maritime ceo issue one 2016

ISSUE ONE 2016 www.maritime-ceo.com

Aldo Grimaldi The shipowner who really

has seen it all

Issue ONe 2016 1

3 At The Prow

Economy 5 US 6 EU 9 China10 India11 Brazil

Markets13 Dry Bulk15 Tankers17 Containers19 Offshore21 Finance

Executive Debate22 Seafarer obesity

Profiles26 Cover Story Grimaldi Holding

31 Perseveranza di Navigazione33 Thorco35 Andriaki37 Genshipping Pacific38 Winning41 Messina43 Elektrans

Recreation44 Wine45 Gadgets46 Books47 Travel

Opinion49 Tobias Knig51 Andrew Craig-Bennett52 MarPoll

Manifest

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Issue ONe 2016 3

News in late February that the 272-year-old Baltic Exchnage will look over takeover bids including from Singapore and Hong Kong will come as a shock to some, while for others it will be seen as another inevitable passing of the baton by what was once the worlds most important shipping hub.

The Baltic Exchange is by any definition a bit of a strange old beast. Its no longer an exchange and has very little to do with the Baltic, but there it has stood at the heart of the London shipping scene since the 18th century.

Beyond its property assets, its value lies in the route assessments and indices published daily against which physical and derivative shipping deals are transacted. In recent years the Baltic has worked hard to transform itself into a digital data provider and has successfully defended the way it collects assess-ments from brokers against charges it could be subject to LIBOR-style manipulation.

It has also under the steward-ship of departing CEO Jeremy Penn finally got its act together when it comes to handling the worlds most important shipping region, Asia. After some half-hearted attempts to expand its product portfolio, it began index publication during the Asian trading day, is working with the Ningbo Shipping Exchange on a dedi-cated Asia-Europe route assessment and together with Maritime London has embarked on a series of expedi-tions to China where it identifies new business opportunities.

Several years ago, opposition from brokers and users was instru-mental in scuppering plans for a deal to sell the Baltic to the London Metal Exchange (LME). But the LMEs ardour has not apparently cooled and as it too seeks to modernise, it has spent the last few months in negotiations with the Baltic about an agreed bid.

Whether the LME has failed to

show enough leg is not clear, but the news that the Baltic is also report-edly in talks with others including the Singapore Exchange suggests that what started as a flirtation has turned into a bidding/beauty con-test. Conversations with publisher and index provider Platts are thought to have been shelved in favour of a markets operator.

Take a step further back for the bigger picture of this sale and you could detect a bidding war between two other trading hubs for derivatives business. Singapore has been claiming ever more volumes of derivatives trade, putting pressure on Hong Kong, which has in the past tended to be Asias top centre for this type of trading. Note here the Hong Kong Exchanges and Clearing bought out LME, the Baltics original bidder, in 2012.

The sale of the Baltic suggests the end of an era in shipping and the start of a more commercially-driven phase in which the lucky bidder is able to monopolise the collection, publication and licensing of dry bulk and tanker markets data.

Londons place in the maritime universe is clearly not what it was, emblematic of the shift east in all things shipping seen since the turn of the century. The loss of the Baltic, one of the icons of Maritime London, just at a time when the City has been trying to assert its importance on the global stage would be very damaging, particularly in the wake of Royal Bank of Scotland pulling out of ship finance.

Baltics Asian shift

at the prow

An ASM publication

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Issue ONe 2016 5

reGULar eConoMY Us

America is defiant at least in the White House. US presi-dent Barack Obama touted his economic record in his final State of the Union, saying, Anyone claim-ing that Americas economy is in decline is peddling fiction. But that may not be everyones view.

In its quarterly survey of 140 US CEOs, the Business Roundtable organisation found that their economic outlook was the lowest in three years. Their outlook based on their projections for sales, invest-ment and hiring plans for the next six months fell from 74.1 in the third quarter of 2015 to 67.5 in the fourth quarter. And there is plenty for Americans to worry about and that could lead to recession again.

Primary among these reasons currently is the slowdown in China. Chinas move towards a domestic consumption model means its buying less of the big stuff com-modities, machinery, etc from America, though opportunities

for American products and ser-vices are brighter than for a while. However, the plummeting price of crude oil may be boosting domestic consumption (70% of the American economy). Consumers do appear to be spending at a higher rate of growth this January 2016 over last January. Spending is up 5% to 6% and some analysts believe that cheaper gasoline accounts for about 1% of that growth.

America is of course a largely consumption driven economy. However, in 2015, exports accounted for about 9.3% of total American economic output. America began exporting oil again in 2015 but, additionally, exports of aircraft and spacecraft rose 57.2% across the year led by international sales of large aircraft, smaller helicopters and communications satellites. Vehicle exports were also significantly up last year - at a growth of 37.1% year-on-year driven by medium-size cars.

Energy exports are likely to become even more important in 2016 with oil exports continuing as well

as the start of exports of natural gas from Americas shale formations. With gas demand in parts of Asia weakening, US suppliers are turning their attention to Europe as their primary market.

But still analysts are asking if the American economy could poten-tially tank in 2016? Some argue the coming presidential elections look likely to be focused on foreign policy and domestic economics. Certainly 2016 looks tougher for China (with reduced growth and struggling state industries) and elsewhere globally (think of stagnation in Brazil), but many believe Americas economic resurgence of late is somewhat immune to global conditions and the consensus seems to be that an unexciting but non-recessionary 2% GDP growth is the best that can be expected this year. The major fly in the ointment to many is that slowdown globally in the emerg-ing markets could feed a strong dollar and lessen external demand for American goods and services thereby dampening growth.

Americas major industrial export categories, 2015 Category % of total exportsMachines, engines, pumps 13.6Electronic equipment 10.6Oil 9.6Vehicles 8.4Aircraft, spacecraft 7.7Medical, technical equipment 5.2Gems, precious metals, coins 4.0Plastics 3.9Pharmaceuticals 2.7Organic chemicals 2.6

Source: US Department of Commerce

Defiance from the topAnyone claiming that Americas economy is in decline is peddling fiction, claims Obama. Some are less confident

maritimeceo6

reGULar

The Eurozones economists appear mainly bullish about 2016 despite the ongoing migrant crisis and the possibility of a British exit from the union (Brexit). European Economics Commissioner Pierre Moscovic recently said, European Central banks still have more firepower they can use to coun-ter a slowdown in global growth, which does not change the outlook for recovery in the Eurozone. Not everyone would agree with that analysis.

French President Francois Holland told reporters Europe was on the edge of an economic meltdown. As ever these comments reflect the different outlooks from the various capitals of the EU France is faced with unemployment at an 18-year high of 10.6%. Germany, the epicen-tre of the migrant crisis, also saw industrial output stagnant at 0% last year and a drop off in consumer con-fidence which will probably translate into a slowdown in retail sales there this year. Germany and France are the two biggest economies in the Eurozone.

Certainly German, and to a lesser extent French and British, exporters are feeling the pain of the global slowdown and the fall in orders from China. Industrial production is a cornerstone of Germanys economy so the stag-nation there is a concern. The EU executives last forecast was in November 2015 and argued that the Eurozone would grow by 1.8% this year and 1.9% in 2017 after an estimated 1.6% last year. But most analysts expect the next round of forecasting to lower those estimates in the light of German stagnation.

