Maritime Matrix Today February 2021 by Marex Media Pvt Ltd

MATRIX Bio-LNG deems to be a ‘prime pathway’ to carbon neutrality

European shipbuilding sector starts to feel the heat

Shipowners still ignore green ship recycling

World’s First Carbon-Neutral Oil Shipment offloads in Indian port

Panama Canal hits news with LNG transit record

TODAY

MAR ITI ME

US$ 3 • ` 150 Vol 10 • Edition 02 • February 2021

02 | Maritime Matrix Today | February 2021

Maritime Matrix Today | February 2021 | 03

Panama Canal hits news with LNG transit record

anama Canal has hit a new record for the transit of liquefied natural gas (LNG) in January.

The Panama Canal Authority reported a total of 58 vessels transited the Neopanamax locks, totaling 6.74 million tons. This compares to 54 LNG tankers that transited the canal in January 2020, and 6.23 million tons reported in November last year. The result came as a result of the canal’s response to the growing demand stemming from a recent boom in the energy market. The Panama Canal Authority further noted that it has implemented a number of adjustments to its operations enabling it greater flexibility and the possibility to respond to changing market conditions. During January further changes have been made to the Transit Reservation System enabling the auction of space available to Neopanamax vessels within 96 hours before transit. Since the change, Panama Canal held 25 such auctions, nine of which were awarded to LNG carriers. During January three LNG carriers transited northbound on the same day, while on January 31, four LNG tankers made their way across the canal, two heading north and two heading south. The increase in LNG tankers’ transit is a response to winter condition s boosting the demand for liquefied natural gas for power generation in Asia. MMT

04 | Maritime Matrix Today | February 2021

Shipowners still ignore green ship recycling

lthough they exist, environmental and labour laws that regulate ship recycling are still ignored by shipowners that continue to send their vessels to dirty scrapyards in South Asia. According to new data released on 2 February 2021 by the NGO Shipbreaking Platform, a total of 630 oceangoing commercial ships and offshore units were sold to the scrapyards in 2020. Of these vessels, 446 large tankers, bulkers, floating platforms, cargo- and passenger ships were broken down on three beaches in South Asia, amounting to nearly 90 per cent of the gross tonnage dismantled globally. The situation has not much improved since 2019 when 469 of a total of 674 vessels and offshore units were broken down on only three beaches in Bangladesh, India and Pakistan. Ships are considered hazardous waste under international environmental law as they contain many toxic materials and substances within their structures, and onboard as residues. These toxics need to be

managed in a safe and environmentally sound manner. Their export from developed to developing countries is banned by UNEP’s Basel Convention. On the beaches of Alang in India, Chattogram in Bangladesh, and Gadani in Pakistan, where near 90% of the global world tonnage was scrapped in 2020, the negative consequences of shipbreaking are real and felt by many. Workers – often exploited migrants, some of them children – are exposed to immense risks. They are killed or seriously injured by fires and falling steel plates, and sickened by exposure to toxic fumes and substances. Coastal biomes, and the local communities depending on them, are devastated by toxic spills and air pollution due to the lack of infrastructure to contain, properly manage and dispose of the many hazardous materials embedded in the ships. “It is a scandal that laws and standards aimed at protecting people and the environment are ignored when scrapping the near totality of the global fleet. Governments, the clients, financiers and insurers of shipping, as well as the employees of shipping, need to take a much stronger stance against this exploitation of vulnerable communities and fragile ecosystems,” Maritime Matrix Today | February 2021 | 05

Ingvild Jenssen, Executive Director and Founder of the NGO Shipbreaking Platform, stressed.

causing the death of one worker, occurred during the dismantling of Polaris’ vessels in Chattogram.

Last year, at least 10 workers lost their lives when breaking apart vessels in Bangladesh. At least another 14 were severely injured. Despite repeated attempts to obtain official statistics, no information on accidents at the Indian and Pakistani yards has been made available. The sector suffers from a serious lack of transparency, and it is expected that many accidents go unreported. Many more workers suffer from cancers and other occupational diseases.

Another South Korean company, Sinokor, is runnerup for worst corporate practice, NGO Shipbreaking Platform said. Sinokor sold four vessels for scrapping in Bangladesh last year. On 24 March, two brothers died due to toxic gas inhalation while working in the engine room of the tanker West Energy at Kabir Steel’s Khawja shipbreaking yard.

The worst dumpers in 2020 Greece tops the list of country dumper in 2020. Greek owners sold 48 ships for scrapping in total, most of which were beached in Bangladesh and Pakistan. “Whilst some EU Member States are increasingly cracking down on environmental crime, almost a quarter of the tonnage broken in South Asia was owned by European shipping companies. Greece in particular has systematically closed its eyes to the deplorable end-oflife track record of its shipping industry,” Jenssen said. What is more, the ‘worst corporate dumper’ prize goes to South Korean company Polaris Shipping. Under pressure following serious incidents on the Stellar Daisy, which sank in the Atlantic with the loss of 22 lives in 2017, and on the Stellar Banner, which was scuttled off the coast of Brazil in June, Polaris Shipping scrapped 11 of its carriers in 2020. All units were beached in Bangladesh and Pakistan. Four major accidents,

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Brazilian state-owned company Petrobras comes third for worst corporate practice. Three years have passed since civil society organisations and trade unions urged the Brazilian government to stop the dumping of toxic ships on South Asian beaches. Yet, oil giant Petrobras dumped nine of its old tankers in South Asia last year alone. The units were auctioned off to cash buyers. Berge Bulk, Costamare, Eurobulk, Evergreen, K-Line, Maersk, Swire & Sons, and Teekay are other well-known shipping companies that dumped their toxic ships on South Asian beaches in 2020, NGO Shipbreaking Platform further said. Laws governing ship recycling are easily circumvented by shipowners, often with the aid of cash buyers. These pay the highest price for end-of-life vessels and typically re-name, re-register and re-flag the vessels on their last voyage to the beaching yards. Almost half of the ships sold to South Asia in 2020 changed flag to one of the black-listed flags Comoros, Palau and St Kitts & Nevis just weeks before hitting the

beach. At least 14 of these flag changes enabled ship owners to circumvent the EU Ship Recycling Regulation.

and retirement cycle for each of our ships,” Carnival Corporation’s spokesperson said.

“Whist European shipping companies own 40% of the world fleet, only 5% of end-of-life ships were registered under an EU/EFTA flag in 2020. Flags known for their poor implementation of maritime law have always been particularly popular at end-of-life. Ship owners hiding behind anonymous post box companies set up by cash buyers and backed by blacklisted flag registries is a reality that begs for the introduction and enforcement of measures that effectively hold the real beneficial owners of the vessels responsible,” Jenssen continued.

Clean and safe solutions are already available. Less than a million Light Displacement Tonnes (LDT) were recorded recycled in EU-approved facilities in 2020, which represent a minor fraction of what these yards are able to handle.

The best ship recycling practices Due to the pandemic, the cruise shipping sector has been forced to downsize, with many ship owners, such as Carnival Corporation and Pullmantur, taking steps to reduce operating expenses, including the retirement of relatively young vessels.

“We applaud companies, such as Carnival Corporation, that have a responsible policy for the recycling of their vessels ‘off the beach’. Now, we call upon policy makers to adopt effective measures, such as a returnscheme for ships, that will incentivise more owners to recycle their assets in a sustainable manner,” Nicola Mulinaris, Communication and Policy Officer at the NGO Shipbreaking Platform, concluded. MMT

Carnival Corporation receives the 2020 award for best ship recycling practice. Leading by example, the American cruise shipping giant sets a standard the remaining of the cruise and shipping sector can follow. “Our highest responsibility and top priorities are to be in compliance everywhere we operate in the world, to protect the environment and the health, safety and well-being of our guests, the people in the communities we visit and our shipboard and shoreside employees. This commitment holds true for every stage of the life

Maritime Matrix Today | February 2021 | 07

World’s First CarbonNeutral Oil Shipment offloads in Indian port

he use of carbon offsets has been attracting increasing levels of interest in the maritime and other sectors as an early technique to improve the environmental impact of businesses that among the largest contributors of greenhouse gas emissions. Using this method, a shipment of oil recently offloaded in India is clamming the title of the world’s first carbon-neutral oil shipment. This follows the recent reports of the first carbon-neutral container shipment. The two million barrels of oil were produced in the U.S. Permian Basin by Occidental and delivered by its Oxy Low Carbon Ventures division to Reliance Industries in India aboard the VLCC Sea Pearl operated by Pantheon Tankers. This transaction, which was arranged in conjunction with Macquarie Group’s Commodities and Global Markets group, is reported to be the energy industry’s first major petroleum shipment for which greenhouse gas emissions associated with the entire crude lifecycle, wellhead through the combustion of the end products, have been offset. Macquarie arranged and structured the bundled offset supply and retirement. The offsets were sourced from a variety of projects verified under the Verra Verified Carbon Standard meeting eligibility criteria for the UN’s International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The volume of offsets applied against the cargo is sufficient to cover the expected GHG emissions from the entire crude lifecycle including oil extraction, transport, storage, shipping, refining, subsequent use, and combustion.

