ISSUE TWO 2019
BY
ping p i h S Nor- ecial rs, Sp n owne s egia lorer Norw and exp t ce ig h finan the spotl in
Ĺžadan KaptanoÄ&#x;lu
Shipping enters a new phase
MANIFEST
3 At The Prow
Economy 4 5 6 8 9
US EU China India Brazil
Markets 11 Dry Bulk 13 Tankers 15 Containers 17 Finance
Executive Debate 18 Where will tomorrow’s seafarers come from?
Profiles 22 Cover Story HI Kaptanoglu Shipping 25 Seaspan
26 Hunter 27 Landbridge 29 Dubai Navigation 31 Uni-Tankers 33 Mitrabahtera Segara Sejati 35 Astro Offshore
Maritime CEO Forum 36 Digital 38 Sulphur cap 40 Dry bulk 41 Tankers
Recreation 42 Wine 43 Gadgets 44 Books 45 Travel
Opinion 46 Santosh Patil 47 Paul Stanley 48 MarPoll
45
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: Paul Collins 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: Mixa Liu Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2018’s four issues of Maritime ceo magazine. Email sales@asiashippingmedia.com for subscription enquiries. Copyright © Asia Shipping Media (ASM) 2019 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: @Splash_247 LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News
ISSUE TWO 2019
Go slow movement is doomed
T
wo wrongs don’t make a right. That was one of my Dad’s most annoying maxims that he’d deploy to drown out arguments with me while growing up. He still does to this day, come to think of it. Still, the phrase has a certain pertinency to it given this past month’s polarised debate on speed limits for ships. One proposal put forward to the International Maritime Organization (IMO) during the May gathering of the Marine Environment Protection Committee (MEPC) promotes the idea of an incentives-driven, goalbased approach to speed up the industry’s decarbonisation process. This concept however is opposed by many owners - more than 120 of them - who signed an open letter to IMO, backing France and Greece’s proposal for global speed limits for ships. The shipowner signatories, a majority of whom are Greek, are not from the liner fraternity. However, they have come up with a proposal to set maximum annual average speeds for containerships, and maximum absolute speeds for the remaining ship types, which take account of minimum speed requirements. The self-serving proposal, long discussed by the shipping community including at last year’s Posidonia, attempts to paint the signatories in a green light, yet I’d be disappointed if it became reality. It’s yet another Band-Aid covering up the gaping wound ships are unleashing on the planet. By being forced to go slow, capacity will be soaked up, rates will rise and new ships with today’s old polluting technology will be ordered soon. This is not a solution to today’s
decarbonisation drive. It is however a very handy hedge for signatories concerned about rising fuel prices come the start of the global sulphur cap next year. I’d also take issue with the part of the open letter sent to the IMO that states: “[R]ecent studies also suggest that ships are speeding up again as global demand recovers”. This is highly debatable and does not pertain to all ship types. The fact is shipping has been in a de facto slow steaming era for the past decade. Data from Clarksons Research shows that that on a general level speeds have come down in tankers and bulkers by 15-20% since 2008 and for containers around 25% over the same period. For me, Anne Steffensen, director general of Danish Shipping, Denmark’s shipowners’ association, summed up the two differing viewpoints – goal-based versus go slow – the best of all when interviewed by Splash. “A goal-based approach gives a level playing field and drives innovation towards new fuel types whereas speed limits will not solve the problem and risk being a sleeping pill,” Steffensen, a former ambassador, said, not mincing her words. IMO delegates at MEPC kicked this can down the road. We’ll hear more about it next year. ●
3
ECONOMY US
A decade of growth America powers on, but analysts are unsure how long the good times can last
O
nce again the US has seen a quarter of pretty good economic growth. Despite the trade war with China and the divided opinions over President Trump both the economy and stock market continue to perform well. Certainly the current resilience of the American economy compared to the generally now perceived slowdown in the Chinese economy appears to give Trump the upper hand in negotiations with Beijing. But, as ever, the two big questions are – 1) is the economy doing well because of, or in spite of, Trump and 2) can this economic growth trend continue? Certainly some of America’s growth is on the back of the president’s tax cuts in late 2017, though that bounce cannot last forever. The US economy expanded at an annualised pace of 3.2% in the first quarter, a much faster rate than anticipated. There was also a spurt in imports due to traders trying to get ahead of any escalation of the trade war with China. However, there are underlying problems that may slow and reverse the growth trend in the near future. Primary among these is that industrial production peaked in December and actually fell in the first quarter of this year, after a strong 2017 and 2018. This is a global problem – China, Germany and Japan are all suffering the same slowdown in industrial production.
Unemployment remains at just about, barring wartime, an all-time low. However, right now America is generating less new jobs than either seemingly more sluggish Europe and Japan. This slowdown in job creation could see unemployment creep back up, weaker consumer confidence and a subsequent slowdown in domestic consumption and retail sales confidence. Supporters of the president’s economic strategy argue that the US economy is still firmly in expansion mode. Analysts admit that this is a decade-long economic growth trajectory since the low of 2008 and runs though both the Obama and Trump terms equally and without any particular help from either president. There was a sharp rise in government spending in the first quarter,
Breakdown of America’s GDP by expenditures, 2018
Sector % of total
Personal Consumption
68.5
Government consumption & gross investment
16.6
Gross private domestic investment
17.7
Net exports of goods and services
-2.7
certainly not called a ‘stimulus’ by the president. Noticeably orders for durable goods rose rapidly in March. The combination of trade and some pump priming got the quarter’s numbers up. Can the next quarter be as good? Inventories are now high compared with sales and this won’t continue for much longer. Rather stocks will be run down. What America needs now is for the president to finally settle the trade dispute with China, not enter into any more trade spats (for instance with the EU), and get back to macro-economic policies. ●
“Shipping needs to learn to celebrate failures from innovations, and to learn from such failures” — Su Yin Anand, cocreator of shipping innovation competition, The Captain’s Table
Source: Capital Economics
4
maritime ceo
ECONOMY EUROPE
Bullets dodged for the moment Brexit might have been postponed, but there’s plenty more to keep Brussels on edge
S
o Brexit was avoided, at least for now. But it’ll be back on the agenda very soon. With Five Star in Italy, far right resurgences in Germany, Austria, Holland, much of Scandinavia and Eastern Europe as well as the gilets jaunes still on the streets of France, the UK’s tortured withdrawal from the union may not be Brussels’s biggest problem by the autumn. Still, economic life must go on. Brexit is essentially now the new normal in the EU. It is quite possible that looming trade wars with both the US and China could overshadow Brexit as the major problem for Brussels. President Trump has threatened to raise US import tariffs to 25% on as much as $525bn of Chinese goods. All this does not benefit Europe and only adds to the continent’s woes. The forecast for slower growth in 2019 from the EU reflects the weaker prospects of certain countries in particular. Italy is forecast to only grow by 0.1% this year, and is also set to breach EU rules for its government budget by a wide margin. Brussels and Rome are at odds already and Italy’s budget deficit rising to 3.5% of GDP in 2020 as economic growth slows, up from 2.5% in 2019, will
The decline in Europe’s growth rate, 2017-2019 Month/year
EU % GDP growth
July 2017
2.8
January 2018
2.7
July 2018
2.2
January 2019
1.5
Source: Eurostat
ISSUE TWO 2019
“
Germany barely missed officially slipping into recession last quarter
”
lead to further clashes. Elsewhere, Germany’s growth rate has been cut to 0.5% for 2019 from a previous forecast of 1.8%, largely thanks to problems in the country’s powerful automotive sector. Germany barely missed officially slipping into recession last quarter. The question vexing European economists is how will the region, with or without the UK, continue to grow, and indeed restart vigorous growth? The Eurozone economy has taken a hit so far this year due primarily to the weaknesses seen in Germany and Italy. The International
Monetary Fund recently slashed its growth forecast for the 19-nation single currency area to 1.3%, down from the 1.8% expansion in 2018. It is also the case that it was hoped by Brussels that a China-EU trade deal could boost growth. However, China’s economy is showing significant signs of rapid slowdown while, due to the ongoing trade war with the US, Beijing has put a European trade deal on the back burner. This may also reflect issues such as Europe’s unease over both Xi Jinping’s Belt and Road Initiative and Huawei and the continent’s telecoms infrastructure. So with limited trade talks, Brexit still to be resolved, economic stagnation in Italy and Germany and the yellow vests still on the streets of Paris it looks like being an uncertain summer for Europe. ●
5
ECONOMY REGULAR CHINA
The trade war bites Beijing is feeling the pain from Donald Trump’s tariffs
T
hings may be getting tougher in China economically but the Beijing government still has an unprecedented number of policy levers it can pull. This quarter it modestly boosted credit which succeeded in strengthening investor sentiment and stabilising real economic activity during the first three months of the year. The growth rates of income, retail sales and industrial production were stronger than in the fourth quarter of last year. It’s also worth noting that while the trade war with America might have been generally running President Trump’s way, it hasn’t been an unmitigated catastrophe for Beijing either. There has also been much talk of a slowdown in consumer sentiment in China. While this does appear to be the case China: Major Export Markets, 2018 Destination
% of total exports
US
19
EU
16
Hong Kong
12
ASEAN
13
Japan
6
India
3
South Korea
4
Others
27
Source: Hong Kong Trade Development Council
6
it is perhaps not yet as serious as some have suggested (though rising personal credit card debt must be a growing concern) and was helped by the government cutting value-added taxes (VAT) and personal income taxes , which offered up a little re-boost to consumer spending. However, the one area of economic policy where the central government seems to have less sway is debt. China’s debt problem is serious. Most bad debts are corporate, rather than household, and are debts issued by state-controlled banks to state-owned enterprises (SOEs). So non-performing loans (NPLs) can, to an extent, be managed. It would be more worrying if the bad debt was in the private sector where most profit is being made and new jobs created. So the government can get a grip on the debt – but it will be an expensive process for China nevertheless. The trade war continues and, given that America’s economic numbers showed growth again in the first quarter, the president may feel emboldened to carry on. However, as the US hikes tariffs on $200bn worth of Chinese goods to 25%, as President Donald Trump and his trade representatives have done, the result has been sudden and devastating. China may now inject stimulus, though many analysts believe this would adversely affect the generally
“
The IMF predicts an all-out trade war could see annual GDP shrink by 1.5% in China
”
important property sector. Still, there’s a lot of residual strength in the Chinese economy. The country remains the world’s largest exporter. However, last quarter’s fall in exports and rise in imports was unexpected by Beijing’s economic planners. Exports dropped 2.7% in April versus a forecast 3% increase, while imports expanded by 4% compared to a projected slip, according to the Chinese Customs Administration. The US (unsurprisingly given the trade spat), Japan and South Korea were the overseas markets that saw Chinese export demand slump most. This does indicate that the IMF is right when it calculates that an all-out trade war scenario between Washington and Beijing could see annual gross domestic product shrink by as much as 0.6% in the US, but by 1.5% in China. At the same time, the rising import numbers reveal China’s continuing reliance on overseas markets for basic commodities and energy – the three fastest growing import sectors were crude oil, copper and coal. ● maritime ceo