Meanwhile, the IMF argues a slightly different progression for Europe. The funds economists

believe that lower oil prices will help support private consumption in Europe and therefore recently added 0.1% to its 2016 Euro area growth forecast, bringing it to 1.7%, where it will remain for 2017. This estimate though may be altered if the two possibles of the breakdown of the 26-nation Schengen open-border

passport-free travel area materialise due to either the crisis over migrants, or the possible British vote to leave the union.

Most feel the Brexit referendum in the UK too close to call at the moment. However, the UK appears to be weathering the current storm better than the continent. The UKs car production hit a record 10-year high in 2015, according to figures released by the Society of Motor Manufacturers and Traders (SMMT) in January. However, the UK is not immune from global events 2015 UK car exports to Russia fell by 70% (due to the sanctions regime) and China exports dropped to 37.5% (due to the slowdown in the PRC).

The EU is now taking about the potential benefits of tailwinds those factors that make it easier for the economy to start growing. The tailwinds listed for 2016 are lower oil prices and the weak euro. If man-ufacturing becomes cheaper and exports pick up then firms will start hiring.

Hung out to dry?How damaging would a Brexit be?

Germanys export partners, 2015Country Exports to in bnFrance 100.32

US 88.37

UK 75.64

Netherlands 70.94

China 67.02

Austria 56.17

Italy 53.32

Switzerland 47.32

Poland 42.35

Belgium 42.25

Russia 36.01Source: German Federal Statistical Office

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Issue ONe 2016 9

Chinas economy has now effec-tively completed the shift from an export-driven model to one that is powered by domestic con-sumption and services growth. That doesnt mean there wont be problems for Beijing to deal with jobs will still need to be created, the end of the old rust belt industries will need to be carefully managed to prevent unrest but the shift has occurred.

The latest official data from the National Bureau of Statistics in Beijing indicates that the con-sumer and services part of the economythe biggest part of the economyremains very healthy. While growth will continue to decel-erate gradually in the coming years, the risks of a hard landing are very low. This is what Beijing is terming the new normal. After three decades of +10% growth, the base has become too big to sustain double-digit expansion. Structural changes and a shrinking workforce mean lower GDP headline numbers for years to come. But remember that while GDP rose by only 6.9% last year, that came on a base that was about 300% bigger than it was a decade ago.

Consumers are now firmly the big story in China good news for

those with goods and services to sell to China and the Chinese. This is being driven by the continuation of a decade of more than 130% real income growth, compared to about 8% growth in real per capita dis-posable personal income in the US over the same period. While there is moderate consumer price inflation, at about 1.5%, household debt is very low, and the savings rate remains very high.

Of course it youre still reliant on the old Chinese economy then the outlook is not so good. The situation will remain weak in heavy industries such as steel and cement. China has passed its peak in the growth of construction of infrastructure and new homes. However, manufacturing

has not collapsed; crude oil imports by volume rose 9% last year, and the volume of copper imports was up 12%. Factories are still producing and exports are still being shipped. Just at a more reasonable rate than the years of demon exporting.

But, its worth reiterating, con-sumption is the story now. Domestic consumption accounted for about two-thirds of GDP growth in 2015, illustrating that the economy has rebalanced away from a depend-ence on exports, heavy industry and investment.

It seems certain that 2016 will be another year of Chinese volatility. The A-share market has, throughout its history, been incredibly volatile. As the real economy becomes more market-oriented, driven by privately owned rather than state-owned firms, there will be more volatility. As policymakers and regulators experi-ment with unfamiliar tools designed to support economic rebalancing, their mistakes will add to that volatil-ity. But with continued wages growth, a strong retail and consumer sector and factories shifting increasingly to hi-tech and innovative products with higher margins this can be offset over the long term.

Consumption growthCategory y-o-y % growth over 2014SUV sales 52

Express parcel deliveries 48Furniture sales 16Household appliances 11Passenger cars 7New home sales 7

Source: National Bureau of Statistics

New balanceConsumers are now firmly the big story in the Peoples Republic

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maritimeceo10

With Chinas GDP growth slowing as Beijing embraces the new normal of its consumption led, less export dependent economy, many in India think it is time for the South Asian giant to step up. Growing urbanisation and a swelling middle class are signs that this might be possible as Indians point to Chinas plateauing urbanisation and prob-lematic ageing demographics. GDP growth is in the region of 7.5% at present though the Indian finance Minister, Arun Jaitley, recently told the World Economic Forum he believes it should be 1 to 1.5% more than this.

India had a generally good 2015 though its steel industry performed poorly and the country had to import more steel from China than it had originally predicted. Additionally, bad monsoon conditions were a drag on agricultural production. However, the collapse of world crude oil prices probably has more far reaching con-sequences in India than in any other developing economy. The Indian government subsidises fuel costs to

a big extent and so any fall in global prices reduces this subsidy signifi-cantly. These savings could allow the government to direct further spend-ing towards infrastructure and road networks across the country.

However, as many analysts point out, the same old problems persist in India. Regulations are still overly burdensome on business, there is little to no support to start-ups (despite Indias obvious potential in hi-tech and innovative new busi-nesses) and skilled workers are still few and far between as the countrys higher education system requires a major overhaul. Meanwhile, the long promised modernisation of Indias antiquated goods and services tax (GST), which would help smooth trade and standardise costs, remains in abeyance due to protests from opposition parties.

Perhaps most worryingly for the long-term, Indian exports are not performing as well as expected. For 13 successive months now, Indias exports have contracted, according to official data published by the min-istry of commerce. Orders from the

European Union, East Asia, China and the US have all shrunk. In the nine months from April to December 2015 period, exports contracted 18.1%. Getting exports back on track will be a major task for the Modi government, which, compared to a competitor economy like Chinas, has far fewer levers to pull. Most analysts however believe that without a renewed push for reforms India will find any recovery in exports very difficult.

A plus sign is the domestic consumer market. Food retailing is growing steadily as is non-food including key sectors such as cars, appliances and electronics. And the single biggest plus for India right now is oil prices. Low crude prices are helping reduce fiscal deficit, and contain inflation. Low inflation, in turn, is helping boost consump-tion. This will in turn of course help retailers (if the antiquated retail investment laws ever see liberal-isation) as well as services such as airlines, hotels and the travel industry which is reporting strong growth.

Gear change Why the South Asian nation is still failing when it comes to exports

eConoMY india

Major retail sales categories in India, 2015*Category % of total spendFood and grocery 66.7

Apparel 8.8Jewellery & watches 7.6Consumer electronics 5.0Pharmacy 2.9Furnishings & furniture 3.6Footwear 1.1Others 4.3

*=not including property, cars, healthcare, public transport, utility bills, etcSource: Indian Ministry of Statistics

Issue ONe 2016 11

Brazils economy continues to not so much melt down as slowly melt away. The Brazilian economy is now heading toward its deepest two-year contrac-tion since 1901 as the government struggles to revive growth and contain inflation. Last year GDP contracted by 3.6%; this year it seems likely that the contraction will be a further 3.5%, according to the IMF (the largest downgrade for any individual economy by the fund) almost in the direct opposite direc-tion of the global predicted economic growth rate of 3.3%.

