ISSUE ONE 2016
www.maritime-ceo.com
Aldo Grimaldi
The shipowner who really has seen it all
Manifest
3 At The Prow
Economy 5 US 6 EU 9 China 10 India 11 Brazil
Markets 13 Dry Bulk 15 Tankers 17 Containers 19 Offshore 21 Finance
Executive Debate 22 Seafarer obesity
31 Perseveranza di Navigazione 33 Thorco 35 Andriaki 37 Genshipping Pacific 38 Winning 41 Messina 43 Elektrans
Recreation 44 Wine 45 Gadgets 46 Books 47 Travel
Opinion 49 Tobias Kรถnig 51 Andrew Craig-Bennett 52 MarPoll
Profiles 26 Cover Story Grimaldi Holding
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Issue ONE 2016
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At the prow
An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editor: Jason Jiang jason@asiashippingmedia.com Correspondents: Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Genoa: Nicola Capuzzo Hong Kong: Alfred Romann London: Holly Birkett Mumbai: Shirish Nadkarni New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully Shanghai: Colin Quek Singapore: Grant Rowles Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel Editorial material should be sent to sam@asiashippingmedia.com or mailed to 24 Route de Fuilla, Sahorre, 66360, France Commercial Director: Grant Rowles grant@asiashippingmedia.com Sales Director: Helen Ong helen@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to 30 Cecil Street, #19-08 Prudential Tower Singapore 049712 Design: Tigersoft Design Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2016’s four issues of Maritime ceo magazine. Email sales@asiashippingmedia.com for subscription enquiries. Copyright © Asia Shipping Media (ASM) 2016 www.asiashippingmedia.com 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 Twitter: @Maritime_CEO LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News
Issue ONE 2016
Baltic’s Asian shift
N
ews in late February that the 272-year-old Baltic Exchnage will look over takeover bids – including from Singapore and Hong Kong – will come as a shock to some, while for others it will be seen as another inevitable passing of the baton by what was once the world’s most important shipping hub. The Baltic Exchange is by any definition a bit of a strange old beast. It’s no longer an exchange and has very little to do with the Baltic, but there it has stood at the heart of the London shipping scene since the 18th century. Beyond its property assets, its value lies in the route assessments and indices published daily against which physical and derivative shipping deals are transacted. In recent years the Baltic has worked hard to transform itself into a digital data provider and has successfully defended the way it collects assessments from brokers against charges it could be subject to LIBOR-style manipulation. It has also under the stewardship of departing CEO Jeremy Penn finally got its act together when it comes to handling the world’s most important shipping region, Asia. After some half-hearted attempts to expand its product portfolio, it began index publication during the Asian trading day, is working with the Ningbo Shipping Exchange on a dedicated Asia-Europe route assessment and together with Maritime London has embarked on a series of expeditions to China where it identifies new business opportunities. Several years ago, opposition from brokers and users was instrumental in scuppering plans for a deal to sell the Baltic to the London Metal Exchange (LME). But the LME’s ardour has not apparently cooled and as it too seeks to modernise, it has spent the last few months in negotiations with the Baltic about an agreed bid. Whether the LME has failed to
show enough leg is not clear, but the news that the Baltic is also reportedly in talks with others including the Singapore Exchange suggests that what started as a flirtation has turned into a bidding/beauty contest. Conversations with publisher and index provider Platts are thought to have been shelved in favour of a markets operator. Take a step further back for the bigger picture of this sale and you could detect a bidding war between two other trading hubs for derivatives business. Singapore has been claiming ever more volumes of derivatives trade, putting pressure on Hong Kong, which has in the past tended to be Asia’s top centre for this type of trading. Note here the Hong Kong Exchanges and Clearing bought out LME, the Baltic’s original bidder, in 2012. The sale of the Baltic suggests the end of an era in shipping and the start of a more commercially-driven phase in which the lucky bidder is able to monopolise the collection, publication and licensing of dry bulk and tanker markets data. London’s place in the maritime universe is clearly not what it was, emblematic of the shift east in all things shipping seen since the turn of the century. The loss of the Baltic, one of the icons of Maritime London, just at a time when the City has been trying to assert its importance on the global stage would be very damaging, particularly in the wake of Royal Bank of Scotland pulling out of ship finance. ●
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ECONOMY REGULAR US
Defiance from the top ‘Anyone claiming that America’s economy is in decline is peddling fiction,’ claims Obama. Some are less confident
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merica is defiant – at least in the White House. US president Barack Obama touted his economic record in his final State of the Union, saying, “Anyone claiming that America’s economy is in decline is peddling fiction.” But that may not be everyone’s view. In its quarterly survey of 140 US CEOs, the Business Roundtable organisation found that their economic outlook was the lowest in three years. Their outlook – based on their projections for sales, investment and hiring plans for the next six months – fell from 74.1 in the third quarter of 2015 to 67.5 in the fourth quarter. And there is plenty for Americans to worry about and that could lead to recession again. Primary among these reasons currently is the slowdown in China. China’s move towards a domestic consumption model means it’s buying less of the big stuff – commodities, machinery, etc – from America, though opportunities America’s major industrial export categories, 2015 Category
% of total exports
Machines, engines, pumps
13.6
Electronic equipment
10.6
Oil
9.6
Vehicles
8.4
Aircraft, spacecraft
7.7
Medical, technical equipment
5.2
Gems, precious metals, coins
4.0
Plastics
3.9
Pharmaceuticals
2.7
Organic chemicals
2.6
Source: US Department of Commerce
Issue ONE 2016
for American products and services are brighter than for a while. However, the plummeting price of crude oil may be boosting domestic consumption (70% of the American economy). Consumers do appear to be spending at a higher rate of growth this January 2016 over last January. Spending is up 5% to 6% and some analysts believe that cheaper gasoline accounts for about 1% of that growth. America is of course a largely consumption driven economy. However, in 2015, exports accounted for about 9.3% of total American economic output. America began exporting oil again in 2015 but, additionally, exports of aircraft and spacecraft rose 57.2% across the year led by international sales of large aircraft, smaller helicopters and communications satellites. Vehicle exports were also significantly up last year - at a growth of 37.1% yearon-year driven by medium-size cars. Energy exports are likely to become even more important in 2016 with oil exports continuing as well
as the start of exports of natural gas from America’s shale formations. With gas demand in parts of Asia weakening, US suppliers are turning their attention to Europe as their primary market. But still analysts are asking if the American economy could potentially tank in 2016? Some argue the coming presidential elections look likely to be focused on foreign policy and domestic economics. Certainly 2016 looks tougher for China (with reduced growth and struggling state industries) and elsewhere globally (think of stagnation in Brazil), but many believe America’s economic resurgence of late is somewhat immune to global conditions and the consensus seems to be that an unexciting but non-recessionary 2% GDP growth is the best that can be expected this year. The major fly in the ointment to many is that slowdown globally in the emerging markets could feed a strong dollar and lessen external demand for American goods and services thereby dampening growth. ●
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ECONOMY REGULAR EUROPE
Hung out to dry? How damaging would a Brexit be?
