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European shippers protest bunker surcharges

PostTime:2018-06-15 10:29:28 View:12

Council’s letter asserts “unjustified” fees violate agreement to end price signaling.       The European Shippers’ Council has sent a letter to European Commissioner for Competition Margrethe Vestager calling emergency bunker surcharges imposed by most large container liner companies “unjustified.”     “Under the present circumstances, the use of such instrument is unjustified. Oil prices had indeed been rising during the last month, but the latest hike cannot be assimilated to an emergency. Oil price fluctuations, up or down, had been frequently happening in the past years and no negative surcharge was applied when the barrel of oil went down to $40 some time ago,” the letter from Nik Delmeire, the ESC’s secretary general, said.     “The application of any emergency surcharge should be reserved for events that cannot be foreseen (such as a crisis influencing the availability of oil). In those situations, it would be unreasonable to have the carrier bear alone the impact on the price of bunker fuel.     “On the contrary, under the present circumstances, the carrier can use a specific clause which exists in many contracts, except for all-in rates type of contracts or spot contracts, to revise the freight rates,” the letter said. “Including such a clause in the contract is part of the negotiating process between the parties. If such a clause is not provided for in the contract in force, the price should remain the same until the contract is completed.”      He added, “The fact that the container liners, who announced that they would apply such a surcharge, have been doing it almost simultaneously is, from ESC’s point of view, tantamount to price signaling.”     Delmeire said this contradicts with a commitment 14 liner companies made two years ago to “increase price transparency for customers and to reduce the likelihood of coordinating prices by ending the practice of publishing and communicating general rate increase (GRI) announcements.”     He said that commitment “was given legal force by a commission decision on July 7, 2016” and noted it comes just at a time when the EC is starting the process of reviewing a block exemption given to shipping consortia. 

International Seaways Wraps Up Acquisition of 6 Euronav VLCCs

PostTime:2018-06-15 10:14:08 View:19

US-based tanker shipping company International Seaways (INSW) has completed the acquisition of six 300,000 dwt very large crude carriers (VLCCs) from Euronav NV. The ships have been bought for USD 434 million, inclusive of assumed debt, the company said. The six vessels have an average age of two years and include five 2016-built VLCCs and one 2015-built VLCC, each constructed at Shanghai Waigaoqiao Shipbuilding. International Seaways financed the acquisition with the assumption of USD 311 million of debt secured by the six vessels under a China Export & Credit Insurance Corporation (Sinosure) facility funded by The Export-Import Bank of China, Bank of China (New York Branch) and Citibank, N.A., and with available liquidity. “The acquisition of these (…) sister ships underscores our success in executing on our stated strategy of growing and renewing International Seaways’ fleet during a low point of the cycle,” Lois K. Zabrocky, International Seaways’ President and CEO, explained. “Since completing our spinoff in December 2016, we have grown our fleet 23% on a deadweight ton basis and reduced the fleet’s average age by close to three years (…) Importantly, INSW has maintained our strong balance sheet with net loan to value at our target of 50%,” Zabrocky added. “Our logo is a lighthouse, a beacon of safety (…) Each of the ships acquired since our formation is named after a lighthouse: Montauk, Hatteras and Raffles. These six ships are expected to be named after lighthouses as well: Seaways Liberty, Seaways Hendricks, Seaways Diamond Head, Seaways Cape Henry, Seaways Triton, and Seaways Tybee,” he informed. With the completion of the VLCC acquisition, International Seaways owns and operates a fleet of 55 vessels. Through joint ventures, it also has ownership interests in four LNG carriers and two floating storage and offloading service vessels.

