IMO 2020 fuel rules set to change ocean freight landscape
Monday, 18 March 2019
Low-sulphur regulations may trigger more slow steaming and transhipment and be ruinous for some container lines if they fail to recover more from customers than in the past, says Drewry.
Next year will be a pivotal year for the container shipping market, with the imminent the IMO 2020 low-sulphur fuel deadline set to trigger more slow steaming and transhipment - and be potentially disastrous for some container lines if they fail to recover enough of their cost increases from customers, according to industry analyst Drewry.
In its Container Insight Weekly briefing today, Drewry noted that failure to recover more of the fuel cost from customers than in the past, when it was estimated to be around 50%, “could be ruinous for some lines, many of which are still operating with highly distressed balance sheets”.
Drewry Supply Chain Advisors’ February whitepaper ‘IMO 2020 Low-sulphur Regulations’ offered some pointers to shippers regarding the new fuel regulation to use in their contract discussions with carriers, and previously launched an ‘IMO 2020 Cost Impact Calculator’ to assess the ramifications, with Drewry noting: “From what we hear, there is a general acceptance among shippers that they will have to pay more towards the fuel cost burden, although there are still a number of sticking points regarding the mechanics of how it should be done.
“On the other side of the table, carriers will argue that a short-term win for shippers could quickly turn into a loss. It is something that shippers might want to consider during negotiations as any cost saving today might raise the likelihood of another carrier bankruptcy in the manner of Hanjin Shipping, causing unwanted chaos in the supply chain and further reducing the competition, thus increasing the risk of much higher rates at a later date.”
Drewry said the reality was that carriers’ fuel costs will start to differ to a considerable degree as the new fuels are pumped into their ships, with the variance to be largely driven by the type of fuel used. It highlighted a new report by the International Energy Agency (IEA) that suggests marine gasoil (MGO) will be the preferred option for shipowners across all maritime sectors from next year when the new 0.5% sulphur limit becomes law. Use of very low-sulphur fuel (VLSFO), which is expected to be cheaper at the outset, will gradually become more popular as concerns over the availability of blending materials dissipate, Drewry indicated.
The IEA said some shipping companies may also be reluctant to adopt a new fuel immediately and would prefer to use MGO until they have confidence that VLSFO will be easily available in ports and stable and compatible with similar grades, Drewry noted.
“Operators with a higher quota of ships fitted with scrubbers that are able to continue to use the cheaper high-sulphur fuel oil (HSFO) stand to make significant operating expense savings, after the initial retrofitting investment,” Drewry said. Last year, the premium between HSFO/IFO 380 and MGO at the port of Rotterdam was approximately $210 per tonne, it noted.
“Depending on their success in raising the fuel recovery rate, carriers will inevitably seek to mitigate the anticipated higher operating expenses. One potential side-effect from the new regulations could be greater slow-steaming and use of transhipment - the logic being that as ships sailing speed is reduced and round voyages are extended carrier s will drop ports from rotations to ensure that transit times to key points remain competitive.
“Fewer direct port calls will induce greater need for transhipment and feeder operations.” Drewry research shows that in the past there is a reasonably high correlation between incidences of transhipment globally, as a percentage of total port throughput, and bunker prices, the analyst pointed out. “The upside from this shift towards more transhipment from a ports and terminals perspective is that this will inflate the global port throughput sum as four container movements at the quayside will be required instead of two with direct port-to-port calls.”
Drewry said it will provide more in-depth analysis of this issue, along with the likely costs implications for shippers and carriers related to IMO 2020, in its forthcoming Container Forecaster report, to be published at the end of this month.
It concluded: “Shippers rightfully want more transparency regarding how the new fuel surcharge mechanisms will work, but they should be mindful of the potential risks to future service options, competition and rates if they don’t concede anything to carriers.”
Older, gas-guzzling box ships bound for scrapyards as IMO 2020 looms
(The Load Star)
Tuesday, 19 March 2019
With the IMO 2020 low-sulphur fuel regulations looming, containership owners are keen to offload as many older gas-guzzling vessels as possible, with the current high scrapping rates providing added incentive.
According to London-headquartered shipbroker Braemar ACM, 12 vessels with a capacity of 36,000 teu have been sold for demolition in the past 30 days, taking the year-to-date number to 30, for 52,000 teu.
This compares with just 48 vessels for 88,000 teu sent to breakers’ yards last year.
Braemar ACM reports on three recent demolition sales in the container sector: the 4,992 teu 2004-built Piraeus, sold ‘as is’ in Singapore at $445/Ldt; the 2,020 teu 1991-built MSC Pylos, sold for $450/Ldt; and the 1989-built 1,800 teu Oriental Mutiara, sold for $468/Ldt, for delivery to Bangladesh.
The sale of the 15-year-old Piraeus is indicative of the overcapacity still prevalent in the panamax sector. Indeed, in its last idle tonnage report, Alphaliner said there were around 40 panamax vessels looking for employment, and the situation “remains worrying for owners”.
