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MICA (P) 024/11/2012 | A Publication by the Singapore Shipping Association

Q4 2013 Issue 40

New shipping trends and challenges: a full reportback Arctic navigation: the way forward or wishful thinking?

shining a light

As global shipping faces uncertain times, Asia’s growth is helping to keep the industry afloat


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MANAGING RISK


in this issue

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6

Still cold up North

“I am in no doubt that, in the conditions I have observed, the active support of these powerful icebreakers is still essential for safe passage of the Arctic Ocean”

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Members’ Events 16 SSA 28th anniversary celebrations 17 P  wC Singapore and SSA hold leasing briefing 18 Pink Ribbon Walk 2013

News

18 Tax incentives for maritime businesses

2 Editor’s note

19 Wine appreciation evening

3 Maritime Manpower Singapore 2013

19 YEG running interest group

4 The day the MLC 2006 came into force

20 Show me the money!

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Features 6 Still cold up North 10 Shipping trends and challenges Editor Esben Poulsson Editorial Team Marianne Choo, Gina Goh, Juliana Lim Publisher Singapore Shipping Association 59 Tras Street, Singapore 078998 Tel: 6305 2260 Fax: 6222 5527 Email: waves@ssa.org.sg www.ssa.org.sg For advertisement enquiries, please call +65 6305 2260 or email waves@ssa.org.sg

Contributors Deloitte Singapore, Eniram Singapore Pte Ltd, PricewaterhouseCoopers LLP, Singapore Maritime Officers’ Union

Photo credits: Corbis, Getty Images, Shutterstock

21 D  eloitte industry insights breakfast seminar 22 New members 24 Calendar of events

Tel: +65 6438 1998 switchsg.sg

Portrait CMYK.pdf

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4/26/12

Waves is published quarterly by the Singapore Shipping Association (SSA). Copyright of the materials contained in this magazine belongs to SSA, unless specified otherwise. No content may be reproduced in part or in whole without the prior consent of the publisher. Views expressed in the articles are those of the respective writers and may not be representative of the SSA.

Printed on recycled paper Cover illustration by Sasan

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welcome

Editor’s Note

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On behalf of the SSA, I would like to again record our sincere appreciation to Senior Minister of State for Finance & Transport, Mrs Josephine Teo, for gracing the occasion with her presence and for her inspirational speech. Feedback from the event was largely very positive though inevitably, some tables found the standard of service not up to expectations. The Organising Committee will address these concerns in a follow up meeting with the event organisers and the venue.

evising a strategy in uncertain times is a universal challenge faced by everyone involved in our industry, and given the obvious complexities we face in a fast changing environment, we felt that this would be an interesting theme for the current edition of WAVES. Against this background, our similarly titled conference, ‘Strategies in Uncertain Times’, was held on 26-27 September at the Marina Mandarin Hotel. Although the attendance was somewhat lower than what had been expected, the quality of the presentations was of the highest standard and we received a considerable amount of very positive feedback from those who attended. At our Gala Dinner, attended by in excess of 1,800 members and guests, I had the strong impression that concerns about strategies in uncertain times were momentarily put on the back burner, as everyone focused on enjoying what was a most successful and enjoyable evening!

On behalf of the Council and the membership as a whole, I would like to record our appreciation towards the team at the Secretariat for their commitment and hard work, ensuring the success of both the aforementioned events. I hope the articles contained in this issue will make useful ‘food for thought’ for all our members as we formulate our respective strategies in uncertain times. Happy reading!

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70 West Coast Ferry Road Singapore 126800 Tel: (65) 6777 2288 Fax: (65) 6379 9800 Email: psamarine@psa.com.sg www.psamarine.com

Waves


News

Maritime Manpower Singapore 2013 Annie Sng

Assistant Manager, Corporate Communications, SMOU/Wavelink

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eld on 6 September 2013, the 7th biennial Maritime Manpower Singapore (MMS) created waves when 15 speakers, including Singapore Shipping Association (SSA) Executive Director Mr Daniel Tan, spoke on the dawn of a new maritime manpower landscape to 360 participants from all over the world. China, Hong Kong, Indonesia, Philippines, South Korea, Taiwan, Ukraine and United Kingdom were all represented. The event, held by Singapore Maritime Officers’ Union (SMOU) and organised by Wavelink Maritime Institute, caught the country’s attention through major media coverage. Singapore was reminded once again that the maritime industry remains vital to the city-state’s economy and growth. Seafaring careers can

Over the next 15 to 20 years, as the maritime sector grows and Singapore expands its port facilities, the sector’s demand for skilled manpower will also continue to grow

provide good career prospects and wages, and SMOU wants to see more of these well-paying jobs going to Singaporeans. One of the multiple pathways into the maritime sector that was highlighted during the conference was the Tripartite Nautical Training Award (TNTA) started by SMOU, working together with e2i, Singapore Workforce Development Agency (WDA) and the SSA. Over the next 15 to 20 years, as the maritime sector grows and Singapore expands its port facilities, the sector’s demand for skilled manpower will also continue to grow. To increase the proportion of Singaporeans in the sector, the government expects employers to play a significant role in developing a Singapore core, so that Singaporeans at all levels can be trained and developed. In this way, when the opportunities arise, it will make sense to look to Singaporeans to take up some of these positions.

