Maritime CEO Issue Two 2020 by Splash

ISSUE TWO 2020

The Zoom Issue

Watch later

MANIFEST

3 At The Prow

Economy 4 US 5 EU 6 China 8 India 9 Brazil

Markets 11 Dry Bulk 13 Tankers 15 Containers 17 Finance

27 Lasse Kristoffersen 29 Jeremy Nixon 30 John Michael Radziwill 31 Shipmanager debate 33 Beate Stelzer & Steven Jones 35 Claus Nehmzov & Paul Jennings 37 Şadan Kaptanoglu 38 Manish Singh & Bjoern Sprotte 39 Thomas Bagge 40 Chartering’s future

Recreation

18 Lay-ups in focus

42 Wine 43 Gadgets 44 Books 45 Travel

Profiles

Opinion

23 Cover Story TV series launch 25 Will Fairclough 26 Paul French & Lars Jensen

46 Charlie Du Cane 47 Andrew Craig-Bennett 48 MarPoll

Executive Debate

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 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 2020’s four issues of Maritime ceo magazine. Email sales@asiashippingmedia.com for subscription enquiries. Copyright © Asia Shipping Media (ASM) 2020 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 2020

Remote surveys are here to stay

s you might have noted from the rather different cover image, this is a special Zoom-style issue of the magazine where we bring readers highlights from our ongoing popular Maritime CEO Leader Series, produced in association with our pals at Ocean Technologies Group. Thus far, I’ve really enjoyed putting this video series together and reckon it’ll be part of our own media platform’s ‘new normal’ offering even once the pandemic recedes. The fact is we all have to get used to the swift digital changes ushered in recent months - they are here to stay. I came across a Reuters article recently that was very negative about the rise in the use of remote surveys taking place via live streaming, a necessary trend thanks to movement restrictions brought about the coronavirus. Increasingly ship’s captains and other crewmembers are walking around a vessel with a phone camera switched on to show specific areas for checks, drawing on previous inspection reports that have highlighted issues. “The effectiveness of virtual inspections only buys time, especially as many vessels in the global fleet are ageing. Remote surveys can also take longer and require weeks of work to process versus a few days for an on-site inspection,” the article suggested, a point of view I do not agree with at all. As with so many parts of shipping, the coronavirus has sped up digital ways of doing surveys and it will, I imagine, continue to be an important way of auditing a vessel even when the pandemic recedes. This virus episode has forced

the experiment of working remotely on most of us and many shipmanagers tell me they have been testing and using remote auditing and focused inspections with the technology working. Moreover, the time saving in not having to travel is enormous and in an office more experts can look at the footage than just one, often biased, subjective and self-interested hired-hand surveyor. Class executives are increasingly saying that the way they go about their business has now changed forever in the space of just a few months. Remote auditing, perhaps not to completely replace physical auditing/ surveying/inspecting, is here to stay and it will enormously complement the monitoring presence onboard. Remote surveying with actual footage available like the bodycam footage police are using now to prove what actually happened is a fantastic opportunity for shipping. Now can we please embrace new technology in our industry and not try to revert to how things were while moaning endlessly about how competent people onboard and in the shipping office used to be in the good old days? ●

ECONOMY US

A shock to America and the world

The economic data out of the US is on par with the Great Depression

here’s no doubt the Covid-19 shock to the US economic system has been tremendous. As of mid-May the Federal Reserve saw the US economy shrinking 42.8% from April through June. The Fed also believes US unemployment rate could peak at 25%. In April, the unemployment rate hit 14.7% - the highest since the Great Depression. Before Covid-19 the rate was 3 to 4%. At present the brunt of the recession is being felt by small businesses who carry low liquid reserves, and also by companies on the demand side as retail stores stay closed. According to one estimate, about half of small businesses will be out of cash within a month, and many of them will close. Top 5 US Agricultural Exports to China, 2019 Category

Revenue US$bn

Soybeans

12.4

Cotton

1.0

Hides and Skins

0.9

Pork

0.7

Dairy

0.6

Source: USDA

Of course, due to the American federal system, the situation in terms of infections, deaths, state responses and lockdowns (or otherwise) has been patchy and so an overall problem, both in the immediate and mid-term, is an uneven recovery. Can a manufacturer in an ‘open’ state get critical parts and components from a ‘closed’ state, let alone from overseas? Of course America is taking some action. Congress has already moved to provide $2.9trn - or approximately 14% of US gross domestic product - in spending to households, businesses and states and local governments facing the virus. As far as trade goes it’s not great, but it could have been a lot worse. America’s trade deficit widened by almost 12%in March. Imports fell 6.2 %, but US exports tumbled a more catastrophic 9.6% to cause the trade gap to rise. That’s the biggest monthly decline in exports ever recorded in the US. Economists polled by MarketWatch had forecast a $44.2bn shortfall by the end of year. Cars, aircraft parts and barrels of petroleum were all big slump sectors, though unsurprisingly exports of services such as banking and tourism

also fell through the floor. Imports dropped to $232.2bn in April from $247.6bn in March. The US imported fewer mobile phones, consumer electronics and autos – hitting China, Europe and Japan with slumping US demand. Shipments of cars and trucks were the lowest since 2011 and are expected to continue to weaken considerably more. Additionally Americans are staying at home so everything from hotels to theatres are taking a hit. Perhaps never before has the rest of the world really appreciated the spending power globally of the American consumer. And finally, of course, the great unknown in any speculation regarding America – president Trump. Just how much support will he give the Democrat leaning states versus Republican? Does he even really see the virus as a threat or an opportunity? How hard will he go after China on trade tariffs and accusations of mismanagement of Covid-19 in its earliest incarnation? And, virus or no virus, we’re getting into election season and Trump is pretty clear he wants another term in the White House. ● maritime ceo

ECONOMY EUROPE

Hit hard and disunited The pandemic has widened fissures within the union

wo major things have come out of the Covid-19 experience in Europe – firstly, Europe (especially the UK, Italy and Spain) got hit harder than they expected. Secondly, the EU has seemingly had absolutely no co-ordinated response to the pandemic either in its exterior diplomacy (NB: issues with China) or internally (NB: each country pursuing its own path from French total lockdowns to Swedish herd immunity). At the same time the politics of the union have opened wide and now range from the hard line authoritarianism of Hungary to the laissez faire approach of northern Europe. Additionally, early calls that the economic fall out costs of the pandemic across Europe would be shared equally out of the EU budget got (unsurprisingly) a lot of support in Madrid and Rome and luke warm responses in Paris and Berlin. Meanwhile, the UK is now effectively out of the bloc and has stated that pandemic or no pandemic it does not wish to extend the Halloween 2020 deadline for a formal withdrawal deal or no deal. Clearly Europe is EU (ex-UK) Major Export Destinations, 2019 Country

% of total exports

USA

China

Switzerland

Russia

Other

Source: Eurostat

ISSUE TWO 2020

now in recession – Brexit may give it a double dip and simply add to the overall costs. One could fairly ask the question of where the union in European Union is right now. The biggest problem for a bloc as opposed to a single nation is uneven recovery. Paolo Gentiloni, a former Italian prime minister and now the EU’s economy commissioner, has stressed this hard recently. The overall EU economy (minus the UK) is expected to shrink by 7.5% in 2020-2021 – a harder crash than the 2008-2009 recession. However, some member countries – Greece (low Covid infection rate but already essentially an economic basket case), Italy, Spain and Croatia particularly – face falls in economic output (GDP) in excess of 9% in 2020, while nations such as Germany and Austria are looking more at contractions of approximately 5 to 6%. Even if Brussels can unite and agree a bloc-wide recovery package

it is unclear what will be the relationship between loans and grants. Unsurprisingly those member nations keener on state roles in their economies, such as France, Spain and Italy are seeking some financial transfers, while those nations more inclined to keep government out of economies, such as Germany, the Netherlands and other northern countries prefer to give support through loans. Across the Channel London, already in a pre-Brexit slow down and now with the highest death rate from Covid-19 in Europe, is faced with an economic contraction of 8.3% in 2020. However, clearly a failure to reach an agreement with the EU on a smoother, more orderly Brexit, would further dampen economic growth and may push it south of a 10% dip in 2021. Downing Street has ruled out any extensions to the talks; Gentiloni, for the EU, has said: “No deal is a lose-lose situation.” ●

ECONOMY CHINA

First in, first out The People’s Republic is further down the post-coronavirus recovery than others, but still looks shaky

uhan and much of China went into lockdown around Chinese New Year and the economy took a massive hit but is now starting to get back to work. China has stimulus going on all over, though it might not admit to too much. Just drive through a city like Beijing and Shanghai and see all the (often unnecessary) digging up of roads going on. Still, there’s no doubt, China’s place in the world is changing post-Covid-19. Many countries are unhappy with the PRC, many manufacturers are looking to bring manufacturing back and some, notably, Japan (and perhaps France), are willing to actually fund it through inducement payments. Of course however much of this will ever actually happen is a moot point. Some investors are hoping that a combination of China avoiding a second wave of Covid-19 and supporting SMEs and privately owned companies (China’s major engines of jobs and profits growth) will allow China China’s Top 10 Imports, 2019 Category

% of total imports

Electrical machinery, equipment Mineral fuels including oil

24% 16.6%

Machinery including computers

Ores, slag, ash

7.9%

Optical, technical, medical apparatus

4.8%

Vehicles

3.6%

Plastics, plastic articles

3.5%

Gems, precious metals

2.9%

Organic chemicals

2.8%

Copper Source: US State Department

2.0

to put a floor under global growth. However, many of the underlying numbers are not great, to say the least. Retail sales were 19% down year-on-year in nominal terms and nearly 22% in real terms. To give an idea of how manufacturing slowed down – electricity usage by industry was down almost 7% in Q1 year-onyear. Fixed asset investment was down approximately 17%. Importantly it’s worth remembering that all of this was expected after the CNY shut down went into a national lockdown. China of course would argue that, and this is true of most other economies too, that Covid-19 related slumps are not a sign of structural weakness necessarily. Certainly this does seem to be the case in China. However, there is a political risk to factor in with the worst slump since 1976 (the end of the Cultural Revolution, the Tang Shan earthquake, an ailing leadership with both Zhou En-lai and Mao on their deathbeds) in a country now not used to decline, hardship, recession and mass unemployment.