Panamax vessels had a temporary reprieve last year as strong demand doubled daily hire rates to around $10,000, but rates have since fallen back to around $8,500 and, with the large number of ships on the spot market chasing cargo, look likely to fall further.
“Some owners have started addressing the oversupply issue by scrapping tonnage,” said the consultant.
While containership owners are set to receive a charter market boost from the forthcoming IMO 2020 regulations, as some incumbent vessels are taken out of service for up to 40 days for the installation of scrubbers and will thus require temporary cover, it is generally in the larger sectors that carriers will be seeking replacements.
Speaking during the Seaspan 2018 earnings call, the boxship owner’s chief commercial and technical officer, Peter Curtis, said it was the 6,000 teu-plus sizes where availability was becoming tight, with carriers looking to fix ships for 12 months or more to cover scrubber installation this year and next.
Meanwhile, in terms of new or extensions of charters for panamax sizes, ocean carriers are tasking their brokers with finding the most economical ships on the market.
One broker told The Loadstar last week he had a number of enquiries in from shipping lines for panamaxes for the third quarter of the year for two-to-three-month charters with options, but that there was little interest in longer-term charters.
“What they are saying is that the ships are suitable until you get near to IMO 2020, then they are not interested unless they are either miserly on fuel consumption or have scrubbers fitted,” he said.
But for the owners of older panamax vessels this is not an option, given the circa $5m cost of fitting a scrubber system and the length of time required to recover the capital expense by way of increased daily hire rates.
According to vesselsvalue.com data, prior to its demolition sale the Piraeus had a market value of $9.14m and an identical scrap value.
Container carriers parry critics of consortia
Tuesday, 19 March 2019
New study from World Shipping Council outlines benefits of vessel-sharing agreements as European regulators study whether to extend antitrust protections past April 2020.
The World Shipping Council (WSC), the primary trade organization for container carriers, says shipping consortia not only lower freight rates by allowing shipping companies to operate bigger ships, but also result in shipping companies passing on efficiencies to customers and improving the quality of their services.
“Vessel-sharing arrangements are essential tools for providing efficient, environmentally responsible and frequent liner shipping services to countries all over the globe,” said WSC.
The WSC made its remarks as it made public an 18-page report Consortia, pass-on and service quality, it has submitted to European regulators who are evaluating whether to extend antitrust protection, the so-called “consortia block exemption regulation” that allows liner shipping companies to cooperate with space-sharing agreements.
The current block exemption regulation expires on April 25, 2020, and regulators have invited comments as they decide whether to renew it.
The WSC report parries criticisms made by nine organizations representing shippers, freight intermediaries and transporters in a statement last month that called for repeal of the block exemption (BER) “unless a revised regulatory framework clarifying the current BER is adopted.”
The nine organizations — Global Shippers Forum, European Shippers Council, European Association for Forwarding Transport, Logistics and Customs Services (CECLAT), European Boatmen’s Association, European Barge Union, European Skippers Organization, European Tugowners Association, Federation of European Private Port Companies and Terminals and International Union for Road-Rail Combined Transport — complained about increasing market concentration and service quality.
They pointed to a report by the International Transport Forum of the Organization for Economic Co-operation and Development (ITF-OECD) from November titled The Impact of Alliances in Container Shipping that said, “The impacts of alliances on the containerized transport system taken as a whole seem to be predominantly negative.”
The three best-known consortia — the 2M, Ocean Alliance and THE Alliance — dominate the major east-west container trades, including those between Europe and Asia and Europe and North America, but there are consortia agreements to many parts of the world.
The WSC report was prepared by RBB Economics. Using data from Drewry Maritime Research, RBB examined global average revenue and operating costs per container from 2013 to 2018.
It found “carriers’ costs per TEU decreased substantially and shipping rates decreased in similar proportions. The close correlation between rates and costs shows that shippers benefit from reductions in operating costs in the form of lower overall freight rates (including surcharges).”
Another part of the RBB report used the “liner connectivity index” developed by the U.N.’s Conference on Trade and Development (UNCTAD), which shows how integrated individual countries are to liner shipping networks. RBB concluded that between 2013 and 2018, “the formation of larger consortia and mergers and acquisitions in the industry have not reduced connectivity. On the contrary, it has increased overall.”
Absent consortia, carriers would have to reduce service frequencies in order to maintain utilization of their ships or replace ships with smaller vessels, which would be both a costly and a lengthy process, the report says.
The final part of the report focuses on services between Asia and North Europe.
WSC says Drewry data demonstrates “the industry has increased capacity and has retained or expanded service coverage between countries in Asia and countries in the EU.”
“For example, in 2013, these services provided direct calls to 20 unique ports in 12 EU countries; by 2018, this had increased to 24 unique ports in 14 EU countries.”
WSC says the absence of consortia “would significantly reduce service quality compared to current levels.”
No relief for container shipping lines as rates on major trades continue to fall
(The Load Star)
Friday, 15 March 2019
There were further significant falls in spot rates on the key transpacific and Asia-Europe tradelanes this week.
