Lloyds List

LLyd's list

Monday 20 February 2012

Nautilus warns against making master a scapegoat

Rush to blame detracts from investigation, union argues

David Osler

Monday 20 February 2012

HOSTILE publicity aimed at the master of Costa Concordia is detracting from investigations into the cause of last month’s cruiseship casualty in Italy and will damage the industry’s recruitment outlook, a leading seafarer union has warned.-

Francesco Schettino was subjected to a barrage of unfavourable media coverage for his handling of the incident, with some tabloids branding him Capt Coward.-

He is faces multiple counts of manslaughter and other charges, which together theoretically carry a jail term of 2,697 years.-

Now Nautilus International has written letters about the case to a number of prominent shipping bodies, including the International Maritime Organization, the UK’s Maritime and Coastguard Agency and the European Maritime Safety Agency.-

Copies have also been sent to European Union transport commissioner Siim Kallas and Britain’s shipping minister Mike Penning.-

Nautilus expresses concern at the leak of recordings of communications between the ship and the coastguard and transcripts of phone conversations while Capt Schettino was in a police station.-

Speculation on the circumstances of such accidents is inevitable, and debate about the principles of design, construction and operation of large passengerships entirely legitimate. However, specific and personalised references to the master’s alleged actions or inactions, and sustained assertions about Capt Schettino’s responsibility and professionalism, are another matter.-

Nautilus general secretary Mark Dickinson maintained that marine accident investigation reports repeatedly show that shipping casualties are invariably the result of a complex web of causal factors and contributory elements.-

“The haste with the public and the press have rushed to judgement in the case of the Costa Concordia is perhaps understandable, given the now common desire to find a figure of blame,” he said.-

“However, it is much less acceptable when it comes from within the shipping industry itself or from authorities who should respect the due processes of maritime and criminal investigation.”

There are, for instance, no comparable instances of airline pilots being subject to similarly extreme vilification within hours of a casualty.-

“The extremely high-profile treatment of Capt Schettino has served to reinforce widespread unease within the international shipping industry about the criminalisation of the maritime profession,” Mr Dickinson said.-

Meanwhile, the International Transport Workers’ Federation and Morocco’s Union Marocaine du Travail have moved to assist more than 100 Moroccan seafarers on four vessels facing shortages of food, fuel and pay in the port of Algeciras in Spain.-

The men and women have been caught up in the troubles facing Moroccan ferry operatorComarit /Comanav , which has led to the lay-up of 11 ships in Spanish, French and Moroccan ports.-

Crewmembers have stated that some have not been paid for up to five months, putting families at risk of losing their homes, while provisions on board are virtually exhausted. Following union intervention, sufficient diesel for crew needs for another four or five days has been put on board.-

The ITF and UMT are calling on the company to pay its crews, and are demanding that the Moroccan transport ministry and maritime authority live up to unspecified obligations in this matter.-

Maersk Line to cut 9% capacity from Asia-Europe

Rationalisation helped by vessel-sharing deal with CMA CGM in west Med trades

Janet Porter

Monday 20 February 2012

MAERSK Line is to axe 9% of capacity it deploys in the Asia-Europe the trades in response to depressed market conditions at a time when all lines are trying to push through hefty freight rate increases.-

Lay-ups and further slow-steaming will be used to help remove excess tonnage, but Maersk has made it clear it will defend its market share.-

The cutbacks will be helped by a vessel-sharing agreement with French line CMA CGM in the Asia-west Mediterranean trades.-

“With this adjustment, we are able to reduce our Asia-Europe capacity and improve vessel utilisation without giving up any market share we have gained over the past two years,” said Søren Skou, who took over as Maersk Line chief executive last month. “We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability,” he added.-

Maersk deploys around 850,000 teu in the Asia-Europe trades, according to Lloyd’s List Intelligence, with new capacity of 144,000 teu due this year, much of which was probably destined for this trade route.-

The move comes as spot rates in the Asia-Europe trades continue to soften. The latest Shanghai Containerised Freight Index was down 1.6% on Friday, with the China-north Europe component falling $10 to $711 per teu.-

Maersk is seeking a March 1 rate increase of $775 per teu in the westbound Asia to north Europe and Mediterranean trades. Other carriers are after similar amounts.-

The 9% capacity reduction will be facilitated by a vessel-sharing agreement with the French line, CMA CGM. Maersk said this would enable it to remove 9% of its vessel capacity “while still maintaining full and competitive coverage for its customers”.-

In addition, the co-operation helps Maersk cut the cost of serving west Mediterranean markets.-

“The Asia-Europe trade remains the world’s busiest trade lane,” said Vincent Clerc, chief product and yield officer for Maersk Line. “However, the supply of vessels currently operating on this trade simply outweighs the demand. We are therefore rationalising our service by taking out vessel capacity and thereby reducing costs.”

Where commercially appropriate, Maersk said it would also consider additional opportunities to reduce capacity, including redelivery of time charter tonnage, lay-ups and slow-steaming.-

Maersk also officially confirmed it will not declare the option for the last 10 Triple E vessels of 18,000 teu.-

Rationalisation is being helped by agreement with CMA CGM that will continue to operate in partnership with Maersk Line in the Asia-west Mediterranean trades, despite teaming up with Mediterranean Shipping Co on routes to northern Europe.-

The French and Danish lines are reshuffling their Asia-west Mediterranean services, with the pair to deploy 11 ships of 12,500 teu in a new rotation from Asia to Malta , Valencia , Barcelona , Fos , Genoa , Malta and Port Said from April.-

Another loop jointly operated by CMA CGM and Maersk Line will deploy 10 vessels of 9,500 teu and link Xiamen , Shanghai , Ningbo , Yantian , Nansha ,Tanjung Pelepas , Port Kelang, Beirut , Malta , Valencia , Malaga , Tangier , Port Said , Port Kelang and Singapore.-

These two new services will replace the MEX service currently operated by CMA CGM, as well as the AE11 and AE20 services operated by Maersk Line on the Asia-West Mediterranean trades.-

Separately, MSC and Zim announced a new co-operation in the South America east coast-US trades, consisting of two loops that will start around the end of March, pending Federal Maritime Commission approval.-

The year of financing expensively

Even best 2012 deals are at 250-400 basis points over Libor, as private equity seeks 15% returns

David Osler

Monday 20 February 2012

SHIP finance will remain more expensive throughout 2012, with bankers expecting spreads between two to four times higher than levels prevailing before the credit crunch, while private equity houses are not interested in anything below a 15% return, according to prominent industry sources.-

Hans Christian Kjelsrud, head of shipping at Nordea, told Lloyd’s List the bank had taken the policy decision to keep loan volumes flat for the next year or two.-

Money will be available to its relationship clients at 250-400 basis points over the London interbank offered rate, with pressure on the upside.-

That compares to levels below 100 bp before the second quarter of 2008, although the immediate impact is offset by the current unusually low level of Libor.-

However, there is considerable uncertainty as to its direction of travel, and the fear is that a Greek sovereign debt default could act as a catalyst for a sudden increase.-

“We have probably seen the average loan margin double between early 2008 and now. New loans are priced in the 250 bp to 400 bp range and I think we will see the average margin on our loan book continue to increase throughout the year,” said Mr Kjelsrud. “As you replace old loans with new loans, the average is going to continue to go up. But 250 bp to 400 bp is a good range for 2012.-

“Loan margin is a function of the credit quality of the borrower and 250 bp to 400 bp is the range where we see our clients right now. But obviously there are outliers. There are deals that are priced between 400 bp and 600 bp, but that reflects a credit risk where we don’t really play.”

Nordea’s pricing seems broadly comparable to that of its competitors. Recent reports from Italy, where domestic banks supply up to 80% of the funding needs of local shipowners, point to a similar spread.-

However, some smaller owners have also had to accept 600 bp.-

Janos Koenig, co-founder of ship finance consultancy Eurofin, said it was impossible to speak of an historic average for Libor. Before 2008, it typically stood between 2%-3%, with margins of 50 bp-100 bp.-

“Good clients were at 50 bp to 60 bp or even below, and there wasn’t really anybody borrowing at over 150 bp,” he said. But rather than regarding borrowing as costly now, it might make more sense to regard it as cheap previously, he suggested.-

Mr Kjelsrud also expects other sources of funding to make good some of the cash that banks are unwilling to provide.-

“Private equity can fill some of the gap,” he argued. “You will also need capacity from the bond market and you are going to need capacity from the export credit agencies. We see quite a healthy chunk of money sitting on the sidelines from private equity and waiting to be invested.-

“You are at the point in the cycle where many private equity players think we are at the bottom, or at least close to the bottom in some of these segments. Private equity has a history of invested at the low point in a cycle.-

“From that perspective, given the fact that shipping is a cyclical business, this is a market on which right now they will start to focus some of their interest.”