What Beijing will be hoping (aside from Japan and others not repatriating their overseas manufacturing) is that sectors like property sales and retail sales are only delayed and not cancelled; that they will pick up again swiftly. This is indeed likely. However, and as ever, China cannot control the rest of the world. Even if there are no moves to repatriate manufacturing it seems clear that orders from Europe, North America, Japan, Korea and other key markets for China will down. Additionally, Beijing’s flagship Belt and Road initiative across Central Asia, Southeast Asia and Africa appears largely now on hold if not in reverse. And, unavoidably it seems, there are rumblings still of trade wars, sanctions and tariffs from both the US and the EU. One crucial statistic everyone doing business with China might be keeping in mind at the moment – every manufactured export from China requires at least one imported component. That may be one way of looking at how global business begins to get back up and running. ● maritime ceo

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ECONOMY INDIA

The long road ahead India looks set to take a real beating from the pandemic

n a world of hammered economies, India’s economy is looking likely to take one of the biggest beatings. This is not surprising given the endemic poverty in the country, large peasant and migrant worker class that cannot work from home, self-isolate or has anything much of a functioning healthcare system to call upon. Still Goldman Sachs’s prediction that the Indian economy will shrink by an annualised 45% this quarter as the coronavirus pandemic takes a heavy toll and see India’s Top Export Destinations, 2019 Destination

% share of total Indian exports

USA

15.9

UAE

9.1

China

5.1

Hong Kong

3.9

Singapore

3.5

Bangladesh

2.8

Germany

2.7

Holland

2.7

Nepal 2.4

2.4

Source: Indian Trade Board

at least a 5% contraction across fiscal 2020/2021. It is also the case that cashstrapped India doesn’t have quite the reserves of cash to throw at the problems created by Covid-19 as the US, UK and other European countries. Even the Indian government’s $266bn rescue package is problematic – it extends a lot of loans but contains very little additional public spending, tax breaks or cash support to revive demand and prevent firms from collapsing. Actual government spending is estimated at only approximately a tenth of the $266bn. However, perhaps the virus will spur some long delayed decisions regarding economic and structural reform in India. The government has said that will it privatise state-run companies in non-strategic sectors and stop fresh insolvency cases for a year. The major problem with New Delhi’s stimulus package, such as it is, is that it prioritises the supply side but virtually ignores the demand side. Loans by banks to companies may just about keep many afloat but it isn’t going to do much to kickstart domestic demand for anything they make. And, of course, the global

nature of the pandemic means export orders will be harder to find. One estimate has argued that with little support on the demand side a fifth of India’s 70m retail traders (who, incidentally, form a bedrock of the Modi government’s political support at the polls) may go under because they are unable to pay wages and rent. The two-month lockdown has hit both exports and imports hard. In the first month of lockdown (April) exports contracted by 60% and imports plunged by a similar 58%. Manufacturing has taken a massive hit – key sectors including engineering goods, gems and jewellery, as well as textiles, all recorded deep negative numbers. This leaves India with a trade deficit of $6.8bn and rising. Consequently, India’s unemployment rate climbed to 27.1% in early May. Especially worrying for Indian manufacturers is the number of cancelled orders from overseas with many clients believing that both the length of the lockdown and the economic restarting processes will be prolonged in India compared to some other key export markets (i.e. China, East Asia or nations ploughing on regardless such as Brazil). ● maritime ceo

ECONOMY BRAZIL

Latin America’s worst case The Brazilian economy is set for its greatest contraction in history

ockdown and stay at home during the Covid-19 crisis has meant that the Brazilian economy is close to collapse. Food shortages, unemployment and social disorder seem more of a political risk and threat in Brazil than in perhaps any of the other economies covered by this magazine. President Jair Bolsonaro has opposed stay-at-home measures to slow the virus, saying they are unnecessarily damaging the economy. Bolsonaro compared the new coronavirus to a “little flu,” arguing that the economic fallout from the virus was worse than the measures required to flatten the curve and reduce infections and deaths. Brazil now has the highest number of cases in Latin America with its always creaky healthcare sector pushed to the extreme. Despite this, as of at the time of writing, President Bolsonaro was joining in with supporters at anti-lockdown rallies in Sao Paolo, a particularly hard hit city. So will the worst case for the region mean that Brazil ends up with the longest recession and be the slowest to emerge from Covid19 or will Brazil get back to work Top 5 Products Exported by Brazil, 2019 Category

Iron Ore

Crude Petroleum

Soy Beans

Raw Sugar

Coffee

Total Source: Brazilian Statistical Bureau

ISSUE TWO 2020

100

faster and simply accept the death toll? Already the consensus opinion is that the Brazilian economy will contract by at least 5% this year, the biggest downturn in the country’s history – or at least since decent record keeping began in 1900. This massive slump builds on what had been several quarters of repeated contraction of the economy anyway. Inflation is expected to bottom out somewhere around 1.6%. Perhaps more importantly than immediate GDP dips are that the long-awaited economic reforms needed to change the underlying structure of the Brazilian economy are now being put on the backburner. This may actually suit Bolsonaro, the so-called ‘Trump of the Tropics’ who has been in a long running war with the country’s state governors over reform. He has also fired his health minister, ostensibly over the response to Covid-19, but also over differences of opinion on how to fund and maintain the country’s health service.

Brazil has an ambitious plan to reopen the economy and get business moving once again – starting with, unsurprisingly, resuming the soccer league. It also appears that bars and restaurants may open quite quickly (at least compared to other countries). Stimulus programmes will be targeted at key industries in Brazil such as aviation, autos, non-food retail, sugar, alcohol and energy production. Of course exports have taken a major hit – especially iron-ore. However, the Brazilian economy minister Paulo Guedes, who has argued the economy will shrink by over 6% this year, is predicting rising exports to China will more than offset declines in exports to the United States. This may well be true – China orders are up 25% and growing, while orders from the US and Argentina are falling by 30%. Guedes’s bet is that new China orders will ultimately outweigh lost orders to their big northern neighbour and other Latin American countries. ●

MARKETS DRY BULK

Brazil and India fare poorly Jeffrey Landsberg from Commodore Research on how the pandemic is effecting key markets

hile new daily coronavirus cases have continued to decline in the United States (which remains the nation with the largest number of cases), outbreaks continue to intensify in dry bulk-significant countries including Brazil and India. The number of new daily cases in each of these countries have continued to set new daily records as of the end of May and this has been showing no sign of subsiding. The most recent data as of the end of May showed that Brazil on May 29 reported 29,526 new cases of coronavirus. This marks the largest number of new coronavirus cases that Brazil has reported and also dwarfs the previous high of 24,151 that was set just one day earlier. Brazil continues to fare quite poorly and the outbreak has reportedly been having an impact on Vale’s operations and Brazilian spot iron ore cargo volume in the capesize market. India continues to fare quite poorly as well. India on May 29

ISSUE TWO 2020

reported 8,105 new cases of coronavirus. This also marks the largest number of daily cases that India has reported. Sadly the amount of new daily coronavirus-related deaths set a record in India on May 29 as well, and in Brazil the daily death count came just short of setting a record. In India, partial lockdowns were also extended through at least June 30. Overall, the coronavirus outbreak remains a significant issue in both Brazil and India. Much more positive, though, is that as of the end of May it has no longer been a major issue in China. Wonderful for the dry bulk shipping market is that the Chinese economy continues to recover. Particularly significant is that Chinese steel production has continued to climb in recent weeks and has remained well above pre-coronavirus levels. We remain bullish for China’s steel production prospects, and among the major commodity segments we remain most bullish for Chinese iron ore import demand prospects. As we have continued to stress in our weekly dry bulk reports, seaborne iron ore trade has not been facing pressure from China. Instead, iron ore supply issues seen in May have been remain rooted in Brazil. China’s demand has been strong. Chinese coal import demand prospects also remain encouraging. The latest data as of May 25 shows that stockpiles at major power plants in China have climbed to 76m tons. Stockpiles have been climbing since early April, but only by a small amount. They are down year-on-year

by 9m tons (-11%) and are enough to meet 21 days of demand. It has remained very helpful for the seaborne coal market that China’s power plant stockpiles are lower than last year’s level. Also encouraging is that the amount of coal stockpiled at major ports in China ended May at only 17.4m tons. This is down year-on-year by 6.5m tons (-27%). As with China’s iron ore import demand prospects, China’s coal import demand prospects are encouraging. It does continue to be reported that coal imports from Australia could be restricted, however, due to coronavirus-related tensions between the Chinese and Australian governments, but as of the end of May no blanket ban has been enacted. We continue to believe that thermal coal imports from Australia are most at risk, as coking coal is much more scarce than thermal coal. For China’s coal import prospects as a whole, though, demand prospects remain encouraging. ●

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MARKETS TANKERS

Troubles in store Floating storage use will recede soon. It could be painful, writes BIMCOâ&#x20AC;&#x2122;s Peter Sand

loating storage is the hottest topic in the tanker shipping industry right now. It has added a buffer to the market which is nevertheless facing severely reduced demand. The increase in floating storage has removed tonnage from the market, with BIMCO estimating that alone in the VLCC market 80 to 100 vessels are being used for short term floating storage. There have been two main reasons for the increase in floating storage. The first is the challenges with finding onshore storage and this is behind much of the increase in storage. The speed and depth of the decline in global oil demand was not matched by producers and refineries, who were much slower to adjust. This was exacerbated by the oil price war which broke out in March and led to supply increasing dramatically in April. This amplified the gap between oil demand and production leading to a full-blown collapse of the oil price, and more importantly

for storage, fast paced stock building. The existing high stock levels and onshore storage facilities which were not geared for such a disruption, led to increased inefficiency in the oil tanker market, with many ships by default becoming logistical floating storage as delays in ports meant they were left waiting for storage to free up for them to be able to discharge their cargoes. The sudden drop in the oil price has led to some traders looking to benefit from the contango in the market and with onshore storage filled up, they have turned to tankers to store oil in. This has however made up a much smaller part of the floating storage than that which has come about through logistical delays and difficulties. Since the start of the Covid-19 crisis, floating storage has, together with the oil price war, caused freight rates in both the crude oil and oil product segments to spike and are still now leaving the tanker market

World supply and consumption of liquid fuels

Implied stock draw (RH-axis) World consumption

Source: BIMCO, EIA Note: Figures from May 2020 and onwards are forecasts and subject to revision.

ISSUE TWO 2020

Dec-20

Oct-20

Implied stock build (RH-axis) World supply

Nov-20

Sep-20

Jul-20

Aug-20

Jun-20

Apr-20

May-20

Stock change (m/bpd)

-10 Mar-20

75 Jan-20

-5

Feb-20

Dec-19

Oct-19

Nov-19

Sep-19

Jul-19

Aug-19

Jun-19

Apr-19

100

May-19

Mar-19

105

Jan-19

Feb-19

Million barrels per day

2018-2020F

110

in a much better place than other shipping segments such as containers and dry bulk. However, the collapse in global oil demand will surely make itself felt in the coming time. As the OPEC+ alliance has now agreed to supply cuts and refineries, at first slow to adjust capacity have now done so, the stock building and storage issues will subside. Already the US, which has a higher production cost per barrel than other major oil producers, is seeing a record low number of rigs producing both crude oil and natural gas. On May 12 only 339 rigs were operating, a 56% decline from mid-March. The implied stock draws from this capacity reduction, which will only occur gradually as demand recovers, will lead to many of the logistical challenges currently holding floating storage up easing. This means that many of the tankers currently tied up with floating storage will be released back onto the spot market, at a time when demand will still be very limited. The time frame for this will depend on the recovery in demand, which BIMCO does not expect to be particularly fast. â&#x2014;?

