bulk carrier...evolution of their scoring system . svis, qi, safety score. heralded as a new,...

Bulk Carrier Leaders25 June 2020 • 17:00-17:45 BST

Part ofMaritime Leaders Webinar Week22-26 June 2020

Presentation documents:Page 2: Will Tooth, MSI5: Scott Bergeron, Oldendorff CarriersPage 20: Capt Panagiotis Nikiteas, Maran Dry Management IncPage 32: Jay K Pillai, Pacific Basin Shipping / INTERCARGO

Dry Bulk Market Update

June 2020

Contact Details

1© Maritime Strategies International

Dry Bulk Market Update

3William Tooth4Cargoes

5Iron Ore

7Coal

9Deliveries

10Scrapping

11Market Balances

Earnings

Dry Bulk Analyst

[email protected]

+44(0)20 7234 9473


Dry Bulk Market UpdateEarnings

Bulker Vessel Earnings• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• MarketBalances

• Bulker earnings fell to thelowest levels since 2016 inthe first half of 2020.

• Seasonal difficulties in Q1were compounded byCOVID-19.

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k $/DayBCI 5TC (180) Cape 170k 1 Yr T/CBPI82-TCA Panamax 75k 1 Yr T/CBSI58 - TCA Supramax 53k 1 Yr T/CBHSI 38 - TCA Handysize 30k 1 Yr T/C


Dry Bulk Market UpdateCargoes

Dry Bulk Demand by Cargo (2019)• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• Market Balances

• Iron ore accounts for far more vessel demand than any other individual commodity, with coal second.

• Minor bulks, although less significant individually, account for over a quarter of dry bulk demand in aggregate.

Iron Ore: Dwt Demand

37%

Coal: Dwt Demand

24%

Grains/Soya: Dwt Demand

13%

Minor Bulks: Dwt Demand

26%

2019


Dry Bulk Market UpdateIron Ore

Global Iron Ore Imports• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• Market Balances

• Global iron ore consumption falling as steel production falls (down 1.1% yoy in Q1).

• However, historically consumption has been a poor indicator of trade.

• Production in Brazil and Australia – the two largest exporters – has been a better indicator.

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MnTMnT ChinaRest of the worldBrazil & Australia ProductionGlobal Consumption (RH Axis)


Dry Bulk Market UpdateIron Ore

Brazilian Iron Ore Exports• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• MarketBalances

• With Australia nearcapacity output, Brazilianexports are the swingfactor.

• Brazilian exports disruptedin Q1 from heaviest rain onrecord.

• Recovery has beenhampered by COVID-19.

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Dry Bulk Market UpdateCoal

Chinese Domestic Coal Prices• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• MarketBalances

• Although coal productionhas been disrupted byCOVID-19 (IEA estimateenergy demand fell 3.8%yoy in Q1), the impact fromreduced consumption ismore significant here.

• China imported the mostcoal globally in 2019 (315MnT) with India second(259 MnT).

• In both countries importscount for less than half ofconsumption.

0%10%20%30%40%50%60%70%80%90%100%

0250500750

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+Tai

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MnTOE Consumption (2019) % Import Share (RH Axis)


Dry Bulk Market UpdateCoal

Chinese Domestic Coal Prices• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• MarketBalances

• A collapse in coal prices inChina has drivenprotectionist measures.

• India too has aimed toincrease the share ofdomestically produced coalconsumed.

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Dry Bulk Market UpdateDeliveries

Bulker Deliveries by Country• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• Market Balances

• COVID-19 disruptions to deliveries were short lived.

• China delivered just two vessels in February (lowest in a month since Feb 2007).

• Rebounded to 26 by April, however.

• Deliveries from other countries showed no sign of disruption.

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# Others Philippines South Korea Japan China


Dry Bulk Market UpdateScrapping

Bulker Demolitions by Country• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• Market Balances

• Meanwhile, scrapping activity has been subdued.

• Only two vessels scrapped in April.

• Despite very low earnings, only 19 vessels scrapped since a spike in February.

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Others Turkey Pakistan India Bangladesh


Dry Bulk Market UpdateMarket Balances

Market Balances• Earnings

• Cargoes

• Iron Ore

• Coal

• Deliveries

• Scrapping

• MarketBalances

• High supply growth andnegative demand growthwill demand a slump infleet employment.

• At 78.8% we’re forecastingthe lowest employment ratesince the 80s this year.

74.0%

76.0%

78.0%

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82.0%

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88.0%

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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Mn Dwt Incremental DemandIncremental SupplyEmployment Rate 202.1 Base Case (RH Axis)

MSI Background and Disclaimer

For over 30 years, MSI has developed integrated relationships with a diverse client base of financial institutions,ship owners, shipyards, brokers, investors, insurers and equipment and service providers.

MSI’s expertise covers a broad range of shipping sectors, providing clients with a combination of sector reports,forecasting models, vessel valuations and bespoke consultancy services.

