Maritime CEO Issue Three 2016

ISSUE THREE 2016

www.maritime-ceo.com

Dr Lynn Simpson

The Australian vet putting livestock shipping on the chopping block

MANIFEST

3 Editor’s Comment

5 US 7 EU 9 China 10 India 11 Brazil

29 Bumi Laut 30 IM Skaugen 31 Team Tankers 33 Arista Shipping 34 TMT 35 Elektrans 37 ICS 38 Super Eco Tankers 39 Epic Gas

Markets

Recreation

13 Dry Bulk 15 Tankers 17 Containers 19 Offshore 21 Finance

40 Wine 41 Gadgets 42 Books 43 Travel

Economy

Executive Debate 22 Yard capacity & cycles

Profiles

Opinion 45 Grant Rowles 47 Andrew Craig-Bennett 48 MarPoll

26 Cover Story Dr Lynn Simpson

43

ISSUE THREE 2016

1

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 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 THREE 2016

The shipping cycle debate

A

nd so to SMM in Hamburg, the world’s largest shipping show. I relish any trip to this great Hanseatic port city, but I do admit being rather concerned at what the mood or attendance will be at this year’s event.

SMM is above all a tech show – a place to come and kit out shiny, new ships. And therein lies the rub – new ships are increasingly rare.

In terms of new orders placed Clarksons Research tells me they think the first half of 2016 was the lowest for 35 years at 18m dwt. The global orderbook itself is the lowest since 2006 in dwt terms at 268m dwt.

So perhaps exhibitors will have to skew their sales of chains and ropes to a more Reeperbahn audience as resident cartoonist The Freaky Wave intimates below.

Come the next edition of the giant German show in 2018 will things have picked up? Well, you, dear reader, make for entertaining reading. Rarely has selecting a single respondent’s quote per question posed in our quarterly survey, MarPoll, been more difficult, such were the choice words on offer this time round. Full results are carried on the final page. Some key quotes that did not make it into the print edition are listed below for your amusement.

Will big data analysis end the cycles? Possibly but unlikely due to

the endless potential for self-interest, greed and stupidity on the part on humans.

It’s still people, or sometimes sheep, that take decisions.

Owners built bigger boxships in a mental vacuum, never considering terminals or truckers or rail.

What’s the difference between a Greek shipowner and a pirate? One wears a three-piece suit, the other doesn’t.

As you can see from that small selection, our readers have strong and interesting views. To stay up to date with everyone’s point of view Splash, our daily news site, has launched a platform, Splash Chat, where everyone can discuss the latest happenings in the shipping world.

Expect also to hear from industry heavyweights via Splash Chat Q&A sessions, with any luck over a beer in Hamburg. ●

3

Seize the Advantage Today!

3 new bundles offering over 30% savings!

Meet us at SMM 2016 — KVH booth no. B6.200.1 2015

SATELLITE COMMUNICATIONS PRODUCT AWARD

Drive your business with the

TracPhone Vip-series Advantage Bundles ®

Now get all the advantages of an advanced SATCOM solution at incredible savings!

13-time Award Winner

All bundles include: • Award-winning TracPhone VIP-series SATCOM system • 5 GB/month at up to 4 Mbps • Global connectivity • News delivered daily via IP-MobileCast

All for as little as $1,399 per month

• Secure myKVH portal and management tools • Extended 5 year warranty and Global support

Choose the bundle that’s right for you at: kvh.com/VSAT247 SCAN QR CODE

*KVH is the world’s No. 1 maritime VSAT supplier as measured by vessels equipped with mini-VSAT Broadband service, according to Comsys, March 2015; Euroconsult, March 2015. ©2016 KVH Industries, Inc. KVH, TracPhone, myKVH, IP-MobileCast, and the unique light-colored dome with dark contrasting baseplate are trademarks of KVH Industries, Inc. mini-VSAT Broadband is a service mark of KVH Industries, Inc. Subject to change without notice.

ECONOMY REGULAR US

It’s all about the politics now Big business is holding back from key decisions until after November’s election

T

he 2016 presidential election cycle is now upon us and so all discussion of economics in the US in the second half of 2016 will, inevitably, be highly politicised.

In the expectation of a fevered and argumentative second half it seems important to hang on to what economic numbers we can. It does seem that unemployment is continuing to fall – perhaps to a 40-year low in the first half of the year. This is starting to filter through into consumer spending and so helping domestic consumption. Credit card loans, automobile loans and mortgages are all up over this time last year showing a certain level of returning confidence.

Consumers have, for a long time now, been very reluctant (understandably) to take on additional debt in the US. That fear appears to be receding.

Though it exists, growth in America is unexciting. Between January and March the economy picked up only by 1.1%, according to the Commerce Department, over the previous year. Still, this was double government analyst estimates. America’s economy has little exposure to Brexit, though is far more concerned about Chinese steel dumping and a possible tit-for-tat tariffs war with Beijing.

ISSUE THREE 2016

Still, America’s economy remains sluggish (rather wittily Liz Ann Sonders, chief investment strategist at Schwab, identified sluggish as Slow, Lumbering, Unstable Growth).

Uninspiring, but with low interest rates and low inflation rates. Exports are subject to global slowdown and some major ‘bell weather’ American exporters have predicted sales cuts in the second half of the year, including construction equipment manufacturer Caterpillar.

However, the major problem for America in the second half of the year will be the political uncertainty until the presidential election on November 8. Uncertain of the outcome firms are said to be hoarding cash, delaying investment decisions and, increasingly, slow to hire and take on wage responsibilities. This is,

of course, always the case in the run up to a presidential election though some analysts say that the ‘Trump factor’ in 2016 makes for a higher level of economic uncertainty.

And, given the Trump rhetoric, and to a lesser extent Hilary Clinton’s opinion, trade is the great unknown post the election. The trade gap in the United States widened to $41.14bn in May 2016 from a $37.4bn deficit the previous month according to the US Census Bureau. Exports shrank 0.2% hurt by a stronger dollar and imports rose 1.6% due to higher oil prices (though still low by mid- to long-term projections). With Trump threatening to pull out of the WTO as well as cancel NAFTA and renegotiate other trade deals it seems trade issues will enter a prolonged period of stasis until 2017 and a new president. ●

US – Year-on-year loan growth Type of loan Commercial and industrial loans

H116 % growth in uptake over H115 14

Commercial real estate loans

8

First time mortgage loans

3

Automobile loans

7

Credit card loans

10

Other revolving and instalment credit loans

6

Source: Wells Fargo

5

Proud to be always moving forward since 1836 in a competitive and evolving global market.

"A Visionary European Shipowner"

WWW.OELSM.COM ÖSTERREICHISCHER LLOYD SEEREEDEREI (CYPRUS) LTD. 3rd Flr 67 Franklin Roosevelt Ave 3011 Limassol / P O Box 57280 3314 Limassol Cyprus tel: +357 25 662555 / fax: +357 25 662666

ECONOMY EUROPE

Beyond Brexit Which countries stand to loose the most from the UK’s decision to quit the European Union?

C

ertainly the decision to Brexit by the UK is the largest thunderbolt to hit the EU in its existence. Quite how the UK will fare outside the EU is a source of great debate as is how well a EU without the UK will thrive.

To an extent Britain was always somewhat apart from the rest of the union – outside the Eurozone and with different border and migration arrangements. However, the UK has consistently outperformed all the other major EU economies in terms of job creation, entrepreneurialism and GDP growth. Britain’s economy grew by 0.6% in the second half of 2016, according to the Office for National Statistics in London. Much of your economic analysis of the UK in the rest of the coming year and beyond will depend on your politics vis-à-vis Brexit. However, it is hard not to see the UK’s underlying economic fundamentals as strong by overall EU standards, particularly in the areas of unemployment, new business growth and lending.

But with all the focus on the The UK’s top 10 trade partners, 2015 Country

% of total UK trade

Germany

12.4

USA

10.1

Netherlands

7.7

China

7.4

France

6.3

Belgium

4.6

Ireland

4.2

Switzerland

3.8

Italy

3.4

Spain

3.1

Source: EuroStat

ISSUE THREE 2016

UK in recent months how is the rest of the EU, and in particular the still troubled (and long troubled before the term Brexit even existed) Eurozone?

The French economy has proved to be one of Europe’s least exciting, though still one of its largest.

The private sector of the economy appears to be effectively stagnant.

Still, the economy may, at best, achieve 1.6% GDP in 2016 though the recent terrorist attacks in France will inevitably hit its important tourist sector (around 7% of GDP). However, France has underperformed the wider Euro area and most analysts expect the economy to decelerate in 2017 and 2018 while retaining high levels of youth unemployment (9.3% unemployment overall, but far higher among the under-25s).

The German economy – Europe’s largest – appears to be more resilient.

While the German economy slowed in the second quarter, expanding just 0.7%, it is expected by most analysts to pick up in Q3. Rising employment, higher real wages and nearly stable

prices are expected to further boost consumers’ purchasing power. As the chart show below a great deal of the German economy is intertwined with the UK (the UK, for instance, is the largest overseas market for German cars) and so Brexit has a special relevance for Berlin.

Still, the Eurozone is a mixed bag of economic statistics. The IMF expects GDP in the Eurozone to grow 1.6% this year but then only by 1.4% in 2017, a slowdown from a 1.7% expansion last year. Additionally, the EU has extended its sanctions against Russia once again and is, like America, suffering under the effects of Chinese steel dumping.

The Brexit referendum absorbed Europe’s policy makers for several months. But that vote is now over and the UK will most likely invoke Article 50 (the exit mechanism) before the end of the year. While the media’s focus has been on the UK’s economy post-Brexit and outside the EU it is important to maintain vigilance over the Eurozone and it’s still mixed bag of economic results. ●

7

The greaT Thing abouT a sTrong Lng Track-record:

WE CAN DO IT RIGHT NOW

We’ve got products, solutions and services for all phases of the lifecycle of the oil & gas process. They’re each designed to increase your efficiency and profitability, while ensuring environmental compliance. As the market leader in multi-fuel applications and engineering, our track record is in a class of its own. Read more about what we have to offer your business at www.wartsila.com

WÄrTsiLÄ: Your shorTer rouTe

ECONOMY CHINA

Exporters are hurting China’s trade with just about everyone is off

A

mid the seeming chaos and news grabbing headlines of the American presidential election cycle and Brexit in Europe, China has rather slipped from the economic headlines. That’s probably because, for the first time in a long time, China’s economy is actually quite boring and steady. We know the larger picture well by now, and it was borne out by the first half of the year’s economic figures from Beijing - the successful transition from a high-speed, heavy industry based economy to a consumer and services-based economy.

Still, this does mean China is an economy of two halves and, depending on which half you’re involved with, determines how happy or otherwise you are. If you’re dealing Slow and steady – China’s first half GDP growth rates Year first half

GDP growth %

H12011

10.1

H12012

7.9

H12013

7.7

H12014

7.4

H12015

7.0

H12016

6.7

Source: CEIC Beijing

ISSUE THREE 2016

with the services, consumption or retail side of China then it’s pretty much all good news - services and consumption remain robust and are now the largest part of the economy.