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According to the companies that worked together to complete this shipment, this type of transaction, which involves the bundling of carbon offsets with crude oil, is an immediate executable solution that helps promote investments in longer-term, industrialscale decarbonization strategies. They believe that this transaction will be a first step in the creation of a new market for climate-differentiated crude oil. This ship is also seen as a bridge to the development of a further differentiated petroleum product, net-zero oil, which Occidental intends to eventually produce through the capture and sequestration of atmospheric CO2 via industrial-scale direct air capture (DAC) facilities and geological sequestration. MMT

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Maritime Matrix Today | February 2021 | 09

31 billion litres of ocean pollution prevented

inister of Transport Omar Alghabra is putting off the return of cruise ships to Canada, extending the reprieve from cruise pollution and our window of opportunity to bring in meaningful ocean protections.

litres of inadequately treated cruise ship pollution laden with fecal coliform, ammonia, heavy metals and polycyclic aromatic hydrocarbons—pollutants that are harmful to human health, aquatic organisms and coastal ecosystems.

According to a report, coastal jurisdictions from California to Alaska are leading the way protecting Pacific waterways from cruise ship pollution—except Canada, where limits are 18 times less stringent and discharges are allowed anywhere. The suspension of the cruise season in 2020 prevented 31 billion litres of ocean pollution from being dumped off the B.C. coast.

“Strengthening Canada’s abysmally weak ocean dumping laws will create local jobs, allow ecosystems to thrive, and protect the ocean economy,” said Anna Barford, Canada Shipping Campaigner with Stand.earth. “We are calling on Minister Alghabra to ensure that our regulations meet or beat those of our West Coast U.S. neighbours before cruise ships are permitted to return to Canadian waters. It is past time for Canada to stop being the cruise industry’s toilet bowl and start leading on protecting our coasts. ”

The cruise industry is dominated by Carnival Corporation, a group that can hardly be trusted to manage its waste. Its cruise brands include Princess, Aida, and Holland America Line, and have been subject to criminal prosecution for a number of environmental misdeeds in other jurisdictions. Canada still has significant work to do, but with this latest effort from Minister Alghabra, there is now the time to do it. Canada has no monitoring schemes that could collect equivalent data or catch the polluters red-handed. Unless Transport Canada steps in, there is a strong possibility that dozens of cruise ships will return in 2022 passing through BC waters on their way to and from Alaska, leaving in their wake tens of billions of

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Reinvigorating the cruise ship industry post-COVID must include updated and strengthened regulations that protect our coastlines before cruise ships are allowed back. MMT

Port of Gothenburg aims to cut emissions by 70 per cent by 2030 I n an effort to speed up the transition to fossil-free fuels in the transport sector, Volvo Group, Scania, Stena Line, and the Port of Gothenburg have joined forces to bring about a significant reduction in carbon emissions linked to the largest port in the Scandinavia. The aim is to cut emissions by 70 per cent by 2030. Trade and freight transport are vital to expand public welfare and to ensure function and development of society. At the same time, the transport sector is a highly complex system, involving different modes of transport and organisations collectively facing big climate challenges. “No single organisation or individual holds the key to meeting the challenges ahead of us. Collaboration is crucial and we are pleased to bring on board two of the world’s largest truck manufacturers and the world’s largest ferry company. With our collective expertise, breadth, and market presence we can make a real difference,” said Elvir Dzanic, Gothenburg Port Authority chief executive. Named the “Tranzero Initiative”, this venture is focused on the one million truck transports and the 55,000 tonnes of carbon emissions generated from road transports to and from the Port of Gothenburg each year. The Initiative also includes electrification of sea transport. The companies involved will introduce a series of interlinked measures designed to accelerate the switch to fossil-free fuels. This task has already commenced with a needs analysis and mapping of freight flows as part of the commitment to offering the market the right products and establishing a fossil-free fuel infrastructure to support this development.

Gothenburg Port Authority will produce the necessary infrastructure and access to fossil-free fuels for heavy vehicles, including electric power, HVO, biogas, and hydrogen gas. Volvo and Scania will put commercial offerings in place for their heavy truck customers, ensuring that in time land transport becomes fossil free in accordance with the goals laid down by the port. Stena Line will also have a key role to play by ensuring new fossil-free vessels are brought into service on the Gothenburg-Frederikshavn route by 2030, moving from vision to reality with its battery-powered vessel concept Stena Elektra. Welcomed by the government The Tranzero Initiative is welcomed by the Swedish government and is entirely in line with the ambition for Sweden to become the first fossil-free country in the world. The chief executives behind the Initiative are also members of the Electrification Commission, which was set up by Minister for Infrastructure Tomas Eneroth last autumn. The transition to fossil-free transport to and from the port will need government support for companies that need to upgrade their fleets, for example designated grants, subsidised charging points, and fossil-free fuels. “We have had a long-standing exchange of views and ideas with the government regarding the challenges we are facing, and our goals are the same. The transport sector needs to move away from its reliance on fossil fuels and with the Tranzero Initiative we are taking a monumental step forward,” said Elvir Dzanic. MMT

Maritime Matrix Today | February 2021 | 11

Paradip Port posts growth in volumes P

aradip Port Trust, India’s second-biggest stateowned port by cargo handled, has turned a corner, to post a growth in volumes since the financial year began in April. The port located in Odisha handled 93.608 million tonnes (mt) of cargo during April and January of FY21 compared to 93.387 mt during the same period last year, posting a growth of 0.24 per cent. India’s dozen state-owned ports handled a combined 542.136 mt of cargo during April to January, 7.44 per cent lower than the 585.732 mt handled during the same period last year. Till December, barring Mormugao Port Trust, all the other 11 port trusts were hit by volume declines triggered by the coronavirus induced demand destruction. However, the extent of volume decline year-on-year has been reducing since July, suggesting a recovery in India’s external trade, according to the ministry of ports, shipping and waterways.

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Mormugao Port Trust handled 17.190 mt of cargo between April and January, 28.12 per cent more than the 13.417 mt handled during the corresponding period last year, according to the ministry of ports, shipping and waterways. Deendayal Port Trust, India’s biggest state-owned port by cargo volumes, handled 95.094 mt of cargo during April-January period, 6.74 per cent lower than the 101.965 mt handled a year earlier. Jawaharlal Nehru Port Trust, India’s biggest stateowned container gateway, handled 51.232 mt during April-January from 56.774 mt a year ago, registering a decline of 9.76 per cent. MMT

PIL to seek approval for proposed restructuring plan

acific International Lines has filed an application to the Singapore High Court to seek approval for the company’s proposed restructuring plan.

Under the plan, Singapore’s container shipping major is vying for fresh financing from Heliconia Capital Management Pte, an investment firm owned by Temasek Holdings, and a re-profiling of the company’s debts by way of a scheme of arrangement. The application comes on the back of the approval of the scheme by the requisite majorities of each class of Scheme Creditors on February 1, 2021. The company started looking for investors having been faced with considerable financial strain due to the impact of the COVID-19 and market volatility including high bunker prices and oversupply of capacity. PIL has already completed the first stage of its comprehensive financing package having secured a $112 million emergency credit facility to fund overdue trade vendors and other critical cash requirements.