However, not everyone is optimistic. A recent ship finance survey from law firm Norton Rose found that while over one-third of respondents expected private equity to provide their primary source of financing over the next two years, there is no firm evidence the money will be available in sufficient quantities.-

Even where it is available, private equity houses “would not get out of bed for anything less than 15%”, Norton Rose head of transport Harry Theochari argued this week. Moreover, there is often the expectation of an equity stake.-

Finally, Mr Kjelsrud seemed unfazed at the prospect of the restructuring that Nordea clients such as Torm are known to be attempting.-

“Given the challenges we have seen in the freight market in the last couple of years, it is a natural part of the business that you will see some covenant breaches and restructurings,” he said. “But a restructuring does not necessarily have to be negative for the bank.-

“It is also a chance to firm up other credit terms, to cut dividends, to maybe get an extraordinary payment on a loan. Even in a restructuring, there is a give and take between the bank and the borrower.-

“There are terms that go in favour of the borrower and terms that go in favour of the bank.”

HMM legal campaign against Grand China reaches California

Attachment order secured in Los Angeles

Rajesh Joshi

Monday 20 February 2012

HYUNDAI Merchant Marine has stepped up its US legal campaign against Grand China Logistics by securing an attachment order in California against containers and other property belonging to the defendant, writes Rajesh Joshi in New York.-

An order of attachment and garnishment issued by Magistrate Judge Paul Abrams in the Central District of California mentions other assets belonging to Grand China, its corporate parent HNA Group and other group subsidiaries as eligible for garnishment.-

These include cheques, disbursement account funds advanced for Grand China ship calls in Los Angeles -Long Beach , freight and hire payments, unmatured debts and payments for bunkers.-

Total Terminals in Long Beach is named respondent in connection with HNA Group containers that it holds.-

The California order came as a federal court in Alabama issued a garnishment order against assets associated with HNA Group in the possession of Norton Lilly International in Mobile.-

HMM is targeting Grand China over a charterhire default of $19.7m including legal costs on the bulker Global Commander , which is in London arbitration. The South Korean conglomerate joins a list of global counterparties taking legal action against Grand China in the US over unpaid charterhire.-

Plaintiffs include the Vafias Group, Golden Ocean, Oldendorff Carriers and Norden. Previous lawsuits have involved attachment of property, including bunkers on ships, containers, bank accounts and other property.-

In most cases, the judges have been asked to pierce Grand China and HNA Group’s corporate veil and consider US assets associated with any company within the group as eligible for garnishment.-

Frontline ‘cautious’ after fourth-quarter operating loss

Tanker giant lowers its 2012 breakeven rates signalling that pressure has eased

Tom Leander

Monday 20 February 2012

TANKER giant Frontline posted a $306m operating loss in the fourth quarter, but the result was better than forecast by analysts and the company said it would “remain cautious” after restructuring to stave off bankruptcy.-

The John Fredriksen -controlled company’s operating loss included $313m in non-recurring items, such as sales of loss-making ships, as Frontline took steps to survive a prolonged market meltdown.-

“Based on current forward rates, Frontline should have significant strength to honour its obligations and meet the challenges created by the current very weak tanker market over the next couple of years,” the company said.-

In a Friday conference call, Frontline chief executive Jens Martin Jensen said he believed the secondhand market for older very large crude carriers had bottomed out and the price of 10-year-old VLCCs would not fall any further. “There are more buyers then sellers out there,” he said.-

According to Mr Jensen, newbuilding prices and asset values of younger VLCCs could still fall somewhat.-

Although Mr Jensen made it clear there were no immediate arrangements for expansion, he said Frontline was already planning for growth.-

“I think it would be wise to wait a few months with buying ships,” Mr Jensen said, adding: “If we see opportunities in other segments, we could be doing something there.”

He made it clear the strong financial backing provided by Frontline’s main shareholder John Fredriksen made such a move possible.-

He also said newbuildings would offer the best opportunities for Frontline, because of their higher fuel efficiency.-

Frontline said it earned an average of $19,100 a day on time charters for its very large crude carriers in the quarter and $13,900 for its suezmaxes, having previously said it would need to earn $30,200 and $23,600 to break even in the quarter, according to Reuters.-

However, the company has now lowered its estimated 2012 breakeven rates to $23,900 for very large crude carriers and $16,400 for suezmax vessels, following the restructuring.-

Frontline’s major restructuring played out through the end of last year. The company operates about 40 ships, having spun off an unlisted company called Frontline 2012.-

Frontline sold 10 vessels to Frontline 2012 in a deal that in effect removed some $1bn in debt and shipbuilding commitments.-

Frontline’s biggest stakeholder, John Fredriksen’s Hemen Holdings, infused $225m in new equity into the new company, taking a 90% stake.-

Mr Jensen said Frontline intended to unburden itself of a further three older vessels in the coming six months, “when we see the right opportunity”.-

He added the company had taken out a provision for a dry bulk charterer that had defaulted on a long-term contract. Though Mr Jensen declined to specify the size of provision, he said it was “not a big amount”. He vowed to “fight till the end” to recuperate the money owed. “We want to send a clear signal we will not tolerate this behaviour.”

Mr Jensen declined to name the parties involved, though he did say the dispute centred on charters of the company’s combined ore-bulk-oil carriers.-

In May of 2009, Frontline said it would raise a claim against Chinese bulk operator Glorywealth Shipping, after it had terminated the charter of its 1992-built, 169,204 dwt Front Striver “prematurely”.-

A tale of two ports

Why London Gateway will inevitably target port of Felixstowe’s customer base

Gavin van Marle

Monday 20 February 2012

TALK to importers, their logistics suppliers and some shipping lines serving the UK, and one message that almost uniformly comes across is that it would take an insane optimist to believe that the country’s economy will have completely turned around within the next 18 months. Yet that is what the Bank of England forecast in its quarterly inflation report published last week.-

Bank governor Mervyn King believes that growth in the UK’s economy will have reached 3% by the end of this year, rising to 3%-4% for the next two years. Contrast that to the Treasury forecast, which aggregates a consensus of research companies and consultancies, and estimates that growth by the beginning of next year will at best be 0.4%, and 1.8% a year later.-

Even that appears optimistic compared to the sentiment from freight forwarders serving the country’s high street retailers. One leading seafreight forwarder told Lloyd’s List that “there is absolutely no sign of overall volumes of business picking up at all”.-

He said: “We are winning business from competitors, and there is a lot of pressure on all forwarders in retaining existing customers, who are much more willing to vote with their feet on prices and walk away from long-standing relationships.-

“So growing our business is about beating competitors on price; stripping a bit of the cost out for shippers and adding a bit of value... but it is probably the toughest environment I’ve seen in the last 25 years.”

