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IHS Fairplay
3 NOVEMBER 2011
VOL 372 ISSUE 6658 PRICE 15.00
Paolo dAmico
Tunisias maritime commitment
for ship suppliers
Time is money
for ship suppliers
Time is money
look out
5 Education, education, education
story of the week
6 When time really does equal money
For ship suppliers, time is of the essence but
implementation and interpretation of regulations
are damaging competitiveness
markets
8 India sees small car exports boom
India, an emerging hub for small cars, has seen
strong export growth and good prospects ahead
9 Welcome to Asia as we extend our
data service to cover this growing sector
shipping markets
10 This weeks data and graphs
15 Japan leads vessel sales
16 Chem tankers target MidEast-Asia
16 Leaseback on the rise
trade & commerce
18 SeaFrance on the brink
A court must choose between liquidation and
accepting one of the two tabled offers
19 Bankers, lawyers and Chinese
investment
20 Cargo reserves demanded
21 Yards tighten their belts
22 Russias USC gets wished-for
acquisitions
23 Cant pay, wont pay
24 KGs contain Korea Line fallout
24 Port at mercy of rail monopoly
26 Analysis: Drydocks Worlds debt
moves into the spotlight
technology
27 Wi- looks to the skies
Conventional phones and laptops can now be
used with a satellite network
27 LNG to fuel 5% of eet by 2020
regulation
28 Support Tunsia, says SafeMed
European Union project offers support to the
revolution-torn country as it strives to develop
a constitution
28 Indian port reform opposed
29 UK concern over fuel directive
logistics & supply chain
30 Bilbao exploits its blank canvas
Diversication, a deep hinterland and good
knowledge of logistics will attract customers, the
port of Bilbao believes
31 Riga takes a Baltic gamble
32 Cochin to set up warehouse zone
32 Solar venture for Yusen Logistics
33 Maersk condent in daily service
decision-makers
34 Working with family pride
Paolo dAmico believes family businesses must
keep clear of blind patronage
shoes & ships
36 Riding the high rollers with
The Shipping Man
movers & shakers
37 Banking giant turns to insurance
38 Shipping in numbers
>> Sector focus:
Ship agency & supply
Look for the stamps in the Trade & commerce section
Shutterstock/Matt Ramsdale
> Trial & Subscribe
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Fairplay 24 online
Daily Shipping News email
3 November 2011
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contents
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W
R
O
S
Wor|d Reg|ster of Sh|ps
Merchant and M|||tary Sh|p ldent|fcat|on
The s|ng|e most author|tat|ve operat|ona| database on g|oba| merchant and m|||tary sh|ps.
Discover more www.ihsfairp|ay.com/info/wrs
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37
story of
the week
movers & shakers
> Trial & Subscribe
Find all this & more on the web at:
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Fairplay 24 online
Newbuildings online
> 3 November 2011
> Issue: 6658 > Volume 373
> For more visit www.fairplay.co.uk
20
trade & commerce
34
decision-
makers
Ta||ored sh|pp|ng data,
made to measure.
lf you wou|d ||ke to know more, v|s|t us on||ne, f|| |n the form and one of our experts w||| be
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lookout
> Regulatory measures passed by
lawmakers are not there for the sake of the
shipping industry.
There is a larger picture in the frame and
shipping has to t in. Nevertheless,
maritime services often performat the
margins of a legislative state or region, or
across several boundaries, and there is often
a good case for requesting clarication on
points of principle. Where legislation works
against shipping, for example by imposing
measures that hinder the operation of a
business or add unnecessary nancial
burdens, shippings voice needs to be heard.
Story of theWeek (p6-7) looks at the EUs
ModernisedCustoms Code, which has raised
concerns among ship suppliers because it
seems to work against trade facilitation. In a
letter to the European parliamentarian
responsible for the code, the head of the
suppliers organisation highlights the huge
investment of money and time in improving
security and building an attitude of quality
through the supply process. What more can
we do? asks Stefan Ericson.
The rst step, as always, is to educate.
Former British prime minister Tony Blair
wont have been the rst to identify his
three priorities as education, education,
education. Thats what associations are
formed to do. Ericsons task is to make sure
Matteo Salvini knows how, in this case, ship
suppliers and the wider maritime sector will
sufer if customs legislation is left to
lawmakers with no real experience of a 24-
hour working environment.