In the first half of this year, final consumption contributed about 73% of China’s GDP growth and real retail sales rose by almost 10%. Big jumps, as predicted, in ecommerce and B2C sales, although good old-fashioned bricks-and-mortar retail is holding up well too.

However, the industrial part of the economy is slowing. The government is doing its best to make sure this isn’t all that painful for ordinary workers – revised rules on state-owned enterprises and average monthly income for the migrant workers, who fill most of industrial jobs, was up 7% in June 2016. But, if you import or export, then things are not so great. June’s exports from China were down fully 4.8% (in dollar terms) after declines of 4.1% and 1.8% respectively in May and April.

Imports into China were even worse – down 8.4% in June. China’s trade surplus narrowed to $48.11bn from $49.98bn.

China’s trade with just about everyone is off – the EU, the US, the ASEAN nations of Southeast

“

China is an economy of two halves

”

Asia. Slumping demand everywhere for Chinese made goods it seems.

However, it is also important to remember that exchange rates have changed affecting export numbers in dollar terms – the renminbi was down 8% in June from a year earlier.

Conversely, the weaker import rates can be partly explained by falling commodity rates (metals, energy and fuels, etc), but reduced production of course means reduced demand for necessary inputs.

What has got a lot of analysts and others annoyed is China’s reaction to tariffs on its steel dumping.

Beijing tends to take a tit-for-tat approach to tariffs and the Ministry of Commerce in Beijing has imposed anti-dumping duties on steel imports from Japan, South Korea and the European Union. This is clearly titfor-tat and does not represent China’s steel producers in their relations with the rest of the world. It is to be hoped that more serious trade negotiations between Beijing and the rest of the world will be a feature of the rest of 2016. ●

9

ECONOMY INDIA

Soon to be the world’s largest oil consumer Few people fully appreciate just how fast India is growing

I

ndia is now the fastest growing significant economy in the world – 7.6% growth last year and roughly the same expected this year – but still gets surprisingly little coverage compared to the fluctuating United States, troubled Europe or slowed down China. But India is big news. Consider this statistic alone – India is forecast to soon overtake Japan, China and the US as the world’s largest consumer (and importer) of oil. That is a massive geopolitical and geoeconomic shift.

India will, in 2016, import more inputs for manufacturing than China for the first time ever. That too is crucial to understand the two sides of India’s economic story – the ramping up of production and manufacturing on one hand and the inevitable insatiable demand for energy and inputs to feed the production beast on the other.

Basically India is now really starting to look like China in the 1990s.

Oil is a good metric for India right now. As well as needing it to feed the manufacturing growth it is essential for consumer growth too – car sales Indian oil imports by source (%) Source

% of total

Saudi Arabia

20

Iraq

17

Other Middle East

16

Venezuela

11

Nigeria

11

Other Africa

8

Other Western hemisphere

7

Iran

6

Others

4

Source: UN/WTO

10

“ ”

India is now really starting to look like China in the 1990s

are up 11% in a few years, according to the Society of Indian Automobile Manufacturers; motorbikes and scooter sales are up by far more, in excess of 40%. Nobody, manufacturers and consumers included, has benefitted from lower oil prices in the last 18 months more than India.

Consumer confidence appears strong in India – witness the growing middle class and, important given the size of the government bureaucracy, a 24% pay hike for central government workers. That pay hike was long awaited and should both boost consumption as well as limit corruption, hopefully.

Not everything in the Indian garden is rosy of course. Private investment remains sluggish; agriculture hasn’t been improving productivity as much as hoped for (though this year’s monsoons and their effects presage a rise in productivity in later 2016 and 2017).

Indian politicians have been among the most vocal to state that they see enhanced trade opportunities with their historic trading partner, the UK, post Brexit.

So India seems to be sailing with a strong headwind at the moment and avoiding most of the pitfalls of the global economy. Analysts point out that some tinkering might help to restrain inflation somewhat and, as ever, there is always a call for Narendra Modi to accelerate the reforms he promised in 2014, upon assuming office, and which have been slow in coming.

One final shaft of positive light, especially perhaps for shippers – after 18 consecutive months of decline, India’s exports inched up by 1.27% in June. ●

“How can you be independent and objective if listed?

We will never be listed.

I can’t see how class societies could be” — Alastair Marsh, CEO, Lloyd’s Register

maritime ceo

ECONOMY BRAZIL

Green shoots?

There’s no Olympic bounce per se, but the worst does appear over for Latin America’s largest economy

R

arely has the Olympics been held against a backdrop of prolonged recession, a government and former president, Dilma Rousseff, in the middle of an impeachment trial, a massive corporate scandal (the Petrobras mess) and the Zika virus still on the rampage. Against all this talk of the supposed ‘Olympics Bounce’ seems a little meagre. Yet maybe things won’t be so bad in the second half of the year, according to many economists.

Brazil is not expected to resume growth but, hopefully, it will stop slipping further into decline.

Stagnation, it seems, is the best that can be hoped for in Latin America’s largest economy. GDP growth may (repeat may) reach 1% in 2017.

Nothing exciting – except that this year will probably be a 3.3% GDP contraction and 2015 saw a 3.8% slump. The general consensus is that, by year’s end, Brazil’s economic contraction will have finally hit bottom. However, most analysts do not expect a V-shaped bounce but rather a period of slack activity before growth resumes.

In a sign of hopefulness, that could translate into strength, ordinary Brazilians seem to be feeling

ISSUE THREE 2016

a bit more positive. Maybe it’s the games or the Rousseff trial, but consumers are showing a bit more appetite to spend. Price rises seem to have topped out encouraging spending. Additionally the new government has made a few tentative legislative moves to improving the national budget – the retirement age has been raised to help shore up the ailing pension system (admittedly not much fun if you were close to retirement age, but a help in the future).

However, the negatives are still scary. Unemployment now tops 11.2%. Inflation reached a 12-year high of 10.7% in January and is remaining stubbornly high. Both these factors could erode the slight growth in consumer sales and confidence if not tackled. Public debt remains high, at around 70% of GDP, and is forecast to top 76% in 2017.

Raising the retirement age a couple of years isn’t going to solve that problem. More legislative and policy moves will be required.

For shippers both Brazil’s imports and exports are not great news. China’s demand for iron ore, copper and soy beans remains muted, meaning no return of the

Brazil – Export bright spots Sector

% growth in Q1 16 over Q1 15(%)

Pork

67

Beef

26

Shoes

20

Chicken

12

Source: Brazilian Central Bank

good old commodities days for Brazil.

Conversely Brazil is not importing much at the moment either – cars, medicines, electronics, white goods and components are all down on previous years. Trade with Europe is a bit better than reported trade to Asia, but not much. Chicken, beef, pork and shoe exports are the major sectors where there is growth.

Still the ‘Brazil has hit rock bottom and the only way is up’theory is shared by many shipowners.

Maersk is seemingly optimistic that Brazil may have hit the bottom of the recession and the import cycle. In its first quarter trade report for the Latin American region, Maersk said its quarterly imports reached their lowest level in seven years and Brazil had become a predominantly export economy for the first time since 2011. ●

11

HALL B5 Stand 307

6 – 9 sept 2016 smm-hamburg.com the leading international maritime trade fair • hamburg

Rustibus® is designed to de-scale and power brush ship decks, hatch covers,tank tops etc. free from paint and rust!

THE BEST SOLUTIONS FOR SURFACE PREPARATION AT SEA.

´SAFETY IS NEVER COMPROMISED´ SafeEdge by Rustibus® THE MAN-HOLE PROTECTION COVER. BY

Designed especially for the marine industry.

This unique cover is specifically designed to allow ventilation and utilities to be accessible while providing an effective fall prevention system to protect the crew from those easily overlooked dark holes in the deck.

sales@rustibus.com BERGEN NORWAY

SINGAPORE

ANTWERP BELGIUM

HOUSTON USA

DUBAI UAE

MARKETS REGULAR DRY BULK

China in a more positive light Jeffrey Landsberg from Commodore Research suggests people are getting it wrong when debating China’s steel tactics

B

ack in late July, Chinese iron ore miners began calling for an anti-dumping investigation into iron ore imports from Australia and Brazil. Overall, it has been widely accepted that this has been a tit for tat response to China receiving intense criticism regarding steel exports. We agree with such a view, and also believe that China’s decision to turn the focus to iron ore exports has been in some ways a necessary strategy to remind the world just how much it needs China and also needs to accept China.

While China’s steel exports have certainly flooded the market since the start of 2014, it remains very significant to recognise just how much the market changed starting in 2014 and that there has been legitimate economic reasons for China producing large amounts of steel and then exporting very large quantities. Prior to 2014, this decade had seen steel prices and iron ore prices stay closely in line with each other. The largest difference in price change came in 2011, during which time Chinese steel prices fell by approximately 6% while global iron ore prices fell by approximately 19% which worked out to a net difference of 13 percentage points. In addition, each year prior to 2014, on average, saw a difference in price movement of only 8%.

ISSUE THREE 2016

However, 2014 is when everything changed. Chinese steel prices fell in 2014 by approximately 14% but global iron ore prices fell by approximately 55%. 2014 marked a year when Chinese steel margins saw significant support, and as we stressed often in the past, China as a whole was benefitting from the collapse in global iron ore prices.

While Chinese economic growth was starting to slow considerably in 2014, China’s steel output still continued to surge and set a record that has yet to be broken. Overall, the combination of steel margins receiving tremendous support and China’s economic growth slowing (which includes China’s steel consumption growth slowing) led to Chinese steel exports suddenly jumping in 2014.

Just as 2014 saw a very drastic change in the difference between steel and iron ore price movement, it also saw a very drastic change in Chinese steel exports. Prior to 2014, this decade had seen China’s steel exports increase every year by basically the same amount each year. However, in 2014 China’s steel exports jumped year-on-year by 31.5m tons. This surge was unprecedented and came partially from Chinese steel margins improving dramatically.

In recent weeks, we have read a great deal of commentary comparing and contrasting China’s steel exports with Australian and Brazilian iron ore exports, with many opining that China’s robust steel exports have been a form of dumping while robust global iron ore exports have been legitimate (we agree that the increase in iron ore exports has been legitimate and is not worthy of an anti-dumping investigation).

However, analysis of 2014 shows that China has had very legitimate economic reasons to drastically increase steel exports starting in 2014. 2015 also saw Chinese steel prices fare better than global iron ore prices (steel prices fell by about 35% in 2014 while iron ore prices fell by about 38%) which allowed the environment of robust steel exports to continue. In 2016, global iron ore prices through the first half of the year finally fared better than Chinese steel prices, but the first five months of this year did see Chinese steel prices rise by about 31% while global iron ore prices increased by only 14%, which further helps point to why China’s steel mills recently have continued to produce (and then export) a robust amount of steel.