Investment into the country has plummeted; unemployment has shot up, inflation is soaring and the coun-trys currency, the real, has lost 35%

of its value. Add to this that investors are still nervous at the slowly, and the seemingly forever ongoing scandals at Petrobras.

In some areas there is not much Brazil can do soybeans, oil and coffee are all major commodities whose prices have fallen on the world markets and just happen to be among Brazils major exports. However, the countrys fractious politics also deters investors. President Dilma Rousseff, who has a mere 12% approval rating, is now likely to be challenged and/or impeached to stand down amid the economic chaos.

The IMF does not believe that Brazil will return to any level of growth until at least 2018 now. Brazils woes also ripple out across Latin America, which will probably see a 0.3% economic contraction region-wide in 2016.

Brazils new finance minister Nelson Barbosa is hoping a new raft of economic reform measures will improve things, but these still have to be voted through and that looks unlikely at the moment. With commodity prices low kick-starting the countrys export economy will prove a tough challenge. Inventories are reportedly at all time highs,

particularly in the iron ore sector. Can Rio get an Olympics bounce

this year? It seems increasingly unlikely as the country has already started slashing the bill for the games, much to the annoyance of the International Olympic Committee.

Consumers are not in a happy mood either amid the turmoil. A record 59m Brazilians were behind in payment of utility bills, or had defaulted loans and bounced checks at the end of last year. So the chances of a consumer led recovery are highly unlikely. With accelerating inflation which topped 10% last year and large job losses across the board things on the consumer and domestic consumption front are only set to get worse. Only the discount retailers are predicting any significant growth this year in the sector.

If there is hope for the major commodities sectors then it is that Chinas imports of major commodi-ties from Brazil seem to be remaining on trend. China remains Brazils top trading partner and imported a record amount of crude last year as oils lowest annual average price in more than a decade spurred stock-piling and boosted demand from independent refiners.

eConoMY BraziL

Brazils key export sectors, 2015Category % of total exportsIron ore 17Petroleum products 13Soybeans 5Steel 3Copper and base metals 2Gold and precious metals 1Other 59

Source: Instituto Brasileiro de Geografia e Estatstica

The greatmelt awayThe South American country is the worst performer tracked by the IMF

Issue ONe 2016 13

reGULarMarkets drY BULk

A key theme of ours over the past several months is that market consensus has continued to hold far too bullish of expectations for dry bulk freight rates. While on the surface the mar-ket is now exclusively full of bears, in reality the FFA curve continues to show that the market still expects a very large rebound in overall freight rates will occur this year. However, we have remained particularly bear-ish for the panamax and handymax markets and continue to urge cau-tion when anticipating a very large recovery. We do believe rates will be able to see a small amount of support from current lows, but the FFA curve shows that the market is expecting panamax and handymax rates in 2016 will average almost double than their current rate. Unfortunately, this is very unlikely to occur.

If the dry bulk fleet is set to see more growth than dry bulk cargo growth this year (which remains our view), then we do not believe that freight rates will be able to experi-ence that large of an improvement. In our reports in 2013 and 2014, we discussed that even as cargo growth was great back during the second half of 2013 when a surge in new-building orders was first occurring, it was evident then that too many

vessels were being ordered. The market had been set to ultimately come under cyclical pressure, but the sudden end of growth in Chinese coal imports was a huge change never before seen in the current China WTO era. While none of this is news, panamax and handymax freight rate expectations for this year seem to ignore the reality of just how much pressure the dry bulk market will continue to experience. Expectations remaining overly bullish, though, will continue to present opportunities to profit in the market

One key issue we have stressed over the years is that when new-building orders were surging in 2013 and 2014, consensus was Chinas coal imports would rise to around to 350m tons in 2014 and 370m tons in 2015 (2013 saw imports set a record of 328mtons). It was fair for the market to expect that imports would continue to grow, before China ended up surprising the market. What is unreasonable now, though, is to suggest a very large recovery is coming in 2016. Approximately 965 panamax and handymax (including ultramax) vessels were ordered in 2013 and 2014. In comparison, 2011 and 2012 saw 560 ordered. The 965 vessels ordered in 2013 and 2014 were ordered in great part due to

expectations that seaborne coal trade would remain robust, but in reality coal trade ended up falling far short of expectations the market held back when so many new vessels were being ordered.

2014 ended up seeing Chinese coal imports come in at 54m tons less than the market had expected back in 2013/2014 when the surge in newbuilding orders was taking place (as China imported only 292m tons). 2015 then saw Chinese coal imports come in at 166m tons less than the market had expected (as China imported only 204m tons). Chinas coal imports falling short of the markets expectations for 2014 by 54m tons works out to an absence of 730 cargoes (if simplified as solely a panamax cargo for the sake of computation). Chinese coal imports falling short of market expectations in 2015 by 166m tons works out to an absence of 2,243 cargoes.

Overall dry bulk fleet growth remains likely to outpace cargo volume growth this year, and panamax and handymax (including supramax) deliveries will make up the majority of the deliveries. At the same time, there remains a very good chance that global seaborne coal trade will decrease this year in absolute volume. This will remain a very negative factor for the panamax and handymax markets, and we do not believe that rates in 2016 will rebound by nearly as much as market consensus believes. The fundamental supply and demand of dry bulk ves-sels is likely to remain out of balance this year, and we continue to remain most sceptical for panamax and handymax expectations.

Coal bets turn redOwners ordered ships in 2013/14 in the mistaken belief China would keep on growing its coal imports, writes Jeffrey Landsberg from Commodore Research

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Issue ONe 2016 15

reGULarMarkets tankers

Unlike many of the other main shipping segments, such as containers and dry cargo, which are going through very challenging times, crude oil and product tankers seem to be humming along nicely, despite (or because of?) continuously falling oil prices and reports of slowing growth in China. Is the tanker market living on borrowed time with a correction just around the corner or can we expect the market outperformance to continue? As is usually the case, it depends.

If we go back a few years, we can see how the seeds for the current bull tanker market were sewn. After the global financial crisis of 2008-2009, tanker rates and prices collapsed and newbuilding contracting slowed to a trickle. As a result, newbuild-ing deliveries during the period 2013-2015 (for vessels ordered after 2009) totaled 491 across all tanker segments, almost 40% less than the 802 vessels that hit the water during the three-year period from 2010-2012 (mostly vessels ordered prior to the financial crisis). Demand for tankers actually started to grow again during this period, partly due to a worldwide recovery in economic activity and partly due to the growth in average distances over which oil and oil products are being moved. Crude trades, for example, are benefiting from more long-haul movement of oil from producers in the Atlantic Basin (like Venezuela, Angola and Nigeria) to consumers in the Pacific. Product tankers are moving more refined products globally over longer distances as a result of the comple-tion of large export refineries in the

Middle East and Asia. Combined, these developments have boosted tanker demand.

In recent years, oil production has provided an additional boost to tanker demand as it continued to grow at a faster pace than oil demand. Initially, the main con-tributor was the United States, where the rapid growth in shale oil production added significant supply to world oil markets. Shale oil production in the US rose from less than 500,000 barrels per day in the first half of 2008 to a recent peak of 4.64m barrels per day in May 2015, a 10-fold increase. The shale revolution impacted the oil and tanker mar-kets in various ways, the two most important being (a) a significant reduction in US crude oil imports, freeing up Atlantic Basin crudes for Asia and (b) a significant decline in the price of oil since the middle of 2014, as production increased faster than world oil demand. In the second half of 2014 and throughout 2015, oil supply continuously exceeded oil demand by a significant margin, leading to significant stock building. In addition to the increases from the US shale, OPEC producers decided to challenge non-OPEC for market share and also increase production.

