hong kong port
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DirectoryTRANSCRIPT
May/June 2011
Japan n Tankers n Malaysia n Car Carriers n Ship Registers
Get me to the port on time
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May/June 2011 asiamaritime 1
May/June 2011
Contents
AM FeAtURes
14 BUNKERS Chinalookstolead
16 TankersOwnersstopsplashingthecash
19 JapanShipownerslookbeyondJapan
24 Ship registersMorethanenoughforall
27 Car carriersHopebeyondtheearthquake
30 Malaysia MISCenjoysboxandgasoptions
32 Vietnam Thegoodandthebad
14
24
AM CoveR stoRy10 In2010,containershippinglookedasiftheworsewasover.
Fromrecordlossesin2008,2010wasaboomyear.Butthisyearisturningouttobeapotentialloserforlinerservicesoncemore.Withmegashipsjoiningservicesdailyand18,000teuvesselsintheoffing,companieslikeMaerskanditsrivalsareseekingtodifferentiatethemselvesbylevelsofserviceandcustomer-centricapproachtocontracts.
Industrydata,however,indicatesthatlinercompanieshavetoovercometallhurdlestogetwheretheywanttobe.Notleastoftheirproblemsistheinabilityofshipperstogettheircontractedcargoestoport.Isthedreamofaviation-likeefficiencyanunattainabledream?
2 asiamaritime May/June 2011
May/June 2011
ContentsAM RegulaR ColuMns
4 Comment Bespoke shipbuilding
6 Briefs Yards, ports, lines
8 Commodities Shale oil and gas
13 Launched China King goes to foreign shipmanager
34 Technical Return to onboard training
36 Ship’s store Pitter, patter of tiny carbon footprints
37 Operations Charterers need to know their place
38 Logistics China market awaits
39 IMO Flagging up anti-piracy options
40 Green page Green ideas from DNV
41 Brief encounters Thin end of the social media wedge
42 Diary Merely moving and passing on
44 Maritime’s back pages The NOL story
8
13
40
44
4 asiamaritime May/June 2011
There is noThing quite like a downturn to focus the mind.
Perhaps the 2008/9 debacle is too extreme an example. At the
time those involved in the shipping industry were too busy
working out how to hold on to their shirts, to spare time for cogent
thought about how they might raise their fame.
But if those two too awful years amounted to a storm, what
the maritime industries are confronted with today is a severe de-
pression that looks to settle upon the maritime industry for an ex-
tended period, of which few can yet determine the length. In some
cases this is giving time for serious thought about how to improve.
One happy result is that there are signs that ideas about im-
proving products and services, with a sideways glance to environ-
mental enhancements, have for the first time broken free of the
commercial conference hall.
This has been ,led by the likes of Seaspan Corp’s president and
chief executive Jerry Wang, who conducted a high-profile game of
bluff with shipyards before finally inking a deal worth $700m for
seven 10,000 teu containerships from Jiangsu New Yangzi Shipbuild-
ing in China. With his demand for swift delivery, super-sized and
energy efficient vessels, the ships will be virtually tailor-made; a phe-
nomenon rarely heard of in the boom years of the mid-noughties.
With fuel prices exceeding capital costs many lesser-known
shipowners are following in Mr Wang’s steps. They are either in-
sisting on fuel efficiencies from known yards or being lured away
by others that are prepared to offer the frills rather than face an
empty shipyard come the end of 2013.
The indusTry in The Mirror
In shipping too boxlines such as Maersk, Orient Overseas
Container Line, MSC, CMA CGM and latterly NOL are prepared
to go for the lower costs (hopefully passed on to the customer)
that can be reaped from vast investment in mega-boxships.
And finally, you could not have missed Maersk’s “New Nor-
mal” an act of public self-flagellation wrapped up in a call for
enhanced services in a transparent environment. There is an argu-
ment that much of what Maersk is calling for in the way of punc-
tuality and ease of transaction should have happened a long time
ago. But hey, better late than never, as the shipper never says.
Welcome to the 21st century.]
PUBLISHER DaysOnTheBay Co Ltd
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6 asiamaritime May/June 2011
n Lines
Thousands of miles from their headquarters in Asia, the European
workforce of some of the top Asian lines had a rude awakening on
17 April, when EU Competition officials came knocking as the sun
was rising. Those reluctantly answering the door included Hanjin
Shipping, Cosco, OOCL, NYK, Mitsui OSK Lines and Neptune
Orient Lines. Among European lines, Maersk, Hapag-Lloyd, Ham-
burg Sud and CMA CGM, also received the unwelcome wake-up
call. It’s far too early to tell what has sparked the spooks at the EU
Commission. Would the fact that lines such as K Line and Hyundai
Merchant Marine have, thus far, been left alone, suggest pre-raid
knowledge? Or is it simply bafflement of an EU team not known for
its maritime nous trying to work out how liner companies turned
a slump into a windfall from 2009 to 2010? The answer will be a
long time coming. With the threat of fines equivalent to 10% of an-
nual turnover if lines are found guilty of anti-competitive practices,
there will be a lot of twitchy shipping executives for some time to
come.
Mitsui OSK Lines must be feeling punch-drunk.
At around the same time its European officers were
welcoming the EU officials, across the Atlantic the
Federal Maritime Commission in the US was telling
the Japanese line to cough up $1.2m after the FMC
said it had found evidence of misdemeanors over
several years – among them, misdescription of com-
modities; unlawful equipment substitution; providing
transportation services to and entering into service
contracts with unlicensed, untariffed and unbonded
ocean transportation intermediaries; permitting use
of service contracts by persons who were not parties
to those contracts; and providing transportation that
was not in accordance with the rates and charges set
forth in MOL’s published tariffs.
The extraordinary growth of Grand China Logis-
tics over the past few years, and its ambition to come
from nothing to become the world’s third largest bulk carrier by
2015, set off alarm bells in the minds of many. Such alarms rang
louder in May when news emerged that the conglomerate was
defaulting on charter payments. Among owners who must be ruing
the day they banked on the “Grand” vision are Hyundai Merchant
Marine, which is, so far, $7m out of pocket on two bulkers, and
the Greek shipping duo Minerva Marine and the Vafias Group.
Grand China insists that the problem is merely a cash flow blip. Al-
ternative explanations include difficulty in obtaining US dollars at
Chinese banks, but confidence too in the behemoth may soon be
in short supply.
Within a few weeks of OOCL’s announcement it had ordered
10 13,000 teu boxships from Samsung Heavy Industries, news is
out that it has found long-term employment for at least three of the
giants. Japan’s Nippon Yusen Kaishan will charter the trio for three
years when they will be deployed within the Grand Alliance serv-
ice network in 2013. ]
n Ports
The Philippines’ leading port operator International Container
Terminal Services Inc once again demonstrated its nimbleness and
an eye for an opportunity when at the end of May it put in an all-
cash offer for Singapore listed Portek International. Renowned
for its ability to profit from medium-sized terminal operations in
developing countries that top global players cannot reach, ICTSI’s
acquisition of Portek, which has operations in Indonesia, Malta,
Gabon, Rwanda and Algeria, would appear to be a perfect match
especially in pursuit of capitalizing on ever burgeoning growth in
Africa. The news of the acquisition at a cost of $147m came just
MOL has had a rough time with the authorities in Europe and the US over the last few months
ambriefsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
weeks after the terminal operator announced a 25% increase in net
earnings for the first quarter of 2011 at $28.5m.
Russia’s Global Ports Investments, the country’s leading termi-
nal operator, accounting for 30% of total box throughput, is to seek
up to $750m from an initial public offering on the London Stock
Exchange later this year. If successful, the company aims to shore
up its position in Russia with further capital investment on the port
sector. “We hold the number-one position in Russian container
handling and fuel oil exports and have strong capacity to accom-
modate expected market growth as well as the potential to expand
our current terminal facilities,” GPI board chairman Nikita Mishin
revealed in a published statement.
May/June 2011 asiamaritime 7
ambriefsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
n Yards
If there is a crisis in shipbuilding, South
Korea’s Samsung Heavy Industries has missed
it. Leading not only its compatriot rivals
Daewoo Shipbuilding and Marine Engineer-
ing and Hyundai Heavy Industries, Samsung
has been the world’s most successful yard thus
far this year. Samsung has picked up orders
worth $10.8bn in the first five months of 2011
($3,2bn in vessel orders and $7.6bn in offshore
contracts). Its order target set at the beginning
of the year is an easily achievable $12bn. Ever
a keen advocate of SHI, shipbuilding analyst
James Yoon of BNP Paribas’ Seoul office says,
“It (Samsung) has essentially already surpassed
the target by 22% if $3.8bn in options on exist-
ing orders for four LNG carriers and five drillships are included.
As a result, the order book has expanded 20% year to date to an
estimated $47.1bn, the highest level since the USD50.1b peak of
2008.”
The acclaim for SHI is not to suggest that its national rivals are
suffering. At the time of going to press rumours abounded that both
DSME and HHI were on the verge of jointly benefitting from the
surge in LNG interest to the tune of $1.5bn, as Greece’s Maran Gas
look set to put in orders for four LNG carriers with options for a
further four. Separately HHI picked up a $1.2bn order for two drill-
ships from drilling contractor Rowan Companies. So far this year
HHI has contracted nine drillship orders worth totally $5bn.
Chances are that the 2010 Hong Kong-listed Chinese ship-
builder China Rongsheng Heavy Industry has been looking at SHI
with a degree of envy. The bulker specialist saw its share price
plummet 7.4% in May after Barclays Capital failed to endorse the
shipyard’s current business model. According to Barclays China
Also listing on the London Stock Exchange was DP
World. The world’s fourth largest port operator debuted
on the exchange on June 1. DP World’s intention is to
attract institutional investors it has been deprived of on
the Dubai Nasdaq due to corporate governance restric-
tions. Some 830m shares were on offer.
The potential for serious disruption at key terminals
run by Australian stevedore Patrick in Sydney, Brisbane
and Fremantle continues to exist despite the decision of
the Maritime Union of Australia to lift work bans on May
26. Following the week-long action that provoked Patrick
to close the terminals, both parties insisted that the dis-
pute over pay has not yet been resolved, opening up the
possibility of further industrial action. ]
Rongheng has an orderbook entirely dominated by bulkers (62%)
and tankers (32%). With both classes of ship almost inevitably see-
ing a decline in orders over the next three to four years future rev-
enues look bleak. Compound this with delayed deliveries of vessels
tied to key contracts such as the 12-ship Vale order for 400,000
dwt bulk carriers, and Barclays’ contention that China Rongsheng
lacks the ability to quickly sidestep into offshore business seems to
spell a slower upward trajectory than punters were expecting when
the yard listed in November 2010.
The beleaguered Japanese shipbuilding sector received a fillip
at the end of May when it was announced the Greek shipowner
Safe Bulkers was to receive loans totaling $122.4m through Japan’s
official export credit system. Banking trio, Japan Bank for Inter-
national Cooperation, the international arm of the Japan Finance
Corporation and Citibank Japan agreed the deal that will go toward
the financing of three new post-panamax bulk carriers thought to
be contracted to Imabari Shipyard. ]
ICTSI’s flagship terminal in Manila. ICTSI has closed a deal for the acquisition of Portek International.
HHI is in line to pick up an LNG quartet from Maran Gas
8 asiamaritime May/June 2011
Jeff Heslewood argues that crude oil prices could be a spur for shale alternatives
SHale oil iS looking pretty
amcommoditiesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
As the world’s oil reserves rapidly deplete, some nations are
looking to alternatives to conventional crude oil extraction. One
such route is oil shale, an organic-rich sedimentary rock that con-
tains significant amounts of kerogen from which hydrocarbons, or
shale oil, can be produced.
The downside used to be the expense of shale oil over conven-
tional crude, but as the price of oil has soared, suddenly shale oil
becomes more attractive. Countries that have significant reserves
of oil shale include China, Brazil, Russia and, of course, the United
States. Of the 48 contiguous states in North America, almost all
have some reserves of oil shale.
Estimates of global reserves range between 2.8 and 3.3trn bar-
rels. The U.S. Energy Information Administration (EIA) estimates
that global shale gas reserves - that is technically recoverable but
not proven reserves – amount to 1400trn cubic feet (tcf) in China,
1150 tcf in the USA, 790 tcf in Argentina, 760 tcf in Mexico and
under 500 tcf in both South Africa and Australia. To put it into per-
spective, 1000 tcf equates to approximately 166bn barrels of oil.
Shale gas is found in shale ‘plays’ which are shale formations
containing significant accumulations of natural gas and which
share similar geologic and geographic properties. A decade of pro-
duction has come from the Barnett Shale play in Texas. Experience
and information gained from developing the Barnett Shale have im-
proved the efficiency of shale gas development around the country.
Another important play is the Marcellus Shale in the eastern
United States. Surveyors and geologists identify suitable well lo-
cations in areas with potential for economical gas production by
using both surface-level observation techniques and computer-
generated maps of the subsurface.
Two major drilling techniques are used to produce shale gas.
Horizontal drilling is used to provide greater access to the gas
trapped deep in the producing formation. First, a vertical well is
drilled to the targeted rock formation. At the desired depth, the drill
bit is turned to bore a well that stretches through the reservoir hori-
zontally, exposing the well to more of the producing shale.
Hydraulic fracturing (commonly called ‘fracking’ or ‘hydrof-
racking’) is a technique in which water, chemicals, and sand are
pumped into the well to unlock the hydrocarbons trapped in shale
formations by opening cracks in the rock and allowing natural gas
to flow from the shale into the well. When used in conjunction
with horizontal drilling, hydraulic fracturing enables gas producers
to extract shale gas at reasonable cost. Without these techniques,
natural gas does not flow to the well and commercial quantities
could not be produced from shale.
KKr investsKohlberg Kravis Roberts & Co. L.P. (together with its affiliates, an-
nounced recently that KKR has entered into a definitive agreement
to acquire certain Barnett Shale properties from Carrizo Oil & Gas,
Inc. for $104m. The transaction, which was expected to close in
mid-May, is being made through KKR Natural Resources. The KKR
partnership with Premier Natural Resources intends to pursue in-
vestments in North American oil and gas properties.
Located in north-central Texas and producing out of the Barnett
Shale formation, the assets contain 122.4 bcfe of total net proved
reserves (based on a third party estimate) and comprise 75 gross
(58.5 net) wells currently producing at a gross rate of 15.7 mmcfe/d
(8.3 mmcfe/d net).
easier to carry than a gallon of petrol
China has spent tens of billions of dollars buying into energy resources from africa to latin america
May/June 2011 asiamaritime 9
amcommoditiesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
“With their significant proved developed producing reserve
component in a reservoir we know well through our current op-
erations in the region, the assets are a great fit for our KKR Natural
Resources platform. We are pleased to add these assets to our
oil and gas portfolio and remain excited about the opportunity
to grow the KNR platform through the acquisition of additional
oil and gas properties in North America,” said Jonathan Smidt, a
member at KKR and a senior member of KKR’s energy and infra-
structure business.
The EnvironmentNatural gas is cleaner burning than coal or oil. The combustion
of natural gas emits significantly lower levels of carbon dioxide
(CO2), nitrogen oxides, and sulphur dioxide than does the com-
bustion of coal or oil. When used in efficient combined-cycle
power plants, natural gas combustion can emit less than half as
much CO2 as coal combustion, per unit of electricity output.
However, there are some potential environmental concerns
that are also associated with the production of shale gas. The frac-
turing of wells requires large amounts of water. In some areas of
the country, significant use of water for shale gas production may
affect the availability of water for other uses, and can affect aquatic
habitats.
China – biggest producerChina has spent tens of billions of dollars buying into energy re-
sources from Africa to Latin America to slake the thirst for fuel from
its growing industry and burgeoning cities. But China may have
more energy reources under its own soil than policy makers in the
world’s second-largest economy ever dared imagine.
