Container Shipping & Trade 3rd Quarter 2017

3rd Quarter 2017 www.containerst.com

Top 20 ports Exploiting digitisation to transform productivity levels

MOL’s new ship: a Triumph in design and energy efficiency Maersk cyber security attack: what the box ship sector is doing to prevent more incidents

“I believe LNG is the preferred maritime fuel for the next 30-40 years” TOTE executive vice president Peter Keller, see pages 5-6

contents Regulars 3 COMMENT 32 LAST WORD

Operator profile 5 TOTE’s vessels are the first box ships to be fuelled by LNG. Its executive vice president Peter Keller spoke to CST

Trade route 9 European ports are eyeing the fast-growing shortsea market

Shipper profile 12 Kongsberg Maritime has joined forces with fertiliser producer Yara to build an autonomous box vessel. CST spoke to both sides to find out about the benefits

Regional analysis 14 As bigger ships enter US trade lanes, North American ports are ramping up their productivity levels. We speak to box terminals on both the east and west coast

Top 20 ports 16 Terminal operators in the world’s largest ports face difficult choices if they are to continue as key hubs for shipping lines

Ship description 20 MOL Triumph is one of the largest box ships ever built and boasts a wealth of features that boost energy efficiency. We go on board the vessel to find out more

Class societies 22 The digitisation trend has strengthened with a raft of new software launched by class societies that helps box ship operators to increase efficiency

Reefers 24 Reefer sustainability and energy efficiency are top of the agenda for both container carriers and reefer manufacturers

3rd Quarter 2017 volume 5 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 9456 3165 e: kym.tan@rivieramm.com Senior Sales Consultant: Ed Andrews t: +44 20 8530 8322 e: ed.andrews@rivieramm.com Group Production Manager: Mark Lukmanji t: +44 20 8370 7019 e: mark.lukmanji@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 Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards

Cyber security 26 Maersk’s experience of a hacking attack in June will act as a wake-up call for shipping lines to protect themselves against such an attack

Market updates 29 COSCO’s acquisition of OOCL creates a new super-power; we look at the TEU size of its new fleet and how it stacks up to its alliance peers

Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

Fleet stats and analysis 30 The feeder market is bullish with a strong orderbook and good opportunities created by the deepsea liners; but the time could be ripe for consolidation

Next issue Main features include: • Trade route analysis: Asia-Europe • Regional analysis: Middle East, Africa and Indian Ocean • Engines: alternative means of power • Ship operations: propulsion systems • Energy efficiency: coatings • Industry leaders

www.rivieramm.com ISSN 2050-7011 (Print) ISSN 2050-7178 (Online) ©2017 Riviera Maritime Media Ltd Front cover credit: Andrew McApline

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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 2017

Valenciaport

where everything is connected

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COMMENT | 3

Could MSC, CMA CGM orders push box ship industry over the edge?

C

oncerns are growing that the recovery seen in the box ship sector could be derailed by the mega ship orderbook.

MSC is reported to be finalising an order for 11 ships of 22,000 TEU, which comes on the back of claims that CMA CGM is also planning to order nine 22,000 TEU ships. This has sparked fears of overcapacity in the Asia-Europe trade.

Alphaliner said in its newsletter at the end of August that if the orders are finalised, they would be delivered from late 2019 onwards and add to the 105 ultra large box ships that would be live on the Asia-Europe trade that year. Alphaliner said that this total includes 59 ships already in service and 46 units currently on order.

The analyst commented “The fresh ULCS [ultra large container ship] plans have re-ignited fears of overcapacity, just like in the situations which triggered previous debilitating price wars in the Asia-North Europe trade.”

And global benchmarking platform Xeneta appears pessimistic about the impact of the ULCS orderbook, even calling it a “mega problem in waiting”.

It has hailed 2017 as a “bumper year” in terms of box ship recovery, with Xeneta chief executive Patrik Berglund highlighting how rates have jumped since their historical lows last year. For the Chinese main ports to northern Europe route last May, the threemonth rolling average for long-term rates for a 40-ft container stood at US$655. This May it was US$1,438, an increase of 120%.

The average at the time of writing in early September is US$1,618.

Strong consumer demand, the restructuring of industry alliances – 90% of all container ship traffic is now accounted for by three major alliances (THE Alliance, Ocean Alliance and 2M) – and Hanjin’s demise all help push up utilisation and rates, Mr Berglund said, but there remains uncertainty.

“We remain optimistic with regards to the remainder of 2017,

but the longer term becomes more complex,” he argued, pointing to one huge issue – the increase in mega-ship capacity.

Mr Berglund said “Each of the key alliance partners is playing catch up with one another, trying to reap the mega-ship benefits.

In doing so they’re going to flood the market with new capacity and risk reversing current positive trends. This is a potential megaproblem in waiting.”

But my view is that the industry should not panic yet about overcapacity fears and I am hopeful that it will be able to weather the ULCS orderbook. My view is based on Alphaliner’s projections that the newbuildings of 14,000 - 22,000 TEU that are to be introduced will only increase Asia-North Europe capacity by around 7% in 2018, with 2019 growth expected to drop down to 4%.

These numbers take into account the expected cascading of smaller tonnage into other trades, including on the Asia-Med corridor, Alphaliner explained. “Such growth levels, assuming carriers will retain the same number of strings on the trade, should be manageable as long as cargo demand remains robust.”

Furthermore, not all carriers are hell-bent on ordering more ULCSs. During an earnings conference call for Q2 2017 at the end of August, Hapag-Lloyd chief executive Rolf Habben Jensen said that Hapag-Lloyd had no plans to order new tonnage once a 15,000 TEU ship ordered by UASC was delivered. He said that Hapag-Lloyd’s THE Alliance had the right mix of vessel sizes. His belief is that “20,000 TEU ships are not suitable for every loop between Asia and Europe”.

This shows that not all carriers are determined to order more ULCS; If other carriers show the same type of restraint as HapagLloyd, then it suggests that the ULCS orderbook is not going to keep on growing at an unmanageable and fast pace. This backs up my view that this orderbook is not necessarily a “megaproblem”. CST

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Container Shipping & Trade | 3rd Quarter 2017

OPERATOR PROFILE | 5

TOTE leads box ship industry in LNG drive TOTE’s vessels are the first box ships to be fuelled

by LNG. Its executive vice president Peter Keller spoke to Rebecca Moore about his belief that LNG is the most important fuel for the maritime industry

U

S container ship operator TOTE is helping to drive the way forward for container shipping industry to use LNG as fuel. Its two 233 m Marlin-class vessels are the world’s first container ships to operate on LNG and it is converting two roro ships to run on the fuel.

Isla Bella and Perla Del Caribe were delivered at the end of 2015 and beginning of 2016 respectively by US shipyard General Dynamics NASSCO and now operate between Jacksonville, Florida, and San Juan, Puerto Rico.

TOTE executive vice president Peter Keller told Container Shipping & Trade that it chose to power the new vessels with LNG because of new and upcoming IMO global sulphur emission requirements that come into force in 2020. “It was also about doing what is right and doing what our

Isla Perla being bunkered via TOTE’s purpose-built transfer skid, which bunkers the vessel within five hours

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customers asked of us,” he added, saying that increasing numbers of exporters and importers were keen for their ocean carriers to be as environmentally friendly as possible.

Explaining why TOTE plumped for LNG and not scrubbers, he said that LNG addressed the “core problem”: the fuel itself.

“Scrubbers are a viable short-term solution for certain applications but they do not address the core issue.” He pointed out that scrubbers only clean the emissions, but the sulphur, particulate matter and nitrous oxides must then be disposed of.

He warned “The clock is ticking. We may not like it, but in 2020 we will all have to deal with the global sulphur cap and the likelihood of other regulatory requirements over and above that sulphur cap is right there. It is not arguable in my view.”

Another reason why TOTE chose LNG was that most of the costs associated with it are fixed, unlike the volatility of the price of other fuels, Mr Keller said. “As a shipowner, that helps me understand what my costs are, going forward. That was a huge issue for us when we commissioned the worldfirst LNG powered container ships.”

With 1.5 years of operational experience to draw on, Mr Keller said that “as with any new technology there are always issues and challenges.” To combat these, TOTE’s marine engineering staff has been working with the dual-fuel engine provider MAN Diesel & Turbo to “develop appropriate solutions to ensure we maintain our highperformance reliability”.

TOTE has developed efficient solutions for bunkering its vessels. It currently bunkers 25 LNG ISO containers a week at Jacksonville Port within five hours using a purpose-built transfer skid (a single-deck loading platform). TOTE's proprietary

Container Shipping & Trade | 3rd Quarter 2017

6 | OPERATOR PROFILE

skid can bunker within five hours as it can bunker from four trucks at once.

Mr Keller explained that skid had been specifically developed to TOTE’s specification. It has been constructed by cryogenic equipment manufacturer Applied Cryogenics Technology, based in Texas.

But this is a temporary solution – TOTE has an LNG bunker barge under construction at Conrad Shipyard. It will be the first barge to use GTT's atmosphericpressure containment system and indeed the first LNG bunkering barge in the US. The barge is slated for delivery in Q1 next year and will take LNG directly from the liquefaction plant in Jacksonville, Florida, to bunker the two Marlin vessels. Mr Keller said that the skid would then be used as a back-up to the barge.

“LNG is the preferred maritime fuel for the next 30-40 years” Peter Keller (TOTE)

Meanwhile, conversion of TOTE’s Orca-class roro vessels is taking place, also at General Dynamics NASSCO. TOTE has entered into a contract with MAN Diesel & Turbo for it to develop a conversion kit for the Orca vessels’ engines so they can operate as dual-fuel machines.

“This ground-breaking programme is proceeding and we hope to be running on dual fuel / LNG in the early 2020s,” commented Mr Keller.

TOTE is a member of multi sector industry coalition SEA\LNG, which Mr Keller chairs, created to accelerate LNG’s adoption as a marine fuel. “We have essentially doubled our membership since establishing the organisation in 2016 and we are working on a number of interesting projects that will continue to focus on the long-term benefits of LNG as a maritime fuel of choice,” Mr Keller commented.