T
he Eurozone’s economists appear mainly bullish about 2016 despite the ongoing migrant crisis and the possibility of a British exit from the union (Brexit). European Economics Commissioner Pierre Moscovic recently said, “European Central banks still have more firepower they can use to counter a slowdown in global growth, which does not change the outlook for recovery in the Eurozone.” Not everyone would agree with that analysis. French President Francois Holland told reporters Europe was on the edge of an economic “meltdown”. As ever these comments reflect the different outlooks from the various capitals of the EU – France is faced with unemployment at an 18-year high of 10.6%. Germany, the epicentre of the migrant crisis, also saw industrial output stagnant at 0% last year and a drop off in consumer confidence which will probably translate into a slowdown in retail sales there this year. Germany and France are the two biggest economies in the Eurozone. Certainly German, and to a lesser extent French and British, exporters are feeling the pain of the global slowdown and the fall in orders from China. Industrial production is a cornerstone of Germany’s economy so the stagnation there is a concern. The EU executive’s last forecast was in November 2015 and argued that the Eurozone would grow by 1.8% this year and 1.9% in 2017 after an estimated 1.6% last year. But most analysts expect the next round of forecasting to lower those estimates in the light of German stagnation. Meanwhile, the IMF argues a slightly different progression for Europe. The fund’s economists
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Germany’s export partners, 2015 Country
Exports to in €bn
France
100.32
US
88.37
UK
75.64
Netherlands
70.94
China
67.02
Austria
56.17
Italy
53.32
Switzerland
47.32
Poland
42.35
Belgium
42.25
Russia
36.01
Source: German Federal Statistical Of fice
believe that lower oil prices will help support private consumption in Europe and therefore recently added 0.1% to its 2016 Euro area growth forecast, bringing it to 1.7%, where it will remain for 2017. This estimate though may be altered if the two ‘possibles’ of the breakdown of the 26-nation Schengen open-border
passport-free travel area materialise due to either the crisis over migrants, or the possible British vote to leave the union. Most feel the Brexit referendum in the UK too close to call at the moment. However, the UK appears to be weathering the current storm better than the continent. The UK’s car production hit a record 10-year high in 2015, according to figures released by the Society of Motor Manufacturers and Traders (SMMT) in January. However, the UK is not immune from global events – 2015 UK car exports to Russia fell by 70% (due to the sanctions regime) and China exports dropped to 37.5% (due to the slowdown in the PRC). The EU is now taking about the potential benefits of tailwinds – those factors that make it easier for the economy to start growing. The tailwinds listed for 2016 are lower oil prices and the weak euro. If manufacturing becomes cheaper and exports pick up then firms will start hiring. ● maritime ceo
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ECONOMY CHINA
New balance Consumers are now firmly the big story in the People’s Republic
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hina’s economy has now effectively completed the shift from an export-driven model to one that is powered by domestic consumption and services growth. That doesn’t mean there won’t be problems for Beijing to deal with – jobs will still need to be created, the end of the old ‘rust belt’ industries will need to be carefully managed to prevent unrest – but the shift has occurred. The latest official data from the National Bureau of Statistics in Beijing indicates that the consumer and services part of the economy—the biggest part of the economy—remains very healthy. While growth will continue to decelerate gradually in the coming years, the risks of a hard landing are very low. This is what Beijing is terming the “new normal”. After three decades of +10% growth, the base has become too big to sustain double-digit expansion. Structural changes and a shrinking workforce mean lower GDP headline numbers for years to come. But remember that while GDP rose by “only” 6.9% last year, that came on a base that was about 300% bigger than it was a decade ago. Consumers are now firmly the big story in China – good news for
Issue ONE 2016
those with goods and services to sell to China and the Chinese. This is being driven by the continuation of a decade of more than 130% real income growth, compared to about 8% growth in real per capita disposable personal income in the US over the same period. While there is moderate consumer price inflation, at about 1.5%, household debt is very low, and the savings rate remains very high. Of course it you’re still reliant on the old Chinese economy then the outlook is not so good. The situation will remain weak in heavy industries such as steel and cement. China has passed its peak in the growth of construction of infrastructure and new homes. However, manufacturing Consumption growth Category
y-o-y % growth over 2014
SUV sales
52
Express parcel deliveries
48
Furniture sales
16
Household appliances
11
Passenger cars
7
New home sales
7
Source: National Bureau of Statistics
has not collapsed; crude oil imports by volume rose 9% last year, and the volume of copper imports was up 12%. Factories are still producing and exports are still being shipped. Just at a more reasonable rate than the years of demon exporting. But, it’s worth reiterating, consumption is the story now. Domestic consumption accounted for about two-thirds of GDP growth in 2015, illustrating that the economy has rebalanced away from a dependence on exports, heavy industry and investment. It seems certain that 2016 will be another year of Chinese volatility. The A-share market has, throughout its history, been incredibly volatile. As the real economy becomes more market-oriented, driven by privately owned rather than state-owned firms, there will be more volatility. As policymakers and regulators experiment with unfamiliar tools designed to support economic rebalancing, their mistakes will add to that volatility. But with continued wages growth, a strong retail and consumer sector and factories shifting increasingly to hi-tech and innovative products with higher margins this can be offset over the long term. ●
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Economy India
Gear change Why the South Asian nation is still failing when it comes to exports
W
ith China’s GDP growth slowing as Beijing embraces the ‘new normal’ of its consumption led, less export dependent economy, many in India think it is time for the South Asian giant to step up. Growing urbanisation and a swelling middle class are signs that this might be possible as Indians point to China’s plateauing urbanisation and problematic ageing demographics. GDP growth is in the region of 7.5% at present though the Indian finance Minister, Arun Jaitley, recently told the World Economic Forum he believes it should be 1 to 1.5% more than this. India had a generally good 2015 though its steel industry performed poorly and the country had to import more steel from China than it had originally predicted. Additionally, bad monsoon conditions were a drag on agricultural production. However, the collapse of world crude oil prices probably has more far reaching consequences in India than in any other developing economy. The Indian government subsidises fuel costs to Major retail sales categories in India, 2015* Category
% of total spend
Food and grocery
66.7
Apparel
8.8
Jewellery & watches
7.6
Consumer electronics
5.0
Pharmacy
2.9
Furnishings & furniture
3.6
Footwear
1.1
Others
4.3
*=not including property, cars, healthcare, public transport, utility bills, etc Source: Indian Ministry of Statistics
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a big extent and so any fall in global prices reduces this subsidy significantly. These savings could allow the government to direct further spending towards infrastructure and road networks across the country. However, as many analysts point out, the same old problems persist in India. Regulations are still overly burdensome on business, there is little to no support to start-ups (despite India’s obvious potential in hi-tech and innovative new businesses) and skilled workers are still few and far between as the country’s higher education system requires a major overhaul. Meanwhile, the long promised modernisation of India’s antiquated goods and services tax (GST), which would help smooth trade and standardise costs, remains in abeyance due to protests from opposition parties. Perhaps most worryingly for the long-term, Indian exports are not performing as well as expected. For 13 successive months now, India’s exports have contracted, according to official data published by the ministry of commerce. Orders from the
European Union, East Asia, China and the US have all shrunk. In the nine months from April to December 2015 period, exports contracted 18.1%. Getting exports back on track will be a major task for the Modi government, which, compared to a competitor economy like China’s, has far fewer levers to pull. Most analysts however believe that without a renewed push for reforms India will find any recovery in exports very difficult. A plus sign is the domestic consumer market. Food retailing is growing steadily as is non-food including key sectors such as cars, appliances and electronics. And the single biggest plus for India right now is oil prices. Low crude prices are helping reduce fiscal deficit, and contain inflation. Low inflation, in turn, is helping boost consumption. This will in turn of course help retailers (if the antiquated retail investment laws ever see liberalisation) as well as services such as airlines, hotels and the travel industry – which is reporting strong growth. ● maritime ceo
Economy Brazil
The great melt away The South American country is the worst performer tracked by the IMF
B
razil’s economy continues to not so much melt down as slowly melt away. The Brazilian economy is now heading toward its deepest two-year contraction since 1901 as the government struggles to revive growth and contain inflation. Last year GDP contracted by 3.6%; this year it seems likely that the contraction will be a further 3.5%, according to the IMF (the largest downgrade for any individual economy by the fund) – almost in the direct opposite direction of the global predicted economic growth rate of 3.3%. Investment into the country has plummeted; unemployment has shot up, inflation is soaring and the country’s currency, the real, has lost 35% Brazil’s key export sectors, 2015 Category
% of total exports
Iron ore
17
Petroleum products
13
Soybeans
5
Steel
3
Copper and base metals
2
Gold and precious metals Other
1 59
Source: Instituto Brasileiro de Geografia e Estatística
Issue ONE 2016
of its value. Add to this that investors are still nervous at the slowly, and the seemingly forever ongoing scandals at Petrobras. In some areas there is not much Brazil can do – soybeans, oil and coffee are all major commodities whose prices have fallen on the world markets and just happen to be among Brazil’s major exports. However, the country’s fractious politics also deters investors. President Dilma Rousseff, who has a mere 12% approval rating, is now likely to be challenged and/or impeached to stand down amid the economic chaos. The IMF does not believe that Brazil will return to any level of growth until at least 2018 now. Brazil’s woes also ripple out across Latin America, which will probably see a 0.3% economic contraction region-wide in 2016. Brazil’s new finance minister Nelson Barbosa is hoping a new raft of economic reform measures will improve things, but these still have to be voted through and that looks unlikely at the moment. With commodity prices low kick-starting the country’s export economy will prove a tough challenge. Inventories are reportedly at all time highs,
particularly in the iron ore sector. Can Rio get an Olympics bounce this year? It seems increasingly unlikely as the country has already started slashing the bill for the games, much to the annoyance of the International Olympic Committee. Consumers are not in a happy mood either amid the turmoil. A record 59m Brazilians were behind in payment of utility bills, or had defaulted loans and bounced checks at the end of last year. So the chances of a consumer led recovery are highly unlikely. With accelerating inflation – which topped 10% last year – and large job losses across the board – things on the consumer and domestic consumption front are only set to get worse. Only the discount retailers are predicting any significant growth this year in the sector. If there is hope for the major commodities sectors then it is that China’s imports of major commodities from Brazil seem to be remaining on trend. China remains Brazil’s top trading partner and imported a record amount of crude last year as oil’s lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners.●
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Markets REGULAR Dry Bulk
Coal bets turn red Owners ordered ships in 2013/14 in the mistaken belief China would keep on growing its coal imports, writes Jeffrey Landsberg from Commodore Research
A