Similarly, Paolo dAmico, this weeks
Decision-maker (p34), has been appointed
to head Italian shipowners association
Contarma, not because he can chair
meetings efectively but because he is
comfortable alongside politicians in Rome
and Brussels. His role is to educate the
ministers in charge of Italys creaking
transport infrastructure that shipping
matters and his aside to Fairplay, that
dAmico companies could be more protable
if they were run fromSingapore, is incisive.
Politicians need to knowthey take shipping
for granted at their cost. Even so, that
message gets lost between the teller and the
audience: shipmanagers, it is alleged, now
spend much of their day nding ways not to
pay suppliers for goods and services received
(p23). Suppliers dont appreciate being
treated like a bank and are not set up to be
run in that way. They pay upfront for goods,
and put themselves in danger by ofering
extended payment terms. Managers who
refuse to abide by the agreed terms deserve
to have their name at least mentioned in
dispatches, or even blacklisted on a website.
For reasons Fairplay nds it hard to
understand, there is a widespread reluctance
to discuss bad practice in this industry.
Perhaps its deference to long-established
tradition, or a fear that whistleblowing is
itself bad practice. But shipping has always
been an industry in which actions spark
reactions upstreamand downstream.
So why are some shipmanagers bad payers?
Suppliers believe managers are under
pressure fromtheir masters shipowners
to cut costs. The downside is that suppliers
provide equipment to the same owners. But
there are enough suppliers still in business to
keep the ships moving, so managers may
think it matters little if one or two suppliers
go under.
Its ne to call for owners to be educated in
the ner points of the business cycle when
times are good but education in operations,
like training of seafarers and the accumula-
tion of ofcer experience, is a tough task
when times are hard. Nevertheless, good
practice is the key to protability at all levels
and should never be left to chance.
Education, education, education
There is so little fairplay in the world. If our own efforts succeed, we shall have taken the rst steps towards
promoting the habit of calling things by their right name and looking at them through uncoloured spectacles
Founder: Thomas Hope Robinson, Fairplay, 18 May 1883
> 3 November 2011 > Issue: 6658 Richard Clayton: Fairplay Editor
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3 November 2011
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5
When time really does
equal money
6
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3 November 2011
story of the week
www.fairplay.co.uk
> With ship suppliers operating on a
just in time basis, international regulations
are threatening their ability to quickly service
ships making short port calls.
European Union (EU) regulations and
directives, combined with national laws and
rules especially in the area of customs and
taxation are the main obstacles to
suppliers exibility.
Many sectors of shipping seek exemption
fromlegislation that attempts to bring order
across business, but supply organisations and
individual companies have taken their urgent
call for a hearing all the way to Matteo
Salvini, the Member of the European
Parliament who has been nominated
rapporteur for the report on the Modernised
Customs Code. In a letter fromthe European
Ship Suppliers Organisation (under the name
OCEAN), chairman Stefan Ericson and vice-
chairmanAlfredo Tosato outlined the role of
suppliers and addressed their concerns about
the updated code.
OCEANis a not an insignicant player in
shipping, although its message is not often at
the top of the agenda. Ericsons letter was
sent on behalf of more than 750 ship
chandlers who work in 1,200 commercial
ports around 70,000kmof coastline. The
basis for the claimto be diferent lies in
shippings 24-hour service.
The sector is characterised by the need to
work against time to put together mixed
consignments with thousands of articles in
small quantities, purchased froma large
number of diferent sources, the letter
states. Crucially, it also means having to
access a ship without delay in the case that
small individual items need to be brought to
the vessel, such as a faulty engine part
replacement while in port or a newmicro-
wave for the crew.
There is a safety element in that specialised
chandlers supply all personal safety and safe
navigation equipment required for vessels to
comply with international regulations.
Given the time-critical nature of the
service, Ericson notes with concern that,
listening to the discussions in the Customs
Code Committee and the hearing of the
IMCOCommittee in June, we were
wondering if trade facilitations are still at
the heart of the modernisation eforts of the
European Union. He acknowledges the need
to maintain a secure environment and
reminds Salvini that much work has been
done in this area through the creation of
Authorised Economic Operator (AEO) status
by bringing in strict timelines of customs
reporting, pre-arrival and pre-departure
declarations. These measures were intro-
duced under the current customs code and
have cost EUbusiness a lot of nancial and
time investments.