SEA\LNG includes class societies, shipyards and shipping lines. “We all need to work together to break the commercial barriers that we know exist,” Mr Keller emphasised.

For example, he said “it is a very immature market [and] there is inaccurate information out there. We need to break down those

Container Shipping & Trade | 3rd Quarter 2017

barriers and move on, by collaborating from molecules [raw, natural gas] to propeller.” He said that TOTE needed to show what it was doing in terms of LNG and communicate both internally and with the outside world.

“We need to do this in a meaningful way, so that what we say is not seen as a market pitch or a sales pitch, but something to drive this exercise forward,” he said.

Asked about whether he believed that LNG use would increase among container ship operators, Mr Keller again highlighted the 2020 low sulphur regulations and the development of LNG bunkering infrastructure as key drivers. With these factors to consider, “we believe more shipowners will opt for dual-fuel LNG technology. It addresses the core issue of fuel quality.”

He highlighted how the global LNG infrastructure network had “grown dramatically” during the first half of the year, with supplies now available in ports around the world, including in the Middle East, Europe, Singapore, Florida’s Jacksonville and Japan’s Yokohama.

He listed costs and availability of LNG as among the factors that would affect the growth of LNG as fuel.

He said “Shipowners will do what is right for the environment.” In his opinion, LNG is the “preferred maritime fuel for the next 30-40 years”. CST

PETER KELLER

(TOTE)

Peter Keller joined TOTE in February of 2012 as president of TOTE Maritime Puerto Rico and has been leading the conversion of the company’s fleet to LNG. Previously he was the principal of Peter I Keller and Associates, a consulting and advisory practice serving the maritime industry.

From 2000 until 2010, Mr Keller was executive vice president and chief operating officer of NYK Group Americas.

He was a member of the board of directors of Pacific Maritime Association, Pacific Maritime Shipping Association and the United States Maritime Exchange.

He was a founder of the Coalition for Responsible Transportation, an industry-wide organisation committed to environmentally responsible practices across the supply chain.

Mr Keller was inducted into the International Maritime Hall of Fame in 2006 at the United Nations in New York.

VIEWPOINT

TOTE to kick off LNG use among Jones Act carriers The LNG bunkering barge to be used by US-based carrier TOTE’s new gas dualfuelled box ships is the first LNG bunkering barge in the US and is expected to help boost the use of LNG by US container ship operators.

LNG infrastructure solutions provider Atlantic, Gulf and Pacific (AG&P) subsidiary GAS Entec carried out the gas handling and design of the 2,200 m³ barge. It will help container ships in North America, especially those in the Jones Act trades, to expand their use of LNG quite significantly. Indeed, the use of LNG among Jones Act shipping lines could develop as much as it has done among ship operators in the Baltic.

There is also a need in the USA for small-scale liquefaction facilities that can serve as peak shaving plants and as local sources of LNG for marine fuel. AG&P is exploring the idea of deploying facilities of this kind on floating platforms using pipeline gas as feedstock. Potential locations are major ports serving Jones Act trades, particularly in the Pacific Northwest, such as Tacoma in the USA. AG&P head of advanced research Derek Thomas

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shortsea shipping TRADE ROUTE | 9

EUROPE SHORTSEA SHIPPING GAINS MOMENTUM 26%

17%

Move over deepsea trades – both small and large ports are eyeing the shortsea shipping market

U

ltra large container ships (ULCSs) and deepsea trades have been hogging the limelight recently when it comes to the European container shipping market, but shortsea shipping has been quietly growing and developing. Now, several ports across Europe’s mainland and in the UK, see this trade as a focus.

Indeed, the congestion caused by the ULCS in some of the major ports of Europe has contributed to the growth of shortsea shipping. It was an opportunity spotted by Netherlands-based Zeeland Seaports whose commercial manager Jean Ruinard told Container Shipping & Trade “Shortsea is a growing sector for Zeeland Seaports. With congested ports like Rotterdam and Antwerp, there is space for a container terminal ‘in between’.”

Indeed, the port authority, together with a terminal operator, is investigating building and developing a terminal for shortsea and niche markets. The plan is for the terminal to take up 30-40 ha and have a quay length of 1,030 m.

Zeeland’s current modal split sees shortsea shipping take up 17% of this sector, compared to 51% for inland shipping, 6% rail and 26% road. If the port gets the green light to build the new terminals, then no doubt shortsea shipping’s percentage of the

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ROAD

SHORTSEA

modal split will grow.

Elsewhere, Port of Amsterdam has strong connections in shortsea shipping. The port is situated right in the heart of shortsea routes to northern Europe, Great Britain, the Baltics and Scandinavia and more than a third of its total transhipment is supplied and disposed of via shortsea to the rest of Europe, including Germany, Poland and Russia.

Port of Amsterdam logistics commercial manager Jan ten Caat told Container Shipping & Trade that shortsea shipping activities take place within all the port’s terminals, with commodities including paper, wood and steel-related products being shipped.

The port now aims to boost its shortsea business even more with the improvements to its facilities.

Mr ten Caat said “The most important one is the building of the biggest new sea lock in the world.” It will be 500 m long, 70 m wide and 18 m deep and when it opens in 2019, the port of Amsterdam will be “ready to welcome more and bigger ships at the same time”, he said. It will offer “more capacity 24 hours a day, is tideless, safe, time-efficient and offers more flexibility”.

The shortsea shipping market is competitive, as not only does Amsterdam compete against other ports but also against trucking. There are direct trucking services between Amsterdam and Scandinavia but trucking is more expensive and the trend towards moving goods in the most sustainable way puts shortsea shipping and inland shipping ahead of trucking, Mr ten Caat said. “Almost 80% of transhipment already takes place through water in Amsterdam. Compared to many other ports, we are much more sustainable,” he said.

Mr ten Caat continued “Throughout Europe all eyes are on sustainability and many big shippers are more and more

ZEELAND SEAPORTS’ MODAL SPLIT*

6% RAIL

51%

INLAND SHIPPING

interested in finding the greenest way of transport [through shortsea shipping].

We believe that the demand for shortsea shipping will be enormous in the near future, due to this trend. Amsterdam is ready for it.”

UK and Europe mainland: sweet spot

A particular shortsea shipping sweet spot is the container shipping trade between the UK and Europe: it is a mature but still growing at a steady pace of 3-4% per year.

UK-based PD Ports – which owns and operates Teesport on the UK’s east coast – is certainly capitalising in the growth of container traffic between the UK and Europe.

PD Ports’ business development director Geoff Lippitt highlighted the four main areas of deepsea shipping for the port: transhipment traffic from deepsea vessels, Baltic feeder traffic, feeder services and roro services.

The port has seen its annual container volumes outgrow the market by an average of 12% per annum. Its volumes are around 500,000 TEU a year – a huge jump from

Container Shipping & Trade | 3rd Quarter 2017

10 | TRADE ROUTE shortsea shipping

the 74,000 TEU that it handled in 2007.

Mr Lippitt said that the Baltic and northern Europe markets were strong for the port so the UK’s looming departure from the EU is a potential challenge. “One of the industry’s key issues is making sure a new customs regime is robust because all containers will need a form of customs clearance,” he said. Currently, there is no customs clearance regime required and any solution depends on the UK’s customs authority being ready, Mr Lippitt said.

He singled out an important trend – the cascading effect caused by the ultra large vessels will ripple out to the shortsea shipping sector. He estimated that feeder vessels in this sector – currently around 1,000 TEU or under – will grow to about 5-6,000 TEU in five or six years.

“There are a number of ports which couldn’t cope with the larger vessels because of the limited size of their locks. We do not have locks and so have the scalability to move to much larger ships and volumes,” Mr Lippitt said.

This is one reason why the port has been investing heavily in its services and facilities. It has developed 370,000 m2 of warehousing and, since November 2014, has established two rail services connecting direct to its onsite rail terminal.

Twice weekly services cover Felixstowe and Scotland. The routes handle between 25,000-35,000 TEU per annum and expanding rail services is part of the port’s strategy to enlarge its hinterland.

The port also recently commissioned its fifth ship-to-shore crane, which went into service in May and will further enhance Teesport’s service performance by reducing

Hamburg Port is a shortsea shipping hub for the Baltic Sea

the time taken to transfer containers from port to road and rail for UK distribution.

Digitisation drive

It has also implemented the terminal operating system made by the US company Navis. Since 2013, this has integrated all the port’s processes across the container terminal, ferry operations, port operations and its rail terminal into one platform. “It allows us to process boxes very quickly through the port and shippers can use the platform too, giving them visibility of their containers wherever they are,” Mr Lippitt said.

He believes there is more need than ever before for shortsea shipping lines to embrace digitisation. “Large vessels put pressure on feeder resources as there are larger container discharges, in shorter timescales, but shippers on shortsea routes are looking for frequency of short transits,” he said.

Navis has recognised PD Ports’ use of this system and its commitment to

PD Ports expects shortsea shipping vessels to increase in size – one reason that it has installed its fifth ship-to-shore crane

Container Shipping & Trade | 3rd Quarter 2017

excellence and innovation across all terminal operations and awarded the port company the title of ‘Excellence’ at this year’s Navis Inspire Awards ceremony, part of the Navis World Annual conference in San Francisco in March.

Inchcape general manager Dean Davison also highlighted the need for shortsea container liners and ports to embrace digitisation. “Digital platforms optimise efficiency and this part of the market must get involved,” he said. “If a shortsea shipping service were to suddenly run late, it would face a lot of challenges,” But using IT platforms allows visibility across the supply chain and improves punctuality and efficiency, he added.

Mega ports get in on act

It is not just the smaller ports in Europe that see shortsea shipping as crucial to their strategy. Port of Hamburg is known for being a major container shipping hub and services all the main trade lanes. However, Port of Hamburg marketing chief executive officer Axel Mattern told Container Shipping & Trade that the port was a shortsea shipping hub for the Baltic Sea, connecting to 160 destinations in that area.

As if to underline the sector’s importance, the port authority is considering whether to set up a terminal entirely focused on shortsea shipping. “We are discussing [what to do with] an area in the centre of the port and this is one of the options,” said Mr Mattern. “Shortsea shipping is interesting because of the need to get more traffic off the road.”