The chart from the Energy Information Agency below illustrates the point. It shows the quarterly changes in OECD inventories (year-on-year) for the period 2009 2015. The last time we have a significant

inventory build was in 2009, but the increases we have seen in the last 18 months have been higher and longer in duration.

The International Energy Agency (IEA) estimated that worldwide crude oil stocks increased by an average of 1.2m barrels per day in the second half of 2014 and by 1.8m barrels per day in 2015. This means that over the last 18 months, world-wide inventories have grown by an astounding 875m barrels. Most of this crude was transported by sea, providing material support for the tanker market.

The abundance of oil in world markets has sent the price of crude spiralling down to levels not seen since 2012. As a result, shale oil production in the US has started to decline already. Significant cuts in capital expenditures by the interna-tional oil industry will also have an impact on production in the years to come. At some point, this will have an impact on tanker rates, especially since the healthy market over the last 18 to 24 months has led to a signifi-cant increase in newbuilding orders. These new vessels may be delivered around the same time as tanker demand starts to falter. And so the tanker cycle starts again.

Too much oil and not enough shipsErik Broekhuizen from Poten & Partners charts how tankers got into such a sweet spot

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Issue ONe 2016 17

Markets Containers

The coming mergers between CMA CGM and APL as well as between COSCO and CSCL will in itself only change the degree of consolidation in the industry marginally. However, the practical ramifications might have significant repercussions on the alliance struc-ture and place some carriers under intensified competitive pressure.

A year ago the problem was that a range of carriers did not have any sizeable portfolio of ultra-large vessels. When this was seen in the context of a three-year forecast it would eventually lead to a signifi-cant unit cost disadvantage for some of the alliances. Since then carriers have placed a significant amount of orders for large and ultra-large vessels. The result is, that when new-buildings have been delivered, then the alliances will be able to field ves-sels of almost equal size. Hence no alliance will have a decisive unit cost advantage from vessel size alone.

The current composition of the alliances shows that 2M has a much larger number of vessels than the remaining three other alliances. Ocean 3, CKYHE and G6 have roughly the same amount of large vessels at their disposal. This means that 2M overall is able to operate a

network with more weekly services. Not only will such a network be able to provide a competitive advantage in terms of commercially more attractive direct port-port services, but it will also have a lower unit cost. A larger number of services on a given trade will result in lower unit costs simply due to a lowering of transhipment and feedering costs as well as through increased opera-tional flexibility.

All else being equal, this means that 2M has a lower unit cost on their network than the three other alliances. This in turn means that with carriers competing on price, then 2M has the strategic opportunity of allowing the price competition amongst the three other alliances to set the base rate level. 2M will then benefit from their lower unit cost to have a higher yield per box. This is an ideal situation for 2M.

However, the coming mergers have a high likelihood of changing this game. Whilst at the time of writ-ing it is not known which changes will happen, the two simplest sce-narios are as follows. One consists of APL moving with CMA CGM into Ocean 3 and at the same time CSCL also pulls COSCO into Ocean 3. The other simple scenario is for APL to still follow CMA CGM into Ocean 3, but for COSCO to pull CSCL into the CKYHE alliance.

Either one of these scenarios leads to a situation where an alliance either Ocean 3 or CKYHE grows to a size rivalling 2M. This means that 2M can lose their network unit cost advantage. This in turn will lead to the competition between these two large alliances lowering rate levels further, placing a significant pressure on the remaining two small

alliances which will be faced with lower freight rates but at the same time have to manage a smaller net-work with higher unit costs.

The other possibility as widely posited across the shipping press throughout February is for CMA CGM joining forces with China COSCO Shipping, OOCL and Evergreen.

Whatever the outcome all carriers are clearly facing a period of significant challenges going forward in the battle for getting the best network.

Were quite often so busy interacting

in our own little global bubble, and the segments we exist in, that we forget to keep up to speed with and learn from other industries Birgit Liodden, the head of

Nor-Shipping

The coming network battleSeaIntels Lars Jensen on liner alliance musical chairs

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Issue ONe 2016 19

The liftboat market has been held up as the new saviour to the offshore sector, something that is patently wrong. There has been a rapid increase in interest in liftboats in recent months, espe-cially in Southeast Asia, just as was evident in jack-ups a couple of years back, and whilst not quite a preci-pice, this sector is in for some severe headwinds.

Theres been plenty written about how liftboats could be a lifeline to hard-pressed Asian shipyards. We have seen a number of yards turning to fill spare capacity by building liftboats, and the liftboat sector has been creative in selling their assets advantages. The advantages include: self-propelled and lower mobilisation costs; large deck space for carrying loads; efficient jacking systems; market growth potential using the

age old liftboat to platform ratio in Southeast Asia being very high as compared to the Gulf of Mexico (GOM).

However, the liftboat market is looking eerily similar to that of the jack-up market. Charter rates seven or eight months hovered as high as $80,000 a day, theyre now as low as $24,000. While the cost to build one in the middle of last year stood at up to $100m, its now halved, with sig-nificant further discounts offered to buyers to take over build contracts, in some cases up to 15%. Theres also an increased number of mid-range liftboats now being offered on the open bid market.

Credit Suisse reports have scaled down the need for liftboats in the Southeast Asia region from 80 to 50 in the last six months due to lower capex and improved efficiency.

Major declines in international liftboat utilisation down to 37% could lead to market incur-sion. Of the 22 current newbuilds in Southeast Asia, only 10 have contracts.

All of this adds up to the barriers to entry in Southeast Asia being lowered, and this will be a challeng-ing period as liftboat owners enter the free cash flow / liquidity issues that haves recently confounded the jack-up sector.

For liftboat operators this year I reckon well see increased insolvency as many in this sector are already

leveraged beyond 1:1 and will fail to meet even interest repayments.

Therell be an oversupply of assets due to market creep from the likes of Middle East and GOM mar-kets where underutilisation forces redeployment to new regions cou-pled with the number of newbuilds coming into the markets.

Still, as bad as the sector is, Id sooner be in liftboats than jack-ups still. Why? Liftboats offer new niche markets in offshore windfarm devel-opment through the entire life cycle of these farms as well as opportuni-ties in decommissioning of offshore platforms.

However, to take advantage of this one needs good management, a sound balance sheet and free cash flow. Whether there is a Southeast Asian entity that can do this, well that is a question for another day.

Liftboats taking on jack-up market characteristicsAndre Wheeler pours cold water on the liftboat hype

Markets offshore

What we will see is the older

generation in offshore move towards retirement at a much earlier age than planned, which will potentially leave a huge skills gap George Gourlay, CEO of OCB

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Issue ONe 2016 21

reGULar

I will not hide it from you, dear reader, 2016 will be worse than last year. What surprises me is how unprepared companies have been for the crisis that has hit many sectors led by dry bulk and offshore. People did not prepare for the con-sequences. The scale and the speed of the current trough are down to over-ordering and overleveraging.