Dry bulk FFA market: Pre-World Cup lull for freight market

PostTime:2018-06-15 09:59:38 View:31

As the World Cup tournament was about to kick off at Luzhniki Stadium, Russia, the freight market seemed to be caught on with the ball watching and boasted little activity since the start of the week. This was particularly true when it came to the lacklustre Capesize market which lacked direction until much later in week where paper contracts gained some momentum. “The bullish sentiment on Capes gathered momentum on Wednesday, with paper leading the charge for the early part of the day,” said a FIS FFA broker. Thus, the Capesize 5 Time Charter average finished the day after making a gain of $239 day-on-day to $17,334 on Wednesday. “The modest gains on the index were a touch better than the general feeling it would be flat,” opined the FIS Capesize broker. Despite the positivism seen in the paper contracts, the physical Capesize market slumped to a lull with inactivity seen both in the Asia Pacific and Atlantic regions. The lack of miners’ movements was blamed for the slow shipping activities, but with the paper contract inching up higher, there might be a chance for market reversal. Meanwhile, the Panamax market had performed better in the week with a buying spree in the paper markets for July and Q3 contracts, after a sluggish start on Monday. However, these were soon brushed aside with a flurry of buying across the curve on Wednesday which saw June trading up to $11,650 and Q3 and Q4 printing at $12,900 and $13,800 respectively before some resistances began to form. By Wednesday, the paper market was rather choppy for Panamax and the time charter average finally closed at $11,948, up $116 at day-on-day basis. Supramax market also faced limited market activity at the start of the week before gaining much momentum mid-week. “Supramax paper opened on Wednesday at a slightly stronger note than were we closed last night as June contract was trading $11,450, then Q3 at $12, 350 and Q4 was seen trading at $12, 800 throughout the day.” observed an Asian-based FIS shipbroker. As such, Supramax time charter average was recorded at $11,282 on Wednesday, after booking a modest gain of $37 at day-on-day basis. Handysize paper market was relatively quiet in the week, and time charter average posted at $8,605 on Wednesday, up $33 day-on-day. Normally, the World Cup tournament has an inhibiting effect on the market as traders, brokers, ship owners and trade participants alike are likely to glue their eyes on the matches and might exhibit emotional trading in the market -just like the results of soccer matches. 

For the freight market, let hope the behavioral trend was not true and freight rates may move out the lull as fast as possible.

US LNG exports reshaping global shipping flows

PostTime:2018-06-15 09:58:34 View:28

The tide has now shifted now shifted for US LNG exports resulting in a reshaping of global shipping flows. According to US consultancy RBN Energy, “Three years ago, US lower-48 LNG exports were zero. Today that number is above 3.0 Bcf/d.” This equates to roughly 14m tons of LNG, if annualised. Consultants McKinsey, in their Feb. 2018 Energy Insights newsletter, wrote: “this rise in US exports has already begun to change the global LNG flow patterns: US LNG has reached European markets where it has displaced Middle Eastern supplies, and some volumes have already reached Asian markets.” They forecast the US having capacity to export 52m tons of LNG in 2022, compared to approximately 14m tons annual capacity at end 2018. RBN’s recent analysis makes important distinctions about the nature of US LNG compared to that from competing exporters. They describe most LNG liquefaction plants around the world as “being built in producing regions where the only viable market alternative for gas production is expensive liquefaction and export.” Compare that with the States, where “US natural gas supplies have numerous alternatives: domestic demand, storage, pipeline export (to Mexico or Canada), or export in the form of LNG.” McKinsey’s experts paint a different visage of the same dynamic, describing the US as a provider of “flexible LNG supplies at scale” that can move to either Europe or Asia, with shipping costs being an important driver of the ultimate destination. The McKinsey analysis, showing continued growth in the years ahead for LNG trades, not surprisingly, fueled heavily by China, bears this out. The consultants suggest that, by 2022, “The total import deficit in the Pacific, therefore, will amount to 70m in the Pacific basin” and that “This 70m tons LNG supply shortfall in the Pacific basin will be fulfilled by incremental LNG supply from the Atlantic basin - thus opening the space for the US to play a greater supply role.” Yet, for reasons explained by the consultants, these export molecules will be less likely tied to long term contracts. The various shipping entities are acknowledging this shift Dynagas Partners LP, the listed Procopiou entity, albeit having a preference for term coverage, explained in a recent regulatory filing: “Most shipping requirements for new LNG projects continue to be provided on a multi-year basis, though the level of spot voyages and time charters of less than 24 months in duration has grown in the past few years.” In a similar filing, Gaslog explained: “GasLog Partners and GasLog continue to pursue opportunities for new multi-year charters with third parties for the remaining open vessels and, on an interim basis, may consider trading the vessels in the spot market, pursuing the most advantageous redeployment depending on evolving market conditions.” GasLog vessels in the spot trades operate in the “Cool Pool” alongside those of Dynagas Ltd, the privately held Procopiou entity, and Golar LNG.