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News

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The day the MLC 2006 came into force

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idely known as the “seafarers’ bill of rights”, the Maritime Labour Convention (MLC) 2006 is an international regulatory instrument that was adopted by the International Labour Organization (ILO) in February 2006, with the main aim of providing protection at work for more than 1.2 million seafarers who serve on the world’s fleets. This year Singapore was chosen as the venue for the official launch of the MLC on 20 August 2013. The event was marked by a panel discussion of high-level representatives of seafarers, shipowners, Singapore’s maritime administration and Dr Cleopatra Doumbia-Henry, Director of the International Labor Standards Department at the ILO, who was responsible for

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discussion was broadcast ‘live’ via the internet from the bridge of APL Yangshan – Neptune Orient Lines’ 10,700-TEU container ship that was berthed at Keppel Terminal that day. The webcast

It is indeed an honour for Singapore to have played host to the ILO for such a momentous occasion the development of the MLC 2006. Incidentally, Singapore is also the first Asian country to ratify the MLC 2006. The other panelists were Capt Robin Foo, President of Singapore Maritime Officers’ Union (SMOU),

Mr Daniel Tan, Executive Director of Singapore Shipping Association (SSA), and Mr Mark Lim, Deputy Director of Shipping at the Maritime and Port Authority of Singapore (MPA). The hour-long panel

project involved three ships and at least 70 support staff across five countries comprising the ILO, broadcasting vendors and local maritime personnel. It is indeed an honour for Singapore to have played host to the ILO for such a momentous occasion. The passionate efforts of the working group from Singapore Shipping Association, NOL Ltd, PSA Corp Ltd, Maritime and Port Authority of Singapore, seafarers unions SMOU and SOS, ensured that no hiccups – not even a typhoon – could deter Singapore from showcasing its maritime efficiency and co-operation onto the world stage. To view the video of the full ‘live’ webcast, please go to: http://www.youtube.com/ watch?v=sVCeuQWdKo0


Hughes’ Views

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Still cold up North

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ews reports over recent months have highlighted the opportunities, challenges and controversies surrounding the prospect of increased navigation in the Arctic. But a description of a recent voyage on the Russian nuclear powered icebreaker 50 Let Pobedy underlines that, despite global warming, we are not talking about a northern version of the Malacca and Singapore Straits. “50 Let Pobedy u-turned, circled and made various manoeuvres to provide

David Hughes Columnist

the expected support to other ships and even to other icebreakers. This really is a powerful icebreaker, breaking ice, riding on ice, making cracks in ice and creating water channels. I could really sense the power of these nuclear icebreakers.” The writer was International Maritime Organization (IMO) Secretary General Koji Sekimizu who, as part of a factfinding trip, undertook a 1,680 nautical mile voyage on the nuclear-powered

icebreaker in late August using the Northern Sea Route (NSR) that links Europe and northern Russia. In a blog kept during the fact-finding trip he made this summer, Mr Sekimizu reinforced the reality that transiting the NSR will always be a challenge. He said: “Our climate is changing, and the area of multi-layer ice has been shrinking due to the increase in seawater temperature. Navigation through the Arctic using the Northern Sea Route has become a reality in summer. However, the Arctic waters are still extreme, even in summer,

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Hughes’ Views the French Classification Society Bureau Veritas’ Director of Innovation, Pierre Besse, said: “All eyes are on the Arctic sea routes and on the opening up of the Arctic mineral and energy resources. We have to ensure the vessels and offshore units that operate in those extreme conditions are safe.”

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and the power of nature cannot be underestimated. I am in no doubt that, in the conditions I have observed, the active support of these powerful icebreakers is still essential for safe passage of the Arctic Ocean, although we should rigorously explore the possibility of Arctic navigation under the mandatory Polar Code currently being developed at IMO.” Furthermore, in addition to support from Russian icebreakers, a vessel must obtain a permit for navigation from the Russian Northern Sea Route Administration before it is allowed to sail through the NSR. Nevertheless, ships are using the route. It should be noted, however, that while Russia issued over 600 permits for the 2013 season, the vast majority was to domestic shipping – the total number of transits through the NSR from Asia to Europe has remained relatively constant over the past three years, with just over 40 transits a year. Still, Russia would like to see the NSR become an international trade artery, especially for oil and LNG. Using the NSR can cut nearly 4,000 miles off the 11,000 miles or so between Northern Europe and Japan, China or South

Waves

“I am in no doubt that, in the conditions I have observed, the active support of these powerful icebreakers is still essential for safe passage of the Arctic Ocean” Korea. That represents a big saving in bunkers and steaming time. Ships using the NSR also benefit from avoiding the costs and possible delays of transiting the Suez Canal and of paying for anti-piracy measures off Somalia. The NSR can only be used for four months during the summer with icebreaker support, though there are plans to increase that to six months. Navigation in the Arctic is not, though, only about a short cut between Europe and Asia. Vast mineral, oil and gas wealth lies under the frozen tundra of Russia, Canada and Alaska, and also below the seabed of the Arctic Ocean itself. For the shipping industry, the obvious challenge is to use Arctic waters safely. As