Currently the shortsea shipping segment is scattered across the port’s different terminals and mixed in with other shipping sectors. Mr Mattern believes that having a dedicated shortsea shipping terminal would be more efficient and lead to even better connections for shipping lines. CST *Data for page 11 piechart supplied by Zeeland Seaports

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12 | SHIPPER PROFILE

2017

World-first autonomous box ship to deliver significant supply chain benefits Kongsberg Maritime has joined forces with fertiliser producer Yara to build an autonomous box vessel that will provide financial, environmental and supply chain efficiency benefits.

The two sides tell CST about the project

ABOVE: Yara Birkeland will slash 40,000 lorry journeys a year by taking containers off the road and transporting them via inland waterways instead

F

ertiliser production group Yara has begun working with Kongsberg Maritime to produce the world’s first fully electric and autonomous unmanned container ship.

Together they will develop and build Yara Birkeland, which will initially operate as a manned vessel when delivered in 2018, moving to remote operations in 2019. Yara expects the ship to be able to perform fully autonomous operations from 2020.

A major benefit is that the ship will remove the need for up to 40,000 lorry journeys each year as finished fertiliser is taken from Yara’s production plant in Porsgrunn, Norway, to its regional container hubs by the sea in Brevik and Larvik.

At present, 100 containers of fertiliser are taken every day by truck to these hubs, from where it is shipped to key markets in Asia and South America. Instead, Yara Birkeland will take it via inland waterways on a voyage of approximately 32 n-miles (roughly 58 km).

Kongsberg Maritime’s strategic projects manager Peter Due told CST that a major reason behind using an autonomous vessel was cost.

“Building a ship is much cheaper without the hotel side. If you reduce the building costs and remove the need for onboard crew, then this model can compete with trucking.” During its

Container Shipping & Trade | 3rd Quarter 2017

Design finalised and completed

by Marin Teknikk, Norway Shipbuilding contract to be awarded

manned operations next year, a containerised temporary wheelhouse/bridge will be installed.

Yara’s head of external and corporate communications Kristin Nordal expanded on the benefits, telling CST “While the initial investment will be higher than on similar sized conventional ships, we expect to reduce OPEX cost significantly by transferring truck transport to this unmanned, electric, ballast-free vessel.”

Crucially, the project fits in with Yara’s wider strategy. “Yara’s main contribution to the world is to deliver crop nutrition to increase food production and environmental solutions to abate emissions from industry and transport. In doing so, we continuously look for ways to reduce our own emissions by adopting new and innovative solutions in production and transportation,” said Ms Nordal.

She emphasised that improving its supply chain and planning optimal material flows between locations “is key to keeping our position in the industry” as a global fertiliser company, with 27 production plants in Europe, the Americas and Australia, and sales in about 160 countries.

Yara Birkeland will be fitted with batteries that will be charged with clean Norwegian hydro power during loading and unloading, leading to the reduction of 700 tonnes of CO2 emissions every year.

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VESSEL PARTICULARS LOA: 70 m Beam: 15 m Depth: 12 m Draught (full): 5 m Draught (ballast): 3 m Service speed: 6 kn Max speed: 10 kn Cargo capacity: 100-150 TEU Deadweight: 3,500-4,500 tonnes

2018

The vessel will be delivered from the yard in the second half of 2018

2019

Testing with a captain and small crew, placed in a container-based bridge and crew unit, is scheduled to start second half of 2018

Remote control tests will be carried out

TECHNOLOGY PROPULSION Electric propulsion Two azimuthing pods Two tunnel thrusters Battery pack capacity: 3.5-4.0 MWh

2020

KEY SENSORS Camera Radar AIS Lidar IR camera

The vessel will be fully autonomous

The vessel will be 75 m long, with a draught of 5 m and capacity for 100-150 TEU. While the concept design has been finalised, a shipyard has yet to be chosen to build it. But it is expected that the shipyard contract will be awarded later this year (see timeline).

Kongsberg is responsible for developing and delivering all key enabling technologies on Yara Birkeland, including the sensors and integration required for remote and autonomous operations, the electric drive, battery and propulsion control systems.

It is currently building a digital twin of the vessel, whch is a digital model formed of hundreds of simulations carried out before the vessel goes into operation. During operation, the digital twin will also harvest live data from the vessel to improve the operation.

The ship will also be equipped with an automatic mooring system and loading and unloading will be done automatically using electric cranes and straddle carriers. “This means that handling ashore will have zero emissions and will become autonomous too. It is not just the vessel that we are looking at, but the whole supply chain,” Mr Due said.

He added that the biggest hurdle is that there are no rules and regulations in existence to monitor the building and design of an

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autonomous ship, so it has been important to collaborate with various governing bodies and authorities, such as Norwegian Maritime Authority and Norwegian Coastal Administration on legislation. The project has also applied for support through the Norwegian Government scheme ENOVA, which invests in solutions that help build a greener Norway.

Ms Nordal also highlighted the importance of working with other organisations “A pioneering project like Yara Birkeland cannot be developed in isolation, so for us the key to success is collaboration.” Yara was “happy to partner with Kongsberg for this game-changing project,” she said.

The project marks the start of more innovation within Yara’s supply chain. “We will see how we can learn from this project to improve transportation to and from other production sites in Yara,” she added.

This project will not just impact Yara, it could have ramifications for the wider container ship industry. “Europe has challenges with congested roads, so the potential for projects such as this is huge,” commented Mr Due. Ms Nordal echoed that assessment, saying that Yara Birkeland “represents pioneering innovation and will set a new standard in the maritime sector for short sea shipping.” CST

Kristin Nordal (Yara): “We expect to reduce OPEX cost significantly by transferring truck transport to this unmanned, electric, ballast-free vessel”

Container Shipping & Trade | 3rd Quarter 2017

14 | REGIONAL ANALYSIS North America

US PORTS:

PRODUCTIVITY QUEST As bigger ships enter US trade lanes, North American ports are ramping up their productivity levels

N

MICHAEL KEENAN

(PORT OF LOS ANGELES) Mike Keenan is the director of planning and strategy at Port of Los Angeles. He joined the port in 2005 as a harbour planning and economic analyst with the port’s planning and research division, where he worked on data analysis and research projects.

Before joining the port, he worked as a consultant with the Los Angeles consulting firm Econ One Research for 11 years. He has a bachelor’s degree in economics from Stanford University.

orth America’s box port scene is dominated by trends emerging from the wider locks on the Panama Canal and much larger ships cascading onto the transpacific trades.

Crucial for Florida’s Port Everglades is the green light it has been given to deepen its channel depth after a bill was passed in Washington DC in December for funding, allowing the project to go ahead.

Port Everglades chief executive officer Steve Cernak told Container Shipping & Trade that the port was currently gathering the funds for this project and that environmental assessments were being carried out for the deepening. The work is expected to be contracted out in 2018 and take three years to complete.

Mr Cernak emphasised that the channel deepening was crucial because of the larger ships moving into US trade lanes. He said that ships of 10-12,000 TEU were the “sweet spot” for the port but, while it can currently accept these ships, they are not 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, he said.

The Florida port has also

Container Shipping & Trade | 3rd Quarter 2017

had its Southport Turning Notch expansion project approved, which will lead to five extra container ship berths being constructed. Although no time schedule has yet been set for this work, it is forecast to be completed by 2020.

Everglades is also in the process of ordering custombuilt cranes to handle fullyladen vessels. Nine new cranes will be added, with an option for three more.

PANAMA CANAL BOOST FOR EAST COAST

These channel and port expansion projects are particularly important because of the Panama Canal’s capacity expansion that took place in June last year and will boost the number of services calling at Everglades.

North-south trade currently contributes 87.1% of Everglades’ container business but Mr Cernak expects that to change once it wins business via the widened Panama Canal. He foresees an opportunity to win at least one east-west service, which would lead to a 10% jump in cargo volumes being handled at Everglades.

The port is already reaping the rewards of the expanded Panama Canal. Its volumes (as of August) are up by 5%

compared to last year and the port is on target to hit 1.1M TEU this year.

Port of Savannah has also felt a big impact from the expanded Panama Canal, both in terms of bigger vessels and strong market opportunities.

The port told Container Shipping & Trade that since the reopening of the Panama Canal in June last year, the average size of the vessels calling had increased by nearly 20%. The largest vessel to call Savannah a year ago was a 10,000 TEU vessel, but in August the port handled its first 14,000 TEU vessel.

Port of Baltimore has been benefitting from the larger ships that are crossing the Panama Canal – this is one of the factors behind its jump in container volumes. Last year was a ‘record year’- and the port this year has managed to surpass this achievement: volumes were up 10% for the first half of this year compared to the same period in 2016.

The port was well-prepared for the Panama Canal expansion: it has a 50ft deep container berth and channel and four neo Panamax cranes.

There is just “one final piece of the puzzle”, Maryland Port Administration director of communications Richard Scher told Container Shipping & Trade: to have double-stacked

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North America REGIONAL ANALYSIS | 15

container trains. The main impediment is the 100-year old Howard Street tunnel, which needs to be reconfigured so that it can accommodate double-stacked trains. The port is applying to a US Government programme - which provides funding for certain transport projects - to receive funding to make adjustments to the tunnel.

“We are cautiously optimistic that we will receive the funding, we have a very strong application,” Mr Scher said, adding that CSX Transportation and the state of Maryland have already committed funding.

The largest terminal operator in the US, Ports America is also boosting its facilities on the east coast.

It has struck an agreement with Sydney Harbour in Nova Scotia to develop and operate a marine container facility in the Canadian port. It is hoped that construction will begin by the end of 2018.

Ports America chief commercial officer Tom Perdue told Container Shipping & Trade “Canada is a growing market for terminal operations and it is natural for the North American industry leader to participate in that growth.”

On the US East Coast, Ports America is investing heavily in Port Newark Container Terminal (PNCT) in New Jersey. Plans involve a US$500M investment before 2030 for expansion that is expected to double the number of containers moving through that terminal and create significant growth within the region.