key theme of ours over the past several months is that market consensus has continued to hold far too bullish of expectations for dry bulk freight rates. While on the surface the market is now exclusively full of bears, in reality the FFA curve continues to show that the market still expects a very large rebound in overall freight rates will occur this year. However, we have remained particularly bearish for the panamax and handymax markets and continue to urge caution when anticipating a very large recovery. We do believe rates will be able to see a small amount of support from current lows, but the FFA curve shows that the market is expecting panamax and handymax rates in 2016 will average almost double than their current rate. Unfortunately, this is very unlikely to occur. If the dry bulk fleet is set to see more growth than dry bulk cargo growth this year (which remains our view), then we do not believe that freight rates will be able to experience that large of an improvement. In our reports in 2013 and 2014, we discussed that even as cargo growth was great back during the second half of 2013 when a surge in newbuilding orders was first occurring, it was evident then that too many
vessels were being ordered. The market had been set to ultimately come under cyclical pressure, but the sudden end of growth in Chinese coal imports was a huge change never before seen in the current China WTO era. While none of this is news, panamax and handymax freight rate expectations for this year seem to ignore the reality of just how much pressure the dry bulk market will continue to experience. Expectations remaining overly bullish, though, will continue to present opportunities to profit in the market One key issue we have stressed over the years is that when newbuilding orders were surging in 2013 and 2014, consensus was China’s coal imports would rise to around to 350m tons in 2014 and 370m tons in 2015 (2013 saw imports set a record of 328mtons). It was fair for the market to expect that imports would continue to grow, before China ended up surprising the market. What is unreasonable now, though, is to suggest a very large recovery is coming in 2016. Approximately 965 panamax and handymax (including ultramax) vessels were ordered in 2013 and 2014. In comparison, 2011 and 2012 saw 560 ordered. The 965 vessels ordered in 2013 and 2014 were ordered in great part due to
Chinese coal imports m tonnes
350 300 250 200 150 100 50 0
2009
Issue ONE 2016
2010
2011
2012
2013
2014
2015
expectations that seaborne coal trade would remain robust, but in reality coal trade ended up falling far short of expectations the market held back when so many new vessels were being ordered. 2014 ended up seeing Chinese coal imports come in at 54m tons less than the market had expected back in 2013/2014 when the surge in newbuilding orders was taking place (as China imported only 292m tons). 2015 then saw Chinese coal imports come in at 166m tons less than the market had expected (as China imported only 204m tons). China’s coal imports falling short of the market’s expectations for 2014 by 54m tons works out to an absence of 730 cargoes (if simplified as solely a panamax cargo for the sake of computation). Chinese coal imports falling short of market expectations in 2015 by 166m tons works out to an absence of 2,243 cargoes. Overall dry bulk fleet growth remains likely to outpace cargo volume growth this year, and panamax and handymax (including supramax) deliveries will make up the majority of the deliveries. At the same time, there remains a very good chance that global seaborne coal trade will decrease this year in absolute volume. This will remain a very negative factor for the panamax and handymax markets, and we do not believe that rates in 2016 will rebound by nearly as much as market consensus believes. The fundamental supply and demand of dry bulk vessels is likely to remain out of balance this year, and we continue to remain most sceptical for panamax and handymax expectations. ●
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Markets REGULAR Tankers
Too much oil and not enough ships Erik Broekhuizen from Poten & Partners charts how tankers got into such a sweet spot
U
nlike many of the other main shipping segments, such as containers and dry cargo, which are going through very challenging times, crude oil and product tankers seem to be humming along nicely, despite (or because of?) continuously falling oil prices and reports of slowing growth in China. Is the tanker market living on borrowed time with a correction just around the corner or can we expect the market outperformance to continue? As is usually the case, it depends. If we go back a few years, we can see how the seeds for the current bull tanker market were sewn. After the global financial crisis of 2008-2009, tanker rates and prices collapsed and newbuilding contracting slowed to a trickle. As a result, newbuilding deliveries during the period 2013-2015 (for vessels ordered after 2009) totaled 491 across all tanker segments, almost 40% less than the 802 vessels that hit the water during the three-year period from 2010-2012 (mostly vessels ordered prior to the financial crisis). Demand for tankers actually started to grow again during this period, partly due to a worldwide recovery in economic activity and partly due to the growth in average distances over which oil and oil products are being moved. Crude trades, for example, are benefiting from more long-haul movement of oil from producers in the Atlantic Basin (like Venezuela, Angola and Nigeria) to consumers in the Pacific. Product tankers are moving more refined products globally over longer distances as a result of the completion of large export refineries in the
Issue ONE 2016
inventory build was in 2009, but the Middle East and Asia. Combined, increases we have seen in the last 18 these developments have boosted months have been higher and longer tanker demand. in duration. In recent years, oil production The International Energy Agency has provided an additional boost (IEA) estimated that worldwide to tanker demand as it continued crude oil stocks increased by an to grow at a faster pace than oil average of 1.2m barrels per day in demand. Initially, the main conthe second half of 2014 and by 1.8m tributor was the United States, barrels per day in 2015. This means where the rapid growth in shale that over the last 18 months, worldoil production added significant wide inventories have grown by an supply to world oil markets. Shale oil astounding 875m barrels. Most of production in the US rose from less this crude was transported by sea, than 500,000 barrels per day in the providing material support for the first half of 2008 to a recent peak of tanker market. 4.64m barrels per day in May 2015, a The abundance of oil in world 10-fold increase. The shale revolution markets has sent the price of crude impacted the oil and tanker marspiralling down to levels not seen kets in various ways, the two most since 2012. As a result, shale oil important being (a) a significant production in the US has started to reduction in US crude oil imports, decline already. Significant cuts in freeing up Atlantic Basin crudes for capital expenditures by the internaAsia and (b) a significant decline in tional oil industry will also have an the price of oil since the middle of impact on production in the years to 2014, as production increased faster than world oil demand. In the second come. At some point, this will have an impact on tanker rates, especially half of 2014 and throughout 2015, since the healthy market over the last oil supply continuously exceeded 18 to 24 months has led to a signifioil demand by a significant margin, cant increase in newbuilding orders. leading to significant stock building. These new vessels may be delivered In addition to the increases from the around the same time as tanker US shale, OPEC producers decided demand starts to falter. And so the to challenge non-OPEC for market tanker cycle starts again. � share and also increase production. The chart OECD Inventory Change Million Barrels Change YoY from the Energy (2009-2015) Information Agency 300 below illustrates the 200 point. It shows the 100 quarterly changes in OECD inventories 0 (year-on-year) for the -100 period 2009 – 2015. The last time we -200 2009 2010 2011 2012 2013 2014 2015 have a significant Inventory Change
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Markets Containers
The coming network battle SeaIntel’s Lars Jensen on liner alliance musical chairs
T
he coming mergers between CMA CGM and APL as well as between COSCO and CSCL will in itself only change the degree of consolidation in the industry marginally. However, the practical ramifications might have significant repercussions on the alliance structure and place some carriers under intensified competitive pressure. A year ago the problem was that a range of carriers did not have any sizeable portfolio of ultra-large vessels. When this was seen in the context of a three-year forecast it would eventually lead to a significant unit cost disadvantage for some of the alliances. Since then carriers have placed a significant amount of orders for large and ultra-large vessels. The result is, that when newbuildings have been delivered, then the alliances will be able to field vessels of almost equal size. Hence no alliance will have a decisive unit cost advantage from vessel size alone. The current composition of the alliances shows that 2M has a much larger number of vessels than the remaining three other alliances. Ocean 3, CKYHE and G6 have roughly the same amount of large vessels at their disposal. This means that 2M overall is able to operate a
Number of vessels
Portfolio of large vessels (including orders) 200 180 160 140 120 100 80 60 40 20 0
2M
Issue ONE 2016
O3
G6
CKYHK
network with more weekly services. Not only will such a network be able to provide a competitive advantage in terms of commercially more attractive direct port-port services, but it will also have a lower unit cost. A larger number of services on a given trade will result in lower unit costs simply due to a lowering of transhipment and feedering costs as well as through increased operational flexibility. All else being equal, this means that 2M has a lower unit cost on their network than the three other alliances. This in turn means that with carriers competing on price, then 2M has the strategic opportunity of allowing the price competition amongst the three other alliances to set the base rate level. 2M will then benefit from their lower unit cost to have a higher yield per box. This is an ideal situation for 2M. However, the coming mergers have a high likelihood of changing this game. Whilst at the time of writing it is not known which changes will happen, the two simplest scenarios are as follows. One consists of APL moving with CMA CGM into Ocean 3 and at the same time CSCL also pulls COSCO into Ocean 3. The other simple scenario is for APL to still follow CMA CGM into Ocean 3, but for COSCO to pull CSCL into the CKYHE alliance. Either one of these scenarios leads to a situation where an alliance – either Ocean 3 or CKYHE – grows to a size rivalling 2M. This means that 2M can lose their network unit cost advantage. This in turn will lead to the competition between these two large alliances lowering rate levels further, placing a significant pressure on the remaining two small
alliances which will be faced with lower freight rates but at the same time have to manage a smaller network with higher unit costs. The other possibility – as widely posited across the shipping press throughout February – is for CMA CGM joining forces with China COSCO Shipping, OOCL and Evergreen. Whatever the outcome all carriers are clearly facing a period of significant challenges going forward in the battle for getting the best network. ●
“We’re quite often so busy interacting in our own little global bubble, and the segments we exist in, that we forget to keep up to speed with and learn from other industries” — Birgit Liodden, the head of Nor-Shipping
17
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Markets Offshore
Liftboats taking on jack-up market characteristics Andre Wheeler pours cold water on the liftboat hype
T
he liftboat market has been held up as the new saviour to the offshore sector, something that is patently wrong. There has been a rapid increase in interest in liftboats in recent months, especially in Southeast Asia, just as was evident in jack-ups a couple of years back, and whilst not quite a precipice, this sector is in for some severe headwinds. There’s been plenty written about how liftboats could be a lifeline to hard-pressed Asian shipyards. We have seen a number of yards turning to fill spare capacity by building liftboats, and the liftboat sector has been creative in selling their assets advantages. The advantages include: self-propelled and lower mobilisation costs; large deck space for carrying loads; efficient jacking systems; market growth potential using the
“What we will see is the older generation in offshore move towards retirement at a much earlier age than planned, which will potentially leave a huge skills gap” — George Gourlay, CEO of OCB Oilfield Services
Issue ONE 2016