Ericson adds: We believe the Modernised
Customs Code must, therefore, focus on
bringing about real, tangible trade facilitation
to genuine, secure business. The current
implementing provisions are not sufcient
and can be improved.
There is some debate about whether the
Modernised Customs Code is t for purpose.
The code was drafted in 2005-06 and
approved in 2008 but the business world has
changed signicantly since the initial
drafting, which leads Ericson to wonder
whether, rather than moving ahead with
innovative, simplied trade facilitation we
are stepping backwards?
This is more than an organisations attempt
to ease the restrictions placed upon its
members: for Ericson and Tosato it goes to
the heart of the ship supply dilemma.
In our industry, a special receipt for goods
delivered on board as ship supply could
signicantly simplify our trade, without
creating any further administrative proce-
dures or security concerns. Further, with
special receipts, suppliers could provide proof
that customs obligations have been met,
across the EU.
There is further concern over opening
hours of customs ofces, especially ofces
that are closed at weekends or with limited
operating hours that create an unsustainable
For ship suppliers, time is of the essence. However, implementation
and interpretation of international regulations are damaging supplier
competitiveness, writes Richard Clayton
In Hamburg you need nine different
access cards to take supplies
to nine terminals
>> sector focus:
Ship agency & supply
situation where vessels scheduled to
leave port cannot do so as access for ship
suppliers is blocked by a closed customs
ofce. The costs for prolonging the stay in
the harbour for the ship supplier to reach the
vessel on Monday morning can be enor-
mous, Ericson warns.
Jens Olsen, president of the International
Ship Suppliers Association, agrees that what
he calls the misuse of the ISPS Code has
become a unhelpful practice that hinders the
protability not only of suppliers but also of
their customers, shipowners and shipmanag-
ers. Suppliers are blocked (by port authori-
ties) fromgetting on board ship unless
they have the right security pass.
Each person must have an
accredited access card, which
can take between one and two
weeks to arrange. It has
become a money-making
spin-of, says Olsen.
In Hamburg you
need nine diferent
access cards to take
supplies to nine
terminals. Its all
above-board, and is
part of a ports
income. He adds
that the practice has
been brought to the
attention of IMO.
Olsen, who speaks on
behalf of 1,650 suppliers
in 94 countries, welcomed
delegates frombetween 40
and 50 countries to the annual convention
held on a DFDS ferry running fromCopenha-
gen and Oslo to coincide with NorShipping.
He is pushing attempts to make supplier
members more quality conscious. Fromthe
beginning of the year the ISSA quality
standard has also covered food and hygiene
and is part of a campaign to encourage
shipowners to select approved suppliers.
Members have already given the initiative
their backing, with 250 member companies
already quality approved.
InterManager, the shipmanagers organisa-
tion, is keen for its own members to identify
and choose ISSA certied companies; the
International Marine Purchasing Association
has accepted the standard but not yet
endorsed the certication; and the World
Customs Organisation, based in Brussels,
has gone through the standard, and
expressed satisfaction around the
AEOstatus.
Ship suppliers have been compared
with a 24-hour supermarket,
stocking thousands of technical
and non-technical items, to meet
the special requirements of
diferent types of vessels and
crews of many nationalities. They
require a single customs regime,
regulations that enhance trade
facilitation and exibility in
application of regulations to meet
requirements. Failure to provide
clarity on these issues is costing
suppliers dear and, in no small way,
damaging shipowner protability.
3 November 2011
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7
Shutterstock/Matt Ramsdale

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3 November 2011
> K Line
Carrying more cars from
Port of Chenai
This page
> Glovis
Beneficiary as exports
increase
This page
> NYK Line:
service from Mundra
demand increases
This page
Indias leading car exporters,
Hyundai and Maruti Suzuki, have
steadily increased their business,
while Ford and Nissan, two
emerging players, are vying for a
bigger slice of the market.
BetweenApril and September this
year, while vehicle sales in Europe
were falling, India had a 22%
growth in exports of small cars. In
the past six months it exported
241,848cars, up from197,761
in the same period in 2010.