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ECONOMY INDIA
Fade in India The Made in India campaign has lost its way
D
espite a political scandal indicating that the government of Narendra Modi might have been manipulating economic data in India, the news is that India’s economy slowed in the first quarter of the year. The culprits were primarily a declining growth in private consumption, a poor increase in fixed investment, and disappointing exports overseas. India’s Central Statistics Office (CSO) issued its Q3 national account data revealing a downward trend in the growth estimate for FY19 to 7% from 7.2%, the lowest in the past five years. Agriculture also performed poorly over the first quarter – a major employer in India and the backbone of the vast rural hinterland economy. More worrying though for longer term growth and economic health is the state of India’s exports, which had peaked to $314.88bn in 20132014, and had declined to as low as $262.2bn in 2015-2016 before recovering partially to $303.3bn in 2017-2018. This small recovery is obviously still way short of the 2013-2014 numbers. And it is an industry-wide problem – passenger car production grew just 3% in a year; car sales declined by a full 8% in the last quarter of 2018. Petrol consumption had its slowest
8
Indian GDP growth – 2014-2019 Fiscal Year
% growth
2014-2015
7.4
2015-2016
8.0
2016-2017
8.2
2017-2018
7.2
2018-2019
7.0*
Source: Indian National Bureau of Statistics *=estimate
sales growth in seven quarters; finished steel production was the lowest in five years. Job creation is looking worryingly wobbly and all this, of course, filters through inevitably to consumer confidence and retail sales. New investment is at a decade low. Now GDP is projected to grow this year just shy of 7%, a per cent less than the central calculated 8% in 2015-2016. Electricity generation, another indicator of industrial activity, grew by 3.5% in 2018-2019, the lowest in the past five years. So where are the good indicators in the Indian economy this quarter? Well, real estate performed well – both commercial and residential while India’s currently high interest rates provide an opportunity for monetary policy intervention by kick-starting growth via more
preferential lower interest rates. Still, most analysts and the government statistics body believe India’s slowdown will continue for some time yet. Most point to the old problems – over regulation, government interference, regulators who become controllers and lack of economic vision in New Delhi. A major problem for the domestic economy is also the income growth slump in urban and rural areas that is forcing people to slow or postpone their consumer spending. This is being seen not just in big ticket items like cars and appliances but across multiple food and nonfood categories in supermarkets and convenience stores nationwide. Hindustan Unilever chairman Sanjiv Mehta succinctly made the point recently: “People don’t stop bathing or cleaning their teeth when conditions become tough. What happens is the number of brands in a family gets reduced —instead of using larger packs, they shift to more price-point packs. That’s the kind of shift that happens.” India needs to get spending again, and soon to avoid losing the gains of the consumer sector in balancing the economy better in recent years. ● maritime ceo
ECONOMY BRAZIL
An age-old problem The country’s pension system needs an urgent overhaul with the number of Brazilians over the age of 65 set to jump to 25.5% of the population by 2060 from just 9.5% today
E
merging markets veteran analyst Mark Mobius may be betting on Brazil and controversial President Jair Bolsonaro but few others are. Mobius’s confidence comes from his belief that Bolsonaro is serious about reforming Brazil’s much troubled pension system and that he can start investment flowing into the country again. That is not the majority view. Most analysts, including the likes of Goldman Sachs and JP Morgan, see little prospect of serious pension reforms, not much in the way of a consumer confidence rebound and a serious continued decline in industrial output. Indeed in March industrial production fell by more than double analysts’ expectations with a 1.3% decline year-on-year despite record low interest rates. All this is according to the country’s national statistics bureau. Most analysts now expect gross domestic product to contract 0.2% in the first quarter of this year from the previous period. The persistence of double-digit unemployment, just over 12%, and little sign of new job creation, is adding to the country’s continuing woes and obviously dampening already poor consumer Brazil’s rising jobless rate - December 2018 to April 2019 Month
% jobless rate
December 2018
11.6
January 2019
12.0
February 2019
12.4
March 2019
12.7
April 2019
12.9
Source: Instituto Brasilero de Geografia et Estatistica
ISSUE TWO 2019
sentiment. Continuing the misery the national statistics bureau also announced that Brazil’s economy got off to an extremely slow start in the second quarter of this year. To add to poor consumer confidence and low industrial output, activity in the all-important services sector contracted in April for the first time since September last year. The services sector noted lack of promised reform of government policies, low privatisation rates of state industries and a growing spate of bankruptcies in the sector as major issues. Services account for around 70% of Brazil’s economy. It is perhaps worthwhile explaining briefly why pensions reform is so crucial in Brazil. The country’s pension expenditures are considerably higher compared to other Latin American and emerging economies. Add to this a rapidly ageing population and more pensioners
with less productive workers to subsidise the pensions pot. Brazil spends the equivalent of 13% of gross domestic product on social security, well above the average of 8% for G20 nations. Brazil needs to act now and so any delay by Bolsonaro worries investors. In stark terms, according to the national statistics agency, the number of Brazilians over the age of 65 will jump to 25.5% of the population in 2060 from just 9.5% now. On current expenditures this will crash the national economy. Bolsonaro needs to save at least $260bn over the next 10 years to even start to get the national accounts in order. Agriculture is an important employer, but only accounts for about 6% of GDP. Meanwhile, the crucial industry and service sectors rely on a competitive Real and inward investment. Neither of these are forthcoming at the moment, and won’t be until the new president deals with the national accounts. ●
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MARKETS DRY BULK
How to explain the handymax sales rush? Commodore Research’s Jeffrey Landsberg tries to get to grips with a quirk in the S&P scene this year
N
otable in the dry bulk market recently is that there has been a significant surge in handymax (including supramax and ultramax) deals in the S&P market. April saw a total of 31 handymax vessels trade hands in the S&P market. This marks the largest amount of deals seen in any of the four major dry bulk segments since October 2016. Sentiment in recent weeks had been improving in the dry bulk market, and handymax activity in the S&P market has been particularly brisk. The 31 handymax deals that were completed in April exceeded the 23 handysize deals that were completed during all of Q1 and dwarfed the one capesize deal that was completed. In addition, it came fairly close to matching the 37 handymax deals that were completed during Q1 and fell just moderately short of the 43 panamax deals that were completed. It is not often that 30 or more of any type of dry bulk vessel trades changes hands in a given month. This did not occur at all in 2018 and occurred only twice in 2017 (March 2017 saw 30 panamax deals completed and September 2017 saw 30 handymax deals completed). Whenever such a robust amount of deals are completed, this almost always occurs in an environment where freight rates are rising. March 2017, for example, saw panamax rates increase by 38% and September 2017 saw handymax rates rise by 18%. April, however, saw handymax rates decline by 6% — but that did not stop a very large amount of handymax
ISSUE TWO 2019
deals from being completed. Sentiment in the handymax market experienced a significant boost in April, even as handymax freight rates were decreasing. Sentiment has remained rather optimistic in May as well, with a large amount of handymax deals continuing to be completed. Overall, though, we remain concerned regarding the ongoing growth in the handymax (including supramax and ultramax) fleet and also the growth in panamax fleet. Already, the handymax and panamax fleets have grown by a net addition of 65 vessels during just the first four months of 2019. The first four months of this year have seen the handymax fleet grow by a net addition of 24 vessels (27 handymax vessels have been delivered and three handymax vessels have been scrapped), while the panamax fleet has grown by a net addition of 41 vessels (44 panamax
vessels have been delivered and three panamax vessels have been scrapped). Sentiment has been particularly bullish in the handymax sector, but we continue to anticipate that handymax and panamax fleet growth issue will have more of an impact on these segments later this year. It remains only the capesize fleet that is undergoing a small contraction. ●
S&P deals by vessel type (April 2018 - April 2019) 40
30
20
10
0
Apr May Jun Capesize
Panamax
Jul Aug Sep Oct Handymax
Nov Dec Jan Feb Mar Apr
Handysize
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MARKETS TANKERS
What are we waiting for? The sulphur cap might not be the silver lining many in the tanker sector are hoping for, argues BIMCO’s Peter Sand
I
running their engine on MGO inside n the tanker shipping industry, existing ECAs, but everyone is aware particularly the oil product of a potentially ‘revoked licence to tanker sector, and amongst selltrade’, if they do not comply to the side investment bankers, we are only regulation. waiting for an IMO 2020 best case In the meantime, we should scenario to play out. As is if there are soon be seeing some well-mainno alternative scenarios. The best tained refineries getting back online case being where the transportation to deliver higher global refinery demand will grow steeply as clean cargoes of compliant fuel are distrib- throughput. First, west of Suez, and secondly east of Suez. uted, while the entire fleet is slow Following the dip in February steaming and capable of passing on and March, US refineries are only all the extra fuel costs to clients. Alternative scenarios would con- slowly increasing their input of crude oil. By the first week of May, inputs sider heavy sulphur fuel oil trading stood at a three-year low (16.4m barlong range tankers being cleansed rels per day). They are clearly behind for trading in MGO and low sulphur when comparing to a normal season. fuel oil clean oil without impacting Reading this while wearing my ‘optianything in the market. This is in mistic spectacles’, it bodes well for a addition to the current overcapacity stronger second half in the making, in the market and effects that may while reading it while wearing my inflict on the shipping industry’s ‘pessimistic spectacles’ it seems ability to recoup the higher bunker that they are in no hurry to increase costs from costumers. output due to weak export demand. IMO 2020 is a risk that everyone US refined oil product exports grew needs to handle carefully in terms by just 1.4% in January-February. of cost, reputation and technical During the same two months of 2018, issues. Some have dealt with these Weekly U.S. Refiner Net Input of Crude Oil exports grew by 4.3%. issues by buying a scrubber, some https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRRIUS2&f=W Putting this into perspective have already gained experience from
Thousand barrels per day