APL launches China-Australia service with fast transit time

PostTime:2018-06-15 09:57:45 View:8

APL is continuing to expand with differentiating new services, unveiling a new weekly China to Australia service that is designed to provide the industry’s fastest transit time on the trade. The China Australia Service 6 (CA6) will connect the central and southern China ports of Shanghai, Ningbo and Yantian to the largest eastern Australian cities of Sydney, Melbourne and Brisbane. The CA6 service promises to deliver shipments from Yantian and Shanghai to Sydney in 11 and 14 days respectively. With CA6 complementing APL’s China Australia Service 3 (CA3), China Australia Service 2 (CA2) and China Australia Service (CAS) that provide weekly coverage between China and Australia, APL shippers can expect to benefit from yet another shipping cut-off time from Shanghai and Shenzhen to eastern Australia each week. The first effective sailing of CA6 is scheduled for August 17 from Ningbo, just ahead of the peak shipping season.

Cosco acquisition of OOIL still faces regulatory hurdles just two weeks from deadline

PostTime:2018-06-15 09:56:58 View:9

With just two weeks to go for the deadline for Cosco to acquire Orient Overseas International Ltd (OOIL) regulatory hurdles still need to be cleared. In its latest weekly newsletter Alphaliner highlighted that the $6.27bn has to be completed by 30 June this year and still needs to be cleared by China's Ministry of Commerce (MOFCOM), and the requirements of the US Committee on Foreign Investment in the United States (CFIUS). Failure for the deal to be approved by the Chinese authorities would seem unlikely, failure to gain CFIUS approval could also affect the closing of the deal. “Obtaining CFIUS approval appears to be the trickier of the two hurdles, and CO- SCO has not provided any official clarification on the status of its negotiations with the committee so far,” Alphaliner said. “While Cosco reportedly proposed to divest or carve out the OOCL-owned Long Beach Container Terminal (LBCT) to help ease US national security concerns, no details of any such plan have been made public until today.”  

South Asia box trade with Europe outstrips MidEast in Q1

PostTime:2018-06-15 09:21:08 View:7

CONTAINER shipments in the combined eastbound Europe to the Middle East and South Asia trade increased by 5.2 per cent in the first quarter compared to the same period a year earlier, Container Trade Statistics show. However, the combined growth rate hides two very different performances by the two destinations. CTS reports that inbound traffic to South Asia surged 18 per cent in the first quarter to total 410,000 TEU, whereas Middle East imports decreased by two per cent to 590,000 TEU. The same divergent story continued into April as Europe to Middle East traffic declined by 1.6 per cent compared to a 22.3 per cent jump for South Asia imports, reported New York's Marine Link. The westbound trade was more balanced as exports from the Middle East and South Asia to Europe were much more closely aligned than they were in the opposite direction. Middle East exports increased 10 per cent in the first quarter to 225,000 TEU while outbound shipments from South Asia rose 8.2 per cent to 525,000 TEU. After four months of 2018 the momentum is strongest for trade in both directions to/from South Asia as well as with westbound exports from the Middle East. On a rolling 12-month average basis, growth from Europe to South Asia topped 10 per cent after April and eight per cent in the opposite direction. The outbound trade from the Middle East clicked up to 6.4 per cent, but inbound trade is still languishing at minus two per cent. Spot rates from Rotterdam to Nhava Sheva have been in decline for the past 12 months. According to Drewry's Container Freight Rate Insight 40-foot (FEU) container rates were US$1,230 in May, which represented a drop of 30 per cent on the same month one year ago when prices were at a recent high point. Rates from Jebel Ali to Rotterdam were priced at similar levels in May having been more stable over the past year. Freight rates are expected to rise across the board for spot shippers due to higher fuel costs for carriers, but stronger fundamentals suggest the increases will be greater for South Asia.