Going forward, we anticipate that Chinese steel prices will fare better than global iron ore prices during the second half of this year and that Chinese steel exports (and overall Chinese steel production) will remain strong this year. Chinese iron ore imports are also likely to stay robust. China is faring better than much of the rest of the world, and the global economy continues to need China to prosper. What has changed recently, though, is that the focus has turned away from China’s robust steel exports and instead to global commodity producers - in this case Australian and Brazilian iron ore miners. ●

13

TECHNICAL

MA N N I N G

I N SU R A N CE S

I N SPE C TI ON S

SU PPOR T

TOTAL SHIP MANAGEMENT SOLUTION

Global Ship & Marine Management

Crowley Accord Ship Management AMSTERDAM | HONG KONG | JACKSONVILLE | MUMBAI www.crowleyaccord.com | info@crowleyaccord.com

MARKETS REGULAR TANKERS

Ordering drought set to end Erik Broekhuizen from Poten & Partners provides a snapshot of what’s been happening at shipyards over the past decade

I

n recent years, the shipyard industry has experienced very challenging circumstances.

Across a broad spectrum of shipping markets, newbuilding activity and prices have been declining. The combination of lower order volume and declining contract prices has been particularly profound in the tanker market this year. This has happened in all segments, for crude oil as well as product tankers. Several years of strong oil demand growth and limited shipyard capacity playing catchup pushed VLCC newbuilding prices above $150m in 2007/2008, right before the global financial crisis sent global commodity markets in freefall. Tanker newbuilding prices and contracting followed the markets down and in early 2010, VLCC contract prices fell temporary below the psychological barrier of $100m (40% below the 2008 peak of $160m). Since 2009, tanker newbuilding prices have been on a slow, but steady decline, even though tanker rates staged a major recovery in 2014/2015, which resulted in a surge in newbuilding orders, particularly for crude oil tankers (MR product tankers experienced a mini-boom in 2012/2013). How low will it go and

ISSUE THREE 2016

when do we expect a recovery in the shipbuilding industry?

The reason for the ongoing decline in newbuilding prices is the result of two developments that have impacted the shipping and newbuilding markets. During the period 2003 to 2007, the Chinese economy went to an unprecedented growth spurt, which resulted in a simultaneous boom in dry cargo, tanker, container and offshore markets. Shipyards, which went through several decades of relatively modest newbuilding demand, were ill-prepared for this order surge and quickly faced capacity constraints. Prices shot up and delivery times lengthened considerably. As the ‘super cycle’ took shape and rates and prices simultaneously touched record levels in various shipping segments, shipyard capacity expansion projects started to proliferate and many new greenfield yards were built, particularly in China.

The global financial crisis and – more recently – the significant drop in oil prices, took the wind out of the sails of the shipyards. The shipyards, many of which dramatically increased capacity, faced a severe drought in newbuilding orders. In 2007, shipyards received 176.7m gt

of new contracts. By 2009, this was down to 35m gt (20% of the 2007 level), as orders for tankers, bulk carriers, LPG and LNG tankers as well as container vessels dried up all at the same time. Faced with a combination of overcapacity and a dramatic drop in orders, yards cut prices and engaged in a price war.

After years of lackluster demand, the situation seems to be coming to a head in 2016. In the first half of 2016, only 11.6m gt of new orders were placed, tracking well below even the 2009 level. In the first quarter of this year, global newbuilding orders were down 71% year-over-year, with Korean yards down an unprecedented 94%. While tanker orders were a relative bright spot through 2015, they have also collapsed this year as freight rates have come down.

The situation has led to numerous bankruptcies and liquidations, which eventually will lead to capacity reductions and a rationalisation of the industry. Expectations are that the industry might hit bottom in terms or prices and utilisation in 2016 or 2017 and the Korea Offshore & Shipbuilding Association estimates that some 56,000 to 63,000 shipbuilding jobs may be cut by 2017.

This will set the stage for a recovery in 2018/2019. Around that time we also expect that oil demand and fleet size will come back into balance and tanker rates and prices will stage a comeback. ●

15

MARKETS CONTAINERS

Changes from the expanded Panama Canal Lars Jensen from SeaIntel Consulting on the winners and losers from the widened waterway

O

n June 26 the 9,400 teu Cosco Shipping Panama became the first neopanamax container vessel to transit the expanded Panama Canal. The question is what this means especially to the Asia-US East Coast container services.

Already we see a significant change in service patterns, and with more to come.

With the new set of locks, vessels of up to 13,000 teu can now pass through the Panama Canal, although the nominal capacity of the neopanamax size is somewhat variable depending on vessel configuration. However, looking at the new service deployment put in place by the container alliances, it is clear that they are presently not going any further than 10,000 teu.

The 2M alliance has not yet made any changes following the opening, and the only change Ocean 3 has performed thus far is the closure of the Manhattan Bridge service using a Panama routing.

The other two alliances have on the other hand instituted significant changes. G6 has merged two services using panamax services into

one service with 10,000 teu vessels, as well as significantly increased vessel capacity on three out of the four remaining services. CKYHE has closed a Suez service and has instead upgraded vessel sizes on all of its four Panama-routed services. Now both G6 and CKYHE operate vessels with an average size of 8,200 TEU from Asia to the US East Coast.

These developments have a range of implications. First of all the Suez Canal has lost a full CKYHE service which is replaced by larger Panama-routed tonnage.

Additionally, another CKYHE Suez service has switched the backhaul to the Panama Canal. Additionally several Suez services maintain a round-Africa routing on the backhaul on account of the low fuel prices. All in all the expanded Panama Canal has a distinct negative impact on the Suez Canal.

Secondly, 2M used to operate the largest average vessel size from Asia to the US East Coast, thereby presumably having the lowest slot costs. But with the new changes, both G6 and CKYHE now operate vessels which are on average 17%

Average vessel size Asia-USEC 8,500

Nominal TEU

8,000 7,500 7,000 6,500 6,000 5,500 5,000

2M

CKYHE Before expansion

ISSUE THREE 2016

G6 AIer expansion

Ocean-3

larger. We therefore expect 2M to modify its own network and phase in larger vessels soon.

Thirdly, these network changes have instantly removed 80 panamax vessels from the trade. If panamax vessels are defined from 4,000 to 5,100 teu this corresponds to 11% of the full panamax fleet becoming unemployed. Given that 2M and Ocean 3 have to remain competitive, it is very likely their services will also be upgraded, which would release an additional 41 panamax vessels onto the market, bringing the share of suddenly unemployed panamax vessels to 16%.

For non-operating owners having possession of these vessels that is a significant challenge, and the problem is most aptly characterized by the time charter rates where a panamax vessel fetches some $4,500 to $5,000 a day, whereas a much smaller 2,000 teu vessel can fetch $7000 to $7500 a day.

Hence following the opening round, it appears the short term winners are the CKYHE and G6 alliances as well as the Panama Canal, whereas the Suez Canal, 2M, Ocean 3 and the non-operating owners have a challenge to address. â—?

17

Parent company of :

From Active Vessel, Project Mobilization to In-active Vessel

LAY UP ANCHORAGE & MARINE SERVICE

BUSINESS UNIT

ANCHORAGE SERVICE | SHIP TO SHIP TRANSFER | UNDERWATER/SALVAGE GENERAL MARINE SERVICE | PORT OPERATOR | PILOTAGE

LOGISTIC SERVICES

PT. Batam Samudra • Project Mobilization • Custom Clearance • Freight Forwarding SHIPPING SERVICES

PT. Pelayaran Batam Samudra • Shipping Agency • Crew Formalities • Ship Owner

Address : Komp. Sentosa Purnama Jaya Blok B No. 02 Jl. Yos Sudarso, Batu Ampar - Batam 29451, Indonesia Phone : +62 778 422 265 - Fax: +62 778 422 275 www.biasmandiri.com | www.biasdeltapratama.com

TRANSPORTATION & WAREHOUSING SERVICES

PT. Batam Samudra Jaya • Steve Doring • Warehousing • Transportation CREW MANAGEMENT SERVICES

PT. Bias Samudra • Ship Crew Management • Tour & Travel

LAY UP ANCHORAGE & MARINE SERVICE

PT. Bias Delta Pratama • Anchorage Service • Pilotage • Ship to Ship Transfer • Underwater/Salvage • General Marine Service • Port Operator

MARKETS OFFSHORE

Cash is king Boardrooms of OSV operators need to be prepared to weather the storm for another five years, writes Andre Wheeler

M

y latest round of advisory services to private equity and fund managers looking at investment opportunities in the OSV sector suggests that the headwinds facing the sector have become gale force in nature. A few months ago, debate was around the green shoot opportunities that were emerging for vessel owners and operators and actions taken to improve liquidity. This debate is now focused on the ‘gale force wind’ that is making sea conditions not just choppy, but unsafe. Here I am talking of the principle of cash in hand and how best to manage it.

What has happened in the market, particularly within Southeast Asia, that underpins this change?

The mega trends in the region are: • Utilisation rates are down – we are seeing that rates are down to 50% in the AHTS and PSV sector, with some companies reporting utilisation down to as low as 23%.

• Charter day rates are down, the average being 40% down on rates achieved in 2014.

• The definition of ‘old’ vessel has changed from that being 20 years plus to now being only 15 years.

ISSUE THREE 2016

• Oversupply of vessels, with 476 units on order of which 200 are speculative.

• 11% of the total fleet has been laid up.

• Smaller vessels (below 80 bollard pull in the AHTS segment and below 3,200 dwt) are mostly being impacted.

• Rig ratios are down, with the global OSV fleet growing in the period 2015/16 by 18%, increasing the vessel to rig ration by approximately 35%.

• Rig usage, the primary driver in the sector, is down 20% globally and 38% down in Southeast Asia.

• Offshore projects E&P has been trimmed such that there has been a 15% reduction in offshore costs.

• Prices for secondhand vessels have fallen 40%.

Suggesting the depth to which the OSV market has sunk is the emergence of what I call nationalistic tendencies. For example, Malaysia and Indonesia, two growth markets, are enforcing and introducing strict cabotage regulations. The Middle East region has embarked on the same process, making it very difficult for international operator prospects.

With this, there has been a review of asset values, particularly with regard to debt levels. A number of companies have reviewed their valuations as they have tried to restructure debt and payment terms. This has been a review of the fleet, particularly with regards to age and size, and with new vessels sales prices offering discounts of up to 30%, we have seen value wiped off the balance sheet.

With falling markets and prices of secondhand vessels, companies can no longer rely on asset sales to boost cash reserves. They will have to resort to other activities such as cutting operating expense, particularly by looking at systems and supply chains. Another option is to lock into longer contract terms at lower margins to generate cash i.e. the old fashioned approach of sacrificing margin for revenue that is bankable.

With the current gale and storm conditions expected to last until 2018, adherence to the principle of ‘cash is king’ will pervade the OSV sector. This focus will dominate boardroom discussion for the next five years, and with low utilisation and charter rates in all markets, we can expect to see an increase in distressed asset sales. ●

19

15th Annual Marine Money Week Asia

East Meets West A sia ’s L argest S hip F inance C onf er ence

20 & 21 September 2016 St. Regis Singapore

Cocktail Sponsor

Speakers Dinner Sponsor

The Marshall Islands Registry www.register-iri.com

Corporate Sponsors

ww w.m a ri n em on ey. c om Media Sponsors

MARKETS IN PROFILE FINANCE

Burnt Germans pull back Dagfinn Lunde takes a look at Hamburg’s place in world shipping

A

nd so to SMM, the world’s largest shipping show. I can’t help but be concerned about the attendance at this year’s mega Hamburg event, however, given how small the global ship orderbook is at the moment – owners and managers don’t need to kit out their shiny new ships at the moment, nor will they need to for a while.