Just over a year ago, Beijing awakened to a technology revolu-
tion that has unlocked massive reserves of gas trapped within shale
rock formations in the United States.
Once deemed too costly to extract, shale gas has turned
around US dependence on foreign gas imports. Just a few years
ago, the United States was building scores of expensive facilities to
import LNG, looking at long-term demand forecasts and wonder-
ing which countries would supply the huge volume of imports it
needed. Instead, the United States is turning import facilities into
export terminals, because its shale gas reserves are estimated to
be big enough to meet domestic demand for 30 years. This is an
American dream that China wants to emulate.
“America’s shale gas production alone has exceeded that of
total Chinese gas output. That gives us a lot of confidence,” said
Zhang Dawei, deputy director of the Strategic Research Center for
Oil and Gas in the Ministry of Land and Resources.
China’s confidence has been bolstered by a new report of its
estimated reserves of shale gas, which shows them to be, by far, the
largest in the world.
China’s imminent shale rush comes at a critical point. It will
soon overtake the United States as the world’s top energy user
and is already the world’s biggest coal burner. China also pumps
more carbon dioxide into the atmosphere than any other coun-
try. Beijing’s bureaucrats thus face a daunting challenge: how to
clean up its skies while meeting the world’s fastest growing en-
ergy demand.
Natural gas burns more cleanly than other fossil fuels and
installing gas-fired power generation is cheaper and easier than
building nuclear plants. The problem is China cannot meet its ris-
ing demand for gas with its limited reserves of conventional gas.
It faces the prospect of becoming as dependent on international
markets for gas as it is for oil, where China is the world’s second-
largest importer. Shale gas may not be as clean as advertised, ac-
cording to a study released recently by Cornell University in New
York. This study argues that significant amounts of methane escape
into the atmosphere during production in wells and distribution in
pipelines.
PetroChinaPetroChina, the world’s second-most valuable energy company,
announced in February it would buy a $5.4bn stake in Calgary-
based Encana Corp’s shale gas assets. Analysts say PetroChina paid
a large premium for that deal. But a CNPC executive said it was all
about gaining expertise for shale.
“We don’t care much about whether the market believes it’s a
good or bad price. The top priority is gaining access to a resource
and mature technology,” he said. “Price is only a secondary con-
sideration.” ]
Is this going to save the environment?
China’s imminent shale rush comes at a critical point. It will soon overtake the United States as the world’s top energy user and is already the world’s biggest coal burner
amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Maersk’s declaration that it’s out to change container shipping for the better has met with mixed responses
The Maersk Challenge
In case you missed it the Steve Jobs-like appearance of Maersk
Line chief executive Elvind Kolding at the TOC Europe conference
in June had all the razzamatazz we have come to expect from Ap-
ple, including the drip-drip effect of the pre-publicity. Full marks to
Maersk for taking a leaf out of Apple’s marketing handbook.
But did Maersk match up to Apple’s ability to innovate? Mr
Kolding’s chief propositions for the “New Normal’ can be summed
up as:
1, Improve punctuality
2, Simplify the shipping process and make more transparent
(“Booking cargo should be as easy as buying an airline ticket
online”)
3, Shift from price to customer service
4, collaborate with customers
5, Lower more transparent carbon footprint
Get me to the port on timeOn the matter of punctuality Maersk claims to deliver around 80%
of its cargoes on time. On this point the findings of Drewry Ship-
ping Consultants begs to differ, stating that during the first quarter
of 2011, the world’s leading shipping line actually called on sched-
ule just 66.4% of the time.
By contrast rival liner operator Mitsui OSK Line claimed to have
achieved 90% reliability on its Asia – US West Coast service in
the same quarter and a 69% on-time service on the Asia – US East
Coast route, based on an arrival time within 24 hours of the original
schedule. But it’s a sure bet that Drewry is applying a more stringent
measure to on-time arrivals as its recent research awarded CSAV the
crown of most reliable deep-sea containers carrier after the shipping
line managed punctual delivery levels of 69.1%.
According to Drewry the number of vessels across the top 20
largest carriers arriving at port on time was a mere 51% from Janu-
ary to end-March 2011. On this basis the industry has a huge hill to
climb to reach target number one.
Clearly, all participants are using different methods to calculate
punctuality. Singapore’s APL claims that on its transpacific services
95% of its vessels arrived on time in 2010, within four hours of their
scheduled arrival. The editor of the Drewry report Simon Heaney
points out that his analysis focuses on services across multi-trades
rather than picking on specific routes. But such large disparities be-
tween calculations leave some space for error.
And frankly, shippers are skeptical. In a response published by
Shippers’ Voice, the website of the Global Shippers’ Forum, entitled
“Shippers’ Voice applauds Maersk-inspired revolution,” the subse-
quent article did nothing of the sort.
Source: Drewry Maritime Research
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
2Q071Q07 3Q07 4Q07
2Q081Q08 3Q08 4Q08 2Q091Q09 3Q09 4Q09 2Q101Q10 1Q1140%
45%
50%
55%
60%
65%
70%
75%
3Q10 4Q10
Note: Freight rates are US$ per 40ft container, which are updated bi-monthly and have then been averaged for each quarter.
Drewry global container freight rate indexOn-time % (right axis)
container service reliability and freight rate
10 asiamaritime May/June 2011
amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Same old storyYes, the writer liked that the fact that Mr Kolding and his company
were prepared to stick their collective heads over the parapet and
own up to shortcomings. But in the words of Shippers’ Voice: “What
Maersk said was nothing new: shippers and their representatives
have been saying such things for many years.” The article went
on to conclude that unless Maersk and other liner companies are
prepared to follow through on the promise they can expect harsh
criticism.
According to the Hong Kong Shippers’ Council, lines such as
Maersk are going to have a hard time if they are to achieve punctu-
ality without compromising on environmental promises. Executive
director Sunny Ho says: “Slow steaming has led to stretched deliv-
ery schedules and a decline in service. Shipowners are not prepared
to guarantee the reliability of their schedules.”
Mr Ho says the lack of reliability has become particularly criti-
cal as shippers’ desire to reduce inventory levels due to uncertain
market conditions means the need for reliable delivery schedules
is higher than ever. “Shippers need to respond to the market much
faster,” he says. “This has resulted in some cargoes being transferred
to air services.”
It is Mr Ho’s reference to an uncertain market that implicitly ac-
knowledges one of the most serious problems faced by liner com-
panies in delivering on time, i.e. non-arrival of contracted cargo.
According to Mr Kolding this can account for as much as 30% of
contracted volumes. Mr Ho was not prepared to accept such a high
level of non-arrivals but did concede that under current market
conditions shortage of cargo could be a factor. “The market is very
fragile and there are a lot of factors affecting cargo flow to the ex-
tent that some shippers may delay cargoes or even cancel.”
In order to attract cargo that is available reliability is the key
even in the face of higher prices. One Asian liner company said
in confidence that it was able to command a premium for on-time
predictability. A typical scenario appears to be that a shipper will
use air services for a small proportion of its shipment, a much larger
proportion will be assigned to a reliable liner company and the rest
would be handed over to the spot market, thus the shipper is com-
manding a three-tier, three price marine component within its over-
all supply chain.
Ultimately, it isn’t easy to see where container shipping can up
the ante. Information technology has been put forward as a pana-
cea by Maersk and others but Drewry’s Mr Heaney thinks that offers
such as IT-delivered track and trace loading and delivery notifica-
tion should be a given rather than a lure for more business.
Instead he suggests that Maersk has got it right to the extent that
through the use of its own terminal network it can gain through
priority booking. Finally he cites schedules as an area where some
reality could be injected. “It would appear that some published
schedules are over-optimistic,” he concludes.
The small shipper’s sTory of ConfusionCoinCidentally or not, in the aftermath of Maersk’s
launching of its “New Normal” the maritime consultancy firm
SeaIntel Maritime Analysis set out to investigate how a small
customer would get on when trying to get a quote from the
big carriers and NVOCCs. It turned out to be a demoralising
experience.
Under the guise of a new cargo owner (a small trading
company) trying to ship two standard feu from Hong Kong to
Los Angeles and from Hong Kong to Rotterdam, the analyst
sought quotes from 33 carriers and NVOCCs on the Pacific
and 27 carriers and NVOCCs on Asia-Europe. Out of 60 re-
quests, 40 recipients did not provide a quote.
In the battle to get its boxes abroad the invented trader
encountered the following:
• When a carrier or NVOCC provides a quote for the same
product, but from two different offices, the quotes are not
identical;
• Requesting a quote through online web forms often re-
sults in no feedback at all;
• Using rate lookup on websites was either not possible or
provided rates far in excess of the quotes received through
email;
• The quote request was for 2 x 40’ dry containers. No price
negotiations were entered into. Yet the sharpest rates were
significantly below the SCFI average spot rates;
Where quotes were eventually received SeaIntel’s imaginary
new customer was confronted with a baffling array of rarely
explained acronyms, the worse example being the following:
“Collect only, CY/CY incl BAF/CAF/CP plus ISPS/THC/DF/
ENS/CK/HQ SE USD 100/SZ/AGS/OWS/WS (RULED) /Others
if any collect only, From BDCGX CFS/CY incl BAF/CAF/POL
THC/HQ SE/ENS plus ISPS/POD THC/DF/CK/SZ/AGS/OWS/
WS(RULED)/CG(RULED)others if any.”
Would this go some way to explaining those missing car-
goes? For more details contact Lars Jensen at seaintel.com.
may/June 2011 asiamaritime 11
amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
12 asiamaritime May/June 2011
Slow Steaming waS supposed to create a warm, fuzzy feel-
ing among the liner shipping industry by cutting both emissions of
carbon dioxide and other marine pollutants and the liners rapidly
escalating fuel bills.
But transpacific shippers have been left feeling anything but
warm and fuzzy claiming that the box lines have been keeping the
cost savings to themselves while shippers face higher inventory
costs and possible equipment shortages.
The divergent views on slow steaming emerged following an
assessment by the United States Federal Maritime Commission on
the issue and whether cost and other benefits had been passed on
to shippers.
The FMC is still carrying out an assessment of the 36 responses
to its inquiry following the April 5 deadline submission, but it is
clear the liner companies and shippers have differing views about
the issue. Among the comments, seven came from exporters and
shipper bodies, while 22 were from container lines and carrier
groups.
While shipping lines reiterated the benefits of slow steaming
and its impact on their bottom line and the environment, they were
more circumspect about making public the details. So while the
information was given to the commission, lines insisted that when
documents were made public, details such as how many sail-
ings involved slow steaming or how much money was saved was
blacked out or deleted.
There was no such reluctance on the part of shippers, who
while lauding the environmental benefits of slow steaming, were
also critical of the way shipping lines introduced the measure with-
out prior warning. Exporters and importers pointed out they were
still largely unaware of services or loops that use slow steaming
and those that operate at regular service speeds.
The response by Jonathan Gold, a vice-president of supply
chain and customs policy at the National Retail Federation was
typical of most of the responses by shippers.
He pointed out that NRF members supported the environmen-
tal benefits from slow steaming, but added: “Members have not
realised any benefits from slow steaming. Major benefits are only
realised by the ocean carrier.”
Echoing the views of several shippers and other trade repre-
sentatives, Mr Gold added: “As a result of the practice, we have
seen supply chains extended by several days, which adds costs
back into the system for the retailer. The practice results in higher
Shippers are up in arms about the veil liner companies have thrown over their slow steaming savings
Slow SteaMing SMokeScreen
inventory carrying costs for retailers and a decrease in the speed to
market, which is critical for a retailer’s success.”
Shipping lines operated services both at reduced and normal
speeds, but there was “no difference in rates offered by carriers for
slow steaming versus regular steaming,” he said.
Becton, Dickinson and Co, a medical supplies firm, said slow
steaming added an extra two to five days in sailing time between
ports. But it had been offered no choice, either by shipping lines or
by freight forwarders, on whether cargo was moved on ships oper-
ating at normal speed or on vessels slow steaming.
Some carriers alluded to the hoary issue that if carriers did
not invest in ships then shippers would not be able to move their
goods. A variation on this theme was offered by Maersk Line,
whose representatives said fuel cost savings by sailing at a slower
speed had been eroded by higher charter rates, which had risen
from $8,000 to $28,000 per day.
“Any cost savings accrued by reduced fuel consumption has
enabled Maersk Line to sustain its service levels in many US trades.
Without such savings, Maersk Line would not be able to obtain a
sustainable return on investment,” the Danish shipping giant said.
But one official rejected such thinking, pointing out that if slow
steaming resulted in a 20% fuel saving on a particular loop, “the
shipper is correct to point out that the pre-slow-steaming bunker
formula has now been transformed into a healthy profit centre for
the carrier”.
It will be a few months before the FMC decides to take any fol-
low up action, although it is it clear there are battle lines between
carriers and shippers over slow steaming. ]
Shippers are getting steamed up about slow steaming
May/June 2011 asiamaritime 13
Supramax bulker, e r bern, is on its maiden
commercial voyage in China after being delivered to
E R Schiffahrt by Vietnam’s Hyundai Vinashin Shipyard
at the end of May.
The 56,000 dwt vessel is the eighth in the series of
11 ships ordered by the German shipowner. The ship
is also the fourth newbuilding to be delivered by Hy-
undai Vinaship Shipyard this year.
The shipyard aims to deliver 11 ships this year and
a further 16 in 2012. The Liberian flagged ship was
named by Mrs. Ngo Thi Thanh Canh, wife of Le Thanh
Quang, who is secretary of the Khanh Hoa Commu-
nist Party.
In June Hyundai Vinashin also laid the keel of the
first of two 56,000 dwt Ice Class Bulk carriers for ESL
Shipping of Finland.
Party for the Party at shiP launch
Shanghai-baSed Zhong An Shipping
has taken delivery of the Hong Kong-flagged
79,600 dwt panamax bulker King Peace from
China’s Wu Jia Zui Shipyard. But while the
ship is Chinese built, owned and crewed,
management is being undertaken by Britain’s
Graig Ship Management.
Ian Morgan, chief executive of Graig Ship
Management, says: “This is an important new
contract, because it is the first opportunity
for us as a UK ship manager to manage a
Chinese-owned, Chinese-built and Chinese-
crewed vessel.
“It makes a lot of sense, we know the ship
inside out because we helped build it, we
know bulk carriers and we know China.”
The firm said 22 of its current newbuild-
ing supervision contracts are for Chinese owners. They com-
prise 18 76,000 dwt bulkers being built at Jiangsu Rongsheng
for Minsheng Financial Leasing and four 45,000 dwt bulkers for
Shanghai Xiang An Electric Power Shipping that have been or-
dered from Chengxi Shipyard. And in a warning to established
amlaunchedamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Asian and Hong Kong-based shipmanagers, Mr Morgan said of
Graig’s management of King Peace, “We see this as a first step
to a growing business becoming a local ship manager for Chi-
nese owners.”
King in safe hands
14 asiamaritime May/June 2011
The decision by the ICS to back an international bunkers levy system has provoked widespread opposition
To levy or noT To levy
ambunkersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
When the InternatIonal Chamber of Shipping concluded
its meeting on 20 May, announcing it would back a bunker levy/
compensation fund-based mechanism as its preferred market-
based measure to reduce CO2 emissions, it’s a fair bet it wasn’t
expecting such an overwhelming backlash from so many other
industry players.
In support of the ICS decision that a levy-based system is “the
one that most shipping companies can live with in order to ensure
a level playing field and the avoidance of serious market distor-
tion”, chairman Spyros Polemis said: “The shipping industry has an
instinctive dislike of unnecessary com-
plication which will be the result of a
system based on emissions trading.
“Governments are looking for leader-
ship from the shipping industry about the
market based measures we prefer to help
reduce CO2, and to raise money for any
environmental compensation fund that
might be developed by governments.