Mr Perdue pointed out that PNCT has already doubled its on-dock rail capacity compared to what it had previously and purchased three super-post-Panamax ship-to-shore cranes that cement “PNCT’s readiness for the ultra-large container vessels”. Further expansion plans include additional yard space, improved gate facilities, deep berths and more super-post-Panamax ship-to-shore cranes.

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Port of LA executive director Gene Seroka and CEO of GE Transportation Jamie Miller announcing mega-ship information portal partnership

This is important because “with the deployment and cascading of larger ships into North America, it is expected that there may be demand for reduced ports of call in the US, consolidated volumes at strategic ports and terminals, with greater peak throughputs.”

Therefore, he said, “we anticipate that increased port handling and productivity will be essential to ensure seamless cargo movement through the supply chain.

Enhancements on landside intermodal connectivity points, [such as] terminals, barges, rail and roads, will be crucial.”

Also, automation, technology and further infrastructure improvements and investments will be required, through both public and private partnerships.

OVER ON THE WEST COAST

Mega alliances have also had an impact on US West Coast ports. “Carrier alliances are concentrating their vessel calls at fewer container terminals as they seek leverage and scale of operations,” Mr Perdue said. As a result, some ports find themselves with excess terminal capacity and are looking closely at combining smaller facilities into larger container terminals, or at repurposing container terminals for other uses, he explained.

So Ports America sees its future on the West Coast in

two gateways: Los AngelesLong Beach in the south and Seattle-Tacoma-Vancouver, British Columbia, in the Pacific Northwest.

Carrier changes have also affected US West Coast’s Port of Long Beach. At the start of 2017, MSC subsidiary Terminal Investment Ltd (TIL) bought out bankrupt Hanjin’s stake in the long-term lease to operate the port’s Pier T terminal. As soon as it took over Hanjin’s share, it sold 20% to 2M partner HMM. Long Beach chief commercial officer Noel Hacegaba told Container Shipping & Trade “Because of this change the terminal is predominantly 2M, and we expect this to benefit the terminal.” TIL is now in the process of raising two cranes that can accommodate 20,000 TEU ships. These will be ready by 2020.

Long Beach expects its container cargo volumes for 2017 to jump by 7% compared with last year.

Over at Port of Los Angeles, its focus is also on boosting productivity.

It has partnered with GE Transportation to launch a port information portal that will allow all those involved in the supply chain to have better planning capabilities to service container ships at the port more effectively.

It will allow ships’ cargo

information to be available earlier and the two-month pilot project (which took place in Q2 this year) included customs' information related to the cargo in the ships.

Port of Los Angeles director of planning and strategy Michael Keenan told Container Shipping & Trade “By getting customs data two weeks in advance rather than two days means that we can better plan the schedule of ships and it will make a big difference for railroads and others.” This is because, by having an extended window of time to track inbound cargo, cargo and vessel movement in the port can be optimised and the predictability and reliability of the supply chain improved.

The pilot took place at Pier 400 terminal, but the port has announced plans to bring the system to all of its container terminals in 2017-2018.

Another productivity drive involves a large piece of unused land in the port complex. A pilot project is being planned on a smaller piece of the site to see if this larger area can be used as storage for trucks and cargo. “Taking trucks off the terminal frees up space and boosts efficiency and means beneficiary cargo owners can pick up their cargo from this land away from the terminal,” said Mr Keenan. CST

Tom Perdue (Ports America): “We anticipate that increased port handling and productivity will be essential to ensure seamless cargo movement through the supply chain”

Container Shipping & Trade | 3rd Quarter 2017

16 | TOP 20 PORTS

Box operators -

obsolete before their time?

Terminal operators in the world’s largest ports face difficult choices if they are to continue as key hubs for shipping lines, writes Gavin van Marle

Shanghai continues to be the world’s largest container port

L

ast year saw a ‘phoney war’ for the global container port industry.

The first half was characterised by weak volumes which made for a gloomy prognosis for the remainder of the year. There was a recovery in the second half of 2016, but overshadowing the entire industry was the ongoing reorganisation of the deep-sea operating alliances. The alliances dropped from four to three but had not yet published their port rotations.

Global container trade across the world’s box ports grew by 1.8% to reach 55.8 M TEU, marginally up from the 1.4% growth recorded in 2015, according to French analyst Alphaliner.

Container Shipping & Trade | 3rd Quarter 2017

While double-digit growth may have become a memory since the financial crisis affected the global container trades in 2009, Drewry Maritime Advisors director of ports Neil Davidson said that given how vast the worldwide trade currently is, even a small percentage gain can translate into a large increase in absolute container volumes.

“Even if you have just 1% on 555 million TEU, that’s still a growth of 5.5M TEU – and that equates to the annual throughput of a pretty large container port,” he said.

That level of throughput is similar in size to three ports – Ho Chi Minh City, Bremerhaven and Jakarta – which are

listed just outside the top 20.

There is still considerable uncertainty hanging over the terminal industry as it seeks to keep up with the changing dynamics of the liner industry – in terms of both the consolidation among carriers and the move towards larger vessels on virtually every shipping lane.

As a result, investment decisions for the 20 largest ports were largely kept in abeyance – with shipping lines consolidated into larger alliances operating larger vessels, the amount of cargo for ports that serve their strings has become larger. In effect, the prizes have become bigger, although less in number.

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TOP 20 PORTS | 17

Now that the three new alliances – 2M plus Hyundai Merchant Marine, THE Alliance and the Ocean Alliance – have begun operating and the majority of port rotations settled, the make-up of the top 20 ports this time next year could look quite different from how it does today.

The top 10 ports in 2016 are still in Asia, despite the slowdown in Chinese exports. Eight of the top 10 ports are in China, with the final two, Busan and Singapore, dependent on Chinese cargo flows for much of their volumes.

This means increasing levels of risk for the transhipment business, ports, and terminal operators.

A PERFECT STORM Mr Davidson warned that operators are facing a perfect storm: there is softening demand growth, at the same time as higher operating and capital expenditure due to the advent of larger ships. There are also increased risks from larger liner alliances which is allowing carriers to press for lower prices and faster container handling rates.

These pressures mean that liner overcapacity has become a critical issue for the port industry, and although the prospects for achieving a balance in the supply-demand ratio have brightened over the past year – most industry analysts are agreed that this could take place in 2019 – it will only take place if certain conditions are met.

SeaIntelligence Consulting partner and chief executive Lars Jensen told delegates at the recent TOC Europe Container Supply Chain event in Amsterdam “Demand will catch up with supply in liner shipping if, and only if three conditions are met." These are: there is no new ordering of vessels; scrapping of the existing fleet continues at current levels; and slow steaming continues at its present rate.

Mr Jensen said “This is the most positive structural scenario for the industry, and in reality that balance will probably come around later.”

However, Mr Jensen also warned port operators that consolidation in the liner industry is only set to continue through to 2025, and predicted a radically different commercial landscape.

“In 2025 we are going to face a market where there will only be six to eight large global carriers left – that’s it; no more than that, because in a global commoditised market you need a high degree of concentration to have a stable industry.”

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He added that there will also be a large reduction in the number of regional niche carriers. “There are hundreds out there. There will continue to be niche carriers, but far fewer than there are today,” he said.

“Because of the phase in of bigger ships, every trade will have bigger ships rammed down their throat – the consequence of that is if I put in bigger ships and the trade doesn’t grow, the only way to compensate is to reduce the number of weekly services.”

He suggested that therefore there will be fewer services with a larger number of vessels. “Port operators have to ask themselves how to invest for that – ports’ customers are telling them they need to invest to handle bigger ships, which is true, but that investment might not actually result in ports handling any more containers than they presently do.”

He emphasised that it was a “huge conundrum” for ports. There are a lot of port capacity investments going on and “if you think the lines have had it bad over

the last five years, watch what happens to the ports over the next decade,” he said.

The net result is an increasingly blurred distinction between the liner and terminal operating sectors, which has been exacerbated by the recent round of consolidation among carriers. Take Rotterdam for example. Its flagship capacity project was the reclaimed Maasvlakte II port area, where the new APM Terminals’ and Rotterdam World Gateway (RWG) facilities are located. In contrast to APM Terminals, RWG has a complicated shareholding – its founding partners were CMA CGM, APL, HMM and MOL along with DP World. The number of shareholders has been reduced following CMA CGM’s acquisition of APL. That in itself is not a problem, but the plot thickens when seen in the context of the new alliance structure – now that CMA CGM has joined China COSCO in the Ocean Alliance – the consortium’s choice of terminal is complicated given COSCO’s investment in Hutchison’s Euromax facility in Rotterdam.

Hutchison’s motivation to sell that

TOP 20 BOX PORTS

(Based on 2016 teu volumes. Source: Alphaliner) Rank Port 2016 TEU* 2015 TEU* % difference 1 Shanghai 37.1 36.5 1.6 2 Singapore 30.9 30.9 -0.1 3 Shenzhen 24 24.2 -0.9 4 Ningbo 21.6 20.6 4.6 5 Hong Kong 19.8 20.1 -1.3 6 Busan 19.4 19.5 -0.2 7 Guangzhou 18.8 17.6 6.8 8 Qingdao 18 17.4 3.3 9 Los Angeles-Long Beach 15.6 15.4 1.8 10 Dubai 14.8 15.6 -5.2 11 Tianjin 14.5 14.1 2.9 12 Port Klang 13.2 11.9 10.8 13 Rotterdam 12.4 12.2 1.2 14 Kaohsiung 10.5 10.3 2 15 Antwerp 10 9.7 4 16 Xiamen 9.6 9.2 4.7 17 Dalian 9.6 9.4 1.5 18 Hamburg 8.9 8.9 0.9 19 Tanjung Pelepas 8.3 9.1 -9.2 20 Laem Chabang 7.2 6.8 6 * million

Container Shipping & Trade | 3rd Quarter 2017

18 | TOP 20 PORTS

stake was to reduce its risk in the port – as more capacity has become available in Rotterdam, it assumed it could lock in COSCO’s volumes. That assumption looks less concrete today.

