Maritime CEO Issue 4 2016

ISSUE FOUR 2016

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MANIFEST

3 Editor’s Comment

Economy 5 US 7 EU 9 China 10 India 11 Brazil

Markets 13 Dry Bulk 15 Tankers 17 Containers 18 Offshore 19 Finance

Executive Debate 20 Crew abandonment

27 Hamburg Bulk Carriers 28 Micelyn Express Offshore 29 Aurora Tankers 30 Suardiaz 31 Norden 32 Ultra Deep Solutions 33 Naggar Shipping

Recreation 34 Wine 35 Gadgets 36 Books 37 Travel

Opinion 38 Graeme Somerville-Ryan 39 Andrew Craig-Bennett 40 MarPoll

Profiles 24 Cover Story Reederei NSB

37

ISSUE FOUR 2016

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AT THE PROW

An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editor: Jason Jiang jason@asiashippingmedia.com Correspondents: Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Genoa: Nicola Capuzzo Hong Kong: Alfred Romann London: Holly Birkett Mumbai: Shirish Nadkarni New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully Shanghai: Colin Quek Singapore: Grant Rowles Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel Editorial material should be sent to sam@asiashippingmedia.com or mailed to 24 Route de Fuilla, Sahorre, 66360, France Commercial Director: Grant Rowles grant@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to 30 Cecil Street, #19-08 Prudential Tower Singapore 049712 Design: Tigersoft Design Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2016’s four issues of Maritime ceo magazine.

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Copyright © Asia Shipping Media (ASM) 2016 www.asiashippingmedia.com Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner.

For reprints of specific articles contact grant@ asiashippingmedia.com

Will politics trump shipping?

O

pinion writers for this magazine and our online news site Splash are selected for a variety of reasons, not least their ability to be divisive.

Lengthy, angry reader comments online on two columns written in the wake of the election of Donald Trump prove that as well as highlighting once again the incredibly bitter divisions that make up American politics in the 21st century.

As the shock dissipates from the real estate mogul’s November win, we need to keep calm heads and really question the doomsayers who are predicting trade armageddon. More sage minds than mine have observed in recent days it is way too early to make that call.

Investors in the US seem bullish – in the 48 hours following Trump’s win, for instance, the Dow Jones US Marine Transportation Index had risen 6.54%.

Elsewhere, Maersk shares took a hit in the immediate aftermath of the election result and while clawing some ground back has yet to fully recover. The Danish giant tried to calm fears, issuing this statement: “It is too early to speculate about

how the election result will impact our business. We hope that the US will uphold and enter into new trade agreements that promote economic growth at home and among trade partners.”

The fact is neither Trump nor Clinton was exactly pro-trade in the campaign – and this is a sentiment widely spreading among electorates across the world – and naturally worrying many a shipowner.

At the recently held Danish Maritime Forum the issue of protectionism was one of the hot topics where leading owners admitted future fleet needs might be considerably smaller than originally projected.

The thoughts and deliberations from that debate were captured by artists at the forum – see below.

At the Maritime CEO Forum I was fortunate enough to moderate this March Trump formed a fair chunk of discussion. A favourite maxim of Navios’s Angeliki Frangou was aired at the shipowner gathering: “What’s bad for the world is good for the tanker market.” Let’s see if the Donald is bad first of all – or if much of his bluster gets reined in with the strictures of taking office. ●

Twitter: @Maritime_CEO LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News

ISSUE FOUR 2016

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ECONOMY REGULAR US

A step into the unknown It’s just too early to make sweeping doom and gloom judgements on the back of the recent election

G

lobal markets do not like events they cannot predict the outcome of – Brexit was a prime example of this, and now the US presidential election. The success of Donald Trump in becoming the 45th President of the United States has not proved an easy event for the markets to digest and so the US economy (in terms of stocks and shares at least) is undergoing a rocky road. The dollar is likely to be adversely affected in the short term too. Of course the American presidential system does allow for the shock of the new or the upset to be considered and reacted to over time – Trump does not get sworn into office until January 20 next year.

So the only way to approach the situation is to first look at how the American economy has preformed in the first three quarters of the year and then have a stab at what might happen over the next few quarters, USA – Top 5 export destinations, 2015 Country

$bn

Canada

312

Mexico

240

China

124

Japan

67

UK

54

Source: US Bureau of Economic Analysis (BEA)

ISSUE FOUR 2016

in the interim handover period and then the first 100 days of the Trump presidency.

You could be excused for missing the news – it got a little lost amidst the campaign debates – but America’s economy looked like it was seriously rebounding in October.

America’s economy expanded at a 2.9% between July to September compared with the same time a year ago - the fastest economic growth in two years. That means that, barring a dramatic post-election slump (or possibly jump) that the US’s GDP should grow by 1.7% this year. Slow by historical standards, but better than the last few years preceding.

And, despite America’s super long election campaigns, US consumers remained robust and seemingly confident – consumer confidence hit a nine-year high in September.

And while trade was a major fixation of the campaign rhetoric, in reality it was doing pretty well.

Exports grew by a very healthy 10% in the third quarter, the best pace in nearly three years driven partly by strong agricultural exports to China.

Finally, and also good news for longterm robustness, worker productivity increased at a 3.1% rate in the third quarter.

But what will happen now? Of course we can’t really know but, should he keep all of what appeared

to be his campaign promises, we can expect a tougher stance at trade negotiations, probably tariffs against various countries (notably China) in various sectors (notably steel). The NAFTA trade agreement with Mexico appears threatened if President Trump cannot re-negotiate in what he considers America’s favour. Bad political relations can lead to poor economic relations too and this may be a factor.

What everyone will be hoping – both supporters and detractors of the new administration – is that any enhanced protectionism in America and moves against global free trade agreements will not lead to a slowing of the global economy. Whoever’s in charge America remains the world’s primary market for goods and any slowdown in American confidence has massive potential knock on effects. ●

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ECONOMY EUROPE

Eastern malaise Brexit and large country focus hides a slowdown in eastern Europe

T

o venture into the murky waters of EU economics at present is to be political it seems. Purely economic analyses of the UK economy post the decision to Brexit are naturally fraught with argument. The weakening pound is a sign of worse to come? The weakening pound is at last a repositioning of the currency to a more competitive and stable position? The next stage will the be the triggering of Article 50 by Theresa May’s government and then the negotiation of a new relationship between Britain and the remainder of the European Union.

A ‘hard Brexit’ looks decidedly more likely and, once again, whether you Forecast EU export markets post-Brexit Country

% of total EU exports

United Kingdom

16

United States

15

China

8

Switzerland

6

Russia

5

Turkey

4

Norway

3

Japan

3

South Korea

2

Others Source: National Institute of Social and Economic Research

ISSUE FOUR 2016

38

favour that or not depends more on your politics than on any economic hard facts. The slowdown in Britain’s economy, to 0.5% growth, was still better than predicted by most economists in the immediate wake of Brexit. Certainly hard Brexiteers will take succour from the reported deals with Japanese carmakers to remain in the UK as their major European base and the importance of the UK as a market for the remaining EU (see table below).

But what of the remaining EU? The EU may be talking of its impending trade deal with the newly non-EU UK but it still has problems with other trade deals, such as the faltering deal with Canada. There seems to be a lot of argument within the EU as to what is happening to the trading bloc’s economy.

ECB president Mario Draghi stated recently that he believed economic conditions in the EU were improving. However, many disagreed with him, including the conservative German Christian Social Union party. This, of course, reflects a growth in the German economy that is not echoed all over the EU. The German economy may grow 0.4% in the next quarter, according to the German Institute for Economic Research, but that’s hardly stellar when you consider Brexit Britain is predicted to grow by the same. Still

most analysts are in general agreement that it is Germany that drives growth in the Eurozone.

Other major Eurozone economies have not turned in great numbers – Spain saw just 0.7% growth and France a mere 0.2%.

Analysts also point to the still extremely high levels of unemployment, particularly youth unemployment, in both Spain and France – levels that would be deemed politically unacceptable in either Germany or the UK. And so Europe is as it always is – a combination of economies on slightly different cycles performing differently and with many of them in a common currency. That currency has worked well for Germany; less so for Greece. Athens is now predicting 2.7% economic growth in 2017, though many Greeks may well ask if the years of austerity were worth it.

While eyes have focussed on the UK’s departure from the union and the fate of the larger economies, one worrying aspect has been slow down in central and eastern Europe; regions that had been strong performers for some years. That period of growth post-socialism and post-enlargement of the EU now appears to be over and familiar problems, such as the middle income trap and climbing the technology curve, are now challenges for the region. ●

7

ECONOMY CHINA

Welcome to stabilisation The bulls and the bears are meeting mid-way in the People’s Republic

C

hina’s recently published third quarter macro numbers were better than most analysts were expecting. Most, even many bulls on the Chinese economy, expected China’s foreign exchange reserves to be depleted in 2016 as the government propped up the slowing economy. However, this hasn’t happened to any great extent and they remain the world’s largest, at over $3trn. Similarly many expected a dramatic devaluation of the RMB. In reality it fell just 2.8% against the dollar during the first nine months of the year. Granted, the election of Donald Trump as US president has since hit the currency. Nevertheless, after a couple of decades of strong growth and the last couple of years of slowdown it seems we now have a period of ‘stabilisation’ Of course, China’s leaders are happy to accept this opinion as, if accepted, it will mean a continued level of confidence in the country’s economy.

“

China is an economy of two halves

”

It might be too soon to say that the transition from a high-speed, heavy industry-based economy to a moderately fast consumer and services-based economy is complete, but it’s getting close. China is learning to live with slower growth

ISSUE FOUR 2016

China’s major commodity imports, 2015 Commodity

% of total ($)

Machinery & transport equipment

36

Non-edible raw materials

16

Minerals and fuel materials

16

Chemical products

10

Textile, rubber & metallurgical products

9

Other

13

Source: WTO

rates and, it seems, the ‘hard landing’ many expected will not now occur.