15:12:17 GMT+0200 (Central European Summer Time) Source: U.S. Energy Information Administration Weekly US Refiners net input of crude oil Weekly U.S. Refiner Net Input of Crude Oil Thousand Barrels per Day Week of 2017 - 2019 5/3/2019 16405 3/5/2019 19,000 04/26/2019 16446 26/4/2019 04/19/2019 16583 19/4/2019 18,000 4/12/2019 16078 12/4/2019 4/5/2019 16100 5/4/2019 17,000 03/29/2019 15849 29/3/2019 03/22/2019 15831 22/3/2019 16,000 03/15/2019 16198 15/3/2019 3/8/2019 16020 8/3/2019 15,000 3/1/2019 15990 1/3/2019 02/22/2019 15890 22/2/2019 14,000 02/15/2019 15711 15/2/2019 2/8/2019 15768 8/2/2019 13,000 2/1/2019Jan 16633 1/2/2019 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 01/25/2019 16463 25/1/2019 2017 2018 2019 01/18/2019 17049 18/1/2019 Source: BIMCO, EIA 1/11/2019 17223 11/1/2019 1/4/2019 17566 4/1/2019 12/28/2018 17760 28/12/2018 12/21/2018 17350 21/12/2018 ISSUE TWO 2019 12/14/2018 17408 14/12/2018 12/7/2018 17436 7/12/2018 11/30/2018 17487 30/11/2018
data from Eurostat shows that in the first three quarters of 2018, 91.6% of EU imports of US refined oil products were imported by six countries: the Netherlands, Belgium, France, United Kingdom, Spain and Italy. Imports to these six countries amounted to 9.5m tonnes, with the rest of the EU taking 0.9m tonnes. Of the six largest EU importers, two are in southern Europe, with imports going in through the Mediterranean, three are centred around the North Sea, with imports to France coming in from both north and south. Imports into southern Europe rose by 69.9% in the first three quarters of 2018 compared to the same period in 2017, while in the same periods, imports into northern Europe fell by 21.2%. However, imports into northern Europe remain higher than those by the south: 6m tonnes compared to 3.5m tonnes respectively. It’s never a shipping story without China being included however. In 2018, China exceeded OECD Europe in terms of refinery throughput for the first time. While China seems ever rising, OECD Europe has been stable at 12m barrels a day since 2015. ●
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MARKETS CONTAINERS
Shippers can take advantage of BAF variation Lars Jensen from SeaIntelligence Consulting explains how savvy clients can game sulphur cap surcharges
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more transparent than the ones being used in 2011-2014 – but that is perhaps scant comfort as transparency was almost nil back then. But at least it is clear that the BAF changes are directly correlated with the changes in fuel prices. And herein lies an opportunity for the risk-savvy shipper. Even though the carriers’ formulas are directly linked to the fuel price change – the sensitivity is not the same. Some rise (and fall) faster than others. As an example, when the oil price increases by $100 a ton, MSC’s BAF on Asia to Europe increase by $62 per teu. But the same fuel price increase would only result in a BAF increase of $39 per teu with Hapag-Lloyd. All carriers have different sensitivities. And it varies from tradelane to tradelane who is more or less sensitive. A shipper could therefore design a strategy whereby they would have a certain amount of volume they would be ready to shift between carriers as the oil price changes. When the oil price increases, they could shift more volume to the carriers with low sensitivity, thereby seeing more modest BAF increases. When the oil price drops, they could shift more volume to the carriers with 100 200 300 400 450 500 525 high sensitivity and thereby see a Asia-North Europe 248 279 310 MSC Freight rate saving example Asia-Eur. larger262drop in all-in rate levels. 213 Hapag-Lloyd Switching 33% of cargo between MSC and Hapag Lloyd The figure shows a practical 0.0% example using MSC and HapagHapagTotal rate -0.1% HapagMSC Lloyd Hapagpaid with Lloyd for cargo from Asia to North MSC BAF Lloyd BAF Baserate Baserate MSC total Lloyd total 1/3 split -0.2% 300 248 213 900 980.6 1148 1193.6 1163.2 Europe. A shipper agrees a contract 325 263.5 222.8 900 980.6 1163.5 1203.4 1176.8 -0.3% 350 279 232.6 900 980.6 1179 1213.2 1190.4 with both carriers when the oil 375 294.5 242.4 900 980.6 1194.5 1223 1204 -0.4% 400 310 252.2 900 980.6 1210 1232.8 1217.6 -0.5% 425 325.5 262 900 980.6 1225.5 1242.6 price 1231.2 is at $500 per ton. At this point 450 341 271.8 900 980.6 1241 1252.4 1244.8 -0.6% 475 356.5 281.6 900 980.6 1256.5 1262.2 the1258.4 shipper agrees a base rate with 500 372 291.4 900 980.6 1272 1272 1272 -0.7% 525 387.5 301.2 900 980.6 1287.5 1281.8 each 1283.7 carrier leading to an identical 550 403 311 900 980.6 1303 1291.6 1295.4 575 418.5 320.8 900 980.6 1318.5 1301.4 1307.1 all-in rate for the two carriers. In the Bunker fuel price (USD/ton) ith the low sulphur rules being just over half a year away – and the actual physical switchover slightly less than that – the carriers continue to strive to implement their new bunker surcharges into contracts. And, yes, some have new names and acronyms for the low sulphur surcharge, but for simplicity, I will call it BAF in this article. First of all, let’s be clear that if the fuel prices increase as expected there is no way the carriers can absorb the added cost. This has to be passed onto the shippers. Secondly, let’s be equally clear – the shippers are most certainly able to pay the added price. If fuel prices increase by $200 per ton, which is the current expectation, this would simply bring the price back to the level we saw in 2011-2014. In 20112014, freight rates were generally higher than now, and hence shippers did indeed pay the higher cost of fuel without their businesses suffering as a result. The only thing which has happened since is that fuel prices have declined, and the associated savings have been passed onto the shippers in the form of lower freight rates. Thirdly, the BAF formulas proposed by the carriers are clearly
700
1334 1349.5 1365 1380.5 1396
675
650
625
980.6 980.6 980.6 980.6 980.6
600
ISSUE TWO 2019
575
900 900 900 900 900
550
525
500
475
330.6 340.4 350.2 360 369.8
450
425
434 449.5 465 480.5 496
400
375
350
325
300
600 625 650 675 700
1311.2 1321 1330.8 1340.6 1350.4
1318.8 1330.5 1342.2 1353.9 1365.6
baseline each carrier gets 50% of the cargo. However, the shipper could also choose to give only 33% to each carrier. The remaining 33% would go to Hapag-Lloyd if the oil price increases and to MSC if the oil price decreases. This leads to a net saving for the shipper compared to the fixed 50/50 split by utilising the difference in BAF sensitivity. This of course assumes the underlying base rate agreed is kept fixed. All it requires for a shipper to pursue such a strategy is to develop an internal BAF risk management tool to quantify the exposure to BAF sensitivity across tradelanes, as well as a willingness, and ability, to shift a certain portion of the cargo between carriers. For the carriers, this poses a clear threat to their pricing strategies. If they were to mitigate this effect while maintaining their BAF formulas, they would create a de facto leak between the BAF and the base rate, undermining the use of BAF as a hedging tool (also a problem they had before 2014). Alternatively, they would have to hold all their shippers perfectly to the agreed volume commitments – both upwards and downwards and split by tradelane, something which they have never had much success in doing in the past. New tools such as NYSHEX provide for such mutual commitments, but this would require a shift from the traditional contracts to the new type of binding two-way commitments. All in all, realistically this means that until the market settles post-2020, shippers clearly have an opportunity to use the spread in BAF sensitivity to their own advantage. ●
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MARKETS FINANCE
Nor-Shipping ought to celebrate finance achievements Dagfinn Lunde lists the reasons why Oslo is so important for shipowners seeking to raise capital
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’m more involved in this year’s Nor-Shipping than normal, helping Jannis Kostoulas get his first Oslo Mare Forum up and running. What I can’t help noticing – and alright, I admit maybe it’s just my banking background - but aren’t the organisers missing a trick with this edition of the 54-year-old show? The strongest theme being marketed is all about green and blue shipping, followed by innovation and digitalisation. I get that Nor-Shipping always tries to position itself ahead of the maritime trend curve, but surely greater focus on one of the country’s greatest strengths over the past decade – finance – would not have gone amiss. Think about it, outside of Chinese leasing, what has propped up shipping investment strategies more in recent years than Oslo institutions? Norway has been a saviour for global shipowners seeking capital without being beholden to the small print of Chinese lessors. The financing landscape of Norwegian shipping-related banks has of course changed irrevocably lately. From first quarter statistics this year it seem that it’s just Nordea now operating in the international bank syndicate market. DNB has been hugely reducing its exposure over the past five years, while interestingly, Hans Christian Kjelsrud, Nordea’s very successful shipping head for many years, has jumped ship to SEB, a Swedish bank rapidly rising
ISSUE TWO 2019
up the ship finance charts. In terms of other Oslo ship finance brands, there is of course Pareto Bank and Maritime & Merchant Bank who are both more focused on project finance for the KS/DIS markets. DNB, Nordea and now DVB have withdrawn from the project market, focusing now on corporate lending to bigger customers. Still, the real saviour for finance for shipping has not been Scandinavian banks but the Norwegian capital markets and what is very interesting is these projects are joined by a crowd of very knowledgeable people who have a long shipping background. I’d say it’s actually unique how deep the investor base is from shipping families in and around Oslo. The Oslo Børs has done fantastically well, a model for other stock exchanges keen to get shipping involvement. It’s an amazingly convenient process to get onto the first rung, the Merkur Market, it can take less than a week, followed by moving on to the OTC then onto a full listing. It’s an easy process and you deal with intelligent, knowledgeable investors unlike what some Greeks say about the US market, which by the way has been closed for shipping IPOs for five years now. There’s also a very deep bond market in Oslo, both for secured and unsecured offerings, that is a
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It’s unique how deep the investor base is from shipping families in and around Oslo
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continuously nice and liquid market. There are some very high class arrangers in this market including brand names such as Clarkson Platou, Pareto, Fearnleys, NRP, Cleaves and Arctic who all can tap big players to buy in to capital-raising exercises – both for bonds and equity. This is a market that moves fast; blink and you miss an opportunity. I was invited to a very good equity project the other day and it was closed in just 24 hours. Keep your eyes peeled when in Oslo this June, there’s plenty to buy into. ●
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EXECUTIVE IN PROFILE DEBATE
Philippines’ dominant crewing position comes under threat Demographics, economics and regulations are compromising the world’s top source of seafarers
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he Philippines, the world’s dominant source of seafarers this century, is coming under severe pressure with the number of deployed crew dropping drastically last year and a host of top managers telling Maritime CEO that the country’s manning preeminence is under threat. Provisional data from data from the Philippine Overseas Employment Administration (POEA) showed that seafarer deployment dropped by
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111,961 last year to 337,502, a huge 25% drop with India, Indonesia and Bangladesh among the nations moving to fill the gap. The Philippines’ competitiveness when it comes to crewing has eroded down to cheaper alternatives coming
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on the scene, greater red tape and a drop in training and skills standards, which once again has put its accreditation by the European Maritime Safety Agency (EMSA) at risk. Commenting on the statistics, Captain Pradeep Chawla, managing
Philippine authorities are still struggling to bring their maritime education, training and certification system in line with international standards
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maritime ceo
EXECUTIVE IN PROFILE DEBATE
director of training at shipmanagement giant Anglo Eastern Group, says that the world’s crewing needs will always find cheaper solutions and the Philippines is consequently now at risk. Seafaring remains a key pillar of the local economy with the billions of dollars sent home by crew from across the world. Chawla says the declining numbers out of Manila are down to the “constant quest” by shipowners to reduce manning costs.