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MARKETS CONTAINERS

The market tanks but rates increase Lars Jensen from Sea-Intelligence Consulting praises the strong capacity management seen by the carriers so far this year

e have reached a point where global container shipping has felt the impact of the pandemic for more than four months. Initially the effect was limited to Chinese manufacturing, and even though that seemed to be a significant impact at the time, in hindsight we now know that it was only a small harbinger of things to come. Looking back at the past few decades, several patterns appear to have been constant in container shipping. When demand drops sharply, rates also drop as carriers scramble to fill their vessels. The pursuit of scale economics of ever-larger vessels simply requires them to be filled. Similarly, whenever oil prices drop sharply the resultant savings are relatively quickly passed onto the shippers in terms of lower rates – with or without a BAF mechanism – despite the carriers’ intention to GlobalFreight rates becoming decoupled from rate Change Fuel price change (IFO380 in 2019 versus VLSFO in 2020) demand and fuel prices Global Demand April 2020 versus April 2019 20%

10%

-10%

-20%

-30%

-40%

Global rate Change

Fuel price change (IFO380 in 2019 versus VLSFO in 2020)

ISSUE TWO 2020

Global Demand

hang on to part of the savings. In April global demand declined a staggering 16.9%. Year-to-date we have seen a drop in global demand of 4.4m teu compared to 2019. There is no data for May as of yet, but it is hardly going to be any better. If it is at the same level of demand drop as April the first five months of 2020 will have seen the elimination of almost 7m teu of cargo. This is the same as the total amount of freight moved by OOCL in all of 2019. At the same time bunker fuel prices have dropped 37% - and this is if we compare heavy fuel in 2019 with low sulphur fuel in 2020. If we look only at heavy fuel, the drop is 50%. Yet the latest data from Container Trade Statistics show an increase in global freight rates of 12% in April compared to 2019. And this in the month where the pandemic impact hit the markets in earnest. It is by now very clear that the structural mechanisms governing supply/demand and pricing have changed in the container shipping market. Of course, there is no guarantee that we will not suddenly see a reversal to the old ways of operating with sharply dropping rates as a result. But after four months of being in a challenged market environment there are no signs that such a reversal is about to happen. Spot rates on the Pacific to the US West Coast are up by more than 40% compared to a a couple of months ago. This is also the only trade where we see carriers re-instate some of the blanked sailings

more systematically. The EuropeAsia back haul trade has seen a 60% increase since the virus outbreak escalated in China. Not all trades have seen similar increases, and some have seen declines, but the pattern is clear: Despite dropping demand and sharply lower fuel prices carriers have consistently for months been able to not only sustain, but increase, overall freight rates by strong capacity management. And it works. It works to the degree that Hapag-Lloyd even maintained their profit guidance for 2020 despite the adverse market conditions, although with a strong caveat that the upper reaches of the guidance might not be achievable. But a profit in 2020 nonetheless. If the carriers globally can maintain this market approach, the industry overall might still come out of 2020 without a loss. But that is for the industry as a whole – there will clearly be some individual carriers for whom 2020 will still be a very bad – or even terminal – year. ●

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MARKETS FINANCE

Why I’m holding onto my gold Dagfinn Lunde is horrified with all the money printing taking place by central bankers across the globe

hen I finished my time as a full-time banker at the end of 2013, I put pretty much everything I had into gold and property. I was simply overwhelmed with how much money was being printed by central banks everywhere - it made no sense to me as an economist. Little did I know the madness was set to accelerate to the point where now rainforests are being turned to cash to paper over the cracks of the creaking Covid-19hit global economy. The world is printing money left, right and center but the system has turned very sour indeed, with 90% of what comes out of the central banks going to the 3% of the richest people. The structure of the world economy is wrong, scary, and plain strange, even for us economists. From a ship finance point of view, I expect things will get a whole lot more expensive post-Covid-19.

ISSUE TWO 2020

Banks had tight capital issues before the pandemic struck. With the losses they see in all the industries they are involved in, they are now panicking, their own share prices are tanking. So, I’d say it is highly unlikely banks will be willing to fund much new businesses, especially shipping. Bear in mind too, banks have a huge offshore issue on top of coronavirus - the cheap price of oil is hurting them massively. Yes, there are lots of smaller regional banks who have emerged in recent years, but they can offer only small amounts and often more to local customers. With the outlook for global trade and shipping so uncertain - not helped by so limited S&P deals - it’s very hard for financiers to tell real asset values and it is hard to be able to judge the risks. Chinese leasing has also taken a step back in recent months and is unlikely to throw as much cash into shipping as in previous years. The irony is, like a decade ago, it is the private equity guys who are now back on the stage. They have a space all to themselves that they have not had before, but bear in mind, they are inexperienced and expensive, although there are a few who came into the market about 10 years ago and they have learned shipping

the hard way. Of the newcomers, one PE fellow the other day quoted me a loan with 36% yield! But to be fair the normal pricing in this market tends to be in the 7% to 14% region, rather tough in shipping when average returns are not above 8%. However, contrary to the banks who today hardly quote any loan over 45-50% of market values, the alternative financiers tend to be willing to quote up to 60-65% to “justify” the higher pricing. At least there is money available, however shipping has a bad name in the capital markets with a number of banks still writing stuff off and too many shipping companies lacking decent corporate governance. To end on a positive note, there is always a comeback however perilous the cycle looks. If I had investment money to hand, I would hoover up offshore assets fast. An OSV built for $40m can be bought for $5m today. There are bargains to be had even with the outlay for layups. And as we all know, shipping is cyclical. ●

EXECUTIVE IN PROFILE DEBATE

Survey suggests shipping is heading towards record lay-up territory Jason Jiang looks at how owners are dusting off lay-up plans

he continued outbreak of coronavirus has forced shipowners to implement various measures to control their operating costs in order to stay in business with many of them starting to look at options to lay up their vessels. Nearly two thirds of Splash readers reckon that the global economic meltdown from the so-called Great Lockdown will result in a record number of ships heading into lay-up in the coming 18 months (see

MarPoll on the back page). Among the most likely candidates for lay-up are car carriers. Estimates from Dynamar indicate that the idle car carrier fleet will hit between 220-250 vessels and 3.8m â&#x20AC;&#x201C; 4.5m dwt, approaching 30% to 35% of the current fleet in the next month or two. In a recently released report, classification society Lloydâ&#x20AC;&#x2122;s Register (LR) states that containerships as well as passenger and cruiseships

are among the first in the maritime sector deciding to lay-up and are becoming reacquainted with regulatory and technical measures to prepare and protect vessels whilst out of service, with the volume of layups already in place not seen since the global financial crisis of 2008 and 2009. According to LR, most containership and passenger vessel owners are looking at hot or warm lay-up options, which allow a vessel to be maritime ceo

EXECUTIVE IN PROFILE DEBATE

quickly reactivated and returned to service within 24 hours to a week. “Whether lay-ups are greater than 2009 when numbers surpassed 1,000, is uncertain; many owners don’t immediately confirm the status of their ships. But already there are indications that Covid-19 presents greater challenges for seaborne trade, suggesting that lay-ups will become a feature dominating shipping over 2020,” the LR report states. Japan’s Mitsui OSK Lines (MOL),

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one of the world’s largest shipowners, also recently announced measures to deal with potential cash flow issues due to the coronavirus outbreak. “Although freight and other income are expected to fall as a result of decline in shipments, we will endeavour to generate funds through the lay-up or redelivery of vessels under short term time charters, the freezing of new investments, in principle, and the disposal of assets in addition to the reduction of operating expenses starting with saving on fuel costs as a result of vessel slowdown,” MOL stated in a recent release. Bjornar Andresen, chief underwriting officer at Gard, is seeing some warm lay-ups in the cruise, ferry and containers sectors, as well as the offshore market which has been in lay-up territory for a long time now. “The premium paid for vessels that are moored in excess of 30 days in the same position without cargo is reduced, but that reflects reduced risks that vessels face in this situation,” Andresen says. Nicolas White, a senior consultant at London Offshore Consultants, also agrees that the market will see more warm lay-ups as owners have no way to repatriate crews at this time. Carl Schou, CEO and president of Wilhelmsen Ship Management, says the company has received inquiries for more than 100 ships for lay-up management. “I think many are cautious about the future and are checking the options available in light of the uncertainty ahead,” Schou says. However, Schou believes the surge pattern of vessels being laid up seldom correlates immediately with a crisis; history shows shipowners tend to avoid lay-ups for as long as possible. “I think there are many factors that could influence the decision to lay-up a vessel such as the type of charter the vessel is on, charter rates, age of the vessel, price of scrap metals and many other variables

“

Whether lay-ups are greater than 2009 when numbers surpassed 1,000, is uncertain

”

that owners take into consideration. Right now, we are getting request from all segments. So it is hard to say which segment is hardest hit by this pandemic,” Schou says. The unique situation at present has been exacerbated by the protracted closure of most shipbreaking yards in south Asia which have been off-line for weeks thanks to Covid19-related work restrictions in India, Pakistan and Bangladesh. To go down the lay-up route is, in the mind of many owners, an absolute last resort, something touched upon in typically wry fashion last month by Andrew Craig-Bennett, our lead columnist, who writes on page 43: “Don’t put a passenger ship or a dive support ship into cold lay-up or you will discover the truth of the Ancient Greek proverb, ‘Once in lay-up, always in lay-up!’ Think about what is needed to reactivate laid up ships and plan accordingly.” Gary Woolley, managing director at Singapore-based Marine Layup Services, says most owners are still doing costing exercises at this stage and hoping for the situation to get better. A second wave of the virus could be the trigger for a far wider fleet lockdown. ●

“Covid-19 is not going away. There are very likely to be further flareups.” — Raal Harris, managing director, Videotel

IN PROFILE

Kuba Szymanski p.31

Paul Jennings p.35

Steven Jones p.33

Manish Singh p.38

Graham Westgarth p.31

Heidi Heseltine p.22

Paul French p.26

Jenna Brown Kate Adamson

p.40

In profile this issue

Beate Stelzer p.33

Maritime CEO brings highlights from the first season of our new TV show

maritime ceo

IN PROFILE

Lasse Kristoffersen

Lars Jensen

p.27

p.26

Mark O’Neil p.31

Athanasia Panagiotopoulou p.40

Will Fairclough p.25

Şadan Kaptanoğlu p.37

Bjorn Hojgaard p.22

Tabitha Logan p.40

Frank Coles

John Michael Radziwill

p.31

p.30

Esben Poulsson p.22

Bjoern Sprotte p.38

Jeremy Nixon p.29

Claus Nehmzow p.35

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IN PROFILE

The launch of the Maritime CEO Leader Series In April we aired the first episode of a new weekly TV show interviewing the great and good in shipping from across the world. Over the next 16 pages we highlight some of the key takeaways from the series

t the start of April senior management from this title held a video conference with top personnel at Ocean Technologies Group, the rapidly growing e-learning company that includes brands such as Videotel and Seagull in its portfolio. The discussion centred around creating a series of videos to air every week on the Splash website, interviewing the great and the good of shipping in short, hopefully not too dry, well produced episodes.