Mr Davidson argues that carrier-terminal partnerships are one way for terminals

to partially offset risks attached to these enormous investments, and points to similar deals between PSA International and MSC, CMA CGM and COSCO for dedicated terminals in Singapore.

The CMA CGM-PSA Lion Terminal (CPLT) started operations with two mega container

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Container Shipping & Trade | 3rd Quarter 2017

berths at PSA Singapore’s Pasir Panjang Terminal 5 (PPT 5) that had an initial annual capacity of 2M TEU in July last year.

With the addition of two more berths under Phase 2 of its development, CPLT now has an operating capacity of 4M TEU. CPLT has achieved high service levels with an average gross berth productivity of more than 160 moves per hour for the mega vessels since the beginning of 2017.

The same process is taking place in Antwerp, which has seen the strongest growth among European ports, largely due to the consolidation of 2M alliance volumes at the port. This growth is behind the PSA-MSC joint venture MSC PSA European Terminal (MPET), which this year added four new cranes as the final stage of the terminal’s relocation and upgrading project. On its completion, MPET will have 41 quay cranes and lay a claim to be the largest container terminal in Europe.

This vividly demonstrates the problem facing ports – to proceed with the MPET project, the partners had to effectively abandon the Home terminal, illustrating what Mr Davidson terms “premature terminal obsolescence”.

“Another factor in the equation is the rapid obsolescence of perfectly good terminal capacity. Last year a terminal in Oakland closed down and there really was not much wrong with it." Mr Davidson said that the same could be said of MSC Home terminal in Antwerp, which was closed down and relocated – “it had big cranes, deep water but is effectively out of the game”. He added that in the UK, Thamesport “hardly does any container traffic these days while two modern, deepwater terminals in Zeebrugge have also been taken out of the game”.

And that is the crux of the issue facing many of the world’s largest container ports – these terminals never had a chance to complete the 30-year lifespan necessary to provide an adequate return on investment.

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Investment in ports has traditionally centred on infrastructure – building larger quays, yard areas and deepening access channels – and superstructure, installing cranes and landside container handling equipment. There is now an increasing focus on improving the digital infrastructure that offers ports the chance to radically improve productivity levels.

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TOP 20 PORTS | 19

Investment in terminals over the last two decades has primarily come from private sources, whereas the new era of digitalisation has led to a renaissance of publicly-owned port authorities, especially as a co-ordinator of how digitalisation progresses.

In recent months three port authorities – Hamburg, Busan and Los Angeles – among other supply chain partners, such as the Global Institute of Logistics, have come together to form chainPORT, an alliance of ports and the cluster that surrounds them “to enhance competitive advantages by sharing risks and resources, extend market access capability, improve product quality and customer service, and ultimately, increase profitability”.

Professor Carlos Jahn, head of Fraunhofer Center for Maritime Logistics and Services, said “Digitalisation holds great potential for seaports to act even more efficiently and effectively. Once the possibilities of intense real-time data exchange are exploited, digitalisation will facilitate optimisation of the whole supply chain.”

This will eventually allow safer and more environmentally friendly processes.

Besides safeguarding and strengthening the competitive position of seaports, digitalisation enables them to become more flexible in a rapidly changing market environment, Mr Jahn added.

Port authority executives argue that they are in a unique position to play a pivotal role in leveraging digitalisation, as they are custodians of the maritime nodes in the global supply chain. They are increasingly relied upon by port end-users and modal operators to co-ordinate and communicate in their port communities.

Hamburg Port Authority chief digital officer Dr Sebastian Saxe added “Decision-makers within the maritime industry and the wider supply chain need answers to the looming question on what opportunities the digital shift offers seaports and to which of the innumerable possibilities attributed to digitalisation are best suited to provide much-needed efficiency gains.”

He said that Hamburg Port wants to stimulate the necessary discussion about future digitally induced scenarios in seaports. “Our minds need concrete images of the future to shape reasonable and intelligent paths towards this future,” Dr Saxe explained.

He adds that by becoming increasingly

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proactive in the digitalisation process, ports are also able to help prepare the global container shipping industry for the disruptive challenges that rapid technological development is creating for it.

“In the shipping business, new players from other sectors are already

challenging the status quo increasingly successfully by implementing innovative, digital business models. It is time to shape the digital transformation along supply chains and networks of value creation hand-in-hand with the established actors,” Dr Saxe said. CST

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Container Shipping & Trade | 3rd Quarter 2017

20 | SHIP DESCRIPTION MOL Triumph

Why MOL’s latest ULCS is a Triumph in design MOL Triumph is one of the largest box ships ever built but it has much more to boast about than that. Andrew McAlpine went on board the vessel to find out more

W

hen MOL Triumph, was named on 15 March this year, during a ceremony held at the Samsung Heavy Industries (SHI) Shipyard, it became the first in a series of four 20,000 TEU container ships for Japanese line Mitsui OSK Lines (MOL). It has since been deployed on The Alliance FE2 service and calls at Dalian, Qingdao, Shanghai, Ningbo, Hong Kong, Yantian, Singapore, Tangier Med, Southampton, Hamburg,

Rotterdam and Le Havre.

Its building contract, announced in March 2015, had followed a flurry of new box ship orders from the world’s top container lines and the industry was rife with speculation about a major order from MOL. Its president Koti Muto had announced during a New Year message that the line had already taken steps to begin operating a 20,000 TEU ship and, less than three months later, the company revealed its deal for four of them – the

largest ever ordered at that time. It also signed an MOU for a long-term charter for two more with Shoei Kisen Kaisha. These additional two vessels will be built in Japan

by Imabari Shipbuilding.

According to SHI, when the ship was delivered MOL hailed its performance for zeroincident construction during the 15 months since steel cutting began in January 2016.

Efficient container loading

five aft of the funnel. It is 58.8 m wide, allowing 23 rows of containers to be loaded across the deck.

A maximum of nine tiers can be loaded forward of the bridge, with 11 tiers possible on all bays behind the bridge due to the installation of four high lashing gantries.

All lashing gantries and container securing equipment are supplied by German Lashing. Below deck, its depth of 32.8 m makes MOL

MOL Triumph’s precise capacity is 20,170 TEU, yet it shares the same overall dimensions as a standard 18,000 TEU ship. It has an overall length of 400 m, which – when space for the accommodation, funnel casing and lashing bridges is taken into account – allows for 24 x 40 ft container bays, which are divided into eight bays forward of the bridge, 11 bays between accommodation and funnel and

MOL Triumph’s energy-saving features Samsung Heavy Industries has included some energysaving features into MOL Triumph, which MOL said is designed to achieve more efficient fuel consumption and an improved eco-environment balance. Their combined effect can reduce fuel consumption and CO2 emissions per container moved by about 25-30%, compared to 14,000 TEU class container ships.

• Optimised hull form: The design of the bow and stern has been refined to reduce water resistance.

Together with a redesigned bow shape designed for slower steaming, this is expected to reduce fuel consumption by 4.5%.

• Low-friction hull paint: This is intended to reduce drag and reduce fuel consumption by slowing fouling

Container Shipping & Trade | 3rd Quarter 2017

growth and preventing it from staying on the hull.

• High efficiency propeller: With optimised blade tips to increase efficiency by approximately 1%.

• Full spade twisted rudder and rudder bulb: The twisted leading edge and the bulb placed in front of the rudder recover vortex energy from the propeller’s slipstream.

• SAVER Stator: Specially developed by SHI, these fins located ahead of the propeller are designed to improve the flow of water coming into the propeller by generating a reverse-direction circular flow. MOL Triumph is the first vessel to have this installed and SHI is measuring its effectiveness to extend the usage of SAVER Stator.

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PRINCIPAL PARTICULARS MOL Triumph

Triumph the first ultra large container ship (ULCS) able to load 12 tiers of containers below deck.

In line with MOL’s EcoSailing Initiative MOL Triumph has been designed to be more fuel efficient and has been equipped with an array of highly advanced energysaving technology developed

by SHI (see box on page 20).

Main propulsion is provided by an electronically controlled MAN Diesel & Turbo 12-cylinder G95ME-C9.2-TII engine, which has a maximum power output of 81,310 kW. This engine is the largest and most powerful engine that MAN Diesel & Turbo has designed and built and was manufactured under licence by Doosan Engine in South Korea.

It has been specified to give MOL the option of converting the ship to LNG

fuel in the future and, ahead of its delivery in April, MOL announced that DNV GL had issued an Approval In Principle for the design of an LNG-powered 20,000 TEU container ship.

It drives a single 10 m fivebladed fixed pitch propeller giving a maximum speed of 24 kts. To assist with manoeuvring in port, two tunnel thrusters with controllable pitch propellers are installed in the bow with a maximum output of 2,500 kW each.

During construction, MOL and SHI developed a basic plan to evaluate the ship’s performance when in service and jointly carry out a hazard identification study to check its compliance with IMO’s new regulations which seek to limit SOx emission from marine fuels and which will come into effect in 2020. MOL

has carried out a feasibility study into retrofitting an SOx scrubber and its funnel has been designed to allow that to be easily done.

Fire originating from a container is a serious risk facing modern container ships – the most recent incident was in April, on board MSC Daniella, showed how quickly a fire can can get out of control – and MOL has clearly taken this risk into account.

MOL Triumph is unique in that it has two fixed water monitors supplied by Task Force Tips installed for on-deck container firefighting. One unit is fitted to a specially-built platform installed on the port side of the funnel and the second is on the top of the bridge island facing forward. The monitors each have a 360° movement with a maximum operating pressure of 28 bar. CST

MOL Triumph shares the same overall dimensions as a standard 18,000 TEU ship, despite having capacity for 20,170 TEU (Credit: Andrew McAlpine)

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Length: 399.8 m Beam: 58.8 m Draught: 16 m Gross register: 210,678 gt Main engine: MAN B&W G95ME-C9.2-TII Bow thrusters: 2 x 2,500 kW Container Capacity: 20,170 TEU Reefer Capacity: 1,500 Flag state: Marshall Islands IMO No: 9769271 Classification Society: Lloyd’s Register Builder: Samsung Heavy Industries, South Korea Hull No: 2167 Delivered: 15 March 2017

MAIN SUPPLIERS Ade Valve Boll & Kirch Filterbau Doosan Engine Furuno German Lashing Hi Air Korea Hisaka Works KTMI Kuraray LEMAG MAN B&W MAN SE Nabtesco NK Co OSRAM Stromag Survitec Task Force Tips Tokyo Keiki Towimor Ushio Reinetso Co WISKA Yone Corporation

Container Shipping & Trade | 3rd Quarter 2017

22 | CLASS SOCIETIES

CLASS SOCIETIES RAMP UP DIGITISATION The digitisation trend has strengthened with a raft of new software launched by class societies that helps box ship operators to increase operational efficiency and meet new environmental legislation

BENEFITS OF THE NEW SOFTWARE DNV GL and NYK Veracity •C hecks all sensors are working and identifies those that are not performing properly.