ISSUE TWO 2019
“There is some concern about the results of the EMSA audits,” Chawla adds, saying also: “The reputation of the ambulance chaser lawyers of the Phillipines is also a factor.” Indonesia has seen a noticeable growth in crew being deployed on international deepsea ships recently, with wages there around a third cheaper than in the Philippines. Thomas Wissman, who heads up US consultants Wissmann & Associates, says Indonesia has been rapidly gaining a crewing reputation as the new Philippines. Nevertheless, Indonesia remains a country with tricky governance, which might stymie crewing levels growth, Carl Schou, the head of Wilhelmsen Ship Management, observes. Kishore Rajvanshy, the veteran head of Hong Kong manager Fleet Management, a company that has up to 5,000 Filipinos on its books, says the crewing data from Manila is likely down to a mix of macro-economic issues and recent government rules and policies affecting the hiring of Filipino seafarers. The Philippines has maintained a healthy GDP growth rate of over 6% in recent years. The unemployment rate has fallen from levels of 8% in 2010 to 5.1% by the end 2018. This trend shows a growing demand for a larger workforce to meet domestic consumption, Rajvanshy observes. “Recent policies and various on-the-ground realities involved in the hiring of Filipinos is adding no comfort,” Rajvanshy says. Wages are still on the rise for Filipino crew while the local currency has declined against the US dollar by 17% over the last four years. Moreover, Filipino manning agencies have to pay additional compulsory government contributions to the local social security and health systems as well as a housing development fund. These payments have shot up recently, increasing the cost disparity with other crewing nations. Allan Falkenberg, group managing director of crew management
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The reputation of the ambulance chaser lawyers of the Phillipines is a factor
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at V.Group, hits out at the nation’s spotty training standards when contacted by Maritime CEO. “Philippine authorities are still struggling to bring their maritime education, training and certification system in line with international standards, despite substantial efforts in recent years. As a result, the European Commission has issued a warning saying that failure to comply with the European Maritime Safety Agency’s standards for the implementation of the STCW Code will lead to the possible ban of Filipino officers from EU-flagged ships,” Falkenberg says. Falkenberg says this has been compounded by inconsistent administration of POEA regulations by Philippine authorities and increasing competition from other nations such as China, Indonesia, India and Ukraine. Ukraine specialist Henrik Jensen, crew manager of Danica Group, has seen for himself the recent changing demands favouring East European crew, not just officers, over Filipinos. “We currently have Ukrainian crew replacing their Filipino peers on vessels,” Jensen says. Jensen says he has owners on his books who have replaced all their junior officers with Ukrainians and Russians to ensure their promotion pipeline. To reverse the trend across the Philippines, Fleet’s Rajvanshy calls for serious efforts to be made to address the concerns between the seamen employment regulators in the Philippines, the manning agencies and the end-user – the shipowners. The crewing industry in Manila is aware of the threat posed from overseas. How it counters this is another matter entirely. ●
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IN PROFILE
Erik Frydendal p.26
Bing Chen p.25
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
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maritime ceo
IN PROFILE
Per Ekmann p.31
Şadan Kaptanoğlu
Sanjeev Verma
p.22
p.27
Lars Jorgensen p.29
Mark Humphreys p.35
Susana Germino p.33
ISSUE TWO 2019
21
COVER STORY
New BIMCO boss sets out her agenda Şadan Kaptanoğlu is already making her mark heading up the world’s largest international shipping association
Ş
adan Kaptanoğlu just has to look and listen to her two daughters around the dinner table for leadership inspiration for what will be a key part of her career coming up. The Turkish shipowner, now
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among the most high profile names in shipping thanks to a landmark vote in May, recounts how her offspring question where everything put in front of them to eat comes from, how it was made and its environmental impact. “They’re far more
We’re sitting targets unless we make and reach our own GHG targets
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concerned about the planet, I’m so proud of them,” Kaptanoğlu says in an exclusive interview from Istanbul with Maritime CEO, days after she was conferred with one of the top positions in global shipping. After 114 years BIMCO, the world’s largest international shipping association, finally has a woman in charge, and, in Kaptanoğlu, the organisation has someone who will champion the industry in her own unique way. maritime ceo
IN PROFILE
Kaptanoğlu, managing director of Istanbul-based HI Kaptanoglu Shipping, was elected president at the association’s annual general meeting in Athens this May. Moreover, Sabrina Chao from Hong Kong shipping line Wah Kwong was voted to become president-designate of the organisation whose members account for approximately two-thirds of the world’s merchant tonnage. “It will be a close collaboration,
ISSUE TWO 2019
and it’s great to have a women after me. If it had been just me, just one woman, well that would have looked like a show. We have to bring as many women as possible to board level in shipping,” says Kaptanoğlu of her successor. On shipping’s gender imbalance, Kaptanoğlu glances down at a photo on her desk of her two daughters, smiles, and tells Maritime CEO that unless the problem is fixed fast shipping will struggle to attract the best of the next generation’s workforce. “Mentoring, emotional leadership, balancing things out, these are the qualities of women,” she says. “We’re the best for reaching out for youth, so we need more women at board level. We all know women are capable, it is now time for the world’s shipowners to be brave.” Kaptanoğlu’s two-year tenure at BIMCO will have a strong environmental focus. The Turkish shipowner takes the reins from Greek owner Anastasios Papagiannopoulos (pictured) and will be leading the organisation through the sulphur cap and towards 2030 decarbonisation targets set out by the International Maritime Organization (IMO). Typically when someone is elected to the BIMCO presidency, Kaptanoğlu relates, they’ll champion one or two major causes. For Kaptanoğlu, the environment will be front and centre of her time at the shipping body. “We will be under a storm of regulations about the environment. It is also my passion,” she says. Ballast water regulation will, in hindsight, look easy with other rules coming in, Kaptanoğlu says. The sulphur cap will take 18 months or so to iron out from implementation, Kaptanoğlu predicts, whereas the whole decarbonisation debate is a “far, far bigger” issue. The BIMCO perspective when it comes to the contentious, topical issue of cutting greenhouse gases from ships, according to its new president, is all about maintaining level playing fields and creating an environment for innovative solutions. “We’re sitting targets unless we
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HI Kaptanoglu Shipping Turkish tanker operator and owner of three local shipyards. Family-run business stretches back more than 100 years.
make and reach our own targets,” the BIMCO boss warns, elaborating: “One thing that’s very important is we have to speak our minds, but need to find solutions together before others regulate for us.” The trick will be in harnessing cross-sector collaboration, Kaptanoğlu believes, admitting: “It will be one hell of a road coming up.” As for her own company, which has been through some financially rough times this decade, the aim now is both diversification and stability. Tankers and shipyards are the bulwark of the business these days, away from the company’s bulker roots. The group now has three yards in Turkey involved in maintenance, repair and building. Kaptanoğlu says her family-run company, whose roots date back to the start of the 20th century, will eventually come back to its bulker heritage, but it might take time. “We are emotionally invested in shipping, but that does not mean that we have to be emotionally invested in any one ship type,” she says, wrapping up the interview. Dinner with the kids – and presumptive heirs to her shipping empire – awaits. ●
“The industry must grow up and become more technically mature and robust” — Michel van Roozendaal, president of MacGregor
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IN PROFILE
Seaspan eyes LNG An exclusive interview with the world’s largest lessor of boxships
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est known for its pioneering containership investments, Vancouver-based ship lessor Seaspan Corporation is diversifying under new management, with LNG seen as a potential new direction. Nevertheless, despite headwinds the company remains optimistic that the market fundamentals for its largest source of business, boxships, remain solid. “We have seen the container shipping sector is fundamentally improving from the demand and supply perspective,” Bing Chen, CEO of Seaspan, says. Chen was appointed as president and CEO of Seaspan in January 2018 following the departure of co-founder Gerry Wang. Prior to joining Seaspan, Chen was the chief executive officer of BNP Paribas China after serving as general manager of commodity trader Trafigura’s China operations. Chen believes a projected 3.3% growth of global GDP and a 3.4% global trade volume growth bodes well for the container shipping sector. “Overall, the growth is still there but the supply side needs to be rather disciplined. If you look at the newbuilding market it is still at record low level,” Chen points out. For the rest of 2019, Chen holds
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Seaspan Vancouver-based ship leasing giant backed by the Washington Corporation. Currently operates 112 vessels with a total capacity of more than 900,000 teu.
ISSUE TWO 2019
a cautiously optimistic view boosted by the upcoming peak season and the IMO 2020 sulphur cap. Chen also sees in general the financing in the market is becoming much more rational from a risk-return perspective. “It is a healthy development going forward. A lot of times oversupply is partly fuelled by easily accessible capital, but capital is gradually become rational ,” Chen says, adding that financing will continue to evolve going forward, and the capital will be more selectively invested in the assets and businesses that is more resilient in terms of value and business model. In May, Seaspan completed a new $1bn portfolio financing program, which could be increased to $2bn through additional commitments under a revolving credit facility and term loan facility. Net proceeds from the program will be used to repay 12 secured credit facilities, for general corporate purposes, and may be used in part to finance the acquisition of vessels. Seaspan currently operates 112 vessels with a total capacity of more than 900,000 teu. According to Chen, Seaspan currently has over 80% of its capacity on long-term charter with an average five-year contract in place. Regarding the hot issue of dealing with the upcoming IMO 2020 regulations, Chen reckons ships with more than 10,000 teu capacity are likely to be candidates to install scrubbers. For smaller vessels it’s not economically justifiable, he says. “Going forward in the next few years, we have seen increasing interest for LNG fuel or dual fuel vessels for both economical and environmental reasons,” Chen says. Chen confirms that the company
is looking at LNG as part of the company’s potential diversification plan. Earlier this year, Seaspan signed a $200m investment agreement with Singapore’s offshore vessel company Swiber, which has been under judicial management since 2016, as part of a restructuring plan for the latter. Under the agreement, Seaspan will pay an initial tranche of $10m to Swiber and a second tranche of $190m will be used to subscribe for preference shares in Swiber’s subsidiary Equatoriale Energy, upon securing the development stage of an LNG-to-power project in Vietnam and achieving major project milestones. “We are investing in the company’s future,” Chen says. In 2018, Swiber decided to venture into the power business and is working on an LNG-to-power floating solution. The company has designed a so-called Gen Blue floating LNG power plant and is looking to integrate the storage of LNG, regasification, and gas-fired power plants onto a single vessel, which Seaspan has identified as an attractive investment. ●
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IN PROFILE
VLCC prowl The CEO of Arne Fredly’s Hunter Group explains what’s the plan with this new tanker owner
P
roving once again what a brilliant asset player he is, Norwegian tycoon Arne Fredly revealed in late May he’s closing in on a deal to offload a pair of VLCC resales, pocketing a stunning $25m profit in the process. Fredly set up Oslo-listed Hunter Group as a pure-play VLCC company early last year, rebranding another company called Badger Explorer. He has since ordered eight scrubber-fitted VLCCs at Daewoo Shipbuilding & Marine Engineering (DSME). Two of the ships on order, which Fredly contracted for $85.5m each, are now close to being sold to an undisclosed party, Hunter stated in a release to the Oslo Bors, at an en bloc price of $196m. According to Erik Frydendal (pictured), CEO of Hunter Group, the plan for the remaining ships, which will deliver later this year and into 2020, is to operate the vessels in the spot market. “We believe it will be the best way to maximise the profit from our scrubber-fitted vessels,” says Frydendal, whose background was
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Hunter Group Created by Norwegian investor Arne Fredly last year as a VLCC pure-play with eight tankers delivering soon from DSME.
