Container Shipping & Trade 3rd Quarter 2018 by rivieramaritimemedia

3rd Quarter 2018 www.containerst.com

Uncovered: the next steps in ULCS safety

Behind the scenes of ‘jumbo-ising’ box ships Zencargo: using digitalisation to solve supply chain inefficiencies

“There is a huge amount of disruptive technology accelerating towards us at a rapid pace … to meet the growing sophistication of our customers” Abu Dhabi Ports chief commercial and strategy officer Ross Thompson, see page 34

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Contents www.containerst.com

Regulars 3 COMMENT 37 MARKET UPDATES 38 FLEET STATS AND ANALYSIS 40 LAST WORD

Operator profile 4 Bernhard Schulte Shipmanagement Singapore’s chief executive explains why he is spearheading a campaign to drive mega box ship safety

Shipper profile 8 Freight forwarder Zencargo’s co-founder explains how the company uses technology and digitalisation to plug the supply chain efficiency gap

Trade lane 10 Big players have made acquisitions in the European shortsea shipping market, emphasising the significance of this sector

Regional analysis 12 Record volumes at US ports are helping to drive infrastructure developments

Top 20 container ports 16 Chinese ports dominate the top 10 with many capitalising on the Belt and Road initiative

Reefers 20 New technology, data monitoring and GWP are under the microscope for reefer manufacturers

Class societies 24 Scrubbers, lengthening box ships and stowage are among class focuses

Green technology

3rd Quarter 2018 volume 6 issue 3

Editor: Rebecca Moore t: +44 20 8370 7797 e: rebecca.moore@rivieramm.com Contributor: Gavin van Marle t: +44 20 7394 7209 e: gavin.vanmarle@rivieramm.com Commercial Portfolio Manager: Bill Cochrane t: +44 20 8370 1719 e: bill.cochrane@rivieramm.com Head of Sales – Asia: Kym Tan t: +65 6809 1278 e: kym.tan@rivieramm.com Senior Sales Consultant: Ed Andrews t: +44 20 8530 8322 e: ed.andrews@rivieramm.com Production Manager: Ram Mahbubani t: +44 20 8370 7010 e: ram.mahbubani@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Head of Production: Hamish Dickie Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

26 Alternative power, scrubbers and cargo stowage are all under the spotlight as box ships makes great strides in environmentally friendly technology

Cyber security 30 Ship operators need to collaborate, train crew and invest in cyber security to protect ships from online threats

Ship to shore

34 Digitalisation is boosting relationships between vessels and ports

Next issue Main features include: CST industry leaders 2018; trade route analysis: AsiaEurope; port regional analysis: Middle East, Africa and Indian ccean; scrubbers; alternative means of power; coatings; propeller and rudders; container tracking and monitoring; automating the supply chain

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Front cover credit: Bernhard Schulte Shipmanagement

Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

Container Shipping & Trade | 3rd Quarter 2018

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COMMENT | 3

LNG and scrubbers at forefront for meeting 2020 directive

I Rebecca Moore, Editor

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believe there will be a sharp uptake of both LNG as fuel and scrubbers in the container ship sector – this year we have witnessed the momentum starting and this is only set to continue. The barriers to LNG box ship use will be broken down with new industry collaboration. In August this year it was announced that an industry collaboration between WinGD, Wärtsilä and GTT, the three main technology companies supplying CMA CGM’S nine LNGfuelled ultra large container ships, had been launched. Their aim is to make LNG a truly viable option for shipowners. This will speed up LNG use because the experience they have acquired through their work on CMA CGM’s box ships is crucial for other LNG container ships. As GTT chairman and chief executive Philippe Berterottière pointed out, operating on LNG fuel requires close integration between the engines, fuel cargo tanks, and the fuel supply and control system. As the three companies have expertise in these fields, they can optimise and streamline the integration process by their co-operation and share this knowledge. Announcing the co-operation, Wärtsilä vice president of processing solutions Timo Koponen said “The conservative barriers that once resisted switching to a ‘new’ fuel are falling down and LNG is now being accepted as a fuel for all types of ships. Through collaboration with other industry leaders, we aim to speed [up] this process.” The collaboration will speed this up by publicising the message and bringing reassurance to the box ship sector that the technical knowledge is now available. There have been other moves within the container ship sector that will push forward LNG use. For example, Crowley Maritime Corp’s new LNG-fuelled container/roro ships

“The 2020 low sulphur directive means there is now an economic case for container ships to adopt scrubbers”

have been delivered (see page 30). They are the first LNG-powered, US-flagged, container/ roro ships and it was essential to specify an environment-friendly ship for the route because it is operating in the emission control area (ECA) along the eastern seaboard of the US. Doubtless other Jones Act carriers will follow Crowley’s lead to meet the requirements of the ECA. There has also been a sharp uptake in scrubber use in the box ship sector. According to DNV GL data, as of July, there were 178 scrubber orders for container ships – only beaten by 185 orders for bulk ships. This places it second in all ship segments for scrubber installations. See page 24. I think this will continue. The 2020 low sulphur directive means there is now an economic case for container ships to adopt scrubbers. Furthermore, scrubber manufacturers are targeting the container market and coming up with solutions that will especially benefit these types of ships. No doubt as 2020 comes closer we will see ever more LNG and scrubber box ship projects. While scrubbers are currently ahead of LNG, I think that LNG will catch up due to industry collaboration and bunker infrastructure developments. CST

Container Shipping & Trade | 3rd Quarter 2018

4 | OPERATOR PROFILE

Bernhard Schulte takes the lead on driving box ship safety Bernhard Schulte Shipmanagement Singapore’s chief executive explains why an industry group focused on container ship safety issues was launched and how it aims to facilitate change

ontainer ship safety is at the top of the agenda for Bernhard Schulte Shipmanagement (BSM) Singapore. BSM Singapore managing director Captain Raymond Peter is chairman of the Containership Safety Working Group, which was established by DNV GL in 2016 and includes container ship operators and owners. The group was launched due to concern among the industry about container ship safety, due to larger vessels and greater exposure to risks. He said that BSM is closely involved

with the local Singapore container community, trying to create awareness of risks. “Container ships do not always know what they are carrying on board – lastminute cargo will come in and it could mean that ships are carrying 5-10% more weight without realising this.” BSM is using the Containership Safety Working Group as a forum to get the message across and facilitate change. “We are trying to create awareness and communicate the safety risks.” Explaining why BSM was so focused on safety, he explained “Container ships are getting larger and this affects safety. Safety

equipment being used has not moved up to reflect the larger size of vessel.” Since 2,000, there have been 143 reported container ship fire incidents (according to statistics quoted by the Containership Safety Working Group). At the same time container vessels have increased in size dramatically from the largest of 9,500 TEU in 2000 to 20,000 TEU in 2018. The group is also concerned about other greater safety challenges due to the larger sizes of box ships, including cargo safety, stowage, lashing and deceleration; navigation manoeuvrability, structural integrity and design.

Ultra large container ship safety and expanding its fleet under management are key focuses for BSM Singapore

Container Shipping & Trade | 3rd Quarter 2018

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OPERATOR PROFILE | 5

Containership Safety Working Group aims:

• Share knowledge and understanding. • Identify risks. • Discuss operational experience. • Discuss current and future safety regulations. • Identify best practice. • Develop solutions for improved safety. • Discuss cost impacts. • Provide feedback and recommendations to the committee at the next annual meeting.

It has decided that its main focuses for 2018 will be cargo stowage and lashing, fire safety and cyber security. Captain Peter explained “We would like to see changes with IMO and are trying to make them aware that they need to look at requirements for very large container vessels differently.” He summed up “container ships are carrying more cargo and the task of the container ship working group is to communicate with the decision makers at IMO to ensure that the operational risks associated with the increased size are recognised and adequately mitigated in future SOLAS revisions.”

Eyeing expansion Containership Safety Working Group 2016 (18 October) report to technical committee findings:

• Existing SOLAS fire safety requirements have not kept pace with the growth of container ships. • Generally, container ships are not able to provide adequate fire-fighting to reach the top tier of containers (the full height of the container stacks on deck) or generate an effective water barrier between container bays. • Container ships are better prepared in the early stage of a fire, to suppress and extinguish fire inside a container located in the lower tiers with safe access and from a safe standing distance. • The industry does not generally invest sufficient additional money into fire-fighting equipment, over and above the minimum requirement. • CO2 systems are deemed to be a partially effective means to extinguish container cargo fires in deck cargo holds but more training and testing of CO2 systems is required for effective operation. • Optional class notations for enhanced fire-fighting capability should be made mandatory. • Fire detection systems based on smoke detectors and visual watch keepers alone are not deemed to be adequate. • There is insufficient fire-fighter training specifically for container ships, with emphasis on fighting cargo fires in container holds and on deck stacks.

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BSM has 12 container ships under full management in Singapore. They include ships ranging from 2,000-10,000 TEU, with owners including COSCO and Maersk. BSM’s global portfolio consists of 64 under crew management and 95 under full management. Captain Peter is ambitious to increase BSM Singapore’s ships under management and aims to add another 12 ships over the next year or two. He is also keen to add ultra large ships to Singapore’s portfolio, especially as the company is so focused on improving the safety aspect of this size of ship. The market consolidation and merger and

Raymond Peter (BSM)

acquisition activity that has taken place in the container market is something that he is very aware of. “We have had one or two vessels change hands, and we did have issues when Hanjin went bankrupt,” he commented. “But this is the cycle of life. We keep ourselves very close to what is happening with our ear to the ground to hear market news.” The consolidation in the market place including Hanjin’s closure – has made BSM very cautious. Captain Peter elaborated “We are very careful, we make sure our payments come in on time every month, and we are very strict with our account receivables.” Looking at upcoming trends in the market place, he warned “More consolidation will happen, we have not seen the end of it. Everyone is waiting to see what will happen with the 2020 low sulphur rules and what will happen with the use of LNG.” He said that the emergence of 20,000 TEU container ships would have a knock-on impact down the chain, with 3,000-10,000 TEU still being the “work horses”, but he suggested that 4,000 TEU vessels would replace the 2,000 TEU box ships. Looking ahead, he emphasised that his concern was about safety of the larger container ships. “That is our focus. At the end of the day if there is an incident at sea and help doesn’t arrive on time, life is at stake.” CST

Captain Raymond B Peter became managing director of BSM Singapore in 2018. He has vast experience in managing oil and chemical tankers, bulk, container, gas and offshore vessels and has been in the shipping industry for 32 years, including 13 years at sea. Captain Peter served on board vessels belonging to Neptune Orient Lines and exited as master mariner for American Eagle Tankers. Having gained experience both in ship owning and ship management after moving to shore, he also worked with ABS, ISM and ISO, attaining experience in auditing. Prior to his current role, Captain Peter was the deputy managing director of BSM Singapore. He is a member of the Nautical Institute in Malaysia and Singapore and is a part of the DNV GL, ABS Technical Committee, Shell Focus Group for the Asia Pacific Region and the Intertanko Gas Committee for Asia Pacific.

Container Shipping & Trade | 3rd Quarter 2018

HullWiper expands presence in container ship market HullWiper Ltd has seen a boost in the use of its eco-friendly, cost-effective hull cleaning solution in the container ship sector. Its managing director Simon Doran explains why and reveals plans for developing the solution

ullWiper’s Remotely Operated Vehicle (ROV) is of growing significance to the container shipping market – with a major reason being that using it does not disrupt a ship’s cargo operations and schedule. Indeed, the container ship market has been a target market for HullWiper since it first launched five years ago as the company recognised that its solution matched the needs of container ship operations, its managing director Simon Doran explained. Unlike traditional hull cleaning methods which use divers with brushes, HullWiper uses the environmentally friendly method of deploying seawater under adjustable pressure to clean a vessel’s hull. Furthermore, the risk of pollution or cross-species contamination is eliminated as the removed marine biofouling is collected and disposed of in an eco-friendly way, rather than being

left on the seabed. As well as being environmentally friendly, it offers energy efficiency benefits. HullWiper explained that its method leaves a cleaner hull and extends the time before another clean or expensive coating repairs are needed. It also reduces the hull’s resistance, which improves the vessel’s fuel efficiency. “Even an increase in slime can make a vessel 5-10% less efficient,” Mr Doran noted. “And by not cleaning the hull in between coatings, the use of fuel can increase by 1-10 tonnes a day.” Homing in on the way that using HullWiper’s ROV does not divert container ships, he said “They run on a very strict timeline when they come to port for cargo operations, so being able to carry out the whole hull cleaning in cargo operations doesn’t disrupt their cargo flow and they can carry on accordingly.”

HullWiper uses the environmentally friendly method of deploying seawater under adjustable pressure to clean a vessel’s hull

If container ships’ hulls cannot be cleaned in port, Mr Doran said that companies need to take vessels off charter for at least one day at anchorage, which means they need to catch up speed after the clean. Explaining how HullWiper was able to do this, as opposed to traditional methods such as using divers, he said “Our ROV doesn’t need to come out of the water for breaks, there are no limitations to our operations – we can clean 24 hours.” He singled out that this was important because container ships arrive and leave at all hours of the day. “Unlike using divers, our ROV does not have safety implications, so there are no restrictions to our ROV operating night and day, and in most weather conditions.” There is another reason why using HullWiper is specifically suited to the market conditions: the large increase in vessel size. As Mr Doran said “The container shipping market has changed dramatically even since we started five years ago – we now have vessels of 20,000 TEU and upwards. From being 280 m long, these larger ships are nearly 400 m in length.” HullWiper is suited to larger container vessels because “as our cleaning is so much quicker than traditional cleaning, it means that we can do this during its cargo operations at port without taking it out of its schedule.” Mr Doran added that HullWiper had carried out cleaning of ultra large container ships at DP World Southampton recently. Since it first launched in Dubai, HullWiper has had a fleet contract with Maersk Line. The company also has fleet agreements with CMA CGM and Hapag-Lloyd, as well as other major container shipping lines. The ROV is available in port at several locations around the world, and the expansion of HullWiper’s network continues to grow through its leasing programme to suitable companies looking to add HullWiper to their portfolio of services. After launching at Jebel Ali in Dubai, it then expanded to Sweden, Singapore, Spain, the Netherlands, Norway, Egypt, Australia and is operational at other key locations across the Middle East. It is also aiming to set up operations in Panama and Mauritius in 2019. Rotterdam was a triumph as the port has banned traditional hull cleaning for 22 years. However, it approved the use of HullWiper in 2016 due to its integral onboard waste filter that collects and disposes of invasive alien species in an ecologically-approved manner. The entire cleaning process is in compliance with regional and local environmental regulations. “Rotterdam is one of the biggest container ports in Europe, so it is of huge benefit to container ship operators that we are established there,” Mr Doran commented.