German ship finance sits on a precipice. KGs – like KSs in Scandinavia – in my opinion are a wonderful way to raise money and are also nice for investors.

I think the whole KG system has been attacked unjustly. People do not trust them because the KG houses completely overdid things in the hot market from 2006 to 2008, contracting vessels without employment and equity or with employment, but no equity paid in. Banks were stupid to provide loans also for the equity part without proper checks. So when the markets crashed they were left out to dry for up to 100% of the project cost. The guarantees given by the KG houses for the loans for expected equity to be paid in, had in reality no value as in some cases the total obligation/guarantees by the KG houses were up to 200 times the equity value.

ISSUE THREE 2016

The banks have also learned that lending 70% of the value can be too much if it is done at the higher end of the market and to ships who might not be ideal for the future market.

However, please remember that the KG and KS systems date back some 200 years and still work fine in Norway and Denmark.

Banks in Germany mishandled the process, which is a shame as I do believe there is – and will be – a place for KG systems in shipping.

German banks have been badly burned by shipping and are now adopting a once bitten, twice shy approach to the sector. They are dealing with a lot of problem loans and management at the banks and public owners will not want much new shipping loan business on their books for the foreseeable future.

Take HSH Nordbank, for example. In July, its state owners warned it will take at least a decade for the Hamburg bank to wind down its EUR7bn portfolio of bad shipping loans. I’m pleased to see that my old DVB colleague Ulrike Helfer has been tapped to run the bank’s bad shipping loan portfolio, she is the ideal person to sort out this mess.

I do not see German banks active internationally in the future.

“

There is – and will be – a place for KG systems in shipping

”

Most of the banks are owned by local governments and taxpayers and politically they need to do some local business but will not be willing to risk more losses on shipping.

Where I can see Hamburg gaining business could be from Brexit. Shipping companies that need an office within the EU going forward may well choose Hamburg or the Netherlands at the expense of London. But it is far too early to see how Brexit will play out. ●

21

EXECUTIVE REGULAR DEBATE

Does permanent exce presage a change in s There’s an argument that too many available drydocks are making profits for owners short-lived. Not everyone is convinced with this theory however

W

hen interviewed by Maritime CEO in July, Dr Adam Kent, director of UK-based markets forecaster Maritime Strategies International (MSI), posited that the state of global shipbuilding has changed ship cycles forever, a contentious point of view that has sparked plenty of debate with leading names in the industry.

Even if yards are wound down or are mothballed the general infrastructure tends to remain in place, Kent suggested. The consequence to shipping, Kent maintains, is that the moment any single sector shows sustained improvement owners will be able to place orders at these underemployed shipyards, which will be hungry for new contracts, and these orders could easily be delivered in a relatively short window, therefore curtailing any sustained market improvement.

“This paves the way for shipping market cycles to become shorter with lower peaks, as shipyard capacity no longer presents a limiting factor to timely provision of new supply,” Kent predicted.

Shipyard excess capacity is extraordinary in scale, says one of the world’s best known shipping analysts. Dr Martin Stopford, president of Clarksons Research, tells Maritime CEO: “Shipbuilding output of around 103m dwt in 2016 is at least 30% above the underlying demand for new ships.”

With China’s imports hardly

22

growing; the world economy in a trough; and the offshore market in deep trouble, Stopford says current output could only be sustained by “heroic price cutting”.

“Cutting capacity makes sense,” he reckons, “but with the market split 37% China, 35% South Korea and 19% Japan it’s a game of chicken for who cuts first and most.”

“Don’t rule out some big price cuts,” Stopford says.

Esben Poulsson, the new chairman of the International Chamber of Shipping (ICS), believes excess shipbuilding capacity will not last forever, but that the shipping cycles of previous decades are gone forever.

“Cycles as we once knew them are probably a thing of the past,” he says, “and what we will see more of is shorter and sharper spikes and volatility as part of the new norm – against a background of rapid changes in technology and production/consumption patterns.”

The veteran shipowner goes on to claim: “If you add in the mixed and uneven prospects for the world economy, let alone the political situation, I think cycles – implying a degree of predictability – are a thing of the past.”

A cycle, by definition, should

“

be symmetrical, points out Adrian Economakis, COO of online pricing platform VesselsValue, but what we are seeing recently with shipping is a non-symmetrical cycle with relatively longer down periods. “This is partly due to shipyard excess capacity - and the correlated low newbuilding order prices - but has also been effected by availability of capital and swings in market sentiment,” Economakis argues.

In simple terms, current excess shipyard capacity, combined with availability of capital and positive swings sentiment, has allowed large amounts of newbuildings to be ordered and delivered. This was particularly evident in 2013/2014 where an improvement in sentiment in the dry bulk sector led to a large amount of newbuilding orders in a very short period, which in turn, combined with lacklustre dry bulk demand, brought the market to its current historic lows.

Interestingly, there was a delayed cyclical effect in the recent buoyant tanker market. Tanker rates, until recently, have been very strong, but positive long term sentiment has been lacking. Values have stayed low and newbuilding ordering was limited.

Shipbuilding output of around 103m dwt in 2016 is at least 30% above the underlying demand for new ships

”

maritime ceo

EXECUTIVE IN PROFILE DEBATE

ss shipyard capacity hipping cycles?

“In other words,” states Economakis, “people were not expecting a sustained good market for tankers, so the earnings market stayed healthy for quite long and looks like a more conventional shipping cycle.”

However, with the recent downward trend in rates and continued fall in tanker values, we may be seeing another stage in a different cycle.

ISSUE THREE 2016

Tobias Koenig from Lexington Maritime believes overcapacity is the new normal for shipping.

“The markets are completely overbuilt and the need to scrap rate is around 50% of the fleet in most sectors,” he says, adding: “There will always be a reason for ordering new vessels, which will keep up overcapacity and the markets at fairly depressed levels.”

Like Kent, Koenig believes cycles

will become shorter, albeit with less volatility.

Basil Karatzsas, a Greek ship finance expert based in New York, takes issue with Kent’s point of view.

“We all know from basic economics that excess capacity cannot remain the permanent market state; eventually some yards will have to shut down or eliminate some of the excess capacity,” he argues, suggesting that the contraction in yards will most keenly be felt in China.

“When there is effectively nil financing for the average shipowner, excess shipbuilding capacity has little material consequence,” Karatzsas maintains.

It’s not just shipyard size, it’s also their efficiency that shipowners need to take into account. Andrew Craig-Bennett, lead opinion writer for this magazine, observes that the manhours needed to build a handysize bulk carrier have been reduced by roughly three quarters during his lifetime.

“There is no practical constraint on shipbuilding capacity at all,” Craig-Bennett believes. “Modern shipyards,” he says, “can flex their own capacity by subcontracting fit out, subcontracting blocks and practically anything else.”

The only practical constraint on ship supply, Craig-Bennett observes, is the supply of main engines – the only large component of a modern ship that is hand-built by experts.

Shipping has yet to decipher just what is the new normal when it comes to shipping cycles – what is more clear however is that there are still far too many drydocks offering temptingly low newbuild prices. ●

23

IN PROFILE

Hans Feringa p.31

Alexander Panagopulos p.33

Costantino Tomasos p.38

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 15 pages

24

maritime ceo

IN PROFILE

Morits Skaugen p.30

Nobu Su p.34

Charles Maltby p.39

Esben Poulsson p.37

Michael Elwert p.35

Jakka Singgih p.29

Lynn Simpson p.26

ISSUE THREE 2016

25

IN PROFILE

Livestock trades exposed The movement of animals at sea has come under unprecedented scrutiny following a series of shocking reports from a respected Australian vet. Maritime CEO has the full story

D

r Lynn Simpson didn’t set out to be the whistleblower extraordinaire of the livestock trades. Indeed, growing up in inland Australia she never had any intention of going to sea in the first place.

It was only when she went to university in Perth, Western Australia, and, needing cash, took up a job as a stevedore in Fremantle, that maritime suddenly appeared on the radar.

“Once university was finished and I was a qualified vet I thought it would be interesting to do one voyage to see the export process from start to stop,” she recalls. “57 voyages later I guess I have to confess to becoming addicted to seafaring.”

What she found onboard was confronting and since she left the ships five years ago to consult to both the live export industry and the Australian government on live export animal health concerns she’s been seeking changes. In a series of searing exposés for our sister title, Splash, Simpson has shocked

26

thousands of people with what actually happens on livestock ships far out at sea. Moreover, though she stopped working onboard ships five years ago, every ship she has described experiences about is still trading; it’s worth remembering the average age of the global livestock fleet is 34 years old.

Armed with a sharp turn of phrase and ample, graphic photographic evidence (pictured), Simpson has done more to shine a light on this hitherto hidden trade than anyone in history, and she might just make history too by campaigning to the very top of shipping – the International Maritime Organization – for change in the sector.

“I loved shipping for it’s sheer scale and adventure,” Simpson tells Maritime CEO. “Tragically I was quickly seeing the live export trades’ similarities to the historical human slave trade. In the 19th century, empires were built on the backs of slaves, kidnapped and sold from their home countries. High mortality rates on voyages, and poor treatment in destination countries once on sold.

Replace human slaves with live animals in your mind’s eye and, well, it’s the same scenario.”

Much of the livestock trades head to or transit the Middle East when that region is at its hottest.

Simpson, chillingly, describes what happens when things get too hot on maritime ceo

COVER IN PROFILE STORY

deck as being “like a cross between a Sunday roast and roadkill”.

The normal body temperature of a sheep is around 38.5 degrees.

Simpson describes how one day she had an entire deck succumbing to the heat.

“They were dropping around us like they had been shot in the head.

Except there was no bullet,” she says. “As they hit the deck we would drag them out and I would cut their throats. One day as I was cutting heat stressed throats for mercy kills, I had a strong spray of blood from the throat scold my wrist.”

Brain damage in humans is a concern if the body temp gets above 41 degrees Celsius.

Simpson took a deck thermometer to measure a dead sheep’s core body temperature on this particular voyage.

“I was blown away to find it was 47 degrees Celsius. About the same temperature of the average household hot water system. Their fat was melted and like a translucent jelly.

They were cooking from the inside,” she recounts.

As well as the heat there is the terrible seasickness many animals go through.

Seasickness – or motion sickness - is essentially determined by the movement of tiny hairs deep

ISSUE THREE 2016

within the ear’s anatomy. Some people get more affected than others.

Simpson reckons she has seen the same with livestock in rough weather and heavy seas.

“When I’m seasick, I’m listless, grumpy, don’t want to eat or drink and just want to lie down and sulk,” she says. “This behaviour,” she continues, “is clearly identified in a percentage of the livestock aboard these vessels. The rolling, pitching and corkscrewing of a vessel during heavy seas can also lead to exacerbated leg abrasions and injuries from aggressively rough deck surfaces.”

Then there is maritime pollution (MARPOL) regulations, which are a bit ambiguous to read for livestock.

“Sometimes, we were not sure where we could discharge so much slurry of livestock shit and urine, so we would wash at night to avoid detection by satellites as we left quite a distinct discolouration in our wake,” Simpson reports.