Certainly the consumer story continues to be a positive one in China – retail sales up 9.8% over last year. The propensity of the Chinese shopper to shop, even with large outflows of consumer spending overseas as more Chinese travel abroad, is (frankly) incredible. This consumer spending rise is made possible by still rising wages. Urban incomes this year are up 5.7% over last year. This is down from the 6.8% of 2014 to 2015, but still very positive territory and more than enough to retain a high level of consumer confidence.

Of course no economy is perfect and China’s no exception to that rule.

The currency may be stable but there are fears over debt (the debt fear never really goes away, just tends to ebb and flow) and also the old worry of a renewed property bubble. There’s no denying that debt is a problem in China – but it is corporate and not household and so therefore, arguably,

manageable. It’ll inevitably cost the Chinese state a lot to deal with the large scale of corporate debts but doing so without social unrest or mass unemployment will be well worth the price to Beijing. The housing market is, as seemingly ever, overheated but not, so most local analyst think, about to go pop. It’s a demand issue and not a more worrying sub-prime or no-doc issue.

However, trade might be an issue. China is upset with calls for boycotts of its products in India.

These calls come at a time of trade numbers that are a cause for some concern - exports in September fell a significant 10% in dollar terms and imports fell 1.9%, with a trade surplus of $41.99bn. China’s manufacturers have seen a weaker domestic demand (for B2B rather than B2C product categories) and weak demand from overseas. China may be almost a nation driven by services and consumers – but not quite yet. ●

9

ECONOMY INDIA

Beware complacency Strong GDP growth is masking shortfalls

I

ndia’s economists and analysts are certainly feeling bullish in the second half of 2016. Arjun Ram Meghwal, minister of state for finance and corporate affairs, led the charge this October claiming that India will achieve 8% GDP growth this financial year. He is also claiming 4% growth for the agricultural sector and told a conference of Indian accountants that, “This is the first time in India that both economy and agriculture sectors are achieving higher growth rates.”

However, some caution against this recent bout of economic hubris Indian exports by major category – 2015 Category

Share of total exports as % of US$ total

Petro Products

20

Agricultural

10

Gems and Jewellery

13

Transport parts

7

Machinery

5

Pharma

5

Metals

3

Fabrics & textiles

7

Electronics

3

Plastics

2

Other

25

Source: Indian Ministry of Statistics and Programme Implementation

10

that appears to largely be based on a notion of China’s growth slowing and India’s growing. The first note of caution concerns just how much remains to be done if India’s economy is to maintain momentum. Chuck Robbins, the CEO of Cisco, wrote an op-ed recently in the Indian media and stated, “India needs to accelerate the building of digital infrastructure, with a laser focus on creating high-speed broadband networks.” A recent survey by the Brookings Institute revealed that internet network shutdowns cost the economy $968m (worse than war-torn Iraq). This is clearly a major problem to be dealt with.

Another area of concern is the rise of a certain antagonism towards China. Indian social media was full of support for calls to boycott Chinese goods this Diwali season.

China was typically swift to respond to such a campaign (as it has done in many, many other instances) and state in its own state media that any such move “will negatively impact the India-bound investments from its enterprises and also the bilateral cooperation between the two countries.” China is probably not overly worried by a boycott – only 2% of the PRC’s exports got to India – but they are worried about the effect on Chinese inward investors into India.

The Confederation of All India Traders (CAIT) predicted a 30% fall in sales of

Chinese-made goods at Diwali.

However, for ordinary Indians (just like with ordinary Chinese in the last two decades) growth is boosting per capita incomes. In India, per capita income has more than tripled, from $550 in 1991 to $1,800 last year, according to the IMF. This is showing in stronger retail sales, which are a boost to many local manufacturers and brands.

However, exports have remained sluggish in some key sectors, such as engineering equipment. Exports of Indian engineering equipment to China, for instance, collapsed by 45% in half a year. However, local exporting seems to be more resilient and Indian exports to Bangladesh, Pakistan and Nepal all saw rises. But to maintain 8% GDP growth India needs to do more than export to its neighbours, it needs to seriously become a global exporter (as China did) and that remains a way off for the moment. ●

“The entire maritime industry is under serious pressure” — Flemming Jacobs, chairman, Danish Maritime Forum

maritime ceo

ECONOMY BRAZIL

Bright Olympics cannot cover up dire financial numbers A new president struggles to overcome a deepening recession

T

hings do not appear to be getting any brighter for Brazil in economic terms. If the country seriously did expect any sort of bounce form the Olympics (generally deemed a success despite dire predictions to the contrary) then they were disappointed. In fact, arguably, quite the reverse - Brazil shed a net 39,282 payroll jobs in September, according to the country’s labour ministry. Brazil’s economy is expected to shrink more than 3% for a second straight year in 2016, with 12m workers officially unemployed.

Opposition politicians have raised a number of economic issues of immediate concern – the still spiralling national budget, which has no official cap applied to it and so can continue to rise without any check.

And, secondly, a mounting pensions catastrophe.

The government led by Michel Temer’s centrist Brazilian Democratic Movement party, or PMDB, claims it is trying to restore Brazil’s sinking public finances. However, it’s a massive job given that the budget deficit is running at approximately 10% of GDP. Without massively swingeing cuts that will be extremely painful

“

to the general public, leading to even higher unemployment and the possibility of serious social unrest, recession seems set to both continue and deepen.

Even the most optimistic economic analysts were shocked by Brazil’s industrial output figures in August, which posted their biggest monthly drop in four and a half years – a decline of 3.8%, according to the Brazilian Institute of Geography and Statistics, or IBGE. The problem was that the August collapse essentially wiped out any gains made in the first half of 2016. This makes avoiding recession hard for the supposedly pro-business government of Temer.

While it is true that a prolonged strike at Brazil’s Volkswagen plants and the stoppages during the Olympics made maters worse, the dip is still significant.

Brazil is still suffering from the trade double whammy of falling imports and falling exports. Imports plunged 9.2% in September from a year earlier, reflecting still weak consumer demand (unsurprising with such high unemployment).

More worryingly exports fell 2.2% over the previous year. Most analysts

”

12 million workers are officially unemployed

ISSUE FOUR 2016

Brazil’s major import categories, 2015 Category

% of imports

Raw Materials

45

Capital Goods (ex-autos)

21

Fuels and Lubricants

17

Consumer Goods (ex-autos)

14

Autos

3

Source: Brazilian Central Bank

agree that raising exports is the only for Brazil to exit recession, create jobs and boost both the nation’s tax base and consumer economy.

However, the most recent data makes this scenario highly unlikely.

It also indicates to most observers that the Brazilian real is overvalued, too strong and hampering Brazil’s exporters from becoming internationally competitive.

Temer has not been in power long, a position he assumed from the disgraced and impeached former president. However, his approval ratings have already slumped alarmingly with only 14% of Brazilians thinking he is doing a good job economically for the country. The Olympics have come and gone, the party’s over. However, the economic pain may only just be beginning unfortunately. ●

11

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MARKETS REGULAR DRY BULK

Bright spark China’s electricity production surge is of great significance, according to Jeffrey Landsberg from Commodore Research

C

hina’s economy has been on a significant turnaround since the beginning of March. As the months have progressed, the turnaround has become even more clear. Electricity production has been showing a dramatic change in China and is just one example of the turnaround. Very encouraging for the dry bulk market are statistics showing China’s coal-derived electricity production in the last few months has been showing a huge shift from earlier this year (and also a huge shift from what was seen last year).

The truth remains that several pundits have been a bit oblivious to this year’s turnaround in China – but this has certainly been very helpful for those in the know, as it has created opportunities to profit in the dry bulk shipping market and commodity markets. Both shipping rates and commodity prices have exceeded the extremely bearish expectations that many markets held at the beginning of this year.

At present, the dry bulk market has not been set to suddenly return to glory, but its longer-term prospects are also likely much better than consensus now believes, as well, as long as the Chinese economy continues to turn as it has been doing this year. Overall, we continue to believe strongly that China not getting adequate coverage of its positive developments will continue to

ISSUE FOUR 2016

create opportunities to profit in the shipping and commodity markets.

We also continue to believe that global economic research too often simply serves to advance a popular narrative, and in the case of China, the narrative of the Chinese economy remaining weak has simply been wrong this year.

Electricity production is one primary metric to use when gauging the actual strength of the Chinese economy, and in recent months electricity production has seen great strength.

Chinese electricity production setting a new record this summer went largely unreported.

At the time of writing, the last three months (July, August, and September) have seen a dramatic shift in Chinese electricity production. China’s electricity production rose year-on-year by 8% in July, by 9% in August, and by 8% in September.

Prior to July, China’s electricity production had risen each month this year by an average of only 2%.

In addition, three out of the last four months of 2015 did not see any yearon-year growth in Chinese electricity production.

Regarding the dry bulk market specifically, what has been particularly noteworthy recently has been the great strength in Chinese thermal coal-derived electricity production. This strength has occurred due in large part from China’s overall economy strengthening and also from rainfall coming in recent months at lower levels than normal.

The most recently released data shows that 361.2bn kilowatt hours of thermal coal-derived electricity production was produced in China in September. This marked a yearon-year jump of 46.6bn kilowatt

hours (15%). This is also not only the largest year-on-year jump in Chinese thermal coal-derived electricity production seen this year, but also the largest growth seen since 2013. n addition, it marks an extremely significant change from the first five months of this year, which saw four out of five months where Chinese thermal coal-derived electricity production contracted on a year-onyear basis.