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in finance before being tapped by Fredly. Frydendal believes the VLCC market will remain weak for the remainder of the first half of 2019 due to continued production cuts from OPEC, refinery shutdowns/maintenance ahead of IMO 2020 and lots of newbuilding deliveries. “For the second half of 2019 when we get our vessels on the water, we are much more optimistic. We believe refineries will come back on line, ramping up distillates output ahead of IMO 2020. OPEC will most likely reverse its cuts and
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newbuilding deliveries will slow significantly,” Frydendal maintains. Additionally he expects a sizeable number of vessels to come off-hire due to scrubber installation. “All in all, we expect a significant improvement in the supply/demand balance, which should be good for rates,” he says. Frydendal reckons that opting for scrubbers and being able to run on HFO will be the most environmentally friendly solution, as well as the most cost-effective solution for Hunter Group, adding that the company is concerned about the quality of the blends and does not intend to experiment with mixing blends. “We do not believe the price of LSFO will be priced at a small premium to HFO, but rather at a small discount to MGO. Keep in mind that in order to produce one unit of LSFO you require about 80% MGO and 20% HFO, and the price of LSFO should reflect that,” Frydendal says. Going forward, Frydendal says the company is quite satisfied with the current fleet, and has no immediate plans to broaden it. “Our target is simply to provide our shareholders with good returns, so we will do our best to maximise shareholder value,” Frydendal concludes. ●
We do not believe the price of LSFO will be priced at a small premium to HFO, but rather at a small discount to MGO
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maritime ceo
IN PROFILE
Landbridge builds on the Belt and Road An up and coming private Chinese VLCC player has grand ambitions
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izhao-based Landbridge Group, a diversified multinational group specialising in port infrastructure, logistics, oil and gas, shipping and petrochemical industries, is gearing up to grab the opportunities from China’s grand Belt and Road Initiative to further expand its business with a competitive VLCC fleet. The company currently owns six VLCC tankers. Four VLCCs are in the water now and another two are set to be delivered by Dalian Shipbuilding Industry Co this year. According to Sanjeev Verma, managing director of Landbridge Ship Management (HK), three of the company’s vessels are running in the VL8 pool while the remaining three are going to be time chartered out. The newbuildings are financed by both equity and lease finance under sale and leaseback structures. In May, Landbridge sealed a sale and leaseback deal with investment firm Värde Partners for one of its VLCCs. “Landbridge Group is probably one of few shipping companies having presence across upstream, downstream and energy
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Landbridge Diverse private Chinese conglomerate with six VLCCs and a number of ports.
ISSUE TWO 2019
transportation. This creates a unique opportunity,” Verma says. Landbridge owns Landbridge Rizhao Port, which is the largest private port in China, operates the Port of Darwin in Australia, and it is constructing one of the largest ports in Panama called Isla Margarita Port. Additionally, it has acquired an LNG field in Australia. Verma says the company is a firm believer in China’s growth. The Landbridge executive sailed at sea for 13 years becoming a master mariner. Ashore he held a variety of positions including a six-year stint at Hong Kong’s Wah Kwong. He joined Landbridge in November last year. “We aim to follow Beijing’s Belt and Road initiatives, the multi-trillion-dollar infrastructure building programme that China is pushing across large parts of the world. We are currently one of the biggest private VLCC tonnage providers from China, with an average age of the fleet being less than two years with all ships planned to be fitted with exhaust gas cleaning systems within 2019. We shall maintain our fleet as young, economical and efficient ships,” says Verma. Verma reckons the VLCC market will start to pick up from the second half of this year. “The oil market is notoriously linked to geopolitics. Most recently, Venezuela and Iran sanctions are affecting oil supply. US crude production was just over 11.6m barrels per day at the end of 2018 making it the largest producer in the world. This is a positive sign with larger tonmile benefitting positively,” Verma says, adding that on the supply side
there are more than 70 VLCCs to be delivered in 2019 while 60 ships are expected to be taken off the market in 2019 for scrubber retrofitting. Verma predicts about 30% of the VLCC fleet will be fitted with scrubbers by the first quarter of 2020. “So, we are very positive for the second half of this year and beyond to 2020, when the spread between HFO and MGO will keep paying premium to these ships with scrubbers. We see second half of 2019 and 2020 should be a good year to the VLCC market,” Verma concludes. ●
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IN PROFILE
Eight ships in first two years Dubai Navigation Corp has plans to get its fleet into double-digit territory soon
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wo-year-old Dubai Navigation Corp (DNC) has just taken on a trio of ships from Viken Shipping, marking a strategic move into the tanker sector. The shipowner moved beyond its dry bulk and feeder boxship origins, pouncing for an en bloc deal for three 13-year-old LR2 tankers. Top management is now on the look out for some further bulker acquisitions. “We believe this an interesting opportunity as the prices on tankers are recovering,” says Lars Juul Jorgensen, the company’s CEO. The new entrants into the DNC fleet have now been renamed Dubai Horizon, Dubai Harmony and Dubai Hope and have been chartered to MISC’s AET for three years with a one-year option. The three tankers take the fleet to eight ships including two feeders, two panamax bulkers and a handy bulker. Jorgensen reveals to Maritime CEO the company aim is to get that number up to 10 to 12 by the end of
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Dubai Navigation Two-year-old Dubai Navigation Corp has a Danish senior management team at the helm. The eight-ship fleet is a mix of LR2s, bulkers and feeder boxships.
ISSUE TWO 2019
the year, if market sentiment picks up and this growth could be achieved on its own or via joint ventures and strategic partnerships. A frustration for Jorgensen and his finance team as he looks to expand is one felt by many smaller names in shipping, namely banks increasingly favouring the biggest names in the industry.
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Competitive debt finance for smaller companies like DNC at levels the stock-listed companies are getting is desired
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“Competitive debt finance for smaller companies like DNC at levels the stock-listed companies are getting is desired,” Jorgensen says, going on to explain: “DNC is a smaller company, however having no legacy issues, being transparent with a simple company structure, with a conservative chartering strategy and low-risk ship investment, we are being charged with higher premiums in comparison with public stocklisted companies. The vast majority of the public companies in the UAE, USA, Singapore, Norway have their stocks trading well below NAV, which banks and funds should realise and focus on DNC and similar structured companies.”
Despite his youthful looks, Jorgensen has been involved in shipping since 1991, working for many brokers as well as owners including Torm and Tsakos over the years. ●
“We would like to see an enhanced industry interaction and closer engagement with all stakeholders” — Arun Sharma, head of the Indian Register of Shipping and new chair of the International Association of Classification Societies (IACS)
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IN PROFILE
Focus, focus, focus In one of his first interviews since being unveiled as CEO at Denmark’s Uni-Tankers, Per Ekmann explains his leadership strategy
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stronger focus on all operations is the key management message from Per Ekmann, confirmed in early May as the new CEO of Danish tanker owner Uni-Tankers, part of Torben Østergaard-Nielsen’s United Shipping & Trading Company. Ekmann has been serving as interim CEO since December 2018, and was previously the CEO of Uni-Chartering. He replaces Torben Andersen, who left last year. “We want to move from, say, a rather opportunistic fleet development to a high focus on fleet acquisition processes enabling us to explore the various fleet developments in a structured ongoing way,” Ekmann says in one of his first press interviews since getting the full-time CEO position. The Uni-Tankers fleet today stands at 39 ships, 17 of which are
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Uni-Tankers Part of Torben ØstergaardNielsen’s United Shipping & Trading Company.Fleet today stands at 39 chemical carriers, 17 of which are owned.
ISSUE TWO 2019
owned and the rest are on time charter. The aim for Ekmann is to maintain a solid fraction of the fleet as owned to keep up in-house technical management expertise while at the same time increasing the share of the time chartered fleet in order, he says, to ensure “operational agility”. The focus will remain on ships in the 5,000 to 17,000 dwt range. Uni-Tankers is also set for a greater concentration on regional trades under its new boss. “We want to move from a worldwide market focus into focusing on core markets and main tradelanes including northwest Europe, the Eastern Med and Black Sea, to/from West Africa, to/from and inter US/ Caribs,” Ekmann tells Maritime CEO. This stronger attention mantra fostered by Ekmann will also focus on key customers. Ekmann’s leadership style is also set to be different to his predecessor. “There’ll be a move away from management focus on operations and being people dependent in terms of experience to focus on management and developing of talents, strategic focus and leadership, knowledge sharing, execution and learning,” Ekmann says. Uni-Tankers also revealed in May it has received an injection of new capital from USTC, which sees the company once again completely
back in the hands of USTC and Østergaard-Nielsen. It had gone through a period where Danske Bank was a co-owner.●
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IN PROFILE
Jakarta bound Susana Germino has travelled the globe working for a variety of owners and managers. She’s now got her first CEO posting
S
usana Germino is in a bit of a hurry when Maritime CEO comes calling for her first media interview since landing in Jakarta at the end of April. After us, she’s got CNBC coming in for a televised chat. 21 years after her career in shipping started, Germino, a well travelled Portuguese native, is now the head of a shipping line, taking the reins at Mitrabahtera Segara Sejati (MBSS), a Jakarta-listed dry bulk logistics operator, principally focused on coal. Founded in 1994, MBSS manages a large fleet consisting of tug boats, barges, floating cranes and support vessels. The company has 86 tugs and 71 barges in its fleet today. MBSS is 51% owned by Indika Energy and 25% by Singapore-based China Navigation (CNCo), the Swire shipping line Germino has been with for the past seven years. Indika Energy is a diverse conglomerate that owns Kideco, the third largest coal mine in Indonesia among a swathe of energy-related interests across the Indonesian archipelago.
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Mitrabahtera Segara Sejati MBSS manages a large fleet consisting of tug boats, barges, floating cranes and support vessels. It is 51% owned by Indika Energy and 25% by Singapore-based China Navigation.
ISSUE TWO 2019
With Germino installed as president director at the Indonesian outfit, diversification will be key to her tenure at the top. “Diversification of cargo and assets is one of the main priorities in our strategy,” Germino tells Maritime CEO.
very supportive shareholders that believe that MBSS has the potential to become a large player not only in the transport of coal but also other commodities in Indonesia.” With that, she has to go — the TV cameras are rolling. ●
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Diversification of cargo and assets is one of the main priorities in our strategy
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Germino’s career path has taken her across many strands of the shipping industry as well as to many distant corners of the maritime world. She studied naval engineering in Portugal, and spent the first years of her career working in shipyards in her home country. Afterwards, she joined Lloyd’s Register, working in London, Shanghai and Hamburg. In 2006, she joined ASP Ship Management with postings in London and Glasgow before becoming commercial director for Bangkok-based Thoresen Thai Agencies, a move that was the start of the Southeast Asian chapter in her career that would later see her move with Swire, first to Papua New Guinea and latterly to Singapore before getting this Jakarta promotion. “We will be working on the synergies across the other companies of Indika and of course CNCo,” Germino says, adding: “We have
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Singapore / April 8
Monaco / October 22
Hong Kong / November 18
For further information contact grant@asiashippingmedia.com or visit www.splash247.com.
