IMO 2020 angst for carriers, and it's not just about the cost
(The Load Star)
Tuesday, 14 May 2019
The risk of engine failure from using incompatible blends of new low-sulphur fuel is “keeping marine engineers awake at night”, according to a new report.
The report, from S&P Global Platts, Into the Storm says the main problem the industry has to address after the January 2020 IMO sulphur cap is how it will cope with “an unfamiliar set of new fuels”.
Jack Jordan, editorial lead, bunkers, at S&P Global Platts, warned: “Trouble will come when products are mixed, and some blends prove incompatible with one another. When a more aromatic 0.5% product comes into contact with a more paraffinic blend, the products are likely to separate and form sludge, blocking filters.
“The risk of a spate of engine failures across the world in 2020 is keeping marine engineers awake at night.
“A contamination crisis in the bunker fuel industry in 2018, after a harmful off-specification product first seen in the US Gulf was exported across the global supply chain, has concentrated minds on how similar problems may arise with the new fuels.”
It follows that for the 95% of container vessels not fitted with exhaust gas cleaning systems (scrubbers), enabling ships to continue to burn heavy fuel oil (HFO) after 1 January, there will be some anxious moments as bunkering starts with LSFO (low-sulphur fuel oil) blends in the fourth quarter this year.
Meanwhile, the lead author of the report, managing editor, freight markets, Alex Younevitch, said although there were a “surprising number of shipping industry participants who believe that getting customers to pay for increased bunker costs will be smooth sailing, the reality may prove to be more complicated”.
He warns that the “imperfect bunker cost recovery mechanisms” of the carriers “could turn this shadow on the horizon into a dangerous storm for the shipping industry”.
With just a few months to go until ships that do not have scrubbers need to begin replenishing their fuel tanks with more expensive LSFO, shippers have told The Loadstar carriers have not been consistent with their requests for low-sulphur fuel surcharges.
“For example, we have Maersk and MSC, on the same 2M vessel, adopting totally different BAF formulas, and we know some of the ships they will be using from Asia will have scrubbers fitted, so it is a bit of a mess,” one shipper source said.
Of the major carriers, Hapag-Lloyd has been one of the most consistent in its insistence on recovery of the extra costs associated with IMO 2020, and claims to have successfully rolled out its MFR (marine fuel recovery) programme across all its regions.
Chief executive Rolf Habben Jansen told investors last week: “There is an understanding from shippers that they must pay more.”
Mr Younevitch said: “Considering the small number of big players that handle such enormous volume of trade, one might assume that liners should be in a good position to recoup any extra bunker costs resulting from IMO 2020. However, recent volatility in fuel oil prices, brought about by shifts in the crude oil market, has unveiled some glaring flaws in the current BAF approach; flaws that could make it a dangerous tool to use for the turbulent times ahead.”
Mega-containerships - Questions of insurance and risk
Friday, 10 May 2019
An American Institute of Marine Underwriters (AIMU) seminar brought into the focus the growing risks associated with mega-containerships in the event of casualty and the huge number of cargo interests involved.
The last 18 months have seen a number of major containership casualties including fatal blaze last March on the 15,252 teu Maersk Honam the fire on the 7,510 teu Yantian Express in January this year.
A panelist on the “Megaships” session at the seminar, who represents cargo interests, noted that General Average was an ancient concept, before railing against its inappropriateness where ships might be carrying goods belonging to thousands of cargo owners.
In both the cases of Maersk Honam and the Yantian Express General Average was declared.
Showing a picture of a large megaship, with nearly two dozen rows of boxes stacked high, to the group, the panelist expressed a great frustration that each box could generate multiple emails that would keep claims staff busy non-stop for weeks. He added that the paperwork swirling around, needed to settle claims, would frequently contain errors, or was incomplete.
The speaker, who works with a leading cargo claims consultant, suggested that a move to a more streamlined system of electronic documentation would go a long way towards smoother and quicker resolution of claims. He said: "The system is broken; it was not designed for vessels like this”, referring to the 18,000 teu monster up on the presentation screen.
In discussing whether large containerships might see a differential insurance rating, previously under consideration but not implemented, he hinted that: "With more data now, this debate will re-open. Large containerships do indeed present more risk." An actual study on this subject has been undertaken by the TT Club.