age old liftboat to platform ratio in Southeast Asia being very high as compared to the Gulf of Mexico (GOM). However, the liftboat market is looking eerily similar to that of the jack-up market. Charter rates seven or eight months hovered as high as $80,000 a day, they’re now as low as $24,000. While the cost to build one in the middle of last year stood at up to $100m, it’s now halved, with significant further discounts offered to buyers to take over build contracts, in some cases up to 15%. There’s also an increased number of mid-range liftboats now being offered on the open bid market. Credit Suisse reports have scaled down the need for liftboats in the Southeast Asia region from 80 to 50 in the last six months due to lower capex and improved efficiency. Major declines in international liftboat utilisation – down to 37% – could lead to market incursion. Of the 22 current newbuilds in Southeast Asia, only 10 have contracts. All of this adds up to the barriers to entry in Southeast Asia being lowered, and this will be a challenging period as liftboat owners enter the free cash flow / liquidity issues that haves recently confounded the jack-up sector. For liftboat operators this year I reckon we’ll see increased insolvency as many in this sector are already
leveraged beyond 1:1 and will fail to meet even interest repayments. There’ll be an oversupply of assets due to market creep from the likes of Middle East and GOM markets where underutilisation forces redeployment to new regions coupled with the number of newbuilds coming into the markets. Still, as bad as the sector is, I’d sooner be in liftboats than jack-ups still. Why? Liftboats offer new niche markets in offshore windfarm development through the entire life cycle of these farms as well as opportunities in decommissioning of offshore platforms. However, to take advantage of this one needs good management, a sound balance sheet and free cash flow. Whether there is a Southeast Asian entity that can do this, well that is a question for another day. ●
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Markets REGULAR Finance
Lowest of the low Dagfinn Lunde warns readers 2015 will feel like a cakewalk compared to the travails owners face this year
I
will not hide it from you, dear reader, 2016 will be worse than last year. What surprises me is how unprepared companies have been for the crisis that has hit many sectors led by dry bulk and offshore. People did not prepare for the consequences. The scale and the speed of the current trough are down to over-ordering and overleveraging. Bulker prices have nearly halved in the last 12 months, as have offshore assets and plenty of owners tell me prices could still come off further. The difference with where we are today compared to other cycles is that shipping’s downturn is in tandem with a banking one. Banking and shipping hitting the buffers at the same time is both very rare and very serious. This has brought a severe shortage of liquidity with very little backstop. As an owner, you need a good long-term relationship with a banker to get any liquidity outside of newbuilding/ ECA financing these days. Shipping
Issue ONE 2016
is a bad word among bankers right now. What’s more, banks are in much worse shape than they are willing to admit. And what of private equity? Seen as the saviour of shipping by some since 2009 – and destructive by others – the PE folk have had their fingers so badly burned from their maritime excursions that they will not be looking at this sector again in a hurry. The yard-driven ecoship ordering wave has been especially disastrous for the oversupply. Another reason why 2016 will be so brutal for so many is that the key driver for so much trade growth since the start of this millennium – China – is in a bad state. The People’s Republic is not stabilising and I fear it could be in for major implosion – just look at the many ghost towns and recent stock market setbacks. Once again, my eyes glanced towards the back page of this magazine and the results of the annual Future of Shipping Poll, a vote that
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Banking and shipping hitting the buffers at the same time is both very rare and very serious
”
always tends to pique my interest. Nearly three quarters of you believe financing for S&P deals for small- to medium-sized shipping lines will be hard to get. From my discussions with countless owners I can confirm this is true. There are myriad smaller Greek owners out there, for instance, who – as their fathers and grandfathers have done in previous down cycles – are desperate to buy, as ships are so cheap, but they are frustrated as their banks are either no longer in existence or are unable even to give conservative financing. All this will lead to, in my view, is still lower prices. As mentioned at the start of this article, in this toughest of tough years I do not apologise for not sugar coating my outlook this year – shipping’s bitter pill will kill off many more companies in the coming 24 months. ●
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EXECUTIVE In profile Debate
Waist waste As he gears up for the London Marathon, Sam Chambers ponders the issue of seafarer obesity
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s the big four zero approaches in my life, it did seem to be a race between what’d get there first, my birthday or my waistline. Putting a sudden halt to this widening girth I’ve signed up for the London Marathon along with my fiancée Eliza. We’re now in our third month of training and more improbably closing in on five weeks without alcohol. April 24 is the big day – 42 km through some of the best sights the British capital has to offer. We’re running in aid of Sailors’ Society and Eliza and I have been wowed with the generosity shown in donations to date. Our training these days takes us through 13 km in the stunning foothills of the eastern French Pyrenees. It is hardly flat, and the elevation jumps around from approximately 450 m above sea level to 750 m so the heart gets a good pumping. Running, as well as its obvious physical benefits, is good for the brain – it provides a decent, clear time to think. On one of my mountain assaults recently my thoughts turned to a career where exercise is seriously on the wane. Seafaring these days has become ever more sedate, much of the daily rituals onboard are now taken up looking at screens, waiting for lights to pop up or buzzers to bleep. On the occasions I have been at sea on commercial ships, I have eaten fantastically well (and run round the decks of VLCCs to work off the constant curry fests) but also noticed the poor shape of many sailors.
22
At dinner the other night, an ex-master told me how he had campaigned hard to try and get his bosses to acknowledge the risks of poor diets and limited exercise, all to no avail. Obesity, he said, was a far greater threat than alcohol onboard and yet no one paid the issue suitable attention. He even used to worry if some of his crew would be able to waddle fast enough and squeeze themselves into a lifeboat quickly if the need arrived. I asked around some leading shipmanagers for input. Simon Doughty, ceo at Wallem, noted how obesity is definitely growing among Filipino seafarers. Wallem’s own reports suggest that 10% of all Filipino seafarers are either obese or borderline before joining and it has become common to require weight loss before accepting a seafarer is fit for sea. Doughty cites the growth in use of smartphones, video games, Facebook and web surfing taking precedence over physical sports as one of the main reasons for this development. Studies indicate that Filipinos spend 60% of their free time on video games or the web. Secondly, Doughty notes Filipinos love fast food and rice. Just a decade ago Filipinos ate three times daily. But studies show that the modern Filipino often eats and snacks nines times a day. Whereas the average male needs 2,200 calories daily, Wallem has
“
found that the average onboard calorie intake is nearer to 3,200. “There has to be a focus on eating less, but better,” Doughty says. Quite so, agree staff from the crew and catering departments at another Hong Kong manager, Fleet Management. “Obesity is truly a growing problem for our shipping industry and it’s a matter of grave concern,” says a source at Fleet, adding: “If you expect to see a seafarer coming home after a long arduous voyage, away from family and devoid of home food, frail and tired, you are mistaken. Some of them come back home as a fat, tardy and sluggish person with more health related issues than before.” Moreover, the dietary over
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There has to be a focus on eating less, but better
maritime ceo
EXECUTIVE In profile Debate
indulgence onboard and related lifestyle diseases is not only a professional hazard for the seafarer himself but to the ship as well. It also costs by way of loss of manhours, reduced productivity and increased medical and insurance costs in case of sickness or an accident. Sophia Bullard, pre-employment medical examination (PEME) director at the UK P&I Club, has worries about the obesity scourge too. In the last two years 38 crew have failed the UK P&I Club PEME on obesity grounds alone. “Carrying excess weight causes a strain on the system,” she says, “and can also lead to other serious illness such as hypertension, type 2 diabetes, and coronary heart disease.” 233 cases of unfit crew examined
Issue ONE 2016
in the same period by the UK P&I Club were found to be suffering from a combination of these illnesses in addition to obesity. The onboard dietary regime has been traditionally rich in animal and dairy fats with a high intake of proteins and comparatively less of fibre in the form of vegetables, fruits and salads. Additionally, the introduction of pizzas, burgers and other fast food items, rich in fat, have also crept from shore to the ship’s menu as part of regular meals with more intake of sugary soft drinks to boot. “Being away from family also brings in an element of loneliness in a person when one tends to eat more,” notes the Fleet source. Anglo-Eastern Univan, as well as Fleet and Wallem, have made dietary
and exercise improvements a priority recently. Pradeep Chawla, managing director, quality assurance and training at Anglo-Eastern Univan, says the awareness of the issues with obesity has increased and many companies as well as medical clinics dealing with seafarers are now keeping statistics about obesity. His company has even made recipe books for healthier options for Indian, Filipino and East European diets. The recipes give the calorie content of the dishes usually prepared by the cooks. Technology – and the arrival of the smart ship – will make seafaring ever more sedentary; the industry has to act as one to change diets and attitudes now. ●
23
In profile
Aldo Grimaldi p.26
Stefano Messina p.41
Angelo D’Amato p.31
In profile this issue Maritime CEO’s 17 correspondents around the world have been in touch with many of the world’s top shipowners. Highlights are carried over the next 13 pages
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maritime ceo
In profile
Thomas Mikkelsen p.33
Daniel Chopra
Dimitrios Korkodilos
p.43
p.35
Gabrijel Kobal p.37
Bosco Lau p.38
Issue ONE 2016
25
In profile
How shipping has changed since 1922 Aldo Grimaldi, 93, discusses shipping revolutions past and present
T
“ 26
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Ours is the era of size is cool
he year 1922 marked a turning point for the shipping industry. Pre-1914, Britain dominated the high seas, with more than half the merchant fleet and at one point, 80% of the shipbuilding capacity. But following the First World War, that era came to a close. A clear indicator that Britain was no longer top dog came with the signing of the Naval Limitation Treaty, on 6 February 1922 at the Washington Naval Conference. This fixed the tonnage of permitted warships as: – US 525,850 (15 ships); Britain 558,950 (15 ships) France 221,170; Italy 182,800 and Japan 301,000. So Britain still had a nominal tonnage advantage, but the US was clearly moving into that space. As an interesting subplot, in 1922 Japan completed the world’s first purpose designed aircraft carrier, the Hosho. In the merchant shipping markets, 1922 marked the end of the post-First World War super-boom, the first of three in the industry’s modern history. The shipbuilding boom was driven by high freights and massive retonnaging of passenger ships by the big liner companies – Cunard, P&O, Orient Line, Union Castle, Hamburg Amerika, Hamburg Sud, etc. Ship prices put the boom into perspective. At the peak in 1919 a 7,500 dwt maritime ceo
cover In profile story
freighter cost $858,000, but by 1922 the standard ship price had slumped 70% to $272,000. It fluctuated around this level during the 1920s, before slumping further to $20,000 in 1932 during the great depression. Meanwhile, ship technology was also changing direction. The switch from coal to oil was underway. And the era of merchant sailing ships, which had enjoyed a profitable revival during the First World War, was all but over. In about 1922 the Pommern, a F. Laeisz flying P class ship, was sold to Gustaf Erikson, who ran the last deepsea sailing ship fleet. In 1939 the Pommern docked in Marienham in Aland Islands, where it is still moored in front of the merchant shipping museum. According to the famous maritime researcher, Dr Martin Stopford, “1922 was a true crossroads for shipping.” In geopolitics it was the turning point of the British and European empires, to be replaced by the US, multinational corporations and a completely new shipping scene.
