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2nd Quarter 2019
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Panama Canal: how it is winning container trade PROPULSION The technology for worldfirst all-electric box feeder
OPERATOR PROFILE Maersk: in collaboration to raise industry safety standards
LAST WORD Smart boxes: revolutionising the supply chain
SHIP DESCRIPTION The energy-saving programmes behind Taiwan newbuilds
Valenciaport
where everything is connected
Valenciaport has an unrivalled strategic location and is well equipped to handle the latest generation of containerships. It is the Mediterranean’s leading port for a variety of reasons. It is connected to over 1,000 ports, has a competitive and efficient workforce, promotes innovative management, provides excellent service quality and prides it self on its environmental commitment.
Contents 2nd Quarter 2019 volume 7 issue 2
Regulars
3 COMMENT 34 FLEET STATS & ANALYSIS 42 MARKET UPDATES 44 LAST WORD
Operator profile
4 Container Ship Safety Forum chairman and Maersk head of marine standards Aslak Ross explains how the carrier is benefitting from the association
Regional analysis
6 Key European ports are expanding capacity and operational efficiency in order to handle ultra large container ships more effectively
Ship description
11 CSBC reveals how building feeder ships for Taiwanese lines under its Seaway Optimum Design and Operation philosophy leads to energy savings
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Editor: Rebecca Moore t: +44 20 8370 7797 e: rebecca.moore@rivieramm.com Contributor: Gavin van Marle t: +44 20 7394 7209 e: gavin.vanmarle@rivieramm.com Commercial Portfolio Manager: Bill Cochrane t: +44 20 8370 1719 e: bill.cochrane@rivieramm.com Head of Sales – Asia: Kym Tan t: +65 6809 1278 e: kym.tan@rivieramm.com Senior Sales Consultant: Ed Andrews t: +44 20 8530 8322 e: ed.andrews@rivieramm.com Creative Manager: Richard Neighbour t: +44 20 8370 7013 e: richard.neighbour@rivieramm.com
Trade lane
Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com
Panama Canal
Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Head of Content: Edwin Lampert
14 Dominant themes on the transpacific are larger vessels cascading into the trade, the impact of the US-China trade war and growth of southeast Asia
18 The Panama Canal has won trade on the Asia-US route since its expansion. The Panama Canal Authority explains how it intends to grow this further
Environment and regulation
22 Biofuel, LNG retrofits and scrubbers feature in some of the latest projects
Propulsion
Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK
26 Battery charging arrangements for the world’s first all-electric container feeder are as challenging as the plans to prepare for autonomous operations
Coatings
28 Coatings are evolving under new standards and expectations
Communications
32 Container ship managers and owners are investing in faster broadband communications to support critical operations and digitalisation
Top 20 carriers
www.rivieramm.com ISSN 2050-7011 (Print) ISSN 2050-7178 (Online) ©2019 Riviera Maritime Media Ltd
Front cover image: Credit: Panama Canal Authority
37 Many carriers are focused on boosting their positions through supply chain efficiency, digitalisation and a focus on customer service
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Main features include: European short sea shipping; port regional analysis: North America; top 20 container ports; ship to shore processes; reefers; shipmanagement; green technology; class societies; cyber security
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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 | 2nd Quarter 2019
COMMENT | 3
Box ship biofuel: why the time is ripe
S Editor: Rebecca Moore
With an increased appetite on the part of beneficiary cargo owners to cut their carbon footprint, container ship operators will gain a competitive advantage by using sustainable fuels”
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ustainable biofuel has entered the box ship sector and is set to quickly gain momentum. Two of the largest ocean carriers have announced trials of biofuel within weeks of each other (see page 22). CMA CGM, IKEA Transport & Logistics Services, The GoodShipping Program and Port of Rotterdam refuelled CMA CGM White Shark with sustainable marine biofuel oil on 23 March. The test saw the companies work together in a first-of-its-kind partnership. Elsewhere, Maersk has joined forces with the Dutch Sustainable Growth Coalition (DSGC) to carry out a pilot test using second-generation biofuel on one of its Triple-E box ships. DSGC members FrieslandCampina, Heineken, Philips, DSM, Shell and Unilever are collaborating with Maersk to carry out a pilot using up to 20% sustainable second-generation biofuels on a large Triple-E ocean vessel. That CMA CGM has carried out the refuelling successfully is an important demonstration to the container ship sector that bunkering box ships with sustainable biofuel works. Maersk’s planned voyage is extremely ambitious – its ship will sail from Rotterdam to Shanghai and back on biofuel blends alone. Achieving such a huge distance, a world-first, is likely to steer the box industry to consider using biofuel. There are other reasons why these two pilots could lead to a take-up of this fuel. The sustainable biofuel used by CMA CGM is HFO-equivalent. This means there are no engineering or operational changes required if a vessel is retrofitted with biofuel, making this an attractive solution as it can be easily used with no capex costs. One of the biggest challenges to using alternative marine fuels is a lack of bunkering infrastructure. Of course, there
is a way to go, but the fact that the Port of Rotterdam, the biggest container port in Europe and a key hub for most box ship operators, has the bunkering infrastructure available is a strong start. Furthermore, container ship operators need to be aware of their customers’ demands, and both pilots show a strong appetite to use sustainable fuels, with both including shippers in the project. Indeed, IKEA Transport & Logistics Services said its intention after the pilot was to put its containers out of Rotterdam on biofuel. With an increased appetite by beneficiary cargo owners to cut their carbon footprint, container ship operators will gain a competitive advantage by using sustainable fuels. Most importantly, operators need to find a way to meet the stringent 2050 stipulation that a 50% reduction in CO2 must be achieved. Using sustainable biofuel – derived from forest residue and waste oil products – will allow this goal to be met. Indeed, the biofuel used by CMA CGM’s vessel, developed by GoodFuels, is expected to deliver an 80-90% well-to-propeller CO2 reduction versus fossil equivalents, and virtually eliminate sulphur oxide emissions. It takes the industry far beyond what is needed for 2020 and is an important step for Maersk to reach its net zero CO2 target by 2050. Maersk has emphasised the importance of collaboration in bringing low carbon solutions to the marine industry. Both biofuel pilots show strong cross-industry partnership, bringing together shipping lines, fuel providers, ports and shippers. They will serve as a platform for more partnerships that will develop and make sustainable biofuel a viable option for the container ship industry. CST
Container Shipping & Trade | 2nd Quarter 2019
4 | CONTAINER OPERATOR PROFILE
How Maersk is collaborating with other operators to improve safety The Container Ship Safety Forum is helping to raise operational standards across the box ship sector. Its chairman and Maersk head of marine standards Aslak Ross explains how the carrier and other members are benefitting
M
aersk Line head of Marine Standards Aslak Ross has emphasised the importance of the Container Ship Safety Forum (CSSF) to the container ship sector, from benchmarking to encouraging the take up of new methods to deal with challenges. And he singled out how Maersk itself has benefitted from the forum. The CSSF launched in 2014 with seven members and has now grown to 23 members – a figure Mr Ross is eager to grow. He is a founding member and chairman of the forum, where for the first time, leading container ship operators have come together to improve safety standards in the industry. The forum is focused on improving container ship operations and crew safety. Mr Ross emphasises the focus on areas unique to container ships. “We focus on what is unique for this industry, so that includes deck and cargo operations, and what is involved with carrying a container. Firefighting is relevant to this, as is lashing.” This involves CSSF looking at areas including access to the lashing bridge, officers moving around on deck and preventing crew from falling from lashing bridges etc. Explaining why the forum was established, Mr Ross says “We are a number of owners that have a focus on safety and thought we could do more in this space. Other industries have
Benchmarking
Deeper insight into risks and pain points
CSSF strategy
Exchange best practice ideas
Container Shipping & Trade | 2nd Quarter 2019
Develop common safety standards
Develop key performance indicators
had forums for a number of years, but there has been nothing in this sector. This means there has been no benchmarking, so we are not able to gauge what problems we are facing as an industry. We have a desire to take care of our people and make sure ships are safe places to work.” All the container ship operators in the forum are like-minded, he said, and agreed at the start that more needed to be done in this space. A major initiative of the CSSF is benchmarking data. Mr Ross expands “We all thought it would be good to start pooling our data to get a better insight into what the issues are and create a network of people with the same problems. More or less every company has accidents from time to time and there is not a large data set on this. By pooling the data, we have so much more information to work from. It allows us better insight into the pain points.” This creates a foundation for developing common safety standards and using key performance indicators. Mr Ross emphasises “The starting point of this initiative was very much about people safety, how do we take care of people’s safety? How can we avoid severe accidents and fatalities?” He explains that the basis of the benchmarking has been developed from ISM Code compliance, looking at all operational areas the code covers. The forum also looks at asset safety, such as how to reduce groundings, fires on board and cargo issues. Mr Ross says that all metrics in these areas have been developed to enable benchmarking. Mr Ross says “And even more important than benchmarks, which tell you how you are doing compared to the industry, is to get deeper insight into the pain points and see what the risks are.” He explains how Maersk uses the data: the shipping line looks at its own data, then at the CSSF data to verify its own observations and give the company direction as to where it needs to look to see where the problems lie and the
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CONTAINER OPERATOR PROFILE | 5
Snapshot CV
Aslak Ross (Maersk)
Aslak Ross started his career with Maersk 25 years ago as a marine engineer apprentice. He subsequently studied for navigator and master mariner qualifications and sailed as both deck and engine officer on board Maersk vessels. He worked as a teacher at Maersk’s maritime training academy and was responsible for quality management of the educational programmes. He worked as an auditor in Maersk’s internal audit function before he became head of marine standards seven years ago. Responsibilities include all HSSEQ matters for vessel operation, danger cargo, end-to-end processes and HSE management for logistic operations. Mr Ross is the first chairman of CSSF.
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right solutions to use. CSSF holds two meetings a year where all members come together to meet and discuss the latest topics and issues. The most recent meeting was a seminar in May in Singapore. Mr Ross explains “At these meetings our data report is presented and then we steer our discussions about ‘how can I deal with this?’ and ‘what have you done successfully?’ and so forth.” In between meetings, members meet in working groups to target certain issues as well as emailing to discuss issues. A major benefit of the forum is that members can exchange best practice ideas. Mr Ross says “We email each other about ‘how are you dealing with this?’ ‘I am seeing this in our fleet, are you?’ ‘Do you use helmets when your crew do a specific operation?’” The discussions come down to very detailed areas, such as what kind of gloves are used for specific tasks. “We also ask each other about more structural areas, such as ‘what should the fire response team be on a ship?’ or ‘what kind of equipment should you have?’ or about the capabilities of firefighting equipment.” He points out that Maersk had benefited from this and introduced new initiatives on the back of discussions with the CSSF and learning from the other member carriers. An example is that Maersk has introduced a thermal camera on board every ship in the fleet. This is used for screening hot and cold radiation for energy leaks, and can spot hotspots, such as on the auxiliary engines around the exhaust system, which could suggest a problem with the insulation or lagging around hot surfaces. By spotting this with the camera, the issue can be dealt with so that if the oil leaks, it does not spray on a hot surface or ignite. It can also be used to help with firefighting. “We can go to a cargo hold and if there is smoke, scan the containers. The camera will pinpoint which one is too hot, through giving us a red image, and so lead us to the fire.” This piece of equipment has been well received by Maersk’s officers. Mr Ross says “This has had positive feedback. We discussed it with officers they said it was great, that they used it so much for preventative maintenance and said they really appreciated it. It is just a detail but shows that we have learned something from the forum. “It is a concrete example about how we have learnt from the experience of another company,
CSSF MEMBERS Ahrenkiel Steamship Anglo-Eastern Ship Management Arkas Shipping & Transport Bernhard Schulte Shipmanagement CMA CGM Group Columbia Shipmanagement Costamare Shipping Company Danaos Shipping Co Eastern Pacific Shipmanagement Hammonia Reederei Lomar Shipping Maersk Line Nav-Tech Navios Containers Management NSB Niederelbe Schiffahrtsgesellschaft Oceanbulk Container Management Peter Döhle Schiffahrts-KG Reederei Nord GmbH Seaspan Ship Management V-Ships (Germany) Wan Hai Lines Zeaborn Ship Management Zodiac Maritime
where we have found we were facing the same problem and adopted their solution.” Another direct impact of Maersk’s work with CSSF is that the company has rolled out a fast response kit to extinguish a fire on deck. Mr Ross says “This is a light piece of equipment which means that officers can easily run out and extinguish a container fire on deck. The thermal camera is part of that package, as is a drilling machine which means that crew can penetrate the container, and it also includes a lighter hose than the standard ones usually used. It is all in a rucksack that someone can quickly put on their back and start firefighting much sooner, so it allows a faster response.” Mr Ross is keen to grow the CSSF and have as many container operator members as possible. He sums up “We hope to create awareness in the industry that safety is important and driven by the values of companies that believe that taking care of their people is important. That is the driver – we can move forward together and become even safer.” CST
Container Shipping & Trade | 2nd Quarter 2019
6 | REGIONAL ANALYSIS
Antwerp Port Authority might have to think about dedicated barge quays and further increase volumes for consolidation to solve inland barge congestion
European ports boost efficiencies for mega ships
P
ort of Hamburg passed a milestone last year after it was given the green light to dredge the River Elbe. This has been an ongoing issue for many years. The River Elbe needs dredging to boost the movement of ultra large container ships (ULCS) through the port. Dredging the River Elbe by 1 m will allow more ships to enter and exit the port at the same time. Port of Hamburg Marketing chief executive Axel Mattern told Container Shipping & Trade “It is quite a process, to prepare for the river and dredging activities. The processes are divided into dredging and building the box where the larger vessels, up to 22,000 TEU, can pass each other.”
Container Shipping & Trade | 2nd Quarter 2019
Key European ports are expanding capacity and operational efficiency in order to handle ultra large container ships more effectively
The benefits of this work are clear: it will double the number of big ships that can enter the port. The work will be finished in 2021. Speaking about the need for this, Mr Mattern explains “It is urgent, but we are quite happy as the decision has been made and it is quite an emotional thing – you can feel it – the logistics industry and shipowners are much more positive about the future and are planning their liner activities differently.” The port will reap further benefits in the future. Mr Mattern explains. “2019 looks like it will be similar to 2018, which was a very hot and dry year so there is not a lot of water in the river system, which is very difficult
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REGIONAL ANALYSIS | 7
for producers and manufacturers relying on river barges to Rotterdam and Antwerp.” He says there is a large chemical shipper that would love the opportunity to switch more volumes to Hamburg to combat this situation. Mr Mattern says “This will be much easier when we have finished with the dredging as to export heavy chemical cargo, you need the draught.”