Bulker prices have nearly halved in the last 12 months, as have off-shore assets and plenty of owners tell me prices could still come off further.

The difference with where we are today compared to other cycles is that shippings downturn is in tandem with a banking one. Banking and shipping hitting the buffers at the same time is both very rare and very serious. This has brought a severe shortage of liquidity with very little backstop. As an owner, you need a good long-term rela-tionship with a banker to get any liquidity outside of newbuilding/ECA financing these days. Shipping

is a bad word among bankers right now. Whats more, banks are in much worse shape than they are willing to admit.

And what of private equity? Seen as the saviour of shipping by some since 2009 and destructive by others the PE folk have had their fingers so badly burned from their maritime excursions that they will not be looking at this sector again in a hurry. The yard-driven ecoship ordering wave has been especially disastrous for the oversupply.

Another reason why 2016 will be so brutal for so many is that the key driver for so much trade growth since the start of this millennium China is in a bad state. The Peoples Republic is not stabilising and I fear it could be in for major implosion just look at the many ghost towns and recent stock market setbacks.

Once again, my eyes glanced towards the back page of this mag-azine and the results of the annual Future of Shipping Poll, a vote that

always tends to pique my interest. Nearly three quarters of you believe financing for S&P deals for small- to medium-sized shipping lines will be hard to get. From my discussions with countless owners I can confirm this is true. There are myriad smaller Greek owners out there, for instance, who as their fathers and grandfa-thers have done in previous down cycles are desperate to buy, as ships are so cheap, but they are frustrated as their banks are either no longer in existence or are unable even to give conservative financing. All this will lead to, in my view, is still lower prices.

As mentioned at the start of this article, in this toughest of tough years I do not apologise for not sugar coating my outlook this year ship-pings bitter pill will kill off many more companies in the coming 24 months.

Markets finanCe

Banking and shipping hitting the buffers at the same time is both very rare and very serious

Lowest of the lowDagfinn Lunde warns readers 2015 will feel like a cakewalk compared to the travails owners face this year

maritimeceo22

In profIle

As the big four zero approaches in my life, it did seem to be a race between whatd get there first, my birthday or my waistline. Putting a sudden halt to this widening girth Ive signed up for the London Marathon along with my fiance Eliza. Were now in our third month of training and more improbably closing in on five weeks without alcohol.

April 24 is the big day 42 km through some of the best sights the British capital has to offer. Were running in aid of Sailors Society and Eliza and I have been wowed with the generosity shown in donations to date.

Our training these days takes us through 13 km in the stunning foot-hills of the eastern French Pyrenees. It is hardly flat, and the elevation jumps around from approximately 450 m above sea level to 750 m so the heart gets a good pumping.

Running, as well as its obvious physical benefits, is good for the brain it provides a decent, clear time to think. On one of my moun-tain assaults recently my thoughts turned to a career where exercise is seriously on the wane.

Seafaring these days has become ever more sedate, much of the daily rituals onboard are now taken up looking at screens, waiting for lights to pop up or buzzers to bleep.

On the occasions I have been at sea on commercial ships, I have eaten fantastically well (and run round the decks of VLCCs to work off the constant curry fests) but also noticed the poor shape of many sailors.

At dinner the other night, an ex-master told me how he had campaigned hard to try and get his bosses to acknowledge the risks of poor diets and limited exercise, all to no avail. Obesity, he said, was a far greater threat than alcohol onboard and yet no one paid the issue suitable attention. He even used to worry if some of his crew would be able to waddle fast enough and squeeze themselves into a lifeboat quickly if the need arrived.

I asked around some leading shipmanagers for input. Simon Doughty, ceo at Wallem, noted how obesity is definitely growing among Filipino seafarers. Wallems own reports suggest that 10% of all Filipino seafarers are either obese or borderline before joining and it has become common to require weight loss before accepting a seafarer is fit for sea.

Doughty cites the growth in use of smartphones, video games, Facebook and web surfing taking precedence over physical sports as one of the main reasons for this development. Studies indicate that Filipinos spend 60% of their free time on video games or the web. Secondly, Doughty notes Filipinos love fast food and rice. Just a decade ago Filipinos ate three times daily. But studies show that the modern Filipino often eats and snacks nines times a day.

Whereas the average male needs 2,200 calories daily, Wallem has

found that the average onboard calorie intake is nearer to 3,200.

There has to be a focus on eat-ing less, but better, Doughty says.

Quite so, agree staff from the crew and catering departments at another Hong Kong manager, Fleet Management.

Obesity is truly a growing prob-lem for our shipping industry and its a matter of grave concern, says a source at Fleet, adding: If you expect to see a seafarer coming home after a long arduous voyage, away from family and devoid of home food, frail and tired, you are mistaken. Some of them come back home as a fat, tardy and sluggish person with more health related issues than before.

Moreover, the dietary over

As he gears up for the London Marathon, Sam Chambers ponders the issue of seafarer obesity

Waist waste

There has to be a focus on eating less, but better

eXeCUtiVe deBate

Issue ONe 2016 23

In profIle

indulgence onboard and related lifestyle diseases is not only a profes-sional hazard for the seafarer himself but to the ship as well. It also costs by way of loss of manhours, reduced productivity and increased medical and insurance costs in case of sick-ness or an accident.

Sophia Bullard, pre-employment medical examination (PEME) direc-tor at the UK P&I Club, has worries about the obesity scourge too. In the last two years 38 crew have failed the UK P&I Club PEME on obesity grounds alone.

Carrying excess weight causes a strain on the system, she says, and can also lead to other serious illness such as hypertension, type 2 diabe-tes, and coronary heart disease.

233 cases of unfit crew examined

in the same period by the UK P&I Club were found to be suffering from a combination of these illnesses in addition to obesity.

The onboard dietary regime has been traditionally rich in animal and dairy fats with a high intake of pro-teins and comparatively less of fibre in the form of vegetables, fruits and salads. Additionally, the introduction of pizzas, burgers and other fast food items, rich in fat, have also crept from shore to the ships menu as part of regular meals with more intake of sugary soft drinks to boot.

Being away from family also brings in an element of loneliness in a person when one tends to eat more, notes the Fleet source.

Anglo-Eastern Univan, as well as Fleet and Wallem, have made dietary

and exercise improvements a priority recently.

Pradeep Chawla, managing director, quality assurance and training at Anglo-Eastern Univan, says the awareness of the issues with obesity has increased and many companies as well as med-ical clinics dealing with seafarers are now keeping statistics about obesity. His company has even made recipe books for healthier options for Indian, Filipino and East European diets. The recipes give the calorie content of the dishes usually pre-pared by the cooks.

Technology and the arrival of the smart ship will make seafaring ever more sedentary; the industry has to act as one to change diets and attitudes now.

As he gears up for the London Marathon, Sam Chambers ponders the issue of seafarer obesity

eXeCUtiVe deBate

maritimeceo24

In profIle

In profile this issueMaritime CEOs 17 correspondents around the world have been in touch with many of the worlds top shipowners. Highlights are carried over the next 13 pages

Stefano Messina

p.41

Aldo Grimaldi

p.26

Angelo DAmato

p.31

Issue ONe 2016 25

In profIle

Gabrijel Kobal

p.37

Bosco Lau

p.38

Thomas Mikkelsen

p.33

Dimitrios Korkodilos

p.35

Daniel Chopra

p.43

maritimeceo26

In profIle

The year 1922 marked a turn-ing point for the shipping industry. Pre-1914, Britain dominated the high seas, with more than half the merchant fleet and at one point, 80% of the shipbuilding capacity. But following the First World War, that era came to a close.