MSI’s team is comprised of professionals with extensive academic credentials, deep industry knowledge and manyyears experience of delivering successful client projects.

MSI balances analytical power with service flexibility, offering a comprehensive support structure and a soundfoundation on which to build investment strategies and monitor/assess exposure to market risks.

While this document has been prepared, and is presented, in good faith, MSI assumes no responsibility for errorsof fact, opinion or market changes, and cannot be held responsible for any losses incurred or action arising as aresult of information contained in this document.

The copyright and other intellectual property rights in data, information or advice contained in this document areand will at all times remain the property of MSI.

1© Maritime Strategies International 12

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Staying Robust & Resilient with New Standards

Riviera Maritime Bulk Carrier Leaders June 25, 2020

Scott Bergeron

Staying Robust & Resilient with New Standards

Management Self-Assessment for the Bulk Carrier Industry

The time has come / TMSA introduced in 2004

Who? – The Dry Bulk Industry along with RightShip and Intercargo

What? – A ship management self-assessment scheme loosely modeled after the OCIMF’s Tanker Management Self Assessment

When? – Not yet defined, but late 2020, early 2021 quite possible

Where? – Onboard & Ashore

Why? – The oil pollution liabilities of the 1990’s have evolved over the last 20 years. With significant improvements in oil pollution prevention, the shipping industry is shifting its attention to air emissions, operational discharges, crew welfare and corporate social governance. The bulk carrier industry has room to improve its overall performance and a management self-assessment is intended to measure the implementation of best practices and continuous improvement.

RightShip – Dry Bulk Management Standard (DBMS)

A self-assessment program designed to increase dry bulk safety standards. Current version subject to change.

30 Areas of Management Practice

Four Sections:Performance

People

Plant

Processes

Four levels of requirementsBasic

Intermediate

Advanced

Excellence

Percentage scoring of each subject based on accomplishment of each level divided by 100. Result is a score of 0 to 4 for each section.

Basic and Intermediate level must be at 100% before scoring of Advanced or Excellence are recognized.

Dashboard to compare statistics and indicators of one company compared with others

Four levels of requirements

Source: RightShip / drybulkmanagementstandard.org

Intercargo – Dry Self-Assessment System (DRY-SAS)

A self-assessment scheme aiming to enjoy industry-wide support, embrace best practices and Key Performance Indicators and raise the bar on safety, environmental and operational excellence.

13 Fields

30 Focus Areas of Management Practice

Each topic to list specific and clear questions rather than stage of compliance

Universal system of risk factorsLow (5)

Medium (10)

High (20)

Scoring based on level of compliance (1-5) multiplied by risk factor. (Lower score = lower risk)

Company score is sum of question scores.

Companies classified in a universal and common database

Current version subject to member feedback. Above points are currently work in progress by INTERCARGO, which can be contacted at [email protected]

Source: Intercargo.org/dry-bulk-self-assessment-scheme

RightShip Safety Score Replacing RightShip Risk Rating

RightShip has announcement the 3rd evolution of their scoring system

SVIS, Qi, Safety Score

Heralded as a new, transparent way to benchmark safetyResponse to criticism of their “opaque” predictive risk rating system

Updated IT platform

Access to the new system starts 30 June 2020. Implementation expected late September.

The Dry Bulk industry has evolved to accept the concept of a minimum star rating acceptable to charterers.

Now what?

With the introduction of DBMS, RightShip will now have 5 elements

Safety Score

Vetting Service

Ship Inspections

GHG Ratings

DBMS

Revision of the GHG Rating system forthcoming?

HONOR TO PARTICIPATE IN THE BULK CARRIER LEADERS WEBINAR

THANKS!

MARAN DRY MANAGEMENT INC.

Self-Assessment Schemes in the Bulkers’ Industry

Discuss briefly recent developments in relation to the introduction of a Self Assessment program

and set next course!


Objective

Where each player stands?RightshipConducts for years now “operator reviews”; format is evolving over theyears; recently launched the DBMS program aiming to “run” it.

Ore Majors / Charterers / TerminalsHighly in favor of a SA program; ability to demonstrate due diligence inthe selection of shipping provider; set their own clear expectations inthe form of “best practices”; select amongst “better” ship operators.


Where each player stands?Ship Owners / Ship ManagersOne Industry Standard, some resistance, competition, sales pitch, needs forresources vs tangible benefits, outsourcing, varying awareness, evaluation andapproaches

IntercargoSet up Working Group“…make a standard frame for assessment of operator’s manual…”Identification of “best practices”Program Bulk carrier specific / all types / all sizesDevelop and run the Dry SAS tool


Who will steer this program?Customers need re-assurance – tools tend to fail or by passed over time

SuggestionInstead of waiting, as by-stander, a tool to be imposed, which will be imposed in any case, cooperate, innovate, demonstrate willingness for improvement in practice, control and lead developments through an accepted NGO


Concerns

Costs Manuals vs realityPractical applicabilityTransparencyUse as commercial leverage (Licence to Trade)


BenefitsKnown and agreed expectationsFair playMeasure and improveReduce costs related to “human errors”Common format

Raise the barDifferentiateObjectivity


If program runs honestly it can be a win-win situation

Will SA be here to stay?Transport 2040 study by IMO-ITF-WMU indicates that world seaborne trade will reach 60,000billion ton-miles by 2020, 74,000 billion ton-miles by 2030 and approximately 84,500 billionton-miles by 2040.