Hamburg wins services
The port has already had some very positive news this year: Hapag-Lloyd and ONE moved four transatlantic liner services from Bremerhaven to Hamburg in January. Mr Mattern comments “This was a nice decision for Hamburg and does not interfere with the dredging, as US liner ships are much smaller.” This will increase volumes at the port by 55,000 TEU in 2019 compared to 2018. Mr Mattern says “For the first three months there has been a significant growth in total volumes with more than 5% already seen. We are especially happy the US traffic is linked to hinterland traffic as they are mainly containers transported to Hamburg or its hinterland.” He singled out Austria as having an “intense” trade with the US. “Austria is very well connected by rail to Hamburg and we see growth in the rail figures in 2019 as well as in total handling.” The Port of Valencia is also focusing on catering to larger vessels. It is building a new part-automated north container terminal that will have capacity for 5M TEU. It is expected the project will take around six years to build. The port authority says the new terminal’s aim will be to “exploit the
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The minimum call size on its own is not solving problems of congestion. We need to evaluate this” Luc Arnouts (Antwerp Port Authority)
BELOW: Hamburg Port has been given the green light to dredge the River Elbe, which will allow more ships to enter and exit the port at the same time
strengths of Valencia as an import/export and transit port with a capacity of around 5M TEU, complementing the existing terminals’ capacity to accommodate the expected container traffic at the port of Valencia by 2050.” And the new project will allow it to receive ultra large container ships of up to 24,000 TEU. Elsewhere, Port of Antwerp had a strong year in 2018 – it saw a year-on-year 6.2% increase in its deepsea box volumes, hitting 11.1M TEU. Antwerp Port Authority director of international relations Luc Arnouts puts it down to the growth in ship size and the subsequent increase in demand for a “cargogenerating” port. He says “The scale and size of ships are increasing. These big ships need cargo volumes and cargo-generating ports are outperforming ports that have less cargo generation. We have a very large integrated chemical cluster, ships are coming to the port where there is a huge industry, which gives us cargo-generating power.” Furthermore, he points out Antwerp’s captive area is “much bigger” than the port itself due to its links to the hinterland. “Bigger ships prefer big hubs that can guarantee cargo flow. That is why the biggest ports outperform mid-sized ports,” he sums up. Another factor behind the boost in its volumes last year is that on the east-west tradelane, Antwerp Port won two new services where it is the first port of call. Mr Arnouts explains “The greatest flow of volumes from the Far East to north Europe will come to the first port as most of the goods' transit is time sensitive so we have a nice balance between export and import cargo.” The port saw a slight growth in its Asia volumes in 2018 but the Chinese restrictions on exporting plastic waste had “quite an impact for all the ports”, Mr Arnouts said, explaining that exported plastic waste used to be a considerable volume. Nevertheless, a growth opportunity for the port is China’s Belt and Road initiative. Mr Arnouts says “This is enriching the choice for supply chain management with maritime, rail or air, as at the Port of Antwerp we can offer all possibilities.” Another priority for the port is to solve the problem of inland barge congestion. In
Container Shipping & Trade | 2nd Quarter 2019
8 | REGIONAL ANALYSIS
Q2 2017 all port stakeholders joined forces to try and solve this issue. There have been regular workshops and a focus on better planning, such as ensuring information arrives earlier for barge and terminal operators. One major initiative is to ensure that a minimum of 30 containers are on a barge heading for one of Antwerp’s deepsea terminals, to allow the barge to better organise unloading and loading. As part of this, consolidation hubs have been installed outside and inside the terminals. But Mr Arnouts says “It is a nice concept of consolidation to increase efficiency, but it remains a difficult one [inland barge congestion]. The minimum call size on its own is not solving problems of congestion, we need to evaluate this and in practice sit round the table again.” He explains “At the container terminals deepsea container ships get priority as they need to be handled in their windows of time, and barges are often the victim of that.” To solve this, he says that the port authority might have to think about dedicated barge quays and berths and further increase volumes for consolidation.
Ireland feeder boost
Port of Cork has container growth plans firmly in place: it is building a new container terminal that should open in Q1 2020. Port of Cork harbour master and chief operations officer Paul O’Regan says “Our main objective is to move the terminal from an upriver position where it is restricted by the size of vessel that can be taken at the terminal, to a facility near the mouth of the harbour which gives much greater scope to take larger vessels and also provides a much larger footprint for the new terminal.” He sums up “The primary objective is to grow the container trade in the Cork region and handle larger vessels as feeder vessels are getting larger. It really is two-fold, the business needs to grow and there is a physical need as the current terminal is too small.” He explains that at the current terminal, vessels are restricted to 160 m in length and to capacity of 1,200 to 1,300 TEU. By contrast the new terminal will be able to take a leap forward with vessels up to 230 m long with a capacity of 3,500 TEU. The new terminal will have capacity for 330,000 TEU. The old terminal will be used for other types of cargo
Container Shipping & Trade | 2nd Quarter 2019
Snapshot CV
Luc Arnouts
Antwerp Port Authority Luc Arnouts obtained a master's degree in law at the University of Antwerp and a master's degree in general management at the University of Ghent. He has been active in the port and logistics sector ever since. He started his career and gained operational experience in stevedoring, warehousing and ocean freight forwarding at the logistics company Group Katoen Natie from 1986 until 1992. In 1992, he moved to SGSGroup Belgium as general manager of SGS-Van Bree. Aviapartner became his new employer in 2000, where he held the position of vice president cargo handling Europe. In 2007, he took up a new challenge as chief commercial officer at the Antwerp Port Authority.
once the new container terminal opens. The new terminal is needed as there has been a growth in Port of Cork’s container volumes. Mr O’Regan explains that Ireland is traditionally fed by feeder services to Belfast, Dublin and Cork with connections to hub ports including Antwerp, Liverpool, Southampton and Rotterdam. He comments “We see these connections continuing and I imagine we will see a growth in the number of services we are getting and probably on scale too.” The port’s container volumes are growing at about five to six % a year. Mr O’Regan says “We are experiencing a growth spurt.” The port last year achieved 230,000 TEU versus 175,000 TEU in 2012, so “we have really good growth levels, primarily driven by agriculture and pharmacy.” The main pharmacy area is only around five miles from the port. Mr O’Regan says “The challenge is to balance imports and exports. Ireland is predominantly an import market and that creates an imbalance in equipment. But since 2015 our agricultural sector is much stronger and there is a 50/50 split, so it is very good for operators. The biggest challenge in Ireland is the very strong growth in the container market with no new facilities coming on line. Current facilities are in areas where there is no capacity to grow, so that is what we are bringing to the current market. Our new terminal is built on a greenfield site and will introduce capacity not available in other ports.” Main markets for Cork include the US, China and the UK. Mr O’Regan comments “Brexit creates some unknowns. We have built in a lot of contingency planning from the point of view of capacity, with overflow areas, where trucks can park longer.” One particular growth area is the reefer market. Mr O’Regan says “The reefer market growth is huge`, and we cannot keep up with the pace reefer goods are being transferred to reefer containers.” The current terminal has 350 reefer plugs, which will go up to 500 plugs in the new terminal with 120 extra for spare capacity. The port is also focused on being more efficient and is the first container terminal in Ireland to launch a vehicle booking system. The system is being trialled and has already speeded up gate times for hauliers using it. CST
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10 | SHIP DESCRIPTION
How Yang Ming and TS Lines newbuilds benefit from an energy-saving programme
TS Lines says that the fuel savings of its 1,800 TEU feeders built by CSBC could be up to 15% compared with similar-sized vessels in its existing fleet
CSBC explains how building feeder ships for Taiwanese lines under its Seaway Optimum Design and Operation approach leads to energy savings
E
nergy efficiency, the 2020 sulphur cap and big data are all major factors for Taiwan’s biggest shipbuilder CSBC when it comes to container ship construction and design. The company is currently building a 2,800-TEU container vessel for Yang Ming and an 1,800-TEU ship for TS Lines. Container ships are an important focus for the shipyard. Since it was founded in 1937, CSBC has delivered more than 680 ships of various ship types, which includes nearly 550 container ships. Explaining the shipbuilder ’s approach to the container ship sector, a spokesperson explains “Although newbuilding prices are reported to trend upwards, competition for shipbuilding orders remains tough, and the newbuild needs are always
Container Shipping & Trade | 2nd Quarter 2019
at the mercy of the shipping market. During the past few years, CSBC has been highly dependent on merchant ship orders for 90% of our revenue, and we realise shipyards have strived so hard due to the downturn in the shipbuilding market, and global shipbuilding has been a buyer ’s market in recent years. “To improve earnings, container ships will not be our only core business. To be more specific, our strategy in the container sector will focus on certain vessel types such as container ships of 10,000 TEU plus and 1,800-TEU to 3,000TEU feeders, and bulk carriers of 208,000 dwt in particular. Our core competency comes out of our strength of design and production to create economical and reliable products.” Both TS Lines and Yang Ming are repeat customers of the
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THE SIGNIFICANT FEATURE OF THESE TWO SHIP TYPES IS THE ‘SEA SWORD BOW’. THIS IS A STRAIGHT STEM WAVE PIERCING BOW, WHICH IS LESS SENSITIVE TO TRIM AND DRAUGHT”
shipyard. TS Lines ordered four 1,800-TEU feeder vessels in 2015 and 2016 from CSBC and the owner booked another pair in 2018 for the same design with modifications to meet new regulations. TS Lines comments that the delivered 1,800TEU feeders benefitted from superior energy savings and manoeuvring performance, and they find that fuel savings could be up to 15% compared with similar-sized vessels in their existing fleet. Yang Ming ordered several 1,500-1,800-TEU feeder box ships at CSBC a few years ago, and in the past two years, CSBC has delivered a series of 2,800-TEU container vessels to another Taiwanese operator. The spokesperson explained “Therefore, we thought that when Yang Ming planned to increase fleet capacity, CSBC would be one of the builders
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they would contact, and indeed, CSBC stood out from the competition to provide high-spec vessels for them. “From the two returning clients, it shows CSBC is wellknown in the feeder box ship market and is highly recognised for innovation and energy savings.”
‘Sea sword bow’ design
Singling out the ships CSBC is building for them, the spokesperson says “The significant feature of these two ship types is the sea sword bow. This is a straight steam, wavepiercing bow, which is less sensitive to trim and draught as opposed to breaking by the hull. CSBC launched this industry-university co-operative research project 10 years ago, with the aim of achieving
Container Shipping & Trade | 2nd Quarter 2019
12 | SHIP DESCRIPTION
energy savings of 10%. A few years later, the shipyard declared the core design philosophy of this programme to be SODO. “We chose the best combination of the energy saving devices, the twisted leading edge rudder and rudder bulb, and adopted the flow field characteristics identified by computational fluid dynamics technology verified by the model basin.” Due to the 2020 sulphur cap, CSBC is trying to remodel the vessels, to equip them with scrubbers and include more tank capacity for low sulphur fuel for flexibility. The internet of things (IoT) is a key feature for the shipyard when it comes to constructing the box ships. The spokesperson says “With the era of IoT, we also help owners to set up the firewall for cyber security and collect big data including the VDR, AIS, AMS and VRC data, and the accommodation wifi system. The feeder ships CBSC is building for Yang Ming benefit from the shipyard’s Smart Ship programme. The shipyard has also recently built container ships for Evergreen. Ever Bliss was delivered in 2017. The 2,926TEU ship was also built as an eco design. The Smart Ship programme was only partially applied in the Evergreen series as the Evergreen newbuilds had all been delivered.
Meeting IoT demands
The spokesperson says “By these efforts, we are not only proud to introduce achievements to potential customers and secure most of our revenue from newbuilding orders, but to lead the trend of cutting-edge technology with the sea sword bow. It may be a turning point to start a new era, the era of IoT.” The shipyard is also preparing for the final goal of the autonomous ship as part of this programme. The spokesperson says “First, we are trying to make things automatic. There will be powerful operational support from devices. To build up the communication and for all kinds of applications, we have started the 4IntShip project, including setting up a network environment, the intranet and internet, to collect and give suggestions. Elsewhere, CSBC is making other ship sectors part of its core business. “Recently Taiwan’s Government is keen on indigenous programmes for navy ships and submarines. As the largest shipbuilding company in Taiwan, CSBC plays a major role. By doing so, it can upgrade Taiwan’s shipbuilding capabilities to a higher level,” says the spokesperson. CSBC is also seeking to take advantage of Taiwan’s Government plan of wind power with its harbour facilities. Windfarm infrastructure such as pin piles, transition pieces, and parts for offshore substations are fabricated in CSBC’s yard. The shipyard’s target is to have merchant shipbuilding, naval shipbuilding, and offshore engineering each contributing 30% of its revenue by 2025. The shipyard also has an active current investment programme, encompassing its above goals. This includes:
Container Shipping & Trade | 2nd Quarter 2019
• Crane upgrade projects in its Kaohsiung yard: – Introducing a 50-tonne level luffing crane by Q2 2019 and upgrading two sets of major cranes to 800 tonnes by 2020. • For Taiwan Government’s windfarm development: – Pier renovation, equipment procurement, and production line construction for offshore engineering. – A newbuild 140 m x 41 m barge: • The barge is expected to be in service by 2019 Q2. CST
Yang Ming boosts eco-fleet Yang Ming has been implementing a fleet renewal programme in order to meet the IMO 2020 requirements. As well as the newbuilds currently under construction at CSBC, in 2019 it signed a charter agreement four 11,000-TEU container ships. During the ceremony in Hong Kong, the time-charter agreements were signed by Yang Ming chairman Bronson Hsieh and Shoei Kisen president Yukito Higaki. The four new vessels will be delivered in 2022. Yang Ming said that to enhance the company’s mid- to long-term operational efficiency and competitiveness, it “continues its fleet optimisation plan”. In addition to these four container ships, in 2018 Yang Ming ordered another 10 11,000-TEU newbuildings through long-term charter agreements with owners Costamare and Shoei Kisen, which will give Yang Ming a total of 14 11,000TEU newbuild container ships between 2020-2022. These eco-type newbuildings with modern designs will gradually replace some of Yang Ming’s high-cost, older ships. Yang Ming highlighted the 2020 IMO low sulphur cap and that “every carrier has prepared accordingly to ensure a smooth transition in operation next year”. It said that all the newbuildings Yang Ming has ordered are designed in compliance with the IMO regulation with lower bunker consumption. The carrier commented “With the new ships which will mitigate the pressure of high bunker prices and increased operating costs following the implementation of IMO 2020, Yang Ming will become more cost-competitive and environmentally friendly in the future.” To reduce its higher operating cost and mitigate the environmental impact of its older ships, it has an ongoing fleet renewal programme to replace older ships upon the expiry of their charter agreements and further review the old, high fuel consumption, non-eco fleet.