According to the TT Club a major containership fire occurs every 60 days and that as the size of containerships increase so does the potential risk and consequence of a large explosion or fire. The club noted in a loss prevention bulletin last September that the capability to respond to a fire at sea had not progressed at the same rate as ship capacities and the large array of cargoes carried.
Khouri outlines ‘disruptors’ for container shipping
Friday, 10 May 2019
The FMC chair says if freight rates don’t improve to recoup carriers’ cost of capital, the industry “points toward more consolidations, mergers and acquisitions.”
Continued low freight rates may spur on the container shipping industry to further contract, said a U.S. Federal Maritime Commission official in a speech during the Virginia Maritime Association’s annual banquet Thursday evening.
“While not a prediction, it is fair to say that if the overall rate structure for carriers does not improve to the point that the container carrier industry, as a whole, is earning its cost of capital, then business history across any or all industry sectors points toward more consolidations, mergers and acquisitions,” said FMC Chairman Michael Khouri.
Khouri noted that for the past 10 years the container carriers have been financially hampered, mostly due to their inability to secure and maintain compensatory freight rates from their shippers.
The carriers’ container freight rates have remained flat during the past decade, and when adjusted for inflation, Khouri said those rates overall are down by 29 percent.
Khouri also said the industry continues to be challenged by surplus containership capacity, which shows no sign of abating, particularly with the continued arrival of new and larger vessels. On top of this scenario, the global economy appears to be losing steam, resulting in lower projected cargo volumes in the next several years. “And the alliance structure we see today will be quite different,” he said.
In addition, Khouri pointed out the potential impact of the International Maritime Organization’s Jan. 1 mandate for the ocean carriers to use fuel that contains no more than 0.5 percent sulfur content. This shift to a lower sulfur content in bunker is projected to cost the carrier industry upwards of $15 billion.
“And there may be other changes in the maritime landscape that simply defy predictions,” Khouri said. “Trade disputes, changing trade patterns, nontraditional participants such as new technology and new supply chain and logistics models entering the business — all of these ‘disruptors’ can completely upend traditional ways of doing business.”
Carriers meeting resistance to fuel surcharges
Wednesday, 08 May 2019
The looming introduction of IMO 2020 rules has seen carriers introduce surcharges to cover the expected additional costs. But customers are showing signs of resisting paying until low-sulphur rules take effect.
Beneficial cargo owners are pushing back against the introduction of bunker adjustment factors designed to alleviate the increased cost of fuel after the January 2020 emission rule change takes effect, according to analysts at Platts.
“There are still questions as to when bunker adjustment factors come into force in the market, with the lion’s share due to kick in at the start of the fourth quarter, but some BCOs have negotiated on start dates, leading carriers to concede that they will come into force as of January 1, 2020,” Platts said in its weekly rates briefing.
Most major carriers have already introduced new bunker adjustment factors that they hope will move the higher cost of low-sulphur fuel onto their customers. And while the new sulphur content restrictions do not take effect until January 1, lines will need to be bunkering with low-sulphur fuel by the fourth quarter to ensure they are not operating on high-sulphur fuel by the cut-off date.
Some BCOs have questioned not only the methodology and transparency of the bunker adjustment factors, but also their introduction a full year ahead of the IMO deadline.
Platts added that the issue would become increasingly important as the year progresses, with demand expected to rise before this additional charge comes into force in October.
One carrier source told Platts he expected a rise in demand before bunker adjustment factor charges came into force, which would coincide with the usual summer peak season for box lines.
“Should this be the case, spot rates on major head-hauls could see some significant strength at the end of the summer months, ahead of the new sulphur-limitation regulations in 2020,” Platts said, adding that spot rates on the US trades had jumped again last week, as demand rose.
“The transpacific routes once again saw the greatest gains associated with its general rate increases, with demand picking up a bit over the course of the month,” it said. “However, import volumes to date appear to be languishing below those a year earlier.”
While the lower volumes this year could be attributed to either the timing of the Chinese New Year or the frontloading that occurred last year, the key demand driver was how fast US retailers were going through their inventory and when they would need to restock again.
“This is what is currently limiting further upside to the transpacific container lanes,” Platts said.
120 shipping companies call for mandatory speed limits for ships
Thursday, 09 May 2019
Support appears to be building for new rules to reduce greenhouse gas emissions generated by the maritime sector, although major container lines oppose this approach.
Support appears to be building for new rules to regulate the speed of ships, with the International Maritime Organisation (IMO) under pressure to consider the subject at a meeting in London next week.