Ten days later the first episode of the Maritime CEO Leader Series powered by Ocean Technologies Group aired and has since gained a loyal following with thousands of people viewing the first 16 shows that have been broadcast as this magazine

â&#x20AC;&#x153;

went to print. The interviews attempt to put in context how the coronavirus has affected - and will shape - shipping as well as giving some time for lighter matters such as the regular cultural lockdown questions posed at the end

The way we have adopted technology over the last few weeks will have a lasting impact

â&#x20AC;?

maritime ceo

COVER STORY

Cultural lockdown Books Heidi: Wild Swans by June Chang Esben: by Michael Palin Bjorn: Red Notice by Bill Browder

“

We need to change as an industry to embrace more flexible working. It’s one of the things that makes us very unattractive

”

of each show. The first episode conducted, Zoom-style, featured Esben Poulsson, the chairman of the International Chamber of Shipping (ICS), dialling in from Singapore, Heidi Heseltine, CEO of UK-based Halcyon Recruitment and Bjørn Højgaard, the CEO of shipmanagement giant Anglo-Eastern and chairman of the Hong Kong Shipowners’ Association. Højgaard discussed how impressed he has been with the speed with which shipping has gone digital during the coronavirus and how seafarers had soldiered on brilliantly during the crisis. “Ashore I must say I don’t think any of us were quite ready to go digital in our communications and daily processes like we have done and yet it has been a remarkably smooth process,” Højgaard said. Shipping has in general adopted a solution-driven, empathetic approach to handle the crisis, according to Halcyon Recruitment’s Heseltine. “It has been the cohesion and collaboration that has made the most difference for me,” she said. Whereas many in shipping had previously been “technophobic”, Heseltine reckoned the current situation has allowed everyone

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to appreciate the real benefits of technology. ICS’s Poulsson praised the industry for how it had handled the pandemic to date. “It underlines what I have always said about this industry,” Poulsson said. “It is amazingly resilient and amazingly flexible and has the ability to change course very quickly as conditions dictate.” Højgaard predicted there will be much less business travel once the virus recedes with shipping embracing more flexible hours. “We will never get back to the

way things were. Flexible working hours, much more video conferencing that is here to stay. The way we have adopted technology over the last few weeks will have a lasting impact,” Højgaard said. The Dane’s point of view was heartily embraced by Heseltine, someone who has for years championed the idea of less rigid working hours for shipping. “We need to change as an industry to embrace more flexible working. It’s one of the things that makes us very unattractive as an industry,” Heseltine said, pointing out that it would be good from for both worklife balance as well as a cost saving perspective. Many of the viewpoints raised in this debut episode would be chewed over by the luminaries in the shows that followed. ●

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IN PROFILE

‘We may have hit the extremes for people flying to a meeting’ Wah Kwong’s Will Fairclough had plenty to say on how Covid-19 could spur greater green thinking in society at large

pril 16 was the date of the second episode of the Maritime CEO Leader Series, and it took viewers to the Hong Kong home of William Fairclough, the managing director of Wah Kwong Maritime Transport Holdings, a famous name in Hong Kong shipping. In conversations with Fairclough in the past it has always struck Maritime CEO that this UK citizen is very aware of his own carbon footprint, wincing at the thought of another flight, and so his thoughts on how the coronavirus might spur a greater green consciousness in society at large made for a fascinating TV interview. On assessing just how seismic the current pandemic could be in terms of changing our daily lives, Fairclough pointed out that for most people in the West the coronavirus and the subsequent lockdowns marked the greatest shift since the

Cultural lockdown Book: Rebel Ideas by Matthew Syed TV: Ozarks on Netflix

ISSUE TWO 2020

“

The world assumed we needed carbon intensive travel to sustain the global economy

”

Second World War. Likewise, he observed: “The financial crisis still burns brightly in all of our minds and we talk about it pre- and after the financial crisis. This will go down at least as the same in terms of impact.” Fairclough hailed the financial resilience of shipping compared to aviation and other transport sectors during the ongoing coronavirus crisis. The shipowner highlighted how shipping might accelerate more rapidly towards a greener future thanks

in part to the spread of Covid-19. Fairclough reckoned the outbreak could could fast forward a number of trends, while also saying: “We may have hit the extremes in terms of the extent people feel the need to jump on an airplane simply to attend a meeting.” “The extent to which the world assumed we needed carbon intensive travel to sustain the world economy and it was not going to go away has been shown that that can stop in a couple of weeks and I don’t think anyone anywhere would have believed it could be done but it has been shown to be possible. So I believe once that enters the human psyche it does alter peoples’ perception of what is necessary,” Fairclough said. The former Clarksons broker also spent much time during the 17-minute video discussing how shipping is keen to move on to the next phase in technology to make greener ships but investment has to be underpinned by commitments from the end-users. “Ultimately that cost has to flow through to the consumer and that is to society at large and what this may do is alter society’s view on whether or not they’re willing to pay for it,” Fairclough said, noting greater urgency in the locked-down nations everywhere to address environmental issues. ●

IN PROFILE

PRC relocation Maritime CEO’s China economy writer Paul French on global trade

ward-winning author and economist Paul French joined the TV show in the middle of May to put China’s economic position in a global context for viewers. French, who has been Maritime CEO’s China economy and book review writer since the magazine launched seven years ago, is a widely published analyst and commentator

Cultural lockdown Book: China Bound by Robert Bickers Podcast: Pong Su by The Age

on China. April economic figures from China were the worst since 1976, French warned, a year when the People’s Republic suffered a giant earthquake, the Cultural Revolution was ending and Mao Zedong was ailing. On the rebound in Chinese consumer demand, French said that while China has been the most compelling consumer story for the last 15 years, getting the nation back into

buying mode would be tricky. The situation from a global trade perspective would worsen thanks to more tariffs likely to come from Washington. “China is clearly going to be the demon bogey man in the US election,” French said. The UK national discussed the reality of politicians such as Japan’s Shinzo Abe calling for industries to reshore back home. To get better supply chains running elsewhere, French said there would be pushback because of all the extra infrastructure such as roads, ports and airports that would need to be built in Western countries. “This puts the green lobby in a bind as what are you going to do: oppose jobs? Oppose apprenticeships?Oppose economic rejuvenation?” French mused. ●

Liner shipping hit ‘disproportionally’ hard LARS JENSEN, ONE of the best known pundits in container shipping, has had a good coronavirus, his musings on social media read by thousands and many of his predictions proving to be correct. The CEO of SeaIntelligence Consulting and a columnist for this magazine (see page 15), warned on an April 21 episode of the show that the container shipping sector would get hit “disproportionally” hard compared to other cargo sectors, while adding that the rebound, which he is predicting in

2021 will also be “disproportionally” sharp. Jensen is predicting that carriers will suffer a combined 10% volume drop this year, but he praised liners’ collective resolve thus far in holding the line on freight rates. In terms of how coronavirus might change liner shipping Jensen argued that existing trends such as digitalisation would be accelerated by the pandemic. Manufacturing would continue to be more dispersed, Jensen said,

while demand centres will continue to spread beyond the main eastwest tradelanes. Peak outsourcing for container shipping was actually reached 10 years ago, Jensen pointed out. ●

maritime ceo

IN PROFILE

Why globalisation is here to stay Lasse Kristoffersen talks digital and life post-coronavirus

asse Kristoffersen talked digital and life post-coronavirus in late April in a popular episode of the Maritime CEO Leader Series. The CEO of Norwegian shipping bluechip brand Torvald Klaveness maintained in the interview that shipping will continue to adapt to both the changes brought about by the current pandemic as well as the more swift adoption of technology by society at large. “When these things happen we tend to overestimate how fast change has come but underestimate the implications of the change itself. For this virus and the technology around it the long term effects are very deep,” Kristoffersen said. “In life this will change how we think about pandemics and risk. It will change how each one of us looks after our personal health,” Kristoffersen said, going on to discuss how the issue of crew repatriation was something that needs

“KR’s transition to a fully digitalised classification society is on the top of my list.” — Hyung-chul Lee, the new chairman of Korean Register

ISSUE TWO 2020

“

When these things happen we tend to overestimate how fast change has come but underestimate the implications of the change itself

to be urgently ironed out or shipping will struggle to attract new generations to a career at sea. The Klaveness boss, formerly with class society DNV GL, was adamant during the video chat that coronavirus would not put globalisation on the back-burner. “I don’t think the world ever goes into reverse, it just finds different ways of going forward and globalisation is here for a reason and the reason is it is better for all,” Kristoffersen said from his home in Oslo. On the physical trades,

”

Kristoffersen said he did not foresee any fundamental changes beyond short-term demand changes. ●

Cultural lockdown Book: Factfulness by Hans Rosling TV: Fauda on Netflix

IN PROFILE

One on ONE with Jeremy Nixon The head of Japan’s top containerline joined us on an appropriately thundery afternoon

t was a suitably stormy afternoon in Singapore when Maritime CEO connected with Jeremy Nixon in early May. The highly approachable and genial CEO of Ocean Network Express (ONE) was happy to take on a whole raft of topics in a quick-fire, nine-minute episode discussing the plight of liner shipping during what would turn out to be among the darkest months for container shipping in the sector’s 64-year history . Nixon discussed how volumes have dropped thanks to the coronavirus and assessed just how bad things could get for liner shipping. Nixon also compared the fallout from today’s pandemic to what happened in the wake of the 2008 global financial crisis. He recalled the V-shaped recovery back then and the fast inventory recovery five months after Lehman Brothers collapsed. “This situation today will take a longer term recovery,” Nixon said, uncertain whether even after 18

Cultural lockdown Book: Riddle in the Sands by Erskine Childers TV: Twin on BBC

ISSUE TWO 2020

“

The transfer across to home working has been relatively painless

”

months if box volumes will have recovered. The ONE boss also discussed digitalisation saying how the pandemic would inevitably make his company review again the way its staff works. “The transfer across to home working has been relatively painless,” Nixon said. Quizzed on whether or not the economic case for the latest slew of record breaking megamax ships was as sound as just a few months

ago, Nixon said: “I think there is still a place for big ships in terms of just the overall economics of running the business. At the end of the day a customer wants a very good price for their container shipping services. As long as we can continue to work in consortia then we can continue to operate big ships but obviously less loops than we did before.” Noticeably all market chatter of ONE ploughing ahead with more giant ship orders have disappeared as Covid-19 has spread. ●