• Optimises fleet.

•C loses efficiency gaps. between vessels.

ClassNK: PrimeShip-Hull • Streamlines design process.

•E nsures that designs are structurally sound.

• Minimises design hours.

• Cuts human error.

ABS Nautical Systems Voyage Manager •F acilitates compliance with MRV regulation, ballast water exchange, US Vessel General Permit, ECA fuel switching, garbage and oil records.

• Visibility of data to improve fuel. efficiency and reduce costs.

•C reates benchmarks to monitor and improve performance.

C

lass societies have increasingly focused on digitisation and there is now a range of new digital solutions that will benefit container ship operators. Among the technologies they cover are the EU’s MRV regulation, streamlining hulls and monitoring vessel performance.

First up, NYK and DNV GL have unveiled the first results of an ongoing maritime data centre pilot project.

Their collaboration, which is supported by engine manufacturer MAN Diesel & Turbo, started in November 2015. Since then, four NYK container vessels have been uploading operational data to DNV GL’s Veracity platform, which was created to track vessel performance and support condition-based monitoring. An extensive amount of engine data has been collected for use in vessel performance analysis and in a condition-based maintenance and survey scheme.

This pilot project was carried out in several phases. The first phase was to build the required components, such as those needed for data collection and data management. The second phase focuses on testing data quality, security, access rights and collection of data for applications such as predictive maintenance and vessel performance. And the third phase will pilot new digital business models.

DNV GL maritime chief executive Knut Ørbeck-Nilssen said that the pilot project has also been a “valuable test bed” for data standardisation and data quality, including collection of the data for further use.”

As part of the pilot project, a hierarchical data model was developed, creating a digital twin – a cloud-based

virtual image of a physical asset – which links sensor signals from equipment on board the vessels to support both simple queries and advanced analytics.

Machine-learning algorithms evaluate the data quality in terms of its uniqueness, completeness and a variety of other parameters. By drilling down into the data, a ship manager can see if all sensors on board are working properly and easily identify non-performing sensors which may lead to low data quality or missing data during a voyage.

NYK Group technology division senior general manager Hideyuki Ando told Container Shipping & Trade “We believe that our data will drive innovative research and with DNV GL’s platform we hope to work with universities and maritime institutes [on the data].” He expects it will reveal that some ships are more efficient than others and help NYK bring them into line.

Mr Ando added: “The data will also help NYK optimise fleet operations, including looking at [fleet] scheduling and at which vessels to put in which services.”

Elsewhere, ClassNK has released a new version of PrimeShip-Hull for container carriers. As a design support tool, this greatly benefits shipyards and designers by streamlining their design process and ensuring that designs are structurally sound.

It was launched to support shipyards and designers as they are burdened with ever more complex designs and calculations due to advances in container ship structures.

PrimeShip-Hull consists of two kinds of software: prescriptive calculation software and direct strength assessment software. The former enables designers to assess structural strength requirements

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CLASS SOCIETIES | 23

such as yield and fatigue strength, along with longitudinal strength requirements.

These enable yield strength and buckling strength assessments to be made, based on a finite-element (FE) model of a hold, and for the torsional strength on an entire ship to be discovered, based on its FE model. It makes the design process more efficient, contributes to reductions in design hours and minimises human error, ClassNK believes.

As the shipping industry gears up for the start of the European Union’s MRV regulation, ABS is supporting compliance with the launch of ABS Nautical Systems Voyage Manager.

It forms part of NS Enterprise, a comprehensive fleet management solution that covers assets, compliance, performance and workforce management.

Voyage Manager is configured to suit a client’s EU MRV monitoring plan so that data can be submitted to a thirdparty verifier and automatically report verified compliance data directly to flag state and EU authorities.

This cloud-based subscription module also supports compliance with other environmental regulations, including ballast water exchange, US Vessel General Permit requirements, ECA fuel switching and garbage and oil records. It will also help owners to comply with IMO’s Data Collection Service, intended to create a global database of vessel CO2 emissions starting next year.

Chief operating officer and vice president of ABS Nautical Systems Stephen Schwarz told Container Shipping & Trade “Client feedback has consistently indicated a mismatch between the desire

to improve data quality from the ship and the availability of a single platform that can be used to analyse and deliver information for practical decision support.” He said that many owners and operators are collecting data but not all have the tools or in-house knowledge needed to analyse it or make informed decisions.

Voyage Manager includes a module called NS Vessel Performance, which Mr Schwartz said will enable owners and operators to use their compliance data to understand “critical performance areas to improve fuel efficiency and reduce costs”.

Vessel Performance produces KPIs, based on a ship-specific model for hull, propeller and main engine performance.

This data can be further analysed by ABS Vessel Performance specialists to create benchmarks that can be monitored to improve performance over time.

Information on the performance of the hull, propeller and engines is compared to sea trials data to provide a comparison with current vessel performance, which can cover such parameters as fuel consumption by main or auxiliary engines, consumption of different types of fuel and consumption of lube oil and fresh water. These can be compared between vessels across the fleet.

Mr Schwarz said that by combining dedicated service delivery with a robust software platform, the Vessel Performance service simplifies data entry, enabling the ship to report performance and environmental data only once to operations and technical management staff. Capturing data directly from sensors and ship systems can improve the accuracy of logged data and reduces the reporting burden on the crew, he suggested.

STEFAN SEMRAU (DNV GL) Stefan Semrau has been working for DNV GL maritime’s advisory section since 2000.

As a senior engineer for structures, he specialises in noise and vibration and works with customers from many different ship segments on carrying out noise prediction analysis, noise measurements and trouble shooting on board vessels.

Container newbuilds hit by crew noise directive Small box ships have been hit by mandatory requirements to reduce noise and vibration levels in crew areas.

IMO’s Resolution MSC.337(91) was adopted by the Maritime Safety Committee in 2012 and has affected every seagoing ship with a newbuilding contract from 1 July 2014. The previous directive in this area – IMO A.468(XII) – was only a recommendation.

This mandatory code dictates that noise levels in crew areas on board, including cabins, hospitals, messes, offices and recreation rooms, must be reduced by five decibels compared to the voluntary recommendation, if the vessel is above 10,000 gt, which DNV GL maritime senior engineer Stefan Semrau commented was “quite a lot” of reduction.

Mr Semrau told Container Shipping & Trade that the ships

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most affected by the requirement are smaller container ships, just over the 10,000 gt mark. These vessels have high engine power and propeller speed, he pointed out, putting them on the edge of being acceptable under the old voluntary standard. Many may not meet the new requirements, he said; “we have given lots of advice in this area.”

DNV GL offers a noise prediction analysis service to shipyards and ship operators to estimate noise levels from machinery, including the propeller and engines, as well as looking at how the crew areas are arranged and insulated. “If we find a situation where the sound requirements are not fulfilled, then we propose counter-measures such as optimising the insulation or isolating the noise sources,” commented Mr Semrau. CST

Container Shipping & Trade | 3rd Quarter 2017

24 | REEFERS

Regulation behind push for new reefer refrigerants Reefer sustainability and energy efficiency are top of the agenda for both container carriers and reefer manufacturers

T

he expectation that future regulation will demand that more environmentally friendly refrigerants be used has led to the launch of more sustainable refrigerants for marine reefers.

Thermo King has traditionally used the R-404A refrigerant in marine reefers but in September last year 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 marine, rail and air vice president and general manager Pauli

Johannesen told Container Shipping & Trade “There’s no legislation currently for marine reefers but to be prepared we have introduced R-452A. There is a lot of discussion around refrigerants and so we have to be smart and make sure that if something comes we are prepared.”

Two major container shipping lines – Thermo King was not able to release their names as this issue went to press – have signed up to the new refrigerant this year.

Mr Johannesen singled out two drivers: the strong take-up of this refrigerant by the truck and trailer market and its approval by the US Environmental Protection

Refrigerants by numbers Source: Carrier Transicold. *Global Warming Potential

Container Shipping & Trade | 3rd Quarter 2017

Agency (EPA). “Its adoption by our truck and trailer customers is close to 100% and this has had a knock-on effect on the marine reefer market,” Mr Johannesen explained.

Furthermore, he said, the EPA stamp of approval gives shipping lines reassurance that this refrigerant will be available on the market long-term.

“Changing refrigerant is an important decision for our customers but now with the high adoption by the road transport market and EPA approval, combined with relatively low switching costs, we are seeing growing demand for R-452A in our equipment,” he summed up.

Elsewhere, Maersk Line ordered the first 100 of a total of 200 refrigerated containers to be chilled by Carrier Transicold’s NaturaLINE natural-refrigerant based system in March this year.

Carrier Transicold director of marketing, global container refrigeration Willy Yeo told Container Shipping & Trade “The interest in our NaturaLINE refrigeration units is reflective of an important trend – the drive toward more environmentally sustainable shipping.”

NaturaLINE units use the natural refrigerant carbon dioxide (CO2), which the manufacturer said has an ultra-low GWP relative to synthetic hydrofluorocarbon (HFC) refrigerants that are used in conventional container refrigeration systems. “This can help fleets like Maersk Line reduce the potential environmental impact of their shipping

1

CO2 GWP*

3,922 R-404A GWP

Pauli Johannesen (Thermo King): “With the high adoption by the road transport market and EPA approval…we are seeing growing demand for R-452A in our equipment”

operations,” Mr Yeo said.

