared to market indices”. Speaking with Splash, Mats Berglund, CEO of Pacific Basin, said: “We will assess carefully attractive opportunities that likely will materialise in the weak market but the priority is making sure we manage through this weak market.” Pacific Basin’s founder’s son Ed Buttery has also sought to nail down bargains in the downturn. Buttery runs
handy specialist Taylor Maritime and has told Splash of plans for the rapid expansion of his fleet. Founded in 2014, Taylor Maritime has grown its fleet of Japanese-built handsize bulkers to nine ships in under two years. “By the end of next year, we plan to have a fleet of 15-20 vessels,” Buttery said, effectively doubling the company’s fleet size. “We also intend to have enough funds on hand to be able to add an additional 10 vessels,” Buttery added. In terms of finding ships, Buttery conceded that he will have to consider Chinese built ships, “as long as they meet certain quality criteria for our customers.”
George Chao was a forceful character, one that could demolish walls if he saw the sense of a project or initiative
Farewell to a shipping legend Following a long illness George Chao, a shipping legend in Hong Kong and president of Wah Kwong, died, aged 76, in hospital on July 20. Chao was one of four sons of T.Y. Chao, the founder of Wah Kwong, and father of Sabrina Chao, the current
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LINES
chairman of the company. Sabrina took over the running of the company in January 2013, and she is now also the chairman of the HKSOA. The Chao family represents one of the most prominent of Hong Kong’s shipping dynasties. George Chao and his brother Frank Chao joined Wah Kwong in the mid1960s. After Frank Chao retired in 1999, George continued at the helm of the company, maintaining the company’s prominence in the Hong Kong shipping community as well as fulfilling a number of roles in important shipping bodies such as Bureau Veritas and the Asian Shipowners’ Forum insurance committee. Always elegantly attired, Chao was considered to be lightening fast when he could sense a deal was on the table with one shipping correspondent describing him as having “the swagger of a riverboat gambler”. Wah Kwong is a founding member of the HKSOA. As with most other founding members, the company’s heritage can be traced back to the mainland. “He was a forceful character, one that could demolish walls if he saw the sense of a project or initiative,” said the HKSOA’s managing director, Arthur
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Bowring. “He was always incredibly supportive of the maritime industry in Hong Kong, and not at all afraid of promoting the importance and needs of our industry to our government. George’s passion for the industry and for Hong Kong will be sorely missed.” Wah Kwong is currently on the hunt for a new CEO after Tim Huxley quit his post in May. Huxley has told Splash “a disagreement among senior management” was the reason for his surprise departure as CEO of Wah Kwong Maritime Transport Holdings. Huxley, who had been with Wah Kwong for nearly nine years, is now looking at other positions in the local shipping scene, as well as pushing his own vehicle, Mandarin Shipping, which he launched 10 years ago, having left brokers Clarkson. Mandarin Shipping ploughs ahead with news it has just fixed its latest newbuilding, the 1, 700 teu Mount Gough, to X-Press Feeders for a period of two to five months at $8,150. The ship is expected to be deployed
on intra-Asia routes. The Mount Gough is the third vessel in a series of six ships ordered at China’s Zhejiang Ouhua Shipbuilding in October 2014. It follows the Mount Butler, delivered in February (and currently on charter to KMTC who has just extended it for three to five months at $8,250), and the Mount Cameron, delivered in June (and currently on charter to Sinokor). Three more vessels of the same type are yet to be delivered: the Mount Hallowers and Mount Kellet (both due in January 2017) and the Mount Nicholson, due in July 2017. The order initially carried an option for two further vessels which has yet to be exercised. The Mount Gough and its sisters belong to the CV Neptun 1700 design, which features a fuel efficient profile and Bangkok Max dimensions. Designed with intra-Asia trades in mind, the ships are gearless and fitted with 350 reefer plugs.
TCC: ‘Building to requirement’ The chairman of Tai Chong Cheang
The challenge for the next half decade is on the demand side
LINES
“All in all, we expect a fleet of around 15-16 vessels by 2020 including our four aframaxes and one existing VLCC. The rest of the fleet will consist of two panamax bulk carriers delivered to us in 2014 and 2015 respectively and seven capes including the aforementioned newbuildings,” Koo said.