The second stage includes the $600 million financing from the investor that is intended to repay critical vendors, and recalibrate PIL’s capital structure to sustainable levels. The support for the structuring plan was vital for PIL which would have otherwise been faced liquidation. The company’s board said that the sanction application has been fixed for hearing by the court on March 3, 2021. The approval comes as the container shipping market undergoes a major rebound following the Covid-19 impact on the demand-side. Liner majors have been reporting better than expected full-year results greatly due to capacity discipline, lower bunker prices as well as higher freight rates boosted by market recovery. MMT

However, this has been described as an interim measure to boost liquidity while discussions on the broader financing solution were underway. Maritime Matrix Today | February 2021 | 13

SCA plans to invest approximately SEK 460 million in Tunadal port wedish forest products company SCA revealed plans to invest approximately SEK 460 million (about $54.7 million) in Tunadal port between 2021 and 2024.

SCA is now building out the port to be able to accommodate ships with a draft of 15 meters, compared with the current 12 meters. SCA also will build a container port with a capacity of 100,000 TEU per year.

As informed, the investment will encompass a new container port and new cargo handling areas.

Finally, the company intends to build land south of the current port to create new space for cargo handling.

SCA’s investments in Östrand pulp mill, in addition to the ongoing investments in pulp production at the Ortviken industrial site, will more than double the volume of pulp to be shipped from the Sundsvall region. The increased volumes mean that the pulp will be delivered to new and more distant markets. Tunadal and Bollsta sawmills are also ramping up their production volumes.

“With this expansion of the port, we will be able to load significantly larger ships and be able to ensure the efficient and competitive transport of the products that are growing in volume in the region. Key parts of the port expansion will be ready in time for the new volumes from the Ortviken industrial site comprising pulp and recycled textile fibers from Renewcell.”

Containers are being increasingly used to transport pulp and solid-wood products. Over the past five years, the volume of containerized trade from Tunadal port has more than doubled, according to SCA.

“With the expanded port, the combined terminal being built by the Municipality of Sundsvall and the improved rail links to Tunadal port, we will have a transport infrastructure that will move Sundsvall closer to the global export markets and the Scandinavian domestic market, thereby benefiting industry and trade across Northern Sweden,” Svensson concluded.

“This development has meant that we need to be able to handle larger volumes of containerized cargo than previously and be able to accommodate larger ships – both container ships and break bulk vessels,” Magnus Svensson, President Sourcing and Logistics at SCA, explained. 14 | Maritime Matrix Today | February 2021

MMT

Oil products stocks climb across board for first time in 8 weeks

il products stockpiles at the UAE’s east coast Fujairah port climbed to a four-week high, with all categories showing gains for the first time in eight weeks and demand for bunker fuel slowing. Total inventory stood at 23.282 million barrels as of Feb. 1, up 7% from a week earlier and the highest since Jan. 4, according to Fujairah Oil Industry Zone data provided exclusively to S&P Global Platts on Feb. 3. Middle distillates led the way, showing a 15% gain to 5.171 million barrels after rising 16% a week earlier. The 33% increase over two weeks puts middle distillates at a six-week high. Heavy distillates inventories, including marine bunkers and fuel used in power generation, stood at 10.78 million barrels on Feb. 1, up 8% from a week earlier and the highest in two weeks. Fujairah-delivered marine fuel with 0.5% sulfur bunker was $461/mt on Feb. 2, $6/mt lower than in Singapore, the world’s largest bunkering hub, according to Platts assessments. Fujairah demand has “dialed down a fair measure from Feb. 1,” Platts reported in its daily Bunkerwire for Feb. 2.

Fujairah marine fuel sales have been hurt due to mainly oil tankers, instead of container ships or cruise lines, calling at Fujairah as well as OPEC+ production cuts, according to Cem Saral, CEO of bunker reseller Cockett Marine Oil. OPEC, Russia and several other key oil producing countries have cooperated on a series of output cuts for more than four years to boost prices, including an unprecedented 9.7 million b/d cuts in mid-2020 during the depths of the pandemic. Those cuts are now being tapered gradually, though Saudi Arabia has announced a unilateral additional 1 million b/d cut for February and March to shore up the market as infection numbers have soared this winter. Light distillates stockpiles, including gasoline and naphtha, stood at 7.331 million barrels as of Feb. 1, up 1% from a week earlier and representing a three-week high. MMT

Maritime Matrix Today | February 2021 | 15

Port congestion and logistical bottlenecks likely to last until end of Q2

ort congestion and other logistical bottlenecks that are delaying container ship services and keeping freight rates elevated are likely to last until the end of the second-quarter, German shipowner Hapag-Lloyd’s North America President Uffe Ostergaard said on Feb. 4.

West Coast terminal facilities are not the only bottlenecks in the system either, Ostergaard said. There are also shortages of available truck chassis to carry cargoes out of the ports, requiring a lead time of 21 days to book a truck at Los Angeles and 14-15 days at the east coast ports of Norfolk and Savannah.

Congestion at US ports will get worse in the months ahead before it gets better, Ostergaard said in a virtual forum. The growing queue at the Ports of Los Angeles and Long Beach, strained beyond capacity by relentless import volumes, will push ships towards other ports and create further pile-ups elsewhere.

“We book our trucks well in advance, but the risk of cancellations or delays are substantial,” Ostergaard said. “It’s hard to give any clear expectations on delivery times. It’s a lot of uncertainty at this point.”

“We are in for a prolonged period of bottlenecks that we are expecting to last until summer around the end of the second quarter,” Ostergaard said. “We’re looking at 2-3 weeks of delays in some cases; not necessarily at anchor because some of our ships are steaming more slowly from Asia in anticipation of delays.” There were 35 ships at anchor in Southern California’s San Pedro Bay on Feb. 4, and another 12 anchored in a growing queue off the Port of Oakland, according to cFlow, Platts trade-flow software. As the line-ups continue to grow in the weeks ahead, wait times for ships to berth at the ports are expected to extend beyond the current 10-14 days for Los Angeles/Long Beach and 3-6 days at Oakland. There is no let-up in US import demand expected for the near term as retail inventory levels have remained unchanged at low levels for months as all stocks are put forward to consumers, Ostergaard said. And further stimulus payments by the US government to counter the economic effects of the coronavirus pandemic could increase consumer demand for goods almost immediately.

Hapag-Lloyd has taken steps to mitigate the congestion, such as using the alternative Port of Norfolk when the Port of New York and New Jersey in congested, and has been shipping empty containers from Los Angeles by rail to export from Houston at increased cost to the shipowner. But the construction of new containers will take months to improve the shortages being experienced in Asia and there are virtually no container ships available in the market for charter to increase carrying capacity, Ostergaard said. Relief to the US container import overload may only come when a significant percentage of the population is vaccinated against the coronavirus and spending habits rebalance towards services, he said. Hapag-Lloyd and its THE Alliance vessel sharing partner One Network Express announced on Jan. 26 that more than 20 scheduled trans-Pacific sailings in February and March would be effectively canceled as delays accumulate into a full round-trip blanked service. Platts Container Rate 13 — North Asia to West Coast North America — was assessed Feb. 4 at $4,200/FEU, a threefold increase from the $1,400/FEU assessment one year ago. MMT

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Bio-LNG deems to be a ‘prime pathway’ to carbon neutrality T he gradual introduction of bio-LNG alongside synthetic LNG is expected to incrementally decarbonise shipping towards IMO’s 2050 target of reducing greenhouse gas (GHG) emissions by 50% compared to 2008 levels.

In a recent report by SEA-LNG, it was noted that LNG as a marine fuel has moved from being a niche option to a mainstream fuel of the future. Instead of avoiding making a decision and waiting for technologies to develop in the future, LNG enables shipowners to reduce emissions now while protecting the future. The report noted the need for lifecycle analysis with current data taking actual operational environments into account, and working with seafarers, ports and port communities is essential. “Specifically, the industry must make decisions on future fuels on a well-to-wake basis, looking at total emissions throughout the lifecycle of a fuel,” the SEALNG report mentioned. However, the report understood that there is likely to be a basket of future marine fuels and owners will need to make comparisons, as well as the fundamental binary choice facing newbuilds in 2021 as decarbonisation forces a choice between using LNG now or retrofitting later. Peter Keller, chairman of SEA-LNG, believes that LNG and its pathway is currently the only significant fuel in the basket for shipping to choose from. Looking back to 2020, LNG-fuelled shipping has made significant progress, seeing a record number of ships using and ports supplying LNG and first uses of bioLNG by ocean-going ships. Today, LNG-fuelled vessels amount to approximately 13% of the current newbuild orderbook and estimates for 2021 and beyond show continuing growth in many classes of vessels.