The meeting of our member national
associations agreed on an MBM that is
levy-based. Such a system should be de-
veloped by IMO,” he added.
After years of procrastination the ICS
now finds itself fast steaming in a race
against time to establish an international
agreement on climate change within
the International Maritime Organization
before the European Union takes steps
to establish its own carbon trading emis-
sions regime. But, as if attacks from the
EU were not enough, other organizations
have also opposed the ICS initiative. No-
tably BIMCO.
While BIMCO did not reject the ICS proposal outright, at its
general meeting in Vancouver in June, members expressed fears
that taking up any market-based measures could damage the cam-
paign for the adoption of the Energy efficiency Design Index at the
IMO’s Marine Environment Protection Committee Meeting in July.
Less surprisingly, the Global Shippers’ Forum has come out
against the ICS move on grounds it would be the shippers that ulti-
mately pay for the scheme. Lloyd’s List quoted GSF secretary gen-
eral Chris Welsh who said that passing on shipping carbon costs
to their customers via a bunker levy not only removes shipowner
accountability, but also fails to reduce carbon emissions.
Mr Welsh told the newspaper the GSF would welcome and
support a voluntary shipping industry initiative to reduce the car-
bon emissions through the IMO.
“Shipowners need to introduce a rigorous scheme targeting
operational efficiencies and other measures to reduce shipping car-
bon emissions,” he added.
Meanwhile representatives of the fuels that sit at the heart of
the conflict, namely bunkers, are sitting on the fence waiting to see
which way the wind blows. The chief executive of the International
Bunker Industry Association Ian Adams
told Asia Maritime “ The IBIA decided
at its Annual Convention in Stamford,
Connecticut in September 2010, not to
take a position on the issue of climate
change and in particular, the issue of
Market Based Measures,” he said.
“Our members being drawn from
all aspects of the Bunker Industry
(Buyer, Supplier and Service) felt it was
too early for the Association to decide
either way as there is still no definitive
proposal from IMO. The Bunker Supply
industry will adapt to the conditions of
the market,” he concluded.
But if the ICS is to be believed, it
too is looking ultimately to EEDI as the
way forward. In its concluding remarks
following the May meeting the organi-
zation said: “The immediate priority
for ICS however, is to ensure that a
package of technical and operational
measures to reduce CO2 emissions,
which has been developed by the International Maritime Organi-
zation, will be adopted by the crucial meeting of the IMO Marine
Environment Protection Committee in July, as amendments to
MARPOL Annex VI.
“Most importantly this includes the Energy Efficiency Design
Index. Agreement at IMO will be vital to maintain the principle of
global rules for a global industry, which cannot be guaranteed if de-
tailed emission reduction measures are left to the high-level climate
change talks at UNFCCC, or the European Commission, which will
be the likely result if agreement is not reached by governments at
IMO this July.” ]
no smoke with-out disputes
May/June 2011 asiamaritime 15
Only price stands between China and its bid to become the world’s largest bunker centre
China bids fOr singapOre’s bunker CrOwn
ambunkersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Over the last few years China has repeatedly surpassed other
nations, particularly in terms of consumption or production be it
shipbuilding, manufacturing or the overall size of the economy.
According to many, bunkers supplies are the next frontier.
Given the huge amount of traffic going in and out of China,
it would not be surprising to see the country near the top of the
heap when it comes to bunkering. What supplied the drag up till
recently was a remnant of the command economy – a monopoly
controlled by China Marine Bunker – known as Chimbusco which
wasn’t broken until 2006.
Commenting on the evolving Chinese market for bunkers, Ian
Adams the secretary general of the International Bunker Industry
Association says, “The monopoly has been broken to a certain
extent but the licenses have been restricted to Chinese companies.
This is having a positive effect with regard to competition and
therefore, prices. As far as opportunities for “International Players”
is concerned this is currently limited to larger trading houses that
are providing a service to the ship-owners.”
Mr Adams adds, “China still needs to invest in its infrastructure
such as storage, blending facilities etc but we fully anticipate that
they will.”
As Mr Adams says, there are far fewer players than in Singa-
pore. They are made up primarily of Sinopec subsidiaries namely,
China Shipping & Sinopec Supplies, China Changjian Bunker,
Sinopec Zhejian Zhoushan. The fifth player, Hong Kong-listed
Brightoil stands out from the group because all of its customers are
international liners. It established a presence in Shenzhen in 2006.
From 2009 it expanded into Shanghai, Ningbo and Zhoushan with
plans to move into Dalian, Tianjin, Qingdao and Rizhao in the
near future.
Brightoil’s Investor Relations manager Rachel So acknowledges
that some demand is moving from Singapore to China but says that
as an important gateway and bunker procurement centre Singapore
will continue to have an important role to play. Brightoil sources
most of its bunker fuel from Venezuela, the Middle East Gulf and
Europe but because much of this fuel reaches China via Singapore,
where Brightoil conducts a lot of its international supply and bun-
kering business, the Lion state is still able to offer better prices than
its Chinese counterparts. Shanghai is currently around $20 per
tonne more expensive.
But Singapore is not sanguine about what it considers a real
threat to its current supremacy. In a recent interview with Bunker-
IBIa secretary General Ian adams
“given that scenario, shipowners would skip stopovers in singapore, which will allow them to save up to one day’s worth of steaming.”
world the chairman of the Singapore branch of IBIA and regional
manager for Asia at Integra Fuels Asia Pte, Mr Simon Neo said that
China posed the biggest threat to Asia as the price gap closes. In
just a year from March 2010 to March this year the price differen-
tial for 380 centistokes grade bunker fuel has narrowed from $39
per tonne to $22.50.
According to industry estimates around 60% of vessels navigat-
ing around Asia pick up bunkers from Singapore. But it’s a fair bet
that a large percentage of those ships are also calling at Chinese
ports.
Mr Neo envisages that in three to five years the price gap be-
tween China and Singapore would have eventually disappeared.
“When the price narrows down to marginal why should shipown-
ers take bunkers in Singapore?” he asked.
Neo told Bunkerworld, “Given that scenario, shipowners
would skip stopovers in Singapore, which will allow them to save
up to one day’s worth of steaming.
“If Shanghai or Shenzhen, for example, together takes 10m
tonnes of bunkers a year, the volumes will definitely need to be
taken from somewhere and it’s likely to be from Singapore,” he
added. ]
16 asiamaritime May/June 2011
Hong Kong based Wah Kwong Shipping acknowledges the quality of its counterparts in a battle against a poor market
WitH a little Help froM our friendS
amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Wah KWong Shipping, a leading Hong Kong-based tanker and
dry bulk owner famously changed its mind about listing in 2008
for what appeared to be solid reasons at the time. But as the market
has softened some listed tanker operators have been able to revert
to the market to help fund their operations during the lean times
that will continue to face the industry over the next few years.
However, Wah Kwong’s chief executive Tim Huxley stands by his
company’s decision.
“It was the right thing to postpone our IPO and we did not
need to do it to fund our expansion - that went ahead in any case,”
he says.
“There are certainly benefits to being a listed company, but
also some disadvantages. Some listed companies have indeed
raised money in what would otherwise have been difficult times to
help them through the downturn and others used the availability
of finance to secure a war chest, which will be quite useful as op-
portunities arise. Our business model, and our conservative nature,
means that we are probably better suited to being private right
now,” he adds.
The Wah Kwong business model has so far managed to eschew
the fickle and frequently ill-informed market investor by virtue of
its ability to tap into important players in the world’s largest market
for raw materials – China. It is not simply a matter of proximity.
Rather, it is the end product of backing the right horse nearly a life-
time ago and nurturing it ever since.
Mr Huxley says, “Wah Kwong has extremely strong Chinese
roots - we are in many respects a Chinese company. Relation-
ships are built over years and have to be mutually benefi-
cial. Yes, we do have an enviable position in this respect
and it certainly did not happen overnight. The com-
pany’s chairman George Chao has been very loyal to
China in many areas and has worked hard to establish
the company there. Wah Kwong is in China for the
long haul and not just because it is the current fla-
vour of the month.”
Until recently, such strong ties did not
stretch to China’s shipbuilders. Previously Ja-
pan’s shipyards benefited because of a merited
reputation for excellence and Wah Kwong’s
good relations with the nation arising out of the
company’s dependence upon Japanese charter-
ers when it was established in 1952. But costs
and a rise in the ability of Chinese shipbuilders
have prompted a rethink in the last few years.
“We now have three VLCCs being built there,” says Mr Huxley.
“Chinese expertise in tankers has come on in leaps and bounds
in recent years and with Korea moving to high end products like
offshore, LNG and the new generation of container ships, it’s no
surprise that people are turning to China for conventional tankers,
which means the products are getting more widely accepted.
“In 2003, when we contracted our current pair of VLCCs, China
was not such a prominent VLCC builder and Korea was very com-
petitive. Things have moved on and major owners don’t have reser-
vations about building tankers in China and major charterers have
come to accept them,” he adds.
As Wah Kwong has stuck by its friends over the years so it has
abided by a business strategy that goes back to its origins – witness
its declaration on the homepage of its website – “Our fleet grew to
meet the growing post war industrial growth in Japan. In those days
our ships were pre-fixed on long term time charters primarily to
Japanese charterers with financing secured on the back of the time
charters. The use of time charters reduced the exposure to market
volatility, and is a chartering methodology that the Group maintains
to this day.”
As recently as 2010, Mr Huxley was espousing the same mes-
sage on news channel CNN and illustrates how the approach still
works now: “In the first five years, you would hope to break the
back of depreciation and generate some decent returns,” he says.
“It is always one of the great lotteries of shipping as to what the
market is going to be like when you come off a long charter and
the market is the market. We recently had a VLCC come free after
a lengthy charter and we re-fixed her for a shorter period at
what is still a profitable level. The real problem comes if
you buy a ship at a sky-high price against a charter at a
very high rate and then the charterer defaults. That’s why
the quality of your counter-party is so crucial.”
Even in the worst of times, Wah Kwong has found that
“reliable counterparties” have seen it through.
“Tankers have not been subjected to the same level of
default as the dry cargo market and no, we haven’t had
any issues on that front,” he says.
“It certainly becomes tougher when you are in
a bad market and your charterer is losing money
- you have to work even harder to ensure there
Wah Kwon Shipping chief executive Tim huxley.
May/June 2011 asiamaritime 17
amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
are absolutely no excuses for you to be put off-hire. Fortunately,
our charterers are all with long term partners and we have ridden
the highs and lows together.”
It is perhaps those deep ties with Chinese mainland charters
that keeps Wah Kwong firmly on Hong Kong soil as its European
peers have been increasingly lured to Singapore.
“Singapore has the refineries and a lot of oil companies have
long had their regional base there. Also, Singapore has been a ma-
jor ship repair centre and tankers do actually go past the port, so
there are plenty of logistical reasons to run a tanker operation from
there.
“However, Hong Kong is better located geographically for
China and North Asia and that is one of the reasons we have a
large number of Chinese shipping companies moving here, com-
bined with the fact that we are still the leaders in shipping finance
and have a recognised legal framework. For Wah Kwong, tankers
are just part of our business and none of our customers are in Sin-
gapore. Hong Kong is our home and it is inconceivable that we
would consider moving,” pronounces Mr Huxley.
Perhaps the only area in which Mr Huxley has moderated his
Tanker shipping is in a spin
stance in the face of an increasingly difficult market is that of mar-
ket consolidation, which he dismissed in 2010.
“I think there will be some consolidation in the tanker sec-
tor,” he concedes. “And the latest takeover of Saga by Double
Hull Tankers proves it is alive and well. I can’t see a prolonged
shipping downturn happening without John Fredriksen picking
up a few choice companies as they come available either. Cash
rich companies will always be there for good deals- whether it is
taking over a company or buying a block of ships as in the case
of the sale of the Cido tankers. It all depends on what is the best
value,” he says.
Tanker operators generally might be having a bad time of it
but a passing mention of business at Wah Kwong at the time of
this interview might seem to belie that fact.
“We had a VLCC come free last month and we fixed her for
eighteen months at a profitable rate. We have another VLCC com-
ing free at the end of 2012, so it’s too early to start thinking about
her, but she was acquired at a low price and has been gainfully
employed all her life, so there is a fair bit of cash in the ship,”
Concludes Mr Huxley. ]
18 asiamaritime May/June 2011
amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
With attention focused on other ship classes tankers may avoid a debacle in the medium term
RestRaint key to eventual RecoveRy
As with All other ship types tankers have not had an easy ride
of it since the heady days of 2008. But it is something of a myth
that 2010 was a disaster for the sector. Sure, the dying months
of that year saw rates freight rates at dangerously low levels. But
taking the year as a whole, where average time charter equivalent
very large crude carrier earnings were around $38,000 per day,
this was not only sustainable, but also higher than 2009 levels.
In the medium term the outlook for tankers might not be
described as rosy but it’s not blue either. The related reason
for optimism is that after an orgy of ordering newbuildings in
earlier years it is apparent that some self- restraint has entered the
market.
Clarksons data shows that 425 tankers were ordered in 2008,
131 further contracts were signed in 2009, and a further 233 were
inked in 2010. So, with just 28 oil tankers ordered so far this year
it is clear owners are finally holding back. Of course, a further
reason is that with the upswing in orders for containerships and
liquefied natural gas tankers, not to mention the increasing reli-
ance among the top three Korean shipbuilders on offshore plant,
there are few yards gagging for tanker orders.
All this will be of little comfort to owners for the rest of this
year, as slippage will ensure that ships ordered in 2008 and
2009 will continue to enter the market in ever greater numbers.
The demand side of the equation is relatively perky as the pro-
jection for crude tanker deadweight demand growth in full year
2011 rose to 3.2% in May. This is largely as a result of increased
demand from emerging economies and a real hope that Japan’s
demand for crude will increase at least 1% over the year to touch
4.5m bpd.
It is also forecast that the beleaguered nation will up its de-
mand for gasoil and residual fuel oil as the reconstruction of the
northeast of the country gains pace. This might not appear to add
up to a major fillip but it should not be forgotten that predictions
for Japan’s crude oil demand prior to the tragic earthquake was for
a 3% fall.
Unfortunately, the increase in demand for crude and product
cargoes from the emerging economies will not be strong enough
this year to counter the new tonnage hitting the water for the first
time.
According to Clarksons the sector is in for a deluge. In its mar-
ket outlook in May the broker said: “…higher import levels will
almost certainly be outstripped by the strongest annual growth
in the overall tanker fleet since the mid-1970s. The total active
crude fleet is projected to increase by 7.4% (22.6m dwt) with the
products fleet on track to grow at an even more rapid rate of 7.7%
(8.2m dwt).
“The overall projected growth rate has risen since last month
[April]: with higher than expected deliveries of crude tankers in
the year to date, the overall tanker fleet is set to increase by 7.5%
year-on-year,” Clarksons said.
Despite the bleak picture, practitioners as opposed to ana-
lysts see some reprieve by 2012. In June, as part of a Capital Link
Shipping tanker webinar, Tsakos Energy Navigation chief execu-
tive George Saraglou maintained that the plunge in orders so far
this year would lead to an improvement in the market as early as
2012.
Teekay Tankers chief executive Bruce Chan agreed that the
supply side was going to be better in 2012 onward and conclud-
ed that it was a just a matter of surviving the onslaught this year.
With few options for improving income the emphasis will
have to be on saving for the rest of the year. Slow steaming has
become as important for tankers as boxships, despite suffering
more resistance from charterers. Even so it is likely there will be
an increasing amount of slow boats to China and elsewhere for
the foreseeable future. ]
slow boat to China
May/June 2011 asiamaritime 19
All JApAn’s top shipping operators finished fiscal 2010 on
March 31, with positive financial results but with a sting in the
tail of the final quarter, and that was without taking on the effect
of the earthquake that hit the country just 20 days earlier.