Into this depressed environment will come 1.6m teu of new container terminal capacity when DP World’s London Gateway begins the first phase of operations in the final quarter of 2013.-

Executives from DP World have for several months been negotiating with several logistics providers to develop warehousing in the logistics park next to the container terminal, but nothing has yet been concluded.-

Lloyd’s List sister publication IFW recently quoted London Gateway commercial manager Peter Ward saying that around 1m sq ft of space is expected to be developed for one customer, representing around 20% of the space in the logistics area, which the port claims will be the largest logistics park in Europe.-

Regardless of whether that particular deal goes ahead, the position illustrates that London Gateway is a game-changer in more ways than one for the UK port landscape.-

Clearly the addition of more than 1m teu capacity in the terminal’s first phase will bring a certain amount of overcapacity to the UK deepsea container terminal market. Observers believe this will hand shipping lines considerable leverage in their negotiations over terminal handling charges.-

What is feared by all is a rerun of the so-called “Thamesport effect”: when the terminal opened in 1989 at the confluence of the Thames and Medway rivers, it generated a steep decline in handling rates, an event burned on the collective psyche of much of the British port industry.-

However, there are important differences between the opening of Thamesport and London Gateway. The primary one is historical: when Thamesport opened, its owners envisaged that it would operate with substantially lower costs than those at Felixstowe because it deployed new automation and would be unencumbered by the legacy of the Dock Labour Scheme.-

That did not last long because around the time Thamesport opened, the Dock Labour Scheme was abolished and labour costs throughout the UK declined sharply. Thamesport lost its cost advantage overnight and went into administration by mid-1990.-

Second, where Thamesport was a standalone company, London Gateway is owned by established operator DP World. Felixstowe is owned by global rival Hutchison. It is pretty clear that neither company has much interest in the sort of price war more commonly associated with container shipping lines.-

Handling charges have a nature specific to the port industry; while they can be subject to rapid downwards shifts, the opposite is not true. It is incredibly difficult for terminal operators to push rates upwards, even in times when capacity is scarce, which it is unlikely to be for some time in the UK once London Gateway opens.-

In contrast, London Gateway executives are marketing the port as the best location for retail importers to serve London, the country’s largest single market, and the densely-populated south-east, positioning this as an opportunity for shippers to save on distribution costs.-

And so the debate about which port to use has moved from one that centres on container shipping lines to one based on shippers and their logistics providers. The interesting aspect, say observers, is how those cost savings will ultimately be shared out.-

Lloyd’s List understands that in fact, rather than cutting charges to attract customers, London Gateway is proposing to put its handling charges at a premium, in much the same way that London workers have to choose between living in the city and paying higher housing costs in return for a shorter commute, or living outside the city more cheaply, but paying more for transport.-

Although it is an understandable strategy, one observer said it is unrealistic given current market conditions: “You cannot charge a premium because no one has the money to pay a premium nowadays.”

Another possibility being mooted is that shipping lines might introduce a two-tier terminal handling charge structure, so that customers receiving cargo through Felixstowe pay a slightly lower rate than those at London Gateway.-

Another seasoned industry observer told Lloyd’s List: “This is the argument that appears to be going on at the moment: there is no doubt that London Gateway will provide some shippers with a saving in distribution costs, but the question is how that cost gets shared out.-

“It’s quite a tortuous route to say that if there is an end saving of, say, £60 per container, that the shipping line should receive £20 of that saving and the port another £20.-

“If you are a shipper with an established distribution system based around a hub in the Midlands, the more that you leak those savings to other supply chain partners, the less attractive it is to re-engineer the supply chain around a port-centric model at London Gateway.”

And of course, not all shippers are the same.-

While large Asian white goods manufacturers might have a single supply-chain pipeline for which it makes sense to consolidate cargo in one hub, other importers, such as large supermarkets, have diverse supply chains that source more widely.-

For goods that come in on ships operating the north-south trades, or from Europe via the Channel, hubbing at London Gateway could well involve extra cost, not less.-

This indicates that London Gateway is primarily intended for the Asia-UK trades, which in any case comprise the majority of containers coming into the country. According to Drewry, volumes from Asia amount to about 3m teu per year, representing 60%-65% of the country’s throughput, with the north-south trades claiming 30% and the transatlantic the remainder.-

Now, 3m teu is under the control of four main shipping groups; Maersk, MSC-CMA CGM, the “gang of six” and CKYH plus Evergreen. It is therefore inconceivable that Felixstowe will not be affected by the opening of London Gateway, in terms of volumes, if the new entrant is to have any hope of securing an anchor client.-

Making the UK a hub for Europe?

London Gateway and Felixstowe are not necessarily rivals

Gavin van Marle

Monday 20 February 2012

COULD the opening of London Gateway push the UK to become a hub for northern Europe, creating a new boom for the country’s transhipment?

Some UK freight forwarders argue just that. They believe that London and Felixstowe need to work together to promote the UK as an alternative distribution point for Europe as a whole, particularly when it comes to imports from Asia.-

This argument is based on three factors: the UK’s deepsea ports have traditionally been the first call on Asia-northern Europe and the last on northern Europe-Asia strings. The change in value of sterling against the euro has given the UK significant operating cost advantages. Finally, the ongoing eurozone crisis profoundly undermines any confidence that cargo owners might have about investing in Continental distribution hubs.-

It is also worth remembering that a decade ago, about 30% of Felixstowe’s throughput was transhipment traffic, but as the UK economy grew and the demand for imports increased, the ratio of transhipment declined against the port’s gateway cargo.-

While this was not intentional, port executives welcomed it, because gateway cargo pays higher rates. Since there has been little substantial addition to the UK’s container terminal capacity for much of the last decade, most transhipment traffic has migrated to mainland Europe. Could that change when London Gateway adds 1.6m teu of new capacity at the end of next year?

“Most of the Felixstowe transhipment was deepsea relay traffic rather than hub and spoke,” said Drewry ports director Neil Davidson. “In theory, London Gateway might attract some traffic destined for the Baltic, but I cannot see carriers dropping a call at Rotterdam or Antwerp for London.”

That view is shared by APM Terminals managing director Frank Tazelaar, whose company is building new capacity at Maasvlakte II in Rotterdam. “London Gateway is not a threat to Rotterdam,” Mr Tazelaar said.-

“It is an internal UK development, while 80% of our project volumes will be gateway traffic and the rest transhipment. There might be some UK traffic that has been transhipped in Rotterdam moving back to London, but the critical mass of Rotterdam is only likely to grow.”

Vale works to win access for VLOCs

Miner to sell 80% of its iron ore at spot prices in olive branch to China steelmakers

Tom Leander

Monday 20 February 2012

VALE, the Brazilian mining giant that is the world’s largest iron-ore exporter, is working with China’s authorities to end the ban on its 400,000 dwt vessels entering the country’s ports, but a solution will take time, according Jose Carlos Martins, the company’s iron ore and strategy chief.-

In a conference call to analysts, Mr Martins said that many of the Chinese ports had the “conditions to receive the ships” and that “it’s a question of adjustment and licensing”.-

In a statement issued earlier this month, China’s Ministry of Transport announced that it had barred Vale’s very large ore carriers from entering the country’s ports due to safety concerns. In practical terms, the ministry removed a loophole that allowed Chinese ports and local marine authorities to decide on a case by case basis whether to receive vessels that exceeded their designed berth capacities.-

The government has now apparently closed that loophole, requiring Chinese ports to verify with central government that their berths can receive vessels exceeding their nominal capacities.-

On February 13,Vale and Dalian port announced that they planned to work together despite the VLOC ban, suggesting that neither the Brazilian miner nor the port saw the government ban as final.-

The port issued a statement saying it had “remodelled its 300,000 dwt berth and storage facility for iron ore, so we can satisfy the requirements of receiving large vessels and we can meet all the transhipment needs as well”.-

Dalian port is the only Chinese port to have handled a valemax to date. Berge Everest arrived and unloaded at Dalian at year-end without incident. But its arrival intensified lobbying by the China Shipowners Association against Vale and its outsized tonnage.-

CSOA said on Thursday that it had not changed its attitude towards the ships and would closely monitor Vale’s operation of the vessels and communicate with other groups whose interests might conflict with its own.-

Mr Martins alluded to this last point, highlighting the fact that perhaps not all constituencies in China oppose Vale’s plan to ship iron ore on big ships, in his analysts’ call on Thursday.-

“We are prepared for alternative solutions and, as you know, China needs ore and as time goes on all this will be solved,” he said.-

Vale’s fall-back plan is to build transhipment centres in the Philippines and Malaysia, shipping ore on VLOCs across the Pacific, then transferring the cargo onto smaller vessels to feed into China.-

Mr Martins told analysts that the transhipment centres would be ready by 2014 with the completion of the 30m tonne a year iron-ore distribution centre in Malaysia. This will work with Vale’s existing distribution base at Subic Bay in the Philippines.-

“This is a game-changer story for the iron-ore market and we think it is good for Chinese steelmakers who can get cheaper iron ore,” Martins told analysts.-

Vale has also announced that it will sell 80% of its iron ore at spot market pricing, a move seen as an olive branch to Chinese steelmakers, who have long urged major iron-ore miners to sell 100% of their ore on the spot market.-