A clear indicator that Britain was no longer top dog came with the signing of the Naval Limitation Treaty, on 6 February 1922 at the Washington Naval Conference. This fixed the tonnage of permitted warships as: US 525,850 (15 ships); Britain 558,950 (15 ships) France 221,170; Italy 182,800 and Japan 301,000. So Britain still had a nom-inal tonnage advantage, but the US was clearly moving into that space. As an interesting subplot, in 1922 Japan completed the worlds first purpose designed aircraft carrier, the Hosho.

In the merchant shipping markets, 1922 marked the end of the post-First World War super-boom, the first of three in the industrys modern history. The shipbuilding boom was driven by high freights and massive retonnaging of passen-ger ships by the big liner companies Cunard, P&O, Orient Line, Union Castle, Hamburg Amerika, Hamburg Sud, etc.

Ship prices put the boom into perspective.

At the peak in 1919 a 7,500 dwt

Aldo Grimaldi, 93, discusses shipping revolutions past and present

How shipping has changed since 1922

Ours is the era of size is cool

Issue ONe 2016 27

In profIle

freighter cost $858,000, but by 1922 the standard ship price had slumped 70% to $272,000. It fluctuated around this level during the 1920s, before slumping further to $20,000 in 1932 during the great depression.

Meanwhile, ship technology was also changing direction. The switch from coal to oil was underway.

And the era of merchant sailing ships, which had enjoyed a profitable revival during the First World War, was all but over. In about 1922 the Pommern, a F. Laeisz flying P class ship, was sold to Gustaf Erikson, who ran the last deepsea sailing ship fleet. In 1939 the Pommern docked in Marienham in Aland Islands, where it is still moored in front of the mer-chant shipping museum.

According to the famous mari-time researcher, Dr Martin Stopford, 1922 was a true crossroads for shipping.

In geopolitics it was the turning point of the British and European empires, to be replaced by the US, multinational corporations and a completely new shipping scene.

The irresistible econom-ics of bunker oil redesigned the tramp ship and opened the way for the super ships of the 1950s and 1960s, the president of Clarkson Platou Research Services recounts. Meanwhile, the serious shipowners like Reedeerei F. Laeisz handed over their beautiful and heroic sailing ships into the capable hands of Gustaf Erikson, who gave them an honourable burial. All this took place against the background of a freight super cycle, followed a decade later by the great shipping depression of the 1930s. Unsurprisingly, many shipping dynasties were founded during this era.

1922 was also the year Aldo Grimaldi, the doyen of Italian ship-owners, was born. Now 93, hes still firmly at the helm of Genoa-based Grimaldi Holding, which currently owns four ropaxes built in Italy at

Nuovi Cantieri Apuania shipyard. Casting his mind back to look

at how the industry he loves has changed, Grimaldi says the most noteworthy thing is the extremely advanced technology applied today to ships during the design stage. This means we can see how the ship will perform even before we build it, he says.

The march towards autonomous ships is also something that amazes the Italian. Thanks to evolution in the field of electronics and com-puterisation, with a small number of crewmembers, we can manage and monitor the entire ship even automatically from the bridge and engine room control station, he notes.

The ease with which ships can now manoeuvre is something else that Grimaldi sees as a huge develop-ment in his lifetime.

The European Union is calling for more and more motorways of the seas

CoVer storY

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Issue ONe 2016 29

Thanks to bow thrusters and azipods, the units can fully turn around on their own. In other words, theres no need for tugs, he says.

A further dramatic change concerns ship sizes with Grimaldi quipping: Ours is the era of size is cool.

Grimaldis fleet of four ships are bareboat chartered out to Spanish, Greek and Danish shipping companies.

Grandi Navi Veloci ferry com-pany was also founded by Grimaldi in 1991 and remained part of the group until 2008 when MSC bought it.

In spite of his age Grimaldi continues to work hard at innovative investment opportunities and today is looking at new ropax orders.

We are carrying out an over-view of the yards in Europe that are capable, by set deadlines, of building the ships we require.

Unfortunately in Italy many of the yards Grimaldi used to turn to have either changed their business model or are rammed full of big cruiseship orders for the foreseeable future.

Grimaldi Holdings chairman is particularly interested at exploring LNG propulsion. It is increasingly important and urgent for us to know whether the new dual fuel technol-ogy will really be adopted soon. If so, we will have to change our original design plans.

Rather like in the year he was born, shipping appears to be on the cusp of significant change when it comes to ship fuel. Propulsion selection is something that vexes the veteran owner whether to go with engines that consume IFO 380 bunker fuel or dual fuel engines that can take LNG.

Dual fuel engines are gaining considerable ground within the mar-ket and, from an investment angle, they may be a winning formula, also

in terms of management flexibility, they bring considerable savings, Grimaldi muses.

With regard to the ferry market in the Mediterranean Sea and more generally in Europe, Grimaldi concludes: We reckon the demand will grow, not only due to the market needs, but also to the new European Union regulations requiring ships with new safety standards. Furthermore, the European Union is calling for more and more motor-ways of the seas, capable of ensuring safe, rapid transport while respecting the environment and ridding our increasingly busy roadways of as many heavy vehicles as possible.

*KVH is the worlds No. 1 maritime VSAT supplier as measured by vessels equipped with mini-VSAT Broadband service, according to Comsys, March 2015; Euroconsult, March 2015. 2016 KVH Industries, Inc. mini-VSAT Broadband is a service mark of KVH Industries, Inc. KVH, TracPhone, IP-MobileCast, MOVIElink, TVlink, MUSIClink, NEWSlink, SPORTSlink, TRAININGlink, FORECASTlink,

CHARTlink, KVH OneCare, and the unique light-colored dome with dark contrasting baseplate are trademarks of KVH Industries, Inc.

kvh.com/onesplashGet the details on how you can benefit from the Power of One, only from KVH.

TracPhone Vip-series Award-winning SATCOM systems with built-in network management.

KVH OneCare A comprehensive customer support program that minimizes your total cost of ownership while maximizing uptime.

Industry Leading Content Licensed entertainment and operations content from the industry leaders.

mini-VSAT Broadband The No. 1 maritime VSAT network* delivers affordable high-speed global coverage.

ContentDeliveryIP-MobileCast

ContentDelivery

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OnboardHardware

TracPhone Systems

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Grimaldi Holding Genoa-based ropax opera-

tor, chaired by 93-year-old Aldo Grimaldi, with four ships currently and

plans to add more.

Spot on

1922 was a true crossroads for shipping

in profiLe

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Issue ONe 2016 31

In profIle

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Even when the Baltic Dry Index is sinking day by day its possi-ble to see the glass as half-full somehow. Thats the view of Angelo DAmato, CEO of Perseveranza di Navigazione of Italy.

I do not agree with the provi-sions I have heard recently by many analysts saying that the industry seems structurally compromised. Dry bulk is a cyclical business and good freights will return, empha-sises the head of the Naples-based shipping company. What I note these days is that finally the indus-try has started to use massively the only tools available to rebalance the supply and the demand: accelerate scrapping even for less than 20 years tonnage and lay up vessels.