Issue ONE 2016
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The European Union is calling for more and more motorways of the seas
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“The irresistible economics of bunker oil redesigned the tramp ship and opened the way for the super ships of the 1950s and 1960s,” the president of Clarkson Platou Research Services recounts. Meanwhile, the serious shipowners like Reedeerei F. Laeisz handed over their beautiful and heroic sailing ships into the capable hands of Gustaf Erikson, who gave them an honourable burial. All this took place against the background of a freight super cycle, followed a decade later by the great shipping depression of the 1930s. Unsurprisingly, many shipping dynasties were founded during this era. 1922 was also the year Aldo Grimaldi, the doyen of Italian shipowners, was born. Now 93, he’s still firmly at the helm of Genoa-based Grimaldi Holding, which currently owns four ropaxes built in Italy at
Nuovi Cantieri Apuania shipyard. Casting his mind back to look at how the industry he loves has changed, Grimaldi says the most noteworthy thing is the extremely advanced technology applied today to ships during the design stage. “This means we can see how the ship will perform even before we build it,” he says. The march towards autonomous ships is also something that amazes the Italian. “Thanks to evolution in the field of electronics and computerisation, with a small number of crewmembers, we can manage and monitor the entire ship – even automatically – from the bridge and engine room control station,” he notes. The ease with which ships can now manoeuvre is something else that Grimaldi sees as a huge development in his lifetime.
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In profile
“Thanks to bow thrusters and azipods, the units can fully turn around on their own. In other words, there’s no need for tugs,” he says. A further dramatic change concerns ship sizes with Grimaldi quipping: “Ours is the era of size is cool.” Grimaldi’s fleet of four ships are bareboat chartered out to Spanish, Greek and Danish shipping companies. Grandi Navi Veloci ferry company was also founded by Grimaldi in 1991 and remained part of the group until 2008 when MSC bought it. In spite of his age Grimaldi continues to work hard at innovative investment opportunities and today is looking at new ropax orders.
Spot on
Grimaldi Holding Genoa-based ropax operator, chaired by 93-year-old Aldo Grimaldi, with four ships currently and plans to add more.
Issue ONE 2016
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1922 was a true crossroads for shipping
“We are carrying out an overview of the yards in Europe that are capable, by set deadlines, of building the ships we require. Unfortunately in Italy many of the yards Grimaldi used to turn to have either changed their business model or are rammed full of big cruiseship orders for the foreseeable future. Grimaldi Holding’s chairman is particularly interested at exploring LNG propulsion. “It is increasingly important and urgent for us to know whether the new dual fuel technology will really be adopted soon. If so, we will have to change our original design plans.” Rather like in the year he was born, shipping appears to be on the cusp of significant change when it comes to ship fuel. Propulsion selection is something that vexes the veteran owner – whether to go with engines that consume IFO 380 bunker fuel or dual fuel engines that can take LNG. “Dual fuel engines are gaining considerable ground within the market and, from an investment angle, they may be a winning formula, also
in terms of management flexibility, they bring considerable savings,” Grimaldi muses. With regard to the ferry market in the Mediterranean Sea and more generally in Europe, Grimaldi concludes: “We reckon the demand will grow, not only due to the market needs, but also to the new European Union regulations requiring ships with new safety standards. Furthermore, the European Union is calling for more and more motorways of the seas, capable of ensuring safe, rapid transport while respecting the environment and ridding our increasingly busy roadways of as many heavy vehicles as possible.” ●
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In profile
Dry bulk glass half-full? Are analysts being too gloomy about prospects? One Italian owner certainly thinks so
E
ven when the Baltic Dry Index is sinking day by day it’s possible to see the glass as half-full somehow. That’s the view of Angelo D’A mato, CEO of Perseveranza di Navigazione of Italy. “I do not agree with the provisions I have heard recently by many analysts saying that the industry seems structurally compromised. Dry bulk is a cyclical business and good freights will return,” emphasises the head of the Naples-based shipping company. “What I note these days is that finally the industry has started to use massively the only tools available to rebalance the supply and the demand: accelerate scrapping even for less than 20 years tonnage and lay up vessels.” D’A mato reckons between 600 to 700 ships will disappear from the supply side in the coming couple of quarters. Recent statistics released by Bimco show some 30m dwt of dry bulk tonnage was scrapped last year and a further 4.6m dwt were also dismissed in January this year. Looking at the national merchant fleet, D’A mato underlines that lay-ups will only marginally affect the Italian dry bulk industry since
Spot on
Perseveranza di Navigazione Naples-based firm with a mixed fleet of bulkers and tankers.
Issue ONE 2016
the average age of Italian-owned bulk carriers is just around five years. While it is nigh on impossible to predict when the markets will rebound the Perseveranza CEO is keen to delve into the global orderbook statistics. “A big question mark,” D’A mato muses, “is also how many of the newbuildings on order will effectively see the water. Many are ordered into lower rating Chinese shipyards and clearly any lender will try to escape from the drawdown. These are all signs which may predict that many vessels will remain idle in the yards for months or, better, will never see the water. I hope our industry has finally understood that present market conditions do not allow for any further newbuildings.” Perseverenza di Navigazione is today more a tanker company rather than a dry bulk one, as the company’s fleet is made up of one LR1, three handysize tankers and three bulk carriers (one handysize, one panamax and one post-panamax). The company is very close to finalising its agreement with banks for a debt restructuring, a common situation for many of the nation’s hard-pressed owners at the moment. D’A mato, who is also financial manager of the family company headed together with his brother Umberto and his father Peppino, has plenty of firm views on the new sources of capital entering shipping. “Intelligent equity and/or turnaround funds are not a threat but an opportunity,” he says. “We see some hedge funds trying to buy loans, also on the Italian market. Some are quite ignorant of Italian corporate law, which can be very protective for
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Present market conditions do not allow for any further newbuildings
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the debtor. This can drive to a wrong pricing and would push companies which can be able to overcome the present crisis without any procedure into court protection procedures.” His advice in conclusion: “The key to avoid destroying value is to involve the debtor in whatever discussion and not only the original lender.” ●
31
In profile
Open minded to new opportunities An exclusive interview with Thorco Shipping’s Thomas Mikkelsen
I
t’s been more than three months since the multipurpose carrier Thorco Cloud sank in the Singapore Strait after a fatal collision with a Stolt Tankers vessel, in which three crewmen lost their lives and three are still missing. Thomas Mikkelsen, the CEO and partner of Copenhagen-based Thorco Shipping, says there’s no new information regarding the collision – as of yet. However, they are in close contact with the local authorities regarding the ongoing investigation. “Thorco Cloud was hit in the starboard side and subsequently sank within few minutes. Currently an investigation is still ongoing and until all the loose ends have been gathered and we have the full picture, we cannot say much about what exactly caused the collision”, Mikkelsen explains. The tragic sinking has left several families without their beloved ones, and Mikkelsen says they are working closely with the crewing agent to ensure that the families and the surviving crewmembers are being cared for. “It has been a tragic incident with the worst thinkable outcome. The fact that three crewmembers lost their lives and three have not been found, is the worst thinkable
Spot on
Thorco Shipping Young Danish company with a fleet of multipurpose general cargo and heavylift tweendeck vessels with capacities ranging from 7,500 to 19,600 dwt.
Issue ONE 2016
thing for a shipping company. We are deeply affected by the immeasurable loss their families have suffered and our deepest sympathy and thoughts go out to the them”, Mikkelsen tells Maritime CEO. Thorco is currently awaiting any news regarding a possible salvage of the wreck. Even though Thorco didn’t have the most pleasant start to the new year there is much to be optimistic about. The company has just added five modern 17,954 dwt tweendeckers in order to keep the fleet young and up-to-date. “We are always open minded with regard to new opportunities and are as such always evaluating options in the market. It goes without saying that market conditions presently are not talking in favour of fleet expansion. However, we believe long term in shipping and want to think long term – therefore we also find it interesting to explore market options at the present level,” Mikkelsen elaborates. He also adds that the company has plenty else going on at the moment. Thorco has helped out with Shell’s FLNG project as well as opening up an office in Spain. However, the weak market has led to a visible capacity surplus in most shipping segments. Mikkelsen believes that we in are in a
historically low market, but he is not too keen on giving any predictions for the future. “I have been very surprised about the market development during the last years and what used to be a trend has turned out to be the opposite. So it has been very dangerous to speculate about the future, as the future has shown us to be unpredictable,” he says. Mikkelsen believes that there will be more uncertainty to come during 2016. “We have a historical low oil price slowing down this industry, the entire world is looking at the economy in China and stock markets all over the world are dropping. Presently there are so many destructive factors, which somehow are creating a global negative atmosphere, and this of course has an impact on shipping needs,” he explains. Mikkelsen finds it hard to believe that shipowners will be able to survive for long in the current market. “I personally think we have to accept the fact that the present market will be the reality for the majority of 2016. We are all affected by a great number of factors globally. All shipping segments – except tankers – are at an all time low level and due to this, we have seen an increasing amount of cannibalism from segment to segment: the bigger bulkers are looking at smaller quantity and seeking alternative cargoes, and containers are doing more breakbulk. However, in Thorco Shipping we believe that when a door closes another opens, and we stay optimistic and seek these opportunities,” he concludes. ●
33
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In profile
‘Instability in the market is not always bad’ The veteran boss of Andriaki Shipping on opportunities brought about by volatility
A
ndriaki Shipping, founded by the famous N.J.Goulandris back in 1953, has been through enough peaks and troughs to know how to weather the worst storms – the trick, top management reveal to Maritime CEO – is to stick to what you know best. Sealing medium- to long-term charters, keeping a tight lid on finances, adjusting to new technologies and having strong family-based human relations form the four key planks of the company’s actions under CEO Dimitrios Korkodilos. Korkodilos has been with Andriaki since 1979. The company’s fleet today has four suezmaxes and two VLCCs. On top of that Andriaki has four 74,000 dwt LR1 product tankers on order at South Korea’s STX Offshore & Shipbuilding – the first time the line has ordered such ship types. The family-run line places great emphasis on nurturing long term careers. Retaining dedicated crews, officers and shore personnel – many of whom have started their career
Spot on
Andriaki Shipping Greek tanker outfit founded in 1953. Fleet today comprises six crude tankers plus four product carriers on order
Issue ONE 2016
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The oil and gas markets hide so many factors beyond anybody’s control
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with the company – is something that fills Korkodilos with pride. Andriaki also maintains a special cadet training program both for Greek and overseas crews. On the tanker markets, Korkodilos reckons volatility is not necessarily a bad thing. “The oil and gas markets hide so many factors beyond anybody’s control and that instability in the market is not always bad,” says the veteran tanker player. ●
“Some owners may struggle to keep standards at the level they prefer” — Ståle Hansen, president and ceo of P&I club Skuld
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In profile
Unbridled overcapacity fuelling project panic The boss of Genshipping Pacific Line does not mince his words when describing the project shipping scene in Asia
I
n a sobering interview with Maritime CEO a leading name in the Asian project shipping scene warns of an impending bloodbath coming to the sector. Genshipping Pacific Line (GPL) CEO, Gabrijel Kobal, is refreshingly honest when talking about prospects for this year – there is no PR spin, just straight talk. “At today’s ocean freights levels no one can be happy,” he says. “If this trend continues for the next couple of months, many players are bound to disappear, restructure or merge.” GPL is a project and general cargo niche player within Asia,
Spot on
Genshipping Pacific Line Singapore-based project and general cargo niche player within Asia, operating between India and the Far East. Its fleet with six ships is a mix of roros and tweendeckers.