In an open letter to the IMO’s member states, 120 shipping companies have officially backed mandatory speed limits for ships to reduce greenhouse gas (GHG) emissions from international shipping. With a view to the upcoming IMO’s Marine Environment Protection Committee meeting (MEPC74), the letter called for support over limiting ships’ speed as a measure to meet the IMO’s emissions reduction goals, European freight forwarding organisation Clecat explained.
The strategy calls for shipping’s carbon intensity to be reduced by at least 40% by 2030 and for total emissions to be cut by at least 50% by 2050, compared to 2008. The signatories indicated that, to meet these goals, new operational measures will have to be implemented for both the existing fleet and new ships, with immediate reductions to be achieved by 2023.
Addressing measures necessary to meet the IMO’s decarbonisation objectives, the letter noted that slow steaming, introduced in the wake of the 2008 economic crisis to manage overcapacity, had significantly reduced GHG emissions. This example was used to demonstrate the potential of limiting ships’ operational speed to help achieve the reduction of shipping emissions and to make a contribution to mitigating climate change.
As such, signatories expressed their support for the mandatory regulation of global ship speeds, differentiated across ship type and size categories, Clecat noted, with greater flexibility being allowed for container ships.
“Our preference would be to set maximum annual average speeds for container ships and maximum absolute speeds for the remaining ships, taking account of minimum speed requirements,” the letter said, adding that “such a regulation should be implemented as soon as possible and the obligation for compliance should be placed both on shipowners and operators”.
The signatories called on all the IMO Member States to support this move at the forthcoming MEPC74, to be held on 13-17 May in London. Although non-binding, the letter demonstrates the initial support for the concept of introducing speed regulation for ships.
Thomas Cullen, analyst at logistics consultancy Transport Intelligence (Ti), said the shipping sector was “still adjusting to the phasing-out of sulphur in bunker-fuel, yet now it is confronted with demands for ‘speed limits’ for ships in order to limit carbon dioxide output”.
He noted that much of the manoeuvring around this issue was being carried out behind closed doors at the International Maritime Organisation in London, adding: “The organisation, which represents most of the major interests in the shipping sector, adopted a policy in 2018 to support measures that cut ‘carbon emissions’ by 40% by 2030 and 50% by 2050.
“Extensive leaking by various parties suggests that the French government has now taken the initiative by proposing some form of mandatory agreement to limit ship’s speeds by type of vessels. This has been supported by the publication of an open letter by a number of ship owners stating that they would prefer “to set maximum annual average speeds for container ships, and maximum absolute speeds for the remaining ship types, which take account of minimum speed requirements”.
The group of ship owners that signed the letter are largely in the bulk trades, he noted, adding: “The major container shipping lines, however, have indicated their annoyance at these ideas with both Maersk and Hapag Lloyd publicly disagreeing with the proposals. They assert their advanced vessels are already highly efficient and promise further fuel efficiency.”
Cullen said the adoption by container ships of ‘slow steaming’ of around 15 knots or less had already had a major impact, adding: “Data published by Clarkson’s and the UK Chamber of Shipping suggest that the speed of container ships has fallen by 25% since 2008. This combined with the increased size of vessels probably has led to a very substantial fall in consumption per container. Of course, the number of containers moved has increased, thus sustaining the gross consumption of fuel.”
He said the implications for customers of container shipping lines “are likely to be both hard to calculate and important”, adding: “Shippers already find it difficult to estimate the arrival times of container vessels; slowing ships further is likely to add to the confusion.
“As the UK chamber of commerce points out, the logical response would be to switch to other modes of freight transport such as air freight, or what is increasingly and option between Europe and China, rail and road. Indeed, the changing nature of supply chain management may be pushing in the direction of faster shipping services.
“Managing this problem for the container shipping sector may be difficult.”
PIL sale chat resurfaces on debt concerns
Wednesday, 08 May 2019
Once again market talk is picking up about a possible sale of Pacific International Lines (PIL), the world’s 10th largest container carrier.
A spokesperson for the Singapore company controlled by the Teo family was forced to deny the line is being put up for sale in the wake of the lead story from Alphaliner’s weekly report suggesting a sale could once again be on the cards.
PIL’s 41% owned subsidiary Singamas announced on Monday the disposal of three of its largest container manufacturing factories in China to Cosco for a total price of RMB3.8bn ($565m).