IN PROFILE

‘Mr Fredriksen is the smartest person in the industry by far’ On a sunny day in Monaco John Michael Radziwill made for a typically upbeat interview

t the end of April while most of the world was still in some form of lockdown Splash TV viewers were given an alternative way of looking at this extraordinary confinement period. Speaking from Monaco in an entertaining episode of the Maritime CEO Leader Series, John Michael Radziwill, CEO of GoodBulk, argued that people need to change their mindset when thinking about being stuck at home because of the threat posed by Covid-19. “There are only two days of lockdown – the first day and the last day and how you make that happen is you live day by day as efficiently and as happily as you possibly can and that is, as they say in India, that is your dharma,” Radziwill maintained. “We’re at war and this is what you need to do and doing that you’re saving lives and giving a backbone to the heroes out there.” The GoodBulk boss had been on the radar for an interview in this series from the start, proving second only to John Fredriksen in terms of a straw poll among close Maritime CEO contacts as to who ought to feature in our Zoom chats with the great and the good of shipping. Radziwill said he was honoured to even be linked with Fredriksen, a man he described as “the smartest person in the industry by far, different league, no arguments”. On the dry bulk markets, Radziwill presented his reasonings

to be optimistic about a second half rally leading towards a “sweet spot” next year. For capes, 2021 and 2022 have a very light historic orderbook while scapping has been picking up prior to demo yards in South Asia going into coronavirus-inspired shutdown. Radziwill was delighted with recent news that Brazilian miner Vale has decided to stop using up to 25 converted ore carriers, the equivalent of 40 normal capes. Moreover, on the demand side, Radziwill said Vale’s most recent production guidance through to the end of the year was 20m to 40m tonnes more than last year. He noted also that coal demand was finally picking up with China and India taking more cargoes in recent days. For panamaxes and supramaxes, agritrade demand looks good, Radzilwill said, as the trade war eases so long as South American countries can supply despite the growth of the spread of coronavirus.

“Message to owners,” Radziwill said in a popular refrain of his, “Let’s not screw it up again please. No newbuildings. There are enough secondhand ships. If you need to find one you can call me I will happily sell one to you and we can all make a lot of money together.” Come the second half of the year when economies restart, dry bulk ships ought to be the “arteries to a recovery”, Radziwill suggested, as China, the US and possibly Europe too would kick in varying forms of infrastructure stimulus. The GoodBulk boss had some advice to his peers: to hold their nerve and hold out for better times for one and all. “Every single cargo that you price prices an entire market and the asset value of your ship so when you do it, do not make a quick decision, think it through, look at the whole picture; synthesise well, decide well,” Radziwill concluded. ●

Cultural lockdown Books The Undoing Project by Michael Lewis Thinking, Fast and Slow by Daniel Kahneman

maritime ceo

IN PROFILE

Shipmanagement special Five managers discuss the long-term impacts of the coronavirus

n mid-March we hosted a shipmanagement TV special with some very testy viewpoints from across the world. The episode started with Kuba Szymanski, secretary general of shipmanagement association InterManager, who set the scene by explaining how the current pandemic compares to previous crises faced by his industry over the past 20 years. Szymanski praised shipmanagers for coming together to find solutions to current challenges brought about the coronavirus. “Shipping has not stopped for a second. Shipping is a backbone. We have been going thanks to our seafarers, thanks to people in our offices,” Szymanski said, going on to applaud international bodies such as the International Maritime Organization (IMO) for pushing through guidelines fast. This latter point of view was not one shared with Frank Coles, CEO of Wallem Group, who did not hold back with his thoughts on the matter. “From a regulatory perspective we have shown how wholly inadequate the IMO is in dealing with a crisis,” Coles said, going on to describe how “blind” shipping is as an industry. “We’ve exposed our soft underbelly in our ability to self-promote and self-govern and it has greatly emphasised that maritime is a blind industry; blind in so far as we have no lobby, we have no ability to influence governments, and we are blind to everyone else,” Coles said. The middle section of the episode saw Mark O’Neil, the president of Columbia Shipmanagement, tackle the question posed on what might be the ‘new normal’ for ship operations in the coming year or two as we have to get used to operating with the coronavirus always in the

ISSUE TWO 2020

background until a vaccine is found. Shipping companies will need to remain extremely nimble, flexible and adaptable, both at the executive decision-making level and in the operations departments, O’Neil said. Planning at the moment is shortterm, almost on a day-by-day basis, he said. Turning to benefits, O’Neil told the TV show, “It’s time for the employers within the shipping industry to look at the benefits which they afford their crews. The crews have been at the forefront of this Covid-19 battle, some of them have not been rotated for nine months… It is now time to look again at the whole question of crew benefits. Is a crewmember, an able bodied seaman entitled to the most basic health insurance, life insurance, disability insurance, pension provisions? This is something we have certainly started to look at within Columbia to see is it affordable, is there a contribution from the crewmember, a contribution from the industry and insurers, etc on how we can facilitate that.” Graham Westgarth, CEO of the V.Group, was up next, tasked with

asking what good can come out of this pandemic mess. Westgarth said the coronavirus had shown how vital it was to leverage all the group’s systems and communication capabilities to keep clients and employees up to speed with every development. The video concluded in Singapore with Carl Schou, the CEO of Wilhelmsen Ship Management, who assessed whether demand for thirdparty shipmanagement will grow as a result of the coronavirus. He pointed out that there was no great, swift surge in demand after the global financial crisis of 2008, and there was unlikely to be this time. “What I think will happen is that many shipowners will try to cut their own costs and if they see this works or doesn’t work, depending on the outcome then we might see added activity in the outsourcing segments,” Schou said. Shipowners might start to consider outsourcing more as a diversification strategy going forward, Schou suggested, due to crewing issues they have encountered in recent weeks. ●

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IN PROFILE

The nurse who decided to go to sea With the Day of the Seafarer approaching we headed to Panama to hear the extraordinary life of Captain Beate Stelzer

omen working at sea are a rarity. A woman captaining a merchant ship rarer still. So with the Day of the Seafarer fast approaching Maritime CEO leapt at the opportunity for a video interview onboard the 4,258 teu Luna Maersk as the ship prepared for a rainy transit from the Pacific side. Berlin native Captain Beate Stelzer’s life story is extraordinary. Deciding back in 2007 at the age of 40 to quit her job as an intensive care nurse for a maritime career switch, Stelzer signed on with Hamburg Sud. Eleven years later with the German carrier now bought by Maersk, she became a captain. “I always wanted to do another completely different job in my life. There are so many interesting jobs you can do; why only do one?” she said of her mid-life career switch. To get more women into shipping Stelzer said it’s important that

prejudices are ditched about women in technical jobs. It’s important too, she said, to make the job more family friendly, for example with shorter contracts. The majority of the episode was spent discussing the challenges of life at sea during the coronavirus. “Uncertainty about getting relieved or not makes some of the crew depressed or aggressive,” Stelzer admitted, saying that it was vital that as captain she had more communication with her crew during these difficult times.

With no shore leave whatsoever for several months, Stelzer related how she saw the same people day in, day out - “the same faces, the same noises” - something she admitted has become boring. The former nurse also addressed the medical challenge for seafarers during the coronavirus crisis with crew unable to go ashore for aid. “Humanity is getting lost by this,” she warned. ●

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‘Uncertainty takes a terrible toll’ STEVEN JONES, THE founder of the Seafarers Happiness Index, discussed the mood of crews around the world in early May. The Q1 report from the index, published at the start of May, had a strong Covid-19 theme to it, revealing dread, fatigue and burn-out onboard. Jones discussed the fears and concerns of crews at sea during the coronavirus crisis. “One of the things that was

ISSUE TWO 2020

really coming across probably most loudly in [the report] was the fact the uncertainty takes a terrible toll,” Jones said in the video interview. “The fact that many of the seafarers are not sure when they will be able to get home.” Interactions onboard are starting to become a bit “frayed around the edges”, Jones warned in the interview, adding: “The stresses are starting to tell.” Since the Q1 report was

published new surveys seafarers’ mood has darkened further, something that will only alleviate, Jones said, once international consensus is reached on how to fix the crew repatriation issue. ●

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IN PROFILE

Digital playlist A former BP and Shazam tech star on what maritime can learn from other industries

aving established itself, the TV show took a new tack on May 21 with the launch of the Maritime CEO Tech Leader Series. Sponsored by the maritime digital platform Dualog, each episode featured interviews with people tasked with changing the face of our industry. The opening episode of this mini-series took viewers to Singapore with top insights from Claus Nehmzow, the chief innovation officer at Eastern Pacific Shipping. Before joining Eastern Pacific, Nehmzow drove digital innovation at BP across Asia Pacific, founded a gamified online education start-up, and was COO at music app Shazam. Nehmzow discussed what he reckoned would be this year’s biggest digital developments in shipping. “We have almost the perfect storm of different technologies coming together and getting to the point where they can be applied,” he said, citing artificial intelligence, machine learning enabling computer vision and better communications,

all technologies that tend to be pioneered first in the consumer world before transferring to the industrial sector, including shipping. “Covid-19 is a kind of catalyst. It allows people to discover or rediscover technologies that have been around for a while that now have new emphasis,” Nehmzow said explaining how with the current urgent need for a contactless society digitisation of processes with trusted technologies such as blockchain has developed rapidly in recent months. Nehmzow also discussed the growth in the use of drones this year as another feature of the contactless

society. “We see Covid-19 as an accelerator to make things much faster, to accelerate adoption of technology, to be an impetus for more innovation,” Nehmzow said. Quizzed about how oil and gas firms differ to shipping in terms of digital adoption, Nehmzow said pointed out the former tend be far larger companies with sizeable analytical and computer science groups embedded in their organisations. Oil and gas are often very large companies and they have huge analytical and computer science groups mainly driven by the exploration, the upstream. “You have lots of PhDs doing fantastic stuff and they’re adopting technology at very advanced super quantum levels,” Nehmzow said, adding: “The shipping industry does not have these pockets of highly sophisticated data. This is a huge opportunity for shipping to drive through the data analytics, to monetise data through analytical algorithms.”●

P&I’s pandemic response PAUL JENNINGS, CEO of the North of England P&I Club and current chairman of the International Group of P&I Clubs joined the Maritime CEO Leader Series on April 28 No club will be immune from the financial fallout brought about by the coronavirus, the North boss conceded in the video interview, but Jennings was adamant that the reserves he and his peers in the International Group had built up in recent years ought to be able to withstand the worst effects brought about by the pandemic. He admonished critics who had been

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saying for some time that too many clubs had been holding excessive reserves. On likely changes coming to his sector – and the world of business in general – once the virus recedes, Jennings reckoned there would be less travel and that the path of globalisation might take a new route. “Do we need to do the amount of travel we did previously?” Jennings mused, adding: “I think it will focus us all on whether we need to jump on that plane for that particular meeting or can we conduct some form of video medium?” The insurance veteran said that

there would likely be more profound debate about where globalisation goes in the coming months. “What the pandemic around the world has taught everybody is that the just in time world we live in is great when everything works but when you stop the supply chain, my goodness, that does create a problem for everybody,” Jennings said. ●

IN PROFILE

Green recovery Şadan Kaptanoglu, the president of BIMCO, was another high-profile guest on our show a few weeks ago

welve months into her two-year tenure as the first woman president of BIMCO, the world’s largest international shipping association, Şadan Kaptanoğlu is having to restress her green priorities, something that risks being sideswiped by the Covid-19 pandemic. Kaptanoğlu explained in a widely watched episode of the show at the end of May why it is so important shipping does not lose focus of its 2050 greenhouse gas commitments. “If we do not follow this green path we will create very domestic, regional, different regulations and that will be a catastrophe for shipping, so we will not lose our focus,” she said. “Shipping is on the track of decarbonisation,” the Turkish shipowner maintained. “We have a target to meet and we are working on it. Yes, we are going through unprecedented terrible times but this will not change this… Because we have a 2050 target for greenhouse gas emissions and this needs to be fulfilled.”