“
Many players are bound to disappear, restructure or merge
operating between India and the Far East. Its fleet with six ships is a mix of roros and tweendeckers. A new tweendecker will be added to the fleet in the coming months. Owners and operators are “well into panic levels”, Kobal says. “We are seeing sort of consolidations through cooperation agreements, even involving arch rivals. Although each of us is fighting for market relevance, freights are well below operating costs.” Project shipping has undergone more merger activity than most of other shipping sectors in the past
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four years, largely down to the influx of huge amounts of private equity cash. GPL is not exempt from such market forces, according to Kobal. “A pinch of optimism has to prevail,” he says, smiling, “otherwise we can start packing already.” Kobal concludes by warning that unless there is a concerted effort by all concerned to curb overcapacity in the project/heavylift sector “we will witness a real bloodbath”. ●
“The real financial pressure to reduce fuel costs is simply not there at the moment” — Alastair Fischbacher, chief executive of the Sustainable Shipping Initiative
In profile
In for the long haul A Singapore-based firm is shipping ever greater volumes of bauxite from Guinea to China
C
hina’s rapacious demand for raw materials is seeing ever-longer dry bulk journeys crisscrossing the globe. No capesize trip is longer these days than from Guinea in West Africa to the People’s Republic. Singapore-based firm Winning is making the running in this niche trade. The Chinese-backed company has mining and shipping interests, and is very much in charge of its entire supply chain. The Winning current fleet is in flux. There’s two supramaxes, one post-panamax, 15 capesizes (of which four are set to be scrapped) while two new newcastlemaxes will deliver later this year. The company also has a couple of transhippers, four floating cranes, 12 tugs and eight barges. Bosco Lau Chi Wah (pictured), vice president and CEO of Winning Logistics Services, explains how the company focuses on taking bauxite from West Africa to China and then project/general cargoes from China back to West Africa. “This two-way trade route will contribute the world’s longest tonnemiles capesize haul,” Lau says. The group’s in-house bauxite from its Guinea mine will increase
Spot on
Winning Chinese-backed, Singapore-based mining/shipping entity with interests in Guinea and Indonesia.
production, and export, from the current capacity of 10m tonnes a year to 30m tonnes a year within the next two years. “This translates to full employment of 40 capesize vessels for one way trade, and the required capacity will be doubled if every ship is employed in two-way trade,” Lau says. Winning is now in the market for more secondhand capes, while it is also in discussions with a number of Japanese trading houses to take on some long-term charters. More transhipment equipment – tugs, barges, cranes, etc – will also be bought, while more ambitiously – and in keeping with Winning’s desire to be in charge of its own supply chain – a shipyard will be built in
Guinea. Moreover, in a bid to get the crew it requires in the West African nation, Winning is establishing a maritime school in Guinea. Besides its interests in Africa, Winning also has a joint venture alumina refinery in Indonesia, for which a number of barges and transhippers are being bought. On the markets, Lau reckons dry bulk freight rates will bottom out towards the end of this year. However, they’re unlikely to significantly pick up anytime soon, which worries Lau from a recruitment point of view. “When the market does recover eventually we need to be in a position with sufficient cash flow to grab opportunities,” Lau concludes. ●
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Winning is now in the market for more secondhand capes
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maritime ceo
OUR PEOPLE OUR PASSION OUR BUSINESS
MF Shipping Group is a internationally operating shipping company based in the Netherlands. In terms of size the organization is now in the top five in the Netherlands and occupies an prominent position in the Tanker segment. The Marine Division, which forms the company’s core division, operates under the flag of MF Shipping Group and is responsible for the day-to-day management of a fleet of 55 Chemical/product oil tankers, cement carriers and dry cargo vessels. MF Shipping Group is a full-service Ship Manager. Our service and packages include, but not limited to: nautical- technical management, crew management, financial management, new shipbuilding projects and environment, health and safety management. We organise all of these processes down to the finest details. Safely and reliably. We do that by making optimum use of our expertise, knowledge and resources. Combined with a hands-on mentality we offer shipping companies and captainowners a comprehensive range of high quality marine services; a well-considered interplay between confidence in a team of highly skilled, experienced and dedicated professionals with many years of shipping background and operational expertise. Our activities, good results and our never lasting efforts to improve the quality of our service have not gone unnoticed. More and more customers are discovering that we offer added value for their business, helping to meeting their targets more quickly and effectively. Not least because we’re always there for our customers 24 hours a day, 7 days a week 365 days a Year. We’re moving forward with faith and confidence in the future. More about us at www.mfshippinggroup.com
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In profile
Messina defends market share Italian owner spending to up fleet size
M
arket and geographic specialisation is helping Gruppo Messina of Italy to defend its position on the trades between Europe, Africa and Middle East in the roro and container segments. The Genoa-based shipping company Ignazio Messina & C. is headed by different members of the Messina and Gais families. The company provides regular liner services connecting southern Europe, the Mediterranean, Africa, Middle East and the Indian Subcontinent serving more than 50 ports, connecting 40 different countries and offering also rail services and road haulage to more than 100 cities in Europe, Africa, Middle East and India. In all of its 70-plus year history, Messina Lines has rarely had to deal with so much growing competition, financial hurdles, low freight rates and political instability as now. Stefano Messina, chairman of Gruppo Messina, tells Maritime CEO: “The current market situation in shipping requires changes in assets, in governance and in commercial strategies. At the same time, thanks to the specialisation of our fleet in relation to the markets we serve, we
Spot on
Gruppo Messina Involved in roro and liner trades, predominantly in the Mediterranan. Also has investments in chemical and product tankers.
Issue ONE 2016
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The current market situation in shipping requires changes in assets, in governance and in commercial strategies
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maintain a competitive position.” Messina’s sentiment seems to be prudent but positive. He sees freight rates and volumes improving to North Africa once political problems in the region are resolved. The Mediterranean arena, like much of the rest of the global liner trades, Messina believes will suffer from overcapacity for the following three years. As of today Gruppo Messina also owns a 63% stake in chemical tanker specialist Diego Calì & C. and also a 50% stake in Four Jolly (a joint venture with Premuda controlling two LR2 tankers). The Messina family made its original debut in shipowning with wine carrying vessels in Sicily at the end of the 19th century. Ignazio Messina & C. today operates a fleet of 21 vessels (including
owned and chartered ones) with a total capacity of 40,200 teu and 62,500 lane metres capacity. Following a long-standing strategy based on secondhand ships, the Genoa-based group in recent years launched an ambitious investment program in newbuildings at Daewoo and STX shipyards in South Korea worth some $600m. “Our company has recently performed a notable investment on the renewal of the fleet, which represents a new focus in our business plan and development strategies. We ordered the eight largest roro container ships ever built that provide us a cargo capacity increase from 26,900 to 45,200 dwt and higher transport efficiency from 0.51 to 0.44 tons of ship for each ton of cargo,” concludes Messina. ●
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In profile
Indian tanker firm readies rapid expansion Expect to hear a lot more about Elektrans in the coming months
T
he Elektrans Group is a new name in India to look out for. As well as a burgeoing shipmanagement empire, the company, via a Singapore subsidiary, is getting more and more into tanker ownership. Established in 2001, Elektrans Group - formerly known as Doehle Danautic India - is the brain child of Daniel Chopra. Chopra’s background prior to forming his own company was with Germany’s Peter Doehle, where he became the company’s youngest master mariner. The company, which rebranded as Elektrans last year, now owns four Indian-flagged tankers and one foreign-flagged VLGC, all via its Singapore offshoot Gauri Ships. The shipowning vehicleis owned in partnership with Singapore-based Glen D’Costa. D’Costa worked with Chris Buttery and Paul Over, the original founders at Hong Kong’s Pacific Basin. He also helped the two famous shipping investors get their LPG
Spot on
Elektrans Diverse maritime conglomerate founded in 2001. Used to be known as Doehle Danautic India. Current fleet of five owned ships set for rapid expansion.