Mitsui OSK Lines recorded a $700m profit, a quadrupled
increase on its dire results in fiscal 2009, but the fourth quarter
indicated turbulent waters, falling by Y2.2bn ($27.4m), or 78%
compared to the previous quarter. Looking to the rest of the year
MOL accurately predicted a slump in the car carrier trade due to
post-earthquake trauma at the automakers’ sites.
The company was perhaps less on the ball when it suggested
only fuel prices would provide a drag on container fortunes for
the rest of the year as freight rates continue to slide on the two
main trade lanes.
With dry bulk business still in the doldrums, MOL expects
company-wide net income to drop 48.5% to Y30bn by the end of
this fiscal year.
Kawasaki Kishen Kaisha also managed a respectable $368m
net profit for fiscal 2010. But K Line expects that figure to be
slashed to $25m by the end of fiscal 2011, citing high fuel prices
and oversupply in the bulk carrier sector.
Finally, Nippon Yusen Kaisha, the largest of Japan’s operators,
recorded net income of Y78.5bn compared with a Y17.4bn loss in
fiscal 2009. In the light of the impact of the natural disaster and a
downturn in market conditions NYK is predicting net income of
just Y34bn by end of March 2012.
Conservative goodNone of the lines can be said to be in a comfortable position but
they have born up better than many other international operators
so far. Analyst Moody’s stated in June that Japan’s elite trio had
been affected less than other shipping companies because of their
strong relationships with customers, their diverse fleets and a pre-
ponderance of long-term contracts.
It has always been the way. And despite the braying of inter-
national shipowners and speculators when shipping cycles are at
their peak, Japanese shipping operators have been happy to turn
a more modest profit more consistently based on the attributes
cited above.
Conservative badHowever, such conservatism has not worked for the lower profile
Sticking to tried and trusted operational strategies, Japan’s top three operators will weather the storm but can the same be said for the country’s shipowners?
ConServative approaCh workS for SoMe
Japanese shipowners in recent years, which have typically placed
heavy reliance on long-term charters with the much larger opera-
tors. For some years now the shipowners have found themselves
penalised by yen-denominated loans for newbuildings against
earnings from charterers in US dollars that are worth less and less
on an almost daily basis. All this is compounded by a 35% cor-
porate tax rate.
In the good times strong relationships between the shipown-
ers and the charters and the local banks worked to everybody’s
benefit. Now the shipowners can no longer avail themselves of
cheap 100% loans and the charterers are driving harder bargains.
After years of having their backs to the wall, Japanese ship-
owners are showing signs of looking beyond the Japan Sea to re-
cover their fortunes. A recent report in Lloyd’s List described ship-
owners around Shikuko Island as reaching a tipping point where
many owners are considering setting up overseas in tax-friendly
environments such as Singapore or Hong Kong.
But this Asia Maritime writer exposed the Japanese ship-
owner’s dilemma more than three years ago when the finance
conference organizer Marine Money made its first call at Imabari
in 2008. At the time shipowners were bewailing the same adverse
circumstances and low charter rates verses high operation costs.
There are indications that Japanese shipowners are looking
cautiously at foreign shipmanagers. Others are actively exploring
moves to Singapore. But the majority are prepared to stick it out
in the hope for better times. ]
amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
20 asiamaritime May/June 2011
amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamammamamamamamamamamamamamamamam
As is well known, CO2 emissions from international
shipping have been rapidly increasing along with the
growth of global seaborne trade. It reached around
870m tonnes of CO2 in 2007. According to the latest
estimation by the IMO, CO2 emissions from inter-
national shipping would increase, without effective
measures, three times the current level by 2050. Ur-
gent action in the maritime field is needed to improve
energy efficiency of ships and consequently to reduce
their CO2 emissions.
Marine Environment Protection Committee (MEPC)
of the IMO has been discussing the measures for CO2
emissions reduction from international shipping, and
developed the draft amendments to MARPOL Annex
VI. The draft amendments to MARPOL Annex VI cover
mandatory application of the Energy Efficiency Design
Index (EEDI) for new ships and providing the SEEMP
for both new and existing ships.
The amendments to MARPOL Annex VI would re-
quire ships of 400 gt and above to calculate the EEDI
values (attained EEDI) and require ships of certain size
Notes oN possible adoptioN of aM eNdMeNts to MaRpol aNNex Vi at MepC 62shinichiro otsubo, director for international regulations at the safety standards division of the maritime bureau at Japan’s Ministry of land, infrastructure, transport and tourism, is a leading advocate of eedi. in an exclusive article for asia Maritime, he dismisses the arguments of the naysayers
Table1 Reduction factors (in percentage) for the eeDi relative to the eeDi Reference line
* Reduction factor to be linearly interpolated between the two values dependent upon vessel size. The lower value of the reduction factor is to be applied to the smaller ship size.
ship Type size
Phase 0
[1 Jan 2013
–
31 Dec 2014]
Phase 1
[1 Jan 2015
–
31 Dec 2019]
Phase 2
[1 Jan 2020
–
31 Dec 2024]
Phase 3
[1 Jan 2025
and
onwards]
Bulk Carrier
20,000 DWT
and above0 10 20 30
10,000 –
20,000 DWTn/a 0-10* 0-20* 0-30*
Tanker
20,000 DWT
and above0 10 20 30
4,000 –
20,000 DWTn/a 0-10* 0-20* 0-30*
Figure 1 Concept of the EEDI requirement
Figure 1 Concept of the eeDi requirement
May/June 2011 asiamaritime 21
amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamammamamamamamamamamamamamamamam
Notes oN possible adoptioN of aM eNdMeNts to MaRpol aNNex Vi at MepC 62
and above to satisfy the required EEDI which is determined by mul-
tiplying the reference line value (an average EEDI value of existing
ships according on the size and ship type) by the reduction factor.
The reduction factors are to become more stringent step by step.
Table 1 shows the reduction factors of bulk carriers and tankers,
which depend on the size of ship and the time of building contract,
and Figure 1 shows the concept of the EEDI requirement.
The EEDI can be categorized as one type of technical perform-
ance standards for new ships, and this type of regulation (technical
performance standards for new ships) has been widely used in the
field of safety and environment protection by IMO. Mandatory
technical performance standards for ships means setting certain
performance criteria in the form of regulations that ships shall
comply with. The mandatory EEDI requirement is no different
from other regulations developed by IMO, in the sense that certain
performance standards are set and that ships shall “do something
technically” in order to satisfy such standards. There are many
options to satisfy the required EEDI, and shipping companies and
shipbuilders can decide their own optimum technical solution for
their newbuilds. Simply put, a “low-tech solution (design speed
reduction)” and “application of new technologies” are available to
improve the EEDI.
The first type of solution (design speed reduction) is effective
because the EEDI value is largely influenced by the ship speed,
which appears in the denominator of EEDI formula, and the neces-
sary power to enable such speed, which appears in the numerator
of EEDI formula. The value of EEDI can be improved considerably
by the reduction of design speed, since the necessary power is re-
duced by the cubic ratio of speed reduction.
As regards the second type of solution (application of new
technologies), there are numerous combinations of available and
effective technologies. Normally, shipping companies and ship-
builders would discuss, during the early design and newbuilding
negotiation stage, the selection of the technologies that would be
applied in their new ships. The initial cost increase and the cost
saving through the reduced fuel consumption would be the prima-
ry focus in the design stage; a possible investment criteria would
be that the initial costs for newly applied technologies would not
exceed the benefits of fuel saving (e.g., present value of saved fuel
costs for several years). Table 2 shows the example of estimation
for EEDI improvement potential. In fact, ships can satisfy the re-
quirement of EEDI in cost-effective manner, without counting on
the first option, i.e., the reduction in the ship speed and installed
engine power.
Optimum solutions, which may be the combination of the first
and the second solution, varies according to each ship. Shipowner,
operator and shipbuilder would discuss together and determine the
optimum solution to satisfy the EEDI requirement. Such discussion
would not prefix the speed reduction option as the sole solution;
if the speed reduction causes longer lead-time, and if the ship is to
carry time-sensitive cargoes, both shipowner and operator would
hesitate to choose this option. However, if the lead time can be
maintained because longer ocean voyage time is compensated by
more efficient port services by the use of, e.g., the port entry reser-
vation system which would reduce the offshore waiting time for in-
coming ships. In such a case, the speed reduction would not affect
the quality of shipping service, and the stakeholders may choose
such option.
The draft amendments to MARPOL Annex VI do not prejudge
specific measures to satisfy the EEDI requirement. However, there
are a few critics who highlight that the mandatory EEDI require-
ment will result in a drastic reduction in installed power, in order
to comply with the required EEDI.
As mentioned above, speed reduction is one of effective meas-
ures. However, optimum speed for newly built ships would be de-
cided by consultation among shipowner, operator and shipbuilder
at design stage, taking into account the envisioned operational
pattern and business model of each particular ship. Shipowner,
operator and shipbuilder are not so stupid that they plan to build
a ship whose speed cannot maintain the quality of service and put
the ship at risk of safety.
In addition, as a safeguard for potential risk that the ship
with excessively low speed is designed and constructed, the draft
amendments to MARPOL Annex VI includes a regulation: “For
each ship to which this regulation applies, the installed propulsion
power shall not be less than the propulsion power needed to main-
tain the manoeuvrability of the ship under adverse conditions, as
defined in the guidelines to be developed by the IMO.” The draft
guidelines will be considered at MEPC 62 and these guidelines will
be further developed through input from all concerned parties.
It is a primitive mathematics that the value of EEDI is improved
by speed reduction. All qualified naval architects know it. How-
ever, whether they would use the speed reduction as the option in
their newbuilds is a different matter. There is nothing wrong, as far
as the global environment is concerned, in that the ship would run
with slower speed with smaller power, as such ship, not only being
certified as having lower EEDI value, would burn less fuel and emit
less CO2. However, any naval architects know that simply slower
ships would not be well received by ship owners/operators. That
is why ship designers and naval architects all over the world, while
being aware of the existence of the easy-way-out (speed reduction),
have been seeking the optimal design using various technologies,
without lowering the service quality and profit potential of ships,
which would have a lower value of EEDI and at the same time re-
duce the fuel consumption in operation.
Maritime industries have been using the EEDI in trials and on
22 asiamaritime May/June 2011
Component of resis-
tance and propulsion New technologies
Improvement effect
of each
technology(%)
Expected year
the improvement
reaches the
maximum
2013-2017 2018-2022 2023-2027
Reduction of air and
wind resistance
Optimization of
superstructure 30 2019 O
Reduction of friction
resistance
Low friction coating 5 2012 O
Air lubrication method 10 2020 O O
Stern duct 2 2013 O O
Improvement of
propeller efficiency
CRP 8 2013 O O O
Sprit stern 4 2024 O
Improvement of
propulsion efficiency
by shape of stern
Stern duct 4 2013 O O O
Sprit stern - - O
Post-swirl system 4 2013 O
Waste heat recovery O O O
Present 2013-2017 2018-2022 2023-2027
Improvement rate of FOCME (%) - 14.5% 25.5% 36.4%
FOCME(t) for 8 years 95,127 81,315 70,853 60,521
Present Value of fuel cost reduction for 8 years M$ - 5.05 8.87 12.65
amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamammamamamamamamamamamamamamamam
Table 2 Estimation for EEDI improvement potential by the application of the energy-saving technologies(Dry cargo carrier (77000DWT))
a voluntary basis for several years. Some shipping companies have
already published a concept of low-EEDI ships whose energy ef-
ficiency is considerably improved. Some shipbuilders also have
completed the conceptual design of ships that will contribute to
the economies of shipowner and operator. Furthermore, some
classification societies, including class NK, DNV and GL have
started issuing the EEDI certifications for trial.
The EEDI concept was developed four years ago, and since
then has been fine-tuned and tested by various stakeholders includ-
ing the industries and the maritime administrations. As a cumula-
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tive result of the international efforts of more than four years, the
amendments to MARPOL Annex VI will be discussed for adoption
at MEPC 62 held from 11 to 15 July 2011 at IMO headquarter.
The draft amendments to MARPOL Annex VI have been care-
fully developed to improve the energy efficiency of ships without
imposing an excessive burden on the maritime industry. Japan
believes that adoption of the draft amendments to MARPOL Annex
VI will contribute to the economy of shipowners and operators and
enable the international shipping sector to achieve CO2 emissions
reduction in an effective manner. ]
May/June 2011 asiamaritime 23
amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamammamamamamamamamamamamamamamam
Table 2 Estimation for EEDI improvement potential by the application of the energy-saving technologies(Dry cargo carrier (77000DWT))
ThE marITImE InDusTry is constantly changing, and class soci-
eties are being called upon to play an ever-greater role in areas that
extend beyond the realm of traditional ship classification. With the
change in ClassNK’s organizational status to a generally incorpo-
rated foundation, it has gained a far greater range of freedoms with
regards to its future development, and can establish new subsidiary
companies. It will now be easier for the organization to develop
new services to address the changing needs of the maritime indus-
try, while also maintaining its status as an independent and non-
profit organization.
ClassNK chairman and president Noboru Ueda explains, “For
example, there is great demand for consulting services related to
new conventions such as the Maritime Labour Convention or the
ship recycling convention, and given our vast range of experience
in these areas classification societies are often the organizations
that are most capable of providing such services.
“Nevertheless, serving as both a consultant and certification
body has always been something of a grey area. Thanks to the
change in status, we can now establish separate entities to provide
these kinds of services, thus directly addressing the growing needs
of industry, while also creating greater transparency,” he says.
Under the new structure, subsidiaries can make a profit. But in
order to optimise ClassNK operations, any excess funds generated
will be returned from subsidiaries to the core foundation.
“However, our goal is to maximize safety and not profits, and
as an independent, non-profit organization, such funds would be
used to further our goals of ensuring the safety of life and property
at sea, and protecting the marine environment,” says Mr Ueda.
President Ueda quickly dismisses any suggestion within the in-
dustry that with subsidiary profits coming in, independence would
go out: “As a third-party verification organization, independence,
transparency, and competence are absolutely essential to our op-
erations. It is for that reason that, even with the changes in domes-
tic law and our change in legal status, we have chosen to remain a
wholly independent, non-profit organization,” he says.
Mr Ueda is equally keen to assure its shipowner clients that
there will be no let up on the core marine business as a result of
the shake up: “While there has been a trend for classification soci-
eties to expand their activities away from the maritime industry and
into the onshore industrial sector, among other fields, at ClassNK
we have no such intentions. We are and will remain dedicated to
serving the maritime industry. As a result of the transition in April,
On April 1, ClassNK became a generally incorporated foundation, thus freeing the organization to set up strategic subsidiaries
we will be expanding the range of our activities, this is aimed at
providing better service and meeting the growing needs of the glo-
bal maritime industry.”
Another reason for the need to breakdown the service offerings
that ClassNK have is the increasing willingness of Japanese Mari-
time industries to seek out new technologies.
“The Japanese maritime cluster, and Japanese shipyards in par-
ticular, have the greatest potential to contribute to wider industry
efforts to reduce greenhouse gas emissions, says Mr Ueda.
“The 22 different projects already being carried out by the
Japanese maritime industry as part of a national project to reduce
maritime GHG emissions are a perfect example of the way that the
Japanese industry is taking a leading role in these efforts. While
addressing the challenges of reducing maritime GHG emissions
will require a global effort, and I applaud all such efforts being un-
dertaken around the world, I know of no other such programme on
the planet that compares in terms of size, scope or practicality to
the efforts being undertaken by the Japanese maritime industry,” he
concludes.
With cutting edge technologies like air lubrication and hybrid
power systems already being outfitted on actual vessels, Japanese
yards look set to lead the way with regards to emission reduction
in the short term, and ClassNK is proud to be part of it. ]
ClAssNK freed tO Offer New serviCes
ClassnK chairman and president noboru ueda
24 asiamaritime May/June 2011
The Cyprus flag has had been in a flap in the previous
decade, hitting a peak of about 29 million gross tonnes in
2000 before falling back to around 20 million gt seven years
later.