“It takes customers directly to an end state, bypassing the need for intermediate solutions with GWPs that are not close to CO2’s.” (see ‘Refrigerants by numbers’ diagram). It is widely available and relatively inexpensive.

Mr Yeo said that Maersk Line is not the only major shipping line evaluating CO2based technology as a way to keep ahead of the new EU legislation on F-gases (which is aiming to restrict the use fluorinated greenhouse gases that are used in - among other things - refrigerants), which is aiming to halve the amount of CO2 contributing to global warming by 2030.

Several other shipping companies, including HapagLloyd, are undergoing trials for NaturaLINE.

2,141 R-452A GWP

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REEFERS | 25

Indeed, he said that due to environmental considerations, many industries are being compelled to move away from high GWP refrigerants, especially in Europe because of the F-Gas Regulation.

In the US, the EPA’s Significant New Alternatives Policy has also initiated bans of HFC refrigerants in many different applications.

Other European directives are having a knock-on effect on the development of reefers.

For example, within the growing global pharmaceutical business, shippers need to adhere to guidelines known as Good Distribution Practices (GDP). European Commission GDP guidelines, which are used worldwide, call for the equipment used to control or monitor environments where medicinal products are stored and transported to be calibrated at defined intervals and for calibration records to be kept.

Therefore in Q3 this year Carrier Transicold added a new calibration capability for the temperature sensors of its PrimeLINE units and plans to add this to its NaturaLINE units

in the future.

With sensor calibration done to help assure proper maintenance of critical temperatures in accordance with GDP, PrimeLINE units’ built-in data recorder is suitable for monitoring and recording temperature performance of the refrigeration system for GDP purposes.

Mr Yeo commented: “Producers of pharmaceuticals that require temperature control are increasingly turning to container shipping as a lower-cost alternative to airfreight, so we see this as very useful in support of the changing logistics of the pharmaceutical business.”

the software settings creating a new timing system for when to stop and start the compressors and when to release the refrigerant.

The company has also added a Performance Enhancement Kit at the start of this year that focuses on the hardware of the older, Magnum containers. Mr

Johannesen said that, by using this with the software, shipping lines could make energy savings of 40%. “It has more efficient, better components, including a temperature change controller and sensors,” he said of the new hardware, adding that return on investment was expected in less than a year.

Energy efficiency boost

In other developments, Thermo King’s new software for older reefers was launched in July last year.

Mr Johannesen said that by uploading it on to Thermo King’s older Magnum model reefers – which are more than seven years old – it would create 20% energy savings. This is because it manages the refrigerant cycle more effectively, with

Maersk Line has ordered Carrier Transicold’s NaturaLINE CO2-based system

Daikin controlled atmosphere slashes cargo damage risk Daikin Reefer has developed Daikin Active Controlled Atmosphere that can control the atmospheric content inside a container by controlling the oxygen and CO2 levels to delay the ripening process of valuable perishables.

According to Daikin Reefer director Katsuhiro Tetsuya, monitoring and control technology increases the reliability of the refrigerating system on reefer containers and reduces the risk of cargo damage.

“For shippers, cargo quality and shelf life remain critical,” he explained. “The risk of damaged goods, plus the added reputational damage from a lack of reliability is high.” He said further advances in machine-to-machine (M2M) communications and data analytics are enabling real-time tracking of the position and temperature of reefer containers around the globe, increasing traceability, optimising maintenance, and preventing breakdowns.

With the right data, covering such parameters as temperature or equipment failures, analysis can be conducted to predict potential reefer breakdown, enabling pre-emptive or scheduled maintenance to be efficiently carried out, Mr Tetsuya said. “The resulting effect is a

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much more streamlined maintenance, breakdown and repairs process, which reduces equipment downtime and minimises mistakes made through human error.”

An array of conditions, including temperature, humidity, and light, can be remotely monitored with small M2M devices that provide automated location data. “Real-time visibility can be improved to achieve greater control over complex container supply chain operations,” Mr Tetsuya explained.

He continued “These new technologies have the potential to revolutionise the trouble shooting, repairs, and maintenance process by alleviating the potential for human error, thereby reducing reefer failures, cargo claims and ultimately food waste.”

The sensors can determine whether something is wrong with the cargo, locate precisely which container it is in, alert the cargo owner and identify what tools are needed to fix the problem.

“Cargo quality combined with failure data analysis enables technicians to adequately prepare for maintenance if something goes wrong with our reefers, before a container arrives in port,” said Mr Tetsuya. “This safeguards cargo and minimises claims.” CST

Container Shipping & Trade | 3rd Quarter 2017

26 | CYBER SECURITY

Maersk cyber attack –

a catalyst for the box industry Maersk’s experience of a hacking attack in June caused shockwaves through the industry, but hopefully will act as a wake-up call for shipping lines to protect themselves with new initiatives and technology against such an attack

CargoSmart’s dashboard showing Maersk vessels and APM terminals’ ports

T

he container industry has been left reeling after a cyber attack crippled Maersk Group’s logistics IT systems – but a positive response to come out of it is that it has raised awareness of the problem among ship operators and terminals, meaning they will do more to protect themselves against this threat.

Cyber security shipping consultancy CyberKeel chief executive Lars Jensen called it a “wake-up call for the industry”.

When CyberKeel launched in 2013, this was not seen as a significant threat but he noted in June that over the past 12-18 months, there had been a gradual change and that there is now a recognition that cyber security may be a genuine threat.

“However we also find that this recognition in many cases still does not translate into the allocation of appropriate resources to properly investigate the company’s current level of cyber security,” he warned.

Meanwhile, blockchain technology could have saved Maersk Group from the attack – the irony of this is Maersk Line began working this year with IBM to implement that technology.

Blockchain expert Antony Abell, managing director of blockchain solutions company TrustMe commented “If Maersk had completed their shift from their existing electronic data interchange to a blockchain-enabled platform, then the

Container Shipping & Trade | 3rd Quarter 2017

ransomware attack on them would not have taken place.”

Supply chain weak link Freight forwarder Marine Transport International chief exective Jody Cleworth explained that a problem for the supply chain is the large number of stakeholders involved – just “one weak link” can open them up to attack, she said.

But they can protect themselves with blockchain, she said. This is because the “only way to get data in is through the chain – an attack cannot work and if it did, it would leave clues for forensic scientists to trace back to the perpetrator”.

While blockchain technology prevents cyber attacks from happening, there is other technology that helps to mop up the damage. CargoSmart played a critical role in helping smooth the supply chain after the Maersk incident. Immediately following the cyber attack, shippers were not able to track their cargo or know which terminals were impacted.

CargoSmart used its Global Vessel Voyage Monitoring Center which is based in Hong Kong and monitors live vessel movements using data from multiple sources and tools. While Maersk’s own tracking system was offline, CargoSmart updated its free pop-up tool, the Live Incident Monitoring Dashboard.

“We were able to quickly provide visibility to the location and speed of all of Maersk’s container vessels based on live vessel updates from the Automatic Identification System,” CargoSmart chief commercial officer Lionel Louie told Container Shipping & Trade.

Its dashboard also provided a projected ship estimated time of arrival, which was calculated by an algorithm that analyses vessels’ historical routes and speed patterns, along with current speeds and locations.

Mr Louie summed up the benefits: shippers and logistics service providers who used the tool had fast visibility to their vessels’ location and ETAs without having to call repeatedly for updates.

Class societies have also launched initiatives to boost cyber-defence. DNV GL has produced a three-pronged approach that enables maritime organisations to take on the challenge of controlling cyber security risks adapted to an industry with limited budgets. The recommended practice for cyber security resilience management for ships and mobile offshore units in operation (DNV GL-RP-0496) was designed to simplify the task of controlling cyber security risks, not only for IT-skilled personnel but also for a wider audience with minimal cyber security expertise.

DNV GL senior cyber security service manager Patrick Rossi pointed out that although a lot is known about cyber security risks relating to IT, less is known about operational technology (OT), which is just as critical, if not more so, when it comes to cyber threats. By looking at these aspects in relation to cyber security at the design and build phases, risks in both areas can be managed and “a competency bridge can be built between the two worlds”, he said, making it possible to use the more readily available cyber security know-how from IT within the OT domain.

Mr Jensen said that the incident “will hopefully act as a catalyst for the maritime industry to further enhance their cyber security posture.” CST

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APM 2016 KEY STATISTICS since 1990

MARKET UPDATE | 29

COSCO and OOCL: a new super-power The acquisition of OOCL by COSCO Shipping Holdings has catapulted the company to the top of its alliance in terms of number of vessels, size in TEU and value. COSCO and OOCL have overtaken alliance partner CMA CGM/APL and are by far the largest in the Ocean Alliance. Its combined fleet is double the size of CMA CGM/APL in terms of capacity. Indeed, based on existing fleet and orderbooks, the combined COSCO-OOCL entity is the world’s third largest container carrier.

COSCO Shipping Lines Co

153

Vessels

1,040,737 Total size (TEU)

OOCL

56

$4,236 Total value (US$M)

Vessels

436,754 Total size (TEU)

$1,996 Total value (USDM)

LIVE

LIVE

209 vessels • 1,477,491 TEU • US$6,232M

25

Vessels

408,403 Total size (TEU)

5

$2,907 Total value (USDM)

Vessels

105,000 Total size (TEU)

$786

Total value (USDM )

ON ORDER

ON ORDER

30 vessels • 513,903 TEU • US$3,693M

Ocean Alliance China COSCO Shipping Corp/OOCL

CMA CGM and APL

Evergreen Group

Vessels

Vessels

Vessels

245

135

130

Size (TEU)

Size (TEU)

Size (TEU)

2,117,394

1,097,568

704,949

Value (US$M)

$10,837

Value (US$M)

$5,523

Value (US$M)

$3,588

Source: Vesselvalue.com

30 | FLEET STATS AND ANALYSIS

BUOYANT FEEDER ORDERBOOK – BUT ARE MORE MERGERS ON THE CARDS? The feeder market is bullish with a strong orderbook and good opportunities created by the deep-sea liners; but the time could be ripe for consolidation

by Barry Luthwaite

F

eeder ships continue to enjoy good rates as they continue to mop up more business, in contrast to the difficulties that have faced the deepsea liner business.