OOCL: In the consolidation mix
Steamship (TCC), Kenneth Koo, is focused on fleet renewal at the moment. “First and foremost is building to requirement from our long term customers and secondly to balance our tankers and bulkers fleet which, at this point, is still skewed towards the capes,” Koo said. TCC recently took delivery of the first of two aframax tankers from Namura Shipyard in Japan. Both vessels are committed on long term charter to BP. In the pipeline are two more aframax tankers, one from Namura and one from Sasebo. “This total of four aframaxes also enables us to replace our existing and sold aframaxes in addition to the long term charter aforementioned,” Koo said. TCC also has a total of three newcastlemaxes on order. Two will be built in Imabari and are committed on long term charter to NS United and one to be built also in Namura and committed on long term charter to NYK. It also has a dunkirkmax to be built in Imabari in a joint venture with K Line. TCC disposed of two capes recently for scrapping and will be disposing of an additional one this year most probably for scrapping as well.
In container shipping’s greatest year of consolidation all of a sudden attention has shifted to Orient Overseas Container Line (OOCL). With analysts suggesting any company who wants to be part of the assured club who are global carriers needs to have a fleet capacity of more than 1m teu, OOCL’s 568,000 teu suddenly looks paltry. Splash has repeatedly been told that OOCL is up for sale for the right price, and not for the first time. OOCL spokespeople continue to deny these rumours. It remains debateable what OOCL could sell for – even though it is widely seen as one of the best operators in the liner sector. CC Tung, the veteran chairman of OOCL, has warned of a very challenging demand side for box shipping for the coming five years. Tung, 73, who has been chairman of the Hong Kong liner since 1996, was downbeat on any swift turnaround in fortunes when announcing the company’s interims this August. “The industry continues to face a
First and foremost is building to requirement supply and demand imbalance. While the orderbook as a percentage of existing fleet is anticipated to drop to 6.7% and 5.5% respectively in 2017 and 2018, the challenge for the next half decade is on the demand side,” Tung said, adding: “The world economy seems uninspiring at best. The US may have passed its most difficult period in this cycle, and China will likely avoid a hard landing. Even if Europe finds its footing in the aftermath of Brexit, the world may very well need to adjust to a ‘new normal’ where unexciting growth and a low interest environment become the norm, at least for a half decade. In the mean time, the polarisation of domestic politics, the rise of populism, and the tendency towards ‘turning inwards’ for many nations may also translate into a slow down in the velocity of globalisation.” The Tungs’ privately held bulk arm, Island Navigation, has had a busy few months of late, especially trading product tankers. It has just moved to take the Japanese-built Classy Victoria LR product tanker from Mitsui OSK Lines (MOL) for $18m. The acquisition follows hot on the heels of Island Navigation taking another Japanese MR product tanker, the 10-yearold Challenge Prelude from Nippon Yusen Kaisha (NYK). The deal comes with a bareboat charter attached. Island Navigation sold its oldest MR tanker, Maple Express, this August for $12.8m.
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PORT
Land pleas fall on deaf ears Hong Kong’s port community wants more space to handle greater amounts of transhipment boxes. The authorities are not convinced however
D
espite dire throughput figures for a long time, Hong Kong’s port community continues to lobby government for more land, arguing that transhipping containers requires more space to shift boxes around. To date, the government has not listened to the port companies’ demands. The Hong Kong Container Terminal Operators Association (HKCTOA) has renewed its plea for more land and barge berths at the city’s Kwai Tsing port to help it stay competitive in the era of ultra-large containerships. The HKCTOA met in July with industry stakeholders and government officials to try to expedite implementation of proposals made by the Hong Kong government, and the next phase of initiatives it has promised. “The structural changes in the world’s shipping market and the ongoing changes
in the throughput mix handled in Hong Kong over the past decade have been particularly challenging to the Kwai Tsing Container Port. More ultra-large vessels berthing, alliance restructuring and additional transhipment volumes have increased the operational complexity that we all face,” said Jessie Chung, chairperson of the HKCTOA, speaking at a recent industry luncheon. Vessel-to-vessel transhipment volumes at Kwai Tsing Container Port have risen from 44.9% in 2005 to 58.7% in 2015, Chung said. River-based container traffic in the Pearl River Delta has likewise increased from 2m teu in 2005 to 2.8m
teu in 2015. “There is an urgent need for additional barge berths and back-up land for handling the high barge and transhipment volumes, which occupy space in the terminals for longer periods of time than truck-based cargo,” Chung continued. The Hong Kong government published its paper ‘Proposals for Enhancing the Use of Port Backup Land in Kwai Tsing’ in mid2015, which included ideas on how land use could be rationalised in the port area. In the document, the government proposed that Kwai Tsing’s yard-to-berth ratio be increased from the current 11.6 ha to 12.4 ha per berth in the first phase.