China’s steelmakers want to benefit from falling iron ore prices. Iron ore averaged $141.80 per tonne in the fourth quarter of 2011, 11% less than a year earlier and 20% less than in the third quarter.-

For decades, iron-ore prices were set by annual benchmarks established in negotiations between global miners and steelmakers. In 2010, the industry moved to contracts adjusted quarterly, using past spot-price averages. Vale’s move to sell 80% of its ore at spot prices accelerates the market’s move towards more open pricing.-

Vale chief executive talks ‘game-changer strategy’

Chinese ports understand advantages of VLOCs but CSA is ‘not helping’

Liz McCarthy

Monday 20 February 2012

AT LAST, financial equity analysts are asking Vale to address two big, unanswered questions: the decision to invest in a hugely expensive very large ore carrier programme and to use transhipment hubs to move iron ore throughout Asia, writes Liz McCarthy.-

The Brazilian mining giant’s chief executive Murilo Ferreira appears to acknowledge now that perhaps it is better to talk about the issues Vale faces with its 400,000 dwt bulkers than to let market rumours build.-

Mr Ferreira opened up during the company’s fourth-quarter financial results call, commenting that when companies “go for a game-changer strategy” they cannot expect it to be easy.-

“It takes time for people to understand and accept it,” he said.-

Although he felt that ports had a good understanding of the technical and safety constraints, Mr Ferreira made a nod towards the Chinese Shipowners Association when he said that “other interests are not helping”.-

However, he remained optimistic that: “[In the] long term, big ships are an alternative for them. And I believe that as time goes by, all of these issues will be solved. It is a matter of concern for us, but it’s not a matter of high concern.”

Vale head of iron ore and strategy Jose Carlos Martins went on to discuss the finer points of its logistics strategy in the Middle East and Asia and the transhipment hub being built in Malaysia.-

One advantage of transhipping cargo in Southeast Asia is that it allows Vale to compete for business from smaller Asian customers in countries with limited port infrastructure, purchasing greater numbers of small cargoes of iron ore and shipping them on panamaxes rather than larger capesizes to reduce freight costs make Vale’s ore more attractive.-

The key idea behind the 35-strong valemax fleet, of which six are in service so far, was to reduce freight costs and increase Vale’s ability to compete against major Australian miners that are closer to Asian customers.-

“We have a huge cost difference from shipping from Brazil to Asia than shipping from our competitors to Asia, so we are addressing it,” Mr Martins said.-

By using 400,000 dwt valemaxes to ship iron ore from Brazil to Southeast Asia, “you have made 85% of the trip very efficiently”, and once there “you can move ore to the small vessels, even to barges, which can then go to rivers”.-

“Then we open [up] a very big logistics option for our ore”.-

Mr Martins pointed out that when Lehman Brothers bank collapsed in September 2008, which brought on a global financial crash that saw trade credit frozen and the bulk market brought to a standstill, miners such as Vale lost vast amounts of production because they had nowhere to store the iron ore.-

As a result, around 65m tonnes of production was lost in 2008 and 2009. For this reason, even if the market is not strong, it is important for Vale to keep moving ore that it can sell on and generate revenue from later.-

“So that is the whole picture that we are working on it,” Mr Martins said. “It’s not only about China. China is important, because it’s the main market that we are looking for. But you have the whole [of] Asia and other alternatives that we have in order to reduce costs, improve quality, and to increase our presence in Asia.”

DFDS and Louis Dreyfus launch Dover-Calais ferry

Failed bidders for SeaFrance go live

Roger Hailey

Monday 20 February 2012

DFDS and Louis Dreyfus launched their Dover-Calais ro-pax ferry service on Friday with 115 ex-SeaFrance staff.-

The 1991-built, 28,833 gt Norman Spirit , chartered by DFDS from Louis Dreyfus, will operate a five sailings per day schedule each way on the English Channel with a maximum capacity for 1,900 passengers and 1,500 lane metres for cars and freight.-

The Franco-Danish joint venture partners were failed bidders for SeaFrance, the French state-owned ferry company, before it went into liquidation in early January this year after laying up its four vessel fleet in mid-November 2011. Those vessels are now set to be auctioned by the liquidator.-

DFDS and Louis Dreyfus, said they intend to launch a two-ferry Dover-Calais operation, with 300 staff, the majority being ex-SeaFrance personnel.-

Carsten Jensen, head of DFDS’ channel business, said that the joint venture had “several options” for a second vessel on the route and expected to have it in place “within a few months”.-

He said that switching Norman Spirit from DFDS’s Dover-Dunkirk route was “probably not a long term solution” on the Dover-Calais route, adding that the joint venture did not rule out looking at one or more vessels in the SeaFrance fleet when it comes up for auction.-

Mr Jensen would not comment on rates, but said: “It is a competitive market. Forward bookings are looking good and we intend to offer a product in terms of frequency and reliability that fits in with our operating model.”

• The UK Department for Transport has received the inspector’s report into the Section 31 Dover port tariff public inquiry.-

The report is not yet in the public domain, but the transport minister has the power, in theory, to reject the inspector’s recommendation.-

The Section 31 complaint was brought by the trust port’s three main ferry line customers against the Dover Harbour Board port dues for 2009 and 2010.-

DHB has plans, subject to DfT approval, to privatise the port for around £400m ($634m).-

SkySails sacks half its staff

Hamburg firm has sold barely 10 kites

Katrin Berkenkopf

Monday 20 February 2012

GERMAN towing kite producer SkySails has had to sack about half its employees amid sluggish demand for its technology, as the Hamburg-based company expects the difficult economic environment to persist, writes Katrin Berkenkopf in Cologne.-

Despite some showcase contracts the SkySails system, which uses wind propulsion to support the main engine, has not yet made a breakthrough in the industry. According to the latest available financial data, SkySails generated a loss of €5.8m ($7.5m) in 2010 and a loss of €8m in 2009.-

Last year, the company was confronted with an unexpected financing gap of €5.3m. The financial database information suggests that this related to the insolvency of shipping group Beluga and its founder Niels Stolberg and the subsequent failure of a loan agreement.-

In the 2010 report, the company acknowledged that owners were shying away from additional investments because of the difficult financial situation. SkySails decided to broaden its target customers particularly in Asia, among shipowners seeking a greener image.-

The company landed one attention-grabbing success when it won an order from Cargill. Nevertheless, fewer than 10 kites have been installed on vessels.-

SkySails had expected to break even in 2013, but the latest development strongly suggest this will be impossible. As a reaction to the low sales figure, SkySails is marketing its Performance Monitor software, which optimises ship operations and was designed as a by-product to the towing kite.-

It’s time we gave fracking a crack

Better to make a buck from shale gas than to tilt at useless windmills

Michael Grey

Monday 20 February 2012

DOWN here in Sussex, we get pretty protective about our rural environment. We become terribly steamed up about landfill sites, especially when it turns out it is the capital’s non-recyclables that are going to be dumped on us.-

Locals become livid about telecommunications masts, even when they are disguised — badly — as trees. And we will march in our thousands to defend the South Downs against wind farmers and their hideous erections, despite their singular success at Glyndebourne, with its wind-powered opera house.-

We make a terrible fuss when somebody wants to drill a test well for hydrocarbons on the coastal plain, even though the explorers insist they plan only a little nodding donkey, tastefully hidden inside a grove of trees, not mentioning the enormous refinery that will be built if the bore proves economical.-

It probably all stems from a lack of any sort of trust in official assurances and not the usual accusation of Nimbyism casually thrown at us when we don’t fall over ourselves with enthusiasm at the prospect of another 26,000 homes being distributed around our county to meet targets imposed by the last government, which was generally thought in these parts to be “South-hating”.-

It was some years ago that we let a man extract gravel from a field near Chichester: now this ancient city has become a semi-island, encircled by vast lakes and noisesome pits.-

We already have to put up with the curious dictats of the Green and nuclear-free city of Brighton, which attempts to spread its leftist influence northwards. And the ever-present rumour of a second runway for Gatwick threatens our quiet way of life in a sort of pincer movement.-

So we are awkward customers, mainly because we have to be. Like the Sussex pigs famed for their intractable demeanour, “we won’t be druv”.-