“The disposal may not be sufficient to forestall the sale of cash-strapped PIL, widely seen as the next most attractive target in the container shipping market amidst the ongoing consolidation trend,” analysts at Alphaliner noted, adding that the company has repeatedly denied that it is planning to sell its shipping operations.
PIL has ceased to publish financial results for the group’s holding company since the end of 2018, even though the privately-owned group had previously released its results in 2017 and the first half of 2018. According to its last publicly available financial figures, PIL recorded a net loss of $141m in the first six months of 2018.
“More worrisome for PIL is the total debt outstanding of $3.46bn as at June 2018, of which $1.08bn was short term debt payable within 12 months,” Alphaliner observed.
To meet its short term cash needs, PIL has also made various sale and leaseback deals for its fleet of containerships in the last few years. The group had previously planned to launch a US dollar bond offering in 2018 but the notes issue was eventually suspended due to poor market conditions at that time.
Alphaliner stated Cosco is the most likely buyer of PIL, due to the close historical ties between the two companies and the complementary route network of PIL as Cosco has also indicated a strong interest to grow its presence in the North-South routes where PIL is currently present. PIL also cooperates with Cosco on various joint services.
Hapag-Lloyd posts strong first quarter on higher volumes
Friday, 10 May 2019
A stronger dollar and a rise in transported volumes helped lift earnings at Hapag-Lloyd. But they also led to an increase in transportation costs as fuel prices rose.
Hapag-Lloyd has reported a 17% increase in first-quarter revenue on the back of better freight rates and higher volumes.
The Hamburg-based carrier had a $109m profit in the three months to March 31, compared with a $42m net loss in the year-earlier period.
Earnings before interest, tax, depreciation and amortisation more than doubled to $547.3m from $242m.
“Thanks to higher transport volumes, better freight rates and a stronger US dollar, we achieved a good result and got the year off to a very decent start,” said chief executive Rolf Habben Jansen-Lloyd.
“We are cautiously optimistic about 2019 despite slightly dampened forecasts for global economic growth and higher fuel prices. Q1 was in line with our expectations and we believe we can make further progress towards our strategic objectives throughout the rest of the year as we continue to roll-out and implement our Strategy 2023.”
Transported volumes rose 2.4% year-on-year to 2.9m teu. Higher bunker costs, which rose $53 to $425 per tonne, and a stronger US dollar saw transport expenses rise 8% from the corresponding quarter in 2018.
But the ebitda figure was flattered by the first-time application of IFRS16 accounting rules, which saw operating leases removed to the balance sheet.
In its earnings statement, Hapag-Lloyd said its performance in the first quarter was dominated by the challenges in the container shipping sector.
“Against a backdrop of unwavering intense competition, developments in the first quarter were slightly above expectations,” the line said. “Compared to the first quarter of 2018, the development of the average freight rate, the increase in transport volume and a strengthening US dollar against the euro had a positive effect on the earnings position.”
CMA CGM launches ADRINAF, the first direct service between the Adriatic Sea and Algeria
Monday, 13 May 2019
· A unique weekly service offering connections to the rest of the world
· CMA CGM reaffirms its commitment to the Port of Malta, its hub in the Mediterranean Sea
The CMA CGM Group, a world leader in shipping and logistics, announced the launch on May 13th of its new short sea service: ADRINAF.
The first direct service between the Adriatic Sea and Algeria
With this weekly service, the Group is offering the first direct connection between the Adriatic Sea and Algeria. It thus opens up new development opportunities for its customers located in Central and Eastern Europe thanks to rail and road intermodal solutions, mainly via Koper. It also allows connections to the rest of the world via its port hub in Malta, thus reaffirming its local commitment and its desire to develop it.
CMA CGM densifies its regional network
With the ADRINAF service, the Group reinforces its intra-Europe and Mediterranean “CMA GM short sea” offer, which is comprised of 33 services operating 63 vessels and making over 300 calls per week. The Group also confirms its strategy aimed at densifying its regional network.
· Rotation: Koper, Venice, Rijeka, Bar, Malta, Skikda, Malta, Catania, Ancona, Koper
· Launch: May 13th
· Transit time: 21 days
· 3 vessels of 1,300 TEUs (Twenty-Foot Equivalent Units)
Hapag-Lloyd Adria Express Service (ADX) – Structural Service Changes
Friday, 10 May 2019
Hapag-Lloyd announced their latest service enhancement of the Hapag-Lloyd Adria Express Service (ADX).