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14 | TRADE LANE
Transpacific faces up to cascading and trade war The transpacific is feeling the effects of larger vessels cascading into the trade, the US-China trade war, and the growth of southeast Asia. Ports on the trade explain how they are handling these demands and challenges
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S transpacific ports have seen strong container volume growth and are ramping up their facilities to handle the cascaded vessels heading their way as well as dealing with challenges from the US-China trade war. UK consultancy Drewry said in its latest quarterly ports update that overall volume growth in North America was strong in Q4 2018 versus Q4 2017, at 7.9% versus a global average of 4.3%. One factor however was the front loading of imports to try and beat tariff deadlines. Port of Long Beach – the US gateway of the transpacific – is riding high: it is beefing up its infrastructure and rail capabilities and has just enjoyed its second-busiest Q1 ever. Port of Long Beach executive
director Mario Cordero says “We have had a good domestic economy in the last couple of years and the global economy is fairly good – that is a major reason, when both economies are at a very good pace, that brings resiliency to the international trade.” He singled out how the port had a “record-breaking” calendar year for 2018, when volumes of 8.1M TEU were moved. He comments “There is a factor regarding trade discussions between China and the US – in Q4 2018 there was the sense that there was a percentile of expedited cargo to meet the 1 January tariff deadline that did not come into play.” The rush of cargo in Q4 contributed to the successful volumes Port of Long Beach saw last year. The port saw container volumes grow in excess of 7% in 2018, leading
Port of Oakland has heightened ship-to-shore cranes and is buying new ones to handle the biggest megaships calling at the US (credit: Port of Oakland)
Container Shipping & Trade | 2nd Quarter 2019
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TRADE LANE | 15
to 8.1M TEU, up on the 7.5M TEU recorded for 2017, which represented a growth of 11% compared to 2016. The forecast for US container volumes is for moderate growth this year, at 1.8%, although Mr Cordero says the port expects to “do a little bit better than this”. The growth forecast for Port of Long Beach is 3-3.5%. He says the reason for the moderate growth forecast for the US is that “we are seeing the potential for the reduction in economy numbers, not just in the US but globally. Leading economists feel that the growth we have had for a number of years will diminish and that is just the nature of the cycle of economics”. Speaking about potential upcoming challenges, he says “The challenge for the container market and port is the ongoing uncertainty in the industry because of the trade tariff discussions (between China and the US). But he comments “On the other hand the administration has not placed the most recently announced tariffs, the deadlines have been extended with no sign they will be implemented. The good news is that there appears there may be agreement here soon and once that happens, that will bring stability to the industry.”
Being big-ship-ready
The port is very much on track with its facility and infrastructure investment – a very important factor when it comes to the larger vessels plying the transpacific. Mr Cordero says “Years ago we decided to invest US$4Bn in infrastructure. This places us in a very good position to receive 12,000, 13,000 and 14,000-TEU ultra large container ships without disruption or obstruction. “We are in the position to receive 20,000-TEU+ vessels, so we are not only a deepwater port but are bigship ready.” This is important as larger vessels have cascaded on to the transpacific as ever-bigger ones are placed on the Asia-Europe. This is a trend expected to continue. Mr Cordero comments “We are seeing larger vessels. If you go back
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Snapshot CV
Mario Cordero Port of Long Beach
Mario Cordero has been executive director of the Port of Long Beach since 2017. From 2003, Mr Cordero served as a member, vice president and president of the Long Beach Board of Harbour Commissioners for eight years, before resigning to accept President Barack Obama’s appointment to the Federal Maritime Commission (FMC) in 2011. He was FMC chairman from April 2013 to January 2017. Mr Cordero was named vice chairman of the board for the American Association of Port Authorities in October 2018. He has practised law for more than 30 years, specialising in workers’ compensation cases.
to 2011, the largest vessel was 8,000 TEU, but three or four years later the vessels were larger. We foresaw this years ago, which is why we invested in our Middle Harbour project… I think in years to come cascading will be at the tune of 16-18,000-TEU vessels. One thing I am absolutely sure of is that we are able to service those vessels. The port is continuing its capital improvement projects with an emphasis on investing in rail. One specific project that could be a game-changer is the Pier B rail enhancement project, estimated to
cost US$870M, that will allow the port to stage trains in the harbour. Mr Cordero says “Not only are ships getting larger, which we are in a good position to receive, but trains are getting longer. Some are 3,000 m long and Pier B ondock rail will allow us to do that in a more efficient and faster manner. On the US west coast, we have the most advanced rail infrastructure of any part of the country and with ondock we are in a very good position to be a leader in container moving.” The port is focused on making the most of the opportunities on the transpacific. Speaking about strategies for the year, Mr Cordero says “Strategy one is to enhance operational excellence, that will continue to place Long Beach as the port of choice and in addition focus on increasing the export market and attracting export commodities. There are plastic resin export commodities opportunities for us here [on the transpacific] in the short term. Enhancing export possibilities is also a strategy and we will continue exploring expanding markets in southeast Asia and Latin America.” China makes up 70% of Long Beach’s import market but Mr Cordero singled out that while Vietnam currently only accounts for 5%, he saw potential for growth in this area. Mr Cordero comments “The market drives this, people look at the outsourcing of manufacturing that has been in China and with all the discussions at a geo-political level, this has enhanced potential other markets in terms of outsourcing.” Change is taking place at the Port of Long Beach as Orient Overseas (International) (OOIL) is to sell Long Beach Container Terminal to a consortium led by Macquarie Infrastructure Partners (MIP) for US$1.78Bn. OOIL's subsidiaries, OOCL and Long Beach Container Terminal (LBCT LLC), have entered into a sale and purchase agreement to sell 100% of LBCT LLC to a consortium led by MIP. LBCT LLC operates Long Beach Container Terminal
Container Shipping & Trade | 2nd Quarter 2019
16 | TRADE LANE
in Port of Long Beach in the US. As part of the sale, OOCL will also enter into a container stevedoring and terminal services agreement with LBCT LLC for a 20-year period. The completion of the sale will be subject to approvals from regulatory authorities and other customary conditions. Mr Cordero says “We welcome a new partnership with the
consortium. It is a premier terminal for us, we have much invested in it and we feel very confident that our investment is very much protected for the life terminal lease (which ends in 2052). We are very optimistic regards our roadmap, we are optimistic for growth at this terminal’s third and final phase of construction of Middle Harbour, which will culminate in 2021.”
PORT OF LONG BEACH ANNUAL VOLUMES GROWTH
2017: 11% to 7.5M TEU 2018: 7% to 8.1M TEU 2019: FORECAST GROWTH 3.5% ‘Growth with care’
Port of Oakland’s overall strategy is growth with care, says Port of Oakland maritime director John Driscoll. He explains how that is being implemented in the transpacific trade, which accounts for more than 90% of Oakland’s business, with expansion, customer service, market diversity and differentiation being key components of this. The Port’s second-largest terminal, TraPac, doubled its size last year after a two-year construction project. The largest terminal, Oakland International Container Terminal heightened four ship-to-shore cranes and purchased three new ones to handle the biggest megaships calling at North America. In terms of customer service, the port has added night gates, appointment systems and up-tothe-minute online turn-time metrics to completely transform operating performance.Truckers now get in and out much more quickly than previously. For market diversity, Mr Driscoll says “While China remains the port’s largest trading partner, significant inroads have been made in other key Asian markets. This month the port announced a new service connecting Oakland to Vietnam.”
TRADE LANE | 17
“The Port is setting itself apart from competitors by introducing unrivalled logistics capabilities.The first step was the 2018 opening of Cool Port, a 26,000 m2 temperature controlled distribution centre adjacent to Oakland marine terminals. Construction will begin this year on the first 43,000-m2 building in the Seaport Logistics Complex adjacent to the Port’s US$100M rail yard.No other port offers such comprehensive logistics facilities in close proximity to vessels and rails.” Oakland’s trade is growing due to the “vibrancy of the northern California market and the demand in Asia for northern California agricultural exports”, says Mr Driscoll. Oakland has reported record cargo volumes in each of the past two years.Its total volume is up 4.2% this year Mr Driscoll says that markets in Japan, South Korea and Vietnam are growing as US exporters “seek new markets in the wake of trade tensions with China”. Explaining the impact of the ChinaUS trade war on Oakland, he says “Export volume has moderated since the rise of trade tensions. However, that could also be the result of a strong dollar making US goods more expensive overseas. We’re waiting to see what happens this year and are hopeful that China and the US will reach a trade accord.” Like other ports on the transpacific, Oakland is also seeing larger vessels cascading into its terminals. The result, says Mr Driscoll, is “more cargo than ever before is being handled here, but on fewer, larger ships. This is good for the environment and helps ease crowding at berths”. He sums up “Our growth with care strategy requires us to minimise the impact of containerised trade on neighbouring communities. This year we will adopt new air quality and truck management plans, developed in conjunction with the community, to ensure cargo growth is not a negative.” This year, the port will have its first full year of operating Cool Port,
which could generate more than 50,000 TEU of beef, pork and poultry exports annually. Elsewhere, at another important transpacific gateway, the cargo operating partnership between the ports of Seattle and Tacoma, Northwest Seaport Alliance (NSA) has authorised construction on the Terminal 5 Modernisation Programme. “Terminal 5 will be able to handle
the largest marine cargo vessels now being deployed in the AsiaPacific trade route quickly and efficiently, providing a critical link for Washington state exports to Asian markets, both for agricultural products...as well as containerised cargo for customers such as Paccar and Starbucks,” said Port of Tacoma commission president and co-chair of the NWSA Clare Petrich. CST
A company of
Clean energy in port The Becker LNG PowerPac® supplies clean power to ships in port such as container vessels, car carriers and ferries. Compared to using on-board diesel engines to produce power, the system’s power supply dramatically reduces harmful emissions. Another product, the floating LNG Power Barge, is an environmentally friendly cold ironing solution for cruise ships in port.
www.hybrid-port-energy.com
18 | PANAMA CANAL
Total loaded TEU has grown by 20% since the Panama Canal expanded its locks in 2016 (credit Panama Canal Authority)
Panama Canal capitalises on container growth The Panama Canal has won trade on the Asia-US route since its expansion. The Panama Canal Authority explains how it intends to grow this further
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n the three years since the Panama Canal was widened, this transit has rapidly gained market share of the route from Asia to US East Coast. The container ship segment is one of the most important markets for the Panama Canal, accounting for 50% of its business. And several figures show the benefits reaped by widening the Panama Canal locks in June 2016, allowing larger neo-panamax vessels to transit the canal. Panama Canal Authority (ACP) senior international trade specialist Argelis Moreno de Ducreux tells Container
Container Shipping & Trade | 2nd Quarter 2019
Shipping & Trade that the canal has 28 liner services transiting the canal weekly, covering trades between between Asia-US East Coast, West Coast South AmericaEurope, West Coast South America to the US and trade areas including the Caribbean and Oceania. Ms de Ducreux adds “Since opening the widened canal locks in June 2016, we soon received bigger vessels. Of the liner services transiting today, 16 consist of neo-panamax vessels, while the remaining 12 consist of panamax-sized vessels. This is important, as the average vessel size has increased from
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PANAMA CANAL | 19
4,000 TEU to 7,314 TEU.” Capacity has reached almost 10M TEU in a one-way direction. Ms de Ducreux says “Compound average growth in the container segment from 2016 to 2018, on a fiscal basis from October to September, was 14% by capacity vessel size. Total TEU loaded has grown by 20% – before opening the new locks we had 12M TEU deployed and by the end of 2018 we had 16M TEU for combined twoway transit.” Ms de Ducreux singled out the importance of the Asia-US East Coast route, which has capacity of 6M TEU through the Panama Canal one way. Indeed, this route has seen average vessel size increase to 8,900 TEU. Ms de Ducreux says “We have seen double-digit growth in capacity since we opened the new locks due to the double or triple size of vessels transiting.” The Asia-US East Coast route has seen a huge boost in capacity. Ms de Ducreux says “We have almost the same amount of services compared to before the locks were widened – 13 now compared to 12 then – but 12 of these are neo-panamax services.” The largest vessel to pass on the Panama Canal Asia-US East Coast trade was 4,500 TEU versus the current biggest size of 14,863 TEU. A crucial aspect to the Panama Canal being able to handle such large vessels is that ports on the US East Coast were prepared to handle larger vessels once the expanded locks opened. Ms de Ducreux says “We have seen how ports have been investing in infrastructure and capacity to receive the neo-panamax vessels and this is also important for us. From 2018 we have seen a very interesting growth in volumes in terminals.” Indeed, the Panama Canal has seen its market share of the Asia-US East Coast market increase since the locks were expanded, from 43% to 48%. One challenge the Panama Canal might have to face on the Asia-US East Coast route is the impact of the US-China trade war. But so far there has been no major impact. Indeed, Ms de Ducreux explains “Last year when this began in June, we saw an increase in loaded containers to the US East Coast – a sign that shippers wanted
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PANAMA CANAL COUNTDOWN
28
Liner services
16
Neo-panamax services
7,314 TEU
Average vessel size up from 4,000 TEU
16M TEU
Capacity deployed at the end of 2018
48%
Market share of AsiaUS East Coast trade, up from 43%
to balance inventory levels in case the situation worsened.” And she pointed out that between June and December 2018, volumes had continued to grow. But she warned “It may have an effect in the future – it depends on negotiations between the US and China.” Looking ahead, the Panama Canal Authority expects a growth in vessel size and a positive impact from the 2020 low sulphur directive. Ms de Ducreux says “Next year we expect a growth in vessel size due to economies of scale. We expect to see average volume increases due to higher utilisation levels, although this does depend on the China and US negotiation. We expect more moderate growth in 2019 and 2020 than the previous years, but this is because the years before had double-digit growth. The economy is steady, and we predict a very positive year ahead.” Singling out the start of the low sulphur directive in 2020 she says “We offer a big advantage as we have a shorter distance and therefore savings in bunker costs compared to longer routes such as via the Suez Canal and Cape of Good Hope. So, we expect more services to go backhaul through the Panama Canal.” Indeed, many of the Panama Canal’s initiatives link into lowering emissions. In March this year it joined the Global Industry Alliance (GIA), a public-private partnership initiative of IMO under the framework of the Global Maritime Energy Efficiency Partnership Project, which is a Global Environment Facility-United Nations Development Programme-IMO project comprised of maritime industry leaders working to improve energy efficiency and reduce greenhouse gas (GHG) emissions in international shipping. Panama Canal Administrator Jorge L Quijano says "Today's announcement marks a proud milestone for the Panama Canal and its long legacy as the green route of world maritime trade. Given our roots in sustainability and innovation, this partnership reaffirms the Canal's commitment to leading our industry to a cleaner and more efficient future." Launched in June 2017, the GIA is a partnership of 18 maritime organisations
Container Shipping & Trade | 2nd Quarter 2019
20 | PANAMA CANAL
working together to share their expertise and provide technical input towards implementing concrete activities that can support the shipping industry's transition to a low carbon future. The GIA members aim to do so by identifying and developing innovative solutions that address common barriers to the uptake and implementation of energy efficient technologies and operational measures. The Panama Canal Authority said that its inclusion in the GIA falls in line with the waterway's almost 105-year history of environmental stewardship. Since opening in 1914, the Panama Canal's strategic geographic location has enabled vessels to shorten the distance and duration of their voyages compared to alternative routes, thus reducing costs and GHG emissions. In combination with introducing the expanded Panama Canal in 2016, which offers greater cargo carrying capacity and requires less cargo movements, the Panama Canal is estimated to have saved more than 750M tonnes of carbon dioxide emissions over the course of its history. The Panama Canal has also launched its Green Connection Environmental Recognition Programme, which consists of the Green Connection Award, the Environmental Premium Ranking and the Emissions Calculator. Together, the three tools promote emissions reduction by recognising and incentivising vessels that comply with the highest environmental performance standards while helping others mitigate their own environmental footprints. The Emissions Calculator also helps the Panama Canal measure and reduce its own carbon footprint, operate more efficiently, develop a low carbon strategy and pursue a path towards becoming a carbon neutral entity.