Overall, the last three months have seen a steady increase in Chinese thermal coal-derived electricity production growth due in part to the strengthening of the economy and weakening in hydropower production. Strong growth is likely to be seen through the end of this year as well, and demand for thermal coal in China is likely to remain robust on the strength of peak winter season electricity demand.

The changes to China’s domestic coal production policy continue to make up much of what is in the news lately, but what also simply remains incredibly important is that China’s electricity production (and specifically its thermal coal-derived electricity production) has been a showing a dramatic change recently.

Overall, the Chinese economy has been in the midst of a significant turnaround that has been underway since the start of March – with recent months seeing the strengthening intensify – and China’s overall electricity production growth and thermal coal-derived electricity production growth have been increasing dramatically. ●

13

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MARKETS REGULAR TANKERS

Retirement planning Can scrapping compensate for fleet growth?

Erik Broekhuizen from Poten & Partners investigates

T

buyers in Pakistan. This vessel was 28 years old.

Let’s look at how many vessels would be scrapped over the next two years if using a fixed scrapping age of 20 years to see how these numbers compare with the current orderbook for delivery in the same period.

For most segments the orderbook well exceeds scrapping under this scenario. The segments that appear the most worrisome are the VLCCs and suezmaxes. Even under this relatively aggressive scrapping scenario, the scheduled deliveries in these segments are almost double the demolition numbers.

The numbers for the large product tankers (LR1 and LR2) don’t look encouraging either, but here we have to note that we need to review these segments in combination with their sister vessels in the crude trade (aframax and panamax). The aframax crude tanker fleet will likely stop growing in the next few years, while the dirty panamax segment is already shrinking as owners opt to build coated vessels to give themselves more trading flexibility and take advantage of the growth in long haul product movements.

For MR and handysize product tankers, the numbers look more encouraging, although it should be noted that a 20 year scrapping age is quite optimistic for these vessels.

he age profile of the tanker fleet gives owners reason for concern. The orderbook for delivery in 2017 and 2018 ranges from a modest 5% of the existing fleet for handiess to a whopping 19% for suezmaxes. However, tanker markets do have a built-in balancing mechanism: scrapping. If the overcapacity in the market gets too high, rates will fall and scrapping will pick up to (eventually) bring the market back into balance (together with demand growth, off course). Given the orderbook, the consensus view of analysts is that the tanker market will experience ample supply growth in the coming years while the forecasts for tanker demand growth are rather subdued. Against this backdrop, what is the potential for a pickup in tanker demolition? Let’s take a look at the pool of available candidates and their current employment.

First of all, what is the number of vessels which could be considered scrapping candidates in each of the segments? In recent years, tanker sales for scrap have been few and far between and the average age of tankers that are sold for demolition is well above 20 years. The most recent tanker that was sent to the breakers (in October), the VLCC MT Progress, was built in 1994. Before that, - in September - the 45,000 dwt MR product carrier MT Zeta was sold to Perc Of Existing Fleet 25% 19%

20% 15%

11%

17%

10%

10%

13%

11% 11% 6%

6%

6% 2%

1% VLCC

Suezmax

Aframax

Panamax

2017/18 Deliveries

8% 5%

5% 0%

11% 7%

LR2

LR1

MR

Handy

Scrapping (20+ yr old) Source: Poten & Partners

ISSUE FOUR 2016

Smaller product carriers typically trade well beyond 25 years of age.

How about the employment patterns of the older tonnage? Many of the older vessels are underutilised, have trading restrictions and/or are being used for floating storage. A freshly delivered newbuilding will be significantly more productive than the old vessel it replaces.

There is also demand growth that we need to consider. While we don’t know what tanker demand growth will be in 2017 and 2018, we can take a look at developments in 2016 to date as an indication.

Our analysis of the crude oil and dirty product trade shows ton-mile demand growth of 4.2% year to date, a number that (if continued) will help defray the impact of the significant fleet growth. While we don’t have the same data for the growth in all product sectors, expansion in ton-mile demand for the LR1 and LR2 product carriers has been around 1.5-2% so far this year, well below the expected fleet expansion. The outlook for MR and handysize product tankers appears brighter. The limited fleet growth in these segments will sow the seeds of a recovery in the coming years.

So, the expected fleet growth may not be as disastrous for the market as it appears at first glance, if we continue to experience healthy growth in tanker ton-mile demand, and if scrapping will pick up in the next few years. These are obviously ‘Big Ifs’. ●

15

MARKETS CONTAINERS

Light at the end of the tunnel Lars Jensen from SeaIntelligence Consulting gives reasons for being optimistic about the box trades

O

f course one has to be careful in concluding that the container carriers can see light at the end of the tunnel – the cheap shot would be to say it is the light of an oncoming train. However, a closer look at the industry dynamics shows that it might well be the time to slowly replace the doom-and-gloom outlook with a more constructive perspective. Hence let us take a look at why it is time to look forward.

First of all we see record low capacity growth – despite the anemic global demand growth, we are no longer adding to the overcapacity of the global markets.

Global demand growth this year has been 3.5% whereas the fleet has grown 3.1%. The ordering of new large vessels has come to a complete standstill, and scrappings are picking up. If this discipline can be maintained we will slowly see the industry progress towards a more healthy balance between supply and demand. However, we should be mindful that even though 2016 is the bottom of the market, and we slowly improve from here, the climb out of the current situation will take quite a while.

ISSUE FOUR 2016

We have seen substantial developments in terms of much needed industry consolidation. Many main players have either disappeared as independent carriers or are about to disappear. Additionally, the main deepsea trades will be handled by three alliances rather than four from spring 2017. Whilst this in itself does not change the supply/demand situation, it does provide a foundation for more long-term stability.

We are increasingly seeing carriers begin to embrace much needed tools such as revenue management, digitisation, automation and process optimisation. This should be seen as a shift from the pure cost-cutting focus of the past years. Whilst clearly these new tools provide much needed cost reductions if implemented correctly, they can also provide the carriers with a platform for a more fundamental change in business models. A change where we gradually see a refocusing on revenue growth and service differentiation.

Hence if we look slightly beyond the immediate problems facing the carriers, there is indeed reason for cautious optimism. However, this

“

There’s a shift from the pure cost-cutting focus of the past years

”

must take into consideration a range of risk factors as well which could prove lethal to some carriers. Most notable amongst these risks we find the possible continuation of freight rate wars when the new alliances begin to assert themselves, the risk of sudden ordering of large vessels driven by shipyards’ need to fill their empty orderbooks and failure to implement the IT systems and processes necessary for the digitisation and automation. For the carriers, a lesser is perhaps the new companies emerging from the technology sector. Despite some of these being relatively aggressive in terms of their drive to disrupt the industry, they are much more likely to provide a path to much needed innovation for the beleaguered carriers. And that outside innovation might be a welcome change can be seen from the fact that out of the 50 largest container lines in operation today, only one new carrier has emerged within the last 10 years. ●

17

MARKETS OFFSHORE

Eyeing the decommissioning boat Boardrooms need to be aware of the dynamics brought about by decommissioning, writes Andre Wheeler

I

t’s amazing how many boards ignored the first indicators of a serious downturn about to hit the market. What gave rise to this behaviour and attitude? In the first place there is the issue of poor corporate governance, particularly with regards appointments of boards and corporate structures. Furthermore, we would see instances in which meeting agendas were manipulated and the integrity of information supplied to directors was questionable. I can recall sitting in a major offshore company boardroom in 2012 warning that the current indicators were not looking good and that attention should be paid to asset purchases without a business case, with a focus on opex and information bottlenecks. The types of data that were available and ignored included the increased productive output of oil/gas onshore (improved drilling, shale, etc), and the rate of newbuilds entering the market.

Rather than focus on the headwinds being felt in the offshore marine sector, there was a recent headline in Splash that caught my eye: ‘DOF Subsea scores decommissioning contract from Ithaca Energy’.

Is this the good news for the offshore marine markets which has seen vessel utilisation rates fall below 50% and in some cases rig utilisation sits at 23%.

After discussing this with players in the Southeast Asian market, it became clear that there was a mixed response, with most saying that this opportunity would have a limited impact in the region. The main reason being that offshore infrastructure in this region is relatively

18

young when compared to the North Sea. There was also the notion that operators were not compelled to decommission. This got me asking whether this was the group think and approach, stated in the introduction, that got companies in the crises that they are in now.

Supply chain elements that would be impacted on, include the following: rig abandonment infrastructure; removal vessels for topsides and substructure; ports/ supply base for recycling; engineering skills and operations resources.

The size of this market is driven principally by OSPAR decision 98/3 which prohibits the leaving of offshore installations wholly or partly in place. The guiding principle is that decommissioning must leave nothing in place with the installation being fully removed. This is a key driver when one considers that the average age of the North Sea infrastructure is 25 years old. Adding to this only 88 of the installations have been decommissioned to date – not much when one considers that 245 of these installations on the UK continental shelf are over 30 years old.

The financial size of this emerging sector is estimated to be about $3.5bn per year for the next five years, $25bn for the period 2016 to 2022.

Over and above these supply dynamics are that the key drivers in the decommissioning market are fundamentally different to what is found in the exploration and production sectors. It is likely to be less cyclical in terms of impact as it not driven by the drive to meet production targets. In essence it is removing

the element that has driven charter rates to their all time highs in 2014 i.e. supply inelasticity. In turn, better planning and vessel utilisation as there would be more flexibility in the arrangements, resulting in lower charter rates on a more sustainable basis.

An example of how this growing sector opens opportunities is found in recent UKGS statements. They have claimed that they will require jack ups, semi subs and drill ships over the next five years for decommission work. Currently the North Sea, courtesy of Rigzone, has over 90 active rigs that are able to support this activity. This would suggest that there would be a need to introduce other rigs to accommodate production service requirements.