In the past four years though, tonnage volumes have
steadily climbed again to reach the current position of about
22m gt. With around 1,650 ships flying the Cypriot flag,
the land of Aphrodite, who was born in the sea foam near
Paphos following the union of Zeus and the Titan goddess
Dione, has the world’s 10th largest merchant fleet.
People involved in the country’s maritime sector are
hoping the gods are again looking benignly on both the
Cypriot flag and the country’s shipping sector in general.
Pointing to the reasons for such benevolence, George
Pamboridis, chairman of corporate services company Pru-
dens, cites three main reasons why the Cypriot flag is more
attractive to foreign owners.
Possibly the key one is the European Commission’s ap-
proval in March last year of a revised tonnage tax regime in Cyprus.
Not only does this mean there are no taxes on the profits earned
or the dividends paid by a Cyprus shipping company with Cypriot
flagged ships operating in international waters, but the salaries of
officers and crew are tax-free.
Mr Pamboridis says the new taxation agreement “goes far be-
yond any other tonnage tax regime in the European Union”. He
added: “This competitive advantage is expected to improve Cyprus’
prospects in the shipping world.”
He points out the tonnage tax concession is “available to any
owner, charterer or ship manager”. Mr Pamboridis added that ship-
ping companies have the choice of either opting into the tonnage
tax scheme or paying a 10% corporate tax rate, which is the lowest
corporate rate in the European Union. But those choosing to join
the tonnage tax must remain in the scheme for 10 years, although
firms can withdraw if ships are sold or the relevant charter ends.
In an effort to deter substandard ships, vessels on the Paris or
Tokyo grey or black lists have to pay either 30% or 60% more in
tonnage tax fees.
Explaining the other reasons for growing interest in the ship-
ping register, Mr Pamboridis says the Cyprus flag is no longer on the
United States Coast Guard’s target list. The flag is also on the Paris
and Tokyo MOU’s white lists.
He says there were also bilateral co-operative agreements
covering merchant shipping with 32 countries including mainland
China.
In the favour of the gods
amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
amamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Cyprus’ favourable tax regime is proving a lure for shipowners in europe and asia
This means “there is increasing interest in the Cyprus flag by
Asian owners,” Mr Pamboridis says.
Cyprus has already started to call itself the “Shipping Metropolis
of Europe”. While this might provoke cries of ‘foul’ by its Greek
neighbours, government figures show there are around 130 Cyprus-
based shipping, ship management and shipping related companies
who employ 60,000 seafarers and 4,000 shore-based personnel.
Currently, about 4% of the global merchant fleet is managed from
Cyprus, while the industry contributed about 5% of GDP last year.
This comes at a time when energy companies are looking with
mounting excitement at what are considered to be vast natural gas
reserves in the eastern Mediterranean. Estimates suggest that the
Leviathan gas field, which lies south-east of Cyprus, has around
2trn cu m of gas, making it the biggest find by US-based gas and
oil company Noble Energy. The firm is expected to start exploratory
drilling of this and neighbouring offshore blocks either by the end
of this year or early 2012.
Mr Pamboridis says if early estimates are correct Cyprus would
only use one tenth of the reserves in the next 50 years.
He adds that while there was no legal requirement to use Cy-
prus flagged vessels, such as offshore supply ships, the exploration
and development of these offshore fields would spur the country’s
maritime sector.
The only issue that could spoil the ongoing renaissance in the
Cyprus flag is the continuing ban on Cyprus flagged vessels calling
at Turkish ports. Mr Pamboridis says a lifting of the ban would be
conditional on Turkey joining the European Union.]
May/June 2011 asiamaritime 25
amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
amamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
The Liberian regisTry currently comprises
3,570 ships totalling 115 m gt., the highest in its
entire history. Since LISCR took over the manage-
ment of the registry in 2000, the fleet size has
more than doubled. The Liberian Registry is the
second largest in the world and with size comes
influence.
The IMO’s Maritime Safety Committee ap-
proved interim guidance on the employment of
privately contracted armed security personnel on-
board ships transiting the high-risk piracy area off
the coast of Somalia and in the Gulf of Aden and
the wider Indian Ocean at its 89th session in May
2011.
“This guidance is largely based on that
which the Liberian Registry has been provid-
ing to its shipowners, ship operators, and
ship masters, since 2010,” says Scott Bergeron, chief operat-
ing officer of the Liberian International Ship & Corporate
Registry, the US-based managers of the Liberian Registry.
Given the recent interest by governments and shipping indus-
try associations in the use of armed security personnel on ships,
the Liberian Registry proposed that IMO undertake this work,
as the competent UN agency for such matters, and provided its
guidance to IMO for consideration by the MSC Working Group
on Maritime Security and Piracy.
The guidance includes sections on risk assessment, selection
criteria, liability, command and control, management and use of
weapons and ammunition at all times when on board and rules
for the use of force as agreed between the shipowner, the private
maritime security company and the master.
To expedite finalisation and promulgation of the guidelines, an
inter-sessional meeting of the MSC Working Group on Maritime
Security and Piracy is proposed for September 2011 to review the
guidelines for any amendments. Representatives of the Registry will
participate.
“The Liberian Registry is working with the naval forces in pira-
cy-affected areas to improve compliance of its registered fleet. It
strongly urges shipowners and their masters to follow Best Manage-
ment Practice,” says Mr Bergeron.
Meanwhile, the Liberian Registry is keen to get the message out
to new clients and new ships as well as offer a wide range of serv-
ices that can be found with one of the largest registers.
“Greece and Germany have traditionally been strong supporters
of the Liberian flag, and continue to be so, says Mr Bergeron.
Flagging up the Fight on piracythe liberian registry has been at the forefront of the war on pirates
“But Asia is a vital market for the registry, and
one where we are growing in strength on a daily
basis, both in terms of existing tonnage and new-
buildings. Japanese vessels, for example, have
been registering with Liberia for over forty years,
and executives from leading Japanese shipping
companies have confirmed that they expect to
see a further increase in Japanese ship registra-
tions with Liberia. LISCR has a dedicated office
in Tokyo and, fittingly, last year it was a Japanese
vessel which took the registry over the historic
100m gt mark.
“Liberia is expanding its business throughout
the Far East and is continuing to attract new busi-
ness there because of its outstanding record for
safety and service, and the proactive support it
offers to owners in the region,” he concludes. ]
scott bergeron chief operating officer of the Liberian
international ship & Corporate registry
26 asiamaritime May/June 2011
Marshalling the forces of asia
amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
asia is proving to be a rich hunting ground for the Marshall islands register
ioM eyes asiaThe Isle of Man Ship Registry continues to make inroads
into the Asia Pacific markets with more owners from the re-
gion selecting the flag as their registry of choice.
And now that focus is starting to pay off with several
major owners from the region taking the decision to put
some tonnage with the Isle of Man.
Registry director Dick Welsh believes the flag’s high in-
ternational standards, growing regional reach and highly cost
effective fee structure mean the flag is naturally attractive to
a wide range of owners.
He believes the low cost structure and the fact that the
IoM flag meets all the international benchmarking criteria
makes it a strong alternative.
The registry is making efforts to engage with owners and
operators across Asia and has homed in on Singapore as one
of Asia’s most dynamic international shipping centres.
The flag has recently appointed Geoff Hutcheon as a
surveyor in the Lion City and Dick Welsh and his colleague
Anne Blyth, the flag’s senior registrar, makes regular visits to
the region. ]
The conTInuIng rIse in the strength of the Marshall Islands
Registry both in terms of tonnage growth and, more importantly, the
quality of that tonnage has been extraordinary.
As of June 2011, the MIR is the third largest and fastest growing
registry in the world with 71.5m gt and more than 2,400 vessels.
Also in June, the MIR qualified to be listed under the United
States Coast Guard’s Qualship 21 program for the seventh year
running.
With this designation ship owners and operators of Marshall
Island flagged vessels are able to apply to the USCG for a Qualship
21 certificate and the rewards that registration entails - a two-year
limited port State control (PSC) oversight for freight ships to a possi-
ble reduction of scope for annual/“mid-period” exams for tank ships
that have applied for and received Qualship 21 certification.
According to the president of International Registries Inc that
manages the MIR through its affiliates, Bill Gallagher nearly 18%
of the vessels on the USCG Qualship 21 vessels list are Marshall
Islands flagged ships.
Further testimony to the quality of the MIR fleet has been its
ability to maintain its white list status with both the Paris and Tokyo
MoUs and has met the LRS criteria of the Paris MoU.
Annie ng managing director of International registries (far east)
We welcome any competition
Asia is playing an increasingly dominant role in the growth of
MIR, headed by the dynamic managing director of IIR for the Far
East, Annie Ng. In just the last year or so Annie has been at the fore-
front of the establishment of new offices in Taipei, Imabari in Japan
and is now on the hunt for the right personnel to open premises in
Fuzhou, China.
Ms Ng’s office had been marketing in Taiwan for some years
before setting up a service office. “Pure marketing may be helpful to
get shipowners our attention but to offer a true service to our clients
a full service office with technical knowhow on hand is imperative
in providing what the client wants and needs,” she says.
Pointing to the fact that other open registries are also experienc-
ing good growth due the extraordinary number of vessels being de-
livered, Ms Ng says, “We welcome any competition, there is always
enough business for everybody.” But she insists that those flags sim-
ply content with a marketing presence in the region will eventually
lose out. ]
May/June 2011 asiamaritime 27
In the drIve to cut fuel costs and reduce shipping’s carbon foot-
print many substitute forms of propulsion such as liquefied natural
gas, electricity, hybrids, or even nuclear fuel have been put forward
as possible alternatives.
What makes Nippon Yusen Kaisha’s car carrier Auriga Leader
truly innovative is the sheer range of alternatives there is packed
into the hull and deck of one vessel.
With the participation of Kawasaki Heavy Industries, ClassNK,
and the Monohakobi Technology Institute, NYK now owns and will
shortly operate the world’s first solar-power-assisted vessel that is fit-
ted with a hybrid power supply system, ballast water management
system and is also adapted to use low sulphur fuel.
Originally built at the Kobe shipyard of Mistsubishi Heavy
Industries, the Auriga Leader has a length overall of 199,99m, a
breadth of 32.26m, depth of 34.52m and is capable of carrying
6,200 cars.
The parties involved in the project, one of a number of such
subsidised by the Ministry of Land, Infrastructure, Transport and
Tourism, began shipboard tests in June. These tests will verify the
effects of a jointly developed hybrid power supply system for vessels
that will be installed on NYK Line’s solar-power-assisted car carrier
the 60,213 gt Auriga Leader. The vessel is also being fitted with a
ballast-water management system and adapted to use low-sulphur
fuel to further strengthen environmental measures.
Photovoltaic problemsThe power generation and endurance of the photovoltaic panels on
Auriga Leader have been undergoing shipboard tests since the com-
pletion of the vessel on December 19, 2008. The tests have shown
that providing a stable power supply from the photovoltaic panels
can be difficult because even a slight change in the weather may
have a significant effect on the amount of power generated. It was
also found that attempting to make the solar power system bigger
to gain more output and to increase its dependency could result in
problems with regard to stable operations due to fluctuations in the
power supply.
each company contributed to the overall designThe hybrid power supply system has been studied since fiscal 2009.
NYK Line and MTI, setting out with the aim of curtailing CO2
emissions, have pursued a stable onboard power supply in case
an unstable renewable energy source such as solar power was to
Sun ShineS on the environMentally friendly
amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
nyK line and Mti will aim to develop an even larger solar power generation system for vessels, while Khi will seek to commercialize the hybrid power supply system for vessels.
nyK’s revolutionary new car carrier draws on a range of green sources for its power including the sun
be adopted. At the same time KHI has been working to develop a
hybrid power supply system for vessels through the use of its self-
developed large nickel hydrogen batteries known as Gigacell®; and
ClassNK is supporting all these projects as part of assistance pro-
vided through a joint research scheme based on industry demands.
Charging and discharging a fluctuating amount of solar power
generated by this hybrid power supply system will stabilise the sup-
ply to the vessel’s electrical power system. This will also minimise
output fluctuations from the diesel power generator and secure a
stable power supply.
Shipboard tests on Auriga Leader will continue in the weeks to
come with the aim of achieving a stable power supply under harsh
marine conditions through the combination of solar power genera-
tion and the hybrid power supply system, and the effects will be
verified. Based on the experiment results, NYK Line and MTI will
aim to develop an even larger solar power generation system for
vessels, while KHI will seek to commercialize the hybrid power
supply system for other ships.]
even if it rains the Auriga Leader will power on
28 asiamaritime May/June 2011
According to the latest figures available vehicle and auto parts
exported from Japan in April were all but wiped out by the continu-
ing fall out from the devastating earthquake and consequent tsu-
nami of March 11.
Just 126,061 units left Japan in April, a fall of 67.8% compared
to the same month in 2010. Buses were the most seriously affected
vehicles, witnessing an 83.2% fall off from the year before. But the
signs are that Japan’s auto industry may now be over the worse.
On June 13, president of Toyota Motor Corporation Akio Toyoda
declared on the company website: “Production in Japan is expected
to return to 90% of normal levels in June. From July and after, the
degree of production recovery will depend on the model, but pro-
duction volume is expected to have recovered to almost normal lev-
els. And, it is hoped to be able to make up for lost production from
around October.” However, Toyota appears to have been the least
affected having lost only 20% of production in April. But Mitsubi-
shi, which was hit by a 70% drop in production, shares Toyota’s op-
timism that production will be close to normal by the fourth quarter.
Further evidence that in the short-term cargo flows are acceler-
ating comes with K Line’s u-turn on its earlier decision to lay up two
vessels in May and MOL reconsidering a similar move. Neverthe-
less the impact on the trade is bound to lead to a drag on full fiscal
year figures come next spring.
NYK, the largest of the Japanese car carrying firms in terms
of capacity, downgraded its volume forecasts in May by 26% for
the period until October and 11% or 2.8m units for the full cal-
endar year.
Mixed picture for car carriers
amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
the earthquake and tsunami in Japan has wreaked havoc in the car carrying business but emerging markets indicate a bright future
MOL said it could be carrying up to 30% less vehicles over the
same period. And does not seem to anticipate much growth beyond
this year. The company currently operates 114 PCTCs but despite a
slew of new vessels joining the fleet this year and next, it only ex-
pects to be operating 110 ships by the end of 2012.
new cars new roadsIt is good to know then, that while Japan may still be the most im-
portant export market for autos and parts, it is no longer the only
game in town, as the head of China for Wallenius Wilhelmsen Lo-
gistics, Leroi Xavier can attest.
Imports of cars into China were around 810,000 units in 2010.
In the first four months of 2011, year-on-year the figures were 30%
up on 2010. Exports from the country are faring almost as well. Af-
ter 510,000 units were exported in 2010, exports grew year-on-year
by 50% for the first four months of 2011.
In order to cash in on the growth of the international trade in
vehicles based in China WWL has invested in two strategic joint
ventures, Tianjin RoRo Terminals with the Tianjin Port Group and
the Shanghai Haitong International Terminal, together with the
Singapore International Port Group, Anji Automotive Logistics and
NYK.
Mr Xavier says that the impact of the earthquake on Chinese
business has been generally limited to a shortage of parts for the
Japanese clusters in Tianjin, Beijing and Guangdong provinces. “Im-
ports from Japan have slowed by 10%,” he says.
china is providing more and more business for car carriers
May/June 2011 asiamaritime 29
amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Intra-Asia welcomes careful driversLike NYK, MOL and K Line, WWL has been developing intra-Asia
services covering Southeast Asian destinations and reaching out to
India. “We are also reinforcing our China/Japan loop services. And
from a deep-sea export perspective we have an ASOC trade cover-
ing pacific islands besides New Zealand and Australia. Also a few
projects for new trades are being assessed,” he adds.