Today’s publication of the Shanghai Containerized Freight Index (SCFI) shows Asia to the US west coast spot rates fell another 6%, to $1,345 per 40ft, and are a massive 51% below their peak in November.
And spot rates for US east coast ports suffered a further 4.9% fall, to $2,357 per 40ft, and have lost 39% in value since November.
The softness in the market, attributed to the usual slow recovery after Chinese New Year and an absence of demand following the front-loading of cargo in previous months to beat a likely US duty hike on Chinese imports, has come at the worst possible time for carriers serving the route.
At last week’s TPM conference in Long Beach, they were anxious to court their BCO customers and sign them up to new contracts, commencing 1 May.
However, aspirations of 20% uplifts in new contracts had to be tempered considerably, and The Loadstar was told that some carriers were content to keep the status quo on freight rates as long as they could get agreement to their new BAF formulae.
Indeed, at a breakfast press briefing at TPM, Hapag-Lloyd’s CEO Rolf Habben Jansen reiterated the pledge to keep the carrier’s new MFR (marine fuel recovery) mechanism separate from freight agreements – albeit that the carrier said that it was not adverse to using the BAF systems of some of its major shippers as long as they were comparable.
However, transpacific spot rates remain higher than a year ago, when they were on the slide, at $1,106 and $2,009 per 40ft for the US west and east coasts respectively.
Elsewhere, the European components of the SCFI also lost more ground, with North Europe spot rates declining 5.3%, to $714 per teu, and to Mediterranean ports losing 3.6%, to $748 per teu. In the same week of 2018, rates stood at $741 and $665 per teu, repectively.
The softening is seasonal, but there are concerns that the outlook for forward bookings is not as healthy as it should be. And in the latest Global Port Tracker report for North Europe, the growth forecast for the year has been revised downwards, to 2.2%, to 16m teu of loaded imports.
Co-author Ben Hackett, of Hackett Associates, said ocean carriers should exercise prudence in their strategy.
He said: “Our projections suggest caution for carriers regarding their orderbooks and for terminal operators with investment plans. Financial pressures will not abate, and the clean fuel legislation will certainly increase costs.”
With a few exceptions, other routes covered by the SCFI also showed a decline, bringing the cumulative comprehensive index down by 3.2% on the week to a reading of 742.1.
Fitch Ratings believes port growth will moderate
Monday, 11 March 2019
Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.
The rate of cargo volume growth seen at ports in past decades is likely to moderate in the future, predicts Fitch Ratings.
The credit rating agency said in a new report on Monday that port traffic reflects a slowdown in China’s economy and a “maturing container shipping industry in the developed world, which has already reaped the benefits of shifting bulk goods into containers.”
Fitch said the port industry is likely to see “growth much closer to that in global GDP than the much faster levels of the two decades before the financial crisis, when container throughput growth was a multiple of GDP.”
“Fitch believes this shift towards containers is now maturing in developed markets as there are few goods left that can be containerized,” the report said. Between 2007 and 2011, Fitch said growth in port container throughput ranged from two to four times the rate of global gross domestic product growth. In the 2012 to 2017 period, container throughput slowed to one to two times the rate of global GDP growth, Fitch said.
“In this lower-growth environment, overcapacity may become a lingering problem, resulting in stronger competition and price and revenue erosion,” it said.
The growing size of ships means “smaller ports not equipped to handle the biggest ships may therefore suffer price wars if volumes shrink,” and in some parts of the world larger ships “may dictate that new port developments need to be closer to the open sea or a neighboring port may be better placed for growth than its competitor and take capacity away,” said Fitch.
In the U.S., Fitch expects “port volume to remain consistent with the U.S. economy,” but added “individual ports with higher exposure to commodities or trading partners targeted by tariffs and trade policies may see greater volatility. As shipping consolidation continues in the next few years, M&A and changes to alliances could affect port service. Nonetheless, volumes are now at above-average levels.”
It said port investment is expected to focus on “enhancements to accommodate larger vessels” and noted “investor interest in North American port assets appears to be increasing.”
The report, titled “Ports-10 years in Infrastructure,” also said, “The increase in protectionist and anti-globalization rhetoric, particularly in the U.S. and U.K., represents a growing risk for the ports sector.”
Fitch said automation and autonomous vehicles have the potential to “significantly reshape the way cargo movements are managed.” It estimated that roughly 3 percent of global container terminals are automated. In the U.S., longshore unions are resisting full automation of terminals.
Global warming could result in more ship traffic through the Arctic Ocean to the benefit of some ports and the detriment of other ports. And rising sea levels mean the need “to prepare port infrastructure for increased incidences of flooding and inclement weather.”
Freightos sees ocean freight rates falling
Friday, 15 March 2019
Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”
Ocean freight rates have fallen in recent weeks, following a pattern that is often seen around this time of year following the Lunar New Year celebrations in Asia.
But the situation is unusual this year because freight rates in the fourth quarter of 2018 were so high and so much capacity was added to satisfy demand from shippers rushing to get goods into the U.S. before threatened tariff increases.