Boosting value-add network
Alongside the boost in shipping business in the Panama region since the locks were widened, container ship services have also increased, offering ocean carriers a wider variety of add-on services. For example, in April this year HullWiper launched its remotely operated vehicle cleaning services on the Atlantic side of the Panama Canal, in Balboa, with the Pacific side of the canal lined up for the
Container Shipping & Trade | 2nd Quarter 2019
future. It is a key location offering strong advantages for container ships. As the key transit point for vessels sailing between the Atlantic and Pacific oceans, the Panama Canal is a main gateway to trade. “There is a prime bottleneck in Panama as there are a lot of ships waiting to transit the canal,” says HullWiper general manager Laurance Langdon. “We can clean them while they wait, day or night.” Meanwhile GAC Group opened an office in Panama in May last year, providing a wide range of shipping services to vessels calling at Panamanian ports or transiting the Panama Canal. The Panama office will provide a suite of services including traditional ship agency, specialised husbandry, ship spares delivery, crew matters and repairs. GAC Panama managing director Alexei Oduber says, “With the opening of the new locks we felt it was time for us to have an onsite solution – before we worked with an agent – and offer the customer a direct approach.” Highlighting the value-added services that have grown alongside the widened locks, he says “The government is working jointly with the Panama Canal Authority and the private sector to develop and promote the valueadded network. It is not just looking at containers but also looking at unloading and assembly. It allows shipping lines to take advantage of other opportunities, such as arranging for spare parts and new crew, and storing pallets of repeated business.” He says that such initiatives were creating a one-stop-shop for shipping lines and helping to create an efficient transit. One service GAC offers that is particularly beneficial for container lines is forecasting for transiting the Panama Canal. Mr Oduber says “Forecasting of canal congestion is key, not just for today or tomorrow but liners plan six to eight months ahead for berthing windows. So, we sit down and look down the road six to eight months. We have a matrix of events, including queues of ships and scheduled maintenance, and weather plays an important part as there can be transit restrictions. We put all three together and forecast slot availability.” CST
Snapshot CV:
Argelis Moreno de Ducreux
Panama Canal Authority Argelis Moreno de Ducreux is a senior specialist and leader of the liner services segment for the Panama Canal Authority. She is responsible for economic research, market analysis, competitive intelligence, demand forecasting and for developing pricing strategies for the liner shipping segment of the Panama Canal. Ms Ducreux holds a bachelor´s degree in economics from the University of Panama, and a master of business administration and marketing from Universidad Latina de Panama. She participates as a speaker in local and international conferences, teaches at the International Maritime University of Panama, as well as other private universities in the Republic of Panama. She publishes papers in international professional forums such as the International Association of Maritime Economists and in local and international journals. Currently, she is member of the board of directors of the Panamanian Association of Supply Chain Management Professionals.
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Commitment to Service The Port of Long Beach is the greenest, fastest, most efficient gateway for goods moving to and from Asia and marketplaces across America. We’re keeping our competitive edge while working sustainably, offering unrivaled customer service while we build the Green Port of the Future.
NEW
Maritime Hydrogen & Fuel Cells Conference 3 September 2019, Bergen
How hydrogen fuel cells will revolutionise maritime Hydrogen and fuel cell technologies are being embraced by the maritime industry as part of wider efforts to promote a green operational footprint. Hydrogen fuel cell vessels and traditional electric vessels with lithium batteries are currently being developed for various maritime applications. This one-day conference will focus on the key features and benefits of hydrogen fuel cell vessels. Industry leaders will bring to light the latest initiatives on hydrogen and fuel cells. Speakers will discuss how hydrogen fuel cells and traditional batteries can coexist and complement each other in delivering clean and efficient energy solutions for various maritime applications. This event brings together vessel owners and operators, classification societies, hydrogen fuel cell manufacturers, systems integrators, naval architects, engine manufacturers, industry associations, analysts and suppliers. To sponsor or exhibit and to promote your position as a thought-leader in this field, please contact:
Ian Glen on +44 7919 263 737 ian.glen@rivieramm.com
Organised by
22 | ENVIRONMENT AND REGULATION
Box ship biofuel and LNG retrofit breakthrough
Hapag-Lloyd's Sajir represents an important test case for retrofits on big vessels (credit: Hapag-Lloyd)
Biofuel, LNG retrofits and scrubbers feature in some of the latest projects and initiatives within the container ship sector
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amburg-based liner company Hapag-Lloyd’s 15,000-TEU vessel Sajir will become the biggest container ship so far to retrofit dual-fuel LNG engines. The company has signed a contract with Hudong Zhonghua Shipbuilding to carry out the conversion at Huarun Dadong Dockyard in Shanghai. The vessel’s 54.9-MW MAN B&W 9S90MEC10 engine will be converted to MAN Energy Solutions’ dual-fuel ME-GI engine concept. Hapag-Lloyd plans to primarily use LNG, with low-sulphur fuel oil as a backup option. “By carrying out this unprecedented pilot, we hope to learn for the future and to pave the way for large ships to be retrofitted to use this alternative fuel,” says Hapag-Lloyd managing director fleet management Richard von Berlepsch.
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Sajir is one of 17 container ships built as ‘LNG ready’ by United Arab Shipping Co before it was acquired by HapagLloyd. Hapag-Lloyd first revealed its plan to convert one of the LNG-ready vessels when it detailed its compliance strategy for the 2020 sulphur cap last year.
Highly efficient
Hapag-Lloyd's first LNG retrofit candidate will feature a 6,700-m3 gas fuel tank, bunkering twice per round trip. The smaller tank size compared to the 18,600-m3 tanks on CMA CGM's large container ships points to greater certainty about bunkering in Asia, as well as space constraints on Sajir, which was designed LNG-ready six years ago. The ship is already highly efficient, running at -60% to the EEDI reference line thanks to modern efficiency features,
including waste heat recovery. Another feature likely to remain is the power take-off (PTO). A recent case study by MAN Energy Solutions highlights how a PTO can optimise energy efficiency by generating electricity from the main engine. Auxiliaries will also be dual-fuel, the line has confirmed. After conversion, the 54.9-MW MAN B&W 9S90MEC10 will earn the -GI suffix that denotes MAN Energy Solutions' highpressure, diesel cycle, dual-fuel engines. A successful retrofit for a vessel of Sajir’s size would represent a significant milestone for advancing LNG as a marine fuel. The high cost of retrofitting has been seen as a barrier to uptake; following the Sajir contract, MAN believes conversions are becoming viable for more vessels and container ships built within the past five years are now seen as good candidates. MAN head of sales, retrofit projects Klaus Rasmussen notes the company has refined its conversion strategies as the number of projects has grown. The age range for suitable candidates is not limited by the need for payback time, he
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ENVIRONMENT AND REGULATION | 23
Biofuel breakthroughs
And there is another alternative fuel that is poised to break into container shipping. Both CMA CGM and Maersk are involved in biofuel projects that introduce this fuel to the container shipping industry. IKEA Transport & Logistics Services, CMA CGM, the GoodShipping Program and the Port of Rotterdam have refuelled CMA CGM White Shark with sustainable marine biofuel oil. The test saw the companies work together in a first-of-its-kind partnership for the shipping industry when 5,095TEU CMA CGM White Shark was refuelled with biofuel oil on 23 March at the Port of Rotterdam. The sustainable marine biofuel oil was developed by GoodFuels, a leading provider of sustainable marine biofuels to the global commercial shipping fleet, after undergoing three years of
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NUMBER OF SHIPS WITH SCRUBBERS INSTALLED BY SHIP TYPE IN OPERATION AND ON ORDER 1,200
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explains, but vessels must have modern ME-C engines. These feature the electronic controls needed to govern fuel injection and exhaust valve timings on gas engines. Mr Rasmussen acknowledges that Hapag-Lloyd has paid a higher cost for works on Sajir due to it being the first of its kind. Any further retrofits would be cheaper as a result of this work, he says. Hapag-Lloyd has put the cost of LNG conversions at US$25M-30M. Further conversions would also offer economies of scale on LNG fuel. The membrane tank, enough for one voyage between Europe and Asia, is the most significant element of the 90-day retrofit. The engine conversion could be completed in around five weeks; the remaining two months will be devoted to installing the tank and the complicated steelwork supporting it. At 368 m in length and weighing 149,400 dwt, Sajir is the biggest ship ever to be converted for dual-fuel operation. Along with the big new container ships ordered by CMA CGM and Eastern Pacific Shipping, they showcase how improving dual-fuel technology – and particularly the prospect of dramatic fuel cost savings – is helping to bring LNG fuel to the attention of owners of everbigger vessels.
Credit: DNV GL
intensive testing with marine engine manufacturers. The second-generation biofuel oil is derived from forest residues and waste cooking oil products and is expected to deliver 80-90% wellto-propeller CO2 reduction versus fossil fuel equivalents, and virtually eliminates sulphur oxide emissions. The company said there are no requirements for engine modifications. The trial was facilitated by the GoodShipping Program, a sustainable initiative dedicated to decarbonising ocean freight. Elsewhere, Maersk has joined forces with the Dutch Sustainable Growth Coalition (DSGC) to carry out a pilot test using second-generation biofuel on one of its Tripe-E box ships on a scale never seen before. DSGC members FrieslandCampina, Heineken, Philips, DSM, Shell and Unilever are collaborating with Maersk to carry out a pilot using up to 20% sustainable second-generation biofuels on a large triple-E ocean vessel. This will sail from Rotterdam to Shanghai and back on biofuel blends alone – a world’s first at this scale, saving 1.5M kg of CO2 and
20,000 kg of sulphur. The DSGC members, many of which are Maersk's customers, played a critical role initiating and sponsoring the pilot. Shell acted as the fuel supplier for the pilot, and as the Maersk operating partner. AP Moller-Maersk chief operating officer Søren Toft commented “To reach our net zero CO2 target by 2050, in the next 10 years we need big breakthroughs. Maersk cannot do this alone. That is why this collaboration with DSGC and its members is such an important step in identifying and bringing low carbon solutions to life. It laid the foundation for how crossindustry partners can work together to take steps towards a more sustainable future. We welcome others to join in our efforts, as this journey is just beginning.” The biofuel used in this pilot is a second-generationbiofuel produced from waste sources, in this case used cooking oil. Second-generation biofuel means the biofuel comes from waste products including used cooking oil, forest residues, wood chip waste etc. This biofuel is ISCCcertified, meaning the whole chain is third-party certified. The benefit of biofuel
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24 | ENVIRONMENT AND REGULATION
is that it can replace or be blended with conventional fuels without large technical adaptations to the engines.
Scrubber box ship boom
The container operator market has been a thriving one for scrubbers. As of May 2019, container ships are the secondlargest maritime sector for the number of ships with scrubbers installed, in operation and on order, with a total of 588. The leading sector is bulk carriers, with 1,129. Pacific Green Marine Technologies (PGMT) business development support manager Devon Smith says “PGMT has had a very good year in terms of sales. We are in constant dialogue with potential clients and fully expect an increase in orders, both this year and in subsequent years.” Both retrofits and newbuild orders are growing within the sector as the 2020 low sulphur cap deadline approaches. Mr Smith says “Retrofit orders continue to be strong, and we expect there to continue to be a very robust market for them in the coming months and years. Container ships tend to be large consumers of fuel, and therefore prime candidates for scrubbers as they can potentially offer a very attractive return on investment. Further, the newbuild market for scrubbers is growing rapidly and we expect the market to remain strong for the foreseeable future.” PGMT’s solution incorporates its patented TurboheadTM technology, which generates an induced frothing process to ensure extremely efficient scrubbing of the exhaust gases. PGMT’s ENVI-Marine scrubbing systems offer a solution to turbulent wet scrubbing that is “more efficient, smaller and more cost effective to build and operate”, says Mr Smith. PGMT also offers a bespoke scrubbing solution, using the vessel’s parameters and operating profiles to model the appropriate scrubber, ensuring clients have a scrubber that suits their needs, without paying for excess scrubbing capacity. One issue that container ship operators need to be aware of is potential bottlenecks and delays
Container Shipping & Trade | 2nd Quarter 2019
Snapshot CV
Nicholas Confuorto CROE
Nicholas Confuorto is the president and chief operations officer for CR Ocean Engineering. He is also a founding member and the chairman of the Exhaust Gas Cleaning Systems Association. Since receiving his engineering degree from Columbia University in 1976, Mr Confuorto has focused his career in the field of environmental controls and has held high-level positions at some of the most respected corporate names in the global air pollution controls industry.