As from week 20, the ADX will be operated with 3 x 1700 TEU vessel of which Hapag-Lloyd will deploy all three vessels.
The revised rotation of the ADX will cover following ports:
Damietta - Koper - Venice - Piraeus - Rijeka - Venice - Ancona - Damietta
The first ADX sailing with this new rotation will be:
Northbound, “Hansa Limburg” Voy 347 N with ETS Damietta, May 20, 2019
APL Enhances Japan Thailand Vietnam Service
Thursday, 09 May 2019
SINGAPORE - APL announced that the Japan Thailand Vietnam (JTV) service is extending its port rotation to the Philippines and within South China. The refined service will be calling three additional ports in Manila, Shekou and Nansha as part of its service rotation.
The enhanced JTV service is primed to facilitate direct shipments from the load ports in South China to the Philippines, promising a fast 3-day Shekou-Manila transit time. The weekly service will also provide direct access to Laem Chabang in Thailand from Manila. These developments will further entrench JTV’s coverage in Southeast Asia while it remains synonymous with its service coverage across the key Kanto and Kansai ports of Tokyo, Yokohama, Nagoya, Osaka and Kobe.
The refined JTV service will commence sailing from Tokyo on 2 June with the following port rotation:
Tokyo – Yokohama – Nagoya – Kobe – Shekou – Hong Kong – Nansha – Shekou – Manila – Laem Chabang – Ho Chi Minh City – Kaohsiung – Tokyo
Heung-A & Sinokor organize joint Korea-Japan service
From Wed/08-May to Tue/14-May
South Korean carriers Heung-A and Sinokor, that are in the process of consolidating their containership businesses, have organized a Korea-Japan butterfly service centred on Busan that covers Hokkaido Island on one wing and minor ports across the Honshu, Kyushu and Shikoku islands on the other wing. It is marketed as ‘THS3' by both carriers. The Hokkaido segment encompasses their shortlived ‘JKH1’ service launched in March following the split of the now suspended ‘PMH’.
The 'THS3’ service connects Busan, Tomakomai, Ishikariwan-Shinko, Busan, Shibushi, Tokushima, Sendai, Kashima, Busan. It turns in three weeks using three ships of 1,000 teu, including the 1,003 teu HEUNG-A HAIPHONG (Heung-A) and two freshly chartered ships, the 956 teu SKY PRIDE (Heung-A) and the 1,096 teu EPONYMA (Sinokor). The first effective sailing occurred on 5 May from Busan with the HEUNG-A HAIPHONG.
With the organization of the ‘THS3’, Sinokor will be able to continue its direct coverage of Tokushima that it had dropped from its ‘BSS’ service in April.
For Heung-A, the ‘THS3’ will bring a direct call at Kashima, previously covered through slots on one of the KMTC Busan - Minor Japan port shuttles.
OOCL to launch two new Asia-Latin America services
Wednesday, 15 May, 2019
Orient Overseas Container Line (OOCL) will introduce two new Asia to South America East Coast and the Caribbean direct services beginning in June 2019.
“With our focus to expand our business network in the Latin America market and to meet the growing demand for quality services in this region, OOCL is pleased to announce two new services, namely the Transpacific Latin Atlantic 2 (TLA2) and Transpacific Latin Caribbean 1 (TLC1), beginning in June 2019,” OOCL stated.
The carrier expects the new routes to offer competitive services with direct calls to strategic ports such as Santos, Navegantes, Manzanillo, Cartagena, Kingston, and Caucedo.
The port rotation for TLC1, effective with containership Cosco Beijing departing Singapore on 30 May, is Singapore, Hong Kong, Kaohsiung, Ningbo, Shanghai, Qingdao, Busan, Manzanillo (Mexico), Balbao, Manzanillo (Panama), Cartagena, Kingston, Caucedo and back to Singapore.
The TLC1 will first begin its services between Asia and Mexico, Panama and Colombia from June, while services to Jamaica and Dominican Republic will commence within the following two months.
The port rotation for TLA2, effective with Cosco New York departing Qingdao on 27 June, is Qingdao, Shanghai, Ningbo, Shekou, Singapore, Sepetiba, Santos, Paranagua, Itapoa, Navegantes, Itajai, Santos, Singapore, Hong Kong and back to Qingdao.