In conclusion, these changes represent a paradigm shift. It will require new thinking and approaches as the best way to take advantage of this new and growing markets based on vessel / rig synergies – after all these assets are mobile. The question is whether those in charge can adjust to this in a planned and coherent manner, unlike what is on display at the moment. ● maritime ceo

MARKETS IN PROFILE FINANCE

Trump in a different light Dagfinn Lunde makes the case for the new US president being a boost for shipping. It’s all about rallying the middle classes

A

s the editor, Sam, points out in his editorial this issue, there has been so much knee jerk, doom and gloom drudgery written in the days before and following the election of Donald Trump as US president.

Personally, I think most people have got it wrong when it comes to the Donald and what his rise means both globally and indeed from a shipping point of view.

Populations are fed up with endless politicians and administrations whose monetary polices only benefit the 1%. Trump and Brexit are just the beginning. I can sense similar vibes across many European nations – most of whom have rather important elections coming up – such as big economies like Germany, France and Italy.

The fact is for much of the West, middle class income has stopped growing. If you look closely at what Trump wants to do economically

ISSUE FOUR 2016

such as his plans to change the tax system, this will inevitably have some trickle down benefits.

Moreover, wooing big American firms back to the US to pay tax and invest at home will help stimulate growth.

Long term, getting the middle class growing is clearly a good thing for shipping – you just have to look at the booming economies across Asia and now also Africa for this demographic fact.

Then there are the billions of dollars he’s earmarked for infrastructure projects – and no, this is not just a wall across the Mexican border! Infrastructure improvement in the US is urgently needed; most of it dates back to the 1930s and 1940s.

This work will also help the US to grow again - more activity immediately and more efficient domestic logistics systems will further help.

Trump bashers will no doubt at this point raise the issue of protectionism, and the risk of trade wars. I feel that this is unlikely – and even if there is the odd trade spat it is likely to only hit the container segment, a sector that I have been downbeat about already for ages. In fact, I do not see the container trade growing for a long time. I have always been sceptical of these big ships – you just cannot fill them all. That said, I am still bullish on the sub-3,000 teu sector as it’s clear that is a very old and comparatively underbuilt fleet.

So that’s my container predictions, what else do I see happening in the year ahead? I am still a big believer in the growth stories coming out of Africa and Asia and believe that in 2017 the demand side for shipping will be good, despite an anemic picture in Europe.

“

Getting the middle class growing again is clearly a good thing for shipping

”

Oil prices remaining low is potentially fantastic. Low energy prices drive industries and consumerism around the world.

Nevertheless, tankers I feel are in for a tough year with the age-old shipping story of supply coming to kill the golden goose once again, especially for VLCCs. Dry bulk has clearly bottomed out – and I am a fan of ships of sizes below the post-panamaxes in particular for this sector.

It has unquestionably been a tough year for shipping and it remains very hard to make money in this industry. However, with ship prices so, so cheap there are bucks to be made by those agile enough to dart in with asset plays and with some staying power. The 30% increase in prices for good Japanese built bulkers in the last six months is a good sign. As ever, there’s never a dull day in shipping. ●

19

EXECUTIVE REGULAR DEBATE

Owners face backlash as crew abandonment cases soar What should happen to shipowners who choose to ditch their seafarers?

Jason Jiang explores the options

A

s the economic downturn’s impact on global shipping becomes increasingly severe, more shipping companies are getting into financial difficulties and more vessels and crews are being abandoned deliberately by owners.

To deal with these problems, the International Labour Organization (ILO) established the Maritime Labour Convention (MLC) in 2006 to protect seafarers’ rights. It was drafted through negotiations among governments, shipowners and unions. As of July, 77 countries that represent 91% of the world gross tonnage of ships have ratified the convention.

“There should be no place for shipowners who deliberately abandon their crew in this day and age,” says Katie Higginbottom from the International Transport Workers’ Federation (ITF).

According to Higginbottom,

from January next year the MLC amendments will come into force, meaning that seafarers will be able to apply directly to P&I clubs or other insurance policies for funds that will cover their repatriation, subsistence and up to four months outstanding remuneration. At the same time flag and port states will have to check that appropriate certification exists to ensure this.

“This is the result of decades of lobbying and campaigning by the ITF. We’re confident that there will be no place to hide for irresponsible owners and we will be monitoring the situation very closely,” Higginbottom stresses.

At the moment, the

“

International Chamber of Shipping, representing maritime employers, and the ITF, as the global seafarers union, are working together and with the various seafarer welfare organisations to assist abandoned seafarers and to contact owners, if possible, and the flag administration to ensure that all is being done to resolve any abandonment situation.

“Our primary concern when ships are abandoned is for the welfare of the seafarers and for their families, who will be distressed and concerned about their futures. Our chaplains are on hand in 87 ports around the world to provide financial and emotional support for crews and their families where it is needed in

Such owners should be prevented from ever owning ships again

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”

maritime ceo

EXECUTIVE IN PROFILE DEBATE

these situations,” says Stuart Rivers, CEO of UK charity Sailors’ Society.

Martin Foley, national director at the Apostleship of the Sea charity, reckons that owners who deliberately abandon their ships and the crew onboard should not be able to act with impunity.

“Care must be taken to ensure that any prohibitive action against owners does not compound an already difficult and stressful situation for seafarers, something our chaplains can attest to when they visit seafarers on abandoned ships,” Foley says.

Foley reckons anyone ditching their crews must face serious consequences. Port state control, along with other stakeholders, should ensure that any other ships in a fleet where one or more has been deliberately abandoned are tracked and the needs of seafarers onboard those ships given particular attention when in port.

Arthur Bowring, the managing director of the Hong Kong Shipowners Association (HKSOA), is extremely concerned about the current ship abandonment situation.

“

“Unfortunately owners who abandon their seafarers are likely to have disappeared, so there becomes an ethical and moral responsibility for the flag administration to take care of the seafarers. It is likely that the flag administration will take out legal proceedings against the shipowner, but the success of this depends on whether the shipowner can be found or identified,” Bowring points out.

“Such owners should be prevented from ever owning ships again, but names change, memories are short, and some shipowners seem to have relationships with their flag administration that allows them to continue as if nothing happened,” Bowring continues.

When contacted by Maritime CEO regarding the issue, Ken Peters, director of justice and public affairs at the Mission to Seafarers, listed a few suggestions to deal with the ship abandonment situation.

First, Peters says there should be within international law a prohibition which bars the shipowner from purchasing back the vessel in a judicial sale. This just encourages rogue

Charterers should refuse to fix any ship belonging to a defaulting owner

ISSUE FOUR 2016

”

shipowners to take this easy path out of their difficulties.

Secondly, like Bowring, Peters believes owners who abandon ships ought to be barred from shipowning.

Owed wages and any other financial disadvantage suffered by abandoned seafarers ought to be compensated as the number one priority, Peters maintains, stressing that court fees, port dues, and all other creditors should not have priority over seafarers.

Sometimes abandoned seafarers are regarded as illegal immigrants for having contravened the term and conditions of their visa and are imprisoned. Such treatment needs redress and compensation for distress should be mandatory.

When an abandonment occurs Peters suggests the flag state ought to deregister all other ships of that owner once the seafarers have been repatriated while flag states andp state control should thoroughly inspect other ships of the owners fleet once one of them has been abandoned.

The final idea Peters has – one that Maritime CEO really thinks could work – is to try and coerce charterers to refuse to fix any ship belonging to the defaulting owner.

Our sister title, Splash will continue to report on the plight of abandoned crews around the world and is in discussions to create a high profile campaign to shame owners who have a track record of neglecting their crews. ●

21

IN PROFILE

Juan Riva p.30

Sherine Naggar p.33

In profile this issue Maritime CEO’s 17 correspondents around the world have been in touch with many of the world’s top shipowners. Highlights are carried over the next 11 pages

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maritime ceo

IN PROFILE

Jan Rindbo p.31

Tim Ponath p.24

Stefan Bülow p.27

Helmut Ponath p.25

Shel Hutton p.32

Venkatraman Sheshashayee p.28

Kenny Rogers p.29

ISSUE FOUR 2016

23

IN PROFILE

Innovation and diversification The father and son in charge at Germany’s Reederei NSB are getting creative to overcome the downturn

T

here’s no mistaking that the dire year for container shipping has made life difficult for the Ponaths. The saving grace for Helmut and Tim - father and son and CEO and COO respectively at Germany’s Reederei NSB - is their diversification, and also their keeness to innovate their way out of trouble.

Take, for instance, last year’s decision to set about widening a series of panamax boxships.

Many might have fretted that the opening of the expanded Panama Canal this June might spell trouble for the humble panamax boxship, but few could have genuinely predicted the speed with which fortunes in this sector have plummeted.

Panamax boxships have been sent en masse for scrapping this year as rates for this ship size have faded away. A report by BIMCO at the end of June highlighted how the panamax segment had seen 150,863 teu of scrapping in the first six months, the same volume as in the previous 18 months through to end December 2015. Amazingly panamaxes less than 10-years-old have been sent for scrap.

Spot on

Reederei NSB German tonnage supplier and shipmanager. While boxships remain its mainstay, NSB also has exposure in the tanker and rig sectors.

24

“

Container rates have reached a level, which will not decrease further significantly

Time charter rates for the panamax segment went down from the monthly average of $15,800 per day in March 2015 to a monthly average of $5,755 per day in July 2016, a drop of 63.5%.

Seeing the impending crisis ahead of others, the Ponaths completed a world-first ship widening project in early 2015, giving one of its ships an extra 20% of container capacity. The company used Chinese yard Huaran Dadong to widen the MSC Geneva, extending its capacity from 4,860 teu to 6,300 teu over a four-month period, upping the ship’s price tag by a tidy $10m in the process, according to online pricing platform VesselsValue.com. NSB has since widened two other vessels in its fleet.