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We do aspire to grow the fleet
venture, Epic Gas, up and running in Singapore. “We do aspire to grow the fleet,” Chopra tells Maritime CEO. However, he’ll only shell out for new tonnage in sectors he sees with strong growth opportunities. For tankers, which have been “bullish” since last year, Chopra says, the slew of new ships coming into the sector this year will likely see a decline in rates in the second half, he reckons. “Inspite of such softening,” Chopra says, “the tanker market is expected to remain comfortable for owners in the near future; crude oil and consequently bunker prices are expected to remain at low levels.” Chopra intends to grow his fleet
with a mix of flags – both Indian and overseas. The Indian economy offers the right owners some very good prospects, he says. “India is globally regarded as the bright spot today,” Chopra says. “With the fast growth of the Indian economy, the Indian EXIM trade is also likely to rise. Thus, India will definitely have a very positive impact on the international shipping industry, but not at the same level as China over the last couple of decades.” Another part of the diverse group’s business is in consolidation. Started last July, the company offers LCL (Less Than Container Load) and FCL (Full Container Load) services from its 14 offices across India. ●
“We question how compliance with the new sulphur emission regulations will actually be enforced” — Captain Peter Hall, chief executive of the International Bunker Industry Association
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WINE
Quality, not quantity Languedoc is home to vast amounts of wine. Some of it happens to be surprisingly good, writes Neville Smith
T
here was a time, not too long ago, that the sight of ‘Pays d’Oc’ on a wine label would send a chill through the wine lover’s soul. This was most likely to happen at events where wine was being poured by quantity rather than quality. And quantity is the issue. Languedoc-Roussillon, a huge area describing the arc of the Mediterranean coast from the Pyrenees to Montpellier is sprawling, rugged and highly variable, much like the wines it produces. For years it was the home to far too many bottles and barrels of indifferent wine farmed on an industrial scale with little interest in what
Two to try Night harvesting and cool fermentation maintain the delicate peachy, fleshy aromas in Terre de Lumière Viognier, Celliers Jean d’Alibert, IGP Pays d’Oc, (£8.25 Corney & Barrow), which is light, refreshing and moreish.
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was happening in the outside world. Thanks to a system that encourages the majority of its 30,000 growers to deliver their grapes to the 300 or so co-operatives that account for about 80% of production, LanguedocRoussillon is still home to far too much unexciting wine. But it is also the venue for some of France’s most expressive, interesting and idiosyncratic wines, made by a group of passionate and highly individualistic growers. Bordeaux it isn’t – its production is three times bigger for a start – and it has terrain that varies from valley floors to rugged slopes. Stylistically almost anything goes. Like Cabernet Sauvignon,
For an unusual red try Atypique, Domaine de la Cendrillon, IGP Pays d’Oc (£9.95 Private Cellar); an organically-grown blend of Marselan, Merlot, Grenache, Syrah and Petit Verdot which combines fruit on the front with depth and grip. ●
Merlot, Syrah, Mourvedre, Grenache, Chardonnay, Viognier, Picpoul, Roussanne, Marsanne? No problem; in Languedoc they can all be made into wine that ranges from the workaday to the sometimes outstanding. There’s much that Rhone drinkers will recognise but plenty they will not – Languedoc has a welcoming attitude to vines and incoming winemakers who use the region as their playground. The duality of the AOC and VdP systems makes selection difficult unless you know your growers – some make both and the former is no guarantee of quality - further changes are seeing AOC replaced with AOP and VdP with IGP. Perhaps its most famous ‘grand crus’ Mas de Daumas Gassac and Grange des Pères, are mere Vin de Pays but can hold their rustic heads high in some pretty exalted company. The best advice is to dive in without prejudice. Despite the hot climate, one of the best known whites, Picpoul de Pinet is a perennial refreshing favourite. Some powerful reds come from Faugeres and Pic Saint Loup in the east and Côtes du Roussillon in the west. ● maritime ceo
gadgets
Console heaven
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ast November, Valve introduced PC customisability to consoles with its Steam Machine: a customisable, open console system running Linux-based SteamOS, backed with the amazingly hassle-free Steam gaming store and DRM system. Steam Machines can bring your PC gaming to your HD TV, or keep it on your PC, and as the hardware is the standard PC fare, Steam Machines can be bought from several companies and are customisable and upgradeable. Maingear’s Drift/X99 is a premium offering, with a price of $1,500 for the lowest spec model with a one-year warranty to up to a breathtaking $9,400 for the top of the range with all the bells, whistles and doodads: i7-5960X 8-core Haswell-E, 32 GB DDR4, Titan X 12GB, three 2TB Samsung 850 EVO SSDs, dual OS (Steam and Windows 10 Pro), a custom paint job, a three-year warranty and a funky suitcase to carry it. All of which makes the Maingear Drift/X99 possibly the most impressive console ever. Maingear Drift/X99 $1,500-9,500 www.maingear.com
Lens capture
I
f a Steam Machine is too old hat for you, perhaps a trip into bleeding-edge territory is more your speed: Microsoft is taking pre-orders for its HoloLens Development Edition. The glasses promise to be a strange new direction for computers and gaming, mixing reality and computer graphics, with the added bonus of making you look like a crazed drug addict in the depths of a bad trip to onlookers. The glasses are a self-contained x86-based system and have 2GB RAM, 64GB storage, Bluetooth 4.1, USB 2, six cameras, four microphones, 802.11ac WiFi, an ambient light sensor and movement detection systems combining gyroscopes and accelerometers. They project 16:9 images with over 2,500 light points per radian. All that tech means the battery life is about two to three hours of use, but you can run them plugged in. There’s also a bluetooth clicker for interaction. As a pre-requisite, you have to sign up to become a Windows Insider, and shipping starts on March 30, so there may be a wait involved. Microsoft HoloLens Development Edition $3,000 https://www.microsoft.com/microsoft-hololens/en-us/development-edition
Nuclear Arctic trip
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his last is not a gadget, but it’s so cool (no pun intended) we think you’ll let it slide: a 14-day trip to the North Pole. Can it get much more interesting than that? Why, yes, yes it can: for example if the trip is on the largest nuclear-powered icebreaker in the world. Yes, you saw that right: you make the trip to the pole on the Arktika-class NS 50 Let Pobedy (50 Years of Victory). The ship was started in 1989, but abandoned and construction did not restart until 2003, with her maiden voyage in 2007. The ship also has Zodiacs and a helicopter for access to difficult to get to sites. The cruise starts at Murmansk, goes to the North Pole and stops off at Franz Josef Land on the way back. North Pole Trip $27,000+ quarkexpeditions.com
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REGULAR Books
Ever smarter supply chains Logistics stories are creeping into the mainstream press more than ever. Paul French identifies why
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ou only have to look around to see that logistics are moving into a new era. City streets are crowded with vans, bicycles and delivery staff dropping off internet-ordered boxes of goods to houses, offices and shops. Tabloid newspapers talk about logistics! Drone deliveries, 3D printing options, driverless delivery cars. But with the internet now firmly established in logistics what are the real game changers coming to the industry? A good place to start to look at some of the issues faced by logistics and supply chain professionals at the moment is The Supply Chain Game Changers: Applications and Best Practices that are Shaping the Future of Supply Chain Management. The book is largely the product of ongoing research at the University of Tennessee’s Global Supply Chain Institute (GSCI). The basic message of the book is to look at the big stuff – natural disasters, currency fluctuations, etc – but never forget the small stuff – HR, sustainability, etc. The authors all argue that a major problem currently is the all too common costly, damaging disconnect between
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purchasing and logistics. Pinning the changes in the world of logistics and supply chain management to one geographic area can be hard but Peter Levesque’s The Shipping Point: The Rise of China and the Future of Retail Supply Chain Management makes a bold attempt to join these dots. Levesque is certainly bullish on China (and is the chairman of the US Chamber of Commerce in Hong Kong and works for Modern Terminals in the Special Administrative Region) but sees the economy as having turned a corner in terms of maturity and so therefore its logistics and supply chain demands will change too. In The Shipping Point Levesque highlights a number of innovative logistics programmes that link China and the Asia Pacific manufacturing base with international retailers and end consumers. Most logistics companies are dealing with infinitely more customers than a decade ago. More suppliers and more consumers. Professor Martin Christopher’s Logistics and Supply Chain Management looks closely, among other things, at how companies
have begun to sell performance rather than just simply physical product. Martin argues that logistics managers need to provide higher levels of service and customer support in this new era of business. Martin, emeritus professor of marketing and logistics at Cranfield School of Management in the UK, strongly advocates dealing with the fact that the real competition today is not between companies but rather between supply chains. The winning approach to supply chains is an integrated perspective that takes account of networks of relationships, sustainability and product design, as well as the logistics of procurement, distribution and fulfilment. And just to squeeze one last book in. Yossi Sheffi’s Logistics Clusters is a fascinating look at why, for instance, Memphis is home to hundreds of motor carrier terminals and distribution centres? Or why does Singapore handle so many containers and so much crude oil? The answer is – logistics clusters. This book is as close to a beach read ( for supply chain and logistics professionals) as it’s possible to get.●
maritime ceo
Travel
The city that never sleeps Sam Chambers takes readers on a whistle-stop tour of the former British colony
I
t does not take long in the Airport Express train for first time visitors to realise that Hong Kong is a city that lives and breathes shipping (some attack it a tad too fiercely on the latter part). As the train belts out of Tsing Yi island headed for Kowloon, a phalanx of skycrapers rears up in the distance – that is Hong Kong island, but in the foreground are the quay cranes of Kwai Tsing, whirring away. Alighting at Hong Kong station you can walk via elevated walkways to our hotel pick, the Mandarin Oriental, home to one of the city’s best shipping haunts, the Captain’s Bar. Once you’ve checked in and you have some to time before meetings kick in take the Peak Tram to the top of Hong Kong island for stunning views of Victoria Harbour (smog permitting!) and the city. Back in town, head for the Star Ferry pier, and before boarding these iconic green vessels that ply back and forth to Kowloon, do step inside the Maritime Museum, located at