X-Press unveils new Malta-related services
From Wed/08-May to Tue/14-May
X-Press Feeders has unveiled two new services hubbing at Marsaxlokk after the recent hub shift from Marsaxlokk to Piraeus and Tanger Med/Algeciras on certain of its feeder services to cater for changing patterns in main lines. X-Press Feeders this week introduces the 'TMX II' and 'AMX', connecting Marsaxlokk with Naples, certain Adriatic ports and the Algerian port of Skikda through slots on CMA CGM services, as detailed below:-
è ‘TMX II’ - Ensured through slots on the Marsaxlokk-Naples leg of the CMA CGM ‘Tyrrhenian Express’ service, which turns in two weeks with two ships of 900 teu. X-Press Feeders first sailing was on 12 May from Marsaxlokk on the JSP SKIRNER.
è ‘AMX’ - Ensured through slots on the CMA CGM recently introduced ‘ADRINAF’ service calling at Marsaxlokk, Catania, Ancona, Koper, Venezia, Rijeka, Bar, Marsaxlokk, Skikda, Marsaxlokk. It turns in three weeks using three ships of 1,100 to 1,300 teu. Xpress Feeders first sailing occurred on 7 May from Marsaxlokk on the TILLY RUSS.
X-Press Feeders introduces panamax sized Singapore-Laem Chabang feeder
From Wed/08-May to Tue/14-May
X-Press Feeders has introduced a weekly shuttle between Singapore and Laem Chabang, marketed as ‘Thailand Singapore X-Press’ (TSX).
The loop is operated with the freshly chartered 5,085 teu classic panamax LAS VEGAS. The ‘TSX’ service will cater in particular to CMA CGM feeder volumes, as the French carrier takes slots under the ‘LCX’ branding. Several other shipping lines also co-load on the common feeder service.
The addition of the ‘TSX’ enhances X-Press Feeders already dense coverage of Thailand, bringing from four to five the number of its services covering this country.
Just last month, X-Press Feeders brought a 4,800 teu classic panamax onto the Straits-Thailand-Eastern India ‘TCX’ service that it jointly operates with ONE, COSCO and RCL. This butterfly service includes a weekly Singapore-Laem Chabang string and was recently upsized.
The current affordability and availability of panamaxes gives carriers an incentive to replace smaller tonnage. Panamaxes are chartered at cheap rates, comparable to those observed for 1,700 - 2,500 teu ships. while the fuel bills and port costs per teu are reduced through economies of scale. This was well illustrated by the recent consolidation on the Singapore-Surabaya route, when Samudera, COSCO, OOCL, ONE, PIL-ACL and X-Press Feeders teamed up to employ three classic panamax ships.
New monthly container service connects Malacca port to China
From Wed/08-May to Tue/14-May
Tanjung Bruas, a multipurpose port located at Malacca, about 70 miles south of Port Kelang, has recently adapted its facility to handle containerships.
The first full container loop to call at the port is a captive service, operated by Xinyi Glass Manufacturing Ltd.This Hong Kong-listed glass manufacturer has plants in South China and Malaysia and it ships both finished roducts and raw materials between its sites.
The service connects Tangung Bruas and Humen Hongye port in The Guangdong Province, South China, on a monthly basis, using the geared 954 teu WEST SCENT, chartered by Xinyi Glass.
The ship made her maiden call at Tanjung Bruas on 19 April and returned for a second trip on 12 April.
Tanjung Bruas Port (TBP) is a subsidiary of MCC Group, a Malaysian utilities and infrastructure group that also operates terminals at Tanjung Pelepas, Penang, Johor and Port Kelang North port.
MCC Group holds 70% equity interest in TBP, a share acquired in early 2017. Tanjung Bruas Port has one T-shaped jetty that can accommodate vessels of up to 150 m in length and the pier offers a depth of 9.00 m.
Weekly Broker: Volatility keeps deals at bay
Thursday, 09 May 2019
The extraordinary volatility within the dry bulk space continues to mute S&P deals. The spot market has seesawed in the past week with current events spooking participants more than actual market fundamentals. Mercifully for owners of large bulkers, demolition action is soaring.
According to Intermodal’s latest weekly report, demolition activity in the capesize segment is up by 186% compared to last year.
“Concerning the muted S&P activity on capes the past four months, it is normal for the decreasing freight rates to cause shipowners to have many concerns about investing in the capesize segment. However, something that should be mentioned along with the muted S&P activity is the asset value’s resistance to decreasing… T/C rates having dropped 35% compared to last year, the values have only decreased by 7%,” noted George Panagopoulos, a research analyst at Intermodal.