Developing HullWiper’s ROV

HullWiper is looking to develop its technology in some innovative ways. Mr Doran said that it is searching for companies that can provide add-on value solutions to its ROV. One of the solutions that HullWiper is seeking is a steel thickness gauge that can be attached to the ROV and deliver readings on how thick the steel is on the hull. “It would allow us to check specific worn areas and let the operator know the condition of the steel so that they can act accordingly in terms of replacing areas of it,” explained Mr Doran.

Container ships are able to have their hull cleaning carried out while in port, so they do not have to disrupt their cargo operations

HullWiper is also looking for a company that can develop a drive film thickness solution to test how smooth the hull is. “The smoothness of the coating is a factor that effects fuel economy. If we can show results to owners, they can plan to carry out measures to make it smoother if it is not smooth enough. It would also determine how effective the cleaning is.” Mr Doran said. Another potential development is that HullWiper is working with a shipyard to deliver an ROV that can be installed on board a newbuild for the first time. The shipyard – which cannot be named – builds a variety of vessels including container ships. Such an arrangement could save a container ship upwards of US$500,000 a year, Mr Doran said. He said there were many benefits for container ships and he highlighted the time-saving and flexibility it brings. “It’s a timecritical business,” he said. “Having an ROV permanently on board means that a container ship does not have to wait in port for the solution to arrive – they can clean-on-demand; starting and stopping when they want.” Aside from seeking add-ons to the ROV, HullWiper is “always looking at making the ROV more efficient”. Mr Doran explained that this involved changing elements of software to add more efficiency, including speeding up the cleaning process. Mr Doran highlighted that a growing trend in the container ship market was that container vessel operators are starting to be more proactive with their cleaning. “Whereas before they would potentially leave it to the last minute and take the vessel off hire for a more aggressive clean, because of the increased costs of coatings they are more proactive. They are now more proactive than reactive.” As well as other benefits, this is also a reason why container ship operators are keen to use HullWiper. To see what HullWiper can do for you and your fleet, go to www.hullwiper.co

8 | SHIPPER PROFILE Zencargo

Zencargo: digitalising logistics to solve inefficiencies Freight forwarder Zencargo’s co-founder explains how the company uses technology and digitalisation to plug the supply chain efficiency gap

K freight forwarder Zencargo was launched at the start of 2017 after its founders saw how “complicated” logistics was and decided to solve this by ironing out inefficiencies through technology. The company is headed up by childhood friends and co-founders Alex Hersham (former associate at Goldman Sachs) and Richard Fattal (previously at Morgan Stanley and Google). In an interview with Container Shipping & Trade, Mr Fattal explained that family connections to the logistics business first sparked his interest in this sector. “Three generations of my family were involved in international trade,” he explained. He singled out his grandfather. “My grandfather was involved in freight forwarding in the UK and was doing business in Europe and Africa, so in my childhood I heard stories about freight and shipping.” Mr Fattal also had a spell working in trade in Africa, where he was involved with a company shipping cocoa. “The logistics was very difficult, and I saw first hand how complicated it was to organise logistics, and that very little had changed since my grandfather’s days,” he explained. He pointed out that Mr Hersham’s previous career also alerted him to challenges within the supply and logistics chain: he worked for a large US hedge fund buying container ships and selling them to shipping lines. Mr Fattal summed up “We came together to solve a problem that we have seen first hand – inefficiencies and the

Container Shipping & Trade | 3rd Quarter 2018

Zencargo’s digital platform gives a transparent view across the supply chain

time wasted in organising purchasing and logistics around the world.” Key to Zencargo’s business is its digital platform that enables beneficiary cargo owners (BCOs) to book, manage and keep track of their international freight and use analytics to optimise routes. This was built in house by a team of Zencargo engineers and is funded by venture capital finance. Mr Fattal explained “It is very much based around communications and access to data. Most people are dealing with silo bits of information and there is no way of unifying it. Whether it is a retailer customer with 100 people responsible for chasing up suppliers in different parts of the world or logistics people who cannot find out where their cargo is on the water, they want to see a view of all their shipments on the water.” He also singled out the email inbox

“nightmare”, whereby there are so many communications and streams of information on different shipments that they are not organised and can “get lost”. In order to solve these problems, Zencargo built a platform that gives all parties all the information they need at the right time, and only shows them important information and actions they need to carry out to progress their shipment as quickly as possible. Mr Fattal called the real-time platform an “interactive workflow”, covering the entire supply chain, from purchase order to end delivery. “They can see where their shipments are, and all shipment documentation and communications are in one place. A crucial factor is that the platform is, said Mr Fattal, “constantly evolving” and it is “not

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Zencargo SHIPPER PROFILE | 9

just a question of it is built and finished.” Mr Fattal said the company had calculated that its platform saved an average business dealing with 10 shipments a month one working week in time. Furthermore, by having such a transparent view of the supply chain, it provides insights, so can save BCOs money over time. Mr Fattal said “They can see what they are spending, where, and which of their suppliers are the most efficient, allowing them to make decisions and improve working capital by seeing which suppliers work best for them.” The platform also reveals container line efficiencies – how long the supplier takes from the purchase order to the order being ready and how long it takes on the tradeline, from the start of the purchase order to arriving at the end warehouse. Mr Fattal said Zencargo did not release figures on how many customers it has, but he said “We have grown incredibly fast”, with FTSE companies, small to medium businesses and larger companies spanning the UK and Europe. The company covers all shipping lines, from the major international ones to niche carriers. Carriers were increasingly focusing on digitalisation he said, singling out Maersk as being especially focused on this. Commenting on shipping line needs, he said “They lean more to companies that are digital because then they save money in terms of how they interact with freight forwarders.” He added that the cost of interaction between them and freight forwarders is “very expensive” and might be as much as US$100 per transaction with all the paperwork involved. Therefore, a “streamlined relationship” between the shipping line and freight forwarder “really does help.” He added “We work to streamline interaction with them – it is a work in progress. They realise the customer service that comes from a digital platform adds value to the end customer and helps them too.” He commented that while many freight forwarders are embracing digitalisation, he believes Zencargo has a “fresh approach.” “We have been involved in consumerfacing businesses, so we understand the consumerisation trend, whereby there is a big trend among business-to-business executives to expect the same user-ability interface and apps they use in personal life. We put that at the centre of our business.” The digital trend within the maritime and

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logistics supply chain has also been fuelled by younger people taking on decisionmaking roles in logistics businesses who have taken supply management and logistics degrees. “They are open to change and excited about the technology, and we use that to our advantage.” He said there are three types of customers embracing what Zencargo is doing: • Large businesses leaning to digitalisation and going through digital change processes. Mr Fattal said by using Zencargo, “we give a free way of digitalising their supply chain overnight with no investment”. • Fast growth business and fast growth scaleup firms that are already digital. “They are excited about our platform as they can show data to customers and are already very datadriven in their whole approach.” • Large commodity traders who need visibility about what shipments they are moving. Mr Fattal summed up “We are attacking those three types and finding success and that is what is informing us on how we build our product going forward.” The company is planning to open an office in China by the end of the year to give visibility to clients with suppliers in China. “We are acting on their behalf to reach out and have a close link with suppliers in this area, overcoming the language barrier and helping to build software to fit their needs. China is a key market for our customers. We want to create easy user interfaces for Chinese suppliers to give the data our customers need and cover any issues with the supplier chain.” CST

SUPPLY CHAIN INEFFICIENCIES ACCORDING TO ZENCARGO

Zencargo carried out analysis of over 100 shipments from a cross section of UK industries and its conclusions are:

£1.5Bn (US$1.9Bn) per annum The amount that inefficient supply chains is costing UK business

50,000 jobs 50,000 jobs are tied up in unnecessary procurement and freight administration

17% Trading with non-EU countries is 17% less efficient than with EU countries

5% Technology adoption can deliver 5% of the annual UK digitisation productivity target

Zencargo’s focus on digitalisation to make the supply chain more efficient complements the digital focus of major carriers, such as Maersk. Credit: Maersk

Container Shipping & Trade | 3rd Quarter 2018

10 | TRADELANE Europe shortsea

Shortsea shipping boosts its position in European box market Big players have made acquisitions in the European shortsea shipping market, emphasising the significance of this sector

he European shortsea container market is a dynamic sector – and is being strengthened with large global players including CMA CGM and DP World snapping up players in it. The importance of this market to CMA CGM was underlined when in June this year it signed an agreement with Container Finance Ltd to acquire container shipping and logistics business Containerships – a move that will strengthen CMA CGM’s intraEurope offering, as the Finnish company specialises in this market. This transaction remains subject to approval by the relevant authorities. Founded in 1966, Containerships is an intra-European shortsea specialist with a strong presence in the Baltic market, Russia, northern Europe, North Africa and Turkey. With a workforce of 560 people, Containerships offers its customers a complete range of services, including logistics solutions by ship, truck, rail and barges. It is also taking an active approach to emissions legislation as it will

take delivery of four LNG-fuelled vessels – chartered from Nordic Hamburg – from next year. Containerships’ network will complement CMA CGM and its affiliate MacAndrews’ service offering in north Europe and the Mediterranean. CMA CGM Group is already present on the intra-regional market through its subsidiaries: CNC in intra Asia, Mercosul, one of the leading players in Brazil’s domestic container shipping market, Sofrana, a key player in the Pacific Islands regional maritime trade, and MacAndrews in Europe. A statement said the acquisition of Containerships will “strengthen even more the development strategy implemented by CMA CGM Group chairman and chief executive Rodolphe Saadé, aimed at densifying the group’s regional network.” And in August this year DP World acquired Unifeeder, the largest container feeder and growing shortsea network operator

CMA CGM will gain from Containerships’ strong presence in markets spanning the Baltic and Turkey and the use of LNG on its newbuilds (pictured is a rendering of Containerships’ LNG-fuelled ship. Credit: Nordic Hamburg)

Container Shipping & Trade | 3rd Quarter 2018

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Europe shortsea TRADE LANE | 11

in Europe. It has announced the acquisition of Unifeeder Group for €660M (US$766M) from Nordic Capital Fund VIII and minority shareholders.

Enter DP World

Based in Aarhus, Denmark, Unifeeder operates the largest and most densely connected common user container feeder network in Europe, serving both deepsea container hubs and the intra-Europe container freight market. The acquisition is subject to regulatory approvals and is expected to be earnings accretive in the first full year after completion. DP World said it will be financed from existing balance sheet resources and is expected to close in Q4 2018. Unifeeder, founded in 1977, is an integrated logistics company with connectivity to approximately 100 ports. DP World group chairman and chief executive Sultan Ahmed Bin Sulayem said “We are delighted to add the Unifeeder brand under the DP World umbrella, which supports our strategy to grow in complementary sectors, strengthen our product offering and play a wider role in the global supply chain as a trade enabler. “The ever-growing deployment of ultra-large container vessels has made high-quality connectivity from hub terminals crucial for our customers and Unifeeder is a best-in-class logistics provider in this space with a strong reputation in Europe.” He laid out plans for the acquisition: DP World’s aim is to leverage the inhouse expertise of Unifeeder and to accelerate growth. “Unifeeder operates on the same common-user principle as DP World and adds to the group’s strong value proposition to international shipping lines and end cargo owners in making the global supply chain more efficient and cost effective.” Unifeeder chief executive Jesper Kristensen said “Not only is there commonality with our business models but we also share the vision of serving our customers through removing inefficiencies and delivering sustainable shareholder value. We have enjoyed great success over the last five years under Nordic Capital’s ownership, and we believe that the Unifeeder brand within the DP World Group has the opportunity to accelerate growth, expand further and take the business to the next level.” Both CMA CGM’s and DP World’s move into the shortsea and feeder shipping market highlights the growing trend to integrate the supply chain more deeply. Moreover, ClipperMaritime consultant James Caldwell pointed out that Maersk Line has negotiated an exclusive contract with BG Freight for Irish Sea traffic, after a competitive tender process involving a number of third-party operators. He said the “aim was to achieve significant cost reductions.” He added “Greater purchase activity vessel owners like MPC Container Ships have made a number of acquisitions in the segment in the last year or so.” He commented that there was a general shortage of tonnage in the smaller vessel segment in Europe, as demonstrated by charter rates for the 1,700 TEU range spiking nearly 50% in H1 2018 (Hamburg Shipbrokers Association). Mr Caldwell added “Nearly 10% of the global fleet in the smaller size range is hitting the 25-year-old mark so will need to be scrapped in the coming years.” Opportunities for European shortsea shipping include the bigger ships being used. Mr Caldwell explained “Continued upscaling of tonnage on key east–west trade routes, using ultra large container ships (ULCSs) with more limited call patterns creates a greater demand for feeder traffic to serve spoke ports with limitations on water depth and handling capabilities.” This has had a knock-on effect on the size of feeder vessels.

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“We have enjoyed great success over the last five years under Nordic Capital’s ownership, and we believe that the Unifeeder brand within the DP World Group has the opportunity to accelerate growth, expand further and take the business to the next level” Jesper Kristensen (Unifeeder)

Dynamar’s Transhipment and Feedering 2018 – Trades and Operators – Ships and Hubs report commented “As many feeder ports have become more capable over time, they have allowed the feeder ship to grow larger too.” It said the average common feeder vessel was 1,300 TEU today against 700 TEU 10 years ago, with a 2,000 TEU average against 1,200 TEU for those employed by the dedicated operator. But it pointed out there are always exceptions: recently MSC used a 10,000 TEU ship on its Antwerp-Eastern Baltic feeder route.

Baltic dominance

The Baltic Sea area is a booming shortsea shipping market within Europe. Feeder volumes in the Baltic region have seen their strongest historical growth rates. Container imports to the Baltic region from 27 European countries have grown at compound annual growth rate (CAGR) 13% since 1997, according to ClipperMaritime data. Mr Caldwell said this was partially due to limitations in infrastructure – there are only two deepwater ports in the region receiving regular deepsea ULCC calls on east-west services (Gothenburg and Gdansk). He added “The largest market remains Russia and the key port in the region, St Petersburg, is limited by the need for ice-class vessels during the winter months, despite the size of its hinterland market. It is also worth pointing out that other Baltic ports like Tallinn can also serve Moscow via direct rail services.” But demand in the Russian market has slowed to 3% CAGR in the last 10 years, Mr Caldwell said, principally due to the global financial crisis of 2008-2009. “This figure has slowed even further in the last five years to about 1% CAGR with the financial slowdown in Russia in 2014-2017 (primarily caused by low oil prices and sanctions which triggered a new rouble crisis),” he commented. The recent acquisitions by major players and the ever-larger vessel size being used in this region suggest this sector will play an even stronger role in the European container sector.