Last month brought a strange confrontation to the heart of Sussex over the possibility that we were all sitting on a fortune in shale gas, identified as an energy source that will keep us going for a few more decades after the oil and North Sea gas runs out.-

An American drilling company was hoping to carry out a little light fracking in the Balcombe area, up the road from here. There were indications that, deep under the High Weald, there could be more than a sniff of the stuff that has revolutionised the energy policies of the US so quickly.-

As you might imagine, this proposal went down like a keg of Old Peculier at a temperance wedding. We are not deeply into environmental enthusiasms in this neck of the woods, Greens being what we eat with our red meat and well-hung game. However, the application by the US energy company Caudrilla was not universally welcomed.-

At a stormy meeting at Balcombe Victory Hall, there was a great deal of shouting that made it nearly impossible for the oil company representative to put his very reasonable case for shale gas.-

Some will suggest this is just rural pig-headedness and the ever-present effort to keep things as they are, against the march of progress in the internet age, which seems to many of us to be moving at the speed of light.-

It could be to do with the vocabulary, even the language of hydrocarbon extraction, with its derrick monkeys and mudmen and toolpushers and wildcatters and roughnecks and shale-shakers. It all sounds like gobbledegook for a community whose comfort zone is the Balcombe Flower Show.-

If you have a little imagination, Caudrilla sounds not unlike Godzilla, the huge mutant dinosaur that wrecked New York, while the word “fracking” sounds a little too much like an expletive for our gentrified Sussex ears.-

Having given you a flavour of the personae from my adopted county, part of me allies itself naturally with those who wish to keep the Philistines at bay.-

But the other part of me thinks the complete opposite, based on my natural opposition to those environmental fanatics who are quite prepared to let us freeze in the dark by closing down nuclear and coal-fired power stations. If they oppose fracking so furiously, these people who spend their lives shrieking about carbon, then fracking is well worth further investigation.-

We are told that fracking — injecting water and chemicals into gas-bearing strata — causes earthquakes. However, the evidence points to something that has shaken an ornament off the mantelpiece, not some mighty wrinkling of the skin that has devastated whole cities.-

One would suggest it is probably manageable, as is the accusation that groundwater is disturbed or polluted by this deep and explosive activity to release the gas.-

In the US, which has more environmentalists per hectare than this country, they would seem — pardon the expression — to have fracked it, albeit with a small number of alarums.-

I know we are compelled by ludicrous climate change laws to festoon this country with windmills that are as much use as a chocolate teapot this month, with no wind and intense freezing cold.-

But if we are, indeed, sitting on a fortune in indigenous shale gas that can help this country out of its financial fix, should we at least give it a fair wind?

Bromma grabs spreader orders at new terminals

Swedish manufacturer predicts move towards tandem box lifts

Roger Hailey

Monday 20 February 2012

AUTOMATED yard handling at the world’s newbuild box hubs is a key trend identified by Bromma, manufacturer of the hi-tech crane spreaders that grab containers.-

Sweden-based Bromma, part of the Finnish Cargotec group, claims a 50%-60% global market share for spreaders, the metal structures at the end of container-handling ship-to-shore and yard cranes.-

Commercial director Vikram Raman, on a visit to London, said in the first nine years of the “automation era”, Bromma sold spreaders to automated terminals in Korea, Taiwan, Algeciras, Hamburg and Virginia.-

However, the past year has seen Bromma win major contracts for new automated terminals in Abu Dhabi, Brisbane and Sydney in Australia, Tercat in Barcelona, the London Gateway, and TraPac in Los Angeles.-

A further brace of big crane and spreader orders have yet to be awarded for each of the two container terminals at Rotterdam’s Maasvlakte 2 container city on the North Sea, but they are likely to be automated.-

“In general, we see a need for faster throughput and one way of doing that is by automating, because then you can move faster in the yard,” Mr Raman said. “When you have humans around, then you have a whole new set of rules to play by.”

Greenfield sites or newbuild terminals within an existing port offer the best environment for yard and ship-to-shore crane automation.-

“We have to keep in mind that to start automating in an existing terminal is a huge effort,” said Bromma vice-president marketing and product business development, Lars Meurling.-

“It is also costly and you will never work out an optimal solution because you are restricted by the way the terminal is operating now.”

One way round that problem is to close the terminal entirely, to make it an effective greenfield project, although few ports have the time and money to do so.-

There is a growing trend for spreaders, which sit at the end of crane arm, to be powered by electricity, replacing the traditional hydraulic version.-

Electrical spreaders have a lower price tag, weigh less and use 10% of the power of a hydraulic version — and the crane itself needs 85% of the power to lift them. As an electrical spreader has fewer parts, it also requires less maintenance.-

Bromma estimates the 10-year emissions savings for an electric yard spreader on a diesel-driven rubber-tyred gantry crane are equivalent to 200 tonnes of CO2. This matches the CO2 emissions from a new Volvo car driving 42 times around the world.-

To flex its environmental muscle further, Bromma estimates by using high-quality Swedish steel in its spreaders, the environmental footprint is one-10th that of comparable Chinese steel, even after shipping it to a factory in Malaysia and back.-

Swedish steel uses magnetite iron ore, which requires less heat to process than hematite used in Chinese steel, where coal-fired plants are less environmentally friendly those in Sweden.-

Port and maritime safety concerns require load sensor technology to be fitted in the spreader, rather than the crane, to detect whether a container is overweight or whether cargo has shifted.-

The International Maritime Organization is looking to establish an international legal requirement that all loaded containers are weighed at the port before they are stowed aboard a vessel.-

Bromma says by using load sensors in the spreader, closer to the twistlocks that hold the container, the accuracy is greatly improved compared with sensors in the crane or on a weighbridge, where the lorry weight variables have to be factored in.-

Mr Raman said the move towards ultra-large containerships of 13,000-15,000 teu and Maersk Line’s order for Triple E 18,000 teu vessels will require ports and terminals to find new ways to make their processes more efficient.-

“The ships are getting bigger and more expensive, so keeping a vessel at a berth can cost a lot of money. That really increases the need for improved productivity in the port,” he said.-

“For larger vessels, what really matters is what you do on the quay and the ship. Automation has caught on in terms of the container yard, but there is a big discussion on how you can be more efficient to and from the ship.-

“Once you have lifted the container off the ship, what are you going to do with it?” Bromma believes newbuild ports will look to “tandem lift” operations, where two fully-laden containers are raised in parallel, side by side, from the ship. New research is under way to see whether it is possible to lift two laden containers, one under the other, in the same grab.-

Tandem lifting would have consequences for the container yard.-

“The big challenge is how do you handle two 40ft containers coming down at the same time, with up to three or four ship-to-shore cranes working one vessel at the same time,” Mr Raman said.-

“There are a lot of containers coming down on to the quayside at the same time, and the question is, how do you deal with that?”

DP World’s London Gateway is one greenfield terminal looking at tandem lift for fully-laden containers.-

“The person who can automate the ship-to-shore and the quay operation will be the big winner,” Mr Raman said.-

Eukor tops ‘most sustainable’ league at Rotterdam

South Korean car carrier had six ships in the Sustainable Top 25 last year as measured by the Environmental Ship Index

Roger Hailey

Monday 20 February 2012

CAR carrier operator Eukor was the most sustainable shipping company calling at the European hub port of Rotterdam in 2011, writes Roger Hailey.-

The South Korean company had six ships in the “Sustainable Top 25”of seagoing vessels that arrived at Rotterdam last year, a league table using the Environmental Ship Index as a benchmark.-

The index shows how ships perform in their emissions of air pollution (NOx and SOx) and CO2, with ships in the index performing better than the statutory standards.-

Rotterdam paid ESI ships that scored 31 points or higher a “bonus” of around 5% of the port dues. However, in 2011, only Eukor’s 2008-built, 21,044 dwt Morning Carol was eligible for the Rotterdam discount in the first instance.-

A port spokesman said: “The meagre score did not suit the policy of the port authority in its aim to stimulate sustainable shipping. The port authority therefore decided to award the incentive to the 25 highest scoring ships that called at the port of Rotterdam in 2011.”