DAmato reckons between 600 to 700 ships will disappear from the supply side in the coming couple of quarters.

Recent statistics released by Bimco show some 30m dwt of dry bulk tonnage was scrapped last year and a further 4.6m dwt were also dismissed in January this year.

Looking at the national mer-chant fleet, DAmato underlines that lay-ups will only marginally affect the Italian dry bulk industry since

the average age of Italian-owned bulk carriers is just around five years.

While it is nigh on impossible to predict when the markets will rebound the Perseveranza CEO is keen to delve into the global order-book statistics.

A big question mark, DAmato muses, is also how many of the newbuildings on order will effectively see the water. Many are ordered into lower rating Chinese shipyards and clearly any lender will try to escape from the drawdown. These are all signs which may predict that many vessels will remain idle in the yards for months or, better, will never see the water. I hope our industry has finally understood that present mar-ket conditions do not allow for any further newbuildings.

Perseverenza di Navigazione is today more a tanker company rather than a dry bulk one, as the compa-nys fleet is made up of one LR1, three handysize tankers and three bulk carriers (one handysize, one pana-max and one post-panamax). The company is very close to finalising its agreement with banks for a debt restructuring, a common situation for many of the nations hard-pressed owners at the moment.

DAmato, who is also financial manager of the family company headed together with his brother Umberto and his father Peppino, has plenty of firm views on the new sources of capital entering shipping.

Intelligent equity and/or turn-around funds are not a threat but an opportunity, he says. We see some hedge funds trying to buy loans, also on the Italian market. Some are quite ignorant of Italian corporate law, which can be very protective for

the debtor. This can drive to a wrong pricing and would push companies which can be able to overcome the present crisis without any procedure into court protection procedures.

His advice in conclusion: The key to avoid destroying value is to involve the debtor in whatever discussion and not only the original lender.

Are analysts being too gloomy about prospects? One Italian owner certainly thinks so

Dry bulk glass half-full?

Perseveranza di

NavigazioneNaples-based firm with a mixed fleet

of bulkers and tankers.

Spot on

Present market conditions do not allow for any further newbuildings

Issue ONe 2016 33

In profIle

Its been more than three months since the multipurpose car-rier Thorco Cloud sank in the Singapore Strait after a fatal collision with a Stolt Tankers vessel, in which three crewmen lost their lives and three are still missing.

Thomas Mikkelsen, the CEO and partner of Copenhagen-based Thorco Shipping, says theres no new information regarding the collision as of yet. However, they are in close contact with the local authorities regarding the ongoing investigation.

Thorco Cloud was hit in the starboard side and subsequently sank within few minutes. Currently an investigation is still ongoing and until all the loose ends have been gathered and we have the full picture, we cannot say much about what exactly caused the collision, Mikkelsen explains.

The tragic sinking has left sev-eral families without their beloved ones, and Mikkelsen says they are working closely with the crewing agent to ensure that the families and the surviving crewmembers are being cared for.

It has been a tragic incident with the worst thinkable outcome. The fact that three crewmembers lost their lives and three have not been found, is the worst thinkable

thing for a shipping company. We are deeply affected by the immeasurable loss their families have suffered and our deepest sympathy and thoughts go out to the them, Mikkelsen tells Maritime CEO.

Thorco is currently awaiting any news regarding a possible salvage of the wreck.

Even though Thorco didnt have the most pleasant start to the new year there is much to be optimistic about. The company has just added five modern 17,954 dwt tweendeckers in order to keep the fleet young and up-to-date.

We are always open minded with regard to new opportunities and are as such always evaluating options in the market. It goes with-out saying that market conditions presently are not talking in favour of fleet expansion. However, we believe long term in shipping and want to think long term therefore we also find it interesting to explore market options at the present level, Mikkelsen elaborates.

He also adds that the com-pany has plenty else going on at the moment. Thorco has helped out with Shells FLNG project as well as open-ing up an office in Spain.

However, the weak market has led to a visible capacity surplus in most shipping segments. Mikkelsen believes that we in are in a

historically low market, but he is not too keen on giving any predictions for the future.

I have been very surprised about the market development during the last years and what used to be a trend has turned out to be the opposite. So it has been very dangerous to speculate about the future, as the future has shown us to be unpredictable, he says.

Mikkelsen believes that there will be more uncertainty to come during 2016.

We have a historical low oil price slowing down this indus-try, the entire world is looking at the economy in China and stock markets all over the world are drop-ping. Presently there are so many destructive factors, which some-how are creating a global negative atmosphere, and this of course has an impact on shipping needs, he explains.

Mikkelsen finds it hard to believe that shipowners will be able to survive for long in the current market.

I personally think we have to accept the fact that the present mar-ket will be the reality for the majority of 2016. We are all affected by a great number of factors globally. All shipping segments except tankers are at an all time low level and due to this, we have seen an increasing amount of cannibalism from seg-ment to segment: the bigger bulkers are looking at smaller quantity and seeking alternative cargoes, and containers are doing more break-bulk. However, in Thorco Shipping we believe that when a door closes another opens, and we stay optimis-tic and seek these opportunities, he concludes.

Thorco Shipping

Young Danish company with a fleet of multipurpose general cargo and heavylift tweendeck vessels with capacities ranging

from 7,500 to 19,600 dwt.

Spot on

Open minded to new opportunitiesAn exclusive interview with Thorco Shippings Thomas Mikkelsen

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Issue ONe 2016 35

In profIle

Andriaki Shipping, founded by the famous N.J.Goulandris back in 1953, has been through enough peaks and troughs to know how to weather the worst storms the trick, top management reveal to Maritime CEO is to stick to what you know best.

Sealing medium- to long-term charters, keeping a tight lid on finances, adjusting to new technolo-gies and having strong family-based human relations form the four key planks of the companys actions under CEO Dimitrios Korkodilos. Korkodilos has been with Andriaki since 1979.

The companys fleet today has four suezmaxes and two VLCCs. On top of that Andriaki has four 74,000 dwt LR1 product tankers on order at South Koreas STX Offshore & Shipbuilding the first time the line has ordered such ship types.

The family-run line places great emphasis on nurturing long term careers. Retaining dedicated crews, officers and shore personnel many of whom have started their career

with the company is something that fills Korkodilos with pride.

Andriaki also maintains a spe-cial cadet training program both for Greek and overseas crews.

On the tanker markets, Korkodilos reckons volatility is not necessarily a bad thing.

The oil and gas markets hide so many factors beyond anybodys control and that instability in the market is not always bad, says the veteran tanker player.

The veteran boss of Andriaki Shipping on opportunities brought about by volatility

Instability in the market is not always bad

Some owners may struggle to keep

standards at the level they prefer Stle Hansen, president and ceo of

P&I club Skuld

Andriaki Shipping

Greek tanker outfit founded in 1953. Fleet today comprises six crude tankers plus four

product carriers on order

Spot on

The oil and gas markets hide so many factors beyond anybodys control

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In profIle

In a sobering interview with Maritime CEO a leading name in the Asian project shipping scene warns of an impending bloodbath coming to the sector.

Genshipping Pacific Line (GPL) CEO, Gabrijel Kobal, is refreshingly honest when talking about prospects for this year there is no PR spin, just straight talk.