Cultural lockdown Book: Automating Inequality by Virginia Eubanks TV: A Plastic Ocean on Netflix

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On propulsion choices facing owners in the coming years Kaptanoğlu was not sure one size/ ship type fitted all. “There won’t be one solution,” she said. “There will be different propulsion solutions for different types of vessels and different types of trades. To put one forward now would only be for some of the vessels or some of the trades so I will not put any one in front.” Kaptanoğlu, the managing director of Istanbul-based HI Kaptanoglu Shipping, explained how the coronavirus has shaped the latter half of her BIMCO tenure and her expectation for a very tough 12 months ahead for the shipping industry. “When something happens like this it can change your priorities,” Kaptanoğlu conceded. “Right now all the shipping associations - not only BIMCO - are working together closer than ever and our top priority are the seafarers to ensure they are safe, both physically and mentally, and to ensure they can have crew changes as soon as possible. It also shows all of us how this crew change system is fragile.” The plight of seafarers marooned at sea has become Kaptanoğlu’s top immediate priority. Getting the International Maritime Organization (IMO) to act fast was easy enough, she said; the harder part was taking the issue to governments around the world. “A shipowner’s responsibility is to protect sea trade and to do it efficiently and effectively so our famous

global supply chains will not change and will work smoothly,” Kaptanoğlu said. On the markets, the Turkish shipowner warned her peers to brace for a “very challenging year ahead”. “We do not expect any V-shaped recovery, more a W-shaped one,” she said going on to explain that like the virus the debilitating effects have spread from cruise to ferries to containers to dry bulk. “Eventually it will lead to all the segments. It will be very difficult times,” Kaptanoğlu stressed. “The quicker shipping companies move and adapt the better, but we will see a lot of change,” she predicted, going on to say: “Lots of people say we have this great chance for change - these are very romantic ideas and I wish it was the case but what we see in front of us are trade barriers increasing, populism is increasing and everyone is going to their own corners and they are trying to roll over the globalisation, but globalisation is a good tool, ultimately it is good for everyone.” ●

IN PROFILE

Training goes virtual overnight Covid-19 has changed how seafarers learn the ropes probably forever

he future of training was the focus for the first June episode of the Maritime CEO Tech Leader Series. Featuring the head of Ocean Technologies Group, Manish Singh, and OSM boss, Bjoern Sprotte, the discussion centred around how training has changed in the last few months and what will be the likely long term changes in training as the Covid-19 pandemic recedes. Kicking the show off, Sprotte related how when the World Health Organization officially declared the

“With so many new rules and requirements to contend with, seafarers and shipping companies are struggling to cope. ” — Petros Achtypis, CEO at Prevention at Sea

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What will see in the coming months is not so much transformation, it is going to be more improvisation, and more adoption

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coronavirus a pandemic on March 11 training came to a “complete standstill” overnight, necessitating a swift adoption of replacement digital tools. “What we have seen is a more connected learning community, which, in my view, really looks ahead instead of having what we call this touch and go,” Sprotte said, explaining how pre-Covid-19 when people came to a training facility, they spent time together, then left and it tended to be tricky to confirm just how successfully the lessons had been absorbed. “With this new technology we stay connected, they share learnings and create a self-learning community by that, which is encouraging each other to learn skills and create a sense of belonging. For us that is also

a retention mechanism obviously,” Sprotte said. Singh, who oversees well-known training brands Videotel and Seagull among a host of products in the Ocean Technologies Group, said shipping as a whole was still adapting to the new normal of remote training. “What will see in the coming months is not so much transformation, it is going to be more improvisation, and more adoption,” Singh told the TV show. “So in the very immediate term I am not expecting a total transformation of the technological platform, I’m seeing a convergence of the few already available technologies to solve some of the problems the customers have.” Singh said his company was helping shipping companies migrate what would otherwise happen in a bricks and mortar environment into the e-learning environment. “Adoption of that will accelerate very sharply in the coming months,” Singh said. Both participants in the episode felt the pandemic had sped up the digitalisation of training by around three years. ● maritime ceo

IN PROFILE

Carriers urged to follow banking’s digital path Thomas Bagge, the CEO of the Digital Container Shipping Association, has had a very busy 2020

n the 14 months since he moved to Amsterdam as the founding CEO of the Digital Container Shipping Association (DCSA), Thomas Bagge has been to the bank just once. It’s a point he makes by way of showing the path liner shipping is on to make booking a box a far more simple, online experience. Bagge, a 13-year Maersk man prior to his DCSA appointment, relayed what carriers are doing to go digital and how so many archaic shipping practices should be consigned to the history books in an entertaining chat in June. Bagge said carriers must aspire to get to the digital levels banks have done. “The example I like to use is personal travel and banking, which has got so easy these days. Why shouldn’t we have the same vision for container shipping?” Bagge questioned. Explaining where he believes the biggest digital advances can be made in liner shipping, Bagge said the focus should be on documentation, something his association has been busy tackling all year. “I think the biggest gain is on the documentation side, the carriers have done a lot on the operational side, but from the customer experience, container shipping is still not great compared to other industries,” Bagge said. In May, the DCSA made clear its determination to consign the centuries-old bill of lading to history. In a new report, the DCSA stated that moving towards a standard, paperless bill of lading will derive

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Eliminating paper from the shipping transaction will make every aspect of commercial container shipping better, faster, cheaper, more secure and environmentally friendly

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$4bn in potential annual savings at a 50% adoption rate for the container shipping industry Since the first efforts to digitise bills of lading in the late 1990s, the promise of an electronic bill of lading for the container shipping industry has remained elusive. In fact, Tradelens, the Maersk and IBM blockchain platform, goes so far as to call an electronic bill of lading standard the “Holy Grail of global trade”. Like the Holy Grail, there are a number of obstacles on the road to attaining it. “Eliminating paper from the shipping transaction will make every aspect of commercial container shipping better, faster, cheaper, more secure and environmentally friendly,”

DCSA stated. In June the association published IoT connectivity interface standards for shipping containers, potentially bringing greater transparency in the movement of goods around the world. The standards can be implemented by vessel operators and owners as well as ports, terminals, container yards, inland logistics providers and other third parties to ensure interoperability between smart container solutions at the radio interface level. “With these standards in place, carriers and supply chain participants will be one step closer to providing customers with an uninterrupted flow of relevant information regarding the whereabouts of containers and the status of their contents at any point along the container journey,” DCSA stated in a release. Back in January, the association published a common set of processes, as well as data and interface standards for track and trace. Founded in April last year, the DCSA features the world’s nine largest carriers. ●

Cultural lockdown Books: Permanent Record by Edward Snowden Podcast: Entrepreneurial Thought Leaders by Stanford University

IN PROFILE

The future of chartering How new tech can transform the business of chartering has been making plenty of headlines. We sat down with an owner, two start-ups and a shipping futurist to assess realistic changes

ew chartering platforms with bold transformative claims have been making plenty of headlines over the last couple of years. To assess the reality over the hype Maritime CEO brought an owner, two start-ups and shipping futurist together to understand what is actually needed to drive the business of chartering forward. The episode started in Hong Kong with Tabitha Logan who oversees chartering for dry bulk owner Asia Maritime Pacific as well as being the co-founder of maritime start-up pitch competition, The Captain’s Table. Logan said a majority of shipowners felt Covid-19 had fast-tracked digitalisation. On new chartering tech, Logan said some leaders of the pack had emerged. Some shipowners have tried to develop their own platforms, others have tapped start-ups while a third route has been for shipowners to become involved in accelerator programmes, Logan explained. Other companies have taken a wait-and-see approach to see what

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What I am looking for is a voyage optimisation software that creates a smart ship

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everyone else is doing, something Logan said was an error as they risked being left behind. “There has been some hesitation from the industry because we are slightly old fashioned, every one likes to do it their own way, work with their own brokers,” Logan said. “Having these platforms you can make decisions very quickly,” Logan said, pointing out that all the new readily available data - at a cost - gives those willing to embrace it an edge. While there are already a whole host of platforms that exist to make the lives of those in chartering easier such as email passing software, voyage calculators, weather analytics, Logan has a growing interest in voyage optimisation software and how to combine everything under one roof. “Everyone knows that shipowning companies tend to be quite siloed

- you have an operations department, you have a chartering department, you have a technical department,” Logan explained. “Information tends not to flow freely between those three departments, not because anyone is not willing to share it, but because it’s an old-fashioned system that has been set up.” As a chartering manager Logan wants to have access to all the data that her tech and ops teams have to be able to make informed real time decisions about her ship. “As a chartering manager,” Logan said, “when I fix my ship I want to know how she is performing; is she over-consuming, under-consuming, what the weather conditions are like?” Being able to make those real time decisions might save a couple of tons of fuel or improve a TCE by a couple of hundred dollars, something that over the year across a fleet amounts to a huge amount of cash. “What I am looking for is a voyage optimisation software that creates a smart ship, a smart ship that I can take all the information we have to hand whether its the laycan, maritime ceo