Bureau Veritas says that it has responded by developing new high-level tools to assess LNG cargo sloshing in ice conditions. It has also developed a probabilistic method for assessing ice loads on structure which will reduce the time and data needed to assess the structure of vessels and units designed for heavy ice operation. All this work is likely to be justified by the massive LNG reserves in the Arctic that may end up sailing to Asia and Europe in gas carriers. For the shipping industry, Arctic navigation is essentially a technical issue about using available waterways. Of course, developments such as the opening up of the NSR are taking place against a background of concern over the environmental effects of greater use of the Arctic by shipping. Broadly speaking, many environmentalists see shipping in the far north of the planet as another detrimental effect of global warming. According to them, global warming has caused the sea ice to melt, allowing vessels to complete the journey from Asia to Europe by sailing through areas that were permanently ice-bound. The World Wildlife Fund (WWF) has long been voicing concern. It says: “Because shipping can significantly affect ecosystems, WWF is taking action to ensure that development in the Arctic occurs in an environmentally and socially responsible way.” The WWF notes that not only are more ships using the NSR, but the Bering Strait between Russia and Alaska is also seeing more shipping traffic, with a drastic increase expected in coming years. WWF cautions “More ships in these waters mean greater likelihood of accidents and disruption in a sensitive ecosystem. Oil spills present the greatest threat, but other impacts pose substantial concern: ship groundings, marine mammal strikes, introduction of alien species and disruption of migratory patterns. Even noise from shipping


vessels can impact marine species that depend on sound for communication.” Summing up WWF’s objectives, its Senior Programme Officer, Arctic Field Programme, Elena Agarkova says: “We want to make sure that this ecosystem – which has remained wilder than most places on the Earth – stays stable.” It is difficult to see how that aim can be squared with the rapid development of shipping and natural resources exploitation that is now underway. IMO stresses that the “safety of ships operating in the harsh, remote and vulnerable polar areas and the protection of the pristine environments” around the two poles have always been a matter of concern for IMO and that “many relevant requirements, provisions and recommendations have been developed over the years”. A new mandatory

ship reporting system in the Barents Area came into force in June. The next step for IMO is a mandatory Polar Code which is being drafted. Many groups, and possibly public

opinion in many countries, are likely to remain firmly opposed to any commercial developments in the Arctic. At the same time the governments in the region are committed to developing the resources of the north. The reality is likely to be continued rapid developments. There is going to be much more shipping in the Arctic but as the IMO

chief’s blog shows, transiting the NSR even in summer will only be possible for vessels with the necessary permits because of considerable support by ships like the 50 Let Pobedy. And in winter, even the ice-free areas of the Barents Sea are some of the most inhospitable, dangerous places imaginable to navigate. Sailing the Arctic has become a bit easier, but not easy. 9

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Shipping trends and challenges

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o some degree, the economic crisis of 2008 and beyond has had a positive effect on the global shipping industry in that it has been forced to take stock and manage itself with less of the carefree abandon seen during the years of excess, when demand was high and banks were falling over themselves to mortgage shipowners up to the hilt. In those days, energy-efficiency meant getting from A to B in the shortest possible time, sometimes to the detriment of both ship and environmental safety. Charter rates were sky high. Shipyards were turning down orders by the score and had to invest in new capacity to meet demand.

Waves

Patrik Wheater Editor of Shipping World & Shipbuilder

Shareholders were happy and company accountants amenable. But all things must pass. And whilst viewpoints on a market recovery differ from segment to segment, there is no ambiguity as to the challenges the global shipping industry will face over the coming years as it strives to meet the demands of world trade amidst shifting economic landscapes. For the liner trades, there is a pinprick of light at the end of the tunnel. The orderbook for containerships has decreased from 67 per cent down to 21 per cent and demolition rates are

encouraging with about 500,000Twentyfoot Equivalent Units (TEU) scrapped this year alone. Annual growth forecasts are acceptable, at between 4 per cent and 6 per cent, and while there are still too many ships on the water, the sector is beginning to see an increase in timecharter rates, particularly for smaller ships of about 4,000TEU, which are expected to increase and recover in 2014 with the trend continuing into 2015. However, according to Thomas Preben Hansen, the CEO of Rickmers Maritime, an owner and operator of 16 container ships, there are some interesting market trends taking place. The sizing up of capacity to benefit from economies of scale is one such trend, indicative of course with the introduction of the 18,270TEU Maersk Mckinney-Moller, the first of 20 behemoths for Maersk Line, and these will be followed by a series of similar sized tonnage for UASC and CSCL, all of which will put increased pressure on port operators to upgrade their facilities. But there is also an increase in chartered-in tonnage which has grown


trends and challenges from 15 per cent to 50 per cent in the past 15 years and which, given the limited profits of liner companies in recent times, is expected to increase rapidly, particularly on intra-Asian trades. Indeed, the steep rise in intra-Asian traffic, which now accounts for 28 per cent of all global container traffic and takes up about 1,500 ships, has witnessed an increase in capacity over recent years from 1,400TEU vessels to 5,500TEU, which are now even operating on Chinese coastal trades. Traditionally, ships on this trade were fed by the German KG market which is now defunct and, according to Hansen, likely to remain that way for some time. But he believes there is “tremendous opportunity” for someone to come in and take over this market. “They need new ships and reliable owners to manage them and I think they would be happy for these owners to be based in Asia. So there is tremendous opportunity to grow this but you need some of the key ingredients.” Ship finance