IN PROFILE
Astro Offshore aims higher Dubai AHTS operator is on the hunt for more tonnage
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ubai-headquartered offshore service provider Astro Offshore is gearing up for a new round of expansion, as the offshore sector gradually gets back on track. Both Mark Humphreys’s grandfather and father served at sea, meaning for the managing director of Astro Offshore shipping is very much in his blood. He founded Astro Offshore in 2009 in Singapore, and over the years, the company has expanded its footprints to the Middle East, having moved its headquarters to Dubai and set up an office in Abu Dhabi last year. During the major crisis in the offshore sector, Humphreys has managed to keep Astro Offshore as a debt-free company. “When you operate with no debt, you have much more flexibility in operations,” Humphreys says. According to Humphreys, the company brought in a number of vessels at much cheaper prices when the market went down, and today the company has not been hit by too much depreciation of its ship assets. The company currently operates a fleet of six AHTSs and 10 heavylift barges, most of which are employed
Spot on
Astro Offshore Founded in 2009 and now headquartered in Dubai. Operates a fleet of six AHTSs and 10 heavylift barges.
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in the Middle East market. Humphreys gives a positive view on the outlook of the offshore vessel market, especially in the Middle East. “Although the crisis in the offshore sector is not over, I still see a good amount of inquiries in the region,” he says. Going forward, Humphreys says Astro Offshore will continue to expand its fleet and look for longer term contracts, adding that the company would rather acquire vessels than charter them. “But we are not going to gamble, as soon as we buy it, we will deploy it for projects,” Humphreys says. “We never make decisions speculatively, and we are not shy to invest in assets,” he adds. Humphreys says the company is actively looking to expand its offering in the offshore heavy transport market, considering investing in newbuild heavylift barges to serve the increasing demand in the region. In January, Astro Offshore formed a partnership with heavylift
specialist Mammoet to collaborate on offshore transport solutions for oil and gas construction projects in the Middle East. Despite having a positive view on the market outlook, Humphreys reckons the high operating costs and tightening local regulations in some Middle East regions could create challenges for international owners, especially as he has seen an influx of OSVs from Southeast Asia into the Middle East market in recent years.●
“The world looks to Norway as a champion of innovation, quality and expertise – in digitalisation, but also in maritime” — Per Martin Tanggaard, head of Nor-Shipping
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MARITIME CEO IN PROFILE FORUM
No industry for old men The Maritime CEO Forum returned to Singapore for the fourth time in April. The digital session, as ever, packed plenty of punch
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he first step in making a change is acknowledging the need for change and by that marker, the maritime industry should by now be well along with the process of digital transformation. To judge by the attention lavished on digitalisation during Singapore Maritime Week in April, the topic ranks ahead of regulation and profitability in the minds of owners. That appears to put the cart before the horse, but rightly or wrongly, technology is being touted as the means to comply with the former and as a key to unlock the latter. The Maritime CEO Forum at the famous Fullerton Hotel was uniquely able to give the topic its due place in the pecking order, bringing together a tech accelerator, a leading shipmanager, an autonomous ship platform and the industry’s leading communications provider for a discussion that ranged widely. Ultimately, digital progress is probably still not fast enough and is hampered by familiar issues; the scale of the challenge, a lack of collaboration and a fragmented vendor-driven approach to name but three. But there is reason to be positive and still plenty of opportunity for the ambitious, if not the brave. So how does shipping get from digital dreaming to reality – and is it even necessary for all players? Wallem CEO Frank Coles has run technology-focused businesses and is no doubt that the problem is not scarcity but abundance. “The industry does need to change but it starts in the office not on the ship, with leadership. There is not enough culture around
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modernising and using technology as an enabler,” he said. “What we have is a lot of people talking fragmented and unconnected apps and tools and they are presenting to people who are very confused and very scared because they don’t understand how to use them. None of it is connected and we’re not collaborating.”
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Change starts in the office not on the ship, with leadership
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Päivi Haikkola is ecosystem lead at One Sea, a platform that drives OEM collaboration with the aim of developing autonomous vessel technology and has found that the desire for collaboration requires more than just open APIs. “I have to admit we have found it is not as easy as it sounds, there are so many internal systems and everyone is afraid their IP will disappear if they open them up.” The feeling that we are still at the start of the digital journey was reinforced by Inmarsat Maritime president Ronald Spithout who was shocked by the company’s research into IoT which found that 51% of respondents had ‘no clue’ how to get real time information off their vessels. “What we have so far is owners using apps for cost saving; that’s the lowest level of digitalisation of the industry as a whole. Only the most sophisticated shipmanagers are getting to the next level,” he said. “The capacity of most organisations [in the digital sphere] is still not there at all, with enormous fragmentation in
standards and platforms.” Incredibly innovative in cargo transport, it seems shipping’s engagement with digital so far is about saving nickels and dimes rather than having a wider vision. Spithout agreed there are far too many solutions and hopes to see a de facto platform where apps and data can be interchanged in a standardised way. “The problem is that it’s disruption and not innovation,” added Coles. “We’re looking for change but it’s really hard to get there. Companies are still using 15-20 different applications in an office when we should be driving towards the least amount of paper as possible. We’re talking autonomy and pushing paper; there’s something wrong with the narrative.” Dhritiman Hui, who brings high level shipping experience to EPS MaritimeTech Accelerator Powered by Techstars, reckons that part of the problem is sectoral. “For young and tech savvy entrepreneurs, shipping is not something you look at. It hums along in the background and not enough technologists have tried to do anything,” he said. Exceptions include ‘poster boy’ Flexport whose valuation exceeds that of Inmarsat and Hui believes the situation “is going to change exponentially over the next 10 years or so. Owners will have to stay ahead of that curve.” But is the start-up model the right one since it tends to focus on discrete problems in a model designed for a short term payback rather than a long term solution? Hui pointed out that unlike in fintech or ride sharing, where a young entrepreneur can run a limited experiment maritime ceo
MARITIME CEO IN PROFILE FORUM
with tens of thousands of users, “in shipping you are talking about innovating around a massive vessel with all the risks attached. It’s much harder for an outsider to come in and experiment.” Instead he advocated teaming up with an incumbent as this gave owners and managers the opportunity to get in on the disruption rather than be disrupted. Haikkola agreed and said the size of the innovation challenge meant that the sums investors could put in and the relative scale start-up companies were far from sufficient. “We realised early on that to back a 10-person start-up on technology that has to last for 20 years is a disaster. When we talk about start-ups what we mean is start-ups like IBM, companies that are not in maritime or autonomy.” The lack of collaboration also means there is very little of the standardisation that is needed, if the industry is to adopt more than the entry level technology. She admitted that even with big OEMs onboard, the task was “overwhelming” not because they wouldn’t share data and information but because the challenges had to be broken out and addressed piece by piece. Perhaps the reality is that the industry needs another shakeout of personnel in order to drive transformation – and a round of retirements. Hui disagreed, noting that his peers and colleagues all want technology, innovation, simplification and cost savings but that new opportunities would come only by having more success stories to share. Having just celebrated a significant birthday himself, Coles agreed that too many companies were staffed by managers thinking in terms of 20 years ago and Spithout advocated for a blend of youth and experience. For her part, Haikkola pointed out that more creative thinking would result from greater gender diversity, though she noted “Elon Musk is a middle aged white man”. So perhaps there’s hope for shipping after all. ●
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CEO Corner
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MARITIME CEO IN PROFILE FORUM
Sulphur cap workshop maps out compliance schedule Delegates were given plenty of fuel advice during a special extra session at the forum
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shipmanager, a shipowner, a fuel reseller and a fuel verification expert made the perfect panel for a special IMO 2020 workshop, a bolt-on event ahead of the Maritime CEO Forum. The workshop, sponsored by Cockett Marine Oil, was designed to inform owners and operators exactly what they need to have in place across their fleet and ashore by the end of April in order to be on track with complying with the global sulphur cap, which kicks in on January 1 next year. Decision making on how to handle the cap – essentially to scrub or not to scrub – should have been made many months ago. The workshop focused on the 90% majority who have opted to go down the compliant fuel route to meet sulphur cap requirements. By now owners need to have
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made plans with charterers for where their ships will be when it comes to the fuel switchover around October time this year. Cleaning and modification of tanks and pipes should already be underway, according to a guide from Wilhelmsen Ship Management. Carl Schou, CEO of the shipmanager, told delegates that it was essential to get ship implementation plans fixed this month, with the IMO a useful resource to do this. He also warned that any retrofitting could take months and will need class approval so yard slots need to have been booked by now, especially as repair yards are busier than ever this year. Cem Saral, CEO of Cockett Marine Oil, told delegates that they would need to be aware of the huge variance in quality of 0.5% fuel, and to be prepared for the fact that their
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Getting compliant fuel is the easy part. Working out how they work on ships is the problem
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fuel and lubes procurement was about to become massively more complex. Main engine damage is a real fear for Saral. “Getting compliant fuel is the easy part. Working out how they work on ships is the problem,” Saral said. The lack of information provided about the key characteristics of these new fuels is proving frustrating for owners, Saral said. Providing some solace on this issue was Rahul Choudhuri, managing director of fuel checkers, Veritas Petroleum Services (VPS). maritime ceo
MARITIME CEO FORUM
lubes was going to be difficult as so little testing of this new lube has been done. “Lubes analysis will become way more critical than it is today,” Huot said. It will be vital owners get multiple lube suppliers in place because of the logistics risk with Huot predicting availability issues will persist for 18 months after January 1. Looking towards the end of this
year in order to achieve compliance, bunker changeover procedures will need to explained to crew from July with a switchover plan finalised by August. Onboard bunkers need to be switched to compliant fuel in September and October with sea trials with the compliant fuel undertaken in November. Any fuel containing 0.5% sulphur and above must be consumed by December 31.●
Banchero Costa’s dry bulk warning
What he had seen of 0.5% fuels so far, Choudhuri said, is that “they are pretty good fuels”. Larger shipping companies have been working test blends since Q4 last year, even onboard. The fuels, which will need to be heated and are likely to be high in cat fines, are stable, from what VPS has checked so far, containing good energy content. “Owners will really need to get to know these fuels,” Choudhuri said, pointing out that some of them have very low flashpoints. Like Schou, Choudhuri urged owners to get their ship implementation plans completed by now, also praising Intertanko for the excellent guidance it has been providing on the subject. Alan Hatton, CEO of Foreguard Shipping, a Singapore-based owner with a seven-strong chemical tanker fleet, said the role of third party shipmanagers was increasingly important in order to comply with shipping’s increasing number of regulations, including the sulphur cap. Charter parties need to be amended by now too, Hatton pointed out. On lubes procurement, Caroline Huot, Cockett’s general manager, said the switch from BN70 to BN40
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RALPH LESZCZYNSKI, GLOBAL head of research at Banchero Costa, took the hot seat for the opening quickfire Q&A markets salvo at the Maritime CEO Forum, using the platform to warn dry bulk owners that 2019 will remain a very tricky year. Citing the series of disasters that have hit miners so far this year as a “string of unfortunate black swans” Leszczynski said he expects rates to pick up in the second half for bulkers but for the year as a whole to not surpass 2018’s performance. Leszczynski said it was still too early to assess just how much Brazilian miner Vale’s woes over the past few months would actually take cargoes out of the market. Leszczynski was more bullish for tankers, after strong demolition seen in the sector last year with the most amount of VLCCs scrapped for 30 years. The impending IMO
2020 sulphur cap should provide a “positive spin” for both crude and product tankers, the Banchero Costa analyst suggested. On the sulphur cap, Leszczynski said he was anticipating chaos at the start of next year as a majority of owners will leave planning to the last minute. “From a logistics point of view it will be a mess,” Leszczynski predicted, suggesting that many owners will play it safe in the first months of the cap’s implementation by using more expensive gasoil. On topical geopolitical issues, Leszczynski said he was optimistic that a solution to the US-China trade spat would be found soon. The silver lining from the trade tit-fortat, Leszczynski said, was that in order for China to reduce its trade deficit it could end up buying more commodities such as coal and oil from the US. ●
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MARITIME CEO FORUM
‘The shipowner has become a charity for charterers’ Is the dry bulk business model fundamentally broken?