Simpson is also keen to stress the anguish onboard is not just with the animals, but also the seafarers too.

“The animals produce tons of sewerage that must be dealt with every day. Large animals have caused many injuries at sea. High ammonia levels are a big problem also.”

There’s plenty more besides that alarms Simpson – follow the QR code below to access all her shocking articles for Splash to date for the full picture. She is now in the process of raising the varied issues with this trade to the IMO, while also fighting a bitter court case with her former employer, the Australian Department of Agriculture and Water Resources.

Nevertheless, the more fundamental question remains whether or not we actually need the livestock trades.

Animals do not need to be transported to start herds overseas – embryos and semen can be far cheaper and without the controversy.

Meat is already widely exported chilled and frozen.

“Australia already exports embryos and semen, so the live export stress of a sea voyage could be avoided and a herd developed in another country at a much lower cost than exporting live animals,” Simpson maintains.

If livestock is to continue, then with the average age of the global fleet so old, the question remains who will pay for fleet renewal.

“I’m not sure we will ever meet the growing public pressure for increased welfare standards and gain a financial profit for traders,” Simpson says.

Concluding, Simpson maintains: “I personally think that public pressure for increased welfare will mean live export of mass numbers of livestock from first world countries will meet an end in the not too distant future. The meat trade will increase and countries will get their protein requirements. Some trade may move to countries that work at more challenging standards and the delivered product may be questionable.”

Stay tuned to Splash for plenty more incredible exposés into the livestock trades from this brave Australian veterinarian. ●

Access all of Lynn’s articles for Splash on the livestock trades

27

service and quality are within your reach

the Republic of the Marshall Islands is the flag of choice for many of the world’s top shipping companies

IRI International Registries GmbH

in affiliation with the Marshall Islands Maritime & Corporate Administrators

tel: +49 40 361 6681 30 hamburg@register-iri.com www.register-iri.com

IN PROFILE

Multipurpose hunt Bumi Laut from Indonesia is readying a series of orders, but not on home soil

S

enior management from one of Indonesia’s oldest shipping lines are scouring the world in anticipation of ordering a series of multipurpose ships. The company, Bumi Laut, however will not be placing these orders on home soil because Indonesian yards are too expensive and too slow, CEO Jaka Singgih tells Maritime CEO. Bumi Laut is a very diverse family-run company with interests in bulkers, tankers, boxships, tugs, barges, warehousing and a sizeable agency business to boot.

Owned ships at present include seven small tankers on charter to Pertamina, four small bulkers trading in Southeast Asia and a box fleet under the brand Fortune Lloyd which trades domestically.

Singgih, the third generation at the helm of the line, reveals he is in the market for a series of MPPs, ranging in size from 8,000 dwt to 15,000 dwt, and he is in discussions with yards in China, South Korea and Japan over the order – but pertinently not with Indonesian shipbuilders.

“Indonesia is too expensive to

Spot on

Bumi Laut One of Indonesia’s oldest shipping lines with seven small tankers, four small bulkers and a box fleet under the brand Fortune Lloyd. A series of multipurpose vessel orders are in the offing.

ISSUE THREE 2016

“

Indonesia is too expensive to build and takes twice as long to complete

”

build and takes twice as long to complete,” he says, adding: “Indonesia has ambitions to build ships. Ambition is good, but the government needs to do more to help.”

Singgih, a member of parliament for 10 years through to 2009, says the government should help by handing out soft loans, making it easier to import key equipment and easing immigration rules so foreign expertise can work at local yards.

Singgih’s son, Jay, 28, has risen to COO level at the group and is being groomed for the top job.

However, that will not happen too soon, his father, a shipping veteran, stresses. “Maritime is an industry that requires experience, passion and knowledge,” he reckons. ●

“I am positive about the future of the shipmanagement industry and the trend towards outsourcing, driven by increased regulation, economy of scale benefits, and the increasing competition for access to quality crew” — Bjørn Højgaard, CEO, Anglo-Eastern Univan Group

29

IN PROFILE

Morits Skaugen on finance The Norwegian veteran owner discusses how owners are struggling to find sources of capital

M

orits Skaugen, ceo of Norwegian tanker firm IM Skaugen, reckons the ongoing pursuit of available finance is the biggest issue vexing shipowners at the moment.

“The biggest talking point,” he says, “is likely to be refinance risk and where to find available finance to plug cash flow needs. Alternatives for owners are drying up.”

Expanding on this theme for Maritime CEO, Skaugen says vessel owners and lenders alike are having trouble establishing the true value of assets – value of vessel or value of mortgage – whether it be offshore service vessels which Skaugen says “look like a disaster”, or tankers which are good at the prevailing spot markets.

“This means,” explains Skaugen, “that charter rates cannot be used as a long term reliable guideline if there are no buyers that can secure finance to buy. This is why there are probably numerous unsold offshore service vessels and probably over 100 tankers for sale, but very few buyers with corresponding finance in place.”

Many ships ordered and built

Spot on

IM Skaugen Norwegian gas owner founded 100 years ago. Today’s fleet comprises LNG, petrochemical gas and LPG carriers.

30

“

The biggest talking point is likely to be refinance risk and where to find available finance to plug cash flow needs. Alternatives for owners are drying up

were for short term financial capital owners out of the US and they are now long term owners by default.

“This is also probably why there is a big discount on crude oil tanker stocks,” Skaugen reckons.

This also means banks are having to be very careful, and with bond and MLC markets out of sync, capital choices are slim right now.

“Recently I heard that only five out of 45 shipping banks are currently lending, and then only to the more AAA look alike clients,” Skaugen reveals.

Skaugen is the third generation at the helm of one of Norway’s most famous tanker names. IM Skaugen’s

”

fleet comprises LNG, petrochemical gas and LPG carriers. The company celebrates its 100th anniversary this year. ●

“Customers are worried about the potential length of the downturn and the effect on safety” — Warwick Norman, CEO, RightShip

maritime ceo

IN PROFILE

Chemical consolidator Hans Feringa has plenty of plans now he’s the boss at Team Tankers

T

he chemical tanker sector is set for significant consolidation and Team Tankers is keen to play a central role in this process, its president and ceo tells Maritime CEO. “We believe,” says the Team Tankers boss, Hans Feringa, “the chemical tanker industry is poised for substantial consolidation among vessel operators that will greatly benefit both customers and shareholders alike. With our global network and vessel operating expertise, Team Tankers is ideally placed to play a leading role in the coming industry consolidation.”

Eleven months into the top job at Team Tankers and Feringa has identified three areas for his chemical tankers to focus on, and is whittling his fleet down accordingly.

Team Tankers currently operates a fleet of 46 chemical tankers of which 35 are owned, six are bareboat charters and five are on time charter.

The three areas identified are its regional stainless steel fleet operating in the Mediterranean and between the Mediterranean and the European continent. The company has 12 ships trading in this fleet and all are around 9,000 dwt for “optimal

Spot on

Team Tankers A history that stretches back to Norway in 1968 was resuscitated two years ago in Bermuda as Team Tankers International. Oslo-listed and with 44 ships in its fleet.

ISSUE THREE 2016

interchangeability”, Feringa says.

Then there is the regional coated fleet trading globally.

“With that we mean we trade these ships globally but on short-haul trade lanes,” Feringa explains. Major tradelanes are US Gulf to Canada, to Mexico, to Caribs, intra-Asia trade lanes and in the Mediterranean. The company has 20 ships trading in this fleet making it the market leader and the ships are all around 13,000 dwt.

Finally, its IMO2 deepsea coated fleet of 10 ships trades globally.

“We have disposed of several vessels which did not fit in these categories and have plans to dispose of two more owned vessels and redeliver one vessel off of a time charter,” Feringa says, adding: “We will continue to exit the few ships that no longer fit the strategy and reinvest those funds and more into higher return potential assets.”

Team Tankers has recently added ships to both regional fleets creating the scale and coverage it requires. It is currently looking at opportunities to expand the IMO2 fleet after having added one vessel to the fleet recently.

The global orderbook for regional ships, both coated and stainless steel is “very low” at 3-5% for the next two years, Feringa observes. “Supply demand balance will tighten in these markets,” he says.

The orderbook for deepsea stainless vessels is high at well over

“

20% and Feringa says he anticipates “competitive pressure” here.

“There are also several new entrants into this business and it is unclear where they will trade their newbuildings when they deliver,” he adds.

Finally, the MR market shows an orderbook of 16% but this is where Team Tankers anticipates the highest demand growth as both the US Gulf and Arabian Gulf refinery expansion projects come onstream and export volumes rise significantly.

Feringa was formerly president of Stolt Tankers. ●

Team Tankers is ideally placed to play a leading role in the coming industry consolidation

”

31

The Royal College of Surgeons, London

14 September 2016 ‘Respect, Responsibility and Remedy in the Maritime Environment’ The International Maritime Human Rights Conference is the first to focus on human rights in the maritime environment. This ground-breaking event will openly tackle human rights requirements, explore topical and emerging matters, and investigate human rights protections and available remedies for abuses.

The conference will explore the key issues associated with human rights in the maritime sphere in an open, objective and constructive way, inviting engagement from, and dialogue with, government, civil society and industry stakeholders.

The event is relevant to all those involved in maritime business and the transportation of goods and people by sea, and offers participants a unique chance to hear about the many initiatives that are being taken by the shipping industry, human rights advocates and other interested parties in tackling the urgent issues surrounding human rights protections at sea.

Topics: ▪ The need for explicit engagement with human rights at sea ▪ Seafarer welfare – challenges, responsibilities and education ▪ The fishing community ▪ Gender and LGBT equality in the maritime industry ▪ Refugees and migrants, including rescues and impact on crew ▪ Corporate social responsibility – including the application of the UN Guiding Principles on Business and Human Rights ▪ Investigation of human rights abuses at sea

Registrations can be made via:

www.mar-rights.com

CONTACT US Sponsorship and delegate enquiries: Jerry Carter, Petrospot Ltd

Media Enquiries: Katherine Winfield, Jeanius Consulting Ltd

Tel: +44 1295 814 455 Email: info@mar-rights.com

Tel: +44 1908 272850 Email: katherine@jeaniusconsulting.com

DIAMOND SPONSOR

PLATINUM SUPPORTER

The National Federation of Fishermen’s Organisations

MEDIA PARTNERS

This event is organised by Ensign Events Ltd, a joint venture between Petrospot Ltd and Jeanius Consulting Ltd alongside the maritime human rights charity, Human Rights at Sea.

LANYARDS & BADGES

IN PROFILE

‘Setting the bar high for others to follow’ Greece’s Arista Shipping is pushing ahead with a revolutionary LNG-fuelled bulk carrier

T

here’s a quote on the homepage of Arista Shipping that sums up the pioneering attitude of this Greek shipowner.

“Quality means doing it right when no one is looking.” So said US automaker Henry Ford nearly 100 years ago, a sentiment that Alexander Panagopulos, chairman and ceo of the Greek line, has clearly taken to heart.

Panagopulos was on hand at Posidonia this June where a plan was put forward to develop a revolutionary LNG-fuelled bulk carrier.