One of those key ingredients, Hansen told delegates at the SSA shipping conference Strategies in Uncertain Times, is financing. “We have improving capital markets but the financing capability in Asia has to be built up to meet demands going forward. Asian lenders are very comfortable with Asian credits. In fact if you go to an Asian office of a European bank you are likely to get better terms that you would if you went to its European office.” However, whilst there is no doubt that Singapore is Asia’s primary shipping hub, Hansen questioned whether the island state is Asia’s ship finance hub just yet. “As a public listed entity we feel it is not quite the shipping exchange it should be. A lot of work has to be done but I believe it has the level of motivation required to reach that stage. It needs to get the main listed companies in the region to come together and give critical mass so that Singapore is known as the shipping exchange in Asia. When that is reached, then the ability to raise equity will probably exceed Singapore’s ambitions as a newcomer, wanting to build up the containership fleet to Asian carriers.” Whilst acknowledging that the sector still needs to reduce capacity and scrap more obsolete or inefficient vessels, Hansen believes there is still scope for investment in new fuel-efficient ‘eco’

tonnage, which would deliver a more competitive edge. “Financing is available. Yes it’s different in terms of repayment profiles, but finance is available and in my opinion it is very hard to imagine not getting a positive return on your investment if you buy a ship today. But you have to be very careful where you put your capital,” he warned, advising fellow owners to invest only in modern, energy-efficient tonnage.

“The steep rise in intra-Asian traffic, which now accounts for 28 per cent of all global container traffic and takes up about 1,500 ships, has witnessed an increase in capacity over recent years from 1,400TEU vessels to 5,500TEU” Bulk recovery

The last thing shipowners operating the bulk trades need, however, is new ships and whilst bulk carrier owners are generally optimistic about the sector’s recovery, ordering more ships, said Khalid M Hashim, the Managing Director of Thailand-based Precious Shipping, “will be getting us into a lot more trouble”. 100Mdwt will enter the fleet over the next 18 months, 75 per cent of which will be in the Capesize and Panamax segments, which are anticipated to be growing at an annual rate of 5.5 per cent. This is countered by a demolition rate of 3 per cent and although there is room for more scrapping, in the first half of this year 12Mdwt was scrapped and analysts predict that 30Mdwt of dry bulk tonnage will have been recycled by year-end, following a scrapping surge in August. According to Hashim, encouraging scrapping rates together with orderbook slippage – the difference between vessels on order but not delivered – could result in 7 per cent growth rate this year for the dry bulk sector and under 2 per cent the next. A recovery in the bulk trades is further substantiated by a bullish Baltic Dry Index

which jumped from 800 points to over 2000 in the space of just three months, a move which Hashim said was largely driven by a freight rate hike for Capesizes, which earned just US$3,000 a day in the first half of the year but now earn about US$40,000 a day as a consequence of China restocking its iron ore. “Currently, China has less than 75 per cent of its iron ore inventory but steel production is running at between 10 and 12 per cent above last year’s figures,” said Hashim. “Secondly, iron ore inventories recently dropped by 1Mt so there is scope for the Capsize sector to move on. Capes carry iron ore about 85 per cent of the time and coal for about 15 per cent of the time. But when China buys in this fashion in a short space of time, congestion eats up about 25 per cent of the capacity and all coal cargoes drop down to the Panamaxes and Supramaxes and that is what has been carrying the segment recently.” Over and above that, Hashim said there are a few other macro-economic indicators that have turned very positive for the bulk trades over the last few months and which suggest this is “the start of the end of the crisis for dry bulk shipping”. He said that grain production in the US will be about 11 per cent higher than last year and this will translate into an additional two per cent demand on the bulk trades while an increase in exports from India could result in a growth spurt for the Handy segment. “If India starts exporting much more than it has, it will suck in a lot more ships – Indian ports are small, have shallow draughts and are extremely inefficient,” said Hashim, offering some anecdotal evidence. “In April we loaded 15,000t of rice at a port on the east coast of India. However, it took two months to complete that cargo which would have normally taken six days and this places pressure on the Indian rupee. If there is pressure on the Indian rupee and greater exports than expected then maybe 10 per cent of all Handysize ships will be trapped and congested in India for between 2 and 6 months. This could result in a growth spurt for the small bulk carrier sector.” Write downs

However, contrary to Hansen’s positive outlook with regard to the availability of finance for liner companies, Hashim argued that finance for bulk carrier

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asian voices

Many voices, one message in Asian shipping industry

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owners remained a challenge. “Bankers are saying, yes, they are ready to lend, but the reality is quite different. Most of the major banks in shipping have had some serious issues and a lot of them are starting to write down the loans they have paid out in the past but which are not being serviced. All are suffering from an excess of lending in the past.” As cases in point, HSH Nord raised its loan loss provisions for 2012 to €1.2bn on a €27bn exposure; Commerz Bank currently classifies €4bn of its €19bn book as non-performing; NordLB has set aside €0.6bn against its €18bn book; RBS has stated that £1bn of its £7.7bn book poses a credit risk; Lloyd’s Bank sold US$750m of its loan book to Oaktree Capital at a rumoured 50 per cent discount; and DNB and Nordea have both announced that they would be increasing their loan loss provisions. Seas of uncertainty

The wet trades, meanwhile, continue to operate in a sea of uncertainty. And while low prices for new tonnage are appealing, surging capacity is depressing freight rates and the outlook remains negative. Gagasan Carriers Chief Operating Officer P Udayakumar sees two major changes taking place: changing oil demand and the supply situation. One of the major dynamics affecting the sector, believes Udayakumar, is