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he basic business model of dry bulk shipping came under scrutiny at the Maritime CEO Forum with a host of owners suggesting that the industry is fundamentally broken. Moderator Tim Huxley from Mandarin Shipping, an ever-present at every forum to date, set the tone describing the first quarter as a “train wreck”. The protracted downturn has seen an alarming drop in maintenance standards among dry bulk ships, Martin Crawford-Brunt, CEO of risk management firm RightShip, told attendees. Martyn Wade, CEO of Grindrod Shipping, mused whether the
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We have to put in a Rolls-Royce but get paid for a jalopy
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sector’s business model is broken, memorably quipping: “We build ships for 25 years and get good rates for maybe four. We have to put in a Rolls-Royce but get paid for a jalopy.” “Which shipowner has made money in the last 10 years?” questioned Pankaj Khanna from the Economou Group, adding: “The shipowner has become a charity for charterers, we pay to move their cargoes.” Khanna predicted more bankruptcies and “blood on the street”, echoing the Grindrod
executive in saying: “This model is not sustainable.” Khanna feared 2019 was unlikely to see much improvement with Q2 potentially turning out even worse than the first quarter. In Q1, Vale, beset by a slew of production disasters, was still able to replace lost production via storage. Punit Oza, general manager at Klaveness Asia, was not mincing his words when he told delegates attending the exclusive shipowner gathering, “We have had a crappy first quarter.” He pinned his hopes on a stronger second half as miners will need to play catch-up to meet their annual targets, a silver lining to a very dark start to 2019. ● maritime ceo
MARITIME CEO IN PROFILE FORUM
The shelf life of scrubbers
The merits of exhaust gas cleaning systems formed a central part of the discussions during the tanker panel
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espite a majority of panellists at the Maritime CEO Forum tanker session professing to be fans of scrubbers, all executives admitted that their shelf life will be brief. The panel featured Mark O’Neil, the president of Columbia Shipmanagement, as moderator with Rajesh Unni, a director at Global United Shipping, Pankaj Khanna, a board member at Heidmar, Lars Malmbratt, general manager of Stena Bulk Singapore and Kenny Rogers, days before he stepped down as head of Aurora Tankers,. Khanna detailed his boss, George Economou’s $350m outlay
to install scrubbers on all his ships, saying he was bullish of the financial advantage this would derive. Rogers said that for Aurora, a subsidiary of IMC, the decision was a commercial one to install the technology on eight newbuilds delivering soon, but he cautioned had the ships delivered in 2022 or 2023 the company would not have opted for scrubbers. Malbratt, meanwhile, said Stena Bulk was not going “full blast” for the technology, deciding to retrofit up to 17 ships, starting in late April this year. Unni was the lone opponent,
Sponsors:
saying he was still not convinced from both a commercial and scientific standpoint on the controversial exhaust gas cleaning systems, saying the technology was still very primitive with significant maintenance and operational issues. Malbratt spoke for the panel when he said: “We should look beyond the sulphur issue. Shortly we can put this behind us.” Quite so, agreed Rogers telling delegates: “Scrubbers are just a temporary solution.” The next Maritime CEO Forum takes place on October 22 at the Monaco Yacht Club. ●
WINE
Summer is pink, white and red Neville Smith picks out some bottles for NorShipping and the changing of the seasons
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eal men drink rosé. Not too long ago this would have been a contentious statement, met with scorn on the merits of the wine and the intended consumer. In the space of a few years, rosé has gone from wannabe to a regular first–team pick, swapping its reputation for the naff with the knowing. Before we go too much further
Two (more) to try PETALE DE ROSÉ Chateau la Tour de l’Eveque Rose AOC Cotes de Provence 2018 (Corney & Barrow £18.50) comes from Provençal blue blood but is pretty butch around the edges, beautifully coloured and full bodied and best drunk with food.
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I should caveat this. In a #metoo era I’m not saying that women can’t drink rosé because men are reclaiming the pink. In fact it’s perfect drinking for the age of, if not equality, then at least diversity. It can cope with pretty much any kind of food and has styles you can quaff all afternoon from the poop of someone else’s yacht and perhaps Bourgogne Côte d’Or Pinot Noir Benjamin Leroux 2017 (Berry Bros & Rudd £23.50) is an own-label offering made of declassified Choreylès-Beaune fruit from very old vines, sourced via star négociant Benjamin Leroux. ●
avoid a headache. But rosé is not alone at this new frontier. Lots of whites carry enough weight that moves them beyond their traditional role as ‘foreplay’ while lighter reds can deliver a huge amount of interest if well-chosen, and are perfect for summer drinking when you want a combination of lighter alcohol and refreshment. Not all wines manage to do both. I’m not going to blame climate change but in general, alcohol levels are on the rise; in part because lazy makers equate weight with impact but also because it takes skill and judgement to balance fruit and acidity (which may be adjusted quite legally in some appellations). One might not want to drink white wine all night (especially given the trials of the upcoming NorShipping trade show) but reds should be precise enough to sit alongside food but not sink the ship. And because it flows in greater quantity in the first week of June then quality is key too. As with all wine selection, it’s a question of mood and managing one’s expectations. It may indeed be the case that nobody has any money in the summer. It’s more likely that those who know have laid in some suitable stocks before the market slows for the season and the moneyed depart for yacht or yurt, leaving those of us who work for a living to keep the world’s economy moving. Rosé can be many things and in Cillar de Silos, Ribera del Duero, 2018 Rosado (Berry Bros & Rudd £14.95), it is an appealing oddity from the heart of Spain’s red wine country, made from Tempranillo and exhibiting full bodied, intense wild fruit. Beaujolais is much misunderstood so let’s be clear, Beaujolais-Villages La Cave de la Croisee, Pierre Ferraud 2017 (Corney & Barrow £11.75) is a single hillside bottling; rich and ripe, like summer pudding in a glass, but with the grace and grip of many a cru bottling. ● maritime ceo
GADGETS
Tiny yet strong and stable
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he Osmo Pocket is DJI’s smallest three-axis stabilised handheld camera ever. Weighing just 116 g, and delivering 4k video at 60 fps and photos at 12 MP, it promises the sort of strong and stable picture that would make Theresa May turn green with envy. Intelligent features include ActiveTrack which tracks moving subjects (designated by tapping on the screen); selfie mode keeps you in centre frame; a 3x3 panorama still shot mode gives you huge pictures (via the Osmo app); time-lapse and motion-lapse; a night mode, as well as long exposures (no tripod required). Storage is a MicroSD card, and it hooks up to an iPhone or USB-C smartphone. Extra accessories can charge it in its case, add a dedicated mic, waterproof it, and attach it to helmets and so on for action junkies. DJI Osmo Pocket $350 https://store.dji.com/shop/osmo-series
Smoking’s good for you
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ancer man and the lone gunmen from the X-Files would approve of this next product: The Smoking Gun from Sage by Heston Blumenthal. Smoking might be bad for you, but it’s great for food! Applewood smoked cheddar is an out of this world taste, but doing it yourself is a huge faff. But with the smoking gun, it’s a doddle: put the food or drink in a container, stick the gun’s hose in and cover with clingfilm, lid or such. Put a pinch of wood chips in the gun, fire it up and it will infuse the food/drinks with the smoky taste of applewood, cherry, hickory, oak or beech. There’s also bourbon-, whiskey-, or cabernet-soaked oak chips. Sage by Heston Blumenthal The Smoking Gun $105 https://www.sousvidetools.com/ sage-by-heston-blumenthal-smoking-gun
Stick with it
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ur final offering is just about the most useful gadget we’ve come across in years, and it’s super cheap too. Sugru is a mouldable glue that dries to a silicone rubber. It comes in two types — family-safe, skin-friendly or the original formula for DIY; and a variety of colours. You can work with it for about 30 minutes, although it takes a day to fully cure (or longer if it’s thicker than 3 mm). Once cured, Sugru is still soft and flexible, thermally and electrically insulating, waterproof and resistant to high and low temperatures. It sticks to plastic, metal, leather, wood, glass, ceramics and rubber. Sugru $9 https://sugru.com/
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REGULAR BOOKS
Trading up north
Paul French looks at historical trading ties between Scandinavia and Asia
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n amongst all the turbulent history of the 19th century China trade – opium, gunboat diplomacy, unequal treaties, etc – we often forget just how many western countries were involved in the early days of the China trade. Scandinavia and northern Europe were at the forefront. Hanna Hodacs’s Silk and Tea in the North: Scandinavian Trade and the Market for Asian Goods in EighteenthCentury Europe is a fascinating history of northern Europe’s early trade with China. Hodacs’s links the trade of the Danish and Swedish East India companies to the British taste for tea, as well as a Scandinavian craving for colourful Chinese silk textiles, import substitutions schemes and natural history in the 18th century. She explores the wholesale market for Asian goods in Gothenburg and Copenhagen, and the Scandinavian involvement in the creation of synthetic dyes in Europe and their impact on Asia. Hodacs is also one of the contributors to the illustrated collection Goods from the East, 1600-1800: Trading Eurasia - Europe’s Asian Centuries, which highlights how a developing love of the Chinoiserie aesthetic in Sweden and Denmark led to an increase in
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Scandinavia’s China trade. This collection is a fascinating look at the maritime history of trade between northern Europe and Asia through the items and artefacts both sides wanted from the other. I’m not sure how many people, even in Denmark, now remember Tranquebar, now the Indian town of Tharangambadi in Tamil Nadu, but it was once a Danish colony and a major trading post for the Danish East India Company. Trials and Travels of Willem Leyel: An Account of the Danish East India Company in Tranquebar, 163948 recalls the 1639 voyage by Leyel to Tranquebar where he took command of its fortress Dansborg. Drawing on Leyel’s own letters and papers located in the National Archives in Copenhagen, Leyel’s biographer Asta Bredsdorff weaves together Leyel’s exploits in the East Indies. So much history between Scandinavia and Asia is now being explored. In 2000 Karl Reinhold Haellquist, a historian and South
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Asia specialist working at the Nordic Institute for Asian Studies (NIAS) in Copenhagen, died leaving behind a large private collection of books, journals, videotapes and pamphlets on various aspects of South Asian studies. They’re now available to view at the Asia Library of Lund University. Haellquist’s own book, Asian Trade Routes: Continental and Maritime, deals with the various maritime bridges built between east and west and particularly from Scandinavia to Asia. Haellquist’s writings and incredible library of books and articles detailing Scandinavia’s historic contacts with south and east Asia are especially interesting in light of today’s developments. While most scholars have concentrated on Scandinavia’s maritime links to Asia, Haellquist also looked at the two region’s overland connectivity. In an era of the supposed rebuilding of the old Silk Road and China’s enormous Belt and Road Initiative these old trans-continental links may be well worth re-exploring. ●
Tranquebar, now the Indian town of Tharangambadi in Tamil Nadu, was once a Danish colony
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maritime ceo
TRAVEL
Is this the world’s most stunning eco-resort? Sam Chambers heads to Apulit island and wonders if this is the real inspiration for the Leonardo Di Caprio blockbuster, The Beach