as liners act quickly to meet the 2020 deadline. Mr Smith comments “Industry capacity and production bottlenecks are always an important issue to focus on.” However, he illustrates how manufacturers are trying to overcome this challenge. “Due in part to PGMT’s joint venture with PowerChina, we are pleased to offer among the largest capacity in the industry and are confident in our ability to deliver large numbers of scrubbers at cost-effective prices.” PGMT has a joint venture with Chinese Government-owned PowerChina, China’s largest power industry engineering, procurement and
construction company. Mr Smith says this venture is “uniquely positioning PGMT in the marine emissions market and providing the benefit of highly efficient products coupled with the capacity to produce them costeffectively worldwide”. Elsewhere, CR Ocean Engineering (CROE) president and chief operating officer Nicholas Confuorto says that the market in the first quarter of 2019 has slowed down “considerably” from 2018 but that this was expected because most companies that wanted scrubbers by the end of 2019 (to meet the 2020 low sulphur directive) purchased these by the end of 2018. “We still see companies that purchasing systems but for 2020,” adds Mr Confuorto. “The operators buying now were the ones on the fence in 2018 but because they now see other companies installing scrubbers, they say maybe we should do it and even though they will miss the benefit of the first few months of 2020, they will make most of next year with the scrubber. The ones not purchasing at all justify their decision thinking that maybe the fuel prices will not be so high and maybe IMO may delay things again. However, IMO again confirmed that they will not change the implementation date.” But Mr Confuorto warns “They will be pushed into a decision because when the price of fuel goes up, they will...rush to get scrubbers as early as possible. We believe that the price differential [between diesel and low sulphur oil] will be more than US$300, and so it is a fantastic opportunity to save money.” The issue of open loop scrubbers being banned in port has also been overplayed, says Mr Confuorto. “There is no proof anything is wrong and studies show that water coming out of the loop has no harmful effect on sea life. Based on that many more operators will be coming out for open loop by the end of 2019 and this issue will just go away. We will see every country allowing open loop, which makes more sense as it operates with less equipment and at lower cost [than closed loop].” CROE is currently fitting scrubbers for four container ship operators. CST
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26 | PROPULSION
Breathing life into Yara Birkeland Battery charging arrangements for the world’s first all-electric container feeder are as challenging as the plans to prepare the vessel for autonomous operations
I
t may not be unmanned by the end of 2020, but I hope there will be two guys on board drinking coffee while the vessel sails itself.” That picture of an idyllic workplace comes from Kongsberg Maritime director of technology Ketil Olaf Paulsen. He is responsible for leading the specification of Yara Birkeland, the 120-TEU vessel that will be the first fully electric container feeder when it is delivered in early 2020 and later the world’s first fully autonomous vessel. Unlike those lucky future crew, the scope and pace of work on Yara Birkeland has been frenetic since the project was announced in mid-2017. Kongsberg, which is leading the project to deliver the design, ship systems and automation for the vessel, demonstrated the concept model in September that year. In May 2018 it agreed a co-operation with cargohandling specialist Kalmar to build an autonomous cargo-handling system at Porsgrunn, including the world’s first
“
YARA BIRKELAND PRINCIPAL PARTICULARS Length Beam Draught (full) Service speed Cargo capacity Deadweight Propulsion Battery capacity
79.5 m 14.8 m 6m 6 knots 120 TEU 3,200 tonnes 2 x azimuth pods, 2 x tunnel thrusters 7 MWh
Container Shipping & Trade | 2nd Quarter 2019
Yara Birkeland will connect automatically to shore power at one port, with a manual back-up at the other
fully automated rail-mounted gantry crane. And in August it awarded Vard the NOK250M (US$29M) contract to build the vessel. Work on the hull began at Vard Braila in Romania in December and the finished ship will be delivered from Vard Brevik. Contracts for equipment supply have also been flowing rapidly. In November Kongsberg selected Swiss battery provider Leclanché to supply the 7 MWh battery packs for the vessel. They are expected to be the biggest in the world when delivered. Norwegian company Brunvoll was selected to provide propulsion for the vessel, via two PU74 pulling azimuth thrusters of 900 kW and two FU63 tunnel thrusters of 700 kW each. There are two very distinct design challenges in that description: first and foremost is the powering. Given the innovative nature of the pure
battery vessel, redundancy was a key requirement. The batteries will be split into four separate battery rooms, with just one capable of providing the power to return to port in an emergency. The 900 kW azipulls also provide redundancy through twin shaftlines. The provision of shore power has yet to be contracted for. Connection will be possible in at least one of the ports and, although there will be automatic connection, the company has not opted for wireless charging as some other recent projects have. At present, wireless charging is not capable of providing the amount of energy needed, explains Mr Paulsen. Assessing charging requirements has been a challenge, given the potential for variation in Yara Birkeland’s operating profile. The amount of cargo to be delivered is a decisive factor in determining the window that the vessel
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PROPULSION | 27
has for charging. At full load, with 120 containers – each taking up to three and a half minutes to load or unload – there is a relatively long time. But at 70 containers, time will be more constrained. The requirement for charging periods of multiple hours may seem high compared to the fast turnarounds achieved by ferries along the Norwegian coast. But the power demand for Yara Birkeland is much higher, and journeys less frequent than those of small vessels. While ferries require just a short top-up between journeys, Yara’s vessel could be draining batteries down to around 30% capacity each time. Although plans have not been finalised, it is likely that shore connection will be made available at both ports, says Mr Paulsen. “All our calculations show it is possible to recharge at only the main port. But if the other port has infrastructure for charging as well, if something should happen – like bad weather – they can connect manually and charge there.” The other aspect of the design challenge is the planned autonomous operation of the vessel. According to Mr Paulsen this is more of a logistical challenge than a technical one. He reports that most of the onboard systems have been confirmed. “The main challenge there is that we are working with the Norwegian Maritime Authority (NMA) as it is developing rules and requirements. It is a little bit like aiming for a moving target.” The process has involved Kongsberg making proposals about the systems it wants to install and NMA investigating whether they are sufficient, as well as setting procedures for verification. Between them, regulator and operator must agree that safety is as good as, or better than, a normally manned ship. One example of the challenges ahead for Yara Birkeland’s autonomous operation – and for all autonomous vessels – is a collision avoidance strategy that complies with international regulations. Although,
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Ketil Olaf Paulsen (Kongsberg): Developing systems as regulations emerge has been “like aiming for a moving target”
says Mr Paulsen, the challenge is “mainly because we know that other ships don’t stick to Colregs”. The use of audio channels is one example. Traditionally ships communicate both with other ships and to shore using mainly audio VHF channels. Kongsberg hopes Yara Birkeland will not have to do this in the long run, as digital communications would be much more effective. But as the project starts, Mr Paulsen accepts that the ship will need to have some form of audio communication system. “There will be digital information sent to the vessel traffic system with route plan, timetables and so on,” he
says. “But in some cases, we might also need audible VHF communication. If you encounter a small fishing vessel, for example, you can only communicate over radio.” As soon as the vessel leaves the shipyard, Yara and Kongsberg will begin testing it for autonomous operation, checking functions one by one – including docking situations, transit, mooring and all functions that will comprise the complete unmanned system. The local maritime authority will give the vessel an exemption on crewing levels so that only two crew will be needed on board while these tests are carried out. There will also be a monitoring and remote-control centre capable of taking over the vessel if needed. In terms of autonomous sailing systems, there should be few surprises. Kongsberg has projects on vessels all along the Norwegian coast that are trialling parts of the technology that will feed into Yara Birkeland, including autonomous docking and transit on vessels of a similar size. “For sailing from port to port, most systems should have been tested for some time,” says Mr Paulsen. “But then we will have the mooring system, the automatic shore power connection and the interface with the autonomous crane to test. There will be enough challenges.” CST
Model tests for Yara Birkeland honed the efficiency of hull form and propulsion, reducing battery power demand
Container Shipping & Trade | 2nd Quarter 2019
28 | COATINGS
Big data and ISO standard boost coatings benefits for box ships Coatings are evolving under new standards and the expectations of the container ship industry
T
he ISO 19030 standard is changing the way the coatings sector operates and delivering potentially huge savings for container ship owners in the process. As a global standard, shipowners and other interested stakeholders can apply this to measure the hull performance of their vessels. And this is just the start, as the ISO standard, published in 2016, is up for review in November this year. An important contributor to developing the standard is Jotun’s and DNV GL’s annual HullPIC (Hull Performance & Insight conferences), which include stakeholders from across the industry. They highlight developments, challenges and advances that could help to further improve vessel performance and look at the role of the standard and how it can be developed. Jotun A/S global concept director, hull
Stein Kjølberg (Jotun): My personal opinion is that one of the ship sectors that benefits the most from ISO 19030 is the container ship sector
Container Shipping & Trade | 2nd Quarter 2019
performance solutions Stein Kjølberg tells Container Shipping & Trade “At these conferences, lots of interesting papers are put forward and it is not just paint companies and systems providers, but owners and operators speaking about their own experience.” Speaking of the upcoming review, he says “I think there are a lot of interesting ideas to put on the table, such as separating the hull and propeller performance and measuring these separately.” The standard does not currently differentiate between the two. Speaking about uptake of the standard among ship operators, the news is positive. Mr Kjølberg says “More and more of our customers are adopting parts of the standard to establish their internal performance methodology. The intention was never to have the standard as 100% for everyone but to use this as a starting point for those who want to understand performance more.” He comments “Owners can develop their own methodology, but hopefully based on the ISO standard. The agreement on certain common principles does not stop innovation but at least means there is common terminology on what it actually means.” And container ship owners are among those who benefit most from the standard. Mr Kjølberg says “My personal opinion is that one of the ship sectors that benefits the most from it are container operators. They burn a lot of fuel and have to be precise as to when they arrive in port – any impact will affect that drastically.” A driver for using the standard among container ship operators is, he says, greater demand from charterers for vessels to meet certain performance criteria and more requests from them to upgrade. He sums up “There is still a way to go, the market has huge potential to look into hull and propeller performance, learn from it and implement it in the most optimal way. That
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COATINGS | 29
is not necessarily to buy the most expensive paint system, but to at least upgrade and look at what kind of trade we have, what kind of charterers we have. A lot of customers do not have a full overview of all trades.” Jotun is looking into market performance and how it is affected by such factors. Mr Kjølberg says “What we have learned is that our products really work when applied to the right parameters of the ship. We need to understand as much as possible about the ships, and the conditions of their trade routes.” He explains how two paint solutions could be used for one container ship. “We have to look at the sea water conditions to see how to maximise products for container ships. If there is high activity, a high sea temperature and a relatively high speed compared to a more diversified trade, different sea water temperatures and the ships passes between both trades, then this affects decisions on what paint to use. “We spent some time looking at optimising combination systems and discussing this with owners.”
Managing onboard paint
Jotun’s chief executive Morten Fon has also spoken about the technological changes brought about by ISO 19030. He noted that Jotun’s Hull Performance Solutions (HPS) offering combines premium SeaQuantum anti-fouling coatings with a suite of sensors to measure long-term performance in accordance with ISO 19030. This provides documented proof of HPS’ ability to maintain a clean hull, with a high performance guarantee promising hull speed loss of under 1.5% over standard drydocking periods, delivering increased fuel efficiency and consumption. For shipowners this translates to lower opex and CO2 emissions. Mr Fon referenced the launch of Jotun’s SeaStock Management Solutions in 2018 as a further step forward. This effectively allows Jotun to manage all onboard paint maintenance – including condition surveys, ordering and logistics – to ensure predictability, optimal quality and protection, and hassle-free administration. He explained “It allows our customers to focus on what they do best, running their fleets, while we focus on what we do best – protecting people and property
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Owners can develop their own methodology, but hopefully based on the ISO standard. The agreement on certain common principles does not stop innovation but at least means there is common terminology for what it actually means” Stein Kjølberg (Jotun)
with world-leading solutions. It is simple, efficient and helps bring us closer, increasing understanding and performance. That is something we can all benefit from.” That spirit of increased collaboration will be key in the future, Mr Fon believes, both for maritime and the broader ocean space. “Data is a key issue,” he stated. “Access to data will allow us to provide better solutions, while sharing data across relevant platforms will help the industry in general push for optimised performance, efficiency and regulatory compliance. Greater transparency will help give us all the ability to navigate what, in the past, has been an unpredictable industry. That is crucial.” AkzoNobel was also involved in forming the ISO 19030 standard. Commenting on the value of the standard, AkzoNobel marine coatings business channel manager Michael Hindmarsh previously told CST “The standard was originally developed to try and harmonise the way ship performance is monitored. It draws a very good line in the sand. But it is just a start, and already people are talking about making it more accurate and improving it.” AkzoNobel sees a huge opportunity in applying big data to fouling control coating selection and using the ISO 19030 standard to prove the benefits. To this end, it launched its Intertrac Vision system in 2015; this is a predictive tool designed to help ship operators assess the return on investment resulting from a coating specification. The iPad-based system processes individual vessel data and operational parameters that trained IP personnel enter during a free consultation. Multiple proprietary algorithms and models are then used to provide an accurate assessment of the impact of each potential fouling control coating choice over a ship’s specified in-service period. Outputs include a vessel’s powering requirement, fuel consumption, fuel cost, CO2 emissions predictions and a full cost-benefit analysis, comparing different coating options and surface preparation options. In 2019, Hempel launched a powerful biocide package and proven binder system. Atlantic+ is said to ensure progressive and controlled self-polishing from the moment the hull hits the water and for up to 60 months thereafter. The new coating is reinforced with Hempel’s patented
Container Shipping & Trade | 2nd Quarter 2019
30 | COATINGS
microfibre technology at a higher level of the company’s strongest cargo hold coating – Hempadur Ultra Strength Fibre. Hempel said the science behind the microfibre technology involves introducing an internal skeleton of fibres into the paint to enhance its mechanical strength – in the same way that steel rods can be inserted into concrete to reinforce a physical structure. Strengthening the antifouling coating in this way means ensuring protection from fouling on areas exposed to impact and abrasion; improving overcoatability; reducing the areas to blast; and ultimately decreasing the costs for the ship’s drydocking.
Coatings for ice-class
A physically more resistant hull coating is required for ice-class ships. PPG Protective and Marine Coatings has been working with the commercial shipping fleet, including crude oil and gas tankers working in the Russian Arctic. PPG has produced a solution that can be applied locally and is resilient enough for severe ice conditions. PPG’s Sigmashield 1200 coating provides protection from the impact of ice abrasion and accretion. Based on a very hard filler composition, the coating’s anti-abrasion properties are built on a highly crosslinked phenolic epoxy technology, further extending the service life of the coating by increasing ‘creep resistance’. This coating can also be applied by cold, single-feed airless spray equipment. PPG said “It has a track record in protecting ice-going vessels, offering easy application as well as maximum abrasion resistance and damage propagation control against ice hazards on the hull's outer shell coating.” A subsequent diving survey of the iceclass commercial vessels after operation in ice-going conditions showed there was no damage on the coated vertical sides of the hulls as a result of ice impact. I-Tech of Sweden holds the IP rights to Selektope, which is an anti-fouling paint ingredient. In a move that builds on the company’s green credentials, I-Tech has developed a new ‘drop-in, dust-free’ dissolvable packaging system to enhance the way the antifouling active agent Selektope is added to marine coatings during the manufacturing process.