Philip von Mecklenburg-Blumenthal, a vice president at Freightos, said in the Asia-U.S. trade, the supply of container capacity “still outstrips the growth in demand.”
On Friday, the Shanghai Shipping Exchange said its Shanghai Containerized Freight Index (based on 13 routes out of Shanghai to various locations around the world) fell about 3 percent to 742.10 from 766.92 last week. Drewry said on Thursday that its World Container Index, which is assessed on eight major routes (both headhaul and backhaul) between Asia, North America and Europe was down 8.2 percent from the prior week.
The global Freightos-Baltic Index, which can be viewed on the Freightos website, stood at $1,357 on March 15, down 5 percent from the prior week.
Von Mecklenburg-Blumenthal noted that in the trade from Asia to the U.S., “ocean freight prices seasonally fall this time of year.”
In 2018, he said China-West Coast prices dropped 25 percent in the three weeks following the Chinese New Year holiday and in 2017 they dropped 17 percent.
But he said 2019 is unusual because the average freight rate in the first two and a half months is lower than it was fourth quarter of 2018. Usually rates are higher in the first quarter because fourth-quarter rates plunge after the rush to get Christmas merchandise from Asia to the West.
But that fourth-quarter slump did not happen last year.
“Peak season started earlier, was stronger and lasted longer in 2018 than the previous two years,” von Mecklenburg-Blumenthal explained. In addition, “we have quite an oversupply of vessels in the U.S. market coming from Asia because of the tariff situation.”
As a result, Freightos said this week that year-to-date, the average first-quarter freight rate from China/East Asia to the U.S. West Coast is $1,906 per 40-foot container or 84 percent of the $2,275 average in the fourth quarter of 2018.
That’s very different from the pattern seen in the prior two years, when freight rates were slightly higher in the first quarter of 2018 and 2017 when compared to the fourth quarters that preceded them.
The change this year was particularly noticeable in the trade from China/East Asia to the U.S. East Coast, where the rate in the first quarter of this year is $3,095 per FEU or 92 percent of the $3,382 per FEU average in the fourth quarter of 2018.
That’s a big change from from the first quarter of 2018, when the average freight rate was 33 percent higher than in the fourth quarter of 2017. And in the first quarter of 2017, the average freight rate was 24 percent higher than it had been in the first quarter of 2016.
Advance shipping in the fourth quarter to beat the planned trade tariff increase from 10 percent to 25 percent pushed some of what would have been first-quarter 2019 demand back into the fourth quarter of last year, said von Mecklenburg-Blumenthal.
He also said there are “several signs of slowing world trade, including the latest international trade indicator.”
In its ocean freight market update, the forwarder Flexport said general rate increases on the trades from Asia to the U.S. West Coast and U.S. East Coast planned for Friday were canceled, but that another GRI was planned through mid-April. It said space was open on ships but that carriers were planning new blank sailings through mid-April, which would reduce capacity.
CMA CGM to trial biofuels for containerships
Friday, 15 March 2019
French container group partnering with IKEA in a project the parties say marks a major step towards the decarbonisation of ocean freight, using second-generation biofuel derived from forest residues and waste cooking oil.
CMA CGM has entered a partnership to test and scale biofuel as a bunker fuel in yet another high-profile push for sustainable fuels amid pressure on shipping to decarbonise rapidly.
The collaboration with IKEA will kick off with the French liner loading a second-generation biofuel oil derived from forest residues and waste cooking oil on board one of its vessels at the Port of Rotterdam on March 19.
The specific product eliminates almost all sulphur contents in emissions and slashes carbon emissions by about 80% to 90% compared with conventional heavy fuel oil, according to the companies.
“Having an HFO-equivalent solution in biofuel oil available with no engineering or operational changes required to our vessel offers a safe, manageable and innovative opportunity to facilitate shipping’s wider transition to new fuel solutions,” CMA ships vice-president Xavier Leclercq said in a statement.
GoodFuels has been able to attract key players to test out its products over the past few months, by stressing that these fuels can run on ships without any engine modifications being made.
BHP bunkered a GoodFuels biofuel at the port of Rotterdam last month on an NYK-owned ship while using blockchain technology. In November 2018, Norden successfully ran one of its product tankers on carbon-neutral heavy fuel oil-equivalent biofuel.
The company has also gained traction by actively pursuing the participation of major cargo owners such as IKEA and BHP, who are willing to pay a premium for more sustainable shipping of their cargo.
IKEA global transport and logistics services head of sustainability Elisabeth Munck af Rosenschöld said the company wants to clearly show it is committed to decarbonisation with its participation in this pilot.
“Only through collaboration can we achieve rapid, necessary change. With a successful pilot completed, our intention is to put the equivalent of at least all our containers out of Rotterdam on biofuel,” she said.
The port of Rotterdam has also been active in these decarbonisation ventures and chief executive Allard Castelein said the port has launched a four-year expedition to stimulate project to slash CO2 emissions from shipping, drawing on a €5m ($5.6m) budget for this purpose.