More ultra-large vessels, alliance restructuring and additional transhipment volumes have increased operational complexity www.splash247.com 15
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PORT
The number of containers handled in Hong Kong during the first nine months of 2016 fell 8.5% to 14.1m teu The HKCTOA said the current yard-toberth ratio is “far below the international standards”. However, the government’s proposals only have addressed around one-fifth of the area that the industry says needs to be optimised and so far little has been done. The association had much the same comments to make in April last year.
HCKTOA and its partners originally proposed land optimisation and other infrastructure initiatives that would enlarge the port’s total storage area and provide for an increase in annual capacity of 3m to 4m teu, equivalent to three or four new container berths. Hong Kong’s Kwai Tsing Container Terminals saw a rise in the number of
containers they handled in September – the first increase since July 2014. Throughput at the terminals increased 4.8% to 1.27m teu. However, a fall of 16.7%, to 350,000 teu, handled by the midstream operators meant that the port as a whole eventually saw a decline of 0.7% (1.62m teu) compared with September 2015’s 1.63m teu. The number of containers handled in Hong Kong during the first nine months of 2016 fell 8.5% to 14.1m teu. It risks sliding below its fifth spot ranking in the global boxport league when full year figures are published early next year.
Register’s fleet numbers climb further The Hong Kong Shipping Register currently stands on more than 105m gt, ranking first in Asia and fourth in the world. It has the youngest fleet among the top 35 flags. After listening to customer concerns, authorities have promised to beef up manpower at the flag more commensurate to the incredible growth in tonnage seen at the register in recent years. “Not only are we strong in numbers, Hong Kong-registered ships are also among the best performers in the world,” maintained secretary for transport and housing, Professor Anthony Cheung Bing-leung at a cocktail reception this March to celebrate the flag passing the 100m gt mark. The detention rate of ships flying the Hong Kong flag is only
slightly above 1%, compared with the world average of 3.5%. “We are delighted and indeed proud that the Hong Kong Flag is a reputable flag of choice and quality,” Cheung said. Speaking in June the director of the Marine Department Maisie Cheng vowed to increase staff numbers at the Hong Kong Register. “I understand that they [shipowners] are concerned about the sustainability of the quality of our service since in recent years the Marine Department has experienced difficulties in recruiting sufficient number of qualified seagoing professionals in meeting the department’s manpower needs, particularly when a considerable number of professional officers
in the department will retire in the near future,” Cheng told a lunchtime audience made up of local shipowners. “To tackle the issue, we have drawn up a basket of measures in a holistic manner with a view to recruiting more new blood to join our professional cadre. A grade structure review on our existing workforce is already in the pipeline,” she added.