There is a feeling of saturation around the 4,500-5,000 TEU capacity range – some owners are considering giving up and selling for recycling as rapidly advancing technology dictates competitiveness.

Mid-size 2,000-3,999 TEU range feeder vessels also struggle, due to banks seizing a number of vessels when loan covenants could not be met or such vessels, dominated by German managed and owned tonnage, were KG-owned. An owner can find such vessels impounded overnight with little or no warning leading to a nightmare scenario: an unwelcome situation that is far from over.

However, coming into the spotlight this year are the smaller sizes from 7501,250 TEU. Those owners who trade in the lowest size are being paid for their patience by gaining good rewards for an almost niche market now that previously dominant German multipurpose tonnage his disappeared from the scene.

Although patchy, there have been some signs of better times with deepsea ships but this could be disturbed as commissioning of a further 14 18,000-plus

Container Shipping & Trade | 3rd Quarter 2017

TEU units occurs this year. In all, 62 ultra large container carriers (ULCCs) are on order. With trading still fragile, especially on the lucrative Asia-Europe route, feeders have been in demand as the bigger ships rotate port callings on a demand business.

Below a certain capacity, boxes will be dropped at a nearby destination and feedered to the next liner service port.

Predictions of the demise of Panamaxbeam vessels have proved to be false.

After a burst of activity earlier in the year, scrapping slumped to a new level in June when only two container ships were sold for demolition. This is partly due to the welcome news for shipowners of the postponement of compliance date for the Ballast Water Management Convention to September 2019.

The collapse of Rickmers sent shock waves through the industry but trading continues for some vessels in the fleet, although the Rickmers empire is no more.

All nine vessels from its Singapore trust Rickmers Maritime were earlier committed in a separate en bloc deal to the Navios group, underlining Greek ambitions of late to break into the feeder business and capitalise on COSCO’s takeover of Piraeus port and hinterland. Creditor banks, however, have ruled out a whole-fleet sale for the balance of the Rickmers deep-sea fleet.

Asset play is very much in evidence with distress sale acquisitions still very much the order of the day. One newcomer is Norway’s Arne Blystad, who struck deals at previously low levels but has since seen their values rise considerably.

Songa Container has been newly established to pursue this project and four vessels have so far been bought, the first of which at 3,421 TEU has appreciated in value from US$7.9M to an estimated US$11.8M today. Rising second-hand values are due to a bullish feeder business and higher spot and time charter rates.

But charterers are shrewd, offering lower period rates to begin with but with options attached for extensions at higher levels.

It is noticeable how period fixtures are lengthening among owners. Some business is being fixed at two years firm trading. All this augers well but a careful eye has to be kept on newbuildings.

With a major shakeup of the deep-sea service alliances, there are danger signs for feeders but events produce a double edged sword. Owners with the smallest feeder tonnage are reaping benefits with most operating door-to-door services between two ports. Mid-size and higher still face problems from saturated tonnage looking for work which drives down rates.

In deep-sea trades, mergers are on everyone’s lips and such moves towards consolidation and power have not ceased yet. The latest has seen COSCO merge with OOCL and the big three Japanese box ship operators NYK, K Line and MOL coming together to form a joint company.

Curiously, that merger will not affect Japanese ports and infrastructure, only overseas operations. This could pave the way for more feeder operations within Japan. The three Japanese majors are

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FLEET STATS AND ANALYSIS | 31

suffering big losses and something had to be done: these accelerated losses by the major operators are forcing employment of more feeder ships.

South Korea is another country badly hit by financial problems after the collapse of Hanjin Shipping and troubles of Hyundai’s box division. Smaller domestic yards have profited from orders for feeder ships for the domestic mercantile marine or foreign owners against South Korean charters. Korea Marine Transport Co (KMTC) is one company benefiting from a mix of newbuilding and newbuilding charter tonnage.

There was scepticism when smaller builders, such as Daesun, started offering 1,000 TEU feeder designs, but such vessels are now earning good money for European and Asian owners. The general consensus is that feedering will continue to grow in the next two years and attract excellent rates from US$6,000-10,000 a day, especially for period business. There is still a lack of availability of the smallest sizes, boosting rates and vessel values in the 1,000 TEU range while mid sizes suffer.

In a stroke of irony, there is further

encouragement from the plethora of ULCCs due to commission in the next three years. They will demand more feeders as they seek to cut losses and achieve economy of scale. One cloud on the horizon is that the majors have seen the advantage in owning their own feeders, with the likes of Maersk, Evergreen and CMA CGM all due to take delivery of their own newbuildings, but in a niche size of around 3,700 TEU. Deliveries have only just started so it will be interesting to judge how successful or detrimental this move will prove in feeder trades.

The balance between supply and demand has narrowed considerably and is likely to hit a surplus for feeders soon on many routes and continue throughout 2017-2019. This bullish consensus is reached by major feeder operators as they build up bigger fleets to cement their strengthening positions.

A buoyant orderbook reveals 243 feeders on order aggregating 517,352 TEU (see map below), of which only 16 are under 1,000 TEU but 102 fall in the 1,000-1,999 TEU capacity range, underlining optimism and future vision

from owners. The totals of feeders are driven by Europe, Asia, Middle East and Mediterranean growth. The announcement of plans for more selfsufficiency in cabotage by Indonesia and Malaysia will further boost the market.

Over six months, the feeder order backlog has reduced from 271 vessels aggregating 554,192 TEU in February to a cellular figure of 243 units totalling 517,352 TEU. With the current controlled orderbook, this partly explains the optimism for a balanced trading pattern in the future.

There will be more consolidation on a smaller scale as strong feeder owners and operators flex their muscles to acquire ex-KG tonnage and smaller companies find the going tough. The latest takeover involved the acquisition of Nor Lines from Norway’s DSD group by Samskip, increasing the latter’s fleet disposition and logistics chain. A bid by Eimskip failed. The Nor Lines brand will continue however. This could herald the start of a series of mergers especially for companies operating mixed fleets where cash flow is tight. CST

Container ships of up to 5,000 TEU on order

4 ships South Korea 5,206 TEU

25 ships 4 ships 12 ships

Croatia

USA

8,000 TEU

3 ships

Japan

Vietnam

50,440 TEU

2,107 TEU

40,200 TEU

173 ships China 365,759 TEU

15 ships Taiwan 37,000 TEU

2 ships Bangladesh 3 ships Brazil 8,100 TEU

340 TEU

Total

243 ships 517,352 TEU

2 ships Indonesia 200 TEU

Data: BRL Consultants

32 | LAST WORD

EDUCATION IS CRUCIAL IN BOX SHIP BATTLE FOR SURVIVAL

Irene Rosberg (Copenhagen Business School): “Industry experience is fine, but it must be enriched by a grasp of fundamentals, technical knowledge and strategic judgment”

The container ship industry is facing some of its hardest challenges ever – but insight and foresight are just as necessary as industry experience to tackle these problems successfully

W

hat a year it has been. It is 12 months since the Hanjin Shipping filed for bankruptcy at the end of August 2016, plunging the sector into turmoil and self-doubt. It was one of the grimmest events in the half century of the battle for survival in the box ship sector.

Seemingly at the mercy of brutal market forces that generate mega-mergers (Hapag-Lloyd and United Arab Shipping Company, COSCO’s US$6.3Bn bid for Orient Overseas Container Line, CMA CGM taking NOL under its wing) and megainsolvencies, it is tempting to ask whether we are helpless swimmers in the tide.

The challenges posed by the new order have inevitably been a main topic of discussion formally and informally among the 48 students enrolled in the 2015-17 class of the Executive MBA in Shipping and Logistics at Copenhagen Business School. This will continue as members of the 2017-19 intake assemble in September.

Our participants are far from being novices at their trade. They are men and women who occupy senior positions in their businesses and we are striving to help them to still-higher levels of achievement. Our programme is known throughout the industry as the ‘Blue MBA’.

The extraordinary complexity of container shipping – which looks on paper to be the simplest of operations – calls

Container Shipping & Trade | 3rd Quarter 2017

for make-or-break decisions on a host of matters: financing, allocating returns to shareholders, a company’s place within a wider group portfolio, restructuring, industry relationships, fleet deployment by capacity and by geography, trade alliances, periods of charter, when to scrap and when to order. We are all sadly aware of disastrous failures to read market cycles and of how little it takes to knock a market or company recovery off-balance.

Can the winning formulae be taught and learned in the classroom? Absolutely not, but one can equip oneself with the tools to tackle the problems successfully. Industry experience is fine, but it must be enriched by a grasp of fundamentals, technical knowledge and strategic judgment – insight and foresight, in other words.

In fact, ‘classroom’ is hardly the right word for the environment fostered by the Blue MBA, a vehicle supporting what many admit remains a rather conservative industry. I have been involved in the development and co-ordination of the MBA since its initiation in 2001 and I believe we have made a difference with our total of 200 graduates from over 40 countries. Our latest cohort comprised 48 participants from 20 nations, which is the maximum capacity for an MBA class at Copenhagen Business School.

The slide in the global container market and attendant uncertainties demand that

we face up squarely to both the boomand-bust nature of shipping and the quality of its leadership and management. The Blue MBA is predicated on the insistence that the educational model must be fully relevant to this ever-changing industry.

Study and lectures are integrated with each person’s day job in their individual enterprise. That is why we appoint some of the top industry figures and academicians as tutors and why each degree thesis – what we call the ‘integrated strategy project’ – takes the form of a detailed study of an issue critical to the student’s organisation.

We benefit from the huge role of the Danish capital in the industry. In addition, one of our one-week modules is delivered in Hamburg – a hub for the container sector and much else besides – and another in London which abounds in ship finance, management, legal and insurance know-how.

We place great emphasis on the diversity of the student body. Besides nationality and gender, this means encouraging representation from the different segments of shipping and shipping-related industry. This makes for a second-to-none dynamic. CST Irene Rosberg is programme director for the Executive MBA in Shipping and Logistics at Copenhagen Business School

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