ReCAAP ISC Piracy meets in Hong Kong to widen interest

PostTime:2018-06-15 09:19:40 View:8

HONG KONG has for the first time hosted the annual ReCAAP Information Sharing Centre (ISC) Piracy and Sea Robbery Conference 2018. ReCAAP ISC and co-organisers BIMCO and INTERTANKO, with the support of the Hong Kong Shipowners Association, developed this year's conference, themed "Counter Piracy: Proactive Response" to underscore the importance of staying vigilant and not taking for granted the success that Asia had achieved in reducing the number of piracy and sea robbery incidents over the past decade. Taking stock of the current situation in Asia and sharing the situation of piracy and sea robbery in other parts of the world including the Horn of Africa and Gulf of Guinea, the conference featured speakers from the Philippine Coast Guard, the Malaysian Maritime Enforcement Agency, Indonesia's BAKAMLA, EU NAVFOR (Horn of Africa), MDAT-GoG (Gulf of Guinea), ReCAAP ISC and the shipping industry.  "This year's ReCAAP ISC Piracy and Sea Robbery Conference addresses developing situations in the Sulu-Celebes Seas, the Horn of Africa and the Gulf of Guinea, as well as pertinent topics such as oil cargo theft and the situation of armed robbery against ships in Indonesia," said ReCAAP ISC executive director Masafumi Kuroki. "In bringing the conference to Hong Kong, we hope to engage the shipping community in China and foster a dialogue between the shipping industry and regional authorities for the welfare of seafarers and the safety of sea lanes," said Mr Kuroki. "Piracy and armed robbery at sea remains a major concern to our seafarers and therefore the shipping industry. In order to keep up with the ever-developing threat, we need to continuously improve our cooperation, processes and procedures. The key to our success includes that anti-piracy lessons learnt from across the globe are shared," said BIMCO head of security Jakob Paaske Larsen. "By doing this, measures which have proven successful in reducing piracy and armed robbery at sea in one region can be recognised, developed and adapted to other regions. This conference is exactly the right platform to share knowledge and work together to reduce piracy and armed robbery at sea," said Mr Larsen. "Piracy and armed robbery around the globe takes many forms and is proving very hard to eradicate. By looking at what works we can see that the Asian model of a coordinated response, backed by proper intelligence, provides a good template for how to deal with this scourge. Those hard won lessons are now being applied to the new threats that the shipping industry is facing off Yemen," said INTERTANKO marine director Phillip Belcher.   

Kerry offers China-Caucasus-Turkey rail-road service

PostTime:2018-06-15 09:18:43 View:7

HONG KONG's Kerry Logistics Network has launched new cross-border rail and trucking service from China through Kazakhstan to Caucasus and Turkey. By leveraging the company's existing presence in Armenia, Azerbaijan and Georgia in Caucasus, the company aims to capture the growing trades in new markets in the region and Europe.  Starting from Lianyungang, the bridgehead of the new Eurasian land bridge in China, the new westbound rail freight service will bring shipments across Kazakhstan and Caspian Sea to multiple destinations in Turkey through the newly-built Baku-Tbilisi-Kars railway.  To offer greater flexibility to customers with different volume needs, both block train and single wagon services are being offered. With a transit time of 18-20 days, the main products to be moved by the new services will include electronic parts, electrical appliances, minerals, auto parts and other industrial goods.  In addition to the rail freight service, trucking service along the same trade route from China to Caucasus and Turkey has also been launched by adding 50 trucks to the company's existing fleet. With a transit time of 12-14 days, this will provide an alternative solution for customers who look for a faster way of shipping freight to these destinations. Said Kerry China and North Asia chief Edwardo Erni: "With our rail freight and trucking capabilities extending their reach to the strategic locations of Turkey and Caucasus, we will be able to grasp the immense market opportunities presented by the Belt and Road initiative with our enhanced position in the region."  

Chinese president blasts protectionism, calls for more open world

PostTime:2018-06-15 09:17:17 View:7

CHINESE President Xi Jinping has called for the development of an open global economy, after saying that his country will not accept "selfish, shortsighted" trade policies. Mr Xi did not name the United States specifically during a speech at a summit meeting of the Shanghai Cooperation Organisation (SCO), a regional security bloc led by China and Russia. "We reject selfish, shortsighted, closed, narrow policies, (we) uphold World Trade Organisation rules, support a multi-lateral trade system and building an open world economy," Mr Xi said in a speech in Qingdao, reported Reuters. The United States and China have threatened tit-for-tat tariffs on goods worth up to US$150 billion, as President Donald Trump has pushed Beijing to open its economy further and address the United States' large trade deficit with China. Mr Xi spoke hours after Mr Trump said he was backing out of the Group of Seven communique, thwarting what appeared to be a fragile consensus on a trade row between Washington and its top allies. "We must discard Cold War thinking, group confrontation; we object to acts of getting one's own absolute security at the cost of other countries' security," Mr Xi was quoted as saying. Mr Xi also announced China would offer the equivalent of CNY30 billion (US$4.75 billion) in loans under a framework set up by SCO nations.