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hai authorities have recently taken the decision to close the beautiful area where the movie, The Beach, was filmed through to 2021 to try and give nature a breather from the hordes of tourists who flock to Phi Phi Leh every year. The funny thing is that though the movie was filmed in Thailand, the original book by Alex Garland was based on his experiences living in the Philippines. The secret beach in the novel is thought to be inspired by one of the many hidden lagoons and beaches found around the north of the island of Palawan in the west of the Philippines. Perhaps Garland made it to Apulit island. If he did, bless him for not publicising this slice of paradise to the world. Nestled within a pristine cove with a backdrop of sheer limestone cliffs, Apulit can lay claim to being among the most stunning eco-resorts in the world. Getting there does take a while, but in its own way that is part of the charm. A flight from Manila to El Nido takes an hour where a van from the resort will
ISSUE TWO 2019
then take you to a little port a couple of hours away at which point you board an outrigger boat and head through azure waters until the rocky, palm-fringed island of Apulit hoves into view. The private island houses just 50 water cottages that combine traditional Filipino architectural style with contemporary design. The cottages are all built on stilts, perched above the sea with an unobstructed view of Palawan’s Taytay Bay, surrounding islands, and dramatic limestone cliffs. The three greatest things about any stay on Apulit are the warm hospitality, the mind-boggling range of flora and fauna for a speck of land barely bigger than one hectare, as well as the packaged, diverse array of activities. Guests can climb and rappel down a 60-meter limestone cliff with a birds’ eye-view of the whole island. Dive and
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discover sunken treasures just off the beach, with a Japanese ship wreck and a plethora of marine species to greet intrepid travellers. Put on headlights and go spelunking in the different caves of Apulit, or hop on a boat or a kayak and go island hopping and snorkelling. Take the nature tour and be blown away at the range of species of animals, including the pilandok or Philippine mouse deer, unique to the island and learn how Chanel No 5 perfume gets its scent from one of the types of trees on this little island. In short, David Attenborough could make a whole series based on this rocky outcrop in the far western reaches of the Philippine archipelago. However, selfishly, just like Garland’s decision not to reveal his real beach, I hope the cameras from the BBC Natural History department stay away. ●
The private island houses just 50 cottages on stilts, perched above the azure sea
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OPINION
Why doesn’t Asia influence world shipping more? Santosh Patil questions why the world’s most important region for shipping is so quiet on the international stage when it comes to the key issues hitting the industry
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ow much does Asia influence world shipping? A Google search with any combination of the words ‘Asia’ ‘influence’ ‘technology’ ‘leadership’ doesn’t throw up any significant results in the maritime and shipping context. The recently held Sea Asia exhibition in Singapore saw a flurry of conference topics ranging from decarbonisation, digitalisation, maritime workforce, upcoming regulations, the future of fleet management and blockchain. It is amply clear that technology and regulation are the two most important drivers altering the maritime landscape. Going by the decarbonisation, digitalisation debate, one cannot help noticing that much of the regulation and technological changes are driven mostly by western interests (technology, equipment and service providers) primarily led by European nations. All the key maritime stakeholders and industry associations, be it IMO, ICS, BIMCO, Intercargo, Intertanko, underwriters, shipbrokers, financiers et al are based in Europe, many of them in London. However, when one looks at the ownership of ships, it is distributed primarily in Europe and Asia. Clarksons data (shipowners by nationality) shows that Asian shipowners contribute about 54% of the world fleet by numbers, 47% by gt and 48% in dwt terms, ahead of
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Europe in all three parameters. With regards to shipbuilding, Asia continues to take more than a lion’s share of the global shipbuilding orderbook. As an industry shipping has been heading east for two decades now reflecting the fact that global economic activity is heading in that direction. Shipmanagement companies too are spread across several maritime hubs across the globe. The largest seafaring nations supplying officers to the global shipping fleet are primarily Asian – China, Philippines, India and Indonesia (ICS data). As per Alphaliner, six of the top 10 container shipping lines are Asian owned. Singapore and Hong Kong take top spots in the maritime hubs competing and even a notch ahead of London in some respects. The recent VesselsValue Top 10 Ship Owning Nations 2019 report lists three Asian nations – Japan, China and Singapore – amongst the top five. This, then begs the question – why are Asian shipping and maritime technology companies not seen to be leading the efforts towards reducing the carbon footprint or leading technological innovations in an industry which is increasingly getting Asian by ownership and trade? Why is it that Asia does not really appear to be at the forefront of all things maritime? Could this
be due to a supply side push – most technology providers being European or American? Could it also have something to do with Asia not upping its game and not taking enough industry leading initiatives? There are few exceptions like Singapore which is seen leading some technology initiatives, however one rarely sees any other significant Asian effort in either the technology or regulatory space. The agenda is set by western interests; be it digitalisation, regulations or new technology. Is there a shift happening in this trend? Recently there was a news article about a gradual shift of maritime arbitration to Asia. While one can see reduced German ship finance, of late there has been a spurt of Chinese funding in the global shipping markets, be it ship finance or owning port assets. As Asian nations increasingly control the world fleet as well as the service industries that serve that fleet, it is likely their influence will grow in the future. Asia’s influence on shipping may not be significant now and it will be an uphill task to establish it so that a truly united Asian voice is heard over the next few decades. However, it is only a matter of time before Asia, with so much maritime activity at stake, emerges as the dominant region within the global maritime industry. ● maritime ceo
REGULAR OPINION
One eye to the telescope? The decision by the Paris MoU to limit the availability of its inspection results undermines the building of a safety culture based on data sharing, argues Paul Stanley from Global Navigation Solutions
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ardly a day goes by without the shipping industry being encouraged to embrace greater data sharing in order to achieve a ‘digitalised business’ mindset or being admonished for not doing so quickly enough. Despite the challenges of the transformation required, there is plenty of evidence that those shipping companies that want to enhance their operations and understand areas for improvement can do so with better data. We also have good examples of where data sharing promotes safety, the most obvious of which is how the effectiveness of Port State Control has improved since authorities started sharing data and making it publicly available. Last year’s Global Maritime Forum meeting in Hong Kong identified data sharing as having the potential to overcome fragmentation in maritime safety and, inspired by practices from the aviation industry, how shipping could establish a platform that enables international bodies to collect, analyse and publish safety-related information. This makes the decision of the Paris MoU to withdraw publication of bulk data except to the IMO and Equasis, so surprising. In fact, the organisation might already be rowing back on the decision it made at the end of 2018 and could allow limited access to its data on PSC inspections following a committee meeting in May. From the results GNS has analysed, sourced from the combined MoU organisations, there is a clear need to maintain a global data stream and make it as widely available as possible if we are to achieve
ISSUE TWO 2019
further improvements in safety. The headline figures are broadly positive: the number of PSC inspections annually is increasing, up 4% over the last four years, while the number of deficiencies has fallen by 8% over the same period. As might be expected, lifesaving appliances and fire safety measures were the biggest causes of deficiencies in 2018. Some 39% fewer navigation related deficiencies were recorded last year compared to 2014, suggesting that the move to digital navigation has made it easier for vessels to comply. Issues with nautical publications were the third most likely cause of a deficiency in 2018, accounting for 39% of navigation-related deficiencies, perhaps because they are easiest to identify. However, whereas paper chart-related deficiencies fell by 66% over that period, issues related to ECDIS and Electronic Navigation Charts increased by a factor of nearly four as more of the fleet transitioned to digital navigation. Managing ENC data should be relatively straightforward – though our research has shown that many operators tend to buy too many ENCs and not always the data they actually need. It is clear from digging a little deeper that the industry still has an issue with navigational safety. If we combine all the defects reported in the Safety of Navigation categories, they dwarf the top two categories, despite being much easier to rectify. It seems obvious that ships will benefit from a single view of their environment in terms of availability of critical voyage and safety data. But according to our research the missed opportunity goes beyond failure to
capitalise on just-in-time delivery of navigation data for operational reasons. Vessel inventories are often not being regularly reviewed against routes, Flag, Port State or technical library requirements and the software installed onboard to help navigate safely isn’t being fully exploited. The first quarter of 2019 has tragically demonstrated how much work is still needed to improve safety of navigation. But surely the answer is not to remove the data which certification bodies, risk managers and service providers can use to show operators where their biggest risk lie. Without the full picture and the ability to establish connectivity between them, it is much harder for owners to know what action to take. Withdrawing a critical data stream undermines the safety management process and increases risk, at a time when more visibility is needed. ●
47
MARPOLL REGULAR
You decide
Every quarter we seek readers’ views on topical issues. The latest MarPoll saw more than 500 of you vote. Results and key comments below What percentage of the global fleet will be noncompliant during the first year of the sulphur cap?
Which sector will scrap most ships this year?
“
Company orchestrated noncompliance will be extremely difficult to exercise and will entail a huge direct risk for owner and crew
”
“
Marginal earnings and new tonnage with eco-engines will make tanker vessels 15+ years of age wholly unattractive
0-5%
11%
6-10%
18%
16-20%
14%
Tanker 22%
11-15%
14%
20+%
43%
Container 28%
Would the Baltic Exchange serve the markets better by going down the ‘last done’ route, like equities markets, rather than its existing broker panel system?
“
Should liners continue to enjoy their block exemption regulation (BER) when it comes up for renewal with the European Commission next April?
“
The market shares no longer warrant this exemption
Last done can be manipulated Yes 56%
”
Bulker 50%
”
Yes 37%
No 44%
No 63%
What shipbroking role will disappear first thanks to technology?
Shipping’s innovation appetite is stymied by the need for quick ROI?
“
”
“
It is stymied by owners continuing to do the same thing expecting a different result
None will disappear. If the question were which sector will be impacted the most, then it’s chartering
”
Agree
83%
S&P 14%
Disagree
17%
Chartering 35%
”
None 51%
Are secondhand ship valuations actually linked to earnings?
“
They are best linked to the prevailing and forward market relevant to the trades they ply
48
”
Which is more likely? The five-year forecast of a shipping analyst is correct, or within five years we find proof of alien lifeforms?
“
Flying saucers everytime
Yes 52%
Analyst 17%
No 48%
Alien 83%
”
maritime ceo
SAFER VESSELS CLEANER SEAS STEERING A PATH TOWARDS A SAFER AND CLEANER MARITIME ENVIRONMENT RIGHTSHIP.COM