Key to servicing Southeast Asia and beyond is the use of Sin-
gapore as a hub. “We have lately developed a High and Heavy
preparation center for one of our major customers and certainly
use Singapore as a hub both on the ocean and inland sides as
part of our Supply Chain management solutions,” says Mr Xavier.
Through one of its parent companies WWL already operates
Tonsberg the world’s largest car carrier and Mr Xavier sees this as
part of a growing trend with the arrival of the first of four mark V
carriers from Japan’s Mitsubishi Heavy Industries expected this year.
“Making larger vessels allows us to carry more cars in both a
more economical way and a more environmentally friendly fash-
ion,” he says.
“There is no doubt that China will export to volume markets
such as North America and Western Europe in the next three
years. When this happens, exporters will need reliable liner serv-
ices and will have to focus more on the quality of their logistics.
This means that RORO carriers will have to dedicate a service for
Chinese exports and this also means that the freight rates will be
higher,” he adds.
Out of the water WWL is growing a strong distribution network
within China, offering an inland network through a joint venture
with Citic. “We operate three technical services centres in Shanghai
and Tianjin and will continue this development in other major ports
in China,” he says.
“Our customers are based on the four major automotive
clusters Guangzhou, Shanghai, Tianjin and Dalian. All logistics
modes are utilised in China. Waterways are very well utilised on
the Yangtze River, and trains are quite well utilised in northern
China.”
So prospects are good but the car carrying business is yet to get
back to the glory days of 2008. When might that be? “I am not sure
whether volumes can reach 2008 levels before China automakers
penetrate European and American markets and start mass exporta-
tions. 2013 could be optimistic but 2015 might be a more realistic
date, Mr Xavier concludes. ]
SERVICE & QUALITYARE WITHIN YOUR REACH
For a full list of offices, please visit: WWW.REGISTER-IRI.COM
INTERNATIONAL REGISTRIES (FAR EAST) LIMITEDThe Marshall Islands Maritime and Corporate Administrators
TEL: +852 2526 6641 [email protected]
30 asiamaritime May/June 2011
Being in possession of the largest liquefied natural gas carrier
fleet in the world, MISC is in as good position as any to capitalise
on the recent surge in enthusiasm for the gas. But is the company
convinced that the party won’t be spoiled by too many guests
coming to the table?
“Although growth rates from 2011 onwards are lower than
the 2006-2010 period, LNG import growth translating to shipping
demand is fairly balanced against growth in supply but with a
period of demand outpacing supply between 2011 to 2015,” the
company says.
“Hence, during the next four years, the LNG shipping busi-
ness is expected to be buoyant with a more balanced picture
beyond 2015,” MISC adds.
The contractual nature of LNG
bus iness compared wi th some
tanker and dry bulk shipping can
provide a buffer against catastrophic
losses. MISC observes that generally,
the nature of LNG business (70-
80%) is based on long term charters
and thus, it may not face the same
risk of overcapacity as with other
classes of vessels. Furthermore, a
more recent innovation in how the
fuel is stored and distributed means
industry players can earmark their
aged vessels for LNG offshore tech-
nology solutions.
on the brink of a golden age?On an even more positive note, the International Energy Agency
released a special report in June 2011 exploring the potential for a
“golden age” of gas in which global use of gas is expected to rise
by more than 50% from 2010 levels and will account for more
than a quarter of global energy demand by 2035.
“But as far as MISC is concerned,” the company says, “our
LNG shipping operation has remained stable and is shielded from
spot rate volatility due to our committed long-term contracts. We
have always maintained a prudent stance and only contract new-
buildings on secured contracts.”
Of course, at the top of the list of spurs to growth in LNG ex-
ports was the disastrous earthquake and consequent tsunami.
MISC estimates that Japan has an additional LNG requirement
of 8-12m tonnes due not only to the Fukushima shutdown but
Liquefied natural gas is set for a positive cycle according to MISC, its largest carrier
DeLIverIng on the proMISe
also the damage to other nuclear plants.
“Furthermore, the long-term impact of the Fukushima shut-
down and the resulting slowing of growth of nuclear power will
also increase global LNG demand by 25m mtpa (equivalent to
3.2 Bcf/d of gas) to 401m mtpa by 2020, up from previous esti-
mates of 378m mtpa,” the company predicts.
The immediate effect of the Japanese disaster has been a
marked increase in short and medium term charters. After the
incident, the number of LNGC sailing to Japan surged 29% since
April and brokers also reported ship unavailability as most ships
were locked for short and project term charter.
Given the size of Japan’s LNG receiving facilities and those
of China and the emerging na-
tions in Asia, there has been a
spike in orders for LNG carriers
in the 145,000 cbm to 160,000
cbm range, with the prospect that
Nakilats’ fleet of 220,000 cbm to
260,000 cbm vessels will continue
to struggle for employment.
On prospects of MISC joining
the market for new vessels the com-
pany says, “As mentioned earlier,
MISC takes a prudent stance in
the building of our LNG fleet and
thus, the expansion depends on the
project requirements.
“In any event, MISC reviews its fleet deployment plan from
time to time, and may embark on a LNG fleet expansion if it is
supported by firm demand of new shipping requirements or LNG
offshore technology solutions such as floating, storage and regasi-
fication units and other floating LNG projects.”
From gas to boxesWhilst the operation of LNG vessels may be considered to be part
of the elite top end of the shipping market, MISC is not afraid to
be deeply involved in the more crowded market of intra-Asia box
carriage.
To cater for the growing regional demand, currently MISC
owns and operates 22 containerships with capacities ranging
from 700 to 4,900 teu on intra-Asia routes. MISC views the intra-
Asia liner business as regional trades covering east of the Suez
Canal, bordering the Pacific Rim, including Oceania and South
Africa.
ammalaysiaamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama
MisC is watching the Lng market closely before making a move
May/June 2011 asiamaritime 31
IEA predicts golden age for gas by 2035
ammalaysiaamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama
There appear to be some complex issues involved in intra-
Asia trade today. On the positive side there continue to be an in-
creasing number of free trade agreements being signed between
China and its partners in Asia.
Less positive perhaps, is the charge to intra-Asia trade by
players better known for Asia-Europe and Asia-US trades. There
also seems to be a slim threat to the business from China’s move
to build expressways from home to Indochina. But MISC is confi-
dent that its fleet of boxships is pitch perfect for the conditions.
“From our perspective, driven by the region’s fast develop-
ing emerging markets and economies, and coupled with China’s
strong presence in Asia’s economic growth moving forward, the
intra-Asia trade-lane will continue to be a beacon among other
trade-lanes in the years to come,” the company says.
“No doubt, the cascading of excess and larger tonnages for
Asia-Europe and Asia-US trades will have an impact on intra-Asia
trades. However, these larger vessels will be limited in their cov-
erage as many port facilities and infrastructure in the intra-Asia
region are still limited to handling nothing bigger than panamax
size vessels.
“Furthermore, although the current overland development be-
tween areas in southern China and neighbouring countries within
Asean have begun in earnest; cross-border volume and road / rail
haulage of containerised cargo is still insignificant as they are
compounded by various customs, border and infrastructure re-
strictions. Comparatively, it is still more cost effective to ship car-
goes directly to the ports, which are closer to consumer markets,”
MISC concludes. ]
32 asiamaritime May/June 2011
NippoN YuseN Kaisha first began shipping services to Vietnam
in 1956, at a time when the Cold War era military conflict was set
to flare up and consume the country for the next 20 years. In fact
NYK’s service was not suspended until 1975, when the commu-
nists claimed victory and closed the doors to external trade.
NYK was unable to ship goods to and from the country again
until 1990. The company resumed a representative office in 1992
through its logistics arm Yusen Air & Sea Services. In 1996, NYK’s
logistics arm at the time, Yusen Air & Sea Services, opened an of-
fice in 1996.
Now, under the new registered name Yusen Logistics, the com-
pany provides a nationwide network of trucking and 7,636 m2 of
warehousing.
Much has been made
in the press of the exodus
of manufacturing from
China’s Pearl River delta –
by some estimates as much
as 25% of production
has fled to countries like
Vietnam and Bangladesh.
But a swathe of Japanese
manufacturers moved into
the country some years be-
fore. It is, for the most part,
these early arrivals that
Yusen Logistics has come
to serve.
A Yu sen Log i s t i c s
spokesperson says that
70% of its customer base
in Vietnam is made up of Japanese manufacturers and traders.
Although Yusen Logistics says it has expansion plans to meet
the needs of the rapidly expanding manufacturing and trading
base, it will have to act fast to catch up with international liner
companies and their related logistics arms that have been investing
large amounts in new ports and terminals.
NYK’ s chief national rival Mitsui OSK Lines, as part of a joint
venture including Hanjin Shipping, Saigon New Port and Wan Hai
Lines officially opened the Tan Cang Cai Mep International Termi-
nal in March this year.
Just a stone’s throw from Vietnam’s commercial capital Ho
Chi Minh City, the new terminal has a megaship capability draft
of 15.8m and a capacity of 1.1m teu. Both Hanjin and MOL have
NYK has a long history of providing logistics support to the Southeast Asian nation
NYK’S loNg roAd iN VietNAMamvietnamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama
hanjin shipping is a stakeholder in Vietnam’s Tan Cang Chai Mep Terminal
been making direct calls to the new terminal on their way to Eu-
rope since January this year.
But Tan Cang Cai Mep is just the latest in a slew of terminals
that have opened in the south of the country under the umbrella of
the government nominated Cai Mep-Thi Vai Deep Sea Port Devel-
opment Project.
An A to Z of leading global port operators has jointly financed
other projects. Hutchison Port Holdings joined up with Saigon
Investment Construction and Commerce in the establishment
of Saigon International Terminals. And HPH’s rival and minority
shareholder PSA sits close by at the SP-PSA terminal, courtesy of a
joint venture with Saigon Port and local shipping line Vinalines.
The list goes on: DP World has its stake in Saigon Premier
Container Terminal with
an estimated eventual
capacity of 1.5m teu.
APM Terminals has
recently completed its
Cai Mep International
Terminal and begun op-
erations at the 1.1m teu
facility.
Although, thus far
NYK has been left out in
the cold as far as prior-
ity bookings at southern
ports is concerned it is
eagerly eying logistics
opportunities in neigh-
bouring Cambodia.
“The market in Cam-
bodia is set to expand in the next two-three years by Japanese and
Korean companies,” the spokesperson says.
“Yusen Logistics has opened a representative office in Phnon
Penh and is reinforcing its intelligence gathering.
Since the capacity of Cambodia’s port and aiport network is
small, Yusen Logistics would employ ocean barge and truck trans-
portation through Ho Chi Minh.
Unconfirmed reports however suggest that NYK will eventu-
ally make the plunge in terminal investments in the near future. An
MOL official told Asia Maritime that a 2010 report linking it with
NYK, Japanese trading house Itochu and local state-owned ship-
owner Vietnam Shipping Lines for a terminal joint venture in the
north of the country is still under consideration. ]
In the coming issues of Asia Maritime you’ll find in-depth features on Asia’s most important maritime nations – and those emerging. You will also gain important insights into industry sectors and the region’s most important figures.
For our regular columns we shall be trawling industry sectors deep and wide. As a result, you’ll find stories on the environment, logistics, industry and personal profiles, innovations, an in-depth investigation into a high-profile industry concern…And a great deal more, all written in a direct and entertaining way so that you will find that Asia Maritime is not just a must-read but a want-to-read publication!
Coming in Asia Maritime in July/August 2011
Russia/Australia/Marine Law/Shipmanagement
Middle East/Special Innovations pull-out
34 asiamaritime May/June 2011
amtechnicalamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
IA rAft of major revisions to the International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers
(STCW Convention), 1978, and the STCW Code were adopted by
the IMO in June, 2010, at a special Diplomatic Conference in Ma-
nila, the Philippines. Known commonly as the Manila amendments,
these changes are set to enter into force on January 1, 2012 and col-
lectively represent an important milestone in the ongoing efforts of
the shipping industry to enhance safety at sea.
The scope of the amendments is wide-ranging and their im-
plementation will have a significant impact on many areas of ship
operation, including training. Indeed the Manila amendments repre-
sent a vital first step in recognising the role of new technology, and
distance learning methods, in the training of modern day seafarers.
Many believe the amendments will act as a catalyst to accelerate the
more widespread adoption of onboard training, including computer-
based training (CBT) systems, to the mutual benefit of shipowners,
ship managers and seafarers.
Among the amendments adopted in Manila are new require-
ments relating to training in modern technology, such as electronic
charts and information systems (ECDIS), and the introduction of
modern training methodology, including distance and web-based
learning, for the first time. There is also a focus on ‘new’ training
methods such as simulator-based training and eLearning. Demon-
strating competence by approved simulator training is now included
in more of the competence areas and there are 84 specific refer-
ences to this in the document.
Speaking at the Tanker Safety Conference in London last Octo-
ber, Captain Ashok Mahapatra, head of marine training and human
element section at IMO, highlighted a number of other key changes
that will have an impact on training regimes. He pointed out, for in-
stance, that companies will be responsible for refresher training on-
board ships, with the Manila amendments setting out requirements
for the demonstration of continued competence in areas of basic
safety training.
The revised STCW requires continued proof of BST competence
every five years, making an allowance for the assessment of compe-
tence ashore for those areas that cannot be assessed onboard. There
are also provisions for environmental pollution awareness training,
security training and training based on general anti-piracy related
information.
The Manila amendments further reorganise and update the
competence tables for engineers to meet emerging and contem-
The new amendments to STCW brings training full circle but with added technology
STCW aMendMenTS SeT To give onboard Training a booST
porary technologies and to set specific competence requirements
for personnel serving onboard different types of tankers, including
guidance relating to CBT. Captain Mahapatra listed the key benefits
of the STCW amendments including the introduction of training in
modern technologies and the acceptance of modern training meth-
ods. However the IMO is reserving judgment as to what the future
holds. According to the spokesman, “The actual impact of specific
amendments on training, and training providers, will be something
that will only be seen once the amendments take effect.”
Shipowner groups have responded positively to the amendments
and to the impact they will have on seafarer training regimes, which
could represent the beginning of a period of significant change.
James Langley, senior advisor for the International Shipping Federa-
tion (ISF) and the International Chamber of Shipping (ICS), says, “The
industry has perhaps not embraced CBT as much as many people
expected, but the STCW amendments might mark the start of some-
thing different.”
Mr Langley highlights the requirement for refresher training,
which has not been included in STCW before. He says, “CBT could
well come into this. For example, it might be possible for an online
assessment to see if a particular crew member needs to demonstrate
further competency and undertake refresher training.”
There are other elements of the amendments that could also give
impetus to CBT adoption. Mr Langley says, “Certainly, CBT would
become increasingly popular and, for areas like ECDIS which be-
Charts are becoming increasingly electronic
May/June 2011 asiamaritime 35
amtechnicalamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
As a result of the STCW amendments onboard training will regain its importance
come mandatory for many vessels in 2012, much
of the training could be done onboard with CBT
technology.”
He continues, “Onboard training makes sense
for shipowners and seafarers as it is less costly and
less disruptive. It is one way of ensuring a happier
crew, as seafarers appreciate the ability to have
training onboard rather than ashore and it might
provide a simpler way of getting additional train-
ing, aiding continuous professional progression.”
The ICS/ISF and their members are now dis-
cussing the implications of the Manila amend-
ments with administrations, with a view towards
ensuring a unified, common interpretation. Mr
Langley says, “The industry has to work together
and administrations have a key role to play. Once
administrations have set out their position on vari-
ous issues, then shipowners will be better able to
develop onboard training strategies around the
revised STCW requirements.”