Arista has teamed up with ABS, Deltamarin, GTT and Wärtsilä for Project Forward to develop a kamsarmax to be the first of this type suitable for worldwide services powered by LNG in compliance with the International Maritime

Spot on

Arista Shipping Predominatly dry bulk focused, this Greek owner was founded in 2008. Run by Alexander Panagopulos, whose family have a long history in shipping.

“

The best way to predict the future is to create it

”

Organization’s Energy Efficiency Design Index 2025 standards, NOx Tier III and Marpol Annex VI SOx emission levels.

The design also could be applied to other bulk carrier sizes and serve as the basis for an LNG-fueled tanker.

The concept features a Wärtsilä four-stroke, medium-speed engine without auxiliary generators, the first time this configuration has

www.splash247.com Splash - for incisive, exclusive maritime news and views 24/7.

been applied to a vessel of this type, significantly simplifying the vessel’s engine room arrangement and contributing to lower capital expenditure.

“It’s about setting the bar high for others to follow. I think it’s called disruption,” Panagopulos tells Maritime CEO. Panagopulos says a debut order for this ship type will happen within two years.

“Arista is planning its future expansion by embracing the forthcoming rules and regulations on emissions,” he elaborates, adding: “We are taking this a step further by designing what we believe the future bulk carriers will look like. Our reasoning is that the best way to predict the future is to create it.”

Panagopulos was co-founder of Superfast Ferries in 1993 under Attica Group, a Greek-listed entity controlled by the Panagopulos family.

Following the sale of the family’s participation in Attica Group in 2007, he founded Arista Shipping in January 2008 to focus on identifying attractive investment opportunities in various shipping sectors with an emphasis on dry bulk. ●

IN PROFILE

Out to shake up shipping Nobu Su is firing on all cylinders when he meets up with Maritime CEO

I

t’s easy to characterise Nobu Su as shipping’s malcontent. It’s been two years since Maritime CEO profiled the Taiwanese shipping tycoon, but in that time Su has quietly made his exit from shipowning and commenced a number of high-profile lawsuits.

Su won’t be drawn on precisely how many vessels his company TMT still owns, saying “almost nothing”.

The company’s last VLCC E Elephant was reported sold at auction in May to Minerva Marine for $55.6m.

With shipping markets being as bad as they are, Su doesn’t think it makes sense for him to go back in as an owner. Instead, he wants to focus on being an innovator, using new technology to help revolutionise what he sees as a conservative industry.

Su is an inventor, but his ambitions don’t only extend to individual technological concepts. He says he wants to redesign “the entire ship”, and create a step-change in propulsion similar to when vessels changed from wind to steam power.

At Posidonia in June, Su formally unveiled his Hybrid Ship system, a hybrid propulsion system that aims to mitigate marine pollution by reducing the required volume of ballast water by 90%.

Su calls his patented Hybrid Ship

Spot on

TMT Taiwanese family run firm that was one of the largest FFA users during the boom years and has since spectacularly crashed.

34

concept a “game changer” because it uses less ballast water, thus reducing the ship’s ability to contaminate the marine environment with invasive species or (Su worries) chemical agents from ballast water treatment systems.

He likens the concept to the Toyota Prius and says adoption will come little by little, but remains too controversial at the moment – he says widespread commercial adoption would be more likely if the concept had been developed by shipyards, rather than being attached to his own name.

Su remains a divisive figure.

This, after all, is the man who claims RBS “engineered” the banking crisis for the benefit of bankers.

Su is suing former RBS employees Fred Goodwin, the bank’s former chief executive; Neena Birdie and Marie Chang. To date, only Chang has been served with court papers.

Goodwin “tried to run away”, Su says, and Birdie has “gone missing”.

The TMT chairman alleges that, between 2007 and 2009, Goodwin, along with Birdie, Chang and RBS Greenwich Futures, the RBS Singapore Branch “conspired to injure Mr Su by unlawful means”.

The bank opened a two secret accounts under Su’s name which “they used as ATM machines” to the tune of $3.6bn, he says. “How can they make a mistake with $3.6bn?”

Su asks. It is, as he puts it, a fraud “too big to hide”.

It’s easy to write off Su’s RBS litigation as paranoia but his claim is the product of over four years of

research and is more convincing than perhaps one would expect.

But why target TMT? Su says he was the perfect target to have his funds misappropriated because he is foreign, owns a privately owned company and is a billionaire.

He took over the family shipping business from his father in around 2000, but things really took off for Su and TMT when China and Taiwan joined the World Trade Organisation in 2001 and 2002 respectively.

Su jokes that during the first seven years of his career he made $1m a day, and lost the same amount during the next seven years.

Hollywood is full of David-andGoliath stories about the little guy who takes on the giant, faceless entity. As Su notes, RBS has yet to slam his claims with a counter-suit for defamation – which he takes as a sign that he’s on the right track.

A lawsuit against Clarksons’ FFA business is also in the works.

Shipowning, he says, can wait until the truth has been outed. Su wants his day in court (or maybe more than one). ● maritime ceo

IN PROFILE

‘Timely S&P asset management remains a core strategy’ The new boss of India’s Elektrans shares his strategic plans with readers

W

atch out for India’s Elektrans Group as it makes plenty of moves in the tanker sector in the coming couple of years. With former Thome man Captain Michael Elwert installed as group ceo this April, the Singaporeheadquartered firm is gearing up for significant expansion.

“Currently, Elektrans Group is with its partners, expanding its tanker fleet as and when we come across the right assets at the right price,” Elwert tells Maritime CEO. The aim is to pursue younger tonnage and to mix the fleet up more between Indian-flagged and other registries.

Moreover, other sectors could be entered, Elwert says.

“The focus of the company is to strengthen its presence in the tanker segment, yet we will keep our options open, scout and consider possible ventures into other ship type segments when time is right and we can

Spot on

Elektrans Diverse Indian group whose shipping arm is headquartered out of Singapore. Pursuing a significant tanker fleet buildup at present.

ISSUE THREE 2016

“

Elektrans is expanding its tanker fleet as and when we come across the right assets at the right price

”

harvest opportunities which could complement our portfolio long-term,” he says, stressing: “Timely S&P asset management remains a core strategy.”

Possible strategic partnerships with other shipowners is also on the cards.

The former shipmanagement boss says his objective is to position the company as a “globally preferred and recognised quality tanker operator driven by a lean and professional team”.

On the markets, Elwert notes downward corrections in the tanker

segment are evident with more expected over the next two to three years.

“We expect the volatility of the tanker market to continue, yet this will certainly offer opportunities to the industry players who have cash and finance at the right time. We will actively scout and target those asset opportunities which will surface over the next two years on secondhand tonnage,” Elwert says.

Elwert, 49, was with Maersk for 18 years before joining Thome in Singapore in 2009. He is also a founding member of the Global HR Maritime Forum. ●

“Shipmanagers are more relevant than ever right now” — Clive Richardson, CEO, V.Group

35

Posidonia 4-8 June 2018 Metropolitan Expo, Athens Greece

The International Shipping Exhibition

posidonia@posidonia-events.com

www.posidonia-events.com

IN PROFILE

Triple-pronged attack Veteran Danish maritime figure Esben Poulsson has identified CO2, ballast water management and sulphur as key issues during his tenure as head of the International Chamber of Shipping

W

hen Maritime CEO comes calling at Esben Poulsson’s door towards the end of June, his bags are packed and he’s about to head off to Panama for the momentous opening of the expanded canal. In Panama he may well have picked up a hat – although he has many already.

The International Chamber of Shipping (ICS) elected Poulsson as its new chairman at the start of June.

As well as the Danish national’s commitments to the ICS, he is president of the Singapore Shipping Association (SSA), and also is on the board or an advisor to the Singapore Maritime Foundation and Straits Tankers. The former Torm man is also chairman of Enesel Pte Ltd, a Singapore management subsidiary of Athens-based boxship operator Enesel.

With his ICS hat on, Poulsson is not hanging around, determined to lobby hard for shipowners on three key issues – CO2, ballast water management and sulphur.

The veteran shipowner tells Maritime CEO he is a “new boy” when it comes to his new ICS role. The

Spot on

International Chamber of Shipping The International Chamber of Shipping (ICS) is the principal international trade association for merchant shipowners and operators, representing all sectors and trades and over 80% of the world merchant fleet.

ISSUE THREE 2016

“

What we at ICS can do is to try to move these agendas on so that there is clarity on what to do

”

secretariat has been busy bringing Poulsson up to speed with the reams of regulations that are hovering over the industry.

“Our stated priority is CO2, ballast water management and sulphur,” he tells Maritime CEO in an exclusive interview. “They are each big issues and very complicated.

What we at ICS can do is to try to move these agendas on so that there is clarity on what to do.”

Too much impending regulation remains unclear, he warns, especially ballast water management rulings coming out of the US. On CO2, Poulsson is worried.

“The EU is running at a different pace to IMO,” he says, adding: “We are trying to avoid unilateral regulations from regions.”

Poulsson reckons that if no solution for CO2 comes about soon, a market-based system will likely be introduced, which is not something ICS favours.

“Shipping is generally a

responsible industry but given current market conditions the last thing we need are three major issues on which we are awaiting decisions,” Poulsson says, adding that ICS’s credibility within IMO should allow it to influence regulations.

And talking of influence, the European who has lived in Asia for the last three decades, has his own personal view on the UK’s decision to quit the EU. “Stay within is best,” he advises. “Influence from inside.” ●

37

IN PROFILE

Partners sought Super Eco Tankers Management is looking at alternative ways to get listed in New York

S

uper Eco Tankers Management is one of very few Greek shipping firms to still be ordering new tonnage. It chose to sign two orders for four new tankers in the last seven months. It’s also on the hunt for partners looking to list.

Costantino Tomasos, managing director of the Piraeus- and Singapore-based shipmanagement company, tells Maritime CEO the orders were all about timing. “The outlook for oil/chemical tankers is still positive in the forthcoming years, newbuilding prices still remain close to the historical minimum despite the level of the freight market – normally there is an inverse correlation between these two variables – and the existing MR orderbook is reasonable compared to other segments.”

The seasoned Greek shipowner (who was born in Italy) also adds: “I guess that short term investors or asset speculators are concerned about the high volatility of the market and therefore only the long term and well established players are used to this scenario. The eco design of the new ships is a further incentive when compared to elder secondhand ones.”

Super Eco Tankers’ role in shipping dates back to the 19th century.

According to VesselsValue.com it

Spot on

Super Eco Tankers Management Has 13 ships on the water and another four on order. Sister firm Super Eco Bulkers Management has seven ships trading and two to deliver.

38

“

This overcapacity and lower rate environment is correcting naturally

”

has 13 tankers under management with a capacity ranging from 37,100 to 52,400 dwt and a further four 40,000 and 50,000 dwt MRs have been ordered in South Korea recently with delivery scheduled from 2017 onwards. Its sister company Super Eco Bulkers Management’s fleet consists of seven units: three 34,000 dwt handysizes, one supramax and a brand new handysize delivered this year from AVIC Weihai. A further two handysizes are on order at the same Chinese shipyard. According to Tomasos, their suppleness, age and restrained size, blended with a right policy to meet customers’ requirements, will preserve his company from the ongoing crisis which is affecting the dry cargo sector and more intensively the larger bulkers.