Analyst Clarksons records 124 ports with LNG bunkering facilities, up from 114 at the start of the year and forecasts this will increase to 170 by 2022. Clarksons also projects the LNG bunkering fleet will double in size in the next two years. The use of bio-LNG, in particular, has emerged as a suitable product as it is derived from mainly waste and agricultural and forestry residues. It is also chemically identical to fossil LNG and can use the same engines, storage systems and bunkering infrastructure, according to SEA-LNG. “Longer term, synthetic LNG, produced through the well-established power-to-gas process, using the same renewable energy building blocks as green ammonia and other e-fuels, is likely to become available in increasing volumes as global renewable electricity capacity grows,” the SEA-LNG report wrote. “The use of LNG now paves the way for bio-LNG and synthetic LNG in the future, offering a future-proof investment for shipowners,” the report said. “Waiting is not an option for getting to zero. Going LNG represents a positive step down the decarbonisation pathway to carbon neutrality in marine fuels.” MMT Maritime Matrix Today | February 2021 | 17

Metals & Mining Outlook

e enter 2021 with many mined commodity prices riding high after recovering from a dramatic pandemic-induced slump in H1 2020. But far from marking a new atmosphere of positivity, the New Year brings new questions. How will Chinese policy affect supply and demand in 2021? Will the growing rhetoric around decarbonisation be followed up with concerted global action? And could fiscal stimulus tied to metals-intensive green investment herald the dawn of a new global supercycle, or is it too early to celebrate?

will US policy decisions impact both domestic and international industry?

Our new report provides expert commentary on these and other key questions affecting metals and mining in 2021. Complete the form for a complimentary copy, or read on for a preview of some of our key talking points.

But with a wider choice of vehicles using a greater range of chemistries, which metals will be the big winners and which will stall?

Aluminium – the rise of green metal? The pandemic-driven collapse in demand left the aluminium market with a sizable surplus in 2020. This could be another year of rising stocks and the dominance of Chinese ‘green’ aluminium. But how far 18 | Maritime Matrix Today | February 2021

Battery raw materials – EV sales could accelerate demand Electric vehicle sales grew 38% in 2020, despite the pandemic. We expect strong growth again in 2021, supported by governments around the world targeting a ‘greener’ recovery from the current downturn. Battery raw materials should see a surge in demand as a result.

Copper – can purchasing levels be sustained? In H2 2020, the manufacturing sector registered a rapid recovery due to demand for consumer durables as the world adapted to home working. It remains to be seen if purchasing levels can be sustained through 2021. And will the world’s focus on an accelerating energy

transition add further price support to an already hot metal? Gold – replenishing reserves will be vital Prices and sentiment are high for gold. But with a fall in mine supply around the corner, reserve replacement is a must. But it can’t come at any cost; with average emissions per tonne of gold around 25kt the industry needs to take action. Will this be the year we start to see a market bifurcating based on green credentials? Lead – limited stocks could further dwindle Li-ion may be the favoured battery technology for EVs but almost all models still also use lead batteries (albeit with 35-60% less lead intensity than in an ICE) so the future seems bright. But with scrap supply at risk due to the weather and coronavirus lockdowns, and with smelters struggling to keep up with demand from battery makers, can the lead industry keep the lights on? Nickel – Indonesia is shaping the market The nickel story is really all about Indonesia: its export ban on nickel ore is expected to reduce Chinese nickel pig iron (NPI) production by almost 40% in 2021. But this should be more than offset by domestic supply coming online. At the same time Indonesia is also embarking on a journey to become a major hub in the battery supply chain. All eyes are on Indonesia’s next move. Zinc – Chinese smelter production is the key variable Given that just under half of the world’s capacity is in China, how the country’s smelters perform and their appetite for imported concentrate will have a large impact on prices through 2021. Meanwhile, with electricity typically accounting for 4050% of smelting costs we will see zinc smelters seeking to reduce carbon emissions through increased use of renewables. Who will take the lead on ‘greener’ zinc? Steel – post-pandemic stimulus could drive demand up Chinese demand remains the biggest risk to our view – but growth shows no signs of slowing. Further upside exists if global demand is boosted by post-pandemic stimulus and the new US administration pursues investment in steel-intensive infrastructure. However, with the industry responsible for around 10% of global emissions will this be the year we see material action on decarbonisation? Metallurgical coal – Australia’s import ban could determine global price and trade flows

coal markets, not least demand erosion from the pandemic and the Chinese ban on Australian imports. Looking ahead, China may be entering a post-peak steel era, but will anyone notice? Solid local demand and the potential for increasing exports mean production growth is still a possibility. Meanwhile, at a global level could lower prices see production leave the market and lead to later supply shortfalls? Iron ore – Chinese demand remains the key driver 2020 was full of surprises for iron ore: despite a global recession, prices doubled, and the majors enjoyed their highest margins since the boom of 2010-2012. However, with prices riding high, will China-Australia trade tensions and overseas mining projects reduce China’s reliance on foreign-owned imports and cool the outlook? Thermal coal – off to strong start, but it may not last A prolonged cold snap in the northern hemisphere coupled with easing Chinese imported coal restrictions has seen demand and prices soar in early 2021. But could producers overshoot the supply response? Will China’s Australian coal ban continue to distort traditional seaborne trade flows? And how will coal be affected in the longer term as carbon reduction policies spread? MMT

2020 brought enormous changes to the metallurgical Maritime Matrix Today | February 2021 | 19

European shipbuilding sector starts to feel the heat T

he shipbuilding industry has been hit hard by the impact of the coronavirus pandemic quashing shipowners’ interest in investing in new ships.

The pandemic crushed down on an already battered industry suffering from overcapacity, weak demand, and flat world trade growth. The European shipbuilding sector was doing fairly well mostly due to the fact that its key branches focused on building high-end and high-value cruise ships and general passenger ships, a sector that was in clover prior to the pandemic. However, as COVID-19 pounded the tourism industry, resulting in the suspension of sailing and massive losses in the cruise sector, the European shipbuilding sector started to feel the heat as well. In the first half of 2020, the global shipbuilding industry saw a 62% drop in orderbook in tonnage and more than 70% drop in value when compared to 2019. “Our figures for the remainder of the year confirmed that this trend continued throughout the whole year,” Kjersti Kleven, Chairwoman, SEA Europe, said during today’s press conference kick-starting SMM Digital in Hamburg.

Kjersti Kleven

Chairwoman, SEA Europe

Commenting on the shipbuilding market, Dr. Martin Stopford, CEO of the shipping intelligence network Clarkson Research, said that shipyards were facing a big orderbook gap. This year the world shipyards will deliver about 80 million dwt of ships, while orders for next year, based on what has already been booked, will be down to 55 million dwt, Stopford added. China is still number one on a global scale with about 11 million Compensated Gross Tonnage (CGT), followed by shipbuilders from South Korea with 9 million CGT and Japan at about 6 million CGT. “Against this background, you would expect prices to fall, but they fell by only 4% last year, which is pretty robust and new building prices slip back by 3%. So, we’re not getting the sort of collapse of prices we saw in the 80s when they literally went down by 30 or 40% in a couple of years. One of the reasons for this is that investors are not so worried about the price, they’re worried about how to order a ship that won’t be obsolete in 10 years, and this is a major problem,” he pointed out.