Feeder market facts (Dynamar)

• 124 carriers act as a feeder operator deploying an annual trade capacity of 43M TEU. • X-Press Feeders is the third largest and the only pure feeder operator. • The Far East trade handles 371 feeder service rotations per week; Europe/Mediterranean handles 284 feeder service rotations a week. • In 2017, around 25 ports could be considered a dominant transhipment port. These include two ports in north Europe: Bremerhaven (57% transhipment business) and Wilhelmshaven/ JadeWeserPort (70%). • The Mediterranean accommodates the largest number of such hubs: nine with an average transhipment share of 79%. CST

Container Shipping & Trade | 3rd Quarter 2018

12 | REGIONAL ANALYSIS American ports

US ports see box ship boom

Port Everglades is hoping to win an east-west service once its capital improvement plan is complete

Mark Montgomery (Ports America)

Container Shipping & Trade | 3rd Quarter 2018

Mark Montgomery was appointed Ports America’s president and chief executive in May 2018. He is a 30-year veteran of the maritime industry. He previously served as president and chief executive of Ports America Chesapeake (PAC) from 2010 to 2014, where he led PAC through a successful public-private partnership with the Maryland Port Administration in 2010. Mr Montgomery serves in board roles at the Port Newark Container Terminal, PAC, the Delaware River Stevedore joint venture in Philadelphia, the CP&O joint venture in Norfolk, the Port of Miami Terminal Operating Co, the Eller-ITO Stevedoring joint ventures in Miami, the National Association of Waterfront Employers, the North Atlantic Ports Association and the General Stevedoring Council. Additionally, Mr Montgomery is a senior advisor and operating partner to the Infrastructure Investing strategy of Oaktree Capital Management.

Bosses at major US ports explain the reasons behind record volumes and reveal infrastructure investments

orth American gateway ports handled an estimated 56M TEU in port volumes in 2017 according to ClipperMaritime. And US ports expect to capitalise further on this growth as they continue to invest in infrastructure and facilities to cater for growing volumes and bigger ships. Indeed, as ClipperMaritime’s Horizons June newsletter pointed out, “A likelihood of further vessel cascading, especially on routes from Asia, means that ever-larger ships could be calling at many US and Canadian regions moving forward placing further pressure on infrastructure.”

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American ports REGIONAL ANALYSIS | 13

Ports America, which operates box terminals across North America, is certainly focused on boosting its infrastructure. Its president Mark Montgomery told Container Shipping & Trade “We will continue to increase capacity from berth, yard, rail, gate and handling equipment.” He added it was focusing on “vessel size changes and the impact of large volumes of cargo handled over shorter periods of time.” Its Port Newark Container Terminal (PNCT) has embarked on a US$500M+ expansion plan that will upgrade the terminal from a 0.85M-lift per year container terminal without ultra large container ship (ULCS) or barge capabilities to a 1.4M-lift per year terminal with ULCSs, barges and significantly improved road and rail capabilities. Mr Montgomery commented “Terminal expansion will enable PNCT to more efficiently move vessels in and out of the terminal and improve its ability to attract additional discretionary intermodal cargo while supporting overall cargo volume growth.” Speaking about Ports America’s work across all its box terminals, he said “We continue to invest in super-post-Panamax cranes and berths and work with our

“We will continue to increase

capacity from berth, yard, rail, gate and handling equipment”

Mark Montgomery (Ports America)

partners on timing as larger ships continue to arrive. Over on the west coast, container cargo volumes reached record heights at the Port of Long Beach in June, surging past the previous mark and distinguishing June 2018 as the port’s best month ever. Trade increased 14.2% in June, compared to the same month in 2017. The port’s terminals moved 752,188 TEU –

4.4% higher than the previous ‘best month’ record set in July 2017. In the first six months of the calendar year, the port handled nearly 4M TEU. The figure is 14.5% above the pace set by 2017, the port’s busiest year ever. June also capped the port’s best second quarter – dockworkers processed almost 2.1M TEU, 10% more than the corresponding quarter a year ago. The prior high was set in Q2 2006. “We are on track to beat our historic pace from 2017,” said Port of Long Beach executive director Mario Cordero. “The domestic and global economies are good, which is why we’re seeing all of this activity.” The port has made large investments in its infrastructure. US$4Bn has been committed in a capital improvement project and, due to this investment, the port is ‘big-ship ready’ and can receive vessels of 13-14,000 TEU. “Our investment was very prudent and we now have the benefits of this,” Mr Cordero observed. Elsewhere, Long Beach Container Terminal is in the last phase of its construction. The terminal, which already has 70 ha operational, will be fully operational in early 2020 with 126 ha. “This state-of-the-art electrified terminal, once finished, will be the fourth-largest port in the country. This shows its

LEFT: Ports America’s Port Newark Container Terminal has embarked on a US$500M expansion plan to handle increased cargo and bigger ships

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Container Shipping & Trade | 3rd Quarter 2018

14 | REGIONAL ANALYSIS American ports

magnitude,” Mr Cordero said. Once completed, the terminal will be able to handle 3.3-3.5M TEU per year.

Record volumes

West coast Port of Oakland is also enjoying strong growth in volumes. Steady growth on top of record volumes is forecast. Port of Oakland maritime director John Driscoll told Container Shipping & Trade “The main drivers include a continued strong local/regional economy for both importing finished products and exporting agricultural products,” and significant new infrastructure investments at the Port of Oakland including: Cool Port, a 26,000 m2 temperaturecontrolled distribution centre that could generate 54,000 TEU annually of chilled/ frozen beef, pork and poultry exports, is scheduled to open in Q4 2018 • Seaport Logistics Complex, a 41,000 m2 distribution centre currently being constructed next to the port’s new rail yard. • Completion of the expansion project to double the Oakland footprint of TraPac

marine terminal in Q4 2018. • Completion of a year-long project at Oakland International Container Terminal to raise the height of four ship-to-shore cranes by 8 m in August 2018. Meanwhile, Oakland wants to recapture cargo in Utah and Colorado that it lost a few years ago. Mr Driscoll explained “The natural gateway for Utah and Colorado is via the Port of Oakland but shippers have options. Some Utah and Colorado import customers shifted their gateways due to service issues and congestion Oakland experienced in 2013-15.” He said that with “numerous improvements” in service (night gates, appointments, online portal) and fluidity of movement within the port, customers have been returning. “We have been making a concerted effort to meet with consignees to identify their needs and reintroduce them to a new and improved supply chain infrastructure we have developed and will continue to improve,” Mr Driscoll said. It wants to market its services beyond

north and central Californian shippers, primarily as an alternative gateway for midwest locations like the Ohio Valley, Memphis and other inland locations using its strong rail infrastructure connectivity with both Class 1 railroads. He summed up “We are fortunate to have a balanced flow of trade through the Port of Oakland with a 51% export and 49% import cargo mix. This is a unique situation that reflects a true balance of trade through this gateway.”

Critical infrastructure

Elsewhere, Port Everglades has seen “stable, consistent” growth in its operations, its chief executive Steve Cernak told Container Shipping & Trade. In 2017, its container volume hit 1.76M TEU. It is in the midst of a capital programme to boost its infrastructure. The port serves the north–south markets (predominantly the Mediterranean, north Europe and central and south America). But once the programme is completed, Mr Cernak is hopeful the port will win

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American ports REGIONAL ANALYSIS | 15

an east–west service, explaining it would benefit due to its “connectivity to north– south tradelanes and the transhipment opportunities to other services.” The port’s south port expansion project is underway, with five extra container ship berths being constructed. Mr Cernak commented “The bottom line is that we are berth-deficient – we really need berth capacity.” It is also in the process of ordering custom-built cranes to handle fully-laden vessels. Nine new super-post-Panamax cranes will be added, with an option for three more. The project is expected to be completed and in operation by 2021. “The cranes are critical.” Mr Cernak commented. “We need their reach.” Port Everglades has also been given the green light to deepen its channel after a bill was passed in Washington DC in December 2016 for funding, allowing the project to go ahead. The environmental assessments needed for the project are being carried out. Currently, ships of 10-12,000 TEU can be accepted by the port, but cannot be fully loaded. Once the channel has been dredged from a depth of 12.8 m to 15.2 m, the port will be able to handle these vessels with ease. But Mr Cernak said “[the dredging] is critical to our future, but more critical in the immediate term is the channel width – we are widening it as much as we can.” This is currently 122 m, but will be widened to 179 m, to allow access for ships with larger beams. Port Everglades is also moving forward with a public-private partnership to build a logistics centre on port property that includes cold storage. The project is being called the Port Everglades International Logistics Centre, and will

“[the dredging] is critical to our future, but more critical in the immediate term is the channel width – we are widening it as much as we can” Steve Cernak (Port Everglades)

include design, construction, financing, operation and maintenance. Port Everglades International Logistics Centre will contain a warehouse, refrigerated warehouse, office space and cross-docking facilities, which will enhance the services available to shippers using Port Everglades. The entire logistics centre will be designated as a Foreign-Trade Zone.Construction is

anticipated to be completed in late 2020/ early 2021. In addition to being chief executive at Port Everglades, Mr Cernak is also chairman of Florida Ports Council and chairman of the American Association of Port Authorities. Asked what the most common challenges ports in the US were facing, he said funding for federal projects. CST

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16 | TOP 20 CONTAINER PORTS

Box port countdown – winners and losers Some ports saw their volumes soar in 2017 compared to 2016 while others saw only tiny increases or a decline in numbers. Chinese ports dominate the top 10 with many capitalising on the Belt and Road initiative, while there is fierce competition among southeast Asia ports to be the transhipment hub of the region

1. Shanghai

Shanghai has scooped top spot for the box port with the greatest volumes in 2017 – jumping by 8.3% compared to 2016 and handling 6.6M TEU more than second-in-the-league Singapore. Boosting its position is its Yangshan phase four terminal, opened at the end of 2016. It is an automated facility capable of handling 4M TEU per year. The yard cranes are driverless, as are battery-powered automatically guided vehicles that transfer containers between quay cranes and yard stacks. The port has also been building up its

links along the Yangtze River as part of its strategy to increase inland waterways traffic. Shanghai looks set to cement its position further as Shanghai city’s three year (2018-20) action plan aims to further strengthen Shanghai’s status as an international shipping hub. Shanghai has ranked first for eight consecutive years – and it looks like that is set to continue.

2. Singapore

PSA Singapore achieved cargo volumes of 33.6M TEU in 2017, an 8.9% leap

compared to 2016. When releasing its results in March, PSA Group chairman Fock Siew Wah explained some of the reasons behind its continued strong growth across Singapore and its other terminals. “2017 ended on a relatively positive note as global container throughput had its strongest showing since 2011, aided by stronger economic growth in many countries. The frenzied container liner shipping consolidation in 2016, which percolated into service deployment changes in 2017, also contributed towards PSA’s group throughput for the year.”

PSA has seen its volumes rise in Singapore and is developing Pasir Panjang Terminal to boost capacity (pictured)

Container Shipping & Trade | 3rd Quarter 2018

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TOP 20 CONTAINER PORTS | 17

TOP 20 CONTAINER PORTS IN 2017 RANK

PORT NAME

COUNTRY

2017 MTEU

2016 MTEU

% GROWTH

1 (1)

Shanghai

China

40.23

37.13

8.3%

2 (2)

Singapore

33.67

30.90

8.9%

3 (3)

Shenzhen

China

25.21

23.98

5.1%

4 (4)

Ningbo

China

24.61

21.57

14.1%

5 (5)

Hong Kong

China

20.76

19.81

4.8%

6 (6)

Busan

South Korea

20.47

19.46

5.2%

7 (7)

Guangzhou

China

20.37

18.86

8.0%

8 (8)

Qingdao

China

18.30

18.01

1.6%

9 (9)

Los Angeles/Long Beach

USA

16.89

15.63

8.0%

10 (10)

Dubai

UAE

15.37

14.77

4.1%

11 (11)

Tianjin

China

15.07

14.52

3.8%

12 (13)

Rotterdam

Netherlands

13.73

12.39

10.9%

13 (12)

Port Kelang

Malaysia

11.98

13.17

-9.0%

14 (15)

Antwerp

Belgium

10.45

10.04

4.1%

16 (16)

Xiamen

China

10.38

9.61

8.0%

16 (14)

Kaohsiung

Taiwan

10.27

10.46

-1.9%

17 (17)

Dalian

China

9.70

9.58

1.2%

18 (18)

Hamburg

Germany

8.86

8.93

-0.8%

19 (19)

Tanjung Pelepas

Malaysia

8.38

8.28

1.2%

20 (20)

Laem Chabang

Thailand

7.78

7.23

7.7%

Credit: Alphaliner

He highlighted the importance of digitalisaton in boosting cargo flow going forward, something PSA Singapore has increasingly focused on. In June this year CMA CGM’s Ze Box and PSA unboXed signed a memorandum of understanding to drive digitalisation and innovation in the shipping and supply chain ecosystem. Ze Box is CMA CGM’s corporate venture capital arm that invests in start-ups with innovations that bring strategic value to the CMA CGM Group, while PSA unboXed is PSA International’s external innovation and corporate venture capital arm. And in February, Pacific International Lines, PSA and IBM finished a successful blockchain trial covering trade between Chongqing and Singapore.

3. Shenzhen

Shenzhen managed to retain its third place despite a strong 14.1% gain by fourthplaced Ningbo. Last year saw it scoop

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25.2M TEU, an increase of 5.1% compared to 2016. Plans to make it a free trade port by the end of 2020 will further boost its throughput. It is reported that the port plans to cut its customs clearance time for cargo by one-third by 2020, through streamlining procedures and lifting some of the trade restrictions.

was created to enable the uptake of LNG as marine fuel. With LNG expected to be used by more container ships, especially after CMA CGM’s announcement that it would be using it on its newbuilds, Ningbo is placing itself in a good position to win more container volumes.