Looking into the future, Tomasos is interested in finding new financial investors and fresh capital.

“I think,” he explains, “for a company which intends to protect its

future, like we are, entering the capital market also implies a strategic choice, for example fleet refurbishment and expansion. Considering our peers in the tanker business, unlike choosing a typical IPO we might merge with a company already listed on the Nasdaq or the NYSE. This is a strategic move we intend on implementing at the right time with the right partnership.” ●

“You can source products online, you can sell products online and you can buy products online, but freight shipping is the last unautomated frontier” — Zvi Schreiber, CEO and founder of Freightos

maritime ceo

IN PROFILE

Hoping for a better 2017 The chairman of Singapore’s Epic Gas is confident that prospects are rosier next year

W

hile admitting rates are foul at the moment, Charles Maltby, chairman and ceo of Epic Gas, is adamant the company is looking at the markets from a long term perspective, hence now is a good time to snap up cheap new tonnage with an eye on rates improving in the pressurised LPG sector next year.

Maltby joined the Chris Buttery backed gas vehicle in 2014, Previously he had been with Pacific Basin in the UK prior to his Singapore switch.

Epic Gas is the only owner operator focusing purely on the pressurised LPG sector with a fleet of 3,500 to 11,000 cu m vessels, the full spectrum of vessels in the sector.

After it merged with Pantheon in 2012 it controlled a fleet of 22 pressurised LPG vessels, and over the intervening years it has placed orders for 13 owned and four bareboat chartered new vessels, a total of 129,900 cu m, at Japanese yards. Some 79% of this newbuild capacity is for vessels of 7200 cu m or larger. Five ships have still to deliver by which point Epic will have a fleet of 43 ships totalling 277, 400 cu m, representing about 17% of the global fleet.

“The scale of the fleet is important,” Maltby argues, “as it enables us to globally deliver a flexible, long

Spot on

Epic Gas Founded by former Pacific Basin duo Chris Buttery and Paul Over, Singapore’s Epic Gas has quickly built up a leading position in the pressurised LPG sector.

ISSUE THREE 2016

term business model to our customers, through time charter, COA, voyage charter relationships, at both fixed and floating rates.”

More large pressurised LPG vessels are likely to be ordered soon, Maltby reveals.

Pressurised LPG vessels are typically involved in the movement of LPG (propane and butane) over the last mile into smaller ports within developing economies. Within Epic Gas about 75% of its volumes are LPG, whilst the balance are petrochemicals such as propylene, butadiene and VCM. However, while global LPG trade grew by 9.8% last year, rates for pressurised LPG have been bouncing along at record lows – often below opex levels - for the smaller pressurised vessels due to overcapacity within the sector, driven primarily by record newbuild deliveries in 2014 and 2015. The low rates have translated into tough financial times for Epic.

In addition, the evolving petrochemical demand in China as domestic PDH plants come on line to produce propylene has led to volatile demand for propylene imports, typically on pressurised LPG vessels.

“This overcapacity and lower rate environment is correcting naturally,” Maltby says optimistically, “and has assisted in reducing newbuild ordering, and also led to scrapping of about 2% of the fleet each year.”

With demand growth for LPG remaining robust, and vessel newbuild supply already reducing, and reducing significantly to below 4.4% in 2017, Maltby says he anticipates a “steady recovery” in rate levels.

Given the backers of the Epic project include the legendary pairing

“

This overcapacity and lower rate environment is correcting naturally

”

of Chris Buttery and Paul Over, the original creators of Hong Kong handy bulker firm Pacific Basin, a listing must be on the cards, something Maltby skirts around.

In 2014 Epic listed on the Norwegian OTC market raising $75m, and in 2015 it added a further $50m.

“Whilst there is no rush to take the company to a wider platform, we manage the business today with the assumption that we will do so when the time is right, whilst at the same time we are very focused on delivering improved profitability, consolidation and further growth,” Maltby concludes. ●

39

WINE

Toto, we aren’t drinking Merlot anymore Neville Smith goes all adventurous, seeking out the odd and unusual

A

s regular readers of this column will know, we are enemies of both the humdrum and the highfalutin. Sure, there’s a place for a reliable weekend favourite or indeed, the world’s finer wines, but after a while, a certain ennui sets in.

Wine is – or should be – about discovery, variety and the pursuit of the unusual. Just because the world is dominated by a handful of grape varieties doesn’t mean you should restrict yourself to them.

The trouble is that appreciating wine, rather than simply drinking it, has a fusty image; more about education than enjoyment; tastings can be fussy affairs and the pressure to buy intense.

If this sounds like your relationship with wine never fear, the tide is turning. Despite what the health

Two to try 2011 ROYAL SOMLO Juhfark (Berry Bros & Rudd £18.95) That’s ‘ewe-farq’ to you and me, one of Hungary’s least known and rarest grapes, a delicate floral white, ripe with stone fruits, refreshing acidity and just a touch of oak.

40

stats will tell you, more younger drinkers, tired of spirits and uninspired by craft ale are developing an interest in wine. But just like the stranger spirits and ‘beardy’ beers, they are seeking, well, not their father’s wines.

In the UK, the charge is being led by a motley crew of bright young things, not least the founders of The Noble Rot, whose wine bar is nothing like it sounds, and whose magazine is a must-read, even in this digital era.

Across London, a new type of tasting is springing up, with wine merchants pitching up to ‘car boot sales’ where punters can try, buy and take home. Elsewhere, informal lunches are designed around the strangest wines the organisers can source. On the high street, the growth of the Coravin system is

IGT Tenuta di Passopisciaro 2009 (Corney & Barrow £29.95) is a true enthusiasts’ wine. Made

by Andrea Franchetti on the slopes of Mount Etna from the Nerello Mascalese grape, this looks like a whopper but is fresh and sappy with smoky overtones. ●

“

The next time you are offered a glass of the mediocre, why not ask if they have anything better?

”

encouraging fresh experimentation by the glass.

Charged with this spirit of adventure, this issue we have sought out the odd and unusual, asking merchants what they like but doesn’t sell easily, the wines they cherish but which are often overlooked.

An honourable mention then, for 2014 De Martino Gallardia de Itata (Berry Bros & Rudd £12.50), a daisy-fresh, dry rosé made from unfashionable Cinsualt in Chile’s Itata Valley. For an unusual sweetie, seek out L’Effronté, Domaine Matrot (Private Cellar £19.95 half bottle).

Made from botrytised Aligoté grapes, this oddball Burgundy is produced in tiny quantities, but packs bags of airy charm.

These – and the two to the left – are merely scraping the surface of the world beyond Merlot and Chardonnay. It’s a journey that with an open mind, can continue for a lifetime. So the next time you are offered a glass of the mediocre, why not ask if they have anything better? ● maritime ceo

GADGETS

Audio fidelity redefined

A

ttention, serious audiophiles: Focal are now accepting pre-orders on their new flagship Utopia headphones, touted as bringing the experience of their $200,000 Grande Utopia speakers to headphones for a mere cheeky $4,000. The speaker driver is an M-shaped dome made with beryllium which is expensive, but it’s strength, lightweight and rigidity makes it respond quickly, for better sound. The headphones are fairly light — 490 grams, and amazingly comfy with the headband made of carbon fibre and leather, and the lambskin leather and microfibre fabric ear cups are filled with memory foam. The headphones are open backed, for some seriously good staging, guaranteed to have most audiophiles lusting after a pair despite the price tag.

Utopia $4,000 www.focal.com

Driven to distraction

I

f audio fidelity isn’t your thing, perhaps another form of faithful simulation will provide more stimulation. This racing simulator weighs in at a hefty 953 kg, which is heavier than a Formula One car: it has three screens and the seat can throw anyone up to 135 kg all over the place (roll, pitch and 360° yaw) at up to half a G, which is pretty impressive for a force feedback system. Three monitors provide you with an immersive view, and you have accelerator, brake, clutch, and wheel with flappy gear paddles from real racing cars. Sound is provided by a 500 watt speaker system. The simulator offers 12 cars from GT to F1 and 16 real courses including the fiendishly tricky Nürburgring.

The Most Realistic Racing Simulator $185,000 www.hammacher.com

Back to the future

H

ere’s your chance to relive that wasted childhood from the eighties! Nintendo are reviving the wonderful 8-bit Nintendo Entertainment System, with all those legendary games: Pac-Man, Donkey Kong, Super Mario, Galaga and Zelda. Nintendo are releasing the NES Classic Edition, a miniaturised version of the original, that comes with a classic controller and 30 pre-loaded games.

Too brilliantly retro to miss. The NES Classic Edition is available on November 11, 2016.

NES Classic Edition $60 www.nintendo.com/nes-classic

ISSUE THREE 2016

41

REGULAR BOOKS

Diplomatic bubble Paul French runs through the contentious issue of who owns what in the South China Sea

T

he July ruling by the Permanent Court of Arbitration in The Hague denied China’s sweeping claims in the strategic seaway and found in favour of the Philippines.

Immediately there was an outpouring of nationalist fury across China and Beijing dismissed the independent court’s decision. Clearly the South China Sea issue isn’t going to go away anytime soon.

Though it has been simmering for a long time it is perhaps worthwhile to catch up on a little background reading on the dispute. Bill Hayton’s The South China Sea: The Struggle for Power in Asia is a good starting point; though a few years old now it is still relevant.

Hayton, a BBC journalist, nicely précises the complexity and absurdity of the South China Sea dispute - which include overlapping claims by Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan and Vietnam. He also shows how the sea route is vital to the longterm interests of all these countries and

“

everyone on either end of the route too.

Hayton shows that the South China Sea is a diplomatic nightmare, and even more so after the Hague ruling, where America perhaps sees China at its most bombastic while China sees America at its most duplicitous (in the belief that America is behind the court’s ruling in favour of its long time ally, Manila).

Sadly ‘intractable’ is a word that keeps cropping up around this subject.

The South China Sea: A Crucible of Regional Cooperation or ConflictMaking Sovereignty Claims? is an edited collection of essays brought together by C.J. Jenner and Tran Troung Thuy. They identify the importance of the waterway right at the start - more than half of global shipping transits the South China Sea, which also holds significant reserves of oil, gas and minerals as well as some of the largest fisheries in the world. Of course all debates, discussions and international rulings are subject to those economic imperatives. This volume is more scholarly than Bill Hayton’s

More than half of global shipping transits the South China Sea

42

”

book and more useful for those looking to understand the legal complexities and ramifications of the messy business of adjudicating the South China Sea. And, finally, we cannot ignore the possibility that the South China Sea could become a zone of conflict quite easily. Richard Javad Heydarian, author of Asia’s New Battlefield: The US, China and the Struggle for the Western believes this scenario is all too possible. For most of the decades since World War II, the Philippines has rested comfortably on the US when it comes to military, security, and foreign policy questions.

But the rapid rise of China as a regional economic and military power has complicated the situation dramatically, and the Philippines is now forced to confront rising tensions and navigate a landscape that is suddenly more complicated. Writing in the Huffington Post, following the Hague ruling, Heydarian believes that China may impose an “exclusion zone” across the area imperilling freedom of fly overs and navigation for regional and external military forces.