”

“Many panamaxes may be closer to the scrapheap than to the open sea,” concedes Tim Ponath. The widening of three NSB ships, he says, has given them a future. Moreover, doubling their reefer capacity has made them more attractive.

His father, Helmut, says that while the widening process clearly shows positive financial gains, it’s been tough persuading fellow owners to sign up.

“Unfortunately, the level of charter rates in this segment sharply collapsed,” says the shipping veteran.

Nevertheless, Helmut says NSB is currently in negotiations with two well know liner shipping companies regarding the widening of panamax vessels.

Another area of innovation being maritime ceo

COVER STORY

touted by NSB is in LNG-driven boxships. The company now has complete specifications on its shelves for LNG-fuelled boxships ranging in size from 1,400 to 5,000 teu.

The folk at NSB love technical firsts – another of which took place recently in the Mediterranean where a sea trial managed what is described as a radical derating whereby a ship with a 12 cylinder main engine was operated with only six cylinders. This efficiency-enhancing measure will be offered to clients soon.

NSB is one of the leading providers of tramp tonnage in the container segment with a fleet in excess of 60 ships ranging in size from 1,000 to 11,000 teu. In addition, it managers tankers as well as jack-up rigs and can count as one of Germany’s very largest shipping companies.

Tim is quick when quizzed about the box trades to hit out at the poor predictions from analysts. 2016 has turned out to be arguably the most tumultuous year in container shipping history, not that most of the so-called experts saw it coming, he says.

“Was this not the year when the shipping markets were supposed to have finally recovered, after a slightly upward trend at the end of 2014 and a stable market in 2015?” he muses, smiling.

Nevertheless, the horror show that has been 2016 should mark the nadir to this particular cycle, Tim hopes.

“I personally assume that rates have reached a level which will not decrease further significantly,” he tells Maritime CEO. Then there is the constant refrain about how size matters in container shipping, something that also irks Tim. While acknowledging that many German small companies have gone to the wall, the fact, he says, that South Korea’s Hanjin Shipping, the seventh largest containerline in the world at the end of August, has filed for bankruptcy

ISSUE FOUR 2016

“

Was this not the year when the shipping markets were supposed to have finally recovered? shows how difficult it is to survive.

He points to the recent news that the three Japanese majors – NYK, MOL and K Line – are merging their container divisions as a sign of just how serious the downturn has become.

While the container operating side of the business has been harsh for NSB this year it has worked hard to boost revenues from its shipmanagement side, which has seen it take on management of 12 boxships in 2016 to date with more to come.

Three tankers are also set to deliver soon and be managed by NSB. “In general, diversification into different sectors has been pushed forward,” Tim says.

Apart from traditional shipmanagement and newbuilding supervision services, the portfolio of the corporate group comprises crew management, technical consulting, spare parts, a simulation and training centre, and commercial management services. The companies of the NSB Group can be found at 10 locations spread all over the globe. They have a combined workforce of 240 shore staff and 1,700 seafarers from twelve nations.

Were it up to Helmut, there’d

”

be plenty more Germans employed but continually his pleas to the government in Berlin on making the German flag more competitive have not quite been met.

NSB has been harassing the Merkel adminstration for a long time on the inadequacies of the local register.

As Helmut recounts, it was only after the announcement of NSB’s successive outflagging of 38 German flagged containerships that murmurs could then be heard in government circles. One year after this reflagging announcement and regulations began to change, first with a relief from 100% taxes on wages and to German manning regulations.

Despite this change, there’s plenty more Helmut would like Berlin to do to help out the local shipping scene, for instance when it comes to the offshore segment where the new regulations mentioned above do not apply.

“It would be sad if we gave away this field to other nations as well,” Helmut says, adding German firms have great potential to be leaders in the offshore wind sector if regulations allow. ●

25

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IN PROFILE

Sulphur ruling coming in too fast Captain Stefan Bülow from Hamburg Bulk Carriers is worried about the new 2020 sulphur cap

C

aptain Stefan Bülow finds himself in an awkward situation when meeting up with Maritime CEO towards the end of October in Copenhagen.

The managing partner of avowedly green Hamburg Bulk Carriers (HBC) is not in favour of a sulphur cap coming in too soon, something that is being deliberated while we meet in the Danish capital. In the end the folk discussing the matter at the International Maritime Organization (IMO) rule in favour of a 0.5% sulphur cap to come in favour worldwide by 2020.

Bülow, responsible for building some of the world’s greenest bulk carriers, is worried that regulators are rushing into decisions without thinking things through properly.

“Regulations should be done slowly – look at how many mistakes were made with MARPOL,” he says,

Spot on

Hamburg Bulk Carriers Founded in in 1999 as a bulk vessel operator for key minor bulk cargoes.

Since expanded to offer shipmanagement duties too.

ISSUE FOUR 2016

“

Regulations should be done slowly – look at how many mistakes were made with MARPOL

”

adding: “If things are pushed too fast and are not correct things get difficult.”

Bülow’s claims there is not sufficient data today to set a sulphur target.

“We have to be very careful, we have to be balanced and not look like clowns in the future,” he warns.

Bülow spent 12 years as a seafarer, rising to master, before coming ashore in 2001. Prior to HBC in 2014, he has held many top positions including managing partner at Ernst Russ, and managing director at Deutsche Afrika-Linien.

At HBC, Bülow looks after 40 handy bulkers including 10 newbuilds – the so called HBC43 series that can lay claim to being among the greenest bulkers ever conceived.

The radical approach to bulk carrier design offers a potential of up to

30% CO2/GHG reduction due to higher energy efficiency with vetting agency RightShip stating that “they are in about the top 2-3% of ships in this size range”. Bülow’s company’s green credentials were burnished last year when HBC was the only shipping company invited to a big environmental gathering with the likes of Bill and Melinda Gates there as attendees.

Bülow says he wants to see green incentives for recycling to get rid of old tonnage.

“The priority,” he says, “should be to get rid of old tonnage.” ●

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IN PROFILE

Top 10 goal Under the leadership of offshore veteran Venkatraman Sheshashayee, Miclyn Express Offshore is planning a big future. If only the markets would pick up

V

enkatraman Sheshashayee (better known simply as Shesh) is one of the bestknown names in Asian OSV circles.

He’s been ceo of Singapore-based Miclyn Express Offshore (MEO) since April 2015. Previous positions included heading up Jaya Holdings and a lengthy stint with India’s Greatship.

MEO has 146 vessels in its fleet and none on order. No orders are likely anytime soon, Shesh says.

“However tempting current prices are, we have decided that we will focus on deploying our existing fleet and paying down debt rather than take on additional capex liability,” Shesh says.

Shesh’s short-term strategy at MEO consists of four prongs: to maintain utilisation, reinforce teams, manage costs and pay down debt.

Long term, Shesh has more ambitious goals.

“We are determined to achieve our strategic vision,” he tells Maritime CEO, “to become a globally reputed group, in the world’s top ten, measured by fleet size, EBITDA and RoI, as well as by safety performance

Spot on

Miclyn Express Offshore Singapore-based offshore operator with more than 140 vessels in its fleet.

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“

This market is a great teacher. I am learning a lot about night sweats and insomnia

and operational uptime. We hope to become a market leader in crewboats, a preferred partner in project solutions, and the provider of choice of general and specialised offshore support vessels.”

The offshore veteran says he has stopped looking for any recovery in the sector.

“I am wary of saying ‘we are near the bottom’, as each time I feel that, there is a new bottom.”

Shesh is adamant that scrapping is a necessity for the long-term health of the offshore business, but he admits scrapping has very little economic upside for owners, hence is generally ignored or postponed.

“Our time is much better served dealing with the here and now,” he says. “When a recovery comes, it is unlikely to be sudden or overnight. It will be gradual, and we have a clear plan of action to execute when that ascent commences.”

”

As a veteran of the offshore scene, not much surprises Shesh these days, even, say, the downfall of Singapore oilfield services provider Swiber Holdings earlier this year.

“Swiber was a train wreck in slow motion,” he says.

“For too long, short term assets have been used to fund long term liabilities,” Shesh says of many offshore-related firms who find themselves in difficulty today.

Nevertheless the offshore owner veteran feels the time could be “ripe” for a non-industry player with reasonably deep pockets and a reasonable risk appetite to come in and build a fleet “super cheap”.

Concluding, Shesh says: “We will need banks to be understanding and give us tenors with wider latitudes and sweep-ins.” He then jokes: “This market is a great teacher. I am learning a lot about night sweats and insomnia.” ● maritime ceo

IN PROFILE

Chemical consolidation The head of Aurora Tankers gives readers good insights into key drivers for the chemical sector

T

his is the right time for consolidation and/or acquisition of secondhand or distressed assets.”

That’s the view of Kenny Rogers who heads up IMC’s chemical tanker subsidiary, Aurora Tankers.

Although he believes pricing will continue to drop further newbuilds in the chemical tanker sector are not a good thing now as they will continue to erode freight rates and dampen the recovery time from the present over tonnage.

Aurora’s fleet today consists of 20 chemical tankers with one more to deliver in January next year.

“The chemical tanker sector is presently challenged due to seasonal impacts and the effects of overtonnage,” Rogers observes. There has been a significant rise in tonnage supply which Rogers says is always a “downward driver” of freight rates.

“Traditionally,” he notes, “the chemical tanker sector has been very disciplined when it came to building tonnage, however many new investors have entered the sector that fundamentally do not understand the market.”