In its first year, Rotterdam rewarded shipowners a total of €53,000 ($68,900) in rebates, and the Dutch mega-hub, Europe’s largest port by volumes, expects to invest a “considerably greater amount” in sustainable shipping during 2012.-

In 2010, the International Association of Ports and Harbours-sponsored World Port Climate Initiative introduced the ESI, a voluntary measure designed by the European ports of Le Havre , Bremen , Hamburg , Antwerp , Amsterdam and Rotterdam.-

Antwerp, Hamburg and Zeebrugge have yet to declare how much they have paid in port fee rebates linked to a favourable ESI vessel performance. Bremen said it launched the ESI in January this year and will pay out rebates in 2013. Rotterdam port manager Tiedo Vellinga, a specialist in sustainable shipping and professor at the Technical University of Delft, said: “The Port of Rotterdam Authority grants the Top 25 a 5% discount on the Rotterdam port dues they paid in 2011.-

“I expect Rotterdam will invest much more in sustainable shipping next year, not only because shipping becomes more sustainable, but also because the standard — the Environmental Ship Index — is considerably simplified and because the sulphur limit in the index is internationalised.”

Eukor Car Carriers director Martin Malmfors said: “We diligently ensure that every Eukor owned and controlled vessel adheres to the highest possible environmental standards — in most cases considerably higher than the current regulatory system requires.-

“This recognition of the Port of Rotterdam confirms that our efforts have so far been well spent and also motivates us to continue our environmental work to improve even further.”

Currently there are 11 ports offering rewards in connection with the index, including Kiel , Oslo , Zeebrugge , Civitavecchia and Groningen.-

Chemical tanker market to recover

Orderbook shrinks leaving space for rates rise

Eric van den Berg

Monday 20 February 2012

CHEMICAL tanker rates could shoot up in the coming years if demand increases, says Eitzen Chemical chief executive Per Sylvester Jensen.-

Speaking at the presentation of the Norwegian tanker owner’s fourth-quarter results in Oslo on Thursday, Mr Jensen noted that the future for the chemical tanker market was increasingly bright due to the sector’s shrinking orderbook.-

“We believe that in the short-term the chemical tanker market will remain challenging, but we do think and believe that the 2012 fundamentals look better than 2011,” Mr Jensen said.-

He expected the coming years to see “significant spikes in rates when we see demand spikes”.-

According to Clarkson Research Services, the size of the handysize orderbook amounts to 8.7% of the global fleet in tonnage terms. Last year the figure was 21.9%, down from 37% in 2009.-

Eitzen Chemical forecasts that annual fleet growth will remain at 3% until 2014, when it will fall to 1%.-

Mr Jensen said the outlook was even better for the niches in which his company operated. The stainless steel tankers orderbook amounted to 6%-8% of the global fleet. Half the tankers operated by Eitzen Chemical fall into this category.-

Mr Jensen said the outlook was best for the smallest tankers. “There are virtually no orders for newbuildings,” he said. “The orderbook is at around 1.1% in our calculation.”

More than half of Eitzen Chemical’s fleet comprises ships smaller than 25,000 dwt.-

The chemical tanker market has already improved over the last three months of 2011, Mr Jensen said. Time-charter equivalent earnings for Eitzen Chemical have risen from $8,936 per day to $9,191 per day.-

After the 2008 crisis, bunker prices shot up, but freight rates failed to follow. Mr Jensen said this disconnect between freight rates and bunker prices was “clearly an indication of an oversupplied market”, although the situation was changing.-

“The freight rates in the market are now approaching where we get paid for the extra costs of bunkers,” he said.-

The European regional market will see the strongest gains in the short-term, as growing demand and weather delays push up local markets.-

Mr Jensen warned that future developments hinged on continued world economic growth. While this looked uncertain in parts of the developed world, emerging economies such as India and China were still growing rapidly.-

Eitzen Chemical posts $80m loss

Small profit in fourth quarter of 2011 wiped out by paper loss of $81.5m in fleet’s book value

Eric van den Berg

Monday 20 February 2012

NORWEGIAN tanker owner Eitzen Chemical reported an $80m net loss for the fourth quarter, as it was unable to overcome a massive writedown on its asset values, writes Eric van den Berg.-

The company announced its financial results for the last three months of 2011 in Oslo on Thursday.-

Eitzen Chemical’s fleet of 72 vessels, 53 of which are self-owned, still operated at a small profit in the fourth quarter in spite of the bleak chemical tanker market.-

Earnings before interest, taxes, depreciation and amortisation amounted to $5.7m, a slight decrease from the $7.1m ebitda reported in the third quarter of 2011, proof of the company’s relatively healthy operational profile.-

The decline in earnings could largely be attributed to the loss of trading vessels. The company sold its 1992-built 4,800 dwt Sichem Castel in November and relinquished control of five other vessels.-

However, Eitzen Chemical’s earnings were completely wiped out by a paper loss of $81.5m, the combined impairment and depreciation of its assets in the fourth quarter of 2011.-

The company was forced to write down the book value of its fleet as secondhand prices plunged in the last three months of 2011, even as the product tanker market recovered slightly. According to the Baltic Exchange’s benchmark for handymax product tankers, this type of tonnage lost approximately 10% of its value in the last quarter of 2011.-

As the value of Eitzen Chemical’s fleet declines, the company is looking increasingly overburdened with debt. The combined total of $973m in interest bearing debt is edging closer to the combined value of the company’s assets, which amounts to over $1.1bn.-

“We have commenced the process to evaluate Eitzen Chemical’s various options to secure a longer-term financial strong platform,” newly appointed chief executive officer Per Sylvester Jensen said during the presentation of the company’s figures.-

In January, Eitzen Chemical announced it had taken on a financial advisory firm to help it meet its future commitments. Under its current covenant, fixed debt instalments will recommence in the final quarter of this year.-

The company has not reported a quarterly profit since 2008.-

In November, both Eitzen Chemical’s chief executive Terje Askvig and chief financial officer Per-Hermod Rasmussen stepped down.-

Dry Fixtures

Monday 20 February 2012

TIMECHARTER

Chariklia Junior (built 2011, 92,932 dwt) delivery Necochea 26 Feb/2 Mar trip redelivery Egpytian Med $13,000 daily + $300,000 ballast bonus — EBC

An Ho (built 2004, 77,834 dwt) delivery aps US Gulf 27/29 Feb trip redelivery China $18,000 daily + $450,000 ballast bonus — Oldendorff

Red Seto (built 2002, 75,957 dwt) delivery Jintang 16/18 Feb trip via Australia redelivery India $8,000 daily — Jaldhi

Yasa Unity (built 2006, 75,580 dwt) delivery Taizhou 16/18 Feb trip via East Australia redelivery China $7,000 daily — charterer not reported

Ecomar G.O. (built 2008, 75,093 dwt) delivery passing Cape of Good Hope 26 Feb/2 Mar trip via East Coast South America redelivery Singapore-Japan $13,250 daily + $425,000 ballast bonus — Norden

Ribbon (built 1998, 74,522 dwt) delivery Rizhao 22/24 Feb trip via Australia redelivery Taiwan $7,500 daily — charterer not reported

Navios Magellan relet (built 2000, 74,333 dwt) delivery passing Taiwan 24/26 Feb trip via Indonesia redelivery India $7,250 daily — CTC

Great Wisdom (built 2000, 74,293 dwt) delivery Caofeidian spot trip via Nopac redelivery China $8,000 daily — charterer not reported

Gallia Graeca (built 2001, 74,133 dwt) delivery San Nicolas 5/10 Mar trip redelivery Singapore-Japan $19,750 daily + $375,000 ballast bonus — Chinese a/c

Capt Stefanos (built 2002, 74,077 dwt) delivery passing Cape of Good Hope 25/29 Feb trip via East Coast South America redelivery Singapore-Japan $13,250 daily + $400,000 ballast bonus — Raffles

Ocean Spirit (built 1999, 73,807 dwt) delivery passing Cape of Good Hope 7/10 Mar trip via East Coast South America redelivery Singapore-Japan $12,700 daily + $400,000 ballast bonus — STX Pan Ocean

Nikolaos A (built 2009, 58,133 dwt) delivery Mumbai spot trip via Goa redelivery China $10,500 daily — Norden — corrects rate of report 16/02

Darya Bhakti (built 2005, 56,045 dwt) delivery US Gulf end February trip redelivery Singapore-Japan $20,000 daily — Pacbasin