This would be resisted by other regional powers and the US and could lead to a dramatic escalation of the arguments over the South China Sea. ●

maritime ceo

TRAVEL

Catalan kudos Sam Chambers has had an on/off relationship with Barcelona. Currently, it’s back on

I

’ll be honest and say it’s taken me a while to fall for the charm of the Catalan capital. A crafty trick years ago involving fake bird poo and a subsequent stolen rucksack with literally my life inside it cast a shadow over Barcelona for me for a long time. And then, just a few months back I hit the beach there, and all of a sudden the city clicked.

For so many of my friends this is the greatest city on Earth – while I would not go that far, I can now see its splendour.

Let’s start with where to stay. If money is no object (which given my access to who receives this magazine – that’s 92% of you!) then I’d go for the W on the Barceloneta boardwalk overlooking the sea, a luxurious skyscraper with sensational Mediterranean views. For those of us who need to keep a more stringent eye on cash then also on the beach a couple of kilometres away is Hesperia Del Mar. Safely checked in head on out (though as a precaution do leave valuables behind – once bitten, twice shy and all that). Now, here’s what I’d do first and it is something that I

ISSUE THREE 2016

“

Highlights in this city are too many to soak up in 48 hours

”

wouldn’t normally recommend. Take a tourist bus. These double deck, open air buses will actually give you a surprisingly brilliant quick flavour of the city and allow you to then pick out favourite neighbourhoods to explore more. The buses stop all round the city and you can get on and off them as you please, and there’s a multi-lingual audio guide to boot.

Highlights in Barcelona are too many to soak up in, say, 48 hours.

This is a city that needs repeat visits.

However, if you want to cram in as much as possible in a limited time here are the places you shouldn’t miss.

Start your day with a trip to La Boqueira, a wonderful market on La Rambla, perhaps the most famous street in Barcelona. An eye-opening experience into why Catalonian restaurants so often are labelled the

best in the world. Make sure you try the raspberry juice.

Adjoining La Rambla is the Gothic Quarter; traipse around this medieval warren for a while before heading on to the Sagrada Familia, Antoni Gaudi’s weird and wonderful basilica that I defy you not to be gawping at for hours just wondering what was flowing through this architect’s head when 130 years ago he had the inspiration for this incredible edifice.

For the health-conscious run between the two hotels mentioned and back along a great track next to the beach. For the less healthconscious, slurp a cocktail on the beach watching all these mad folk running around.

In terms of eating tapas is, of course, a no brainer – El Xampanyet in the Gothic Quarter is unbeatable in this department, plus a decent glass of cava. However, my top pick is more fish-orientated and might look a little unexciting when you rock up, perched on a street corner, but do try restaurant Palermo on Calle Mallorca – a place that keeps me coming back for more. ●

43

OPINION

Awards fatigue Grant Rowles dishes the dirt on the realities of the myriad maritime awards shows and urges sponsors to spend their money elsewhere

D

espite difficult times, leading companies in the maritime industry have shown amazing resilience, remarkable ingenuity, and dedication to safety and best practice.

We’re here tonight to celebrate the achievements of those who have put their best foot forward.”

Wake up! I haven’t been to a maritime industry awards night in years, but I can imagine the opening speeches resonate in this way – the same as they have since publishers started to realise they can make a bigger profit from awards nights than they can from the publications they are pinned upon in order to seem credible.

It is time that the industry recognised that the abundance of maritime awards nights that are being held, probably more than 50 a year these days, are nothing more than big money making exercises. Of course, we’re all here to make money, but let’s not dress these awards ceremonies up and take them seriously as if they are symbols of excellence, judged by industry experts who proclaim your company to be greater than another.

That would be completely false.

As someone who has witnessed many awards from the inside, let’s get this right. They are run by spreadsheets. X amount of sponsors plus X amount of tables. The spreadsheet is far more lengthy than the nominations lists for all the categories (if you enter, there is a better than good chance you’ll be shortlisted although you have just cost yourself a few thousand dollars to buy a table!). The spreadsheet is also far more complex than the nominations and judging forms.

Yes, judges are assembled with good intentions in most cases. Yes, they are presented with all the nominations in an unbiased fashion

ISSUE THREE 2016

to choose the best submissions. It’s the system, which isn’t right. The judges are judging the best submission rather than the best company, because that’s all they have to go on.

It is all about marketing spiel. What else can someone from Intertanko do when judging the container line of the year award, for example?

While the intentions of the judges can’t be questioned, how do you deal with a sponsor paying up to $20,000 who demands they win an award?

Especially when they also advertise in your prestigious, hard-hitting, unbiased publication? Perhaps if the judges don’t select them you can make up an award, maybe a newsmaker or personality award? Maybe an encouragement award? Ever wondered why the night just goes on and on?

It’s difficult to fathom why companies would spend so much money to sponsor one of these awards. For the amount mentioned, you get a table of ten, your logo up on the screen and an advert in that valuable commemorative program amongst other things. You even get to network amongst a room full of other sponsors, also eagerly chasing the very few shipowners or managers in the room.

Maybe, just maybe, your boss enjoys going up onto the stage and taking the limelight for two minutes while he passes the award to the winner and has his photo snapped?

It’s time to put the egos aside, and your money back into something worthy. Invest in safety, education, support a charity, or reward your staff with a beer and a pat on the back.

If you really do want a good night out networking you can support your local shipowners’ association event instead. A table at the Singapore Shipping Association annual dinner costs a fraction of the price of a maritime awards night and over 2,000 people attend.

Hold my hand for ten minutes and I could probably introduce you to half a dozen shipowners – free of charge. ●

45

Maritime Future Summit smm-hamburg.com/mfs

be connected 5 sept 2016 hamburg Hype or revolution?

Digital technologies could transform the whole shipping industry. What are the benefits with regard to efficiency, security and energy savings? What is needed to turn visions into reality?

Hot topics – to be discussed at the all-new Maritime Future Summit.

in cooperation with

facebook.com/SMMfair

linkedin.com/company/smmfair

twitter.com/SMMfair #SMMfair

youtube.com/SMMfair

REGULAR OPINION

Are you fluent in Quality Managementese?

Andrew Craig-Bennett takes Safety Management Systems to task

A

friend spent a year as chief engineer of a North European ferry. The friend in question says that I can use his name, which is Duncan, and he says that I can name the very, very, well known outfit who owned that ferry, and owns an awful lot of other sorts of ships, too, but I feel that perhaps I had better not. You may like to be the judge of this, as you read on.

This particular ferry was, in accordance with company policy, a ‘dry’ ship. As so often happens with ‘dry’ ships, not everyone in the crew was quite as dry as the company might have liked. (At this point a vision rises before my eyes of almost the entire crew of a ‘dry’ containership standing in the bar of the Kwai Chung branch of the Hong Kong Mariners’ Club as sailing time drew nigh, all of them getting just as ‘wet’ as they could manage, and then weaving their way over to the waiting minibus.)

One of Duncan’s colleagues aboard this ferry was so notably un-dry that he managed to report for duty onboard, having left his documents in the taxi. He discovered this some little time later.

Now, Duncan is not without a sense of humour, so before he paid off himself he carefully wrote, printed off, and bound a spoof section of the company SMS entitled, ‘Conduct when Socially Disadvantaged’, using the same type face and formatting as the actual SMS, and left it lying about.

When he re-joined the ship, he found that his spoof had been incorporated into the real SMS, and circulated round the fleet.

From this, Duncan draws three conclusions. First, that ferry company is deficient in sense of humour (but we

ISSUE THREE 2016

all know that anyway); secondly that company’s SMS, like most companies’ Safety Management Systems, is unreadable, so nobody reads it; and finally, in this day and age, any ship carries with her the equipment needed to forge any document that her officers may feel they are in need of, so why on earth do shore inspectors, be they Port State Control folks or any other variety, insist on paper documents?

Anyone disagree with Duncan?

Thought not.

At this point, I have a confession to make. Once upon a time, a very long time ago now, a younger, brighter, and far more bushy-tailed version of myself looked at his then employer’s fleet instructions and was horrified by the thought of what a good barrister might make of them.

Indeed, this bushy-tailed young man wrote a note to his managing director which summarised the fleet instructions as: 1. Thou shalt not carry unmanifested cargo 2. Thou shalt not appear in a passenger space out of uniform 3. Masts shall be painted mast colour.

And with that he volunteered himself and a couple of others for the task of writing a new version.

This was about a decade before the ISM Code came into effect, but I think I can, to my lasting shame, confess to having been aboard that particular bandwagon. I have since jumped off it, because I cannot think of anything in shipping, not even time charter clauses, that has generated quite so much boring, unreadable, garbage.

I have not the slightest doubt about what a good barrister can do with almost every company’s SMS; he will be able to demonstrate that hardly anyone has actually read it, because it is unreadable. It is written in Quality Managementese, a very special language used for programming, not computers, but people.

There is a large and well established cottage industry built on Quality Managementese, and the ignoble thought occurs that the late Douglas Adams might have had some fun with this, had he not died in 2001, at a time when the whole racket was just getting into its stride.

So, what are we going to do about it? ●

47

MARPOLL REGULAR

Your views Our quarterly topical survey saw more than 650 voters take part. Results and spicy comments below Market-based measures are the best way for shipping to tackle CO2 emissions

Refund guarantees should be banned to make shipping less of a casino

“

“

Isn’t it the casino aspect that attracts the risk taking megarich players?

So many other industries have committed to this method.

Why not shipping? What makes shipping special?

”

Agree 59% Disagree 41%

Can computers replace shipbrokers?

Agree 60% Disagree 40%

Have prices for secondhand dry bulk tonnage bottomed out?

“

“

Anyone who buys now must expect to incur trading losses, and most of the ships for sale are junk

Recent development such as Uber, Airbnb, etc should definitely motivate brokers to stay relevant

”

Yes 43% No 57%

No 58%

Has the economic case for 18,000+ teu containerships been proven?

“ No 12%

When an organisation is agile and dynamically adapts to unexpected shocks, it can survive in just about all conditions. The words agile, dynamic and shipping historically have not been typed so close to each other

”

The shift in technology will bring an end to shipping cycles

“

There is a scale limit to everything; VLCCs, A380s, and 18,000 teu might just be the upper limit for containerships

”

Yes 26% No 74%

Should ownership structures in shipping become more transparent?

“”

“

Greed invariably conquers logic

Agree 7%

Yes 88%

Disagree 93%

No 12%

48

”

Yes 42%

Shipping has been using the past to predict the future

Yes 88%

”

The IMO supporting the open register system is akin to touting the purchase of second passports by criminals from dodgy countries

”

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

“Teekay has thrived here.

Canada is admired around the world, and Vancouver is a great place to live.”

Art Bensler, Executive Vice President & General Counsel, Teekay Corporation

No wonder Vancouver attracts the best and the brightest. Canada’s largest port is also the most diversified in North America, with a progressive tax regime, rock solid banking system, top tier services, and a lifestyle that’s the envy of the world. Learn more at vancouverimc.org or contact Kaity Arsoniadis-Stein at kaity@vancouverimc.org

DISCOVER THE VANCOUVER ADVANTAGE.