4. Ningbo

In fifth place, Hong Kong managed to reverse two consecutive years of losses in 2015 and 2016 with a 4.8% improvement in 2017. Its volumes hit 20.7M TEU. Hong Kong is hoping to gain new maritime business generated from China’s One Belt One Road initiative. At a seminar held in the UK in February last year, speakers from Hong Kong and London outlined various opportunities the huge investments could open up for both maritime hubs. Secretary for transport and housing at the Hong Kong Special Administrative Region, Anthony Cheung said “We see only looming

Ningbo’s volumes soared by 14.1% in 2017 – the greatest year-on-year increase among the top 20 global box ports – reaching 24.6M TEU. It has won a clutch of new services this year, including a new central and south China-Australia Express sling that was launched in August by Evergreen, Hyundai Merchant Marine and APL. In the same month, APL announced it was adding Eagle GO Guaranteed to its Asia-Europe service network that also includes Ningbo. The port joined the LNG Bunkering Port Focus Group in July last year which

5. Hong Kong

Container Shipping & Trade | 3rd Quarter 2018

18 | TOP 20 CONTAINER PORTS

opportunities and growth potential from the Belt and Road initiative.” He pointed out that China has signed more than 30 bilateral agreements with countries for infrastructure investment. “Hong Kong has thrived as a free trade hub and is consolidating as a super connector in maritime services,” Professor Cheung said. Furthermore, the port will benefit from the boost in trade links on the back of the Hong Kong-ASEAN Free Trade Agreement, which will be implemented from 2019.

Road initiative. In March this year, Qingdao Port International and COSCO Shipping Ports established a joint venture – Ocean Bridge International Ports Management – to boost co-operation with the Belt and Road initiative. A statement said “The two sides will make full integration of project development and management to realise the complementary advantages, raise the level of the operation and management of the terminal and achieve win-win development, to integrate into the Belt and Road initiative.”

6. Busan

9. Los Angeles/Long Beach

Busan is still in sixth place, with 20.4M TEU, an increase of 5.2% compared to 2016. The port is focused on boosting its transhipment cargo volumes and to this end is creating a worldwide business network based on Busan Port and thereby developing Busan into a global transhipment hub, with cargo from Busan’s areas of investment being fed into the South Korea port. Created in 2016, the port’s international business division has been looking around the world for potential areas of interest and said at the time the emerging markets of southeast Asia such as Cambodia and Vietnam, and South America and Africa were of particular interest.

7. Guangzhou

Guangzhou is still at number seven in the league. It saw its volumes rise by 8% to 20.3M TEU. Its main container terminal is Port of Nansha, which said a major reason for the jump in container traffic between 2016 and 2017 was trade with North America, which increased by 32.6%. Currently the Port of Nansha has over 50 global services serviced by over 20 carriers. A statement said the port’s location as the only deepwater port on the west side of the Pearl River Delta is a key to the recent surge. The location is close to many new sourcing factories providing products for export as well as to a rising population of domestic consumers. The west side of the Pearl River is also less congested than the Shenzhen ports on the east side of the Pearl River Delta.

8. Qingdao

Qingdao is at number eight in the global league. Despite holding on to its place, the Bohai Bay port only saw its volumes climb by 1.6% to 18.3M TEU. However, no doubt that percentage rise will grow rapidly in future, as Qingdao is, like Hong Kong, planning to capitalise on the Belt and

Container Shipping & Trade | 3rd Quarter 2018

Los Angeles and Long Beach – the largest ports in the US and known as the gateway to southern California – have seen their combined volumes grow by 8% to 16.8M TEU. 2017 was a record year for both ports. Port of Long Beach saw its container volumes soar by 11% in 2017 compared to 2016 hitting 7.7M TEU. This is the port’s highest annual container volume in its 107-year history. Explaining what lay behind it, the port's executive director Mario Cordero told Container Shipping & Trade “Cargo growth and trade overall in the global community have shown positive numbers but our investments in container infrastructure have proven to be a big factor.” Over at Port of Los Angeles, the port has had two back-to-back ‘record’ years in 2016 and 2017. It handled just over 9M TEU for the calendar year 2017, up from 8.8M TEU in 2016. These are the best volume results since 2006. The forecast is for slow but steady annual growth of low single-digit figures.

“Cargo growth and trade overall in the global community have shown positive numbers but our investments in container infrastructure have proven to be a big factor” Mario Cordero (Port of Long Beach)

10. Dubai

Dubai saw its volumes grow by 4% to reach 15.3M TEU last year. In 2017, DP World invested US$836M of capital expenditure in the EMEA region, which was mainly focused on the capacity expansions at Dubai’s flagship Jebel Ali port, Jebel Ali Free Zone and London Gateway (UK). Volumes have been boosted as the company invested in the Jebel Ali Free Zone and inland terminals, which the company said have “proven to not only diversify our business but also improve the quality of our earnings.”

11. Tianjin

Tianjin has stayed at number 11, with volumes of 15M TEU, representing a 3.8% increase compared to 2016. In a statement announcing its 2017 results, the port highlighted its focus on containerised cargo. It said it would implement the strategy of prioritising the development of its container business, strengthen efforts in route development, actively explore new routes and enhance their capacity, expand transhipment capacity, and increase the cargo volume of Bohai Rim feeder ships. It is another Chinese port hoping to capitalise on the Belt and Road initiative: calling itself an “important hub” in the initiative, as well as in the China-Mongolia-Russia economic corridor and a strategic point on the Maritime Silk Road.

12. Rotterdam

Port of Rotterdam has jumped from number 13 in 2016 to 12 in 2017. Its volumes soared by 11% to hit 13.7M TEU. It has benefited from the launch of the new mega alliances launched in April last year. According to research from CargoSmart, the number of vessels calling at Rotterdam after the formation of the alliances rose from 192 to 222, with the average vessel size rising from 14,500 TEU to 14,900 TEU. A major strategy for the port is boosting the productivity and efficiency of its container terminals’ operations with a strong digitalisation strategy, including use of internet of things (IoT) technologies. In January this year it announced its collaboration with IBM on the IoT initiative. A centralised dashboard application is being developed that will collect and process real-time water and weather sensor and communications data, analysed through the IBM IoT platform. This will no doubt be advantageous for capturing more services and cargo.

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TOP 20 CONTAINER PORTS | 19

13. Port Kelang

Port Kelang has dropped from number 12 in 2016 to 13 and seen its volumes plunge by 9% to 11.9M TEU. The port’s main container terminal operator, Westports, lost out after CMA CGM acquired Singaporeheadquartered APL in 2016. One of the stipulations of the sale of state-owned APL was that CMA CGM also take on APL’s Singapore terminals, resulting in the line adopting a dual-hub strategy for southeast Asia and transferring a large number of Ocean Alliance volumes from Kelang to Singapore. But it is not all bad news for Kelang – its largest trade is now intra-Asia, which saw growth of 8% and accounted for 57% of its traffic in terms of trade mix in 2017. Its CT8 and CT9 terminal expansion programmes mean the port has future long-term capacity secured.

Port of Los Angeles had two back-to-back record years in 2016 and 2017. Reasons for this include infrastructure investments

14. Antwerp

Antwerp port has jumped from number 15 to 14, with a 4.1% rise to 10.4M TEU. It has also enjoyed a record Q1 this year – container volumes jumped by 9.5% compared to the same period last year. The big driver behind this growth is the Europe–North America trade lane, which soared year-onyear by 14.5%. Northeast and southeast Asia, Antwerp’s largest market, was stable but grew by a smaller 4.1%. China’s ban on imported plastic waste affected volumes. Port of Antwerp director of international relations Luc Arnouts told Container Shipping & Trade that the port was optimistic about passing 11M containers for 2018, a growth of 6% compared to 2017.

15. Xiamen

Xiamen has jumped from number 16 to 15 with throughput soaring by 8% to 10.3M TEU. It has put in a solid performance over the last few years; in 2015, it was the fastest growing of the top 10 largest container ports in China, with volumes rising by 7.5% compared to 2014. It has focused on expanding over the past few years. In 2010, Xiamen Port incorporated the neighboring port of Zhangzhou to form the largest port in China’s southeast region. The world’s top 20 shipping companies have all established major shipping routes and operations in Xiamen.

16. Taiwan

Taiwan’s flagship port, Kaohsiung, has seen its volumes drop by 1.9% to 10.2M TEU, pushing its position down from number 14 to 16. In its 2040 master plan executive summary, the port said it

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could no longer rely on the strengths of its convenient location and that change was the “only effective approach to facing and succeeding against brutal competition”. To this end its major focuses include building more deepwater ports as “effectively meeting the needs of the largest container ships will be key to Kaohsiung Port maintaining and expanding its role as an international transhipment centre.”

17. Dalian

Dalian has kept its place at number 17, despite seeing only a small increase (1.2%) to reach 9.7M TEU. In August 2017 Dalian Port Company revealed that its subsidiary Dalian Container Terminal Company signed deals to acquire the assets of two container terminal subsidiaries, Dalian Port Container Terminal and Dalian International Container Terminal. This move should boost volumes, as its aim is to further integrate resources, reduce management costs and improve operational efficiency.

18. Hamburg

Hamburg is in at number 18 with a small decline in volumes of 0.8%. However, while there has been a slight decline in transhipment volumes, there has still been growth in the port’s hinterland volumes – and it is this more lucrative growth that Hamburg is targeting. Hinterland traffic has steadily increased by 2-2.4% a year over the last few years, according to Hamburg Port Authority marketing chief

executive Axel Mattern. “These volumes are the most important index for us,” he said. “We have a huge volume of feeder containers. They are good business because they are counted twice, but they are not money spinners for the port. A container that goes to the hinterland is a more attractive proposition.”

19. Tanjung Pelepas

Malaysia’s biggest container port saw its volume creep up by 1.2% year-onyear to reach 8.38M TEU. It competes with Singapore and Port Kelang to be the transshipment hub for southeast Asia, and is facing a lot of competition, particularly from Singapore’s closer relationship with CMA CGM through the carrier’s acquisition of Singaporeheadquartered carrier APL. Tanjung Pelepas is investing around US$2.1Bn under its latest plan to further improve the port’s capacity over the next five to 15 years.

20. Laem Chabang

Laem Chabang saw its volumes shoot up by 7.7% to 7.78M TEU. This eclipses its 3.6% growth between 2015 and 2016. Laem Chabang expanded its container operations in June this year when Hutchison Ports Thailand opened its US$600M terminal – its third at the port. The new terminal will help Thailand boost its transhipment traffic as the facility could pave the way for a 40% capacity increase in the vessels calling at the port. CST

Container Shipping & Trade | 3rd Quarter 2018

20 | REEFERS

Reefers future-proof New technology, data monitoring and GWP are under the microscope for reefer manufacturers

China’s rising middle class alone is having a significant impact on global food trends, all of which is underpinned by advances in cargo care and reefer technology,” he continued, adding it “stands to reason” that to facilitate this expanding global trade, the global supply chain must continue to develop. He pointed out that refrigerated storage capability in Asia has grown, as has the refrigerated transport industry across North America and Europe, as the technology in refrigerated vans, trailers and reefer containers advances. The required cold chain infrastructure is becoming a priority at the point of origin as well as at destination, enabling shippers who previously did not have the means to transport their products across long distances due to high rates of spoilage in the first mile to enter the market. But Mr Goh pointed out, it is not only improvements in the early stages of transportation that are opening up new markets and opportunities for growers.

Active CA combats ageing

Carrier Transicold has introduced a PrimeLINE model that can be converted to a refrigerant with a lower GWP (pictured are Evergreen PrimeLINE units)

he global cold chain market is set to be worth a huge US$293.2Bn with annual growth of 7.6% by the end of 2023 according to a report from MarketsandMarkets. It highlighted the growth in international trade of perishable foods, and an increase in consumer demand for perishable foods as the key causes for the market increase. To support this fast-growing trend, the global supply chain must continue to develop, said Daikin reefer container

Container Shipping & Trade | 3rd Quarter 2018

department general manager Ah Huat Goh. “As consumers’ awareness of the benefits of healthier lifestyles, clean eating and ‘superfoods’ increases on a global basis, so too does the appetite and demand for fresh produce,” commented Mr Goh, explaining this has been driven not only through increased understanding, but also changes in disposable income, enabling a willingness to pay more for higher quality, healthy foods. “The enormous purchasing power of

The supply of high quality fruit and vegetables at affordable prices across long distances relies upon reliable reefer technology. “Active controlled atmosphere (CA) technology slows down the ageing process that food and other sensitive perishable products undergo during transit. This allows them to be transported in better condition for longer periods of time and extends their shelf life,” said Mr Goh. He said that by manipulating ripening rates through self-generated nitrogen at the start of the shipping process, active controlled atmosphere can greatly extend the postharvest life of some perishables. Daikin’s new Active CA technology was launched last year. “In addition to high respiring cargo, with Active CA, it is now possible to transport products that are generally considered difficult to transport under passive CA, due to their low respiration rates,” said Mr Goh. By reducing the oxygen level without relying on cargo respiration, Active CA can be used “regardless of voyage length and to transport the broadest spectrum of cargo; from leafy

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REEFERS | 21

vegetables, blueberries, cherries and lychees with a low respiration rate, to produce with a high respiration rate, such as avocados, bananas, and cut flowers.” He added “Conventional passive CA relies on respiration, so it’s crucial to wait for the cargo to respirate to adjust the level of oxygen; Daikin’s Active CA, however, removes the need to wait.” Passive CA reduces oxygen density through cargo respiration or by nitrogen gas flushing that was produced separately. Instead, Daikin Active CA produces nitrogen-rich gas with inbuilt equipment and supplies it into the reefer container to reduce oxygen density. “This achieves the CA set point in half of the time of conventional passive CA meaning it is now also viable for shorter voyages, such as intra-Asia and other regional trades,” Mr Goh said. Mitsubishi’s MAXtend has been developing its CA solutions. MAXtend division head and director Sanjay Savur told Container Shipping & Trade that all of its CA solutions are offered to container shipping companies as a complete service. This way the lines are assured of a singlepoint responsibility. MAXtend’s service also includes advice on the suitability of CA for new kinds of cargo which may not have been previously transported by sea over long distances. Mr Savur said “By enabling safe transportation by sea our CA solution helps shipping lines by opening up a wider range of cargo to them and their customers.” Over the last few years the company has added remote data monitoring capability using its 3G Global Modem and has rolled this out to all shipments. “We can now monitor all cargo shipped using our MAXtend CA solution at critical points during the voyage,” Mr Savur explained. The data is automatically scanned using specially developed software, and MAXtend receives alerts when potential problems are detected. “In this way we can take corrective action to prevent cargo damage. This added data monitoring capability has enabled us to offer a value-added service to our customers,” he summed up. Indeed, he highlighted that data monitoring was a growing trend within the reefer sector. “Data monitoring is definitely something our customers are showing interest in.” To this end, the company is developing new tools to measure cargo quality during a voyage and has begun sharing this data ‘live’ with a few selected customers. The company intends to offer

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Daikin’s active CA technology slows down the ageing process for sensitive cargo

this to all its customers in future. “It will help them make informed decisions about how long they could store the produce after arrival at destination. It will also help them understand precisely what factors contribute to changes in cargo quality,” Mr Savur said. This year the company will be launching a new development to its MAXtend system with the introduction of a new CO2 removal system using membrane technology. “This will enable us to replace our disposable CO2 scrubbers (absorbers) with a more ecofriendly reusable system,” Mr Savur said. Thermo King has also noted an

automation trend within the reefer sector and has been applying this technology to its reefers to boost energy efficiency and cut costs. Last November, the company launched an energy data logging system, which is standard on all units to allow customers to measure how much energy their reefers are using. Marine commercial leader Michel Gadron said “We do not want to hide what energy a unit is consuming and as a side effect some of the inland terminals and depots charge a fixed amount to customers in terms of energy consumption. The logging system means our customers can counter invoices and use this data as a basis for negotiations.”