Navios Apollon (built 2000, 52,068 dwt) delivery Japan spot trip via Nopac redelivery south-east Asia approx $8,000 daily — IVS

Hai Kuo (built 2005, 49,420 dwt) delivery North China spot trip via south-eastAsia redelivery China intention nickel ore $11,000 daily — charterer not reported

Glory Sanye (built 1994, 45,216 dwt) delivery Savannah early March trip via US AC redelivery Med approx $8,000 daily — Pacbasin

PERIOD

Skythia (built 2010, 177,000 dwt) delivery Xingang prompt 5/8 months trading redelivery worldwide $13,350 daily — Oldendorff

Edwin (built 2012, 174,942 dwt) delivery ex Yard Shanghai end Feb 5/7 Months trading redelivery Singapore-Japan range $12,500 daily — CMN/Felion

Grain Harvester (built 2004, 76,417 dwt) delivery north China end Mar abt10/abt13 months trading redelivery worldwide $11,250 daily — WBC

Navios Magellan (built 2000, 74,333 dwt) delivery Rizhao 22/24 Feb min 11/max 16 months trading redelivery worldwide $8,000 daily first 50 days $11,500 daily balance — WBC

Isabelita (built 2010, 58,080 dwt) delivery China end February 1 years trading redelivery worldwide approx $11,250 daily — HMM

Mandarin Phoenix (built 2010, 57,000 dwt) delivery Bukpyung early March 1 years trading redelivery worldwide $10,000 daily — Sinochart

ORE

Coscobulk vessel to be nominated , 160,000/10 Saldahna Bay/Qingdao 20/30 Mar $14.35 fio scale/30,000sc — Ore & Metals — Fixed last Wednesday 15th February

Mendocino (built 2002) 70,000/10 Puerto Ordaz-Palua comp Boca Grande/China 27 Feb/6 Mar $40.00 1-1 fio 3 days sc-30,000 sc/15,000 sc — Duferco

COAL

Vessel to be nominated , 120,000/10 Newcastle/Kaohsiung 5/15 Mar approx $10.25 fio 35,000sc/28,000sc — China Steel Express

Vessel to be nominated , 80,000/10 Baltimore/Rotterdam 3/12 Mar $11.50 fio 25,000 sc/25,000sc — Cobelfret

MISC

Bosna (built 1985) 26,000/mm Chrome ore Bandar Abbas/Qingdao 22 Feb/8 March $34.00 fio 3,500fc/7,000sc — Dezandis

Bulk carrier fleet tops 9,000 vessels

Newbuilding deliveries could push it over the 10,000 mark by year-end

Liz McCarthy

Monday 20 February 2012

THE dry bulk carrier fleet has topped the 9,000-vessel mark, after a bumper number of newbuildings were delivered into service during January and continue to arrive this month.-

According to London-headquartered shipbroker Clarksons’ database on Friday morning, there were 9,021 vessels listed in the dry bulk fleet, up from the 8,997 at the start of February.-

So far, Clarksons counts 149 bulkers delivered in January and 16 in February, adding 13.5m dwt. This stands at 14% of the record 1,173 vessels of 98m dwt that entered service last year.-

The panamax segment for bulkers between 60,000-99,999 dwt accounts for most new deliveries, with Clarksons counting 47 so far, including nine this month.-

Counterbalancing the newbuilding deliveries is a continuous stream of demolition sales, with at least 58 bulk carriers with a total capacity of 2.8m dwt understood to have been sold for scrap so far in 2012.-

By comparison, 368 bulkers of 22.3m dwt were reported sold for demolition by the broker last year.-

Overall, as of Friday, the dry bulk fleet stood at 9,021 vessels, over one-third of it comprising handysize vessels between 10,000-39,999 dwt. This sector now numbers 3,065 vessels. The handymax fleet of 40,000-59,999 dwt has 2,504 ships and the panamax segment has 2,066.-

Although all size sectors have seen huge growth, the capesize market for vessels over 100,000 dwt has seen its fleet double in the last five years. Compared to 1,386 vessels now, at the start of 2007 there were just 713 capesize vessels.-

“It is a supply problem that we are facing with a lot of newbuildings last year; almost one panamax and one capesize was delivered every working day,” Golden Ocean chief executive Herman Billung told analysts on his company’s fourth-quarter financial results call this week.-

Having questioned the true size of the dry-bulk orderbook during previous results calls, he said that in 2011, of 140m dwt scheduled to have been delivered, just 96m hit the water, representing 70% of contracts.-

Mr Billung said he expected about 90m dwt to be delivered this year, with continued slippage due to several Chinese shipbuilding yards — notably greenfield sites that were only established during the shipping boom years of the mid-1990s — facing cash-flow problems that could drive them out of business.-

“[A] lot of owners are struggling with the financial issues. And so I think it is fair to say that many of the new yards in China, particularly small ones, will [find it] difficult if, over the next 12 months, they have smaller orderbooks,” he said.-

Many shipbuilding yards were trying to compete with each other on payment terms for newbuilding contracts to attract business, he added.-

This reflected comments from other heads of publicly listed dry-bulk shipping companies during the week, including Safe Bulkers chairman and chief executive Polys Hajioannou.-

Based on a global fleet of 9,021 bulk carriers, Clarksons says the total orderbook stands at 2,443 ships, or 27% of the fleet. Of these, 1,539 ships are scheduled to hit the water in 2012, followed by 737 next year, 160 in 2014 and seven in 2015.-

Even if only 70% of the 2012 orderbook enters service this year, it could push the bulk carrier fleet beyond the 10,000 ship mark by year-end. However, this depends on how many more vessels are sold for scrap as overcapacity keeps charter rates low.-

The bulk carrier fleet already dwarfs a containership fleet that stands at 5,097 vessels, according to Clarksons. The tanker fleet comes close second to dry bulk vessels, with 7,966 ships.-

The largest bulker to be delivered into service so far this year was China Shipping Group’s 310,000 dwt CSB Prosperity from Dalian Shipbuilding in China.-

Market sees sideways shuffle

Capesize period fixtures more active as owners eye a lacklustre spot market

Tom Leander

Monday 20 February 2012

THE capesize market avoided a freefall in recent weeks, but it has not shaken off the blues.-

Brokers expect the market to remain flat over the next week, with rates staying at around $7.60 per tonne for Western Australia to China iron ore voyages and at $19.50-$20 per tonne for the Tubarao, Brazil to Qingdao route.-

Owners appear to have been swayed by the belief that current conditions will stay put for some time. Brokers report a climb in short period fixings for five to seven months at $13,000-$13,500 per day — although some brokers reported lower rates, between $12,000 and $13,000 per day.-

Broker Braemar Seascope said in its weekly report that rates of $12,000-$13,000 per day for five to seven months yield far more than working the vessel spot, with current average time charter earnings of just over $5,000 a day.-

This lacklustre state has persisted despite the return to market of the iron ore majors. Brokers report that enough cargoes have been fixed from Western Australian ports to have cleared out some of the tonnage build-up that marked the previous two weeks.-

However, owners are still willing to fix at spot prices between $7.50 and $8 per tonne.-

Miner BHP Billiton reportedly chartered a capesize ship for $8.50 a tonne, but brokers said this was a prompt fixture needed quickly, and therefore an exceptional deal in this current market.-

As for rates on the Tubarao to Qingdao voyage, a broker in Beijing reported charterers that wanted vessels loading in the second half of March paid $20.50 per tonne.-

“This market is going sideways,” said one Hong Kong broker, who was walking home at 1730 hrs, evidently feeling the rest of the evening offered little excitement as far as fixing capesizes was concerned.-

He noted the paper market for freight futures contracts in February and March had slipped, supporting the view that rates would remain flat through this month and into next.-

Freight Investor Services reported an average trading price for the March contract at $8,825 on February 16, down $50 from the week before.-

The trading price for the February contract had aligned closely with the physical market, down $200 to $5,650 from the week before.-

However, second-quarter contracts increased slightly from the previous week, by $175 to $12,400.-

RS Platou Markets analyst Rahul Kapoor sees the underlying cause of the capesize market’s uninspiring short-term prospects as high iron ore inventories at Chinese steel mills.-