IN PROFILE

the weather conditions, the condition of the ship and I can then assess that in real time,” Logan said, going on to explain how it used to be when a ship was fixed the voyage instruction would simply be full-speed or eco-speed. “Now we know it is really not as black and white as that - we know the different speeds and consumptions you can go at… This is a really interesting space as you can really add value and I think you can improve the overall earnings on your ships using this type of software,” Logan suggested. In Athens, the TV show caught up with Athanasia Panagiotopoulou, co-founder of VesselBot, a platform using AI and big data to change chartering. Shipowners this year during Covid-19 have been exploring new ways to carry out every day tasks in a more efficient way, Panagiotopoulou said. Stakeholders in the industry have realised the advantages these new platforms can bring. Being able to make decisions on real time data is increasingly important for shipping, Panagiotopoulou insisted, allowing companies to make and change decisions fast and to adapt to new situations quickly. Automation will change the way that chartering departments do their everyday tasks, Panagiotopoulou said. “They will be able to optimise their jobs and gain more money because they will be able to make

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optimal decisions. They will be able to be very fast because of the tools they can use,” the Greek tech entrepreneur told Maritime CEO. The most important thing for the C-level executives, she maintained, is that they will be able to measure their return on investment (ROI) in a positive way. The age-old problem of shipping assessing tech ROIs hesitantly was something touched upon in conversation with Jenna Brown, CEO of UK-based Shipamax, a start-up that can count the founders of Yahoo! and PayPal among its investors. Some technology developments are slowing down this year as there is less capacity to try things that do not show a clear, quick ROI, Brown said “Let’s be frank no one has the money to experiment right now so I think efficiency driving, cloud driving are winning but maybe more experimental things not so much,” she said. On what a shipowning chartering department 10 years from now might look like, Brown said: “I don’t think you’re going to see something that is wildly unrecognisable. I think you’re still going to need a human to make those judgement calls, those intelligent decisions that a machine just can’t do. I think what you will see is a lot less manual administration across the board so the first wave of that has already been going on for over a decade of processing emails and not having to write everything out and what we’re seeing trending now is integrating systems.” The vital importance of

integrating systems - and moving away from the silo mentality - as espoused both by Brown and Logan was something K D Adamson, a well known shipping futurist, focused on during the episode. “The reason we talk about shipping being behind is because there is little understanding the entire operation needs to be optimised and what shipping is is deeply, deeply siloed and that’s nothing to do with technology, that’s to do with culture,” said the CEO of Futurenautics. Adamson referred back to Logan’s keenness to get data from her operations and technical departments to help inform her own chartering decisions. “I guarantee you there will be someone in her technical department saying, ‘What the hell does she think she’s doing coming in and sticking her nose into technical?’. Everybody is the same as everybody has their turf and what a lot of organisations outside shipping realised a long time ago was that you optimised everything, that you need cross-functional, agile, transparent operations and teams and you use digitalisation to do that. What shipping has been doing is bringing in digitalisation to reinforce their silos and looking at technology in a siloed way and that actually isn’t going to work; it’s not going to give you the value you expect,” Adamson stressed. The issue will no doubt continue to make headlines for years to come. ●

WINE

Luscious Limoux Sam Chambers feels angelic as he drinks for a good cause in the south of France

very year on the weekend before Easter is the Toques et Clochers festival in and around the bohemian city of Limoux, one of the finest, yet most understated wine growing regions in France. The two-day charitable gastronomy festival celebrates Chardonnay production in the Limoux wine appellation. Each year a different village in the appellation is chosen to host the festival and the money raised is used to restore the church in that village. Punters rock up, pay five euros

and are handed a plastic wine glass and proceed to wander around a beautiful medieval village where art exhibitions, live music mingle with a number of wine stops to try this year’s Chardonnay output. Limoux’s chalky territory makes its Chardonnays exceptional. The vines, located in the foothills of the Pyrenees, are among the oldest in the south of France and produce wellrounded, full-bodied whites. Limoux itself is worth a weekend away. Located just to the south of the magnificent walled city of Carcassonne, Limoux is quite an

Two (more) to try

To the north of the city, seek out Maison Antech for its unparalleled array of sparkling wines. A tasting of all of them is a must. Pure Emotion is a particular favourite - an incredibly dry, delightfully light pink featuring Chardonnay, Chenin, Mauzac and Pinot Noir with subtle hints of wild strawberry. Serve super cold and you might find that champagne will be a disappointment henceforth. ●

STOP BY ANNE DE Joyeuse’s shop in Limoux to sample all sorts of fabulous local grape produce but do make sure you leave with a bottle of two of La Butiniere, the vineyard’s top Chardonnay - it’s heavy, thick with a mineral style and soft notes of honey and delicate vanilla.

artist’s commune with a lovely river running through it. The little city is easy to get around and sample the many wine houses dotted in the area. Stay at the Hotel des Arcades, and ask for one of the rooms in the annex, they’re essentially apartments, located just off the main square. Historically this region has been better known for its sparkling wines, which are produced and sold under the Blanquette de Limoux and Crémant de Limoux appellation titles. Records suggest that the world’s first sparkling wine was produced in this region in 1531, by the monks at the abbey in nearby Saint-Hilaire. What is it with monks and their penchant for producing alcohol? For my money, the bubbles produced in Limoux, which tend to feature the Mauzac grape, are far superior to any champagne (and considerably cheaper). A typical Limoux sparkling wine is very dry and crisp and serves as a super aperitif or to go alongside seafood. Travel restrictions aside, I hope to see you in Limoux just ahead of next Easter. ● maritime ceo

GADGETS

Enhanced reality

R has been around for a while, but the technology is still a bit shaky. Text has been really hard to read. For games, it’s not a major problem, but in flight or driving sims, it’s a serious issue: readouts need to be read at a glance. Finnish company Varjo has changed that with its VR-2 Pro headset. The bionic display touts “human-eye resolution” (60 pixels per degree) in the “sweet spot” centre, with a more standard resolution on the peripheral vision where the human eye gets blurrier. The VR-2 Pro also has advanced hand tracking as well, tracking individual fingers, which means you don’t really need hand controllers. All this is SteamVR and OpenVR compatible. At $6,000 it is aimed more at companies then gamers, but if you have the cash, it’s the best VR in town. Varjo VR-2 Pro $6,000 www.varjo.com

Digital notebook

oleskine has been making nice notebooks for years, and it’s now moving into the digital side of life with its Smart Writing Set Ellipse, which consists of a special notepad and a smart pen. The notepad paper has tiny dots on it to aid the pen to record your handwriting exactly and transfer it in real time to your phone. The phone app can add colours, and also has an OCR function to turn your handwritten notes into searchable text files. It can also record the audio going on during the note taking. Moleskin Smart Writing Set Ellipse $150 www.moleskine.com

Temporary tattoos

rinters have branched out a lot recently, with machines that will print 3D objects and even waffles. The Prinker S is another ground breaking paradigm shift: it prints temporary tattoos on skin. The tattoos are in cosmetic ink and will last for a day or more (if you don’t wash it), but they will come off with makeup remover or good old soap and water. You simply load up a tattoo image from your phone and print away. Choose from hundreds or make your own. Print in black or colour (colour requires an extra ink pack). We in the gadget cupboard realise it’s thoroughly daft and we want one. Badly. Prinker S $420 www.prinker.us

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REGULAR BOOKS

Winning back imports and exports Rules and trade flows will inevitably change post Covid-19. Paul Frencxh has some useful primers to keep readers up to speed

or everyone in the shipping, transportation and logistics industry the catastrophic hit to global imports and exports of Covid-19 is both one of the most immediate fall outs and, quite possibly, one that will be most long-lasting. With talk of moving away manufacturing from China, relocating to multiple sources, quarantining goods, ships and crews coming in and out of different countries and territories it’s a whole new world for the import/ export game. And nobody is outside this dynamic – consider: every Chinese export requires at least one imported component, input or chemical. So let’s go back and rethink the import/export business from the ground up in the wake of Covid-19. Going back to basics? Then perhaps start with Aralyn Kraft’s Export Compliance for Beginners. Perhaps most usefully it breaks down the language jargon of the import/export business - EAR or ITAR regulations? What is CCL, ECCN, Categories and Denied Persons Lists? What do USML and CCL dual-use mean? How to determine your product’s classification? It’s a minefield of acronyms and terminology you need to get a grip on.

Got to grips with the lingo? Or a more experienced import/exporter? Then perhaps Thomas Cook and Kelly Raia’s Mastering Import and Export Management is a good addition to your knowledge library. It’s a roadmap kind of book that helps you navigate pitfalls such as major regulatory changes (and there will be more of those coming down the pipe!) as well as new documentation, operations, and procedure. The book is particularly good on ship perishable freight and dealing efficiently with government agencies and oversight. Similarly (and don’t be put off by the title!) Import/Export for Dummies is a good source of information particularly if you are yourself, or are dealing with, small- to mid-sized businesses. Again a lot of rules are going to change over the coming months so being as up-to-date with the existing rules and regs is crucial to know what’s new, what’s now defunct and what you have to do to comply with post-Covid-19 changes. Maybe with so many companies

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sadly going to the wall now might be the time for the brave to launch into the new world of super-regulated and cautious importing and exporting. Kenneth D. Weiss’s Building an Import/Export Business is full of real-life examples from importers and exporters starting with dealing with foreign currencies, shipping procedures, customs requirements, through to trade pacts, and online resources. They say fortune favours the brave so perhaps now is the time to get into the game. And finally, for everyone, whatever your experience, Luis Mulet’s Export Best Kept Secrets: Figure Out The Best Way To Expand To New Markets And Help Your Business Become Better Equipped To Enter The Exciting Exporting World. Mulet’s book covers the Americas, Europe, Asia and Africa with contains tips covering export trade law, trade regulations and customs, market intelligence, trade opportunities assessments, and offshore company formation. ●

Every Chinese export requires at least one imported component, input or chemical

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maritime ceo

TRAVEL

Diamonds aren’t forever Sam Chambers muses on the future of business travel

t was 11 years ago that my first class treatment from the lovely folk at Cathay Pacific came to a permanent end; my top tier Diamond membership of their loyalty programme had run out, I was relegated to gold. .I can honestly say though I hope I never attain that Diamond card again and in the years since gold status has made way for silver and latterly even that has slipped from my grasp - as it will do for many of you in the years ahead. Don’t get me wrong, the perks of being a Diamond geezer were wonderful. The flashest airport lounge imaginable, upgrades galore, lounge access even when not flying Cathay, ludicrous baggage allowance … the list goes on. But what one has to do to become Diamond, phew, that’s an effort. In a 12-month period you need to crank out 120,000 miles with CX. To put that in perspective, Hong Kong to London is just over 6,000 miles. It’s alright if you are a high-flying exec such as you dear reader, as taking business class gives you double points. Your humble scribe here though has never coughed up the cash to sit up front in the plane so 120k worth of miles meant that in that particular 12-month period my feet barely touched the ground, home on my little island back then was a place