20 | Maritime Matrix Today | February 2021

Kleven believes the delay in investments would continue until better market conditions and confidence in the market return, especially in Europe. “Like in other businesses, both shipyards and equipment companies have had severe challenges in their production and many of them had to stop their productions. Due to these delays, some companies have been faced with liquidity problems and last, but not least, until this day there have been difficulties with foreign workers as many of them have not able to return to work due to border closures, similar to seafarers but not in the same extent,” Kleven explained. “Finally, we have seen significant layoffs taking place already in 2020, and these are even expected to increase as of this year and onwards. We all know that redundancies have a negative impact on the sector’s know-how and skills at a time where we are really

looking for new talent and investing in new skills that we need to cope with the green and digital transition.” She added that the pandemic has put further pressure on Europe’s ability to keep a strong maritime technologies sector. “I would say looking at the industry as a whole with masses of demand, the shipbuilding sector is a growth industry. However, we need digitally ergonomic designs, by that I mean we need to ensure that the ships have the item I4 technology that will enable them to achieve the sort of goals both in the performance area, logistics, and the carbon saving climate change area,” Stopford concluded. MMT

Maritime Matrix Today | February 2021 | 21

IMI calls on international suppliers to enter Saudi market

“

It’s remarkable how much progress is being made at the shipyard. Dredging and reclamation works have been done. The drydocks have been dug out, and warehousing is starting to go up. It’s really taking shape,” Julian Panter, VP business development, IMI, said.

The region has trade ties with 200 countries and jurisdictions, and, last year, saw imports and exports hit almost $650bn, foreign investment of just over $28bn, and ship exports of $6.6bn. “We are keen to get international suppliers to set up permanent facilities,” said Abdullah Mahanna, VP, procurement and supply chain management, of the opportunities IMI can provide. “The cluster is to be 22 | Maritime Matrix Today | February 2021

designated a special economic zone; it will be feasible to set up facilities inside the cluster next to IMI.” Cementing the prospects for the yard’s success are the guaranteed offtake agreements signed by IMI with Saudi Aramco, for 20 rigs, and the National Shipping Company of Saudi Arabia (Bahri), for 52 bulkers, chemical tankers and VLCCs, to be built over a 10-year period. “Saudi Arabi has a world-class shipyard to capture the local market. It is so big that the offtake will fill only 40 percent. We still need to go out and [allocate] the other 60 percent,” said Panter. “We are looking to capture international newbuilds.” In addition to opportunities provided by its four joint venture partners, Saudi Aramco, Bahri, Lamprell and HHI,

IMI is also calling on potential suppliers to support its existing training and development programs by offering internships to its professional, graduate, apprentice, and support cohorts. Work on the first two of the 20 Aramco rigs has already begun at Lamprell’s yard in Sharjah, UAE, for handover next year, while one VLCC is under construction at the yard of Hyundai Heavy Industries (HHI) in South Korea, as IMI wanted to start building capabilities early, to ensure that staff learnt how to work on live projects, and also provide an opportunity to generate early revenues. “It’s a business that has a very secure pipeline,” said David Galea, vp, legal, IMI. “Saudi Arabia’s foreign investment laws are opening up to allow 100 percent ownership for foreign companies. This is the largest economy in the Middle East. There are benefits without risks.” Citing data recently provided by shipping economist Martin Stopford showing that the orderbook has hit a 31-year low against the existing fleet, Mahanna said IMI offered a compelling proposition at a time when the COVID-19 pandemic continued to threaten the wellbeing of businesses around the world.

and try their best to be part of our supply chain and provide us with their excellent products. “Now is the time to take the decision to join in our efforts and invest.” Organised by Seatrade Maritime, the Saudi Maritime Congress is to take place later this year in Dammam, and is expected to include tours of the IMI facility for conference participants. IMI will be a leading global maritime facility offering ship and rig companies state-of-the-art products, infrastructure and high-quality solutions that will help drive the development of Saudi Arabia’s maritime industry. Last week, Saudi Arabia Airlines announced that international flights would recommence on March 31, and details of the event are expected to be provided soon. MMT

“I am not aware of much newbuilding going on at the moment. Capitalising on our offtake agreement, this is a great chance for our suppliers to roll up their sleeves

Maritime Matrix Today | February 2021 | 23

IIMS launches standalone professional qualification in marine corrosion T

he leading worldwide professional body for marine surveying, the International Institute of Marine Surveying (IIMS), has launched a standalone professional qualification in marine corrosion. The qualification comprises 10 modules and is offered separately from the Institute’s two award-winning professional qualifications in marine surveying. The course that supports the qualification is entitled ‘Marine Corrosion and Prevention in Small Vessels, Ships and Offshore Structures’.

IIMS Chief Executive Officer, Mike Schwarz

The programme has been written primarily with marine surveyors in mind, those whose job it is to inspect, understand and report on corrosion and is pitched at education level 4/5. Who should study for this qualification? The professional qualification in marine corrosion is intended for marine surveyors of yachts and small craft, ships and offshore structures. It is also relevant for design engineers, material specifiers, other professional engineers and students of marine science and engineering. IIMS Chief Executive Officer, Mike Schwarz, said, “IIMS has made a significant investment to bring the Professional Qualification in Marine Corrosion to market. This is one of the most important new initiatives from the Institute since the award-winning IIMS Diploma in marine surveying was launched 20 years ago. Corrosion remains the one aspect of marine surveying where knowledge is vital. It is apparent that many people still have an insufficient depth of knowledge about corrosion and I expect this Professional Qualification will appeal to many.” MMT

24 | Maritime Matrix Today | February 2021

Corvus to develop and produce modularised and cost-effective PEM C orvus is spearheading a collaboration with Norwegian partners Equinor, shipowners Norled and Wilhelmsen, ship design company LMG Marin, the NCE Maritime CleanTech cluster and R&D institution the University of South-Eastern Norway (USN) to develop and produce modularised and costeffective PEM (Proton Exchange Membrane) fuel-cell systems for the international marine market. Production will be based in Bergen, Norway. The development is scheduled to showcase its first marine fuel cell system onboard a vessel in 2023 and the product will be available for commercial delivery from 2024. “Adding fuel cell modules to our product portfolio is a natural step for Corvus and advances our vision to be the leading supplier of zero-emission marine solutions. Fuel cell technology has reached a maturity level where scale-up of systems will be the next step,” said Geir Bjorkeli, ceo of Corvus.

an important step to reach shipping’s ambitious goal to cut greenhouse gas emissions by 50% by 2050. Reducing the cost of fuel cells and increasing access to the technology is crucial to accelerate the transition. Corvus believes that the project represents an important step towards achieving both goals by producing modularised systems not available on a large scale today. The project has received EUR5.2m ($6.3m) in funding from state agency Innovation Norway. “Decarbonisation is inevitable and at Toyota, we are convinced that hydrogen will play a central role in creating a better future, both environmentally and economically,” said Thiebault Paquet, director of fuel cell business group at Toyota Motor Europe. MMT

Interest in hydrogen for maritime applications has been increasing rapidly, with hydrogen power seen as Maritime Matrix Today | February 2021 | 25

Acquisitions take centre stage

ver the last two months, the maritime and offshore satellite connectivity market has been sparked with a bout of merger and acquisition activities. ViaSat to acquire Rignet In late December 2020, ViaSat announced an agreement to acquire RigNet, an American energy connectivity provider for approximately $222 million. It is believed RigNet’s customer base in the energy market is of strong interest to ViaSat, with the upcoming launch of ViaSat-3, a new constellation of three satellites. RigNet Founded in 2001, RigNet is a US-based service provider of connectivity services, applications and cybersecurity solutions primarily for the offshore oil, gas and energy market. The company is headquartered in Houston (USA) and also has offices in the UK, Singapore, Brazil and another US office in Louisiana. It employs roughly 650 staff globally. In its latest publicly released financials, Q3 2020, the firm recorded revenues of almost $161 million for the first nine months of 2020, down by $18 million from the same period in 2019. RigNet recorded a net loss of $36.5 million for the same period in 2020, almost double 26 | Maritime Matrix Today | February 2021