According to Ablira’s latest weekly report, news that a court has ordered Vale to halt operations at its Brucutu mine has caused some volatility for capes and despite last week’s improvements, activity is quiet once again. The kamsarmax and panamax markets have remained steady so far this week while period activity in the Pacific has remained at healthy levels. Additionally, fixtures for handysizes have been limited this week.
“A fair amount of activity was to be seen in the dry bulk sector these past two weeks. However, it is worth mentioning the lack of capesize transactions, reflecting the high uncertainty that still prevails for these units in the market. On the other hand, supramaxes continue to hold the main spot light right now, primed by their fairly buoyant performance in the freight market during the most recent slump. Meanwhile, age does not seem to be a significant barrier, with several vessels older than 15 years old changed hands during this past week,” Allied Shipbroking said in its weekly report.
Multiple shipbroking houses including Seasure Shipbroking, Advanced Shipping & Trading and Lion Shipbroking all reported the sale of the 2010 Chinese-built 53,400 dwt supramax bulker Thrasher. The vessel was sold by Eagle Bulk to Indonesian owner Mulyadi Wibowo’s Meratus Line for around $10m.
Intermodal and Advanced Shipping & Trading reported a transaction in which German owner HS Schiffahrt acquired the 2010-built 29,600 dwt handy bulker Redhead (pictured) from Canadian Forest Navigation (Canfornav) for an undisclosed price and the vessel has been time chartered back to the Canfornav.
Broking sources also tell Splash that the 17-year-old, Oshima-built post-panamax Shin Sapporo Maru was sold to Jiangsu Steamship for a price believed to be in the high $8m mark.
On the tanker front meanwhile, Fearnleys in its latest weekly report points out that the VLCC market saw another lackustre week with ships piling up in Fujairah and Galle while owners are currently facing returns well below OPEX for most cargo combinations. It’s on the products side where the action is at the moment, as noted by Allied Shipbroking.
“Things seemed to be heating up on the tankers side as well, with a fair flow of transactions being noted during this two week period. The main focus still holds on the product tanker segments, with several LR1, MR and smaller oil product carriers being changing hands, while even vintage tonnage finding firm buying interest right now,” Allied Shipbroking said.
Lion Shipbroking, Banchero Costa and Allied Shipbroking and Advanced Shipping & Trading all reported the sale of the 2010-built 50,000 dwt MR tanker Unique Explorer. The Japanese-built ship was sold by Chinese owner Unique Shipping to Indian owner Pallonji Shipping for a price of $17.5m.
Allied Shipbroking, Lorentzen & Stemoco and Andreas J. Zachariassen all listed an en bloc sale of two 2004-built 46,000 dwt MR tankers Seaways Ariadmar and Seaways Antigmar. The two South Korean-built ships are said to have been sold by International Seaways to Nigerian interests for over $8m each.
Intermodal and Lorentzen & Stemoco reported a deal that saw Norwegian owner Odfjell sell the 1996-built 10,100 dwt product tanker Bow Querida. Turkish owner Beykim Petrolcülük has acquired the vessel for a price of $2.3m and renamed the ship, Fericek.
According to Braemar ACM Shipbroking, it has been a slightly muted week in terms of concluded secondhand containership sales.
One sale recorded was the 2007-built 1,102 teu boxship Max Centaur, which was sold to Germany-based buyers for $5.7m. The vessel is to enter a long-term time charter with Maersk Line.
“Otherwise in the second hand sector, a number of buyers remain interested in securing post-panamax tonnage and we expect the next trading sales to set benchmarks considerably higher than lost done,” Braemar said.
Alphaliner reported that Bremen-based D. Oltmann Reederei has purchased the 5,624 teu Guang Dong Bridge from Japanese owner Shunzan Kaiun for a price believed to be between $13m and $14m.
Marshal moves for its third ship in 2019
Tuesday, 14 May 2019
Six-ship strong Marshal Shipping from Dubai is linked to its third ship in in two months, adding a sub-panamax containership, its second ship in this segment. Marshal is paying Borealis Maritime $7.1m for the 2,496 teu Puccini, its most expensive container vessel to date.
Borealis originally bought the ship as the ER Bremen five years ago. The Puccini is the fourth boxship in Marshal’s fleet. In March, the Middle Eastern owner also added its first two aframax tankers to its fleet.