Seaspan turnover tops $1bn in 2018 and eyes an IMO 2020 bonus on the way
(The Load Star)
Thursday, 14 March 2019
Seaspan Corporation is bullish on the prospects for the charter market for the second half of the year, as ocean carriers look for tonnage to take over from ships being fitted with scrubbers.
The world’s largest boxship lessor said ship availability in the 6,000 teu-plus sectors was “becoming tight”, as carriers looked to tie up charters for 12-month periods, as well as to fill in gaps resulting from the further slowing of operational speeds ahead of IMO 2020.
“What we are seeing in our discussions is customers planning for the 35-40 day drydocking of their ships,” said Peter Curtis, EVP and chief commercial and technical officer at Seaspan, which owns a fleet of 112 vessels with a capacity of some 900,000 teu, mostly fixed on long-term charters with carriers.
Speaking during the firm’s Q4 18 earnings call, Mr Curtis confirmed that 10 of its “larger ships” would have scrubber systems installed at the request of two liner clients.
“Payback” would come mostly from a hike in daily hire rates to cover the cost of the installation and provide for a return on the investment, he said.
The systems being installed are open-loop scrubbers, which use seawater to wash sulphur from exhaust gases, the wash water then discharged back into the sea.
A number of port authorities around the world have banned their use in their waters, but Mr Curtis explained that it was a relatively straightforward procedure to close the exhaust valve of the tank with the heavy fuel oil and open the valve of a tank containing compliant fuel when approaching restricted areas.
Moreover, he said he did not expect to see any time lost for the cleaning of tanks ready for accepting low-sulphur fuel oil (LSFO), having agreed procedures with its customers for the decontaminating of the tanks to be done at sea.
Some carriers have expressed concern to The Loadstar about a possible shortage of LSFO, but Mr Curtis said that, having spoken to a number of oil majors, he did not expect any shortages of the compliant fuel when the IMO’s 0.5% sulphur cap comes into force on 1 January next year.
With its first charter agreements signed, with Evergreen and HMM, Seaspan now counts all of the nine largest liners as its customers. Mr Curtis described the first deal, with Evergreen in the fourth quarter, as “a big win for us”, and said the company’s focus was “always to have a broad footprint in the industry”.
Seaspan reported fourth-quarter revenue of $295m, compared with $214m for the same period of 2018, and for the full-year, turnover hit $1.1bn, versus $831m in the previous year.
Net earnings after dividends came in at $44m for Q4 ($42m) and $208m ($111m) for the 12 months.
Following the last tranche of a $1bn investment from Fairfax Financial Holdings, which will see the investment manager take a 38% majority stake in Seaspan, the company is yet to use its “war chest” for acquisitions in the shipping sector, president and chief executive Bing Chen explaining that no suitable candidates had met its criteria.
In October, Seaspan surprised investors by announcing it was planning to invest up to $200m in the restructured Singapore-based oilfield services group, Swiber Holdings.
Global Ship Lease signs new boxship charter with Hapag-Lloyd
Tuesday, 19 March 2019
Global Ship Lease has agreed a new three-year charter with Hapag-Lloyd for 2015-built, 9,115 teu boxship UASC Al Khor.
The previous charter with Hapag-Lloyd, at $40,000 per day, is set to expire in June and the new charter is in direct continuation through to the second quarter of 2022.
Ian Webber, CEO of Global Ship Lease, commented: “We are pleased to announce another longer-term charter of one of our modern, high-specification, eco, wide-beam containerships acquired through our recent strategic combination with Poseidon Containers. The fixture is consistent with our strategy of locking in contracted cashflow for longer periods when rates have risen to attractive levels, whilst retaining some exposure to the short-term charter market, allowing us to enter into new charters in an improving market. This charter extension further improves our long-term cashflow visibility and is indicative of our expanded relationship with charterers.”
The charter will generate around $28m of adjusted EBITDA.
Nissen Kaiun contracts four boxships at Shikoku Shipyard
Tuesday, 19 March 2019
Nissen Kaiun has turned its attention away from offloading bulkers to ordering boxships. The giant Japanese owner has ordered four 800 teu vessels at local shipbuilder, Shikoku Shipyard, for prompt delivery next year. No price has been given for the ships, which will each feature 300 reefer plugs.
The Nissen Kaiun fleet today stands at 121 vessels in total, comprised of 63 bulkers, 28 boxships, 20 tankers, one LNG carrier, three VLGCS and six reefers. It has been one of the most active sellers of dry bulk tonnage over the past 18 months.
Last year the Japanese company ordered eight boxships, four 1,900 teu units in China and four 1,800 teu vessels in South Korea.
Johs Thode Reederei close to quitting shipowning
Tuesday, 19 March 2019
Johs Thode Reederei is is nearing a shipowning exit with brokers reporting that the oufit is netting close to $16m for two 1,024 teu sisterships, Hanse Endurance and Hanse Energy, both delivered in 2008 from Daesun Shipbuilding.