SMARTer ships are the future of shipping: There is no turning back says Palau International Ship Registry’s CEO

PostTime:2018-06-14 10:33:42 View:17

SMART ships will continue to be the driving force for the new decade as technology puts the control and management of shipping onto a new level and there is no stopping this and nor should there be, according to Panos Kirnidis, CEO of Palau International Ship Registry (PISR). The registry has been developing its own unique technologies for its fleet and this is one of the reasons it was called the fastest growing registry in the world in 2017. Panos Kirnidis believes there is still some reticence to accept technology by some registries. “There is no escaping technology in shipping and we believe it is essential that everything we do with shipping comes from technology. We have taken a strong position in supporting increasing use of technology and blending this to work with people in the shipping world. Paper chats and certificates have long gone and everyone needs to adopt a smarter and more accessible way of working because there are real benefits to be gained.” PISR has been at the forefront of an IT drive and Panos Kirnidis recognises the threats of cyber-security as an even stronger reason to adopt robust and reliable IT systems. “Rather than shy away from technology and become fearful of increasing hacking and related cyber-crimes, the shipping world need to work together to demonstrate that we have the solutions. Technology is much more than just security for ships: it’s also about operational excellence both for shipping operations and the way in which seafarers behave in everyday work situations. We must not forget that the role of the human in shipping is still very much a part of the world. “We have a Deficiency Prevention System (DPS) operating through a dedicated department monitoring all Palau ships so they can reduce deficiency and casualty rates. I want to see more technology adopted to ensure the maritime sector remains safety and environmentally compliant. We are not in an age of full autonomous operation – and even when that arrives we will still need seafarers in one capacity or another – but we are on the cusp of sailing into an IT shipping world that will benefit us all and we must grab these opportunities now.”

Marine Fuels: Increased Transparency And Knowledge Of Supply Chain Will Solve Contamination Issues – Says 20|20 Marine Energy

PostTime:2018-06-14 10:25:21 View:15

20|20 Marine Energy, a leading maritime consultancy, yesterday stated that the shipping industry and bunkering sector face significant challenges in relation to contamination post 2020 if there is not a better understanding of the provenance of products within the marine fuel supply chain, clarity on the quality and formulation of what is being purchased, and a fundamental commitment to not continually repeat the same mistakes of the past. The comments follow recent reports regarding fuel contamination issues on over 30 vessels in the Houston area. 20|20 Marine Energy is also aware of rumors between February and April 2018 regarding a significant outbreak of fuel quality issues in the US Gulf Coast, with estimations of as many as 100 vessels seeking claims due to fuel quality, which have caused a number of technical problems, including in some cases a complete loss of engine power. It is understood that these claims also extend to the Panama Canal. “The Gulf Coast last saw a series of contamination claims in 2013. However, in 2007 a myriad of claims with supply origins in the Gulf Coast tore their way through the entire global bunkering industry, impacting almost every major supply port,” said Adrian Tolson, Senior Partner, 20|20 Marine Energy. “These problems continue to happen again, and again, the same mistakes continue to be made and it looks like the industry is operating in a state of blissful amnesia. It needs to change.” “Firstly, the industry needs to see more transparency and clarity around products. We believe that now is the time for blenders and suppliers to fully warrant the quality of their fuel, even if it is sold within the Platts window. Secondly, suppliers should no longer be able to hide behind the fact that products just ‘meet ISO specifications’, when in reality they are not fit for purpose, and contravene Clause 5 of ISO 8217. And finally, there needs to be a universal increase in knowledge of the fuel supply chain by all parties involved, so that history stops repeating itself, and to ensure that positive change can occur. This is particularly important in a post 2020 world, where there is already concern about the quality of blended products that will flood the market to meet the 0.5% Sulphur limit.” 20|20 Marine Energy also believes that there is a correlation between an increase in contamination issues and rising crude and fuel prices, where prices increase to a point where producers can get a better return from the bunker supply chain, rather than selling into normal outlets. Adrian Tolson continued: “2007 and 2013 were eras of peak bunker prices, so it is no surprise that we are now dealing with this problem with fuel oil now rising to $400 per ton, and crude at over $70 per barrel. The general consensus is that crude will continue to rise post 2020, and suppliers need to get their houses in order. They can no longer use the excuse that margins are under pressure, and that they are being forced to use the cheapest components. In fact, the clever ones will use this situation as an opportunity to build and market their brands around transparency and professionalism, instigating processes, such as warranties that ensures the viability and provenance of their products. Not all will be able to achieve this, and if this means the industry loses a few participants as collateral damage, then so be it. Bunkering will be better for it.”