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HKSOA
World shipping acknowledges Arthur Bowring As he prepares to step down as managing director at the influential Hong Kong Shipowners Association a host of well-known names in the industry pay tribute to Arthur Bowring
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HKSOA
A
mong many things most locals will have no idea how grateful they should be towards the departing managing director of the Hong Kong Shipowners Association (HKSOA) is is the air they breathe. Granted, Hong Kong remains hardly a blue-skied, clean environment, but thanks to the dogged determination of Arthur Bowring it is better than it was. “It was Arthur who rather stubbornly pushed for a self regulation of the use of low sulphur fuel in Hong Kong port resulting in the Fair Winds Charter and in the process got the whole of the Pearl River Delta thinking differently on air pollution from ships,” recounts Peter Cremers, chairman of Anglo-Eastern Univan and one of many chairmen canvassed in this tribute to Bowring, the unflinching champion of Hong Kong shipping over the past 20 years. Prior to this revolutionary pact among local lines, shipping accounted for as much as 50% of Hong Kong’s total sulphur dioxide emissions. The Fair Winds Charter was ahead of its time – the voluntary de facto emissions control area story now coming full circle at the end of October with the International Maritime Organization’s decision to institute a mandatory 0.5% global sulphur cap in 2020. The charter can stand alongside many accomplishments Bowring has achieved over the years. He has, for instance, personally made the lives of seafarers better via his contributions to the Maritime Labour Convention as well as ships safer via his ‘fit-for-purpose’ campaign, something that eventually spawned the Common Structural Rules. Bowring steps down next month in the top job at the HKSOA, although he will continue to have a consultant role at the association. His career prior to joining the association helps explain his deep understanding – and indeed empathy – for all things shipping. Bowring had eight years seagoing experience during which time he commenced his degree studies. Armed with an honours degree from UWIST Cardiff, he joined Lloyds Register as a ship surveyor. While at Lloyds Register, he took a three-month sabbatical to upgrade and prepare a polar expedition ship for the three year Transglobe Expedition, led
His involvement has benefitted not just Hong Kong’s shipowners, but also seafarers worldwide by Sir Ranulph Fiennes. In 1980, Bowring joined Tradax Ocean Transportation in Geneva, which later became Cargill International, as operations superintendent. He moved on to be owning broker, and then a chartering broker, handling oil and dry bulk cargo requirements for various Cargill product lines. Bowring then took responsibility for fleet insurance and developed an internal consultancy role, which included the handling and resolution of disputes arising through the oil and dry shipping activities of Cargill. In 1994, Bowring headed east, commencing work for Orient Ship Management in Hong Kong. On the closure of the company’s business in 1995, he became a marine consultant, handling investigative work, legal, marine claims and project management. In 1997, he was appointed managing director of the HKSOA and has since taken on many other roles and been at the forefront of many crucial international maritime regulations that have come in over the past 20 years not least when it comes to seafarers. Bowring is chair of the Labour Affairs Committee of the International Chamber of Shipping, vice chairman of the Special Tripartite Committee of the ILO Maritime Labour Convention, 2006 and spokesperson for maritime employers at the ILO. Bowring’s current chairman, Sabrina Chao, who also heads up Wah Kwong, one of the founding members of the HKSOA, lavishes praise on the departing managing director.
“Arthur has put Hong Kong firmly on the international platform,” Chao says. “Our active involvement and contribution in the International Chamber of Shipping (ICS) and various industry bodies are very much driven by Arthur’s passion for the industry and of course his wealth of knowledge. Arthur is very well respected and he has solidified HKSOA’s position in the global shipping industry as the voice of Asia.” Quite so, agrees Anglo-Eastern Univan’s Cremers. “Arthur has definitely almost single handedly put the HKSOA on the world map as the Asian voice in shipping, not afraid of making its opinions clear,” he says. ICS chairman Esben Poulsson acknowledges Bowring’s contribution to world shipping especially his handling of seafarer-related legislation. “The ICS,” Poulsson says, “has benefited over many years from Arthur’s extensive knowledge and expertise with regard to most of the major issues facing our industry but it is his tremendous contribution on the industry’s behalf at the ILO and in particular the drafting of the Maritime Labour Convention that really stands out and for which the we will always be extremely grateful.” Mandarin Shipping’s Tim Huxley, who has served on various committees within the HKSOA, says Bowring’s “tireless” work has hugely enhanced Hong Kong’s global standing as a shipping centre.
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HKSOA
“He has,” Huxley says, “ensured Hong Kong has had a powerful voice in global shipping and his involvement has benefitted not just Hong Kong’s shipowners, but also seafarers worldwide.” Bowring’s counterpart in Copenhagen, Anne Steffensen, a former ambassador and now director general of the Danish Shipowners’ Association, praises Bowring’s “constructive and contributing” nature. “For me Arthur is the face and voice of Hong Kong shipping,” Steffensen says. “He has a strong international profile and is influential in ICS and elsewhere in the global shipping community.” A host of former HKSOA chairmen also eagerly tell Splash of Bowring’s important influence. Kenneth Koo, chairman of Tai Chong Cheang Steamship and chair of the HKSOA from 2009 to 2011, says his relationship with Bowring stretches back to before Bowring was appointed managing director of the association. “Arthur was - and is still - a very good
Arthur is the heart and soul of the HKSOA friend, partner and teacher to me in so many ways,” Koo says. “Our greatest moments together were groundbreaking including the earliest guidelines to the selection and applications of ballast water tank coatings, fit-for-purpose design of ships, a first ever network of maritime educational training schools in China. Our collaboration during my decade-plus chairmanship of the HKSOA’s manning sub-committee and my chairmanship of the HKSOA which included the hosting of the ninth Asian Shipowners Forum will remain forever in my heart as some of the most meaningful milestones in my shipping career. Arthur is indeed the heart and soul of the HKSOA.” Lest people forget, it was the HKSOA, through its ‘fit-for-purpose’ campaign, that sowed the seeds for the Common Structural Rules, yet another feather in Bowring’s cap.