In absolute numbers, the number of seafarers required by 2040 is expected to be significantlyhigher than its current level. In some scenarios, the figure is almost double than theapproximately 1.6 million seafarers working today.

Better be smart and courageous in managing this growth and steer beyond minimumcompliance. It saves more than it costs….


Will SA be here to stay?Changing approach

Involved parties cannot accept anymore that incidents are thenecessary evils of doing shipping. Successful business performancecannot be seen anymore without an effective and robust integratedmanagement system and without a truly involved leadership.


Will SA be here to stay?Changing approach

In a world of diminishing, and fiercely fighting for returns, there isexpectation for better value from safety systems. “Human error” is notaccepted anymore as convenient cause. Qualitative data areincreasingly analyzed in addition to the “measurable” targets and KPIs.


Will SA be here and stay?Changing approach

Safety management systems that are “paper” exercises, heavily gearedon the technical issues and downplay human element are, or soon willbe, obsolete.Changes of persons in major organizations and/or new ideas and plansfuel this change in the coming years.


Thank You!!!!


Pacific Basin Shipping : Bulk Carrier Issues

Bulk Carrier Issues

Riviera webinar – Bulk Carrier Leaders

Jay K Pillai, Director – Fleet, Pacific Basin Shipping(Head of Ship Management)

Vice Chairman, INTERCARGO25 June 2020


www.pacificbasin.comPacific Basin business principles and our Corporate Video

Pacific Basin – Well Positioned for Future

2

Our Vision

To be a leading ship owner/operator indry bulk shipping, and the first choicepartner forcustomers andother stakeholders Secure counterparty

US$2bn+total assets;

strong balance sheet

Total Cargo Volume Carried in 2019

67m tonnes9,000+ Port Calls across 110 Countries

Owned Fleet

11781 Handysize 35 Supramax

1 Post Panamax

Hong Kong HQ12

Global Offices

300+Shore-based staff

3,900+Seafarers

World’s largest owner and operator of modern Handysize and Supramax Ships

240+ Handysize andSupramax vessels

500+Major Industrial

Customers

1,500+voyages/year

“

”


Safety at Sea at Grave Risk – No Crew Change

3

SEA (Seafarer’s Employment Agreement) on board bulk carriers ranges from 4~9 months

About 100,000 seafarers require to be changed per month

About 30% of all seafarers on ships have exceeded SEA

About 6% of all seafarers have been serving 12~16 months

Seafarers are assigned Key Workers Status - However, ALL Governments are not supporting Ship Owners

on the urgent matter of Crew Change

Crew on board are fatigued - Safety at Sea & Ports is at risk

Pacific Basin Shipping : Bulk Carrier Issues 4

Must Relieve ALL Overdue Seafarers NOWWe request ALL leaders of Port States to: FACILITATE crew change for any nationality ENSURE that no cargo ship will sail with seafarers on board who have

served >9~12 months on or after 30 June 2020

Urgently allow these Key Workers to: be relieved at their ports, without any restrictions, whatsoever fly to any port with any airline, transit any airport and grant them visa on

arrival to join ships to relieve fatigued crew reserve at least 25% seats on each flight for key workers disembark from ships at any port with visas, without confirmed air tickets,

and fly any airline and transit any airport to reach home

ACT NOW BEFORE ACCIDENTS HAPPEN & BEFORE SEAFARERS ARE COMPELLED TO INITIATE STRIKE ACTION ENCOURGED BY ITF


Key Workers on 12,000 Bulk Carriers


Sustainability of Dry Bulk SectorTopical Sustainability Themes BWMS, 2020 Sulphur Cap, Collapse of Dry Bulk Market in 2020 with

Owners/Operators not making ROI, but incurring losses OPEX and Dry Docking Costs escalating with rising labor costs Long Term - Ship Owners can cooperate on reducing shipping’s climate

impact and to ensure the sustainability of our sector

Refrain from ordering New Buildings Not fit for purpose for 25 years to meet IMO’s 2030 & 2050 targets >40% and >70% CO2 emission reductions from 2008

Close the supply~demand gap and improve ROI

Influence Designers, Shipyards, Engine Makers & Energy Suppliers to develop energy efficient, low-carbon/zero-carbon ships & fuel to transport essential commodities at reasonable cost to the end user fit for purpose for 25 years

bulk carrier...evolution of their scoring system . svis, qi, safety score. heralded as a new,...

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