Spot on

Aurora Tankers Chemical tanker firm. Subsidiary of Tsao-family controlled IMC Group, a diverse conglomerate with interests in bulkers, ports, yards as well as a significant real estate portfolio.

ISSUE FOUR 2016

Aside from the tricky financial conditions, Rogers reckons the human element is the most challenging factor for most chemical tanker owners now.

“Maintaining qualified and motivated shore staff as well sea going staff in the next five years will be critical. Chemical tanker experience for

“

shore side personnel is very limited,” Rogers says.

He concludes by warning: “Shipping in effect has entered a second downturn before the post Lehman Brother downturn was over.

Only experienced and motivated management will keep owners afloat in these turbulent times.”●

Many new investors have entered the sector that fundamentally do not understand the market

”

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IN PROFILE

‘Setting an example by taking the environmental lead’ An interview with Juan Riva, the president of the European Community Shipowners’ Associations

S

panish shipping group Suardiaz is entering a new step of its business development plan with investments mainly in LNG bunker vessels and new orders of roro ships still to come in the near future.

“We recently signed a 1+1+1 new construction of LNG ready bunker vessels which will be the first multiproduct LNG ready barges in Europe” Juan Riva, CEO of Grupo Suardiaz tells Maritime CEO. “Within our new investments we are also taking into consideration the potential renewal of our roro fleet for the motorways of the seas which would now incorporate dual motors.

In addition, we are also considering chemical vessels and a small scale LNG ship.”

Grupo Suardiaz, officially established in 1944 by brothers Rafael and Jose Riva Suardiaz, is still today a family owned shipping firm and one of the strongest companies in the Spanish maritime market. Since the beginning of its activities in the maritime field, the company was a pioneer at operating roro vessels and nowadays has the largest fleet of

Spot on

Grupo Suardiaz Spain’s largest roro operator with interests also in LNG bunkering and boxships.

30

“

The challenge that we might encounter is having enough compliant fuel supply available

”

roro and car carriers in Spain.

“We currently operate 10 car carrier and roro vessels, two containerships and two bunkering ships,” says Riva, clarifying that the company’s main activities are motorways of the seas, Suardiaz Energy, terminals, agencies, port services, road and rail transportation.

Looking at the mid-term future of the industry, the ceo of Grupo Suardiaz underlines that “as long as the global commercial activity is sustainable, our industry will remain strong, providing solutions to the transport demand between countries. However, there might be some variations in geographies

and type of cargo.” Nevertheless he cites new regulations as one of the biggest challenges for shipping.

“A very important challenge our industry will face in the future is having to adapt our fleets to the new environmental regulations, either by adapting the current fleets with innovative technologies or via the construction of new even greener vessels. Nonetheless, we must not forget that maritime shipping continues to be by far the most efficient and environment friendly means of transport, with the lowest fuel consumption and CO2 emissions per transported ton.”

Talking also as president of the European Community Shipowners’ Associations (ECSA), Riva stresses that EC shipping firms fully support the decision of the IMO’s 70th Marine Environment Protection Committee (MEPC) on limiting the sulfur limit of maritime fuels to 0.5% by 2020. “Although shipping continues to be the most sustainable means of transport, we believe in setting an example by taking this lead in the transportation sector,” Riva says, concluding: “The challenge that we might encounter is having enough compliant fuel supply available by then, which is what the Bimco reports have actually suggested as a potential struggle. However, setting challenging targets is the only way to achieve ambitious goals. In addition to this, MEPC has also agreed to develop an IMO strategy in order to further reduce CO2 emissions in the maritime transportation, which might be enforced by the MEPC 72 meeting in 2018." ● maritime ceo

IN PROFILE

Norden rejigs fleet Jan Rindbo, the head of the Danish bulk line, outlines priorities in what is a very tricky market

A

t his latest quarterly results, Jan Rindbo, CEO of Denmark’s Norden, was honest, saying the $12m loss over the three-month period was “unacceptable”.

Rindbo has been at the Danish bulker and tanker outfit since the summer of 2015, having previously worked at Hong Kong’s Pacific Basin for 13 years.

Since coming onboard he has moved to radically alter the fleet mix at Norden whereby larger bulker carriers have been offloaded to focus instead on supramaxes and panamaxes. On the tanker side too the company has been busy shuffling assets, most recently at the end of August when it sold a 10-year-old product tanker for $14m.

The Dane is naturally cautious in today’s troubled markets but tells Maritime CEO he is confident the company is moving in the right direction in terms of what it specialises in.

On the dry bulk side Rindbo says he is now seeing better quarters, with February marking the low point and a gradual improvement since then.

To handle this changed market environment Rindbo explains Norden has increased the operating

Spot on

Norden Danish global tramp operator founded 145 years ago with mix of dry bulkers and tankers.

ISSUE FOUR 2016

side of the business whereby ships are now being taken on the shorter side of contracts.

Norden has sold almost all its large bulkers, now determined to concentrate on supramaxes and kamsarmaxes. Adding more bulker tonnage just now is not on the cards, Rindbo says.

“We are always looking at more tonnage but feel 2017 has a large headwind so we have not been rushing to buy more as we see many newbuilds coming.”

As far as the tanker side of the business goes, Rindbo says Norden has been preparing for a weaker market for many months, hence the decision to sell two tankers this year as well as focus on building up cover for 2017.

“We had been preparing for a weaker tanker market,” Rindbo says, then admitting: “It came a quarter earlier than predicted and was more severe than we have predicted.” The reason for the caution on tankers, he explains, is the volume of newbuilds delivering, which, he says, will create a temporary overcapacity.

Despite the difficulties posed by market conditions there have been some standout moments for Norden this year, not least the news this August that the Danish company had clinched one of its largest shipping contracts in its 145-year history.

It has concluded a deal with Enviva

“

2017 has a large headwind so we have not been rushing to buy more

”

to ship 11m tons of wood pellets from the US to Europe over a 15-year period. The pellets will be used by power firms as fuel. For Rindbo and his team it is deals like this that fire optimism amidst a tricky environment. ●

31

IN PROFILE

The art of subsea Shel Hutton is by no means your conventional shipowner

S

hel Hutton: the man… the myth... the legend.” So gushes one contact of this dive veteran on LinkedIn, and indeed there is a sense that Hutton is rather different than your average shipowner. Just look at the picture and the name of the ship he’s signing for. Then there’s his educational background on LinkedIn: Hudson’s Bay College of Tequila.

However, do not be fooled, Hutton is whip smart and aware of a lovely niche in an otherwise saturated offshore market.

Armed with more than 35 years experience in the offshore industry Hutton founded Ultra Deep Solutions (UDS) in August 2014, having previously worked for many well-known names including Kreuz Subsea and Technip.

By 2014, Hutton had identified that the dive support sector was a rarity in offshore – with an ageing, limited fleet.

“The last company I came from was moving in the wrong direction,” he recalls. “Swiber/Kreuz were in a self-destruct period and I wasn’t liking what I was seeing.”

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After Kreuz was sold to Headland Fund out of Hong Kong Hutton set about planning the creation of UDS to, as he says, “tackle a market that was getting old”.

Hutton explains there are 95 DSVs in the world. More than 30 of these are over 30 years old. Out of the 95 he found at least 15 others underpowered or poorly designed. This left just 55 to compete against.

“As long as we stuck to our business plan to build the best vessels, DNV-GL classed, and at the lowest cost we would be in good shape,” he recounts, adding that the plan was never to build for tomorrow but build for the future adding in the latest high tech to the vessels.

UDS now has four vessels on order and is looking to sign another three to four contracts in the coming 12 months. This includes subsea vessels not just dive support ones.

“UDS,” Hutton insists, “will have one of the youngest fleets in the world at the lowest cost.”

Moreover, he’s adamant that oil prices are ticking up. He claims to have called the oil price bottom correctly this February.

“

Our company’s strategy really has relied on timing and holding little debt

”

“Right now as the recovery is happening the new zero for oil is $45 to $50. Our turnaround will be mid2017 to Q3 2017, when we will see oil at $65 to $70,” Hutton says.

The owner of the Andy Warhol among other vessels hopes for more than 15 minutes of fame. “Our company’s strategy really has relied on timing and holding little debt,” he concludes. ●

“Without sulphur enforcement the good are punished and the bad are rewarded” — Anna Larsson, chair, Trident Alliance

maritime ceo

IN PROFILE

‘I’m crazy. Shipping is an addiction’ Egypt’s Sherine Naggar tends to make for fascinating interviews

A

n interview with the eloquent, self-deprecating Sherine Naggar is never dull.

The chairman of the Egyptian based, family controlled Naggar Shipping, founded by his grandfather in 1897, in a candid interview describes both himself and various family members as crazy or nutcases in their career pursuits.

Naggar, and assorted scions, like to think big when it comes to shipping projects. The chairman’s current obsession is to buy six rail ferries, hooking up with China’s One Belt, One Road (OBOR) initiative, whereby said vessels will offer voyages over land and sea from Stavanger to

Spot on

Naggar Shipping About to turn 120, Naggar Shipping is one of Egypt’s largest maritime firms with interests in liners, agency, surveying, logistics, NVOCCs and engineering.

Beijing via the Middle East. Naggar has identified two of the six ships to buy so far and is likely to tap Chinese financing for the acquisitions, he tells Maritime CEO. This sea/rail idea of Naggar’s is something he’s been brewing since 2006, well before China’s current president, Xi Jinping, came up with OBOR. He stresses that the concept is not to take business away from shipping, but more from aviation. If it takes off, Naggar says the project will eventually involve far more than just six vessels.

As well as operating ships, the Naggars, who hail from the Mediterranean city of Alexandria, are involved in agency, surveying, logistics, NVOCCs and engineering.

Two years ago the firm sold all its tankers leaving it mainly as a liner operator these days.