of that in 2019. Not exactly a rosy trajectory over the last two years. The company divides its business into four segments: managed communications services (MCS), applications and IoT, systems integration, and corporate with its biggest segment, MCS, suffering in 2020 compared to 2019. However, not all is doom and gloom when RigNet, in October 2020, announced a multiple-year contract with an undisclosed offshore drilling contractor to provide fully MCS and global satellite access to its entire global drilling fleet. The new contract also includes RigNet’s machine learning platform, Intelie, and other supplementary applications, intelligence, and network security solutions. One key challenge the company has faced is the diminishing number of sites that it manages for MCS; a count in Q3 2020 noted 1,190 sites compared to 1,229 in Q2 2020. In Q3 2019, the firm held 1,386 sites. In Valour’s opinion, the justifications for ViaSat intent to purchase RigNet are not some paradigm leap in market growth or unseen grab of untapped assets. The move is relatively simple one. RigNet provides a relatively steady business in an uncertain business

environment, the energy sector, at the moment. It allows ViaSat to slowly grow its nascent maritime connectivity proposition and meld it with RigNet’s wellknown managed communications services business. This business has a reasonable array of customers, 500 companies, which encompasses 369 offshore production sites, 173 maritime vessels and a number of other sites. Finally, one of the main quotes of the great Warren Buffet, always try and buy under-priced assets. At the moment, most energy related companies are relatively lowly priced. Marlink proposed acquisition of ITC Global Marlink Group, owned by Apax Partners (France), has signed an agreement to acquire 100 per cent of ITC Global, a maritime and energy service provide owned by Panasonic. The value of the deal is yet to be disclosed, if it ever will. The question is what value ITC Global brings to Marlink Group, the leading retail maritime service provider? ITC Global ITC Global is an American satellite-based communications provider which primarily serves the energy, mining, maritime, and NGO markets. The company was originally set up in 2001 and has its headquarters in Houston, Texas. Interestingly, the firm was acquired by Panasonic in 2015 and now operates as a subsidiary of the Japanese company. In January 2020, ITC Global partnered with Inmarsat to expand its service to providing Ka-band coverage to energy, maritime and yachting customers. The fiveyear strategic partnership means ITC Global will act as a reseller for FX. ITC Global’s parent company, Panasonic Avionics, signed a similar agreement with Inmarsat in 2018 to provide inflight connectivity.

Group, Radio Holland’s VSAT distribution business over 2016 and 2017. Nonetheless, Marlink has strategised a strong surge of organic growth since. The proposed purchase of ITC highlights two things. Firstly, this period of organic growth has possibly to come to an end. In the Sigmoid Curve, there are critical phases. Development, introduction, growth, maturity and decline. To arrest the decline, it is vital to catch the next opportunity on the rise, before the current one fells. I believe we are in a spell of acquisitions and mergers within the industry with companies scoping out potential suitors and targets. Marlink Group is very well known for its presence in the maritime connectivity commercial merchant market, and high-end leisure. As such, ITC Global’s strong maritime offshore energy, passenger and enterprise customer base provides Marlink group with a new market segment to master. Looking at this from other side of the fence, in my opinion, Panasonic Group has conducted a thorough review of its business operations over the last twelve months. This will indubitably entailed picking which businesses and operations will see the group through, in the long term. Unfortunately, it would seem, Panasonic doesn’t see ITC Global as a long term fit for its business portfolio. Finally, with the downturn of the energy sector, and speculating that Panasonic were looking for an exit plan in maritime, Marlink Group will likely achieve a very good deal price for ITC Global. It is predicted we will see three more notable mergers and acquisitions over the course of 2021. MMT

Marlink Group’s potential acquisition of ITC Global is an interesting move within the maritime connectivity sphere. Not to second guess Marlink’s case, the firm’s maritime satellite connectivity solution, SeaLink, has made remarkable progress in recent years. Over 2020, the firm increased its SeaLink vessel count by 1,000 from 2019. That said, Marlink Group, in the past, has not been shy to purchase some key players; OmniAccess, Telemar Maritime Matrix Today | February 2021 | 27

Shipping’s biggest challenge is addressing climate change

IMO Secretary-General

Kitack Lim

he biggest challenge for the shipping industry will be addressing climate change, the IMO SecretaryGeneral Kitack Lim said in his address earlier today kicking off SMM Digital in Hamburg. Over the next four days, the industry’s most renowned maritime fair is going digital featuring 60 hours of programme and more than 100 speakers from all maritime sectors broadcasted via two free streaming channels. The event will serve as a platform for the industry stakeholders to discuss the pressing challenges in the maritime industry ranging from the impact of the pandemic on various sectors to the role of the shipping industry in driving economic recovery in a greener and cleaner manner.

“Now is the time to initiate shipping’s energy transition to meet ambitious decarbonization targets of the IMO’s Greenhouse Gas Strategy and to ultimately phase out greenhouse gas emissions from shipping. New technologies, new fuels, and innovation will be vital. Research into the development zero carbon marine fuels is underway with hydrogen, ammonia and biofuels considered to be viable options. Nevertheless, as Lim pointed out more action is needed requiring investments in R&D and infrastructure development. “To achieve this IMO is stepping up its efforts to act as the global promoter of R&D in zero carbon fuels bringing together industry stakeholders from the public and private sector,” he added.

One of the key topics is the colossal task of decarbonizing the industry as well as the potential pathways of cutting emissions from the existing ships and those yet to be built.

Maritime trade is vital for the world economy. As explained, to develop a greener maritime industry structural cooperation on a massive scale will be required.

“IMO is working to ensure shipping can embrace the upcoming revolution while ensuring safety, boosting environmental protection, and managing cybersecurity risks. However, the single, biggest challenge we will be facing is climate change,” Lim said.

“We must all work together to enable this truly sustainable future,” he concluded.

28 | Maritime Matrix Today | February 2021

MMT

Tanker Market looks promising

n a 2021-2025 Tanker Market Outlook by McQuilling Services, the shipbroking and consultancy firm finds crude fundamentals under intense pressure entering 2021 on subdued economic activity, although expectations for a sustained but gradual recovery remains intact. The traditional tonne-mile demand growth is projected to increase by 5% for VLCC tankers this year. However, including demand changes from the unwinding of floating storage, the McQuilling report forecast a 12.5% reduction year-on-year. “As the world restores demand following the Covid-19 demand disruptions, we find structural challenges to the crude demand story over the medium term, including decarbonisation efforts and the inclusion of biofuels into product supply,” the Tanker Market Outlook report stated. “As such, we project that crude demand likely peaked in 2019, indicating that the fundamental outlook for crude tanker demand will face headwinds over the longer term.” Demand for tankers transporting refined products is seeing substantial support from increasing utilisation of refinery capacity in the Middle East, whereby gasoil and jet fuel length find growing export opportunities to the West and notably Europe. Furthermore, the Middle East naphtha balance is coming under pressure from shifts in refining yields, suggesting longer-haul movement to Asia from West of Suez export centers. “Finally, we find MR tanker demand supported by activity between the US Gulf and Latin America, while refinery closures in the Australia/NZ region underpins growing demand in the East, where additional positive factors emerge, including robust growth from the Middle East to East Africa,” the report wrote.

In terms of vessel capacity supply, crude tanker fleet growth, when measured on an average inventory basis, will grow 1.2% in 2021, despite McQuilling’s projection for 94 crude tanker deletions this year. Net fleet growth in 2022 and 2023 will continue to trend near 0% growth despite a flurry of contracting in the second half of 2020 as a reaction to attractive newbuilding pricing. Long term projections for vessel deliveries point to a cyclical delivery peak in 2024/25, which supports McQuilling’s call for a deteriorating earnings profile in the final year of its forecast period. Spot market earnings for VLCCs are projected to average $9,400 a day in 2021 on a no-scrubber basis. The peak year for VLCC spot market earnings has been pushed out to 2024 at $39,500 a day while aframaxes are projected to return $6,800 a day in 2021 before taking a similar course. The years 2022 and 2023 will see improving fundamentals for crude tankers, although McQuilling is skeptical that crude tanker earnings in 2022 will fare significantly better than the 2018 market. “The findings from our analysis show a more promising balance of fundamentals in the refined product tanker segments of the market. The strong demand recovery anticipated from core product balance mismatches, along with relatively light increases on the supply side will support non-eco spot market earnings on triangulated voyages for LR2 and LR1 tankers, averaging $17,100 a day and $15,900 a day, respectively over the first two years of our forecast period,” the report stated. The MR2 segment is projected to average $14,200 a day over the forecast period, basis non-eco consumptions, with the 2022-24 period revealing significant strength, following a challenging 2021. MMT

Maritime Matrix Today | February 2021 | 29

US initiates process to seize Iranian oil aboard Greek tanker

he United States has initiated a process to seize alleged Iranian oil aboard a Liberian-flagged, Greek-owned tanker.