Sales registers show that the deal comes only weeks after the German company let go of a third ship, the 28,000 dwt Hanse Gate bulker, for just under $5m. Chinese boxship operator SITC International Holdings is identified as the taker of the two feeder ships while it’s still unclear who has taken the handysize bulker.
VesselsValue shows that the company is left with one 1,118 teu feedership. Traditionally Johs Thode has focused on the container feeder segment as well as on handysize bulk carriers and multipurpose tonnage. Johs Thode Reederei’s orgins were as a family business, founded in 1890 as a shipbroking company initially.
Weekly Broker: Bulker bargain hunt grows
Thursday, 14 March 2019
With the industry increasingly comfortable that the worst is over for dry bulk, especially sub-cape size, there has been a rush this week to snap up bargains before prices start to escalate.
Allied Shipbroking’s latest report shows that five-year-old 180,000 dwt capesize bulkers and 10-year-old 170,000 dwt capsizes have seen an average price drop of 4.5% and 2% respectively since early February, while 10-year-old 76,000 dwt panamaxes and five-year-old 58,000 dwt supramaxes have also seen prices decline by 3.3% and 2.8% respectively in the same period.
The only increases have been in the segments of five-year-old 82,000 dwt panamaxes and 10-year-old handymaxes, where prices have gone up by 2% and 2.2% respectively.
According to Alibra’s weekly report, very little period activity was reported this week for capes as the market remains under pressure, however there is some optimism that the market might finally have hit rock bottom. The panamax market has experienced some pressure stemming from the cape sector and lacks direction while period deals have been limited for the smaller sizes but fixtures reported suggest that rates have firmed slightly.
“On the dry bulk side, another week with a fair amount of activity taking place. Here, the scene in the market seems relatively the same, with current buying focus seemingly centered around the panamax and supramax size segments. With all this being said and given the current trends of the freight market, we will likely continue witnessing a healthy flow in these size segments, with the rest holding in a slumber state until we see some sort of recovery taking place in the freight market and buying appetite starts to shift once more,” Allied Shipbroking said.
Splash reported this week that Hong Kong owner Pacific Basin picked up two ultramxes from Tufton Oceanic for a total price of $34m.
Several shipbroking houses reported China’s Mingsheng Finacial Leasing has taken over a newbuilding 64,000 dwt ultramax bulker, Ocean Neeraj, from Noble Group, which completed a debt restructuring at the end of last year. The vessel, which is currently near completion at Cosco Zhoushan Shipyard, was sold for a price of around $22m.
Lion Shipbroking reported a transaction in which the 2010 Japanese-built 58,700 dwt supramax bulker Korean Lily was sold by Japanese owner Doun Kisen to Greek bulker owner Diligent Holdings for a price of $14m.
Allied Shipbroking, Intermodal and Lion Shipbroking all reported China’s Shanghai HNA Marine Shipping, a shipping unit of HNA Group, has sold three bulkers en bloc, including two 2012-built 79,600 dwt panamax bulkers FH Ri Zhao and Zhen Bang, and 2015-built 81,500 dwt kamsarmax bulker FH Fang Cheng. The vessels are believed to have been sold to Greek interests for a total price of $47m.
“On the tankers side, weekly volume of transactions seem to be on a stable path these past couple of weeks, without noticing any aggressive buying spree (nor any steep clampdown) as of late. Here, in its most part, overall activity continues to reflect a robust appetite for smaller size units, while we see some sort of spark of life in the VLCC market,” Allied Shipbroking said.
This week, Splash has already reported that Taiwanese owner Formosa Plastics sold two 2009-built LR1 tankers, FPMC P Fortune and FPMC P Eagle.
Allied Shipbroking reported an en bloc sale of two product tankers – the 2007-built 20,900 dwt White Shark and the 2008-built 19,900 dwt Crimson Shark. The two Japanese-built vessels were sold by Japan’s Mitsubishi UFJ Lease to Singapore-based Golden Stena Baycrest, a tanker joint venture between Stena Bulk and Bay Crest Managment for $25m in total.
Multiple shipbroking houses reported that Turkish owner Fiba Holding sold its 2013-built 50,000 dwt MR tanker Gan Trust while Allied Shipbroking identified the buyer as Hong Kong-based Island Navigation, a low-key offshoot of Hong Kong’s Tung family. The Tungs sold containerline OOCL to Cosco, but remain firmly in the shipping business via Island Navigation. The company currently operates a fleet of nine handy tankers.
Intermodal, Lion Shipbroking, Lorentzen & Stemoco all listed the sale l of the 1999-built aframax tanker Hildegaard. Dubai-based Marshal Shipping is said to have acquired the vessel for a price of $8m.
It has been a quiet week in the secondhand containership sale and purchase market. According to Braemar ACM Shipbroking, two 2008-built 1,049 teu sister containerships – Hanse Endurance and Hanse Energy – are rumoured to have been sold by German owner Johs Thode to China’s SITC at below $8m each. Last week, Johs Thode also sold its handy bulker Hanse Gate. The company’s fleet will be left with only one vessel if all the transactions are completed.