He points out that steel production has declined, but iron ore imports into China were only marginally down in January, to 59.3m tonnes from 64m tonnes the month before. This is explained by “lower international prices and driven more by Chinese new year restocking”.-

Mr Kapoor estimates high imports and lower steel production have caused current iron ore inventories to hit a new record, above an estimated 125m tonnes. He says the capesize market “could stay depressed far longer than what the stock market expectations are building in”.-

Some dry bulk-related stocks were broadly up since February 12. Nasdaq-listed Dryships’ share price rose to around $3.56 on Thursday, from $2.20 per share at the start of the week.-

China Cosco Holdings, listed in Hong Kong, was up to $5.13 on Friday from $4.70 on February 12. The stocks were driven up, along with container line stocks, on positive sentiment following statements by China’s premier and its central bank head that the nation would help to support the European Union bailout.-

Tanker Fixtures

Monday 20 February 2012

CLEAN

Bahrain to South Africa — Maersk Mizushima , 35,000t, W170, Feb 26. (Engen)

Bahrain to East Africa — Pacific Pearl , 35,000t, W160, Feb 24. (Kobil)

Middle East Gulf to Chittagong — Fpmc 19 , 35,000t, RNR, Feb 21. (Aot)

Qatar to Qatar — Navig8 Loucas , 30,000t, $160,000 lumpsum Feb 17. (Nakilat)

Ruwais to UK Continent — Marika , 65,000t, $1,700,000 lumpsum Mar 01. (Chevron)

Kuwait to Mediterranean — Stena Progress , 60,000t, $1,300,000 lumpsum Feb 28. (Kpc)

Kuwait to Pakistan — Estia , 60,000t, RNR, Feb 21. (Kpc)

Porvoo to US Atlantic Coast — Torm Lilly , 37,000t, W180, Feb 24. (Neste)

Balt to US Atlantic Coast — Stena Provence , 37,000t, RNR, Feb 23. (Charterer Not Reported)

Black Sea to Mediterranean — Valle Di Cordoba , 30,000t, RNR, Feb 18. (Litasco)

Black Sea to Mediterranean — Andromeda , 30,000t, RNR, Feb 18. (Charterer Not Reported)

Black Sea to Mediterranean — Bentley 1 , 30,000t, W130, Feb 22. (Clearlake Shipping)

Caribbean to US Atlantic Coast — Magnifica , 36,000t, RNR, Feb 20. (Charterer Not Reported)

Sicily to Italy — Robert Maersk , 30,000t, W150, Feb 22. (Total Erg)

Gela to Mediterranean — Montenero , 30,000t, W145, Feb 22. (Eni)

Mediterranean to West Africa — Arcadia I , 33,000t, RNR, Feb 18. (Trafigura)

Beira to East Africa — High Nefeli , 35,000t, RNR, Feb 21. (Shell)

Okinawa to Philippines — Nord Sakura , 35,000t, $290,000 lumpsum Feb 25. (Winson)

South Korea to Japan — Freja Ocean , 35,000t, $290,000 lumpsum Feb 23. (Bp)

Malacca to Singapore — Queen Express , 30,000t, RNR, Feb 17. (Petco)

Cont to US Gulf — Andes , 37,000t, W150, Feb 24. (Charterer Not Reported)

Rotterdam to US Gulf — Nord Observer , 37,000t, W160, Feb 21. (Chevron)

Ara to China — Athiri , 60,000t, RNR, Feb 24. (Clearlake Shipping)

Cont to Montreal — Baltic Soul , 30,000t, RNR, Feb 20. (Morgan Stanley)

Brofjorden to US Atlantic Coast — Nord Sea , 37,000t, RNR, Feb 23. (Charterer Not Reported)

US Gulf to UK Continent — Freja Andromeda , 38,000t, W82.5, Feb 25. (Atmi)

US Gulf to east coast Mexico — Swarna Mala , 38,000t, RNR, Feb 14. (Pmi)

West coast India to Middle East Gulf — Nave Andromeda , 55,000t, $300,000 lumpsum Feb 29. (Aramco Trading)

West coast India to Singapore — Neptun. D , 60,000t, W110, Feb 28. (Charterer Not Reported)

Skikda to Cont — Amalienborg , 30,000t, W152.5, Feb 19. (Aot)

Spanish Med to Mediterranean — Valle Di Siviglia , 30,000t, W142.5, Feb 19. (Repsol)

Lavera to Mediterranean — Maersk Kalea , 30,000t, W140, Feb 18. (Morgan Stanley)

DIRTY

Kharg Island to China — Vessel to be nominated, 270,000t, W55, Mar 03. (Glasford)

Ras Tanura to Karachi — Akaki , 80,000t, $425,000 lumpsum Feb 21. (Pnsc)

Fujairah to Karachi — Karachi , 80,000t, RNR, Feb 22. (Pnsc)

Ras Tanura to Onsan — Safaniyah , 267,500t, W52.5, Mar 06. (S.Oil)

Middle East Gulf to US Gulf — Sarah Glory , 280,000t, W34.5, Mar 06. (Exxonmobil)

Basrah Oil Terminal to US West Coast — Alterego II , 130,000t, W80, Mar 03. (Bp)

Ras Tanura to Durban — Eliza , 267,500t, W54, Mar 03. (Bp)

Basrah Oil Terminal to Yosu — Maersk Nautica , 275,000t, W52.5, Mar 01. (Gs Caltex)

Tallinn to US Gulf — Belmar , 100,000t, RNR, Feb 22. (Mercuria)

Black Sea to Mediterranean — Thenamaris vessel to be nominated, 80,000t, W87.5, Mar 02. (Eni)

Black Sea to Black Sea — Altai , 80,000t, RNR, Feb 23. (Litasco)

Novorossiysk to Mediterranean — Vessel to be nominated, 80,000t, W86, Mar 03. (Eni)

Caribbean to Singapore — Antarctica , 270,000t, $4,500,000 lumpsum Mar 09. (Petrochina)

Sidi Kerir to Venice Italy — Neverland Angel , 80,000t, RNR, Feb 29. (Ies)

Ceyhan Terminal to Mohammedia — Heidmar vessel to be nominated, 80,000t, W82.5, Feb 20. (Samir)

Ceyhan Terminal to Mediterranean — Ns Consul , 80,000t, W85, Feb 25. (Litasco)

Ceyhan Terminal to Mediterranean — Vessel to be nominated, 80,000t, W82.5, Feb 24. (Repsol)

Sines to Mediterranean — Southern Spirit , 30,000t, W195, Feb 19. (Statoil)

Malacca to Singapore — Ocean Victory , 30,000t, $200,000 lumpsum Feb 21. (Conoco)

Singapore to Guam — St Pauli , 30,000t, $750,000 lumpsum Feb 26. (Petrobras)

Miri to Visakhapatnam — Sea Luck III , 68,000t, W92.5, Feb 28. (Sci)

West Africa to Vadinar — Kahla , 260,000t, $4100000 lumpsum Mar 19. (Ioc)

Girassol to Durban — Jag Lok , 130,000t, W95, Mar 10. (Engen)

West Africa to East — Evgenia I , 260,000t, W57.5, Mar 14. (Trafigura)

Algeria to Mediterranean — Mesaieed , 80,000t, W82.5, Feb 23. (Cepsa)

BIANCA RAMBOW (GERMANY)

Portsmouth, UK, Feb 17

Fully cellular containership Bianca Rambow (9981 gt, built 2004) experienced an explosion in the engine-room, while at the port of Hamina on Feb 15.Due to the incident, the vessel sustained damage to the machinery.No injuries were reported as the engine-room was unmanned at the time of incident. The vessel is waiting to be taken toa shipyard for repairs. The Maritime Accident Investigation Board will board the vessel on Feb 18 to conduct an investigation. -- Correspondent.-

DANICA HAV (BAHAMAS)

Kiel, Feb 17

General cargo with container capacity Danica Hav (1536 gt, built 1984), Varberg for Lubeck,was in

danger of running aground at Sjællands Odde, last night. A Danish rescue helicopter succeeded in

lowering a crewmember to the vessel and found the captain intoxicated at the helm. A mate was woken up who managed to turn the ship a few minutes before it would have run aground. The Russian captain was subsequently arrested and a blood sample taken. -- Correspondent.-