On 3 February, the US Department of Justice (US DOJ) said it filed a forfeiture complaint in the U.S. District Court for the District of Columbia alleging that all oil aboard the M/T Achilleas is subject to forfeiture based on U.S. terrorism forfeiture laws. The 324,655 cbm very large crude carrier (VLCC) is managed by Greece-based Capital Ship Management, data provided by VesselsValue shows. As explained, the complaint alleges a scheme involving multiple entities affiliated with Iran’s Islamic Revolutionary Guard Corps (IRGC) and the IRGCQods Force (IRGC-QF) to covertly ship Iranian oil to a customer abroad. According to the US DOJ, participants in the scheme attempted to disguise the origin of the oil using shipto-ship (STS) transfers, falsified documents, and other means and provided a fraudulent bill of lading to deceive the owners of the Achilleas into loading the oil in question. The complaint alleges in part that the oil constitutes the property of, or a “source of influence” over, the IRGC and 30 | Maritime Matrix Today | February 2021

the IRGC-QF, both of which have been designated by the United States as “foreign terrorist organizations”. The US authorities claim that Iran uses profits from oil sales to support the “malign” activities of the IRGC-QF. “The forfeiture complaint filed today serves as a reminder that the IRGC and IRGC-QF continue to exert significant control over the sale of Iranian oil,” John C. Demers, Assistant Attorney General for the National Security Division, said. “The U.S. Attorney’s Office for the District of Columbia will continue working with our law enforcement partners to stem the flow of illicit oil from Iran’s Islamic Revolutionary Guard Corps and Qods Force,” Michael R. Sherwin, Acting U.S. Attorney, noted. The forfeiture complaint is America’s latest move in enforcing sanctions that target the Iranian shipping and petroleum network. In late October 2020, the US imposed sanctions on the National Iranian Tanker Company (NITC), the National Iranian Oil Company (NIOC), and the Iranian Ministry of Petroleum, in an effort to further increase economic pressure on Iran. MMT

China’s iron ore futures vaulted to a one-week high C

hina’s iron ore futures vaulted to a oneweek high, buoyed by expectations of improved demand for the steelmaking raw material after the Lunar New Year holiday. Iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trading 4.2% higher at 1,004.50 yuan ($155.16) a tonne, after earlier hitting a one-week high of 1,017 yuan. It has gained 1.4% this week, after three consecutive weekly losses. Spot iron ore jumped to $157 a tonne on Thursday, from $150 the day before, SteelHome consultancy data showed. SH-CCN-IRNOR62 Weekly Chinese steel inventory data released on Thursday to “select” institutional clients showed the growth in warehouse stocks had far outpaced those held by steel producers, said Atilla Widnell, managing director at Navigate Commodities in Singapore. “Traders of the DCE and SGX-listed iron ore futures contract perceived this data to be bullish for underlying physical demand,” he said. “It suggests COVID-19 afflicted steel supply chains are returning to normal and local blast furnaces may soon start to lift capacity utilization rates to meet stimulusfuelled steel demand for 2021.”

After the holiday, Widnell said “leading indicators will be the pace at which warehouses restock steel, rebounding blast furnace capacity utilization rates, and slower arrivals of Australian and Brazilian iron ore – all of which should be price supportive”. Iron ore fell 0.4% in volatile trading on the Singapore Exchange SZZFH1 by 0715 GMT, as concerns emerged over China’s ongoing COVID-19 controls, which may delay construction workers’ return from their holiday. Coking coal DJMcv1 jumped 2.5% while coke DCJcv1 climbed 1.7%. Rebar on the Shanghai Futures Exchange gained 1.6%, hot-rolled coil added 2%, and stainless steel rose 0.2%. MMT

Asian iron ore markets are likely to be quiet in the next two weeks, with physical and derivatives traders expected to be away during top steel producer China’s week-long Lunar New Year holiday from Feb. 11. Maritime Matrix Today | February 2021 | 31

World’s 4900 ports are not yet using digital technology

he majority of the world’s 4,900 ports are not yet using digital technology for even the most basic processes, Innovez One, a Singapore-based provider of smart-tech and AI solutions for the maritime sector, said.

based transactions as the norms for shipboard, shipport interface and port-hinterland-based exchanges. This leads to a range of inefficiencies in ordering, execution, and billing, as well as a lack of sustainability and competitiveness, Innovez One stressed.

As explained, 80 per cent of ports continue to rely on manual, legacy solutions such as whiteboards or spreadsheets to manage critical marine services such as towage, pilotage and launch boats. This leaves many ports commercially vulnerable and less able to compete in an increasingly digital world.

Alarmingly, this dynamic makes the ‘last mile’ of a journey at sea a weak link in the global logistics chain, opening up risks of delays, late payments, increased fuel consumption and emissions, reduced revenues, and even safety concerns stemming from a lack of traceability.

While the phrase ‘smart ports’ has been used regularly within the maritime industry for a number of years, the benefits of digitalisation remain the preserve of only a few, large ‘Tier 1’ ports that have the profile and financial muscle. This has created a polarised landscape within the port sector, according to the tech company.

For the 20% of ports where this is not the case, they have often been able to rely on their own in-house software, Innovez One noted.

Many ‘Tier 2 and below’ ports still use manual, paperbased processes or Excel spreadsheets to arrange and execute jobs and rely on personal interaction and paper32 | Maritime Matrix Today | February 2021

“The current dynamic reflects the often-messy reality of port operations, which is a blend of high-tech digital and paper-based, manual processes sitting side-byside,” David Yeo, CEO, Innovez-One, commented. “This causes issues in relation to interoperability, where systems are not talking to each other properly, which is

impeding effective execution. However, it also highlights the fact while global supply chains are becoming increasingly automated, of which ports are an integral part, the majority of ports still overwhelmingly rely on person-to-person systems.” The ramifications and missed opportunities for ports from increased efficiencies, revenues, sustainability and competitiveness are said to be significant. In particular, towage operators are missing out on the opportunity to make substantial savings of their annual fuel costs by reducing the mileage of tugs while saving yearly maintenance costs and personnel cost savings of their towage vessels. However, Innovez-One believes that this current dynamic does not need to continue, and that the vast majority of ports are unnecessarily missing out on the opportunity to reap the benefits of digitalisation; particularly when affordable technology, with a fast return on investment, exists and is readily available. Critically, as ports digitise, the solutions developed must be based on a strategic port framework with a set of common criteria. One of the core elements will be to consistently ensure that management systems are based on common design criteria to support an open architecture, enabling different solutions and applications from various suppliers and vendors to coexist and be interoperable with each other, in real-time.

This must be handled in an agile way to secure compatibility so that port management services can continue to provide services without interruption 24/7/365. “It is staggering that digitalisation seems to have only been reserved for the larger top-tier ports and established towage operators. Our mission is to readdress the imbalance, because there is no reason why every port cannot be a smart port; digitalisation should be for the many, not the few,” David Yeo continued. The company designed and engineered its proprietary software, marineM, an AI-powered platform for managing sea ports and nautical services operators’ entire operations, linking together each stage of the towage and pilotage chain. The solution has been used in some of Asia’s busiest ports, such as Singapore and Tanjung Priok in Indonesia, for over a decade in some cases, enabling hundreds of thousands of dollars of savings per year. In Tanjung Priok, marineM has saved $155,000 in annual fuel costs, by reducing mileage by 20%, as well as $90,000 in annual maintenance costs, and $150k per year in reduced incidents. MMT

Maritime Matrix Today | February 2021 | 33

“Transparency and sharing of information important for industry to emerge stronger from crisis,”