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decreasing US oil imports. Tanker companies have historically depended on the US but declining demand as the country increases domestic production to become an energy-independent country, surpassing Russia and Saudi Arabia as producers, will place enormous pressure on the market. This is already resulting in a seismic shift in the wet trades, says Udayakumar. In the past there was a lot of oil going to the US but tanker movements are shifting to the east, towards China and developing countries in Southeast Asia where oil demand is expected to rise to 97mbpd. However, whilst global oil consumption is expected to increase by 1.1m barrels a day, OPEC crude is expected to slide next year to 29.7mbpd or about 600,000 a day less than the amount pumped in August 2013, which could in effect widen the gap between supply and demand. Indeed, the overcapacity and supply/ demand imbalance is “creating a freight rate prospect many would term as an emergency”. The spot market rate for a VLCC is currently under US$10,000 per day and given that 165 orders for tankers of 27,500dwt and above were placed between January and July this year, it is likely to remain that way unless more vessels are taken out of service and scrapped. All is not doom and gloom, though, and there are some market positives

from which the sector can take solace. Owners of LR1, LR2 and MR tankers are likely to be the beneficiaries of an anticipated 15 per cent increase in the demand for petroleum products over the next two decades. And the ASEAN region is still on a growth trajectory, especially Malaysia, Myanmar, Singapore, Philippines and Indonesia, all of which are increasing their investments in infrastructure development. Indeed, the ASEAN community’s growing importance to world trade formed the basis of a keynote speech at the SSA conference by Singapore’s High Commissioner to Malaysia, His Excellency Mr Ong Keng Yong, who said: “The economic slowdown in Europe and the US did not severely affect the shipping industry in Southeast Asia, due to the vibrant trade within the region.” That said, the ASEAN region is not without its own set of challenges and HE Ong stressed the importance of continuous infrastructure development if higher growth rates are to be achieved. Referring to a Goldman Sachs report, he said Indonesia, Thailand, Malaysia and Philippines need to pour at least US$300bn into transport links to help ease freight bottlenecks through 2020, especially at ports in Jakarta, Indonesia, where delays are posing huge problems for shippers. Challenges remain

Whilst there are positive signs that shipping is slowly but surely recovering from its historical nadir, operational and capital costs are expected to increase as shipowners invest in technologies and systems to meet the glut of new legislation due to enter into force over coming years, and counter party risk is sure to be an issue that shipowners will have to deal with. But perhaps the most pressing concern is one of human resources and the availability of competent and experienced officers and crew to operate vessels of increasing complexity. Based on the future supply of ships and anticipated entrants into the future labour market, this will be a serious issue that the “shipowner ignores at his peril”, warned Hashim. “This is the major challenge.” Swire Pacific Offshore Operations’ Managing Director Neil Glenn couldn’t agree more. “Despite all the advancements in technology, vessel


CELESTE HOLDING PTE. LTD. 1 Temasek Avenue #15-01 Millenia Tower Singapore 039192 Tel: (65) 6837 1555 Fax: (65) 6837 2555 E-mail: general@celestehld.com


asian voices design and all the comprehensive management systems that have been developed, success for operators today revolves primarily around one thing: the quality of the people working in the industry.” He said that stakeholders’ expectations are increasingly high. And in the offshore marine industry there is no ambiguity as to what those expectations are: they want operators that can successfully undertake the job they have been contracted to do; but they also want to make sure they have the skills, experience and judgment to handle the risks and the confidence to challenge them when conditions are unsafe. Increasingly, customers want to know who’s onboard and whether, in addition to the formal qualifications that allow them to serve, they have been able to demonstrate specific competencies to undertake the task they have been given; how much experience have they had doing the work and with such and such piece of equipment. How much training have they received? Attracting talent

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“People today want to ensure that when they join a company they have a chance to fulfil their potential, so they want proactive transparent performance feedback and want to see that they have a career ahead of them. They increasingly recognise that to progress in their career they also need to upgrade their skills, they know the demands of the industry change and the requirements of the customer and the skills.They possess change so they need to have access to career and skills development,” said Glenn. The concern of course is that the individual leaves or is ‘poached’ once that investment in training and continuing professional development has been made. “But the flip side to that, in an industry like ours, which is very much based around safe operation and risk mitigation, is what happens if you don’t train them and they stay? As a company you have to be very clear on which side of the line you fall. There is a clear need in the industry, if we are to live up to the expectations of all our stakeholders that we continue to invest in the training and the development of our workforce.” HE Ong stressed that skills and vocational training is an essential requirement. “In this increasingly volatile

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that there are generational changes taking place and that the things that are important to young people now taking up a career at sea are quite different from those that went before them. Organisations have to recognise this and address it,” warned Glenn. High expectations

“There is a clear need in the industry, if we are to live up to the expectations of all our stakeholders that we continue to invest in the training and the development of our workforce” economic atmosphere, companies are naturally reluctant to invest in training, but this would only affect their competitiveness in the long-run as workers would not be able to cope or adapt to changes such as technological advancements.” The shortage of new entrants to the maritime and offshore industries, especially seagoing careers, is another challenge that must be addressed and companies must accept the generational changes that have taken place over the last decade or two if it is to attract fresh talent. “The first questions we get from people joining the organisation is what type of broadband do we have onboard? How fast is it? Can I ‘Skype’ and download movies? This is recognition