Thailand - Singapore - Eastern India Rationalization
From Wed/13-mar to Tue/19-Mar
Ocean Network Express (ONE), RCL, X-Press Feeders and COSCO will rationalize their offerings on the Thailand - Singapore - Eastern India route in early April, with the consolidation of volumes in a single weekly loop instead of the current two weekly loops.
ONE, RCL and X-Press Feeders will close the weekly loop they jointly operate on this route, dubbed ‘Thailand-Straits-Madras’ service, that they market respectively as ‘TEI2’, ‘RBM’ and ‘TSC’. It employs three ships of 2,500 - 2,700 teu. They will bring the volumes of the closed loop on the ‘Thailand-Chennai-Pendulum’ jointly operated by ONE, Xpress Feeders and COSCO, that market it as ‘TEI1’, ‘TCX’ and 'TCX' respectively.
The ‘TEI1/TCX’ ports of call will be maintained, with only the insertion of a new westbound call at the Port Kelang Northport so that the service will call at both Port Kelang terminals in each direction. The service will also be upsized from the 4,200 teu scale to the 5,000 teu one to accommodate extra volumes. The rotation will be stretched from three to four weeks, with more buffer time and for the additional port time in Port Kelang. The ‘TEI1/TCX’ will then connect Singapore, Port Kelang (W + N), Kattupalli, Chennai, Port Kelang (W + N), Singapore, Laem Chabang, Singapore. It will be ensured with four ships of around 5,000 teu.
With this new arrangement, the revised ‘TEI1/TCX’ will remain the only full container service that offers direct link between Thailand with Eastern India. The overall weekly capacity will be reduced from about 6,800 teu to about 5,000 teu.
Of note, some of the slot buyers on the closed loop, which include Interasia Lines, CMA CGM, APL, HMM, Samudera, Evergreen and BTL, should also shift their volumes to the enhanced loop, subject to confirmation by each participant.
APL Enhances China Southeast Asia Service
Friday, 15 March 2019
SINGAPORE - APL announced the addition of Ho Chi Minh City as a port of call by its China Southeast Asia Service (CSE). This will extend the market coverage of the weekly service which currently connects Central China to the Southeast Asian markets of Thailand and the Philippines.
The refined CSE will open up a route from Ho Chi Minh City to Manila with a direct sailing. Primed to be an express service from Central China to Southern Vietnam, the enhanced CSE will offer shippers an alternative ocean freight from Shanghai and Ningbo to Ho Chi Minh City.
The enhanced CSE service will commence sailing from Shanghai on 17 March, calling the ports of Shanghai, Ningbo, Laem Chabang, Bangkok, Manila North and Ho Chi Minh City.
Gold Star Line resumes Middle East links
From Wed/13-mar to Tue/19-Mar
Gold Star Line (GSL) will resume its Middle East links that were suspended in December 2018 when it ceased a slots participation on Hyundai Merchant Marine’s Far East - Middle East ‘KME’ service.
The new offering will be marketed as the ‘Goldstar Gulf Express’ (GGX) and it will be ensured through slots on certain segments of two separate services, connecting Jebel Ali with the Straits and
Cochin on one service and Jebel Ali to Colombo on the other.
The first option will be offered through slots on certain legs of the ‘Galex’ service, jointly operated by Emirates Shipping Line (ESL), Regional Container Line (RCL), KMTC and Sea Lead Shipping. GSL slots on the ‘Galex’ will be limited to Singapore, Port Kelang, Cochin … Jebel Ali … Port Kelang. The service full rotation connects North Asia, India and Middle East and it turns in eight weeks using eight ships of 5,000 to 6,700 teu. Gold Star Line’s first effective sailing is scheduled on 9 April from Singapore on the 5,527 teu TALASSA.
The second option will be offered through slots on the Jebel Ali-Colombo segment of the ‘CCG’ joint service of Global Feeder Shipping (GFS) and Evergreen. The full service rotation connects Jebel Ali with various Indian ports and Colombo in Sri Lanka and it turns in four weeks using four ships with sizes ranging from 3,300 to 4,300 teu. GSL’s first effective sailing is scheduled on 15 April from Jebel Ali on the 3,359 teu MOGRAL.
The ‘GGX’ will enable GSL to once again extend its coverage to the Middle East and through these three transit hubs - Colombo, Port Kelang and Singapore - it will link up with the rest of GSL network.
GSL introduces regular service to the Maldives
From Wed/13-mar to Tue/19-Mar
Gold Star Line will introduce a regular service covering the Maldives, a small island nation in the Indian Ocean, through the introduction of the ‘Goldstar Maldives Service’ (MVS), connecting Colombo with Male, the capital city and main port of Maldives.
The 'MVS' will be offered through slots on the regular Colombo-Male shuttles operated by Lily Line, a Maldives-based carrier that provides most of the container capacity between Male and Colombo. These shuttles allow to connect the Maldives with the rest of the world, using the services of several Main Line Operators. Lilly Line currently operates three ships of 1,078 to 1,550 teu on these shuttles.
Thus far, GSL served the Maldives with the same Lily Line shuttles, but on an irregular basis.