Cutting down PTI

Ah Huat Goh (Daikin): the reefer chain must continue to develop to keep up with the fast-growing cold chain market

Thermo King has also applied automation to cut down on pre-trip inspections (PTIs). Mr Gadron said “PTIs used to be done in depots but there is a trend for major checks to be done when the reefers are on voyage, meaning that when the reefers come to the depot, the checks are already done, saving costs.” Last year Thermo King launched an auto check feature for customers called SmartPTI, which is carried out when reefers are on voyage. The reefer unit runs algorithm tests and produces data that is sent to the overall vessel automation system. It helps operators measure their CO2 footprint, improve service and maintenance schedules leading to improved unit performance and preventative maintenance. Mr Gadron said “If something unexpected happens on the voyage, corrective maintenance can be carried out,

Container Shipping & Trade | 3rd Quarter 2018

22 | REEFERS

GWP countdown

Conventional refrigerants’ GWP: R-134A = 1,430 R-404A = 3,922

rather than running behind and waiting until a unit comes in on the land side. This is much more proactive than previously.” Reducing PTIs is also important for Carrier Transicold. It launched TripWise at the end of last year. This software automatically monitors unit performance during voyages, reducing the need for manually activated pretrip. “This saves time and energy and improves operations efficiency,” pointed out Carrier Transicold global container refrigeration director of marketing Willy Yeo. While the refrigeration system is in use, the software monitors the operation of fan motors, sensors, the compressor and valves to see if the unit is running within normal parameters. Before putting units into service again, operators conducting visual inspections of refrigerated containers can press the pre-trip button on the controller keypad. The TripWise software will indicate either pass or check. Mr Yeo said “The alternative of conducting manual PTIs when the units are in port can require several hours of run time, consuming energy and tying up service personnel and equipment.” As an example, for a fleet with 10,000 refrigerated containers making four turns per year, conducting manual PTIs at US$50 per unit, per turn adds US$2M in annual expense. So, the savings from using TripWise software can be significant.

GWP refrigerants gain momentum

New alternatives: GWP: R-513A = 631 R-452A = 2,141* CO2 = 1 *(alternative to R-404A)

Container Shipping & Trade | 3rd Quarter 2018

Thermo King has traditionally used the R-404A refrigerant in marine reefers but in 2016 it also started offering the option of using R-452A, a lower global warming potential (GWP) alternative that can be implemented on new and existing units without the need to change any components or settings. Thermo King said that this so-called drop-in possibility is unique in the market. Mr Gadron noted that in the last few months, there has been an uptake in shipping lines purchasing this refrigerant. “This means that they recognise the value of the capacity, cargo integrity and efficiency of our units with R-452A. There is pressure from shipping line customers and stakeholders to be greener and this matches with our ambitions in this area too.” Elsewhere, Carrier Transicold has introduced a PrimeLINE model that can be converted from R-134a to R-513A, a refrigerant with a lower GWP. Mr Yeo commented “Among the biggest challenges faced by the container shipping industry today is the transition to new

“TripWise saves time and energy and improves operations efficiency” Willy Yeo (Carrier Transicold)

refrigerants that have lower GWP than those that have been used for the last 25 years.” Conventional container refrigerants include R-134a and R-404A, which have GWPs of 1,430 and 3,922, respectively. A new alternative for R-134a in some existing designs is R-513A, which has a GWP of 631, so about half that of R-134a, and more than three times lower than R-452A (GWP 2,141), which is used in some competitive units as an alternative to R-404A. Mr Yeo explained “Phasedowns of traditional HFC refrigerants due to their higher GWP have raised concerns about their future availability and pricing, and some of our customers have indicated an interest in using R-513A as an alternative.” So for customers acquiring new PrimeLINE units, Carrier Transicold has introduced a new version with a provision that enables customers to transition from R-134a to R-513A at a time of their choosing. These units feature a new digital scroll compressor designed for use with R-513A, as well as traditional R-134a. But he emphasised fleets that want to use a more sustainable refrigerant and also want to hedge against price and availability issues associated with some high or medium GWP refrigerants should first consider Carrier Transicold’s natural-refrigerant based unit. The NaturaLINE unit uses the natural refrigerant carbon dioxide (CO2), which has an ultra-low GWP relative to hydrofluorocarbon refrigerants used in conventional container refrigeration systems. CO2 is the only alternative refrigerant already proven for this application that has a GWP of 1. He warned “CO2 refrigerant takes refrigerated container customers to an endstate, bypassing the need for intermediate solutions such as R-513A, which will be subject to phase-outs within the lifespan of units purchased today.” CST

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24 | CLASS SOCIETIES

Class homes in on ‘jumbo-ising’, scrubbers and stowage Scrubbers, lengthening existing box ships and stowage are all under the spotlight for class societies

they don’t exist yet, engine makers have not been able to test their compatibility with their engines. “There is a bit of uncertainty about low sulphur fuels that will be available, how available they will be and how they will behave with machinery,” said Ms Mundal.

‘Jumbo-ising’ gains momentum

NV GL published a new class notation, Emission Reduction, for exhaust gas cleaning systems in July this year, as it revealed that one of the biggest markets for scrubbers is the box ship sector. DNV GL head of section for environmental certification Stine Mundal told Container Shipping & Trade “Scrubber activity was quite low in 2017 but we really see interest picking up in 2018.” This is due to the upcoming 2020 low sulphur cap. DNV GL gathers monthly global statistics for ships confirming scrubber orders – and interestingly the container ship segment has now overtaken the cruise sector for the confirmed orders and installed scrubbers. As of July, there are 178 confirmed scrubber projects for container ships – only beaten by 185 orders for bulk ships. This places it second in all ship segments for scrubber installations. Explaining the boom in orders for container ships, Ms Mundal said “These ship types spend so little time in the ECAs which were introduced in 2015, there was no business case – but now with the upcoming sulphur cap, this is a completely different story and that is why these ship types are seeing the economic benefits of using scrubbers.” Concerns over the low sulphur fuels available are also fuelling the scrubber surge. Ms Mundal said “Some operators are worried about the availability of low-sulphur fuel.” Furthermore, new compliant blended fuels will be coming onto the market – but as

Container Shipping & Trade | 3rd Quarter 2018

Stine Mundal (DNV GL): box ship scrubber activity has increased in 2018 as the low sulphur cap means there is now a business case

Stine Mundal (DNV GL) Stine Mundal is head of section for environmental certification in DNV GL – Maritime and has been with the company since 2009. She is responsible for the global service delivery of approval and certification of diesel engines, exhaust gas cleaning systems and ships according to Marpol Annex VI, Emissions to air. Ms Mundal previously held several different international positions within DNV GL within different fields of ship classification. She holds a Master of Science degree in naval architecture and marine engineering from the Norwegian University of Science and Technology.

Meanwhile DNV GL ship type expert for container vessels Marcus Ihms singled out two projects the class society is classing that are “challenging and interesting”: MSC’s new 22,000-TEU vessels currently being built and the lengthening of existing CMA CGM and MSC box ships. CMA CGM and MSC are lengthening eight and 10 14,000-TEU ships respectively to turn them into 17,000-TEU box ships. This trend has been referred to as jumbo-ising. Mr Ihms told Container Shipping & Trade “From an engineering point of view it is challenging and to my knowledge a lengthening of this size of vessel has never been carried out before.” The work is being carried out in China, with the first vessel – one belonging to CMA CGM – expected to be completed at the end of August this year. Mr Ihms commented “The main issue is the longitudinal strength of the vessel. The vessels are relatively young – the youngest is less than five years old so you can imagine that in their original layout are not designed to withstand a lengthening.” He said the extra strength that needed to be provided was “quite substantial” – the 10% length increase in the vessels equates to 20% more strength. “That has been a challenge as the shipowners and yards do not want to have to strengthen every part of the vessel but have a smart solution including short production period.” He said the solution was to add a large structure in way of the main deck to provide additional longitudinal strength, meaning the yard “did not have to reinforce existing parts but instead added something extra to the vessel.” Mr Ihms said deck container capacity

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CLASS SOCIETIES | 25

Elsewhere, Lloyd’s Register (LR) has been working closely with ultra large container ships (ULCSs). It has classified numerous ULCSs with TEU now in the 20,000 range. Lloyd’s Register lead specialist structural analysis, marine and offshore, Seb Brindley said “With over 50% of their cargo on deck, the importance of on-deck stack security and safety is vital for commercial success.” LR has developed a methodology to help operators maximise their vessels’ potential. Mr Brindley examined the benefits. “This unique methodology is specifically engineered and validated to capture the stack behaviour, allowing clients to quickly, easily and reliably ascertain the stack safety… the importance of the lashing bridge strength, container corner post rigidity and twistlock separation can be investigated.” Mr Brindley singled out the closed end of a typical 40 ft inner stack with single external lashing as an example. Homing in on twistlock separation, he said this is inherent in the twistlock design due to a slight gap or play in its connection with the corner casting allowing it to be easily fitted and removed. The gap between two container corners connected with a twistlock can increase about 18 mm under tension. “For external lashing arrangements, this phenomenon not only causes a substantial increase in the lashing rods’ load but also reduces the compressive load in the corner posts,” Mr Brindley commented. He said for the examined stack, there are four main states due to the interaction between twistlock separation, lashing rod loads and lashing bridge stiffness. • In state one there is minimal support from the lashing bridge, resulting in excessive stack deformation. Multiple twistlocks are in tension causing a large load in the port lashing rod. This force pulls the stack to port relative to the lashing bridge and in some cases may cause the starboard

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140%

State 1

State 2

State 3

State 4 Container Compression

120%

Starboard Lashing Rod Force Port Lashing Rod Force Total twistlock separation below lashing rods

100% 27

80% 60%

40% 9

Total twistlock separation (mm)

Boosting stack safety

IMPACT OF THE LASHING BRIDGE STIFFNESS AND TWISTLOCK SEPARATION ON THE LASHING ROD AND CORNER POST COMPRESSION LOAD

Utilisation (applied load/safe working load)

was enhanced by increasing deckhouse and the funnel height. He feels lengthening vessels will become a stronger trend within the box ship sector. “It is a relatively small investment compared to ordering a newbuild of 17,000 TEU. It is cheaper and faster to upgrade current vessels and makes 14,000-TEU ships much more competitive,” commented Mr Ihms. “14,000-TEU vessels are the work horses and overnight they become much more competitive.”

20% 0% 0.1

0 10.0

1.0 Log lashing bridge transverse stiffness/LR rule value

Lloyd’s Register has launched a methodology to ascertain stack safety

lashing rod to be in tension, further increasing the load in the corner post. • In the second state, with increased support from the lashing bridge, only the port lashing rod and the twistlock below the lashing rod are in tension. An increase in the lashing bridge stiffness only changes the separation of this twistlock and the lashing rod tensile load and the corner post compressive load remains unchanged. • In state three only the twistlock below the lashing rod is in tension and an increase

in the lashing bridge stiffness transfers the load from the twistlock to the lashing rod, reducing the corner post load. • In state four, the twistlock below the lashing rod is in the float condition. Similar to state 2, the loads in the lashing rod and corner post are independent to the lashing bridge stiffness. Mr Brindley summed up “Twistlock separation, lashing bridge deformation and corner post compression influence the stack behaviour.”

ClassNK: digitalisation is a “game-changer” One of the main trends in the container industry today is digitalisation. All class societies are heavily involved in this, including ClassNK. ClassNK senior corporate officer, director of innovation development division Hirofumi Takano said “We help the maritime industry maximise profitability and explore new business models by offering digital solutions and giving guidance on cyber security.” He singled out ClassNK’s Ship Data Center (ShipDC), as an example of a data platform that offers companies the ability to safely store and manage their data and make it available to authorised stakeholders. He said “As times change, the means for collecting and analysing data have changed and potential benefits have increased. That is why ClassNK established the ShipDC subsidiary in 2015. Soon after, I observed a change in the mind-set of maritime leaders, especially among shipowners and ship operators, about the value which data collected from ships can provide to their organisations.” He said ships are now more often equipped with sensors which measure and transmit data and parameters from machinery and the vessel in real-time. “This data can be made valuable by applying intelligent analytics and drawing conclusions in order to optimise voyages and the efficiency of ships.” He observed “Without a common platform like ShipDC, multiple interfaces and exchanges could be necessary to achieve the same results, while having to make comparably higher investments and being exposed to a potentially higher cyber security risk.” He summed up. “I believe the next five years will completely change the way we work and that digitalisation will be the game changer.” CST

Container Shipping & Trade | 3rd Quarter 2018

26 | GREEN TECHNOLOGY

Crowley Maritime Corp’s LNG-fuelled container ship El Coquí, seen here before delivery from VT Halter Marine (credit: Crowley)

ECA sets a green target for new Crowley box ships

ts environmental benefits were to the fore when Crowley Maritime Corp’s new LNG-fuelled container/roro ship El Coquí arrived for its maiden call in San Juan, Puerto Rico on 30 July. It is the first LNG-powered, US-flagged, container/roro ship and it was essential to specify an environment-friendly ship for the route because it is operating in the emission control area along the eastern seaboard of the US. “Low emissions, reliability and appropriate transit speed were primary considerations,” according to its designer, Wärtsilä Ship Design (WSD). Commenting on what makes the ship stand out, vice president of Crowley’s inhouse Global Ship Management division, Cole Cosgrove, said “the thing that separates it is the fact that we’re using a cleaner-burning fuel. [It has] a much better environmental impact [and] we’re excited to bring a much cleaner product to the Puerto Rican service.”