Indeed, the importance of equipment and systems onboard a ship cannot be underestimated from both the human resources and customer perspectives. For instance, the operating systems onboard are designed to help crews do their jobs more efficiently and when you have poor system performance, it creates “a lot of frustration” for the people onboard. “And if they don’t have the tools to do the job they will go somewhere else. They have plenty of choice,” said Glenn. Customers, too, have high expectations about the systems aboard vessels. And there is now a clear preference in the industry for modern, proven vessels with larger capacity, fuel efficiency and higher levels of technical specification. Yet they also want cost-competitiveness and value for money. The question, asked Glenn, is can operators meet those expectations? “Broadly, yes, but not all customers want the same things and different customers have different ideas about vessel specifications. Some have very clear uncompromising standards on minimum specification which is higher than other customers may have. Others have specific requirements about the age limit of vessels; others are less specific, so there is quite a big difference. But I think over time, this will slowly start to converge.” Whilst great attention has been paid to global trends and the effect the European and American economies have had on shipping, the dynamism and robustness of the maritime sector in Southeast Asia, the changes taking place on a global socio-economic level and the developments in offshore energy will see the shipping markets recover and offer some degree of sustainability. However, shipowners across all segments of the industry must be prepared to get rid of their old energy guzzlers and invest in more modern, efficient tonnage. It must also band together to address the very real human resource concerns that could ultimately render the industry incapable of putting ships to sea safely and efficiently.


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members’ events

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SSA 28th anniversary celebrations

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he Association celebrated its 28th anniversary in September with a gala dinner at Resorts World Sentosa Convention Centre, attended by 1,800 people both from Singapore and abroad. Senior Minister of State for Finance and Transport, Mrs Josephine Teo, graced the dinner and gave a rousing speech on the strength and robustness of shipping in both Singapore and the South East Asian region, despite the current downturn. A special entertainment segment of the evening was put up by volunteers from

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the Singapore Shipping Association’s (SSA) Young Executives Group (YEG), who performed a catchy dance item to a popular Korean pop song. It was an impressive dance performance considering that the girls had only had a total of seven practice sessions, and no background in dance! Towards the end of the evening, eight fortunate dinner attendees walked away with almost $9,000 worth of lucky draw prizes, which included cruise tickets and electronic gadgets. All in all, it was another successful event for the Association and we would like

to express our appreciation to all who have contributed and participated in the celebrations. The Association would especially like to thank the following members for their generous sponsorships towards the gala dinner: Ang

& Partners, Celeste Holding Pte. Ltd, DNV Petroleum Services, Griffin Travel Pte Ltd, Hong Lam Marine Pte Ltd, Maersk Singapore Pte Ltd, PSA Corporation Limited, Skuld Singapore Branch, and Star Cruises.


PwC Singapore and SSA hold leasing briefing

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n 24 July 2013, over 100 Singapore Shipping Association (SSA) members attended a breakfast briefing jointly organised by PricewaterhouseCoopers (PwC) Singapore and the SSA. During the briefing, PwC Singapore shared insights on the revised Exposure Draft on Leasing and its implications. PwC Singapore’s Accounting Advisory Partner, Mr Chen Voon Hoe, highlighted that the proposed model appears simpler to apply than previous proposals. However, he said, this may underestimate the

Shi Jie Soh

Manager, PwC

impact of having to identify and recognise assets and liabilities in respect of all leases, as well as the need to re-think the different types of accounting models to apply to different types of leases. This topic generated great interest amongst the attendees as leasing is such an important activity for many organisations.  The breakfast briefing was also very interactive and saw many attendees sharing their views.

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member’s events

Pink Ribbon Walk 2013

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s part of the Singapore Shipping Association’s (SSA) Young Executives Group’s (YEG) community efforts to support the Breast Cancer Foundation (BCF), a team of 41 YEG members took part in the Pink Ribbon Walk at the Marina Bay Waterfront Promenade on 28 September 2013. Donned in pink and SSA caps, the YEG were present to help to champion the cause of the BCF with the 4.1km walk.

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YEG educational and networking session: Tax Incentives for Maritime Businesses

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r Lim Peng Huat, Director and Head of Taxation Services, Accounting Solutions of Complete Corporate Services Pte Ltd, delivered a presentation on Tax Incentives for Maritime Business for over 50 participants, from the SSA’s YEG at the SSA Conference Room on 15 April 2013. He spoke about the overview of the tax incentives available

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to shipowners and operators, tax treatment on vessel disposal, and tax exemption on in-house ship management fees. The talk was received with overwhelming response and participants found the talk to be insightful and beneficial to their businesses. The evening was rounded up with a mini networking session among the participants with drinks and canapés.


Wine appreciation evening

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ollowing the success of the first wine appreciation event held in June 2012, another one was organised by the SSA YEG committee and was held on 6 June 2013. The venue was at a training room housed at BDO LLP, which really gave the atmosphere of a wine tasting class with a classroom seating of tables and chairs. The wine sommelier from The Local Nose was candid and detailed in her explanation to the participants, accompanied

by tasting notes and even a mini quiz that the participants took part in at the end of the tasting. A selection of cheeses, crackers and fruits were served in platters to pair with the six different kinds of wines that were tasted that evening. Cupcakes and finger snacks were generously sponsored by BDO LLP as well. Hopefully in time to come, some of our YEG members will become wine connoisseurs in their own rights!

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YEG running interest group

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he YEG committee has recently spearheaded a running interest group, led by Ms Charlie Tan, a committee member from YEG and broker from M3 Marine (Offshore Brokers) Pte Ltd. The group kicked-start their first run on 12 September and is looking to make it a more frequent affair – perhaps on a monthly basis or biweekly basis if time permits. If you are an avid running fan yourself, do keep a lookout in your email inbox for updates on the next run!