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to shower, unpack and repack. Frankly, looking back on it, travelling that much was not good for the mind, let alone the environment. As I look back on those frenetic days - and edit through the comments by many carried in our In Profile section this issue - it is clear that business travel, as we knew it, is unlikely to return to 2019 levels for many years to come, if at all. The Global Business Travel Association estimates the market for business travel was worth about $345bn a year before Covid-19 struck. Best-case scenarios I have read by multiple analysts suggest the market will recover 70% in 12 months’ time, but realistically it will take many years for this hugely valuable slice of the world economy to get anywhere near its 2019 levels. As and when travel does return en masse your trip to the airport will become a whole different, likely more stressful experience. Biodata will likely become the new fingerprint/iris scan for travellers. “Safety is the new loyalty, and consumers will choose brands that prioritise their well being,” Jennie Blumenthal, the travel, transportation, and hospitality leader for consulting

company PwC, wrote in a recent report. The other thing to keep in mind as the world economy faces up to a recession on an epic scale is that flight prices are set to be wildly expensive. Travel website Dollar Flight Club reported that flight prices could dip after the pandemic. It looked at past travel disruptors and found that airfare prices dropped after incidents such as the 2008 global recession or the 9/11 terrorist attacks in the US in 2001. The study also found, however, that these dips were followed by a sharp increase in flight prices when demand rebounded. Dollar Flight Club also forecast airline mergers and a reduction of commercial flights in the future. “Airlines will significantly cut back on available capacity by reducing the number of flights and routes to increase load factor. This will help increase revenue but will lead to ticket prices increasing,” the study found. Those in container shipping might recognise this particular market tactic. The fact is you and I in shipping have been way too willing to be in attendance for the opening of an envelope for far too long. Those days are over, as might your prized Diamond status. Planet Earth thanks you. ●

OPINION

’Don’t over think it. Shipping is simple’ Fifteen years into his career, Charlie Du Cane, commercial director at Mandarin Shipping, has just been provided with valuable advice while chewing over matters ad infinitum during lockdown.

ow can shipping be simple? There have never been more complicated times in the world, and by extension in the shipping industry. Technology is changing everything from the bill of lading, the way we handle insurance, crewing and, aided by the climate crisis, will lead to fundamental shifts in ship propulsion in the near future. Black swans seem to swarm overhead like the flying monkeys in the Wizard of Oz, as dam collapse blends into trade war, which merges into global pandemic. This sense of permanent flux is added to by the permanent revolution of who does what in shipping. The emergent superpowers of the Chinese leasing houses have overtaken everyone in ship financing, as the Europeans have largely run for the hills. In my little bit of the business, the Danish dry bulk operators seem to change staff or name so often that sometimes I think they are all on a carousel in the Tivoli Gardens, a constant confusing whirl of brown pointy shoes, and floral lined shirt collars. But most confusing of all is the information flow. In July 2005, on my first day in the shipping industry, I was told that the average person read more in one day than they had done in a lifetime in 1905. I remember 2005 as an era

of blissful simplicity. History had ended, shipping was profitable, and people still read Lloyd’s List. How times have changed. No one is certain of anything anymore, but the flow of analysis, broker reports, bank reports, environmental reports, trade reports, etc flows across the desk of the frazzled shipping exec like a river that has multiple often contradictory currents. Recently in one day I read a broker stating that dry bulk is about to receive a massive shot in the arm from China, and a banker’s analysis that was so dire it actually gave me heart palpitations. The waters have never been muddier in shipping. So, I was slightly bemused when one respected shipping veteran who I speak to regularly said to me the other day: “Your problem, Charlie, is you over think it. This business is simple.” Surely the opposite is the case? How can anyone with his experience describe the current state shipping finds itself in as simple? Locked down in London, it has given me time to (over) think about things, and I fell to pondering this idea of simplicity, and I had one of those eureka moments when my own understanding of this business took a step forward. Actually, he was right, when you strip away all the layers, the noise and the occasional downright panic we feel today, simplicity is best, and over thinking always gets

people into trouble. Take for example the eco-ships debacle of 2013. Smart people came up with great predictions as to why these ships were necessary to save the planet (or was it fuel bills?), but they forgot some of the simple fundamentals of shipping: supply goes up, market goes down; if it isn’t a good deal on the day – don’t buy it. Equally how many people are feeling a bit sheepish about scrubbers these days, especially on secondhand ships? Scrubber mania was interesting, as people thought they could beat heavy handed regulations, and beat the market too. But every decision was made based on not having access to the key metric in all of this: what the spread between low sulphur and high sulphur fuel oil would actually be. As far as I can tell on secondhand vessels most people presumed a spread of $250 lasting for two years. Five months in we are at $50 dollars, and it has already dipped to parity. The lesson? Only act on what you actually know. The next decade is going to be fascinating in our business, if possibly traumatic, as geopolitical decoupling, technological change, and the imperatives of the green revolution dominate everything. Those that will thrive in this market are those that never forget to just keep it simple. ● maritime ceo

REGULAR OPINION

Two horsemen of the apocalypse Andrew Craig-Bennett on the new normal

t’s too late to buy that VLCC. It’s far too late to sell anything, but you might want to try to cancel that open-loop scrubber installation. It might just not be too late to make an investment in hull cleaning equipment. Don’t put a passenger ship or a dive support ship into cold lay-up or you will discover the truth of the Ancient Greek proverb, “Once in lay-up, always in lay-up!” Think about what is needed to reactivate laid up ships and plan accordingly. So much for the obvious. What about the rest? One thing that stands out is that people seem to want to avoid the recollection of plagues. We don’t mind remembering and thinking about wars, revolutions, invasions, volcanic eruptions and spectacular accidents involving lots of people dying, but we do seem to want to forget about two sorts of disasters – earthquakes and plagues. At this moment, the newspapers, the television, radio and social media pundits are all busy telling us that Things Will Never Be the Same. I think they are wrong. History suggests that people will want to get back to ‘the same’ just as fast as they can, and we will see a resumption of whatever we were doing before, with extra eating drinking and being merry, in order to forget all about this pandemic, just as our ancestors tried to forget the others. This suggests that shipping will be back to business as usual quite soon, and all that we must think about is investment timing. Timing in deep sea shipping is largely a question of still having cash

ISSUE TWO 2020

when nobody else has any, so the thing to do is to be around and see what may influence when shipping businesses may run out of money. One thing that tramp owners know very well, and liner, passenger and oil support owners sometimes forget, is Mr Micawber’s rule – “Income twenty pounds, expenditure nineteen pounds nineteen shillings and sixpence, result happiness. Income twenty pounds, expenditure twenty pounds ought and six, result misery!” Speed of application of this rule is vital! There are, as we know, Four Horsemen of the Apocalypse, the first horseman is Pestilence, followed by War, Famine and Death. Well, we’ve got Pestilence. As shipping people, death isn’t much use to us, but war and famine used to be very handy for freight rates. War isn’t around on a scale big enough to help freight rates – at least, not yet, and war on a big scale has been a bad idea since the 6th of August 1945, but famine will be along any minute. Logic tells us that crops which can be planted, tended and harvested using mechanical equipment on a big scale are going to be less affected by a shortage of people than are crops which need a lot of manual labour. It has been a truism for decades that you don’t ever make a ship investment decision based on the grain trades, because they are normally unpredictable, but I think that in today’s

circumstances we may pencil in some more ton miles for grain. Logic also tells us that, across the world, regular maintenance of all sorts of things is being deferred, and when the coronavirus outbreak is contained, as it will be, there will be a rush to do the maintenance and repairs that have been deferred, and this will happen before people make big new investments. Lastly, this is a very odd recession. Recessions in shipping usually start with importers being unable to open letters of credit because the banks have run short of cash. This one started differently, but we may be reasonably sure that as it ends, people will have trouble opening letters of credit. There will be demand but financing that demand will be harder. In other words, money will be in short supply, and when there is a shortage of something, the price goes up. The price of money is called interest. Gearing is not going to be good. Keep calm and carry on. ●

MARPOLL REGULAR

Pandemic pondering Readers have plenty to say about how Covid-19 is shaping our industry Which sector will be hit hardest by coronavirus?

Which sector will see the quickest recovery once the coronavirus outbreak recedes?

“

Consumers around the globe will avoid spending on anything which is considered as nonessential

”

Dry bulk 8% Containers 45% Crude tankers 4%

Containers are the barometer of global trade

LNG 1%

Dry bulk 30%

LNG 8%

LPG 1%

Containers 41%

LPG 1%

Car carriers 37%

Crude tankers 7%

Car carriers 2%

Product tankers 2%

Product tankers 11%

Does the current lull in demand mean that digital efforts will be accelerated or decelerated?

Will ship leasing come under pressure this year thanks to these financial institutions’ exposure to the aviation sector?

“”

“

Cost savings too great to pass

The banks will seek to divest their transport portfolios away from ever riskier aviation

Sped up

85%

Yes

70%

Slowed down 15%

30%

Will shipping experience record numbers of layups in the coming 18 months?

“ 64%

36%

”

Has the coronavirus fundamentally changed how your business operates going forward?

“

More digital tools will be required. More remote working

Yes

60%

40%

”

Will seafarers be considered as essential workers and permitted more freedom of movement?

“

Smaller shipping companies with cash flow on the lower side will be the most affected ones

Yes

”

Sorta. On paper yes. In ports and airports, not so much, especially if fear takes over decisions

Yes

59%

41%

”

Does the current crisis mean that we will get back to more free trade sooner or later?

“

”

It’s a US election year!

Yes

33%

67%

maritime ceo

Listen to the sea

Posidonia 26 - 30 October 2020 Metropolitan Expo, Athens Greece

The International Shipping Exhibition

Organisers: Posidonia Exhibitions SA, e-mail: posidonia@posidonia-events.com

www.posidonia-events.com

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My ships have become digital I was facing different IT and security challenges that I had to handle on a per vessel basis. Now, with help from new and cyber-secure solutions from Dualog, I have fully included our ships in the company IT infrastructure. Magically we have switched from repetitious manual operations and routines into one integrated and seamless solution. #DUALOG CUSTOMERSTORIES

NAME

Thomas Dinter POSITION

IT Manager

COMPANY

TB Marine Shipmanagement GmbH & Co. KG Hamburg, Germany SCOPE

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Maritime CEO Issue Two 2020

Articles inside

MarPoll

Travel

Andrew Craig-Bennett

Charlie Du Cane

Books

Gadgets

Wine

Claus Nehmzov

Beate Stelzer & Steven Jones

Chartering’s future

Paul Jennings

Thomas Bagge

Shipmanager debate

Manish Singh & Bjoern Sprotte

John Michael Radziwill

Finance

Cover Story

Containers

Jeremy Nixon

Lasse Kristoffersen

Dry Bulk

At The Prow

TV series launch