David Koo, chairman of Valles Steamship and HKSOA chair from 2006 to 2007, says Bowring has always been “cheerful, charming, hard working and dedicated”. Koo’s brother, Kingsley, who chaired the HKSOA just before Sabrina Chao, tells Splash: “I can truly say that Arthur is extremely knowledgeable in all maritime issues facing our industry. If you have any questions, Arthur is the one to go to.” Concluding, Angus Frew, secretary general of global shipowning association, Bimco, describes Bowring as “the acknowledged voice of shipping in Hong Kong”. “His opinion is highly respected throughout the international shipping community,” Frew says, adding: “He is going to be an extremely hard act to follow, and we will miss his valuable input on international shipping issues.” The woman tasked with that “hard act” is Sandy Chan Pui-shan, former CEO of Hong Kong Estate Agents Authority, who will take over from Bowring on December 1.
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INSURANCE
IUMI selects HK for first non-European base The decision by the International Union of Marine Insurance this October bolsters the city’s credentials amid fierce regional competition
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ctober 24 marked a momentous day for the local insurance scene, one that cements Hong Kong’s position as Asia’s leading hub for maritime insurance. The International Union of Marine Insurance (IUMI) announced the opening of a new overseas hub in Asia –the first time in the organisation’s 142-year history that it has established a permanent presence outside of Europe. Making the announcement at the 4th Asia Marine Insurance Conference, IUMI president, Dieter Berg said, “The Asian marine insurance market accounts for almost 30% of global premium income and global trade in this region continues to grow. The opening of our new Asian hub, based in Hong Kong, recognises this significant contribution. Through this initiative, we hope to align IUMI more closely with the activities and aspirations of our colleagues in Asia and ensure that
IUMI remains relevant and of service to this very important region”. The Asian hub was created to give IUMI more visibility in the region and to help foster closer cooperation with its Asian members and the maritime industry in general. The new hub will facilitate the regular exchange of views between members as well as with governments, authorities, regulators and NGOs. In addition, IUMI will use the hub to share global insurance expertise and promote education and training for marine insurance practitioners across the region. The new hub will also help broaden IUMI’s Asian membership. The new hub has been created with the strong support of the Hong Kong Federation of Insurers (HKFI) who were instrumental in its set-up and who will provide the secretariat. HKFI has a long association with IUMI, having organised a number of IUMI events and
Hong Kong will be the super-connector between IUMI and our neighbouring markets
conferences in Hong Kong as well as being represented on IUMI’s executive and technical committees. HKFI enjoys strong support from the Hong Kong government and has close working relationships with IUMI members and insurance companies throughout the Asia region. “The union’s move on the one hand recognises the increasing importance of Asia in the marine insurance industry, and on the other highlights Hong Kong’s position as a prominent industry player in Asia,” said Professor Anthony Cheung Bing Leung, Hong Kong secretary for transport and housing. “By unleashing the unique advantages and soft power of Hong Kong’s maritime industry, the Asian hub will further raise Hong Kong’s profile as a maritime services hub,” commented Ronnie Ng, chairman of the Hong Kong Federation of Insurers, adding: “We are confident that Hong Kong will be the super-connector between IUMI and our neighbouring markets and help propel the marine insurance industry in the region to new heights.”