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member’s events

Show me the money! A Seminar on Energy Efficiency Noël Jelsma Regional Director Asia Pacific, Eniram Singapore Pte Ltd

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how me the money!” is a catchphrase from the 1996 movie Jerry Maguire, starring Tom Cruise and Cuba Gooding Jr. In the movie, the volatile star football player portrayed by Cuba Gooding Jr. demands that his agent “shows him the money”. Inspired by this very straightforward sentiment, Eniram Singapore and RollsRoyce joined forces with the Singapore Shipping Association (SSA), Lloyds Register and V Ships in July to show Singapore’s ship owners and operators the money that can be saved through the implementation of various ‘energy efficiency’ best practices and solutions. Rolls-Royce is one of the world’s leading suppliers of highly efficient ship designs, power and propulsion systems, and through-life support services to the marine industry. Eniram, meanwhile, is an innovative provider of energy management and voyage optimisation systems for the shipping industry. Mr Luis Benito got the ball rolling with a presentation on how eco-designs are impacting the shipping landscape. He provided clear evidence of the savings that could be achieved through proper study and an understanding of the operational requirements leading to the right application of Lloyds Register’s proven eco ship designs. This, he showed, can lead to consistent operational savings being achieved.

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Mr Ajit Kurup from V Ships provided a detailed presentation of the impact of proper vessel maintenance on the bottom line. The differences between Time Based and Condition Based Monitoring were explored, as well as such issues as the importance of staff quality, spares selection, and having the right IT systems in place. Rolls-Royce’s Mr Louis Soh gave a fascinating insight into how advances in propeller and rudder technology and design are creating significant improvements in vessel propulsion efficiency. The case studies on propeller re-blading and rudder/propeller redesign that Louis shared with the audience showed measurable

savings of over 10 per cent, resulting in significant operating cost benefits to the operators. Finally, Mr Noël Jelsma from Eniram Singapore delivered a presentation on the importance of accurate data collection and analysis to enable performance optimisation. In his presentation, Noël emphasised the challenges around moving from

Rolls-Royce’s Mr Louis Soh gave a fascinating insight into how advances in propeller and rudder technology and design are creating significant improvements in vessel propulsion efficiency

“perception” to “measurement” to ensure that energy efficiency initiatives deliver measurable results. Eniram’s case studies covered cruise vessels, container ships and VLCC’s, including an excellent example of how accurate data collection and optimisation can create major operational savings and support an increase in the asset valuation of an existing vessel. The closing panel discussion, chaired by Mr Tim Wilkins from Intertanko, raised a number of excellent questions from the audience, clearly indicating a good level of engagement from the shipping companies present. The event was well attended, with participants receiving a lot of great feedback.


21

Deloitte industry insights breakfast seminar

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SA’s second Industry Insights Breakfast Seminar of 2013 was held on 29 August at Deloitte Singapore. Entitled ‘Enhancing Value through Restructuring and Analytics’, it was a fruitful twohour session. Participants from SSA were treated to breakfast, where they got to network with fellow industry players. Mr Richmond Ang, Managing Director of Deloitte Singapore and Mr Andrew Grimmitt, the company’s Executive Director, spoke first. Their presentations covered case studies and

provided advice in relation to the restructuring phase in order to maximise stakeholder’s value and recoveries. Next, Mr Vivekanand Gopalkrishnan from Deloitte Analytics Institute discussed current challenges faced by the shipping sector, and wowed the audience with an interactive tool for scenario planning and strategic purchasing. The tool was aimed at enhancing risk assessment, increasing revenue and reducing cost. The seminar was well received, with a strong attendance of 50 participants.

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new members

ordinary members Dolphin Drilling is part of the Fred. Olsen Energy Group, an international drilling contractor operating in the mid- and deepwater segment. The Fred. Olsen Energy Group was formed in 1997 as an amalgamation of all energy related activities affiliated to the Fred. Olsen companies and provides exploration and production services to the offshore oil and gas industry building on 150 years experience in shipping and more than 40 years in offshore drilling. The fleet of Fred. Olsen Energy ASA with subsidiaries currently consists of two deepwater units and five mid-water semi-submersible drilling rigs in addition to one tender support vessel and one accommodation unit. The Group has two newbuilds under construction, an ultra deepwater drillship scheduled to be delivered in 4Q 2013 and an ultra deepwater semisubmersible for harsh environment scheduled to be delivered in 1Q 2015.

Leo Shipping Agencies Pte Ltd was set up to provide agency services to prospective Principals whose vessels call at Singapore. We offer a comprehensive range of agency services for liner and tramp operations covering all vessel types. Staff have 20 years of experience and are knowledgeable on all port, regulatory and shipping matters involving various government agencies.

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Toll Marine Logistics (TML) is one of the key business units operating under the umbrella of Toll Holdings. Headquartered in Singapore, TML owns and operates over 60 vessels ranging from tugs, barges, landing crafts and floating cranes. Its main business activity include the customisation and provision of marine logistical solutions through chartering and management of its vessels for handling of bulk commodities such as coal, iron ore, sand, aggregate, etc.

associate members ECU-LINE is a global NVOCC with headquarter in Antwerp, Belgium and is part of The AVVASHYA Group headquartered in India. With 190 offices in over 90 countries and more than 3000 employees, the company is one of the market leaders in its industry segment. With a company history of 25 years ECU-LINE is well established in the logistic sector and counts all major multinational freight forwarders and many small and midsize companies to their customer base. 