Container Shipping & Trade | 2nd Quarter 2019
The expanded polystyrene (EPS) container, which can be added to paint without being opened, fully dissolves almost instantaneously without leaving any traces in the coating system. This innovative packaging therefore allows for the dust-free charging of 100% Selektope powder material to a liquid paint batch, eliminating dust formation completely. It also allows the paint manufacturer to make optimal use of available Selektope and improves safety in the paint processing plant. Each EPS container is supplied within a CurTec HDPE screw lid jar with a locking mechanism making it durable with improved impact resistance for transport. The complete EPS container system can hold 300-800 g of medetomidine (the chemical name for Selektope) as a dry powder within an18-g EPS container. The formal launch of the EPS container at SMM 2018 followed extensive testing with the packaging qualified for use during the manufacturing process without compromising paint performance. I-Tech chief executive Philip Chaabane says “This latest innovation from I-Tech supports our customers in the safe use of Selektope and is a game-changer for the addition of biocides during the paint manufacturing process. In recent years, I-Tech has been successful in scaling up the production of its unique technology from quantities measured in kilos to a robust manufacturing platform producing at multiple tonnes scale.” CST
ABOVE: Hempel’s new Atlantic+ strengthens antifouling coating by ensuring protection from fouling on areas exposed to impact and abrasion
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15-16 October 2019, Singapore
Addressing the operational realities of the 2020 Sulphur Cap Fuel is the lifeblood of the shipping industry and is fundamental to almost every aspect of propulsion. So, when there is a change to the fuels picture, it has a knock-on effect for all other aspects of operation. From 1 January 2020, shipping will see huge changes in its use of fuel, as the Global Sulphur Cap comes into force, dictating the use of compliant fuel or abatement technologies. With the deadline approaching fast, this issue is dominating discussion in the industry and this is why the Sulphur Cap 2020 Conference in Singapore will reflect this by taking the Global Sulphur Cap as its theme, examining all the key issues facing shipping through the lens of the Sulphur Cap. ISSUES ADDRESSED WILL INCLUDE:
• What is the right fuel choice? • What role can enginebuilders play in aiding compliance and how are their designs and plans affected by the cap? • What are the technological problems posed by new fuels? • Will there be sufficient compliant fuel available? • Will fuel quality be maintained? • Are scrubbers an efficient and cost-effective solution? • How is lube choice affected by the cap? • Will we see large-scale adoption of LNG post-2020? • How will shipowners’ operations and bottom lines be affected?
To sponsor or exhibit and to promote your position as a thought-leader in this field, please contact: Tom Kenny on +44 7432 156 339 | tom.kenny@rivieramm.com
Platinum sponsor
Gold sponsor
In association with
Organised by
www.asian.sulphurcap2020.com
32 | COMMUNICATIONS
VSAT connectivity enables IoT and digitalisation
hipowners are replacing legacy L-band communications systems with very small aperture terminal (VSAT) technology that delivers online connectivity to support the growing digitalisation of maritime logistics chains. VSAT facilitates better monitoring and managing of vessel operations and containers, while providing bandwidth for crew welfare. “We see the VSAT solution as critical to our business operations,” says Seaspan manager of process improvement Rajesh Gopinathan. In Q1 2019, Seaspan finished installing Ku-band VSAT on 107 container ships to optimise fleetwide operations. Mr Gopinathan explains that Ku-band VSAT is
“helping our business succeed” by enabling digitalisation of its operations, management and procurement. This includes 24/7 support from the service provider. “KVH assists us in continuously improving the features and functions as our business requirements change,” says Mr Gopinathan. Seaspan also invested in VSAT to improve welfare and media delivery to its 4,500 employees. Seaspan executive vice president of ship management Torsten Holst Pedersen says close communications between seafarers on these vessel and shore offices is a key aspect of successful ship operation. “We can keep seafarers abreast of current initiatives and updates in the company,” he says. KVH installed TracPhone V7-HTS
and TracPhone V11-IP antennas, and integrated communications devices to open KVH’s AgilePlans and miniVSAT Broadband connectivity for the managed vessels. Seaspan subscribes to KVH’s IP-MobileCast content delivery service that multicasts news, sports, entertainment and operations content to the vessels. It uses IP-MobileCast to send custom video messages to the managed fleet once a month to instruct and encourage seafarers. “We recognise that video is a particularly effective format for this communication,” says Mr Pedersen. “We plan to use it increasingly as a communication channel, both to deliver dynamic content and to conduct calls.” Seaspan’s monthly operational update videos highlight accomplishments, convey safety information and discuss critical operational topics. Another container ship operator, Nordic Hamburg, deployed KVH’s
Tore Morten Olsen (Marlink): “Owners want the connectivity and fully managed ICT solutions”
Martin Kits van Heyningen (KVH): “There is no such thing as enough bandwidth”
Ronald Spithout (Inmarsat): Fleet data enables maritime internet of things (IoT)
Container shipmanagers and owners are investing in faster broadband communications to support critical operations and digitalisation
S
Container Shipping & Trade | 2nd Quarter 2019
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COMMUNICATIONS | 33
VSAT hardware and connectivity for faster operational communications and crew welfare. Nordic Hamburg operations and insurance manager Jacobus Varossieau says VSAT AgilePlans provides flexibility in communications for its fleet. Nordic Hamburg uses network management solutions, fast data speed and crew welfare services on the vessels. “This solution enables us to offer our customers exceptional value and connectivity,” says Mr Varossieau. “This applies to both our operational efficiency as well as offering our valued crew fast, effective, and reliable communications.” VSAT enables Nordic Hamburg to adopt more digitalisation applications across its fleet. “We now have a service that helps us future-proof our shipboard communications in line with today’s digital demands,” says Mr Varossieau. KVH co-founder and chief executive Martin Kits van Heyningen thinks more shipowners will upgrade onboard communications to VSAT. “There is no such thing as enough bandwidth,” he tells Container Shipping & Trade. “Owners want more bandwidth, more content, better coverage and VSAT for their business models. They want it all-inclusive with installation, content and network controls.” Mr Kits van Heyningen thinks crew welfare remains a major reason for VSAT installations, but operational and monitoring requirements have greater importance in decision making. “A big driver is IoT applications and business models that depend on getting the data off vessels and integrating ship IT,” he says. But, he warns shipowners to ensure that connectivity is controlled, especially if there is onboard wifi that enables seafarers to use their own devices. “Owners do not want phones to soak up the available bandwidth on a vessel,” Mr Kits van Heyningen continues. “Smartphones and tablets will automatically synchronise with cloud services, but that is unwanted traffic for owners.” To prevent this, owners need to allocate bandwidth, block traffic and manage access.
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Outsourcing IT
Owners can go further by combining controls with remote IT management to enhance the reliability of onboard computers and communications equipment. Norwegian ship operator Torvald Klaveness selected Marlink in Q1 2019 to provide VSAT services and Palantir’s remote IT management platform for ships it operates. Sealink VSAT is being deployed across a fleet of 23 combination carriers and container ships. Marlink is supplying its XChange centralised communications management devices and Palantir KeepUp@Sea remote IT services on these ships. Torvald Klaveness head of IT and development Lars Erik Luthman says standardising IT management and optimising vessel performance are key pillars of the ship operator’s digital strategy. “With VSAT connectivity as a backbone, the scalable KeepUp@Sea solution will allow us to consolidate our IT operations on a single platform, reducing complexity, simplifying troubleshooting and ensuring that our software, licences and antivirus are always up to date,” he says. “Through this we are looking to optimise IT management on board and ashore, improving stability and availability across our fleet of 23 owned and managed ships, and ultimately reduce overall operational expenditure.” Marlink president of maritime Tore Morten Olsen says owners are increasingly outsourcing IT management and servicing. “There is a lot of traction in the market to overcome the challenges of managing the onboard IT,” he tells CST. “Owners want the connectivity and fully managed ICT solutions.” These services will be in greater demand as more performance and condition monitoring sensors are installed on ships and environmental monitoring devices on containers. “As soon as ships have sensor data, operators cannot afford to have breakdowns in communications,” says Mr Olsen.
CONTAINER SHIP CONNECTIVITY BENEFITS Improves operational efficiency Ship monitoring/management Container information Digitalisation applications Crew welfare IT remote management Bandwidth management Segregated operations/crew VSAT channels Conveys safety video information Communications with clients
Fleet data
Shipowners can also invest in Ka-band VSAT with Inmarsat’s Fleet Xpress global service which is provided with FleetBroadband L-band for back up. This can be connected to a dedicated IoT service such as Inmarsat's Fleet Data service, launched in Q1 2019 to support vessel monitoring. Fleet Data was developed in partnership with Danelec Marine for merchant shipping and has a vessel remote server that preprocesses ship sensor data. It uploads it to a secure, cloud-based platform that has user dashboards and an application program interface (API). Inmarsat Maritime president Ronald Spithout describes Fleet Data as “the first and only service to enable maritime IoT through a combination of existing shipboard data infrastructure and dedicated high-speed bandwidth”. Vessel managers can access and analyse data through the API to enhance vessel safety and efficiency, or the fleet’s environmental footprint, says Mr Spithout. “They can also make this data available to third-party applications that monitor fuel efficiency or hull performance.” Currently available on Fleet Xpress, Fleet Data will be rolled out across Inmarsat’s FleetBroadband service by the end of 2019. CST
Container Shipping & Trade | 2nd Quarter 2019
34 | STATS AND ANALYSIS
Feeder market continues newbuild order rush The scale of feeder ordering is almost unprecedented, with the strong market likely to continue, explains Barry Luthwaite
T
he hunger in feeder trades shows no sign of abatement. Owners continue to reap good rewards from profitable rates induced from charters on time and spot employment. European and Asian traders reap dividends from port congestion and profit from 'troubles' the ULCS find themselves in. Orders for ULCS have stalled as existing tonnage struggles with maximum loads. Suddenly the thinking has changed from direct, to a balance between direct calls and feeder factors in ports to satisfy customers. Congestion has been delaying discharge and loading of ULCS allowing feeder vessels to play a crucially important role in minimising delays to the customer.
Freight rates are keeping owners very happy at the current time despite falling over a one-year period as more vessels have delivered into the global fleet. At the end of April 2019, feeder sectors command the following time charter rates on average: TEU 1,100 TEU
Rate (US$)
Period
$6,584
daily over 12 months
1,700 TEU
$8,088
daily over 12 months
2,500 TEU
$10,042
daily over 24 months
2,700 TEU
$9,964
daily over 24 months
3,500 TEU
$9,740
daily over 24 months
4,250 TEU
$9,700
daily over 24 months
2,500 TEU
$9,144
daily over 12 months
2,700 TEU
$8,960
daily over 12 months
3,500 TEU
$8,754
daily over 12 months
4,250 TEU
$8,773
daily over 12 months
Container Shipping & Trade | 2nd Quarter 2019
The most striking feature now is the rush by the box majors to order directly owned feeder ships instead of chartering in, which in the long run allows more operational control and economy of scale. The market is so busy that in recent months major box ship owners have increased lengths of employment to up to two years or added optional extensions for feeder owners. However, the newbuilding market is still suffering from bankruptcies of shipyards especially in China, where smaller, privately owned yards cannot secure enough cash flow after gaining success from rapidly rising feeder orderbooks. The runaway success of China is vividly illustrated by the fact that of 331 container ships up to 5,000 TEU on order, 221 will be commissioned in this country. The next two nearest nations of Japan and South Korea only share jointly 37 vessels each. The total orderbook at the end of April 2019 stood at 331 vessels which will commission 741,939 TEU into the global fleet over the next three years. The situation three months earlier stood at 302 vessels aggregating 591,953 TEU. One thing is clear in owner preferences. Only one vessel is on order in the 4-5,000 TEU range. This size range was very popular at one time with several 5,000 TEU units being constructed as wide-beam designs allow extra capacity. Today they are a dying species with many destined or already delivered to the recycling yards. The most popular units are between 2,000-3,000 TEU, especially in the 2,500-2,700 TEU capacity range and suitable to fit Bengalmax and Bangkokmax draft restrictions.
Unprecedented feeder orders
The sheer scale of feeder ordering is almost unprecedented and currently there is work for all on a sustainable basis, but will the bubble burst? A number of feeder orders are running in tandem with ULCS commitments, with the majors effectively operating a partnership to provide a successful final delivery path to the customer. It has reached a stage where the feeder has become an indispensable asset. For feeder owners it is a win-win situation. Spot business can be secured at higher charter rates for single voyages while time charter business shows increasing signs of necessity over a longer duration with optional extensions. Bonds are increasingly built up between owner and charterer. Certainly, in Europe more pools and consortia are being formed to stay competitive. Enforced sales have all ⊲
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FLEET STATS AND ANALYSIS | 35
SHIPBUILDER
NO
TOTAL TEU
Huangpu Wenchong
45
92,996
Others
Hyundai Mipo
30
56,100
Shoei Kisen Kaisha
24
43,200
Jiangsu New Yangzijiang
28
53,683
Sinokor Merchant Mar.
22
30,800
Imabari
22
43,600
Wan Hai Lines
20
48,744
Jiangnan Shipyard
21
49,440
Nissen Kaiun
14
25,600
Tsuneishi (Zhoushan)
19
42,468
ICBC Maersk Line
13
28,640
China Sb. Corp.
12
31,600
Undisclosed
12
25,868
Fujian Mawei
12
13,935
Lomar Shipping Ltd.
11
19,950
Guangzhou Wenchong
12
24,800
Quanzhou Ansheng Shipping
11
26,400
Zhoushan Changhong
11
26,700
Rickmers, Bertram
10
13,087
Chengxi Shipyard
10
13,800
Yangming Marine
10
28,000
WUT Guangda
10
12,254
China Navigation Co.
8
20,400
Taizhou Sanfu
9
21,600
COSCO Shipping
8
11,240
COSCO Guangdong
8
14,150
Del Monte Fresh Fruit
8
18,200
Japan Marine United
8
24,288
Evergreen Marine Corp.
8
22,400
Daesun
7
7,062
Jiangsu New Yangzijiang
8
8,800
Jinling
6
11,448
SITC Marine Co.
8
21,000
Kyokuyo
5
5,488
CMA CGM
6
16,500
PT Daya Radar Utama
5
500
Indonesian Govt.
6
600
Philly Shipyard
4
14,400
Sea Consortium Pte. Ltd.
6
16,200
Tsuneishi (Cebu)
4
7,600
XT Shipping
6
10,800
Chuangdong
3
3,000
Zhonggu Shipping
6
11,448
COSCO Zhoushan
3
9,900
Nordic Hamburg/Containerships
5
6,840
Ben Thuy Shipbuilding
2
1,400
SITC Ship's Mgmt. Co. Ltd.
5
5,040
Ezhou Guangda
2
2,280
TS Lines
5
6,888
General Dynamics NASSCO
2
7,000
Arkas Group
4
12,400
Huanghai
2
1,760
Cape Shipping S.A.
4
10,800
Hunan Jinhang
2
1,306
Cosmoship Mgmt.
4
6,000
Jiangdong
2
1,000
Kambara Kisen
4
10,800
Keppel AmFELS
2
5,925
Lepta Shipping
4
7,600
Kouan Shipbuilding
2
2,800
Marlink Schiffs.
4
4,648
Shanhaiguan Shipyard
2
5,400
Tote Maritime
4
14,400
Wuchan Shipyard
2
1,400
COSCO
3
5,400
Xiamen Shipbuilding Ind.
2
4,800
Gerchicon UG
3
6,900
Yangzijiang Shipbuilding
2
3,800
Korea Marine Trans.