Overall though, Mr Langley cautions against
thinking that the implementation of the revised STCW next year
will have an instant impact on current training practices. ”This is a
stepping stone, not a major step forward, certainly as far as onboard
training using CBT is concerned,” he suggests.
Nonetheless, leading maritime training providers are confident
that the new regulations will give impetus to more modern, cost
effective and crew-friendly methods of training. Roger Ringstad,
managing director of Seagull AS of Norway, says, “We think this is
a significant piece of regulation. While it is an evolution from past
STCW versions, there are areas where it will have a particularly
high profile impact, for example ECDIS training. The revised STCW
is much clearer on this, setting out new requirements relating to
training in modern technology such as Electronic Chart Display and
Information Systems, which will become mandatory on new tankers
from 2012.”
Seagull also notes that there will be new certification require-
ments for able seafarers. Up to now onboard competence verifica-
tion has largely been restricted to officer level. “However our read-
ing of the amendments is that there will be an extension to include
able seafarers as well,” says Mr Ringstad. He continues, “Certainly
we expect this regulatory initiative will open up a greater require-
ment not just for training, but for re-training as well. It is perhaps
not a revolution, but in some areas we will see a greater focus on
onboard CBT and distance-based learning as a result of the changes
made through the amendments.”
Seagull is now preparing to meet the changing requirements of
shipowners and operators in the wake of these latest STCW revi-
sions. Mr Ringstad notes. “We started last year a systematic review of
all our training modules to see where revisions might be necessary.
As a result we can see that we will need to look deeper into certain
areas and we have begun that process.”
Updating the company’s existing range of CBT modules to take
advantage of the opportunities that are likely to open up for training
providers will be a gradual process. As Mr Ringstad points out, the
revised STCW has a fairly wide implementation window stretching
from 2012 to 2017.
One area of concern that is highlighted by Seagull is the need
for flag states to harmonise their approach to the revised STCW. “Flag
states are not always in complete agreement with one another as to
how regulations should be implemented and this is a headache for
ship owners and operators, as well as for training providers such as
ourselves. In the past we have seen regulations implemented differ-
ently from one flag state to another, and we hope this will not hap-
pen in this case.”
While regulations are an important driver behind the greater
adoption of onboard CBT and distance learning, there are other fac-
tors that are also likely to encourage more shipowners and operators
to embrace this approach. “If you do training onboard you can use
the actual equipment concerned, so it is widely agreed that this is
the best way to go about training and companies like Seagull can
provide the necessary structure,” says Mr Ringstad. “It is also more
cost effective and surveys from the Nautical Institute have shown
that seafarers are keen on onboard training as otherwise training can
eat into their valuable leave time.” With the recruitment of seafarers
in some sectors of the shipping industry still proving problematic,
ensuring they can spend more quality time with their families could
become an ever more important consideration for owners and
operators. ]
36 asiamaritime May/June 2011
MTM geTs The nod froM dnVMTM MeTalizing, a player in the thermal spray coating
industry has won the DNV approval certificate for its thermal
sprayed zinc coating procedure.
DNV has approved MTM Metalizing’s thermal sprayed zinc
coating technology for use in ballast tanks, double-skin spaces,
cofferdams and other enclosed spaces, under the International
Marine Organization Performance Standard for Protective Coat-
ing requirements.
Mr Bill Jordan, General Manager of MTM Metalizing noted
that zinc has extensive anti-corrosion qualities. “Zinc provides
greater galvanic protection than other metals such as alumini-
um. It is the easier of the two metals to apply by either flame or
arc spray. It can be deposited onto steel via spraying which is
what MTM Metalizing specialises in,” explains Jordan.
MTM Metalizing is the first metalizing company in the
world to obtain a DNV Certification of Approval for its thermal
sprayed zinc coating technology. The certification is valid until
31st December 2013.
MTM Metalizing gained the certification after extensive
testing including accelerated corrosion tests. This is believed
to be the first “Alternative Coating” approval issued under the
IMO guidelines. The application speed that the IMC-patented
equipment produces allows the use of metalizing as a realistic
alternative for ballast tank coating. ]
eVac inTroduces orca iii’s Tiny fooTprinT evac, a supplier of wastewater collection and treatment solu-
tions has introduced the ORCA III small footprint physicochemical
advanced wastewater treatment unit.
The ORCA III comes in six different sizes, with a hydraulic load-
ing capacity ranging from 20cu.m./day down to 1.5cu.m./day. It is
ideally suited for efficient wastewater treatment for vessels that stay
idle part of the time, thanks to its physicochemical treatment tech-
nology. The system meets the requirements of MEPC 159(55) of the
International Maritime Organization.
“With the ORCA III in production, Evac offers the whole range
of advanced wastewater treatment systems for the marine industry,”
says Mika Karjalainen, General Manager of Evac Oy. “Its predeces-
sor, the ORCA II unit, has been installed on several hundred vessels,
and it complements our MBR biological membrane wastewater
treatment units.
In the ORCA III wastewater treatment system the sewage from
the holding tank for black and grey water is transferred, using a
macerator pump, to a sedimentation tank through a static mixer and
flocculation dosing. In a separate second tank section the clarified
liquid is re-circulated through a disc filter and the organic matter
is oxidised with Hypochlorite, after which the clean wastewater is
discharged overboard. ]
lloyd’s regisTer’s Knowledge Based Management team (KBM)
has successfully created a pilot risk-based inspection and maintenance
programme for Modern Terminals Limited’s (MTL) quay side and rubber-
tyred tire gantry cranes in Hong Kong.
MTL operates four Container Terminals 1, 2, 5 & 9(S) in Hong Kong.
At all these facilities, the management of equipment inspection and
maintenance programmes is critical to continued effective operation.
After MTL commissioned Lloyd’s Register to develop a risk model for
the equipment, the KBM team saw that their Arivu™ risk-based solution
was well suited to the client’s needs. The Arivu product is a software-
based system that generates maintenance and inspection plans and
maps them directly onto an organisation’s risk tolerance and financial
objective framework.
Initially, the KBM team worked to understand MTL’s objectives
and then used the Arivu™ software to create port crane models. These
models delivered a tailored task plan for each crane that factored in
the crane’s design, usage, age and condition. The models were suc-
cessfully piloted and, by using KBM’s risk-based maintenance strategy,
the client’s maintenance costs were reduced and operational reliability
strengthened.
Kenny Lam, Engineering and Planning Manager for MTL, said the
company was pleased with the result of the pilot project. “In this pilot
project, the KBM project team worked closely with us to develop the
risk models for our port equipment,” Said Mr. Lam. “The KBM team
gave us excellent support during the entire project and also devoted ad-
equate resources to achieve each project milestone.” ]
reducing crane operaTion risk
amship's storeamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
May/June 2011 asiamaritime 37
amoperationsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
“Why do you hate charterers so much?” – a correspondent
writes after a recent outburst which suggested that people who hire
ships for a quick voyage have got no right to tell the shipowner how
to run his ship. But it is not a matter of likes
or dislikes – I was complaining on behalf of
ship operators who have seen a disturbing
lack of balance in the contractual relation-
ship between both sides in a charter party.
You could argue that shipowners have
themselves to blame. If they hadn’t been so
full of boundless optimism, they would not
have built so many ships that they had to
spend their days on their knees, grovelling in
front of potential charterers who might deign
to use them. It is astonishing that so few of
the lessons of recent history; of the great
overtonnage of the 1970s, which lasted into
the 90s, seem to have registered with today’s
big spenders.
But increasingly, voyage charterers seem
to be pushing their luck in dictating to own-
ers and managers how these ships are to be
operated. Once it was enough that the cus-
tomer agreed the basic terms for the voyage,
which spelt out the origin and destination, the dates of commence-
ment and completion, and a few other factors. A few years ago,
aided by the new facility of weather routeing and its sinister auxil-
iary of “hindcasting”, charterers started to actually specify the route
the vessel must take on her voyage, effectively challenging the role
of the master and his traditional judgement. The courts seemed to
think that this was unexceptional, and backed the charterers on
numerous occasions, which disappointed the professionals no end.
Charterers were increasingly throwing their weight around on
the loading and discharging berth, ignoring the cargo plan of the
master, doing whatever suited them best, and if the master objected
on the grounds that he did not want his ship damaged, threaten-
ing the owner that his ship would be “blacked”, or demanding the
master be replaced. Somewhere along the line, the “give and take”
that characterised the relationship between charterers and ship-
owners became “you give and I take!”
Today the charterers are determined to exercise a managerial
control of the chartered vessel, even demanding the right to ap-
prove the appointment of the master and officers, with a lot of rules
Michael Grey maintains many charterers are getting too big for their boats
The cusToMer is noT always riGhT
specifying the experience they must have in rank. They argue that
there is a dearth of experience around, with so many senior offic-
ers retiring (it is worth asking them why this is the case!) and they
cannot take the risk of their cargo ending
up on the beach as a result of somebody’s
inexperience.
It might appear a compelling argu-
ment, except that once again it treads on
the owner’s clear responsibilities to man
his ship with the people he thinks are
competent and capable, and not those
that might happen to suit the organisation
which might charter his ship.
Somebody has to employ a “first trip”
mate or second engineer, master or cargo
officer, and it is an outrageous liberty for
a voyage charterer to start intruding into
the specific manning of somebody else’s
ship. It is also making it nearly impossible
to properly man ships, to determine a fair
and responsible promotions policy, which
will encourage the retention of good and
ambitious officers. How does the em-
ployer reward talent and encourage good
officers, if some charterer is allowed to influence the appointment
of officers, rejecting those it deems are insufficiently experienced
in their respective ranks? It is an unjustified infringement into the
operation of another business that is not one’s own and deserves
to be robustly resisted by any shipowner with character. Is not this
“market dominance” legally questionable?
Now we have charterers telling owners not to employ armed
guards aboard ships carrying their cargoes through pirate-infested
waters, thus preventing the owners from exercising their duty of
care for their employees, as they see fit. Will the charterers take re-
sponsibility for any consequences from their prohibition, if the ship
is captured and harm comes to the seafarers?
People who hire ships have no lack of contractual rights – but
the unbalanced market is enabling these customers to hugely in-
crease their powers. Owners should tell charterers’ brokers to get
lost when they submit unjustifiable demands. Maybe it won’t always
be the case that the charterer will always have the whip hand – the
cycles do come around – and when this happens the ill-will that this
sort of bullying control has generated will be remembered. ]
38 asiamaritime May/June 2011
For years Li & Fung has been sourcing 50% of its products,
chiefly apparel, footwear and other fast moving consumer goods,
from China for export to the lucrative western markets of the US
and Europe. But the tide that was turning in terms of new world
trade patterns prior to the global financial crisis has now become a
positive swell. Vice president of the logistics arm of Li & Fung, LF
Logistics’ Tommy Lui explains what this means for the company:
“Our business in goods from China to the US going forward can
only be described as steady. Europe has already surpassed the US
as the largest export market but the continent has some issues these
days.”
Japan, has traditionally been Li & Fung’s third largest market,
“but it has huge problems. Trade volumes will take a hit especially
in the high value products sector,” says Mr Lui.
But the huge compensation factor is that a huge market is open-
ing up on the company’s doorstep in China. The rapid rise in costs
of production in China may serve to slow volumes to Li & Fung’s
traditional markets but the increased affluence at home means Li &
Fung will have to move fast to catch up with developments.
“The majority of our goods are still for export. Our domestic
business is still in its infancy,” says Mr Lui.
Asia’s leading sourcing, distribution and retail group has its eye on China’s growing domestic market and the rise of Asean as consumer
The new fronTier
“Li & Fung has 3,000 trucks and 20 warehouses, some of
which are the most advanced in China. “We have set up a national
distribution network for fast moving consumer goods that can be
distributed to around 880 cities across China on a daily basis. But
we have barely scratched the surface,” he concludes.
Many companies might be content to find and exploit a niche
catchment area such as Guangdong. The southern province has
a population of around 96m and commands 7% of the national
economy, sufficient to make any savvy retailer rich. But Li & Fung
has grander plans that may eventually centre on Shanghai.
Mr Lui says the Chinese market consists of three-tiers and in-
creasingly, four distinct geographical markets. “As a retailer you
have to have a presence in Shanghai, Beijing and Shenzhen. It’s
unlikely that you will make money in these cities – they are satu-
rated. But they are where customers seek out new products.”
By being situated slightly west of Shanghai products can be
fed easily to the north to second-tier cities such as Tianjin and
Qingdao, and to the southern counterparts such as Dongguan and
Guiyang. But equally important are the western cities of Chengdu
and Chongqing in Sichuan province. Both with urban popula-
tions of 10m they are important industrial centres that until now
have been isolated from the rest of the country and only exposed
to western brands in the last five years. Consumerism is high and
customers are literally queuing out the door of western branded
outlets.
Through a series of free-trade agreements with Asean, China is
rapidly becoming more than a sum of its parts. “Inter-Asia is hap-
pening big time,” Mr Lui declares.
Extraordinarily ambitious government sponsored trans-Asian
roads and railways will revolutionise business between China and
its trading partners.
“We are most impressed by the expressways being constructed
between China and Southeast Asia because the highway that con-
nects Guangxi to Vietnam goes all the way up to Ho Chi Minh City
and on to Laos and Cambodia. From there you will be able to cut
across to Thailand and down to Malaysia and Singapore,” he says.
“When that is built in three to four years there will be an im-
mense amount of trade between China and Southeast Asia. Small-
scale production will eventually migrate from China to Southeast
Asia. China will concentrate on large-scale mass production and
customisation. Each market will start to differentiate while working
as a tightly integrated manufacturing network,” he concludes. ]
amlogisticsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
senior vice president of LF Logistics
Tommy Lui.
May/June 2011 asiamaritime 39
Flag states’ role in the Fight against skull and crossbones
Piracy was inevitably back on the agenda at the IMO’s Mari-
time Safety Committee during the committee’s deliberations be-
tween May 11-20, although the precise role to be played by flag
states over the question of armed guards and privately contracted
naval support, remains unclear.
At the meetings at MSC last month, interim guidance on the
use of privately contracted armed security personnel on ships tran-
siting the danger zone - which now extends not only to the Somali
coast but the Gulf of Aden and the Indian Ocean - was agreed.
Interim recommendations for flag states include the use of
privately contracted armed security personnel on board ships in
high risk areas and guidance to shipowners and operators as well
as masters if they decide to use privately contracted armed security
were approved to try to clarify the position of those deciding to
provide armed guards for their vessels to counteract piracy threats.
According to the IMO, “The guidance to shipowners notes that
flag state jurisdiction and any laws and regulations imposed by the
flag state concerning the use of private security companies apply to
their vessels. Port and coastal states’ laws may also apply to such
vessels.”
The IMO has stressed that the use of private security person-
nel should not be considered as an alternative to the use of best
management practices to deter piracy, as well as the use of protec-
tive measures. One continuing area of concern for the industry is
the fact that many companies are not abiding by best management
practices or reporting their presence to military authorities before
transit across the target zone for attacks - which has become ever
larger with the use of motherships.
The IMO says, “placing armed guards on board as a means
to secure and protect the vessel and its crew should only be con-
sidered after a risk assessment has been carried out. It is also im-
portant to involve the master in the decision making process. The
guidance includes sections on risk assessment, selection criteria,
insurance cover, command and control, management and use of
weapons and ammunition at all times when on board and rules for
the use of force as agreed between the shipowner, the private mari-
time security company and the master.”
The IMO says that interim recommendations for flag states
recommend that they have a policy on whether or not the use of
private armed guards will be authorised.
The flag state position is one that has raised a number of ques-
tion marks. Clay Maitland, senior partner of IRI which runs the
Marshall Islands register said recently that the register was not pre-
pared to sign any document endorsing the use of armed guards on
vessels or indeed prohibiting their use. At the same time, he said
such measures were now necessary in what was in all likelihood to
become a “shooting war” in the near future. However, as Mr Mait-
land pointed out, “once an escalated shooting war begins, seafar-
ers are going to be exposed to friendly as well as hostile fire. One
wonders how industry spokespersons will react when the casualty
list begins to rise.”