“

- Capt Jaideep Dhamankar, Country Head in India, MTM Ship Management

The key to successful leadership today is influence, not authority”- Kenneth Blanchard. This quote perfectly describes Capt Jaideep Dhamankar, Country Head in India of MTM Ship Management since past 6 years. Before MTM, Capt Dhamankar held senior positions in Varun and Scorpio. He started his shore career with Bernhard Schulte Ship Management. Ashore for almost 14 years now, his sailing career has always been on various types of oil tankers. In conversation with Jagdamba Pandey, Capt Dhamankar talks about impact of COVID 19 and challenges faced by MTM. How has MTM managed the impact of COVID19, and how has it changed the way MTM operates? COVID-19 has given a cruel blow to Shipping Industry, by disrupting shipping operations and schedules. MTM became agile and adaptable to this changing situation and focused on building effective response strategies and plans. In light of the evolving COVID-19 situation, we implemented the following operational adjustments: Crew change procedures - We have aligned our crew change procedures as per IMO’s and Director General of Shipping recommended framework of protocols. We also developed our own stringent procedures in line with the recommendations of official bodies. Communication We have heightened our communication frequency with our vessels through port updates and safety bulletins. We also arrange regular video calls with our vessels and Superintendents. Surveys/Audits - We are following closely with flag state requirements to align our mitigation plans if travel restrictions continue beyond dispensation time frame. Wherever possible, we arrange for remote surveys/ audits. With regards to internal audits, we do video calls and based on our internal audit checklist, involving senior officers on-board and internal auditor verifying the 34 | Maritime Matrix Today | February 2021

system from shore. The remote internal audits are approved by flag and supported by class. Disruptions in supply chain - The main challenges faced are limited availability of air cargo, service engineers, delivery, and logistics options. This could mean longer delivery time for ships to receive their spares and stores. We have increased our vigilance to ensure ships will not be exposed to the risk of spares and stores shortages. Social distancing of shore employees - Some of us are operating from home as required by local government recommendations. The affected offices will be operating under their business continuity plan to ensure continuity of services. This arrangement will continue until further notice.

Stepping up cyber security - Working from home as securely as possible during the pandemic is high on our agenda. We have stepped up our cyber security initiatives and communicated the guidelines to all employees. Employees are reminded to stay vigilant as we expect an increase in fraud attempts. Response to impact - We expect the impact of this pandemic to be felt throughout the industry, differently for different stakeholders. We are proactively doing scenario planning and adjustments in our systems and processes to accommodate the anticipated changes.

What is your current and ideal work/life balance? Work-life balance means something different to every individual. When I talk about balance, not everything has to be the completion and achievement of a task. It must include self-care so that our body, mind and soul are being refreshed. I follow these five mantras: • Prioritize what is important • Make space in my work life for the rest of myself • Have not made work my only identity

What are the key challenges you see for the Maritime industry post COVID19?

• Indulge in hobbies outside of my work

The shipping industry has seen a widespread impact on the operations causing decline in international trade activities across the globe.

Please enlighten us on your views of self-assessment for continuous improvement…

Crew change will remain a major challenge post Covid 19. Countries come up with stringent rules for crew change, which make it difficult to carry out crew change in a particular port. Stringent measures in ports also impact the trade traffic. Cargo backlogs will cause problems to the operators. The demand and supply from industries are currently at stake. This has also hampered commercial operations, resulting in the withdrawal of services in some of the regions. Transparency and sharing of information might be key to the shipping industry emerging stronger from the crisis. How do you build rapport with your Seafarers? Communication plays a key role in building rapport with our seafarers. At the start of lockdown, there was no hope for crew change. We got in touch with the families of each crew member and assured them of the wellbeing of the seafarers. We believe in honesty and transparency. We have kept our crew duly informed with our plans. We are implementing some initiatives to enable the crew to increase their interaction time with their family. We have increased our mental health awareness efforts and also have frequent casual discussions with crew from shore to address their concerns about the pandemic. How do you see MTM business progressing in India in your capable leadership? We started MTM with a single ship in 2016 and have reached a count of 24 vessels within a span of 4 years. With the support from my management and seniors, we expect to grow further and will be looking for strategic partnerships with like-minded companies.

• Make it a point to exercise and meditate on daily basis

Learners engaged in self-assessment are found to be more interested in their work and are able to interpret why and what they are doing. Also, by analysing one’s own work, one builds ownership and high expectations on the improvement of one’s work, mainly through the internalization of criteria and standards of performance. In essence, self-assessment is a reflective activity and develops reflective as well as meta-cognitive skills. However, it needs to be noted that self-assessment in any context needs to be conducted with a clear reference to explicit (i.e., shared) standards and deliberate judgments by (external) assessors, who may be operating as either a critical friend or a supervisor. How do you see the impact of digitalisation in the industry and how is MTM using it to advantage? In recent years, the industry seems to have woken up to the idea of ‘adapt or sink’. Calls for the industry to embrace technology are being heeded. E-Platforms, Advanced Analytics, Internet, Artificial Intelligence, Autonomous Vessels and Robotics, Block Chain, and Cyber Security have emerged as invaluable to shipping and contributing to performance improvement. Rather than injecting digital technology into our organization sporadically, MTM has systematically orchestrated the implementation of each element of the digital transformation. To avoid incremental and fragmented efforts, MTM is committed to bold and rapid digital adoption. We are focussing on building the required capabilities both organically and by acquiring digital talent. MMT

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Ship Owners load up with bulkers

ry bulk carriers have been the “weapon of choice” for many ship owners. In its latest weekly report, shipbroker Allied Shipbroking said that “the year has started off on a very strong footing, with the sale and purchase market having rallied in recent weeks with a strong volume of activity emerging and showing bullish sentiment at its heart. The prime driver in all of this has been the strong rise in freight market conditions for dry bulkers and containerships, while at the same time we have seen a very strong improvement in overall sentiment in recent months as to the nearterm prospects for these markets as well as for global trade as well. According to Allied’s George Lazaridis, Head of Research &Valuations, “this has caused a surge in buying interest, while on top of this we have also started to see an increased appetite for speculation, with asset prices shown fair gains during the same period (albeit this price increase has been primarily concentrated for now in the more modern vessels). The total number of dry bulk vessels concluded in January is more than double the average monthly figure noted in 2020 and an increase of more than 22% compared to December 2020 (which was the most active month by far last year)”.

Lazaridis said that “one of the most prominent commodities that helped feed a major part of this improvement has been iron ore, whose trading had shown a continuation of its pre-end of year rally, showing resilience in this trend that could hold well into 36 | Maritime Matrix Today | February 2021

the new year. Yet part of this positive drive seems to be taking a step back this week, as demand and in turn prices for iron have retreated over the past couple of days. Chinese steel mills have started to see a pile up in stockpiles while they have been posting continually lower production levels as part of their seasonal preholiday slowdown”. He added that “the same picture has been portrayed in the futures market, with last week logging the largest percentage drop since the start of the year. Despite this recent correction, the fundamentals are still good, with iron ore prices earlier in the month having hit their highest level since mid-2011. Yet with China accounting for the lion share in crude steel production globally and with blast furnace utilization rates set to drop further over the coming days, all things are pointing to a likely a further softening in the market during the first part of February.

The Chinese New Year festivities are expected to cause an increased disruption this year, given that most of the rest of the world is still heavily battling disruptions as part of the COVID-19 restrictions and lockdowns still at play”, Allied’s analyst noted.

“Yet the expectation is holding that once China reopens, the market should be quick to respond and most likely feeding an even greater rally than the one noted thus far. All this bullish talk in respect to the demand fundamentals of iron ore as well as many other main dry bulk commodities has been at the forefront of most of the speculation taking place. At the same time, this bullish optimism has helped further substantiated thanks to a fleet supply which has been more moderate during the past year, while it is also expected to remain at similar levels during 2021. Given all this you would expect an even bigger buying frenzy to be taking shape in the sale & purchase market.

In the past, all of these ingredients would have been more than enough to set the market ablaze. Yet given all that has taken place during the past couple of years, and more importantly the developments that took shape last year, there are many in the market that are still seemingly holding back. This may well be a better and more sophisticated approach to undertake to such investment decisions, though there is fair doubt as to how long this “holding back” attitude may last, especially if the year of the “Metal Ox” proves to be even more promising than what market indicators are showing right now”, Lazaridis concluded. MMT Maritime Matrix Today | February 2021 | 37

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