Container Shipping & Trade | 3rd Quarter 2018

A pair of LNG-fuelled container/roro ships had to meet US coastal emissions requirements, writes Paul Gunton

He was being interviewed for a corporate video on Crowley’s website in which he said the ship will “provide the next generation of logistics supply to the islands.” Its chief officer, Jaime Torres, echoed those sentiments. The ship “will make it easier for the people of Puerto Rico to get their cargo quicker while at the same time protecting the environment,” he said. The ships are fitted with a MAN

Energy Solutions 8S70ME-C8.2-GI main engine and three of its 9L28/32 DF auxiliary engines, installed in a hull based on WSD’s CRV 2400 WB standard model. Wärtsilä also supplied its propeller, rudders, transverse thrusters and shaft line, along with its bearings and stern tube. El Coquí was delivered on 20 July by VT Halter Marine, although this was later than planned: delivery was originally scheduled for the second half of 2017 with a second ship, Taíno, due in the first half of this year. That vessel is now expected to be delivered ‘later this year’, Crowley said in a statement when El Coquí was handed over. That statement included comments by Shipbuilders Council of America president, Matthew Paxton, who said “evolutions in LNG technology are providing a historic opportunity for American yards and the supporting industrial base to design, build and outfit some of the most technically advanced

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GREEN TECHNOLOGY | 27

and environmentally friendly vessels that are the envy of the world.” They will operate from Jacksonville in Florida and have been specifically designed for the route, carrying a mix of up to 2,400 TEU, including 300 reefer boxes and about 400 cars and larger vehicles on enclosed, ventilated and weather-tight roro decks. They are 219.5 m long and have a deadweight of 26,500 tonnes. • For full details of the ships’ design, download a 2014 paper presented by WSD engineers to the Royal Institution of Naval Architects.

Ship names reflect Puerto Rico’s heritage

Crowley’s choice of names for its two new ships – El Coquí and Taíno – reflect two of Puerto Rico’s traditional inhabitants. A coquí is a small frog that has been a cultural symbol of Puerto Rican history for centuries. According to the website Welcome to Puerto Rico, when Puerto Ricans want to express their nationality, they say “Soy de aquí como el coquí” (I am as Puerto Rican as a coquí). It features on stone carvings dating back hundreds of years, to the time of its native

Taíno inhabitants. At the time of European contact with the island in the 15th century, the Taíno were the principal inhabitants of much of the Caribbean, including Cuba, Trinidad, and Jamaica, as well as Puerto Rico. The ships have been termed the Commitment Class, which reflects a sentiment expressed by Crowley chairman and chief executive, Tom Crowley. “This delivery represents another milestone in our unwavering commitment to Puerto Rico,” he said when El Coquí was delivered. Crowley has been serving the islands for more than 60 years.

Autonomous box ship will cut ship and shore emissions Fertiliser shipper Yara signed a Nkr250M (US$30M) deal in August with Vard shipyard to build the world’s first autonomous and electric container vessel. It will incorporate features designed to minimise its own environmental impact and its operation will cut vehicle emissions on a section of Norway’s road network. Yara Birkeland’s hull will be built by Vard Braila in Romania and completed by Vard Brevik in Norway in Q1 2020. Once in service, it will gradually move from manned to unmanned remote operation by 2022,

relying on technology from the Norwegian technology company Kongsberg. Its input includes the sensors and systems integration needed for remote and autonomous operations. That transition will begin with tests during its first year of operation, Yara’s head of external and corporate communications Kristin Nordal told CST, while it has crew on board. It will be powered from batteries that will be recharged during the vessel’s loading and unloading port calls using

shore-supplied electricity generated by hydropower. This will help meet the project’s goal – announced in May last year – that it will be a zero-emissions ship. Those batteries, along with other permanent loads, will form part of the ship’s ballast, giving it sufficient stability so that it does not need to take on or discharge ballast water, she said, removing the need for ballast pumps. It is neither a large nor a fast vessel, being designed to carry fertiliser from Yara’s factory at Porsgrunn to ports in

Yara Birkeland will carry containers of fertiliser for export (credit: Yara)

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Container Shipping & Trade | 3rd Quarter 2018

28 | GREEN TECHNOLOGY

Brevik and Larvik where the company ships products to customers around the world. Exact details of its capacity were not provided when the contract was signed, but when the project was first publicised in July 2017 its container load was quoted as 100-150 TEU and its deadweight as 3,5004,500 tonnes. It will have a maximum speed of 10 knots and a service speed of 6 knots, drawing energy from 3.5-4.0 MWh of battery capacity. This will be enough to remove 40,000 truck journeys a year. Those journeys are each 40 km long and eliminating them will reduce NOx and CO2 emissions and noise, improving the environment and road safety in a densely populated urban area. Ms Nordal said there will be a saving of 700 tonnes of CO2 per year but what the local community will mostly notice is a reduction of dust, she said. Speaking in August, Yara president and chief executive Svein Tore Holsether described the ship as “a game-changing vessel that will help us lower our emissions and contribute to feeding the world while protecting the planet.” At the same time, Vard chief executive and executive director Roy Reite viewed the contract as an “innovative and exciting project.” Kongsberg chief executive Geir Håøy paid tribute to the Norwegian maritime cluster, which he said had “taken a leading position within technology, design, legislation, testing and all other aspects of the development.” • Yara Birkeland has received Nkr133.6M (US$15.6M) from the Norwegian state enterprise Enova, which is owned by the Ministry of Climate and Environment to encourage effective use of Norway’s renewable energy resources. Prime Minister Erna Solberg was present for the contract signing at the shipyard in Brevik, Norway.

“A game-changing vessel that will help us lower our emissions and contribute to feeding the world while protecting the planet” Svein Tore Holsether (Yara)

Container Shipping & Trade | 3rd Quarter 2018

Portable power plant cuts port emissions

Copiapo is one of Hapag-Lloyd’s seveb C-Class ships to have had its cargo capacity boosted (credit: Hapag-Lloyd)

A portable generator unit fuelled by LNG has been tested in the port of Hamburg since the beginning of 2018. It makes it possible for large and very large container ships to stop their auxiliary diesel engines while they are alongside and take power from the containerised unit instead. It consists of two 40-ft units, one containing a 1.5-MW generator plant while the other is a tank container of LNG that can fuel the generator for up to 30 hours. They are locked together and lowered into a ship’s container bays by a shoreside gantry crane. Once in place, the generator is connected to the ship’s power system and can supply the electricity needed for onboard operations while the ship is docked. It has been developed by Becker Marine Systems and its subsidiary Hybrid Port Energy and has been dubbed the Becker LNG PowerPac. Those companies have partnered with Hapag-Lloyd and the Hamburger Hafen und Logistik AG (HHLA) – Hamburg port’s largest terminal operator – to test a prototype at HHLA’s Container Terminal Burchardkai. In a statement issued in mid-August about the trials, HHLA said the unit had been used successfully many times with Hapag-Lloyd’s 20,000-TEU container ships. “Together with Hapag-Lloyd, HHLA is using the project to intensify its efforts to keep Hamburg’s air clean,” the statement said. It quoted Becker Marine Systems managing director Dirk Lehmann, who said the pilot phase had been a complete success and described the Becker LNG

PowerPac as “a straightforward solution for the reduction of harmful emissions in the port.” He is confident the system has an international market and reported conversations “with a variety of European and Chinese ports.” Hapag-Lloyd executive board member for shipping Anthony Firmin was enthusiastic about the tests. “Shoreside power is an important component in our extensive efforts to make our business even more sustainable,” he said. These tests mark the latest stage in the project, which began in early 2016. HHLA has been an expert partner and handling service provider for the project and it defined the technical and processrelated requirements for both shipside and shoreside handling of the PowerPac. HHLA executive board member Jens Hansen said that, as a result of the tests, “PowerPac handling might well be integrated into our terminal processes.” That would be welcomed by Hamburg’s senator for economic affairs, Frank Horch, who said using PowerPacs would make “a valuable contribution toward reducing harmful emissions in Hamburg.” Its development was supported by Germany’s Federal Ministry of Transport and Digital Infrastructure, which awarded a seven-figure-euro sum to the project as part of the government’s mobility and fuel strategy. Parliamentary state secretary for the federal minister of transport and digital infrastructure Enak Ferlemann said that air pollution control, especially in ports in densely populated areas, “is very important.” CST

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CMY

30 | CYBER SECURITY

Owners can prevent cyber attacks on container shipping Shipowners, operators and managers need to collaborate, train crew and invest in cyber security to protect ships from online threats, writes Martyn Wingrove

ontainer shipping is at the forefront of cyber-related threats in shipping and therefore needs to be on top of security. Box ship operators need to learn from previous attacks on the sector, discuss methods of improving security and act upon it. They must invest in securing IT networks on shore and on board ships and train crew and shore staff in better cyber awareness and in following procedures to prevent accidental malware infections. This was some of the advice provided to delegates at Riviera Maritime Media’s European Maritime Cyber Risk Management Summit, held in London on 15 June in association with Norton Rose Fulbright. Templar Executives director Chris Gibson said shipping companies need to be proactive to learn from the way other organisations have responded to cyber attacks. He specifically mentioned the 2017 cyber attack on Maersk Group and its impact

on container shipping and terminals. “There is no such thing as too much collaboration, but it is not something that can be mandated,” said Mr Gibson. It is about building relationships and trust “and the wider those relationships are the better”. He also highlighted the importance of cyber security within a shipping company’s supply chain and supporting players, as there are ship-to-ship, ship-to-port, and owner-to-supplier relationships. “It is not just vessels and ports, terminals and thirdparties can be hacked,” said Mr Gibson. “Supply chain is important as there are many levels of interaction.” Owners need to know the vulnerabilities of their IT and operational technology (OT) and the potential attack vectors. Then they need to react to reduce the risks, for example, by segregating OT, such as ECDIS and radar, from potential threats. Zodiac Maritime has introduced rules on its container ships to prevent malware from entering key OT for vessel navigation. Zodiac’s manager for quality, health, safety and the environment Karl Meher-Homji told Container Shipping & Trade that its seafarers and vendors were not allowed to have USB memory sticks on the bridge. He said this was imposed to tighten security on ship bridges and had prevented malware from accidentally or deliberately being transferred to key navigational equipment. USBs are not even used for updating electronic navigational charts (ENC) on ECDIS. Captain Meher-Homji said ENC updates were brought on to ship bridges on disks from reputable ENC providers and their local agents.

OT penetration

Itai Sela (Naval Dome): hackers were able to change the position of a ship and the depth information on ECDIS

Container Shipping & Trade | 3rd Quarter 2018

Delegates at the summit were told about the cyber risks to navigation equipment. Penetration test specialists. Naval Dome and Cyber Prism highlighted the ease with which malware can be used to alter information on key navigation devices. Naval Dome chief executive Itai Sela described how cyber security experts broke into radar and ECDIS. They were able to

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CYBER SECURITY | 31

change the position of a ship, the depth information on ECDIS and meddle with targets on radar to place a ship in jeopardy of grounding. This was achieved by introducing malware into email and breaking passwords in shipping company headquarters. “We found multiple blind spots and that many systems are unprotected,” he said. Naval Dome experts hacked the headquarters of a shipping company and instructed someone there to send an infected ENC update to the ship. Once that was inside ECDIS, the malware started to act, manipulating the depth data and altering the ship’s position on the display. Naval Dome has developed a USBbased security capsule that defends OT equipment from cyber attack. It provides a multi-layered defence with software that detects and intercepts malware. Cyber Prism technical director Keith Chappell conducted a live demonstration of how easy it is to access data in ECDIS using an adapted USB that can capture data, such as passwords, user names and administration accounts. His colleague, development director Dave Manning explained that OT operating systems may remain unchanged on ships for decades, and become unsupported by software companies. “If hackers get into the OT then the ship can be in trouble,” he said “and remember it could be a 20-year-old machine running an old operating system.” Mr Manning said shipping companies should monitor systems and know the status of software updates and patch levels.

Class advice

Classification societies are formulating notations and guidance to help container shipping improve onboard cyber security. This will be particularly important as cyber security becomes a requirement under IMO’s ISM Code from January 2021. Lloyd's Register (LR), ABS and DNV GL provided guidance to delegates at Riviera’s summit. LR cyber security product manager Elisa Cassi said shipping companies should get a third party to monitor their IT network, the OT equipment and people to “stop people sharing data to others or compromising procedures”. She said an attacker may try to get through the communications system to compromise components of the navigation system. Shipowners “need to identify any compromise before the attacker tries to penetrate” onboard OT devices and

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Chris Gibson (Templar Executives): highlighted the importance of cyber security within a shipping company’s supply chain

In its development, ABS identified the risks, vulnerabilities and threats to OT. “Managing connection points and human resource deals with the biggest threat to OT systems on board,” said Mr Skinitis. DNV GL has developed class notations covering cyber security on newbuildings. It has also produced an online video instructing shipping companies to become more aware of cyber threats. During the summit, DNV GL maritime cyber security service manager Patrick Rossi said ship operators should set up multiple barriers to prevent hackers. These should include firewalls, updated antivirus, patch management, threat intelligence, intrusion detection, emergency recovery and awareness testing. OT should be segregated from open networks, only official ENC providers should supply USBs and update disks should be used and cleaned of malware before being inserted into ECDIS, and these systems should be segregated from the internet.

Cyber regulations and guidance for shipping

“intercept this at the time when an attacker tries to authenticate.” Ms Cassi explained that technology can support the early detection of cyber incidents on ships, ports or offices, and early interception and prevention of a cyber attack. She added that shipping companies need to “investigate the vulnerabilities through analytics and machine learning”, understand the behaviour of potential threats and use predictive analysis. LR conducts surveys of cyber security of onboard systems and can determine whether a ship is safe to navigate. Ms Cassi said LR is also working with other class societies to define cyber secure ship notations through the International Association of Classification Societies. ABS advanced solutions business development manager Pantelis Skinitis said shipowners need to change passwords on OT as some have not been changed since they were originally commissioned on the ship. He also advised owners to verify vendors and service engineers and ensure their USB sticks are clean of malware. ABS has created cyber safety guidance for ship OT, particularly for ships coming into US ports and terminals.