The MSC also agreed guidelines to assist in the investigation of
crimes of piracy and armed robbery against ships that are “intended
to assist an investigator to collect evidence, including forensic
evidence, to support the submission of written reports which may
assist in the identification, arrest and prosecution of the pirates that
held the vessel and crew captive.
International Chamber of Shipping secretary general Peter
Hinchliffe says: “ICS is very pleased to see that the IMO has
endorsed two important sets of guidelines on the use of armed
guards, one for companies and one for flag states although both
need further development this year. It is pleasing that the legal
pitfalls in the employment of private armed guards have also been
recognised and that further work will be done on this.
“ICS believes that a robust international signal is required to
demonstrate that further acts of piracy and the use of violence are
not acceptable. In particular States are urged to take action to pre-
vent further mother ship activity and to seek UN Security Council
action to create a ‘blue beret’ force of armed guards to be deployed
to vulnerable ships.” ]
amimoamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
sandra speares reports from the iMo on the latest developments in the fight against piracy
Flag states are carving out a role in the fight against piracy
40 asiamaritime May/June 2011
amgreen pageamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Det Norske Veritas, the Norwegian classification
society is unveiling a series of green ship designs.
The first in the series was the Triality very large
crude carrier that was publically launched at the end
of last year although work on the project, by more
than 35 DNV staff had been ongoing for some time.
Kaveh Mansoorian, DNV senior customer rela-
tions manager in Hong Kong said some of the con-
cept work was done by the firm’s offices in Asia, al-
though there were no regional shipping companies
involved.
Commenting on the project, Jan Koren, DNV
segment director for tankers, said the challenge
“was to develop a new concept VLCC with the same
cargo carrying capacity and operational range as
today’s ordinary VLCC”.
He adds: “The new concept was to be charac-
terised by the following main features: LNG fuelled,
ballast-free and capable of effectively recovering
volatile organic compounds - significant volumes of cargo vapours
which would otherwise be lost to the atmosphere.”
Mr Koren says: “The Triality VLCC will not be contracted in the
very near future, but the project points in specific directions for the
development of future designs. It is worth noting that features incor-
porated in the Triality concept may well be applied to smaller tank-
ers too.”
Five months on, DNV unveiled its Ecore design for a very large
ore carrier which was produced as part of a joint maritime indus-
try project. This has involved engine maker, MAN Diesel & Turbo,
cargo equipment specialist Cargotec and other partners, FKAB and
TGE Marine.
DNV project manager Pål Wold says the aim was to develop a
large ore carrier design that lowered fuel costs and improved load-
ing efficiency.
The curvaceous design – one hesitates to call it sexy, although
it does have a certain allure - features a more ballast friendly hull
shape and a large centre cargo hold layout. There are also two-
stroke dual fuel ME-GI engines using liquefied natural gas and a
highly efficient self-loading system.
The vessel has two receiving hoppers, one on each side, and
bulk material is loaded into one of these at up to 16,000 tonnes per
hour by the shore-based loader. From the hopper, cargo is fed to
the loading conveyor, which travels on rails in the upper part of the
cargo hold and ensures continuous loading throughout the length of
the hold. The conveyor is reversible so that it can distribute material
to both ends.
DNV unveils ore and crude carriers that leave a lighter footprint
DesigN for chaNge
Cargotec sales director Johan Ericson says: “The MacGregor
material handling system is designed to overcome the problems that
can be caused at bulk cargo loading terminals by the length and
width of a vessel. It makes it possible for the shore-based loader
to operate at a single point along the vessel, removing the need to
move the loader, or the ship, or even both, during the loading proc-
ess.”
Mr Wold says: “Our goal was to combine proven systems and
design concepts to demonstrate how fuel costs can be reduced and
loading efficiency improved.”
The designers canvassed opinion from shipowners, cargo own-
ers and brokers to ensure the project was consistent with market
demand, while designing the vessel for a recognised iron ore trade
- from Australia to China. “Ecore is grounded in market reality and
applies existing technology to real-world issues,” Mr Wold adds.
The concept specifications feature a 250,000 dwt vessel with a
length of 330 m and a loaded draught of 18 m operating at a loaded
service speed of 14.9 knots. The vessel features a ship-to-ship LNG
and fuel oil bunkering system for locations off Shanghai or Western
Australia. DNV estimates it would take nine to 15 hours to bunker
the vessel with around 4,000 cu m of LNG.
Mr Wold says that with a single cargo hold, the cargo centre-
hold layout and midship-form was developed to minimise the need
for ballast, and enable more efficient cargo handling and allow
space for LNG tanks to be stored below the main deck. ]
Conveyance made easy
May/June 2011 asiamaritime 41
ambrief encountersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
There are many mansions in the house
of Bernie B, the great operator in the public
relations game. One is the home of the risk-
taker, for Bernie likes a bet or two and it was
somehow typical we met on the fast catama-
ran to Macau, me en route to a cheap flight,
him to splash the cash on the tables.
A very hard man to categorise. Very af-
fable face to face, fond of a drink or three but
with the best distribution in the business.
Bernie B has every little port paper in the
world on his distribution. If you need a crane
driver and you are the worst paying port
operator in South Asia, Bernie can find you
one (for a very reasonable fee). If you need
to produce the glossy but stodgy sandwich of
documents necessary for an IPO on one of
the world’s stock exchanges, Bernie’s stable of
designers, wordsmiths and lawyers will do the
needful. But the killer ap for Bernie B is how
prepared he is for when the sticky stuff hits
the fan.
Hours it seems after some bulker spills
its guts on some picturesque coast, days
before the dozy Clubs and insurers get their
acts together, a grave faced” company rep-
resentative” appears on the screens and in
the breakfast newspapers, to the naked eye
a company spokesman, to we few, one of the small team of actors
employed by Bernie to help him manage the periodic crises arising
in the industry. Like the villains in many Hollywood films, these
character actors tend to be British, middle aged, weary looking and
many times married.
How Did Bernie B get to where he is today? Like many he be-
gan his rise in the field of PR as a journalist for a trade paper, Pow-
ered Ships, back in the early 1970s. Didactic, scary sub-editors
hammered his command of good clean prose into him.
Busy as he is, Bernie B can still knock out 400 words of crystal
clear prose on any subject of the hour. Dozens of people in the in-
dustry first learned to endure the blue pencil wielded by Bernie B.
Yet it is not entirely clear where he comes from. There is a touch
of the middle European about him, but he swears he is part Bel-
gian. He speaks English like a native, but can converse and swear
in Cantonese to a standard that has made him famous in South
China. Certainly he can work in German French or Russian when
he needs to.
CC Kai meets Bernie B, dean of the PR men
On the OtheR side Of the Pen
He is very able at merging and demerging with much bigger
companies. He has sold and resold companies like B Associates
or B PR or some variation on that theme many times. He seems to
profit from the knowledge that the big battalions never quite “get”
shipping and transport, nor do they manage to proceed beyond
the “oily rag “ image that more or less prevails in the world for the
industry.
For Bernie B’s success rests on something like an innate abil-
ity to turn a profit married to the wonder and enthusiasm of an
industry nerd. He is still something of a ship-spotter. He can still
be found at the end of a quay scrutinising a ship. His address book
of people who really know ship construction is a legend. He is
rumoured to be in negotiation with a large PR conglomerate that
is anxious to get into shipping. Will it be a deal too far? Will the
man with the goatee prevail? How much longer can his liver en-
dure the abuse? When will the Tai Tai get her way and force him to
retire? All very hard to say—such is the highwire act of Bernie B,
dean of the PROs.]
42 asiamaritime May/June 2011
At lAst the spotlight moved to Hong Kong and away from its
closest rival as the Seatrade Asia Awards event was shipped in to
the Grand Hyatt on June 17.
Award winners, Harry Banga of Noble Group (Seatrade Life-
time Achievement Award), Wah Kwong’s vice chairman Sabrina
Chao (Seatrade Young Person of the Year), and president of China
Rongsheng Heavy Industries Group, Chen Qiang (Seatrade Personal-
ity of the Year), mingled amidst a gathering of more than 450 guests.
Hong Kong plays Host to sHipping’s finest
Other notable winners included Pacific Basin (Bulk Operator
Award), Thome Ship Management (Ship Manager Award), HSBC
(Ship Finance Award), while China Rongsheng picked up its
second award of the night in the Shipbuilding category.
In a time of general gloom for the industry, a night of
communal back-slapping is always a welcome event. ]
Winners stand on ceremony at the seatrade Asia Awards in hong Kong
the impending exit of NOL chief executive Ron Wid-
dows, announced at the end of April looks, as each day
passes, like a tip of the iceberg moment. During his three-
year reign at the helm of NOL and a number of years previ-
ously with subsidiary APL, Mr Widdows has been a high-
profile figure in a high-profile sector of the shipping industry.
Apart from his full-time jobs he formerly led the Transpacific
Stabilization Agreement and is current president of the
World Shipping Council.
And yet there is a sense
that the magic was leaving
this ultimate professional. Mr
Widdows could be accused
of holding out against the
inevitable by refusing to join
the megaship rush. His an-
nouncement that NOL was
finally ordering 10 14,000 teu
CHanging of tHe guard at nol
amdiaryamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
Apl president eng Aik meng joins the exodus from Apl
42 asiamaritime May/June 2011
At lAst the spotlight moved to Hong Kong and away from its
closest rival as the Seatrade Asia Awards event was shipped in to
the Grand Hyatt on June 17.
Award winners, Harry Banga of Noble Group (Seatrade Life-
time Achievement Award), Wah Kwong’s vice chairman Sabrina
Chao (Seatrade Young Person of the Year), and president of China
Rongsheng Heavy Industries Group, Chen Qiang (Seatrade Personal-
ity of the Year), mingled amidst a gathering of more than 450 guests.
Hong Kong plays Host to sHipping’s finest
Other notable winners included Pacific Basin (Bulk Operator
Award), Thome Ship Management (Ship Manager Award), HSBC
(Ship Finance Award), while China Rongsheng picked up its
second award of the night in the Shipbuilding category.
In a time of general gloom for the industry, a night of
communal back-slapping is always a welcome event. ]
Winners stand on ceremony at the seatrade Asia Awards in hong Kong
the impending exit of NOL chief executive Ron Wid-
dows, announced at the end of April looks, as each day
passes, like a tip of the iceberg moment. During his three-
year reign at the helm of NOL and a number of years previ-
ously with subsidiary APL, Mr Widdows has been a high-
profile figure in a high-profile sector of the shipping industry.
Apart from his full-time jobs he formerly led the Transpacific
Stabilization Agreement and is current president of the
World Shipping Council.
And yet there is a sense
that the magic was leaving
this ultimate professional. Mr
Widdows could be accused
of holding out against the
inevitable by refusing to join
the megaship rush. His an-
nouncement that NOL was
finally ordering 10 14,000 teu
CHanging of tHe guard at nol
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Apl president eng Aik meng joins the exodus from Apl
44 asiamaritime May/June 2011
ammaritime’s back pagesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam
All ChnAge At nOl
Singapore container Shipping giant Neptune Orient
Lines has been in the news following the announcement that
Ron Widdows would retire as group president and chief ex-
ecutive officer at the end of this year.
Mr Widdows, 57, has been with NOL for 30 years and
will remain as a senior adviser when he is replaced by Mr
Ng Yat Chung, a senior executive of Singapore Government-
owned investment company Temasek Holdings.
Mr Ng, 49, spent 28 years in key leadership roles in the
Singapore Armed Forces, including a stint as chief of Defence
Force, before joining Temasek in 2007 as portfolio manage-
ment managing director. Temasek Holdings owns about 68%
of NOL.
NOL says that Ng’s appointment stems from the company’s on-
going succession planning and leadership renewal process.
Mr Widdows became NOL’s CEO in 2008 after heading its con-
tainer shipping business APL from 2003. NOL acquired APL (Ameri-
can President Lines) in 1997.
out of the boxAPL was one of the first shipping lines in the world to sense the
customer benefits of containerisation.
In 1958 APL’s CEO Ralph Davies, an oil man, sent a fact-finding
mission to 26 major ports to assess the readiness for containers
around the world.
Despite a skeptical industry, around 25% of all APL cargoes in
the Pacific were containerised a decade later, with the figure leap-
ing to nearly 60% by 1973.
Birth of noLNOL began life in December 1968 as Singapore’s national ship-
ping line, wholly-owned by the government just as it was becoming
clear that containerisation was the way of the future.
Today, NOL group has grown to be a major force in global
container transportation and logistics through its industry-leading
container transport brand APL and its supply-chain management
arm APL Logistics. The group now transports more than 2m feu
annually.
The company’s initial fleet of five vessels faced tough competi-
tion from well-established players during those early days including
large British and European consortia, which had dominated the ma-
jor trade routes since the 1820s.
Against tremendous odds, NOL charted a path of growth - ex-
panding into new trades with new services. By 1973 the company’s
K K Chadha looks back to the origins of Singapore’s most successful shipping venture
fleet was 20-strong and by the mid-1970s NOL had turned its first
profit under the leadership of managing director Goh Chok Tong,
who went on to become Singapore’s second Prime Minister.
The 1970s marked the true era of containerisation - an opportu-
nity that NOL seized with investments in new purpose-built vessels.
NOL entered the Asia-Europe trade as part of the ACE consortium
with partners OOCL and K Line, while the company’s foray into the
key Trans-Pacific trade began with a standalone service.
NOL’s successful Initial Public Offering (IPO) in 1981 reflected
its “coming of age”, raising S$155m (US$126m) to fuel further
growth, expand the company and diversify ownership beyond the
government.
The maturing NOL group continued to grow landside capabili-
ties to augment its liner business, and by the early 1990s had diver-
sified into the lightering business with oil and petroleum product
tankers - under the brands AET (American Eagle Tankers) and NAS
(Neptune Associated Shipping).
The NOL group’s brands, APL and APL Logistics, are leaders in
the global container transportation industry with more than 11,000
employees providing
services in over 140 countries, helping to make NOL the largest
shipping and transportation company listed on the Singapore Stock
Exchange.
As of today NOL is active in tackling a range of key issues in the
global supply chain on behalf of its customers, from changing secu-
rity requirements to the increasing importance of China and India,
the challenges facing the Panama Canal and infrastructure-related
congestion in North America. ]
the neptune coral, one of the first cellular container vessels in the noL fleet, introduced in 1977
Greg MarchAsia DirectorThe Journal of CommerceHong KongTel: +852 2585 [email protected]
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For more details, contact:For general or registration inquiries, please email us at [email protected].
Specific topics for discussion include:Beyond the coast: big labor cost increases in traditional manufacturing regions in China are forcing the relocation of manufacturing and assembly deep into the hinterlands, creating urgency around inland transport connections including container on rail. To what degree should shippers seek to manage this?
How are labor shortages impacting origin consolidation and other logistics activities? Capacity, supply and demand and rate outlook on the East-West trades.
Global economic overview: Trade, consumer spending, global imbalances and performance of individual national economies all impact on container shipping volumes.
South China economic development post-recession
Hosted by Silver Sponsor Organized byLanyard & Badge SponsorPlatinum Sponsors
Intercontinental Shenzhen, China
October 11-12, 20115th Annual TPM Asia Conference
ASIA
TPM Asia presents a series of in-depth sessions with top-level speakers focusing on container trade and
logistics in the Europe-Asia, Trans-Pacific, and Intra-Asia markets, from an Asian perspective. This confer-
ence will address these issues head-on, with keynote speakers, roundtable discussions and formal
presentations. The objective is to give shippers, carriers, 3PLs, terminals and other industry professionals
a detailed briefing on a range of urgent issues affecting container shipping and logistics in Asia.