3
7,500
Zamakona
2
210
Royal Arctic Line
3
2,410
Zhejiang Jiuzhou
2
7,600
Shenzhen Energy
Zhejiang Yangfan
2
4,608
Grand total
Naikai
1
2,450
Nakatani
1
278
PT Dhumas Tanjung Perak
1
100
STX Dalian
1
5,000
Vard Bratvaag
1
120
Western Marine
1
160
Zhejiang Ouhua
1
1,730
331
641,939
Grand total
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SHIPOWNER
NO
TOTAL TEU
48
83,436
3
3,000
331
641,939
For a full list of orderbook data inclusive of hull number, owner, capacity, charter, year, containment, class, propulsion and owner country please visit: www.brldata.com
Container Shipping & Trade | 2nd Quarter 2019
36 | STATS AND ANALYSIS
Containerships on order up to 5,000 TEU
37
221
37
12
31,600 TEU
8
27,325 TEU
6
600 TEU
4
2
2
1
7,600 TEU 210 TEU 1,400 TEU
1
160 TEU 120 TEU
76,104 TEU 63,162 TEU
433,658 TEU
⊲ but ceased in a revived trading position although banks and other creditors remain cautious. A salient feature looking ahead, however, could be a growing orderbook of too many ships. The average age of a feeder is always longer due to shorter distance voyages which boost earnings potential. There is only evidence of vessels built in the 1990s and early 2000s going for recycling. They are largely faced with new emission control legislation from the start of 2020 requiring big expenditure on renovation which is not economical. The newbuildings, in most cases, will incorporate the most efficient fuel performance engines and charterers will lean towards supereco-friendly ships. The big mover in the last three months for newbuildings has been joint Chinese/South Korean Sinokor Merchant Marine. A huge order was placed by this owner among three Chinese yards. Four 2,400-TEU units were placed at Jiangnan Shipyard while 16 1,100TEU vesels were equally shared between Huangpu Wenchong and Chengxi shipbuilders. Deliveries are set for between 2020 and 2021. The world’s largest container ship owner – Maersk – struck a deal with ICBC Financial Leasing, China to construct 13 2,200-TEU feeders shared between three yards. Jiangnan Shipyard will build five plus optional five units which is firm business. Other business centres on three
Container Shipping & Trade | 2nd Quarter 2019
TOTAL
NO 331
641,939 TEU
more from Zoushan and a final five from Japanese builder Imabari. All deliveries are scheduled between 2020 and 2022. No prices were confirmed. All the vessels are aimed at deeper penetration of the intra-Asian feeder markets. Subjects have still to be cleared on the latter two deals. Maersk will lease the vessels and offer long-term charter employment with the option to purchase on expiry. All the ships will be operated by the Maersk subsidiary Sealand (Asia). Maersk has made it clear the company will concentrate on feeder penetration in the next few years after calling a halt to ULCS construction in the immediate future. The owner recently completed delivery of a series of 3,700-TEU feeder ships now serving Europe, introducing a somewhat niche capacity size. The secondhand market has also been very lively with multiple acquisitions and even company fleets by feeder operators. There will be disappointment that currently there is a slowing of enforced sales partly inspired by strong trading freight rates. Suddenly there is an ambition, especially among Asian-based owners, to build up larger fleets and to challenge for top status in market leadership. Asian companies also have an eye on penetrating European owner-dominated markets. Such competitive factors consolidate and expand a bullish trading market in the immediate future. CST
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TOP 20 CARRIERS | 37
Top 20 carriers: a turning point Last year’s top 20 carrier table showed the impact of M&A activity in the sector. This year, consolidation activity has calmed down and many carriers are focused on boosting their positions through supply chain efficiency, digitalisation and a focus on customer service OPERATOR
TEU/SHARE
1
APM-Maersk
4,142,498/18.0%
2
MSC
3
COSCO Group
2,886,255/12.5%
4
CMA CGM Group
2,666,810 /11.6%
5
Hapag-Lloyd
6
ONE (Ocean Network Express)
7
Evergreen Line
8
Yang Ming Marine Transport Corp
9
Hyundai Merchant Marine
427,058/1.9%
10
PIL (Pacific International Lines)
379,908/1.6%
11
Zim
320,834/1.4%
12
Wan Hai Lines
281,618/1.2%
13
KMTC
159,547/0.7%
14
IRISL Group
154,415/0.7%
15
Antong Holdings (QASC)
16
Zhonggu Logistics Corp
137,513/0.6%
17
X-Press Feeders Group
124,900/0.5%
18
SITC
109,747/0.5%
19
TS Lines
20
SM Line Corp
3,377,894/14.7%
1,693,041 /7.3% 1,547,811/6.7% 1,274,528/5.5% 644,620/2.8%
148,264/0.6%
79,141/0.3% 75,356/0.3%
Source: Alphaliner TOP 100 / May 2019
1
MAERSK
Maersk is still the largest global container carrier, with a current fleet of 4.14M TEU and a 17.9% share of the world’s global container fleet. It is strengthening its business by transforming itself from a conglomerate to a global integrator of container logistics, providing customers with end-to-end supply chain solutions. This involves integrating
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its container, port and logistics businesses to operate as one company. According to Maersk’s 2018 ‘message from the CEO’, 2019 will be the “year of accelerating our transformation”. Steps to achieve this include: Damco’s Supply Chain Services (now known as Logistics & Services) and Maersk Line’s Ocean sector have become integrated, the integration of Hamburg Süd, and the separation of Maersk Oil and Maersk Tankers. Also key is customer experience and digitalisation. Maersk has become the first container
Container Shipping & Trade | 2nd Quarter 2019
38 | TOP 20 CARRIERS
shipping company to offer digital ocean customs clearance with the launch of an online platform. Maersk launched its Customs Clearance online shipping management platform in May 2019.
2
MSC
MSC is at number two, with a fleet of 3.4M TEU, taking up 14.7% of global fleet capacity. Its orderbook of 393,568 TEU (22 ships) is one of the largest among the top carriers. Indeed, it is building 11 ships of 22,000 TEU, which will be delivered from this year onwards. The carrier announced last year that it will equip its newbuilds with 11 MAN B&W 11G95ME-C9.5 high-efficiency main engines. It is also jumbo-sizing 10 14,000TEU ships to turn them into 17,000-TEU box ships. It is a leader in developing digitalisation after joining forces with Maersk, CMA CGM, Hapag-Lloyd and Ocean Network Express to establish the Digital Container Shipping Association, to pave the way for standardisation in the container shipping industry.
3
COSCO GROUP
COSCO Group has overtaken CMA CGM to move up from last year’s position of number four, to this year’s number three. It has a fleet of 2.9M TEU. Its change in position is due in large part to its acquisition of OOIL last year. COSCO has also enjoyed a vigorous newbuild delivery programme, with 16 vessels of a combined 285,316 TEU capacity delivered in the first nine months of last year. For 2019, it has 10 new
vessels due to be delivered. Synergies between COSCO and OOCL’s middle and back desk functions such as cost control will be optimised and are expected to result in synergies in areas such as route networks, information systems, container fleets and supplier procurement. The acquisition will also lead to more comprehensive geographical coverage, and more flexible global capacity control. The company is boosting its end-to-end transportation solutions with the strengthening of its ‘Belt and Road’ strategy.
4
CMA CGM
CMA CGM might have been pushed down to number four by COSCO with its current fleet capacity of 2.7M TEU, but its newbuild orderbook is the largest of the top 20 carriers, with 450,088 TEU on order. This, of course, includes its nine dual-fuel 22,000-TEU mega newbuilds – the first ultra-large container ships to be fuelled by LNG. Indeed, according to VesselsValue, following CMA CGM’s order of 10 15,000-TEU ULCSs earlier this year, the operator has been catapulted into the top three largest ULCS owners, snatching second place from rival container owner MSC. This increases CMA CGM’s number of UCLSs on order to 19. CMA CGM currently owns 20 live ULCSs. Container trade routes are notoriously competitive for market share. The extra tonnage from CMA CGM increases the Ocean Alliance's overall tonnage to 3.82M TEU, placing it comfortably ahead of 2M, with 3.33M TEU, and THE Alliance, whose companies own 2.15M TEU. CMA CGM has also expanded with its takeover of shortsea operator Containerships and its move this year to become the majority shareholder of Ceva Logistics.
The orderbook of CMA CGM is the largest of the top 20 carriers, with 450,088 TEU on order (credit: CMA CGM)
Container Shipping & Trade | 2nd Quarter 2019
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TOP 20 CARRIERS | 39
The cost savings from integrating the container ship operations of NYK, K Line and MOL into Ocean Network Express, have surpassed estimates before the integration.
5
HAPAG-LLOYD
Hapag-Lloyd is in fifth place with a fleet capacity of 1.7M TEU. It has no newbuilds on its orderbook at present. It has hit headlines recently, as its 15,000-TEU vessel Sajir will become the biggest container ship so far to retrofit dual-fuel LNG engines. Last year it launched its Strategy 2023, where it will focus on significantly improving quality for its customers, selective global growth and becoming profitable throughout the cycle. It will achieve this through key cost initiatives that focus on network optimisation, terminal partnering and further improvements in procurement and container steering. In addition, it has optimised revenue management to ensure that the most attractive cargo gets on board. There will be more investment in digitalisation and automation including increasing the share of the online business via the web channel to 15% of Hapag-Lloyd’s overall volume by 2023.
6
OCEAN NETWORK EXPRESS
The combining of NYK, K Line and MOL’s container ship businesses as Ocean Network Express (ONE) has pushed the Japanese trio to number six in the Alphaliner top 100 largest ocean carriers, with a fleet capacity of 1.5M TEU.
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It has had a slightly rocky time, but the signs are positive for the future. ONE “set sail in choppier waters than we had expected”, MOL president and chief executive Junichiro Ikeda said in his 2019 New Year message addressed to all officers and employees. He said that ONE did not reach its projected liftings due to disruptions in initial operations. He added “However, the cost savings derived from integrating the container ship operations have surpassed estimates before the integration. We also know exactly what must be done to improve cargo volume liftings and earnings. We will closely heed the lessons we have learned from ONE’s results to date as we fulfill our governance responsibilities as an investing company of this business venture.”
7
EVERGREEN
Evergreen is at number seven with a fleet capacity of 1.3M TEU. It also has a large orderbook, with 393,348 TEU due to be delivered. Its delivery programme incudes its 11 G-class 20,150-TEU megaships that started delivery last year and are due to be continued this year. Ordered from Japanese shipyard Imabari Group in October 2015, these are its largest ships. Taiwanese carrier Evergreen has stood strong in the face of consolidation within the container shipping industry, despite its smaller size compared to partners in the Ocean Alliance.
Container Shipping & Trade | 2nd Quarter 2019
40 | TOP 20 CARRIERS
8
YANG MING
Yang Ming is at number eight in the rankings with a fleet capacity of 645,738 TEU. It has a sizeable orderbook of 221,800 TEU. Yang Ming and Shoei Kisen Kaisha Ltd (Shoei Kisen) signed charter agreements for four 11,000-TEU container ships in April this year. The four new vessels will be delivered in 2022. Yang Ming said that to enhance the company’s mid- to long-term operational efficiency and competitiveness, it “continues its fleet optimisation plan”. In addition to these four container ships, in 2018 Yang Ming ordered another 10 11,000-TEU newbuildings through longterm charter agreements with owners Costamare and Shoei Kisen, which will give Yang Ming a total of 14 11,000-TEU newbuild container ships between 2020-2022. These eco-type newbuildings with modern designs will gradually replace some of Yang Ming’s high-cost, older ships. The carrier commented “With the new ships which will mitigate the pressure of high bunker prices and increased operating costs following the implementation of IMO 2020, Yang Ming will become more cost-competitive and environmentally friendly in the future.”
9
HYUNDAI MERCHANT MARINE
Hyundai Merchant Marine (HMM) has a fleet capacity of 427,058 TEU. It has big ambitions to grow its fleet with 396,000 TEU (20 vessels) on its orderbook. In October last year it signed contracts for 20 eco-friendly box ships – which includes an order for the world’s largest box ships. Daewoo Shipuilding & Marine Engineering will build seven 23,000TEU vessels, to be delivered in Q2 2020, while Samsung Heavy Industries will build five 23,000-TEU vessels, also to be delivered in Q2 2020. Finally, Hyundai Heavy Industries will build eight 15,000-TEU ships, slated for delivery in Q2 2021. HMM said the benefits of its shipbuilding programme include being able to secure stronger “fleet competitiveness with the benefit of economies of scale” and helping the carrier to “form a stable basis for making profits.”
10
PIL
PIL has a fleet of 380,636 TEU. It has recently completed a newbuilding programme that comprised 16 11,800-TEU box ships and has just one ship of 600 TEU on its orderbook. It has recently focused on using digitalisation to boost efficiency of the supply chain. This includes a successful trial of a blockchain-based electronic bill of lading (EBL) to track a shipment in real-time at the start of the year. Built on the enterprise-ready IBM blockchain platform, the trial saw an EBL used to track in real-time a shipment of approximately 108,000 mandarin oranges being imported to Singapore from
Container Shipping & Trade | 2nd Quarter 2019
China by Hupco in time for the lunar new year celebrations. PIL said using the EBL reduced the administrative time to transfer the title deed on the shipment to just one second from about a week.
11
ZIM
ZIM has a fleet of 320,834 TEU, and currently has nothing on its orderbook. This is another carrier focused on digitalisation. It has recently joined the Digital Container Shipping Association and has announced a landmark in developing its blockchain-based paperless bills-of-lading technology, which enables all parties in a transaction to issue, transfer, endorse and manage documentation through a secure decentralised network. The first pilot of the project was announced in November 2017, carried out in co-operation with Hong Kong-based logistics technology firm Sparx Logistics and Israel-based blockchain company Wave. In the initial trial, containers were shipped by Sparx Logistics from China to Canada. On 14 January, ZIM announced two transactions had taken place in which original bills of lading were transferred to the receiver less than two hours after the vessels to which they related had departed – a significant improvement over the days or even weeks that the process can normally take. ZIM chief information officer Eyal Ben-Amram said “Having gained considerable experience with this revolutionary technology, we are now moving forward. It is part of our commitment to maximise digitalisation, and at the same time enhance our customer service levels and nurture customer relations.” ZIM now plans to roll out the technology across all of its customers in selected trades.
12
WAN HAI LINES
Wan Hai Lines has a fleet capacity of 281,618 TEU. In November last year Wan Hai signed contracts with shipyards for 20 box ships as part of its fleet improvement plan. Wan Hai Lines has confirmed an order of 20 container vessels with Japan Marine United Corporation(JMU) and Guangzhou Wenchong Shipyard Co/China Shipbuilding Trading Company (GWS/CSTC). The contract includes eight 3,036-TEU container vessels with JMU and 12 2,038TEU container vessels with GWS/CSTC. The vessels will be deliveredfrom October 2020 and January 2021 respectively. Wan Hai Lines operates a fleet of 72 owned vessels and 24 chartered vessels. It commented in a statement “This new shipbuilding contract is the company’s latest fleet renewal plan, so as to ensure that the company’s vessel fleet is able to remain competitive and support continuous market development. Eventually, the company hopes to deliver better service quality to its customers with a more efficient vessel fleet.”