Having been in the family business since 1973, Naggar is somewhat disenchanted with how the character of the industry is these days. “Shipping is ugly now,” he

“ ISSUE FOUR 2016

says. “Shipowners today are on their own.” Banks are aggressive, he says, freight rates “lousy”, the ITF are all over owners and as for Port State Control, well they’re “morons who cause chaos”. International shipping bodies, he urges, need to become far more commercial and back their members more strongly.

So with all this aggravation, why’s he still in the business? “I’m crazy,” he admits. “It’s an addiction.”

And what of the other mad men in the family? There’s Naggar’s “crazy” nephew, who, having just graduated from McGill in Canada, is now working on developing hydrogen propelled ships, mainly aimed at the tanker market.

“It’s dangerous,” Naggar concedes, “but I like the idea very much.”

Then there’s Naggar’s “nutcase” of a son, a trained marine engineer, who is working on developing plastic wood composite.

The family tales in the Naggar household run and run. ●

”

Shipowners today are on their own

33

WINE

It’s beginning to taste a lot like Christmas Value is relative; Christmas is about relatives. Drinking wine is about realising the former while mitigating the latter, writes Neville Smith

L

et’s face it, 2016 has not been a vintage year for shipping. This is not to say that no money has been made. One of the problems facing the industry is that (in relative terms) there is still too much of it sloshing about. But for most of us it’s been about surviving a relentless tide of bad news and a recovery deferred.

As a result, many a Christmas lunch table will be absent a whole lot of cheer come December and New Year toasting will be along the lines of ‘please let this be the beginning of the end’. But there’s no need to stint

Two to try WHEN THE GUESTS have gone and it’s time for presents, reach for Berry Bros & Rudd ‘house’ Champagne (Mailly, Grand Cru, £26.95) a non-vintage blend of Pinot/Chardonnay Grand Cru blend that over-delivers at this price.

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– despite the falling pound there are many good value options for the discerning that needn’t blow the roof off if you are hiding from creditors.

As a result and in the spirit of public service, Maritime CEO brings you the guide to smart seasonal drinking with one eye on your wallet and another on the label. Below is selection of wines to party with and one or two you’ll probably want to keep to yourself. After all, good cheer might be for sharing but no one said shipping was a team sport, did they?

Party wines are often a problem

Private Cellar’s Renaissance GamayPinot Noir 2012 (£10.95) from the Loire valley is a fresh and fleshy blend of Pint Noir and Gamay (the latter is fashionable again you’ll be pleased to hear) that will keep many a party moving.●

because of the need to balance volume and quality, so think about it this way. Private Cellar’s Les Rafelières Sauvignon Blanc 2015 (£8.95) is a lowly IGP from the Val de Loire but is from a very strong vintage, leaning towards the Sancerre style and all the better for it.

For your Christmas lunch or dinner play it straight and simple.

Burgundy and Claret are just the ticket and Corney and Barrow’s 2015 White Burgundy (£12.50) made by Domaine Dominique Cornin is a creamy, luscious bargain of a thing.

Corney & Barrow’s House Claret 2012 (£9.25) hails from Maison Sichel is a classically-framed, juicy, oak-tinged performer.

Dessert calls for dessert wine - regardless of whether you are reaching for the figgy pudding or something more refined - and there are none finer than those of Sauternes. Berry Bros. & Rudd Sauternes 2012 by Ch. Doisy-Védrines (£12.75 half bottle) has everything you need to round off proceedings in style. ● maritime ceo

GADGETS

Safe travels

W

ith increasing amounts of technology in our lives, carrying things has become more essential. Knomo has combined beautiful bags with the extra safety of an RFID-blocking lining.

The Bungo Messenger Bag is full grain leather with canvas details, and big enough to carry a 15.6” laptop. It also sports an adjustable strap landslip band on the back to slide it onto a trolley for when you’re travelling with luggage. Inside, the laptop section is padded, and it has several organisational pockets, all RFID shielded so any passports, credit cards and so on can’t be electronically stolen whilst they’re in the bag.

Knomo Bungo Messenger Bag www.knomobags.com $329

Sonic perfection

S

ennheiser has been one of the leading brands of headphones for decades. The wireless version of their foldable Momentum headphones for smartphones with active noise cancellation is out. They connect with smartphones via Bluetooth (there’s a built-in microphone for calls). The battery lasts 22 hours, and is recharged via USB. They can also be used wired, with or without the noise cancellation. The noise cancellation is good, although there are better solutions on the market, but where these headphones excel is the sound produced: they do to music what an iMac 5k does to typography. The sound is so clear and beautiful, you just don’t want to take them off.

Sennheiser Momentum Wireless www.sennheiser.com $500

Watch this!

I

f you own an expensive mechanical watch, then you can do no worse than invest in a serious watch winder. Döttling have just the thing — the Döttling Gyrowinder, a 360° gyroscopic watch winder that is not only functional, it’s good enough to pass as a display case, with a hand-blown crystal glass cover and six LED lights to light up your watch. The gyro winder runs off the mains and will rotate your watch in all directions — which closely resembles how your watch moves when on your wrist. It also comes with a set of counterweights, to custom balance to your watch’s individual weight.

Döttling Gyrowinder www.doettling.com $ 18,000

ISSUE FOUR 2016

35

REGULAR BOOKS

Where is China going?

Paul French leafs through three books looking at the People’s Republic with Xi Jinping at the controls

T

he Sixth Plenum of the 18th Communist Party of China Congress took place in October with Xi Jinping declared China’s ‘core’ leader.

Xi has emerged as a much greater figurehead leader of China than any other leader since perhaps Deng Xiaoping, or even perhaps Mao himself.

This comes at a time of the completion of the rebalancing of the Chinese economy. Many feel it is essentially a moment when China is entering a new phase. But will that phase be stable, peaceful and unproblematic or will it be a period when demands for political change come to the fore, fractious geopolitical realignments occur (not least in the wake of one D Trump being handed the keys to 1600 Pennsylvania Avenue) and some economic problems created decades ago have to be finally solved? In recent months some pretty

36

“

Control will be the hallmark of the Xi administration

”

big beasts in the international China watching community have weighed in on the subject.

First, the economy. Arthur Kroeber has been one of the leading independent economic analysts of China for over a decade now. Kroeber’s snappily titled book, China’s Economy: What Everyone Needs to Know, gives a useful overview of how China’s economy was freed from the shackles of Maoism and exploded into three decades of growth, the problems the current leadership inherits from that growth (pollution, debt, high expectations, a demographic time bomb, etc) before offering some analysis of the

future. Kroeber argues that much talk of China as an innovator ignore the fact that most is “adaptive innovation”, making things work better in the Chinese context. Kroeber is also worried about Xi’s tendency to want to control things rather than reform and liberalise.

Which brings us to Kerry Brown’s book CEO China: The Rise of Xi Jinping.

Brown, a former British diplomat and now head of the Lau Institute at King’s College in London, sees China’s anti-corruption drive, its rebalanced economy, its international stance as all ways in which, though he may have inherited these issues, Xi Jinping has been able to cement his position as head of the Communist Party and country. Brown explains in great detail Xi’s desire to control as many aspects of China and its citizens’ lives as possible – the internet, universities, banking and the currency.

All of this goes to support Kroeber’s theory that control will be the hallmark of the Xi administration rather than any notion of democracy or a renewed push to liberalise the Chinese economy.

Which, finally, brings us to David Shambaugh’s book, China’s Future.

Shambaugh, who teaches political science and international relations at George Washington University, specialises in the party-state relationship in China. In this concise book he looks at China’s emergence onto the global stage. As with Kroeber and Brown he asks whether the immediate future under Xi might be one of stagnation, both politically and economically.

Shambaugh see this decade as crucial to determining how China will engage the world in the future - more liberal or even democratic or will China instead emerge as a hard, authoritarian and aggressive superstate? ●

maritime ceo

TRAVEL

In the shadow of the casinos Heading to Hong Kong? Then pack in an extra 24 hours with a quick side trip to Macau

M

any people will be descending to south China for Hong Kong Maritime Industry Week, a packed few days of more than 40 events. For those that can find the time take 24 hours out of your schedule and head to nearby Macau.

There is plenty more to this former Portuguese conclave than the gaudy casinos that it is most famous for. Still, this is Maritime CEO, you’re in shipping so you know all about casinos – this could be your type of town!

Yes, Macau is vastly different to what it was, even, 15 years ago, with giant gambling palaces dominating the skylines and the little city of just half a million raking in more revenues than Las Vegas.

Nevertheless, tucked away down sidestreets and in the shadows of these new edifices visitors can still get a taste of the old Macau – where Europe meets the Far East in a fantastic fusion.

Ferries leave Hong Kong every quarter of an hour and take no more than a hour, passing pass the mouth of the Pearl River, and docking close to the downtown area.

If you’re planning to stay the night (we reckon, you’d be mad

ISSUE FOUR 2016

not to) then there are two hotel recommendations. First is the Pousada De Sao Tiago, an old fashioned place set in a fort near the A Ma temple in the west of the city. Alternatively, if after the hustle and bustle of Hong Kong you fancy something more secluded and calmer, try the Grand Coloane Resort. Coloane and Taipa are two islands linked by bridges (and latterly casino causeways) to mainland Macau.

“

Where Europe meets the Far East in a fantastic fusion

”

Any trip to this nearly 500 year old city should include a walk through the UNESCO World Heritage site that is the old town starting from the tiled, colonial Senado Square all the way up to the famous ruins of St Paul. On the way check out the Macau Museum, housed in Mount Fortress, a former military base built

by Jesuits in the 17th century, and adjacent to the ruins. An escalator leads to a park on top of the fort that offers views of the Macau peninsula.