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2016 IN REVIEW
14 Leung Chun-ying, the chief executive of the territory, details plans to merge two maritime bodies to create the Hong Kong Maritime and Port Board
19 GMT Shipping & Logistics Group quits shipowning with supramax sale 20 CMA CGM, Cosco Shipping, Evergreen and OOCL
form OCEAN Alliance, a new container grouping with operational HQ in Hong Kong
19 Shipping portal Hong Kong Maritime Hub launched by veteran journalist Mike Grinter
18 Japanese giant MOL starts LNG shipmanagement out of Hong Kong
18 Pacific Basin announces plan to raise $150.6m via a rights offering
1 The Hong Kong Maritime and Port Board is created January
February
March
April
May
30 Noble Group appoint co-CEOs William Randall and Jeff Frase to take over the reigns of the company from Yusuf Alireza
31 Jinhui Shipping holds restructuring talks with lenders
30 Simon de Courcy Hughes, a co-founder of Rodskog Shipbrokers, retires
2 Maersk Line switches its Asia headquarters from Singapore to Hong Kong
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2016 IN REVIEW
20 Hong Kong container terminals renew plea for more land 20 Wah Kwong president George Chao passes away, aged 76 28 Peter Levesque announced as Sean Kelly’s successor at Modern Terminals
8 Boxship outlook to remain grim for rest of the decade, warns OOCL chairman CC Tung
June
July
August
September
October
4 Tim Huxley resigns as CEO at Wah Kwong Maritime Transport Holdings
3 Noble Group founder and chairman, Richard Elman,
announces his intention to retire within the next 12 months 19 Giant fire engulfs Wan Hai ship in Hong Kong waters
10 Noble sells its US electricity business to Calpine Corporation for $1.05bn
24 Pacific Basin negotiates lower charter rates by offering new shares
26 New Hong Kong owner Tribini Capital takes
delivery of first newbuild, a 2,700 teu boxship
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OPINION
Why Hong Kong is a natural breeding ground for shipowners Mandarin Shipping’s Tim Huxley examines the city’s latest generation of owners
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fter a grim year for most shipbuilders, the last week of October brought some cheer to Ouhua Shipbuilding in Zhejiang province. The Tribini Tai Hang, a 2,700 teu container vessel was christened by her owners, Tribini Capital, whilst Mandarin Shipping took delivery of the Mount Gough, the third in their series of six 1,700 teu Topaz class container ships. Whilst clearly marking a good week for the shipyard, these two events were also significant in that they reflected the continued growth of two young Hong Kong-based companies and confirm yet again why Hong Kong remains a great place from which to run a shipowning business. Together with other recent arrivals on the scene such as fast-growing handysize owner Taylor Maritime, who are entrusting their shipmanagement to another start-up, Langton Shipping, Hong Kong is seeing a new breed of shipping company to add to the established names. Why do shipowners, particularly start-ups, continue to choose Hong Kong? In the case of the companies mentioned above, it is in part because Hong Kong is ‘home’. All the founders are long term residents who see the city not just as a vibrant hub located at the heart of the world’s most dynamic region, but also a great place to live - friendly, safe, dynamic and whilst Hong Kong certainly has some issues, it is generally devoid of the prejudices and problems that affect many other cities. There is of course much more to it than that. The fact that all these new companies raised most of their equity in Hong Kong shows that the entrepreneurial instincts which gave rise to the likes of Pacific Basin in the ‘80s are alive and well. Hong Kong’s vitality and the ability for people to build extensive networks both inside and outside the shipping industry mean that there are always people willing to listen to a well structured proposal.
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Hong Kong’s obituary has been written countless times, but the city always bounces back and reinvents itself Despite the turbulence of the last few years, Hong Kong has maintained a strong core of shipowners, and with it the top quality shipping services which exist in a symbiotic relationship. One only needs to look at the directory of members of the Hong Kong Shipowners Association to see the depth of expertise which exists here and which makes it so straightforward to do business. Whether it be the corporate services to set up a company, the best dispute resolution services in Asia, financial, broking and insurance services made up of both global and local companies, you don’t need to go outside the city for anything. Criticism of the government
for not doing enough for shipping is unjustified. Sure, a closer working relationship would be good, and moves are being made in that direction, but Hong Kong remains a business friendly city with government acting as a facilitator and connector, not a provider of incentives and subsidies. Hong Kong’s obituary has been written countless times, but the city always bounces back and reinvents itself. For decades the shipping industry has been at the core of Hong Kong life and remains one of the most globally recognised examples of ‘The Hong Kong Advantage’. There is no doubt it will continue to remain so into the future.
PORT
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