Regional Container Lines revamping three services
Wednesday, 20 March, 2019
Thailand’s Regional Container Lines (RCL) is revamping and restructuring a number of services with its partners.
RCL and Ocean Network Express (ONE) are revamping the Thailand – Indonesia services RTI 1 and RTI 2 with larger vessels. For RTI 1 RCL will deploy the 2,800 teu Racha Bhum with a second vessel deployed by ONE. On the RTI 2 services the two companies plan to deploy a pair of 4,200 teu vessels.
“The higher capacity in both the RTI1 and RTI2 will help to meet growing traffic between Thailand and Indonesia going forward,” RCL said.
“Both Indonesia and Thailand remain amongst ASEAN fastest growing economies and by providing direct shipments between the two countries and via its transhipment hub of Port Klang and Singapore, RCL can provide its customers access to a wealth of destinations within Asia”.
RCL will also be taking over operation of the Thailand – Vietnam – China service RBH from partner ONE deploying the 1,000 teu Danu Bhum in addition the 1,000 teu ALS Satsuki. A call in Nansha will also replace on Hong on the service with the new rotation being Bangkok – Thai Sugar Terminal – Haiphong – Nansha – Shekou – Bangkok – Thai Sugar Terminal.
“RCL is excited with the growing opportunities in Haiphong and our ability to expand our participation in this trade. The addition of Nansha call too will bring us closer to our customers and provide them the convenience of a direct call,” said an RCL spokesperson.
Meanwhile RCL and its partners ONE, Xpress Feeders and Cosco, will be merging its TCX and TSC services between Thailand and India called RMB with four 5,500 teu vessels deployed on the service Kattupalli will be added as port of call to the new service.
An RCL spokesperson commented: “The RMB will be the only direct service between Thailand and East Indian ports of Chennai and Kattupalli. Both importers and exporters in Andhra Pradesh will enjoy a choice of discharge and loading ports whichever is more convenient and cost advantageous to their businesses”.
New container handling equipment to help raise port efficiency
Thursday, 14 March 2019
UK-based BLOK Container Systems has introduced a new equipment to speed up the handling of containers so as to improve the overall operational efficiency at ports.
The equipment BLOK Spreader enables four empty shipping containers to be lifted and transported on to quaysides as a single block, potentially easing congestion in container ports as well as reducing emissions and saving billions for the industry.
“This is a major innovation that is going to change the maritime sector – it is perhaps the biggest step forward since the introduction of the shipping container as multiple container handling has the potential to revolutionise port handling systems,” said Selwyn Rowley, BLOK’s director of sales and marketing.
“Ports around the world handle 679 million containers annually of which around 24% are handled empty. Container terminals charge at least GBP100 ($133) and often much more a lift, so the potential savings created by being able to move four at a time rather than one run into the billions,” Rowley said.
“Ships have become bigger now and carry as many as 20,000 containers but that volume has exacerbated delays at ports and more efficient handling is required. The price of fuel is also going up and tough new environmental standards are being introduced so time savings are essential to allow for slower sailing.”
Robust performance from DP World, with new acquisitions ready to make their mark
(The Load Star)
Thursday, 14 March 2019
DP World today reported a 4.2% increase in 2018 revenue, to $5.65bn across its global terminals.
The Dubai-headquartered terminal operator reported an adjusted ebitda of $2.8bn, giving it an equity margin of 49%.
Total throughput on an equity-adjusted basis was 36.8m teu, and gross throughput of 71.4m teu.
The group said total capital expenditure for the year was $908m, well below its guidance of $1.4bn at the beginning of the year .
However, this may not include the company’s numerous acquisitions during the year: Denmark’s feeder and shortsea shipping line, Unifeeder; UK-continental Europe ferry operator P&O Ferries; India’s Continental Warehousing Corporation; and Cosmos Agencia Marítima, in Peru.
DP World group chairman and chief executive Sultan Ahmed Bin Sulayem said: “This robust performance has been delivered in an uncertain trade environment, once again highlighting the resilience of our portfolio.
“We have made good progress in delivering on our strategy of strengthening our portfolio to become a global solution provider and trade enabler, with approximately $2.5bn worth of acquisitions announced in the year.
“These offer strong growth opportunities and enhance DP World’s presence in the global supply chain, as we continue to diversify our revenue base and look at opportunities to connect directly with the owners of cargo and aggregators of demand.
“Going forward, we aim to integrate our new acquisitions and drive synergies across the portfolio, with the objective of removing inefficiencies in global trade, improving the quality of our earnings and driving returns,” he explained.
The company has forecast 2019 capex of up to $1.4bn, “with investment planned mainly in the UAE, Posorja (Ecuador), Berbera (Somaliland), Dakar (Senegal) and Sokhna (Egypt)”.
Mr Bin Sulayem added: “[The] current year has started with trading in line with expectations, and while the near-term outlook remains uncertain, with the trade war and geopolitical headwinds, we expect our portfolio to remain resilient and see increased contributions from our recent acquisitions and investments.