Issue ONE 2016
the ferry terminus and the purveyor of rather fine, inexpensive shippingrelated ties. Over in Kowloon the Peninsula, where James Bond tends to stay, has a very funky bar on its top floor called Felix. This might sound strange, but gentlemen, do go for a pee – the views are insane. Other things we recommend are a trip to Happy Valley racecourse on Wednesday evening, a ferry ride to one of Hong Kong’s 280 islands for a seafood lunch, a bus ride out to Shek O along great winding coastal roads, a stroll – or even a run for the exercise conscious – along Bowen Road, and if time is no issue take a one hour ferry for a day trip to the former
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Our hotel pick, the Mandarin Oriental, is home to one of the city’s best shipping haunts, the Captain’s Bar
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Portuguese enclave turned Las Vegas on Chinese steroids that is Macau. Hong Kong is rightly famous for its food. For tip top Cantonese fare at very reasonable prices try along Wellington Street in Central, while for those feeling adventurous and in the mood for curry, there’s a host of weird and wonderful outlets at the infamous backpacker’s hangout called Chungking Mansions over in Kowloon. For Thai, you cannot go wrong with the Chilli Club in Wan Chai. To wash down all this great food, try and find someone who is a member at the Foreign Correspondents’ Club (such as your humble scribe), as this is another legendary shipping hangout. Other places to head out to include Sevva, a bar on the top floor of a mall in Central nestled amidst the futuristic, famous Hong Kong skyline, or 001, a tricky-to-find basement speakeasy on Graham Street, just about within staggering distance back to your luxurious hotel bed. ●
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Opinion
CSCL Indian Ocean grounding must serve as a wake-up call
Tobias KĂśnig suggests many ports are not fully prepared for the ultra large container vessel era
T
he recent grounding of the 19,000 teu container vessel CSCL Indian Ocean was close to being a real catastrophe. But the experienced pilot reacted immediately when the navigation system failed and prevented the worst from happening. The ship grounded hard on the soft banks of the river Elbe outside of Hamburg. After initial attempts to pull the ship off the banks had failed, Germany’s Central Command for Maritime Emergencies (CCME), which took over the control of the salvage operations together with renowned salvage experts, decided to lighter the vessel as much as possible and commence a dredging operation around the giant ship. Eventually a winter storm and a spring tide in combination with 12 tugs of an aggregated 1,085 tons of bollard pull were needed to refloat the vessel safely. Everything went extremely well and the situation was certainly
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handled in a very professional manner, with very little interruption of the regular business and without any oil pollution. No doubt, the port of Hamburg has proven that it is very well prepared to handle such emergencies. Regardless, however, this is a wake-up call for the entire maritime industry. Ships are getting bigger and the ports are struggling worldwide to cope with the issues created by ultra large container vessels (ULCVs). Which ports along the trade route are capable of pulling a 180,000 dwt vessel off the banks, once stranded? How do you discharge the containers when there is no crane big enough to reach out to the top tiers? How do you place a jack-up platform on the soft grounds of a muddy river? What do you do, if a river or a port entrance is blocked by one of those 400 m long vessels? Who pays for the costs of the ships, which are trapped and those which have to deviate? I could go on with a long list
of questions. All of the important questions have to be discussed and answers must be given in order to be best prepared for emergencies and protect the safety of the people, the environment and the port. There are physical limits to the size of ships and at the same time, there are port limitations, which must be considered. CSCL is one of the most valuable customers of the port of Hamburg. Losing this carrier because of physical limitations at the port would be a severe financial and economical setback for the entire region. Hamburg is a hub port and a significant number of the containers discharged in Hamburg are transhipped to their final destinations. The ULCVs are the preferred size in the Far East-Europe trade and until someone proves otherwise, they are here to stay. Therefore, we have to make sure that the coastal tradelanes and river ports are always safe for these new giants of world trade. â—?
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9th Annual
Hong Kong Ship Finance Forum Renaissance Harbour View Hotel Hong Kong Thursday, 7 April 2016
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Conference Organisers: Kevin Oates, Marine Money Asia Pte Ltd Mobile: +65 9151 7036 Koates@marinemoney.com / asia@marinemoney.com
REGULAR OPINION
The most dangerous man in the industry Andrew Craig-Bennett on the recession-hit disillusioned expert
T
his is a true story; I have slightly tweaked the names and the geography. Quite a few years ago, I was chatting with a man who had been the finance director of what was then an up and coming airline (it arrived some years ago and remains one of the world’s best airlines). He gave me this account of something that happened when this little airline had recently bought its first jets. He had been due to fly back to his airline’s base city and, this being a small but up and coming airline, and long before 9/11, he handed his card to the purser once cruising height had been reached and he was invited to join his colleagues on the flight deck. Which, of course, he did. Now, my friend was the sort of man who takes an intelligent interest in all aspects of his company and who goes out of his way to be on friendly terms with as many of his colleagues as he can. And quite right, too. He was no mere bean counter. So, when he entered the flight deck, he knew everyone there. Since he also made a point of knowing something of the technical side of airline operations, his eyes scanned the three instrument panels (this was in the days of the flight engineer). To his right, on the flight engineer’s panel, four red lights were winking on and off, intermittently. Ahead of him, two altimeters were showing a remarkably high altitude for the type of plane and the trip. “Excuse me, chaps,” he said, “but aren’t those the low oil pressure warning lights?” “Yes, Colin.” “And aren’t we above the normal service ceiling for this aircraft?” “Yes, Colin.”
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“I don’t want to sound picky, but could I ask why?” Three pairs of eyes turned to him. “You should know!” “Er…?” “You are the man who put in the fuel saving bonus!” The points of this story, of course, are first: beware unintended consequences, and secondly never trust an expert. Literary readers will recall Joseph Conrad’s Captain McWirr of the SS Nan Shan, who “could be relied upon not to improve on his instructions” – a valuable quality, perhaps. In these straitened times, there may be found, aboard very many ships of all types, an even more dangerous man than the mere “expert improving on his instructions”. We have the mere incompetents, of course, hired because they are cheap. We have the competent making bricks without straw because the needed spares and supplies have been red pencilled by a superintendent trying to stay within a budget, but far, far, worse than these we have the disillusioned expert. The disillusioned expert began his sea career full of hope – the romance of the sea drew him to it, he began with a good employer and he was a diligent student. He rose in his
profession; he married and started a family, and his world seemed secure. He made a point of knowing, not just what he needed to pass exams and get by, but as much as possible about his field. He would “talk shop” at the drop of a hat, and, like Belloc’s Charles Augustus Fortescue, “Would seek, when it was in his power, For information, twice an hour.” Then the recession hit, he was laid off, he bounced around bad ships and worse employers, and his youthful idealism turned him into a bitter cynic, because he knew more than the superintendents did, and he knew he would never get the credit for anything that he did. So he has switched off; he does the minimum and – this is the really dangerous bit – he knows, and will unfailingly take, all the short cuts, because why do more and because running a little risk makes life interesting. The chickens may not come home to roost. He may never have an accident. But if he does, it won’t be a small one. It could destroy your company. How many such men are you employing? And when are you going to wake up and restore their faith in you? ●
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MARPOLL REGULAR
The Future of Shipping Our third annual look into what’s in store for the industry sparked plenty of debate. Results and key comments below Are container alliances doomed?
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When will private equity make its exit en masse from shipping?
Yes 24%
2016
19%
Yes 68%
No 76%
2017
28%
No 32%
2018
22%
What price a merger between Maersk and MSC?
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Will further consolidation be seen across the shipping industry in 2016?
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5%
Later
26%
“
”
Overinvestment has not been removed from the system
What will be the average price of a barrel of oil in 2016? $21 $31 $41 $51 $61 $71 $81
No 6%
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High debt leverage and unrealised impairment losses will force companies to fold or merge. Indecision and circumstances will propel the final outcome
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How soon till we see the world’s first autonomous ship?
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- $30 14% - $40 27% - $50 35% - $60 18% - $70 2% - $80 3% and above 1%
There will be a war in Middle East that will technically raise the price of oil. This is foreseen by many; that’s why there is a huge stockpile of oil stored in tankers around the globe
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Will the force that is the Chinese economy awaken in 2016?
”
Will finance be easily available for small- to mid-sized owners for secondhand purchases? Yes 27% No 73%
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I wish it could be different, but I’m not too optimistic, but I believe that the consolidation the industry needs should come from below
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Is the family-run shipowner a spent force?
This decade 13%
Yes 12%
Yes 35%
Next decade 50%
No 88%
No 65%
Not at all
37%
Regulators are unlikely to permit fully autonomous ships for commercial service
52
2019
They are stuck
Yes 94%
“
Should we expect bankruptcies among shipping lines to peak in 2016?
“
Prolonged weakness in the Chinese economy as shadow banking looms
”
“
Among all categories of investors, only families are patient (or obsessed) enough to wait out shipping cycles
”
maritime ceo
MAXIMISE YOUR SHIP’S EARNING CAPACITY. RIGHTSHIP’S GHG EMISSIONS RATING IS USED BY CHARTERERS TO SELECT 1 IN 5 SHIPS. MAKE SURE YOUR SHIP IS THE ONE.
environment@rightship.com Rightship.com/ghgrating
Expand your operations to ancouver, Canada. Set up your branch office and manage your international shipping business from Vancouver.
Canada offers a competitive, predictable and flexible regime with a strong banking system.
vancouverimc.org