To catch a glimpse of yesteryear seek out the Pastelaria Caravela, a

back-alley café overshadowed by the outrageously designed Grand Lisboa casino that serves as a gathering spot for the local Portuguese community.

Start the day the Portuguese way with a bica (a long shot of espresso) or a galao (similar to a cappuccino) and raid the pastry cabinet, which includes some typically Portuguese treats such as pasteis de nata.

Food is the real reason we keep coming back to Macau – it ranks as one of the best places on Earth – and that’s not just our thoughts, per square metre no other city can boast more Michelin stars.

For some traditional Macanese dining, head to Club Militar for great bacalhau (salty cod) or seafood rice, washed down with some Portuguese wine. Or if you’re feeling flash (or flush after a successful trip to the roulette table) then double back to the aforementioned Grand Lisboa and the Robuchon au Dôme high up for the best French food you’ll sample anywhere in Greater China.

And just in case you do win big at one of the casinos (The Venetian and the Grand Lisboa are our gambling picks) then there’s only one way to head back to Hong Kong – take the helicopter, they go regularly from the same ferry terminal. ●

37

OPINION

Dinosaur shipping CEOs Graeme Somerville-Ryan explains how to handle social media

E

very single day – every day of the week – your clients, employees, and stakeholders look away from their PCs and laptops and use their mobile devices to access news, go shopping, order a cab, Skype or FaceTime their friends and family, do their banking, look for new jobs, and check the sports scores…they might even take a moment to look up and yell at their kids ‘get off your devices’.

Analytics teams look at how long we all spend online, what we have been reading, and what sites we visit.

Marketing teams are doing their best to appreciate what information we have taken away from every one of our online actions and, of increasing importance, what we will share with our friends and colleagues.

This information has profoundly changed the world of corporate marketing. We know, for example, if you have a bad online ‘customer experience’ then you will leave with negative views of a company’s overall technical competence…even if the two aspects are completely unrelated.

Think about this…if you apply online for an onshore job with a shipping company and the form doesn’t load properly – the applicant will believe this is directly related to your ability to safely ship X cargo to Y port.

As business owners and managers, we cannot afford to be left behind in the digital revolution. We have a commercial obligation to meet and talk to our customers (and employees) where they reside – and increasingly this is online. This new digital/social media ecosystem is where people share news, form views of people and companies, and are influenced by the actions of others.

So what should CEOs do to avoid being dinosaurs? I have learned the

38

single biggest precursor to success is the support and buy-in of senior managers. But the very people who need to strategically drive the success don’t understand what needs to be done and what success looks like.

The trouble is, it is very hard to get good advice in this space. So where do you start if you don’t know what you’re looking for?

First accept that digital/social marketing is, to a large degree, a completely new form or marketing and communications. An afternoon’s reading on the subject will probably leave you as up-to-date on the subject as your marketing and PR teams.

Understand the implications of developing a digital strategy. This will impact your staff, some suppliers, and your own time commitment.

Be prepared to shake things up and provide leadership.

Incorporate sales…because little else matters. The disconnect between marketing/PR and sales is evident in most sectors…but if you are starting from scratch you have a great opportunity to move from a ‘press release culture’ to a more client focused approach.

Start slow…but be prepared to push boundaries. Social media gets bad press in shipping. Insurers regularly publish (online) about the perils of rogue posts and uncontrollable

coverage – but still want you to visit their websites and pay their premiums. So…consider how far you can go to get a commercial advantage.

Understand what you are going to measure. This is the really tricky part (and is the part which is commercially sensitive). Metrics are an easy sell/scare tactic: “Maersk has 155,840 followers” sounds impressive – but a sensible question is ‘so what?’

Don’t compare yourself to the competition. I think around 99% of companies are getting this wrong – the chances are you are too (sorry).

From what I can see and measure, the bigger the company the more likely this is. Simply replicating someone else’s efforts because of a brand name doesn’t equate to success. But the fantastic thing is that, in this brave new world, if you can get this right you have the opportunity to dominate this space.

If you still doubt the future is digital and social, you only have to look at what is going on in sectors such as law, accountancy, medicine, trading, banking, publishing, and even transport with the advent of Uber. We are already starting to see the application of artificial intelligence to ‘professional’ human jobs.

Big data can now be used to do these roles better and faster…and we have only just started.

Successful companies should always be asking themselves how they can improve the customer experience – how do you increase the touch points and give clients the information they want. In tough times you should be looking for any small advantage.

It’s not the marketing teams and consultants who have to recognise the end of an era. It’s the industry leaders. ● maritime ceo

REGULAR OPINION

Farewell, the Gutenberg Galaxy; hello, the Zuckerberg Zoo Andrew Craig-Bennett assesses what a Donald Trump presidency means for us all

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his November marked the moment the world bade farewell to two centuries of Anglo-Saxon dominance – a hundred years of Britain, from the Battle of Waterloo in 1815 to the Battle of the Somme, and a hundred years of the United States, ending with the election as president of the US of a fascist ‘television personality’ married to a nude model.

‘Decadence’ is the term that we need, here – decadence on a scale not seen in the world since the fall of the Roman Empire – which fell in much the same way, for much the same reasons.

Chinese readers will recall the story of Zhou Enlai meeting Nikita Khrushchev; Khrushchev said to Zhou, “You are the son of an aristocrat, but I am the son of a peasant!”

“Yes”, replied Zhou, “And we both betrayed our class!”

We have now seen a hat trick of ‘democratic’ events in which men who come from the elite, and who have betrayed their class – Roderigo Duterte, in the Philippines, on May 9, was the straw in the wind, he was followed by Boris Johnson and Nigel Farage in the UK, on June 23, and today by Donald Trump in the US, and they have, with the use of the internet social media, most especially Mark Zuckerberg’s Facebook, successfully

ISSUE FOUR 2016

suckered the soggy mass of lazy, ill-educated, ill-read and ill-informed proles, and a good supply of what V.I. Lenin called “useful idiots”, in three nations, into putting them into power, by telling lies and by promising the proles what they want.

What the proles want is ‘good jobs’ but with the ability to buy the stuff they buy now at cheap prices, because it is made by under paid, hardworking men and women in other countries who have ‘stolen their jobs’, and they want ‘no foreigners’.

They can’t have this, of course, but no matter, they don’t read, they just look at ‘memes’, and the damage is done.

The common factor is the ‘seeding’ of the ever-so friendly Facebook, full of pictures of kittens and food and grandchildren, with its oh-so clever algorithms to deliver onto your screen the very things that you want to see, be they things you might want to buy or people who think like you, with lies and deceit – really wicked, evil, lies and deceit – and the poisoning

of minds against the ‘mainstream media’, who actually – can you believe this – who actually think that facts matter, and who really do employ people to check them, because they are out dated enough to think that their advertising revenues depend on their reputation and that their reputation depends on them telling the truth. How very Gutenberg of them!

How very ‘Broadcast!’ Zuckerberg has destroyed all that.

So, what does the end of the Anglo-Saxon world order mean for shipping?

First, obviously, world trade follows the US, and indeed silly little England, into a man-made recession, next year. Maersk Line has already taken a hit, and if Maersk catches a cold, everyone else in this business gets pneumonia.

Next, the dollar becomes – and will the mighty Disney Corporation please understand that I allude here to their pre-WW2 merchandising – Mickey Mouse Money. The Fed won’t raise that interest rate – it will be printing dollars like they are going out of fashion, because, indeed, they will be going out of fashion. We can’t use gold to pay freight with, and the Yen and the much abused Euro will benefit, but the big winner will be the Renminbi Yuan, the currency of the new global superpower, the only nation wise enough to keep Zuckerberg and Co out.

Keep in mind that the adoption of the RMB as the default currency of world trade will automatically solve the problem of the Chinese debt spiral, just as it once solved, but will no longer solve, the problem of US debt.

“The winner takes it all,” as a Swedish pop group sang, and the winner is the People’s Republic of China.

The upheavals consequent on this event will be enormous. In the course of the rivalry and disorder, there will be fortunes to be made, amidst the general collapse. And our industry is very good at finding those. The really good news is that there will be such a shortage of investment capital that shipping returns will rise as investment becomes scarcer. Good luck! ●

39

MARPOLL REGULAR

Your take Every issue we pose a series of topical questions. The latest survey saw more than 600 of you respond. Results and key comments below Are maritime award ceremonies a waste of time and money?

“

Most can ill afford the luxury of travelling to some fancy dining hall to find out they failed to make the cut, again

”

Yes 66%

Has the tanker recovery ended?

“

Slower growth remains available, as long as we don’t get greedy

”

Yes 37%

No 34%

No 63%

Should charterers blacklist owners who abandon crews?

“

Should governments intervene to save financially troubled shipping and shipbuilding companies?

“

More transparency in ownership is needed

Companies that are unable to fund their own survival do not deserve to stay afloat

”

”

Yes 97%

Yes 24%

No 3%

No 76%

Which shipping city is set to gain the most from Brexit?

What should happen to the livestock trades?

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Asians will beat Europeans at this game

”

Singapore 27%

“

With a sensible timeline and strict inspection regime, this will drive slaughter and freezing at home state

”

Hamburg 20%

Rotterdam 19% Amsterdam 7%

Be banned 27%

Oslo 3%

Be forced to significantly upgrade vessels 65%

London 24%

Carry on as normal 8%

Container shipping freight rates will pick up in?

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Shipping may have to accept the bubble has burst and what was will not be again 2019 22%

”

Which nation will see the greatest contraction in shipbuilding capacity by 2020 in percentage terms?

“

Unfortunately, the high end of the industry will suffer, and China will reap the most benefit

”

South Korea 38%

2017 7%

2020 21%

Japan 15%

2018 25%

Later 25%

China 47%

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maritime ceo

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