At todays ocean freights levels no one can be happy, he says. If this trend continues for the next couple of months, many players are bound to disappear, restructure or merge.

GPL is a project and general cargo niche player within Asia,

operating between India and the Far East. Its fleet with six ships is a mix of roros and tweendeckers. A new tweendecker will be added to the fleet in the coming months.

Owners and operators are well into panic levels, Kobal says. We are seeing sort of consolidations through cooperation agreements, even involving arch rivals. Although each of us is fighting for market relevance, freights are well below operating costs.

Project shipping has undergone more merger activity than most of other shipping sectors in the past

four years, largely down to the influx of huge amounts of private equity cash.

GPL is not exempt from such market forces, according to Kobal. A pinch of optimism has to prevail, he says, smiling, otherwise we can start packing already.

Kobal concludes by warning that unless there is a concerted effort by all concerned to curb overcapacity in the project/heavylift sector we will witness a real bloodbath.

Unbridled overcapacity fuelling project panicThe boss of Genshipping Pacific Line does not mince his words when describing the project shipping scene in Asia

The real financial pressure to reduce

fuel costs is simply not there at the moment Alastair Fischbacher, chief executive

of the Sustainable Shipping Initiative

Genshipping Pacific Line

Singapore-based project and gen-eral cargo niche player within Asia,

operating between India and the Far East. Its fleet with six

ships is a mix of roros and tweendeckers.

Spot on

Many players are bound to disappear, restructure or merge

www.splash247.comSplash - for incisive, exclusive maritime news and views 24/7.

maritimeceo38

In profIle

Chinas rapacious demand for raw materials is seeing ever-longer dry bulk journeys crisscrossing the globe. No capesize trip is longer these days than from Guinea in West Africa to the Peoples Republic. Singapore-based firm Winning is making the running in this niche trade. The Chinese-backed company has mining and shipping interests, and is very much in charge of its entire supply chain.

The Winning current fleet is in flux. Theres two supramaxes, one post-panamax, 15 capesizes (of which four are set to be scrapped) while two new newcastlemaxes will deliver later this year. The company also has a couple of transhippers, four floating cranes, 12 tugs and eight barges.

Bosco Lau Chi Wah (pictured), vice president and CEO of Winning Logistics Services, explains how the company focuses on taking bauxite from West Africa to China and then project/general cargoes from China back to West Africa.

This two-way trade route will contribute the worlds longest tonne-miles capesize haul, Lau says.

The groups in-house bauxite from its Guinea mine will increase

production, and export, from the current capacity of 10m tonnes a year to 30m tonnes a year within the next two years. This translates to full employment of 40 capesize vessels for one way trade, and the required capacity will be doubled if every ship is employed in two-way trade, Lau says.

Winning is now in the market for more secondhand capes, while it is also in discussions with a number of Japanese trading houses to take on some long-term charters.

More transhipment equipment tugs, barges, cranes, etc will also be bought, while more ambitiously and in keeping with Winnings desire to be in charge of its own supply chain a shipyard will be built in

Guinea. Moreover, in a bid to get the crew it requires in the West African nation, Winning is establishing a maritime school in Guinea.

Besides its interests in Africa, Winning also has a joint venture alu-mina refinery in Indonesia, for which a number of barges and transhippers are being bought.

On the markets, Lau reckons dry bulk freight rates will bottom out towards the end of this year. However, theyre unlikely to signifi-cantly pick up anytime soon, which worries Lau from a recruitment point of view.

When the market does recover eventually we need to be in a position with sufficient cash flow to grab opportunities, Lau concludes.

In for the long haulA Singapore-based firm is shipping ever greater volumes of bauxite from Guinea to China

Winning

Chinese-backed, Singapore-based mining/shipping entity with interests

in Guinea and Indonesia.

Spot on

Winning is now in the market for more secondhand capes

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Issue ONe 2016 41

In profIle

Market and geographic specialisation is helping Gruppo Messina of Italy to defend its position on the trades between Europe, Africa and Middle East in the roro and container segments.

The Genoa-based shipping company Ignazio Messina & C. is headed by different members of the Messina and Gais families. The com-pany provides regular liner services connecting southern Europe, the Mediterranean, Africa, Middle East and the Indian Subcontinent serving more than 50 ports, connecting 40 different countries and offering also rail services and road haulage to more than 100 cities in Europe, Africa, Middle East and India.

In all of its 70-plus year history, Messina Lines has rarely had to deal with so much growing competition, financial hurdles, low freight rates and political instability as now.

Stefano Messina, chairman of Gruppo Messina, tells Maritime CEO: The current market situation in shipping requires changes in assets, in governance and in commercial strategies. At the same time, thanks to the specialisation of our fleet in relation to the markets we serve, we

maintain a competitive position.Messinas sentiment seems to

be prudent but positive. He sees freight rates and volumes improv-ing to North Africa once political problems in the region are resolved. The Mediterranean arena, like much of the rest of the global liner trades, Messina believes will suffer from overcapacity for the following three years.

As of today Gruppo Messina also owns a 63% stake in chemical tanker specialist Diego Cal & C. and also a 50% stake in Four Jolly (a joint ven-ture with Premuda controlling two LR2 tankers). The Messina family made its original debut in shipown-ing with wine carrying vessels in Sicily at the end of the 19th century.

Ignazio Messina & C. today oper-ates a fleet of 21 vessels (including

owned and chartered ones) with a total capacity of 40,200 teu and 62,500 lane metres capacity.

Following a long-standing strat-egy based on secondhand ships, the Genoa-based group in recent years launched an ambitious investment program in newbuildings at Daewoo and STX shipyards in South Korea worth some $600m.

Our company has recently per-formed a notable investment on the renewal of the fleet, which represents a new focus in our business plan and development strategies. We ordered the eight largest roro container ships ever built that provide us a cargo capacity increase from 26,900 to 45,200 dwt and higher transport efficiency from 0.51 to 0.44 tons of ship for each ton of cargo, concludes Messina.

Italian owner spending to up fleet size

Messina defends market share

Gruppo Messina Involved in roro and liner trades,

predominantly in the Mediterranan. Also has investments in chemical and product

tankers.

Spot on

The current market situation in shipping requires changes in assets, in governance and in commercial strategies

[email protected]

www.posidonia-events.com

Posidonia6-10 June 2016

Metropolitan Expo, Athens Greece

The International Shipping Exhibition

enterthe multi-billion market

Maritime CEO 210x297 13-11-15 14:10 1

Issue ONe 2016 43

In profIle

[email protected]

www.posidonia-events.com

Posidonia6-10 June 2016

Metropolitan Expo, Athens Greece

The International Shipping Exhibition

enterthe multi-billion market

Maritime CEO 210x297 13-11-15 14:10 1

The Elektrans Group is a new name in India to look out for. As well as a burgeoing ship-management empire, the company, via a Singapore subsidiary, is getting more and more into tanker owner-ship. Established in 2001, Elektrans Group - formerly known as Doehle Danautic India - is the brain child of Daniel Chopra. Chopras background prior to forming his own company was with Germanys Peter Doehle, where he became the companys youngest master mariner.

The company, which rebranded as Elektrans last year, now owns four Indian-flagged t

maritime ceo issue one 2016

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