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new members

KPI Bridge Oil is a leading international  broking and bunker trading company with over 40 years’ of experience in the marine transportation industry. With 7 offices strategically located worldwide including London, Singapore, New York, Miami, Seattle, Istanbul and Valparaiso, we are well positioned to provide the products and services to support our customer’s needs 24 hours a day 7 days a week. Our dedicated bunker brokers and traders strive to bring value to our customers without sacrificing quality and service. Building strong and long lasting relationships with business partners around the world enables us to be – The Real Bunker Company.

KVH Industries is a leading manufacturer of solutions (TracPhone® V-IP series, mini-VSAT Broadbandsm, IP-MobileCast™, and TracVision®) that provide global high-speed Internet, voice services, content delivery, and television via satellite to mobile users at sea, on land, and in the air. KVH is based in Middletown, RI, with facilities in Illinois, Denmark, Norway, the UK, Singapore, Philippines, India, and Japan.

23 Seafin Pte Ltd is the Asian arm of the Eurofin Group, one of the world’s largest privately controlled maritime finance and investment advisory companies. The company is active in Structured Finance, Vessel & Fleet Credit Facilities, Marine Portfolio Evaluation & Analysis, and Advisory services for shipping companies, banks and financial institutions on strategy, marketing and development in the shipping finance arena, including distressed debt solutions.

TSMP Law Corporation is a medium-sized law firm with about 50 lawyers. The Shipping team is one of the leading shipping practices amongst Singapore law firms and handles all aspects of corporate shipping work (including ship finance, sale & purchase, shipbuilding contracts, etc) and shipping litigation. The team of nine lawyers is headed by Chua Choon King and Collin Seah who collectively have more than 40 years’ experience in the shipping arena.

Virtus Law LLP is a successor firm to ‘Arthur Loke LLP’ which was established in Singapore in 1981. We are a Singapore based firm offering Singapore law expertise in corporate, finance and litigation (both court and arbitration) matters. With particular experience in the shipping and offshore sector, we are able to offer advice on both contentious and non-contentious matters.

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members’ events

Executive Development Programme Maritime HR Management

Taught by Captain TA Kumar, this course is intended to provide participants with useful insight into the skills needed to become an informed professional crewing agent for the recruitment and ongoing management of sea going staff. Upon completion of the two-day course, participants will be able to conduct an effective interview. Participants will also be equipped with an understanding of the flag state, the MLC, 2006 and

STCW 2010 (Manila Amendments) requirements, the verification process of seafarer documents and certificates, immigration requirements, the guidelines for employment agreement, welfare and wages and also the need for cultural awareness. The Maritime Cluster Fund (MCF) is available for this course and applicants who qualify for the grant will be able to enjoy a 70 per cent subsidy off the full course fees. Sign up online via www.ssa.org.sg to secure a spot now!

Training Calendar jan – march 2014 COURSES OPEN FOR REGISTRATION Fees* Course Title Start Date End Date Duration SSA Non-SSA members members

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Introduction to Shipping 18/03/14 18/03/14

1 Day (9.00am – 5.00pm)

$171.20

$256.80

Intermediate Course on Shipping Documentation 11/03/14 – Bills of Lading

27/03/14

6 Evenings (6.30pm – 9.00pm)

$401.25

$601.88

Compliance of IMDG Code for Transport of 19/02/14 21/02/14 Dangerous Goods

3 Days (9.00am – 5.00pm)

$642.00

$963.00

Basic Course on the Code of Practice for Bunkering 22/01/14 22/01/14 1 Day $224.70 (SS600:2008) 26/03/14 26/03/14 (9.00am – 5.30pm) Intermediate Course on the Code of Practice for Bunkering 21/02/14 22/02/14 2 Days $588.50 (SS600:2008 Chapter 1 – for Cargo Officers) (8.45am – 6.15pm)

$310.30

Maritime HR Management 12/03/14 13/03/14

2 Days (9.00am – 6.00pm)

$428.00

$882.75 $642.00

*Fees are inclusive of GST. MCF Training Grant is available for eligible participants. Please refer to www.mpa.gov.sg/mcf for more information. Dates may be subjected to change. To register, please submit your registration form electronically at www.ssa.org.sg or call Kuna at 6305 2270 for enquiries. For the full list of courses, please visit the SSA website.

g Upcomin ts n e SSA ev

NOVEMBER 2013 2/11 Deepavali 8/11 Environmental Sub-Committee Meeting

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12/11 Ship Operations and Port Services SubCommittee Meeting 14/11 Maritime Safety & Security Sub-Committee Meeting 20/11 Services Committee Meeting 26/11 SSA Council Meeting 28/11 Technical Committee Meeting DECEMBER 2013 2/12 Offshore Services Committee Meeting

4/12 SSA Year-End Cocktail Reception 11/12 Legal & Insurance Committee 25/12 Christmas Day

JANUARY 2014 1/1 New Year’s Day 6/1 Young Executives Group Committee Meeting 8/1 International Committee Meeting 10/1 Bunkering Sub-Committee Meeting 21/1 Cruise Sub-Committee Meeting 27/1 Operations, Training & Manning Sub-Committee meeting 30/1 SSA Council Meeting 31/1 Chinese New Year


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Waves issue 40