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TOP 20 CARRIERS | 41
13
KMTC
Korea Marine Transport Co (KMTC) is an intra-Asia regional company, deploying regular container liner services to China, southeast Asia, southwest Asia, the Russian Federation and the Middle East. The company also owns and operates terminals in the port of Ulsan and Busan New Port. This carrier joined the top 20 last year due to the consolidation that has taken place within container shipping lines. Its position in the top 20 reflects the strength of the intra-Asia trade which is now similar in size to the Asia–Europe and transpacific deepsea trades. The carrier is benefitting from a mix of newbuilding and newbuilding charter tonnage – on its orderbook it has eight ships of a total 106,545 TEU.
14
IRISL
Iran’s national shipping line IRISL Group arrived in the top 20 last year – propelled up the rankings due to the consolidation among some of the major carriers and after UASC, Hamburg Süd, NYK Line, MOL and K line disappeared as separate names. It was previously at number 24. It has been affected by political events as it is subject to US sanctions on Iran. US sanctions against Iran forced the carrier to give up its newbuilding programme. It placed an order with South Korean shipbuilder Hyundai Heavy Industries for four 14,500-TEU container ships in late 2016. These ships have now gone to new Shanghai-headquartered carrier Reach Shipping Lines, which has deployed the vessels on a new Far East-Colombo service.
15
X-PRESS FEEDERS GROUP
X-Press Feeders Group has slipped from its position of number 14 last year to 17 in May 2019. Its orderbook has 5,564 TEU, split between two ships. Its fleet of 125,514 TEU consists of 72% of chartered-in tonnage, which has enabled it to take advantage of some cheap daily hire charter rates and allowed it to be flexible. Dynamar’s Transhipment and Feedering 2018 - Trades and Operators - Ships and Hubs report describes X-Press Feeders as the world’s third largest and the single pure-feeder operator.
18
SITC
SITC has a fleet of 110,400 TEU capacity, bolstered by 22,00 TEU (nine ships) on its orderbook. The Chinese carrier’s orderbook has grown within the last 12 months, as in May last year it was 15,666 TEU.
19
TS LINES
TS Lines is a new entry into the top 20. The Taiwan carrier has a fleet capacity of 79,141 TEU and an orderbook of 8,000 TEU (six ships). TS Lines ordered four 1,800-TEU feeder vessels in 2015 and 2016 from CSBC shipyard and the owner booked another pair in 2018 for the same design with modifications to meet new regulations. These are currently being built.
TS Lines currently has newbuilds under construction at CSBC shipyard (credit: CSBC)
ANTONG HOLDINGS
Quanzhou Ansheng Shipping, a subsidiary of Chinese transportation company Antong Holdings, has risen up the ranks and is now at number 15, from its position in May last year of 16. Previous to 2018, it was at number 29. Container line mergers and acquisitions plus an aggressive newbuilding programme have propelled it up the ranks. Its fleet of 148,264 TEU is set to be boosted by 19 vessels of a total of 24,788 TEU it has on its orderbook. This includes eight 12 640-TEU box ships, which are expected to be delivered in 2019 onwards.
16
17
ZHONGGU LOGISTICS CORP
Zhonggu was catapulted into the top 20 last year – it was at number 33 in April 2017. Its fleet of 137,513 TEU is larger than a year ago, when it consisted of 125,566 TEU capacity. This is due to the delivery of newbuilds. The carrier still has 1,448 TEU on its orderbook.
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20
SM LINE CORP
This South Korean carrier was formed from the now-defunct Hanjin, with five ships coming from that carrier. SM Line’s parent company, Samra Midas Group, acquired the business operations of Hanjin's Pacific and Asian routes. Concentrated on the northeast Asia-southeast Asia, Far East-India and transpacific routes, it has a fleet of 75,356 TEU. CST
Container Shipping & Trade | 2nd Quarter 2019
42 | MARKET UPDATES
Container ship scrapping is building momentum There has been a surge in container ship scrapping in the first four months of 2019. Container Shipping & Trade looks at the driving forces
A
ccording to data from VesselsValue, 56 container ships were sold for scrap in 2018. Already in the first four months of 2019, 46 vessels have been sold for recycling. Does this mean 2019 has the momentum to overtake 2018 and by how much? It is tempting to annualise January to April figures, and suggest that 138 container ships would be scrapped in the whole of 2019 but the numbers that produces do not seem realistic. This includes a projection of 66 vessels to be scrapped from the handy container fleet, an event that would have a substantial impact on the size of the fleet. But caution is needed in making such assumptions, as the reasons for recycling are numerous. A random examination of the individual ships sold for scrapping in 2018 reveals some familiar stories. In the case of 1997-built Feedermax Noble Breeze, the vessel was sold by Rickmers in 2013 and passed Special Survey in 2017, a significant investment in the vessel by the new owner located in the Middle East. The markets failed to recover and in 2018, the value of the vessel had fallen to scrap, according to VesselsValue data, which also records the crew were abandoned by the Middle Eastern owner in 2018 with no diesel to run the generators. The vessel was sold for scrap on an ‘as is’ basis. A sad case, but for most vessels sold for scrap in 2018, the decision to scrap revolves around age and the date of
Post Panamax Container 31 9
21
24
Panamax Container
45
Feedermax
15 8 Sub Panamax Container
Container Shipping & Trade | 2nd Quarter 2019
CONTAINER SHIP SCRAPPING 2019
6 4 4
33
66
20 18
Handy Container
2018
2019 Candidates*
Annualised 2019
Source: VesselsValue, May 2019 Notes: *Candidates based on the date of Special Survey and age
the next Special Survey. Now that the Ballast Water Management Convention is in force, retrofitting a ballast water management system is added to the equation. This is obligatory, and another potential capital cost is a scrubber to burn high sulphur marine fuel post-2020, if that is the route the owner is taking to conform to IMO
2020. Both are significant investments. On smaller vessels optimised for TEU capacity, there may not be the space to retrofit even a modular ballast water treatment system, although a deckhouse version is an option. Ballast water treatment system fitment as part of a Special Survey drydock is a 20-day plus event, and of course, the vessel is
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MARKET UPDATES | 43
off hire and not earning revenue. There is very little data available recording which container ships are fitted with ballast water treatment systems and scrubbers, so this cannot be used as a basis to estimate the number of container ships that may be sold for scrap in 2019. However, the 2018 data reveals the average age of the vessels and the date of the next Special Survey prior to the sale for scrapping. Using these two factors, a list of potential candidates for scrapping in 2019 has been derived. The total number of 83 is still significantly higher than the 2018 scrappage, but more realistic than the 166 vessels from the annualised projection. For instance, in the handy container sector the annualised projection calls for scrapping 66 vessels, far in excess of the total in 2018. In the feedermax sector, the analysis based on the average age of previously sold vessels and the date of the next Special Survey reveals a larger group of candidates. Regarding scrapping, container ship operators and owners need to be aware that the EU regulation on ship recycling became law at the start to 2019. The aim of the European Regulation on Ship Recycling (EU SRR) is to prevent waste being exported from Europe. Vessels flagged in the EU may only be recycled in one of 26 yards on the EU-approved list. Most of the yards are in Europe, with two in Turkey and one in the USA. None are in the traditional shipbreaking countries of the Indian subcontinent and China no longer imports ships for recycling. So far, it appears that only one vessel has been sold in line with EU SRR, and that was by a Norwegian owner, Greig Star, which sold Star Gran for dismantling at the EU SRRapproved LEYAL Ship Recycling Group yard in Turkey. Grieg Star chief executive Camilla Grieg said of the decision to recycle the vessel under EU SRR “Star Gran is 33-years-old, and it is time for its last voyage. It has served us well, and it is wistfully we send it to the recycling yard. With Grieg Green’s expertise
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and the quality of LEYAL Ship Recycling Group, we feel confident in a transparent and high-quality process.” The reported Star Gran demolition price of US$250/ldt is far below the US$425/ldt that could have been realised through a sale to an Indian subcontinent scrapyard, indicating a sacrifice of US$1.6M to adhere to green recycling principles. Should there be the expected surge in container ship scrapping in 2019, it will have the largest impact in the medium size ranges. According to Clarkson Research Services, the container ship orderbook is equivalent to 12% of the current fleet by TEU. That figure is skewed by the growth in orders at either end of the container ship size ranges. There are 68 vessels of 15,000 TEU or higher on the orderbook, which provide 1.32M TEU (51%) to the total of 2.75M TEU on order. At the other end of the scale, there are 304 Feedermax of 0.55M TEU on order (14% of the orderbook). Between the size ranges of 3,000 to 14,000 TEU there are only 80 vessels of 875.7M TEU on order. The container ship orderbook is a donut with no 6-7,999-TEU vessels on order. This suggests the fleet will return to some semblance of an equalised supply/demand balance in some sectors. According to Alphaliner, a liner
reference database, the 6-7,999-TEU sector is still in demand if somewhat erratically, noting that “modern ‘widebeam’ tonnage of 6,800 TEU remains unemployed in Asia.” But the “trading environment is generally positive for this segment and charter rates remain on a firming trend.” There has also been a revival of interest in the classic Panamax, which is much in demand in Asia, according to Alphaliner. It notes that the number of ships of over 4,000 TEU deployed in the Far East regional trades has increased steadily since 2010, from fewer than 30 vessels to 195 units currently. Of these, 153 are classic Panamaxes and the reason for the popularity is the low charter rates on offer. Operators of feeder services in the Far East, and especially China, can charter in a lower cost, higher capacity classic Panamax to replace smaller vessels, leading to marginal savings in the bunker costs per TEU. This will be a key factor with the introduction of the IMO sulphur cap on marine fuels on 1 January 2020. Low sulphur fuels and alternative compliant fuels are almost certainly going to cost far more and there will be push back from shippers. Carriers will be looking to mitigate this, and chartering in a cheaper, but larger vessel lowers the fuel spend per slot, while absorbing excess classic Panamax supply. CST
The 1991-built handy container ship Wan Hai 206 was sold for scrap at US$400/ldt ‘as is’
Container Shipping & Trade | 2nd Quarter 2019
44 | LAST WORD
How smart containers boost supply chain efficiency
D
Thomas Nouvian, Traxens maritime business unit deputy director
We believe a very large percentage of the container fleet will become smart as the cost of technology goes down”
eploying smart containers enhances supply chain visibility and enables shipping lines to reduce problems encountered by cargo in transit CMA CGM and MSC are increasing the efficiency of their supply chains through using ‘smart containers’ – a concept set to grow on the back of potential regulation, customs authority involvement and the increased appetite for creating valueadded services. Each carrier is equipping 50,000 containers with technology from French company Traxens. This consists of a tracking and environment monitoring device permanently fitted to the box, which records data including GPS position, temperature, impact, movement and the door opening. The shipping lines access the data generated via Traxens’ web portal hub or through API. Traxens maritime business unit deputy director Thomas Nouvian said “Use of this data leads to lead-time reduction and an understanding where on the journey the container is losing time – a classic example is a missed transhipment.” Detecting a missed transhipment allows shipping lines and beneficiary cargo owners (BCO) to take corrective action. Highlighting another benefit, Mr Nouvian said “It provides information on cargo quality. There are three big areas when it comes to sensitive cargo: temperature, humidity and shocks.” Examples of container shocks include detecting when a container has been dropped from height. Elsewhere, monitoring when containers have been opened in unexpected locations can alert shipping lines and BCOs to potential security breaches. Mr Nouvian said “Getting the right container to the right customer at the right time and place is very challenging and means carriers can build up massive
Container Shipping & Trade | 2nd Quarter 2019
inventories in some places and slack off in others. It is also a big headache to count the number of containers in one place. Using a smart container means they know at a click of a button the exact number of containers in different depots and can better capitalise moving their inventory of containers.”
Developing smart box usage
The shipping lines using the smart containers are considering deploying this technology. Mr Nouvian said MSC was looking at implementing smart containers for dangerous goods. “It would give them much closer visibility of this cargo as they will get data about any potential deviation from normal, in terms of temperature, gas or humidity level,” said Mr Nouvian. Mr Nouvian believes smart container use will grow. “We believe a very large percentage of the container fleet will become smart as the cost of technology goes down.” Traxens is in talks with customs authorities around the world to implement the ‘green lane’ concept whereby the container is processed quicker as customs can access the smart container data. Mr Nouvian said “This is still a concept for now, but a strong belief of ours is that the smart container will become mandatory for some commodities (such as dangerous cargo) and some origins.” A further driver is that using smart containers helps carriers provide a valueadded service and not just sell a commodity. MSC is developing a dedicated smart container service where the shipping line’s teams can use the data and proactively inform BCOs if there are any problems. The appetite for using smart containers looks set to grow and to this end, Traxens expects to add to its customers. It is speaking with a third shipping line which it hopes to start working with later this year or next year. CST
www.containerst.com
Maritime Hybrid & Electric Conference 4-5 September 2019, Bergen
Achieving significant reductions in fuel consumption, maintenance costs and emissions The electric revolution is here, the maritime industry has embraced innovations in hybrid and electric power and propulsion technologies. Scandinavia is leading the world in the development and operation of electric powered vessels. This two day conference will discuss the latest innovations in hybrid and electric technologies and how they can provide significant reductions in fuel consumption, maintenance costs and emissions. PROGRAMME HIGHLIGHTS • The potential of hybrid and electric power as clean energy and in creating a green footprint • How big is the hybrid and electric market? • China is a big player in providing competitively priced solutions – how are they forging ahead? • How is Europe leading the world with its green initiatives? • How are hybrid and electric technologies being regulated? • Hydrogen fuel cells versus lithium-ion batteries • How can hybrid and electric solutions be used for various types of vessels and maritime applications? • Energy density considerations and analysis • How do you go about replacing auxiliary engines with a battery solution? • Assessing the number of battery packs required over the life-cycle of a vessel • The price of batteries and how manufacturers are looking to reduce costs • Managing risks and ensuring safety • Can hybrid systems and batteries achieve zero emissions shipping? This conference will demystify how hybrid and electric technologies benefits maritime operations. Industry leaders will make transparent the costs involved and the efficiencies that are realistically attainable. For more information please contact Indrit Kruja on +44 20 8370 7792 or at indrit.kruja@rivieramm.com
Event partner
www.hybridelectricship.com
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Predictability and control to keep your fleet in shape
Jotun SeaStock Management Solution. The control you need. When you need it. Any marine vessel in operation needs to be maintained. Not merely for its aesthetic appeal, but also for its efficient and effective operation and steel preservation. Jotun SeaStock Management Solution offers superior control and predictability of your onboard maintenance. So you can save time, reduce hassle and focus on what really matters. Your core business. Maintain your business the professional way. With Jotun.
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