• EU general data protection regulation (GDPR) came into effect 25 May 2018. • IMO – Resolution MSC.428(98) – from January 2021 cyber security will be included in the ISM Code. • TMSA 3 – cyber security was added to tanker management and assessment in January 2018 • EU directive on the security of networks and information systems (NIS Directive) from May 2018. • EU privacy rule (PECR) of individuals’ traffic and location data. • Rightship added cyber security to inspection checklist. • BIMCO – guidelines based on International Association of Classification Societies.

Regulations define data security requirements

Regulations surrounding security of data and ship systems have tightened to improve vessel operator responses to cyber threats. Norton Rose Fulbright partner Philip Roche highlighted that vessel owners and managers needed to ensure they include cyber security in IMO’s ISM Code by 1 January 2021. From that point, port state control will play a limited role in enforcing cyber security. “I can see them doing a check that there is a policy in place,” he said. Inspectors will rely on class notations and certificates

Container Shipping & Trade | 3rd Quarter 2018

32 | CYBER SECURITY

to understand regulatory compliance. Mr Roche said the industry could also see something akin to an international oil pollution prevention certificate which ships would carry around to prove they are compliant. Norton Rose Fulbright partner head of operations and cyber security, Steven Hadwin, explained that regulators are already more active in cyber security, whether it is the EU general data protection regulation (GDPR) or the EU directive on the security of networks and information systems (NIS) directive. “Data protection and cyber security needs to be taken seriously from a legal point of view,” said Mr Hadwin. Courts will focus on the importance of personal data and cyber security. Data could then “become a considerable liability for an organisation” he said. If this data loss affected a European entity, then GDPR could be in play. Under GDPR if an organisation loses data, “it will need to speak to a regulator within 72 hours,” said Mr Hadwin. “It could impose a fine of up to 4% of that organisation’s global annual turnover.” PwC UK cyber security director Niko Kalfigkopoulos explained the legislation and reasoning behind the NIS Directive, which came into full effect in May this year. These “regulations have teeth” he said because of the potential size of fines and

“If the ECDIS is in a track control mode ... then the hacker can fool it and cause the ship to change direction” Ken Munro (Pen Test Partners)

damage to company reputation from being a victim of a cyber attack. This is one of the reasons why boardroom executives should be aware and understand what is required for compliance.

Ship network bridges exposed to cyber threats

Shipowners need to be aware OT can still be hacked even if they appear to be on a separate network to a ship’s IT. Pen Test Partners was able to hack OT on a simulated container ship by taking control of the bridges between IT and the operational network. This meant ethical

hackers could take control of the ship’s navigation, steering and propulsion systems. Pen Test Partners senior partner and ethical hacker Ken Munro said at the Information Systems Security Association conference in London in July that bridge equipment, such as ECDIS, radar, voyage data recorder and serial-IP convertors could be hacked. These have Windows operating systems, which means it is “trivial to exploit and take control of the serial COM ports after taking control from the IP network” said Mr Munro. It is easy to control the IP convertors because they usually have default passwords. Hackers then have complete control of the serial data it is sending to the OT of ships and can tamper with the data without alerting the crew. Serial traffic can be routed through a laptop and the GPS data feed to ECDIS can be changed. “If the ECDIS is in a track control mode, whereby it directs the autopilot, then the hacker can fool it and cause the ship to change direction,” said Mr Munro. Ship IP and serial networks should be segregated, said Mr Munro. IT and OT personnel should work closer together, preventing security holes from creeping in. Passwords for serial devices must be changed from the default and communications encrypted. “Serial device software must be kept up-to-date and patched against security flaws,” he said. CST

Elisa Cassi (LR): “Shipowners need to identify any compromise before an attacker tries to penetrate”

Container Shipping & Trade | 3rd Quarter 2018

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34 | SHIP TO SHORE

Box ports: speeding up the supply chain Digitalisation, sophisticated terminal operating systems and intermodal capabilities are driving efficiency and boosting relationships between vessels and ports

La Spezia has reduced dwell time for containers from six days to less than four

ort operators are boosting their efficiency with better intermodal capabilities and more sophisticated terminal operating systems. Italian terminal operator Contship Italia has focused on boosting its efficiency through IT, infrastructure and inland area investment – and underpinning these three strands is its business model, which covers moving the container from port to final destination. Indeed, its marketing and corporate communications director Daniele Testi said the fact that Contship Italia concentrated not just on the portside

Container Shipping & Trade | 3rd Quarter 2018

operations but on moving the container to its final destination, was a “unique model” in Italy. To this end, the company has its own rail company, locomotives, inland terminals and warehousing. Contship Italia’s main gateway terminal La Spezia is a good example of the group’s efficiency drive. An important part of the company’s strategy is to boost the quantity of cargo travelling by rail to improve speed of operation and decrease the dwell time of the container. Four TEU per square metre is handled at the port – which Mr Testi said was one of the best results among ports in Europe and Asia.

La Spezia handled 1.3M TEU last year. “We did this with the same space available as 10 years ago, which shows that our productivity is higher,” said Mr Testi. Last year the port saw a 17% increase in volumes between 2017 and 2016. The port has reduced dwell time from six days to less than four due to a mix of IT and having an efficient transport system. Crucial to the efficiency of the port is using Contship Italia’s inland depot Melzo in Milan, which is used an “extended quay” of La Spezia. The company has invested more than €40M (US$46M) since 2011, to increase terminal capacity and launch its own rail services

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SHIP TO SHORE | 35

including running three trains per day between La Spezia and Melzo allowing 35% of La Spezia’s cargo to be handled by rail, three times more than the average in Italy. Mr Testi told Container Shipping & Trade “Because of limited space in La Spezia, we cannot keep export containers there but can move these containers from Melzo to the port, close to the arrival of the vessel. Melzo is used as a buffer to ship cargo.” He said viewing Melzo as an extension of the port would be “more and more vital in the future as a main system to move cargo more quickly out of La Spezia,” due to the expansion the container terminal is to undergo. Indeed, Contship Italia is investing €200M in La Spezia: its target is to move from a throughput of 1.3M TEU per annum to 2M TEU, and to boost rail use at the port to 50% of its cargo volumes. The aim is to complete phase one by 2022, and the second phase will start from 2020. Five new quays will be constructed, operations will be semi-automated and new quay cranes added. Contship Italia has expanded its hinterland reach through its intermodal system. It now has one train a day to Basel and Zurich and from September this year three trains a week will travel from La Spezia to Munich, with plans to launch another service to Stuttgart in Germany next year. The port is competing with north European gateways including Rotterdam and Antwerp for cargo to and from these areas. “Because of our geography and cost competitiveness we think we will attract cargo,” said Mr Testi. The port operator started serving Switzerland in 2013 with its train to Basel and last year its volumes totalled 12,000

Khalifa Industrial Zone is integrated to Khalifa Port, boosting efficient flow of cargo

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Ross Thompson (Abu Dhabi Ports) Ross Thompson joined Abu Dhabi Ports in 2016 as vice president of commercial and business development in the company’s ports unit. In January 2017 he was appointed chief commercial and strategy officer, responsible for the functions of corporate commercial and strategy, quality and excellence, business process and business intelligence. Previously, Mr Thompson worked at Peel Ports Group and APL. He holds a Bachelor of Arts degree in international business and languages from Plymouth University, an executive management diploma from Singapore Management University and an executive diploma in maritime economics and supply chain from Erasmus University Rotterdam.

TEU to Switzerland. Now it has launched a service to Zurich, it aims to double these volumes.

‘Disruptive’ technology

Abu Dhabi Ports’ (ADP) flagship terminal, Khalifa Port, was only opened in 2012 and efficiency and technology are top priorities. Khalifa Port is connected to almost 70 international ports. ADP also owns free zone Khalifa Industrial Zone Abu Dhabi, an emerging industrial and logistics hub in the region, which is crucial to the port and also part of ADP’s efficiency drive.

Underpinning all of this is technology and efficiency. ADP chief commercial and strategy officer Ross Thompson explained “If you look at the supply chain industry, there is a huge amount of disruptive technology accelerating towards us at a rapid pace, including automation and robotics; all these things are on our horizon and need to be at the forefront as to how we can apply them to the industry to meet the growing sophistication of our customers.” He said being a new port gave Khalifa an advantage, as the port operator can “design new assets better than simply trying to change older assets,” as when looking at technology, “starting with a fresh place is sometimes easier.” Summing up the port’s use of technology, Mr Thompson said “Our strategy will always be to invest in technology which adds value to the customer supply chain and drives economic benefit for ADP and the Abu Dhabi economy.” When Khalifa Port opened its doors in 2012, it was the first semi-automated terminal in the region. “It was unproven technology at the time, no one knew what effect sun, sand and dust would have on automated equipment, but we have found no impact and are looking at further automation.” ADP works with local institutes and universities to look at ways innovation and technology can help the container terminal industry. “We look at

Container Shipping & Trade | 3rd Quarter 2018

36 | SHIP TO SHORE

how innovation and technology in parallel industries can be applied and adapted to benefit port operations and the supply chain,” said Mr Thompson. Furthermore, Khalifa’s free zone, integrated with the port, means the port and industrial zone are a “stronger value proposition together.”

“We have looked at how to create smart ports and integrated smart cities – if supply chains are moving into a port, how can we create smart processes and use blockchain? We drill down to the physical flow of cargo and data flow and look at what we are able to invest in now and what we can do in the future to reach our end

Boosting ship to shore Big strides have been made in boosting the efficiency of loading and unloading cargo both within container terminals and on the actual box ships themselves. Switzerland-headquartered Data and System Planning (DSP) provides worldwide IT solutions and business operation consultancy to the shipping industry, port and terminal management and intermodal transportation. This includes implementing and optimising terminal operating systems (TOS). Indeed DSP has been a Navis service solutions implementation partner since 2007 with a team of worldwide operational experts in container terminals. Navis’ N4 TOS enables terminals to optimise their operations and move cargo more efficiently. The trend within container terminals to boost the efficiency of their operations can be seen by the growth of those installing Navis TOS. DSP chief executive Marco Fehmer told Container Shipping & Trade the company had made 130 Navis container

port implementations with many of these taking place within the last year. These include at DP World Jeddah in Saudi Arabia, DP World Prince Rupert in Canada,

DP World unveils tracking tool

track and trace their containers – from shipto-shore, out of the port gate and back again.

DP World has upgraded its Where’s My Container cargo tracking tool to provide more supply chain visibility. It will now offer advanced tracking for users of DP World’s London Gateway and Southampton ports, providing even more visibility and enabling users to plan, adapt and drive efficiencies. CST spoke to DP World UK managing director and DP World Gateway chief executive Chris Lewis about how this boosts efficiency. What impact and benefits will the updates in Where’s My Container have on shipping lines? DP World customers and cargo owners benefit from this tool. It enables them to

Container Shipping & Trade | 3rd Quarter 2018

“It provides a solution for vessel operators themselves and is setting a standard in the industry” Marco Fehmer (DSP)

APM Terminals’ Tangiers TM2 in Morocco and Bremerhaven Port’s Eurogate container terminal project. Explaining the benefits of using Navis, Mr Fehmer said “The Navis solution is robust,

Do you think the tool will be further developed? As organisations continue to look for new ways to use digitalisation and data to boost their bottom line, we plan to remain dynamic by evolving this service in line with this fast-changing industry. Upcoming functionality includes email and SMS push notifications relating to the status of containers, greater visibility of container journey milestones and access to crucial historical data. The final phase of roll-out will see Where’s My Container provide the greater visibility and transparency that shippers moving large volumes require. As part of this we are looking into a direct interface and link-up between DP World and customer systems for a seamless user experience.

goal of a smart integration platform,” said Mr Thompson. Last year Abu Dhabi Ports launched Maqta Gateway, which is behind a port community platform that allows all data and document flow to be fully integrated with all stakeholders. It is also investing in blockchain and automation.

stable and has all the features needed. What is important is high flexibility to configure behaviour to meet terminal business needs, as each terminal has different needs depending on equipment used, electronic data interchange requirements and so on, so we can customise the system.” Mr Fehmer highlighted that an important part of future technology is “really pushing for co-operation between the vessel and the terminal”, where “the vessel stowage co-ordinator may collaborate and share plans in advance with the terminal; the terminal can see the cargo split on board from the beginning and so can see how many cranes should be deployed and reduce unnecessary yard shiftings.” He emphasised the significance of Navis’ co-operation tools for pre-planning and sharing information in advance. “It provides a solution for vessel operators themselves and is setting a standard in the industry,” he said. While Navis can be used with automated terminals and traditional terminals, Mr Fehmer said there was a move to automation within the container port sector, as such technology is “not a risk any more.”

Is digitalisation important for DP World in the UK? What are its strategies here? The logistics and supply chain industry is demonstrating ever-increasing levels of digitalisation and automation, in everything from trucks (platooning) and in warehouses and factories, to ports. As such, digitalisation is a key pillar for DP World in the UK, and we aim to constantly enhance our capacities in this area and look at ways of sharing data that will be to the benefit of all parts of the supply chain operation. Automation at DP World London Gateway comes via our gate system, truck handling, stack management, shuttle carrier management systems and through optical character recognition on quay cranes. This level of automation means that operations are more efficient. Importantly, automation is leading to a skill-set shift, creating new jobs in IT, planning, engineering and control. CST

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VesselsValue MARKET UPDATES | 37

COSCO to be head and shoulders above Ocean Alliance partners If COSCO’s merger with OOCL goes through as expected, it will dominate its alliance and significantly increase its power in the container ship sector

OSCO will dominate the Ocean Alliance in terms of size if the merger with OOCL takes place, and it will narrow the gap between its position and Maersk Line. Post takeover, VesselsValue says that COSCO will own 49% of the Ocean Alliance fleet by value, 54% by TEU and 51% of the vessels by number. It will be head and shoulders above its Ocean Alliance members, with 225 vessels at 1.76M TEU (comprising of 164 provided by COSCO and 61 by OOCL). This dwarfs CMA CGM and Evergreen, which have fleets consisting of 97 vessels at 769,967 TEU and 94 vessels at 467,268 TEU, respectively. The takeover will see COSCO inch closer to Maersk Line, the world’s biggest shipping line. VesselsValue staff writer Court Smith commented “If the merger of COSCO and OOCL concludes as expected, it will bring COSCO closer in capacity to the Maersk Group in terms of total TEU capacity.” The gap has certainly narrowed between the two, with COSCO and OOCL’s combined fleet of 225 vessels creeping up on Maersk’s 311 vessels at 2.27M TEU.

And the gap will narrow even more, when COSCO’s newbuilding orderbook is taken into account. Its 370,534 TEU on order will push its fleet to 2.13M TEU. Maersk’s newbuilding orderbook is considerably smaller than COSCO’s, at 96,016 TEU. Once added, they will boost its fleet to 2.37M TEU. Interestingly, OOCL has nothing on its orderbook. Mr Smith commented “COSCO’s aggressive ordering has already nudged the carrier into the number two slot when ships yet to be delivered are considered, but the addition of a large number of ships on the water will move them firmly into the number two position behind the combined Maersk Group.” Moving back to the Ocean Alliance, CMA CGM and Evergreen also have healthy orderbooks. CMA CGM’s is very close to, but still behind, COSCO’s at 18 vessels at 241,063 TEU. Evergreen’s orderbook stands at 25 vessels at 231,128 TEU. Mr Smith emphasised that this merger is a “significant step that increases COSCO’s power in the container markets.” He noted noted that the fleet profiles of OOCL and COSCO are fairly similar in

terms of age and size breakdowns. He said it looked like some of the older COSCO ships in the Atlantic and Pacific Basin might be candidates for replacement by age and size, which would help moderate overcapacity on the primary routes. The takeover of OOCL by COSCO will see the biggest impact within intra Asia, while its footprint in the Asia-Middle East trade will also rise significantly, said the UK’s Drewry Shipping Consultants. The consultancy dubbed OOCL the “perfect bride” for its good track record for above-average profits in a challenging market and a reputation for being a very well-run company – therefore retaining the management team, processes and systems “is a wise move and could be of enormous value to COSCO,” it said. It added “From a marketing perspective the acquisition of OOCL will enable COSCO to broaden its customer base, having previously being perceived, rightly or wrongly, as China-centric. OOCL’s reputation and history with global shippers will provide COSCO with an inroad to a wider selection of big western shippers with volume.” The OOCL/COSCO deal is important in other ways: it is likely to signal the end of the recent consolidation activity in the container ship sector, because the size of the top seven box shipping lines would make it difficult for them to obtain approval for future mergers. CST

POST TAKE-OVER, COSCO WILL OWN

49% of Ocean Alliance by value

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54% of Ocean Alliance by TEU

51% of Ocean Alliance by number of vessels

Container Shipping & Trade | 3rd Quarter 2018

38 | FLEET STATS AND ANALYSIS

Booming second-hand market boosts feeder sector The newbuilding orderbook is showing steady growth in the container feeder sector, the second-hand market is soaring and Chinaâ&#x20AC;&#x2122;s role is ever more dominant. Barry Luthwaite reports

It would, however, be a mistake to say that everything is fine in feeder trades. About a year ago, a scheme was suggested by struggling owners to set up a warehousing system under caretaker control of banks and leasing companies, with ships remaining under operation of previous owners who know the markets and have employment for them. Patience is a fragile asset today, however. New kids on the block are emerging and several have the advantage of being debt-free with financial backing to spend big in growth sectors. Feeder trading is a big attraction. Such is the scramble for good quality modern tonnage, that competition is a healthy factor in driving up spot rates and inducing longer time charter deals in order to hold on to precious business secured.

Sinokor is merging its shipping operations with Heung-A Shipping, boosting its position in the feeder market (credit: Prachanart Viriyaraks)

eeders continue to go from strength-to-strength with 2018 so far promising to be one of the best in general trading terms. The market both in secondhand and newbuilding business reflects this. Distress sales still dominate in second-hand business, particularly with good quality ex-German built and owned tonnage. The KG debacle is far from over, but the spotlight has now passed to banks or leasing companies on their behalf. Nominal owners or operators are perplexed that financiers owed money can strike at any time. Some of the feeders are running on monthto-month instalments and owners/operators could be punished if defaults occur. Fortunately, market rates for time and spot freight business continue to rise on the back of a lack of availability, and congestion in ports as ultra large container carriers often take 24-36 hours to clear cargo. While Europe grabs most of the headlines, there are changes in intra-Asia trading too. Owners operating mixed fleets in addition to container ships can be badly hit by cash flow and ordered to sell ships to ease the situation. The tight situation with the latter produces a steady flow of sales candidates where the owner is not in control of the situation and is forced to accede to demands from bankers, shareholders and sometimes courts. Conversely, many owners are making handsome capital from enforced sales at prices often below the book value of vessels, which are sold to relieve the debt taken on by banks and lessors. In some cases whole fleets are being purchased outright at bargain prices.

Container Shipping & Trade | 3rd Quarter 2018

Ambitious Sinokor

In one of the biggest-ever second-hand deals, Sinokor Merchant Marine agreed in principle to acquire 32 feeders between 698 and 1,794 TEU from nominal Dutch owner Vroon Containers after the company successfully concluded a financial restructuring of its mixed fleet in April. Vroon was quick to point out that it was only acting as commercial manager of the 32 vessels and the sales were concluded direct from a warehousing structure operated by Nord/LB Asset Management bank in Germany. Five vessels have already been delivered to Sinokor but there may still be subjects to clear on the whole deal. The ambition of Sinokor knows no bounds as the joint Chinese/ Korean owner aims to dominate intra-Asia trading. China itself has recognised the importance of more self sufficiency in direct feedering and is now investing in many newbuildings. For Sinokor this year is a defining moment since, if the warehouse deal concludes for 32 ships, its feeder fleet will increase by over 20,000 TEU. In tandem with this move Sinokor also announced it will merge its shipping operations with Heung-A Shipping by the end of this year and the duo is expected to integrate Hyundai Merchant Marine into its setup by the end of 2019. Heung-A is heavily engaged in feedering in Asia especially around the 1,000 TEU mark for which there is strong demand. Sinokor and Heung-A Shipping already control 34% of Asiaâ&#x20AC;&#x2122;s total fleet complement. A rationalisation programme is currently being implemented by the South Korean government and the combined fleet of Sinokor and Heung-A, including charters, will take it ahead of SITC, China. Sinokor will trade the vessels within China and to South Korea. Although not intended, the Sinokor move is enhanced by the unfortunate bankruptcy of privately owned Chinese builder Zhejiang Ouhua. Chinese builders still have serious liquidity problems despite state mergers. In the case of Zhejiang Ouhua not enough cash could be raised to save the builder and work has been halted since early this year, although one completed

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FLEET STATS AND ANALYSIS | 39

vessel was delivered in January to Reederei Nord. But the owner has been forced to cancel three sisters. Little interest has been shown in saving the builder and court protection intervention has been ruled out. In feeder terms, this is not just any closure but one of the leading builders of coastal container ships. The current orderbook comprised 13 feeders and seven multi-purpose vessels with TEU provision. Most of these will be cancelled and refund guarantees honoured. In a bullish climate owners want their ships and will be bitterly disappointed at the outcome. Zhejiang Ouhua joins six other failed Chinese builders in recent times. Some of the orders have been switched to other builders such as Huangpu Wenchong but building schedules have been deferred and later delivery times apply as well as additional cost. Support was given to the yard by local government but the scale of debt outstanding in loans was too much to continue. Some will rightly argue that freight rates will rise at the prospect of so many vessels being removed from future trading. Due to smaller sizes scrapping is a rarity and longevity is a feature in wellkept vessels.

FEEDER SHIPS ON ORDER (UP TO 5,000 TEU IN SIZE) CHINA No. on order: 57 TEU: 105,076

SOUTH KOREA No. on order: 4 TEU: 7,200

GERMANY No. on order: 28 TEU: 44,363

THAILAND No. on order: 4 TEU: 6,752

JAPAN No. on order: 22 TEU: 35,430

TURKEY No. on order: 4 TEU: 13,600

USA No. on order: 20 TEU: 47,725

GREENLAND No. on order: 3 TEU: 2,410

MALAYSIA No. on order: 19 TEU: 46,088

NETHERLANDS No. on order: 3 TEU: 5,540

UK No. on order: 18 TEU: 34,700

ICELAND No. on order: 2 TEU: 4,400

SINGAPORE No. on order: 13 TEU: 31,600

UAE No. on order: 2 TEU: 5,600

UNDISCLOSED No. on order: 13 TEU: 33,716

VIETNAM No. on order: 2 TEU: 1,400

GREECE No. on order: 10 TEU: 22,200

BANGLADESH No. on order: 1 TEU: 160

FRANCE No. on order: 9 TEU: 24,800

BRAZIL No. on order: 1 TEU: 2,700

INDONESIA No. on order: 7 TEU: 700

HONG KONG No. on order: 1 TEU: 2,700

DENMARK No. on order: 5 TEU: 18,500

PHILIPPINES No. on order: 1 TEU: 278

Second-hand business rockets

Latest statistics point to sobering confirmation of market strength. In a plethora of secondhand business, 90 feeders up to 5,000 TEU have changed hands in the first five months of this year and this figure does not include a potential 27 more vessels in the Nord/LB warehouse collection to Sinokor. Nord/LB have taken their selling interest further by introducing an experimental online site dubbed VesselBid.com in collaboration with Toepfer Transport. The scheme has taken a year to establish and the first vessel inviting bids was 2,702 TEU BuxHarmony built in 2007. Offers were asked from a starting base of US$11.5M. Rising second-hand prices may defer interest in potential bids as wise owners like to buy at low prices when they have the upper hand. The market will determine how this move shapes up but there are plenty of ships to choose from with German-related tonnage the leading provider as an outlet for banks, lessors and private equity investors. Unfortunately, this further underlines how German domination may disappear in the feeder markets over the next few years. This would be a sad occurrence if it happens. MPC Trading is moving closer to its goal of trading 100 feeders by later this year. The Norwegian-listed German operator has now reached a total of 78 vessels in its quest to offer the biggest feeder fleet based in Europe. Newbuilding contracting shows a steady growth with 46 feeders committed so far in 2018, aggregating 85,998 TEU. The difference this year is that more Asian owners have recognised the need for feeder tonnage against increasing congestion. China Navigation leads the way with eight ships committed. In the context of the overall order backlog, Chinese construction dominates with 182 vessels aggregating 373,339 TEU which will commission by the end of 2019. This firmly underlines China as the leading feeder ship provider. In total 253 vessels are committed globally so Chinaâ&#x20AC;&#x2122;s share is almost 72%. Most builders deem such construction as uneconomical. The relative drought for non-Chinese owned newbuildings has played its part in driving up freight rates. In trading fleet terms Germany still leads the feeder table with 1,169 vessels totalling 2,351,508 TEU. China has moved up to second place with 420 units offering 698,736 TEU. Greek owners occupy third place with 343 units aggregating 842,925 TEU. A concerted effort is being made to modernise Greek cabotage, mainly through the acquisition of secondhand feeders. CST Credit: BRL Consultants

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Undisclosed

CROATIA No. on order: 4 TEU: 8,000

GRAND TOTAL

GRAND TOTAL No. on order: 253 TEU: 505,638

Container Shipping & Trade | 3rd Quarter 2018

40 | LAST WORD

Small box ships: an obvious candidate for methanol As the 2020 low sulphur deadline looms, methanol will be added to the marine fuels mix – and would suit small container ships

hipowners and operators build assets for the long term but must take a short-term view of the markets in which they will trade. Seen in this context, IMO’s 2020 sulphur cap, while important, is the start of the conversation about clean fuels, not the end. The shipping industry is focused on 2020’s near-term effects, but the likely impact of this piece of regulation extends beyond its intended environmental goals. Despite being shrouded in a fog of contradictory reporting and analysis, we know that bunker prices will rise in 2020 and there will be shortages and pinch points where supply and demand are out of step. All bets are off if we revert to a sustained higher world oil price regime. In the past, shipowners have tended to go where the bunkers are low cost – even if that means some risk to quality – but given the supply position, it seems less likely that they will be able to source low sulphur fuel oil (LSFO) or gasoil in future without having long-term agreements in place. Even after supply/demand normalises, the post-2020 era will be one of higher fuel prices, making alternatives more attractive to owners planning newbuildings in the next few years. A sustained high price for LSFO or gasoil, especially when some form of carbon levy is added, might be a boost to LNG but could also make methanol competitive as a marine fuel for newbuildings and conversions alike. Granted, it will take some time for methanol to be adopted across the global fleet, but as the marine fuels market moves from a spot business to one defined by longer-term contracts, it becomes more attractive. An obvious candidate is the small

Container Shipping & Trade | 3rd Quarter 2018

container ship sector. Far less costly or complex than LNG to install, methanol is liquid at atmospheric pressure so requires less tank space and offers simpler, safer installation and handling. As the world’s most widely shipped chemical commodity, an additional benefit of methanol is its availability at ports around the world. Wherever you see tank farms at port facilities, you are likely to have methanol storage capacity – and that includes most major container ports.

Chris Chatterton (Methanol Institute): methanol is ‘far less’ costly or complex than LNG to install

Methanol’s safety profile should also be better understood. Safe handling practices draw on a long history and experience in shipping and industrial use. No more harmful than diesel or gasoline, methanol is miscible in water and so is far less hazardous to the environment than heavy fuel oil, biodegrading rapidly in the event of a spill. As a low flashpoint fuel, methanol is subject to the revision of the IGF Code. Further guidance should be available this year and full regulatory approval by 2023. The environmental argument for methanol is irrefutable. Like LNG, methanol addresses the SOx/NOx/PM emissions question and provides 2020 compliance but unlike LNG, methanol offers a future pathway to a low and zero-carbon emissions profile, enabling it to be part of the gradual decarbonisation of shipping. Methanol production already offers a wide range of feedstock and process technologies for future-proof, zero-carbon biomethanol and several plants are already producing low-carbon methanol through a carbon capture/re-injection production loop, as well as from biomass. To generate a like-for-like comparison of the costs of methanol versus LNG or LSFO, the industry requires a better means of pricing than the current link to posted contract pricing. The Methanol Institute has been working with industry partners including Lloyd’s Register to develop an online cost comparison tool. Available free of charge, the calculator enables owners and operators to understand the comparative fuel costs associated with HFO, LSFO, LNG and methanol-based propulsion. Methanol may not be the fuel of the mass market by 2020, but owners able to think beyond the next few years to the next phase of maritime regulation should be considering what the marine fuel market will look like, and how alternatives such as methanol fit into that future. CST Chris Chatterton is chief operating officer at Methanol Institute

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Valenciaport

where everything is connected

Valenciaport has an unrivalled strategic location and is well equipped to handle the latest generation of containerships. It is the Mediterraneanâ&#x20AC;&#x2122;s leading port for a variety of reasons. It is connected to over 1,000 ports, has a competitive and efficient workforce, promotes innovative management, provides excellent service quality and prides it self on its environmental commitment.