Many of that number moved
through Chennai Port. In 1H11,
it handled 137,682 cars, up from
117,456 in 1H10. Chennai
Ports deputy trafc manger, G
Edison, told Fairplay the ports
car exports were up by 13.7%this
year and rising even faster. So far
in 2011, Hyundai, responsible
for the bulk of the trade, has
exported 123,492 cars through
the port. The other main users
are Ford and Nissan.
K Line andGlovis both operate
regular pure car carriers from
Chennai. An ofcial of Parekh
MarineAgencies, which handles
both companies, said: We have
noticed a growth in exports since
2006and we foresee an increase
India sees small car exports boom
The future looks bright
for car carriers as India
experiences strong
export growth, writes
Christina George
markets
> The stories behind the numbers > For more visit www.fairplay.co.uk
> Top destinations by country of
Indian car exports
Sales country 2011 2012 2013 2014 2015 2016
United Kingdom 38,432 39,306 40,365 41,245 39,832 42,709
Germany 32,835 29,300 28,739 30,110 34,017 36,414
South Africa 32,400 26,807 22,251 23,511 21,208 20,406
Italy 31,703 30,571 36,284 39,002 37,890 39,715
Netherlands 20,898 18,790 17,282 17,041 17,105 19,409
France 16,782 18,130 18,218 17,046 17,294 16,555
Russia 14,213 20,756 24,673 25,955 28,285 31,946
Spain 10,472 10,997 12,775 13,535 12,749 13,642
Belgium 10,086 9,952 9,430 9,413 9,003 10,032
Chile 9,677 8,481 7,949 7,579 9,782 12,418
> Regional sales (excluding Asia)
for Indian car exports
Sales region 2011 2012 2013 2014 2015 2016
West Europe 192,734 184,109 189,830 194,397 197,080 209,293
Africa 38,935 35,923 31,230 35,880 35,444 34,742
East Europe 29,999 38,088 43,900 50,632 56,954 63,538
South America 15,101 14,085 15,172 15,893 20,182 22,959
Middle East 5,545 11,334 12,080 13,423 14,342 14,846
North America 1,859 6,584 8,393 9,207 10,155 9,767
IHS Automotive
in business prospects. We handle
six vessels a month.
In the July-September quarter
of this year, Hyundai, the main
car exporter in India sold
116,146 `made in India small
cars across the globe.
Maruti Suzuki, had exports of
about half that level. Maruti,
which has faced labour disputes at
its production centres, sawits
exports fall 20%to 59,625
vehicles betweenApril and
September, down from74,779a
year earlier. This was despite the
company increasing its exports to
non-European markets.
Mundra, another leading car
export port, sawbig volumes
fromNissan and Maruti. An
ofcial at Mundra Port told
Fairplay: Because of the strike at
Maruti plants, exports fell in
September and October, but we
did phenomenally well inAugust.
The Nissan Pixo is the number-
one car exported followed by the
Maruti Alto and Maruti 800.
Nowwe also have Ford andTata
in the markets and we see a very
promising increase in volume.
The major lines operating at
Mundra Port are NYKLine and K
Line. About six ro-ro vessels call
at the port every month.
The port ofcial said there were
plans to expand the facility to
handle more cars. With a new
Maruti plant being inaugurated
near Mundra, we hope to do more
exports. Maruti has signed a
contract with Mundra Port to
export 33,000 cars/month.
At Mumbai Port, Tata cars rule
the roost, followed by Volks-
wagen. Asmall fraction of Maruti
cars are also exported through
Mumbai. On average, we handle
about 10 vessels a month,
Now we also have Ford
and Tata in the markets and
we see a very promising
increase in volume
3 November 2011
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Fairplay
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9
markets
www.fairplay.co.uk
including heavy-duty vehicle
exports said a port ofcial.
Although Hyundai and Maruti
are struggling to increase exports
because of huge domestic demand
and labour issues respectively,
Ford and Nissan, which started
selling their Indian-made small
cars outside the country last year,
have been signicantly increasing
their exports. Nissan exported
49,700Micra models between
April and September, while
exports of the Ford Figo tripled to
12,105units that compares
with 3,474units last year.
Nissan primary market, taking
85%of exports, is the European
Union. Other markets are South
Africa (7%), west Asia and north
Africa (4%each), other parts of
Asia and LatinAmerica.
It will be a fewmonths before
the impact of the slowdown in
Europe is felt, as it takes a couple
of months for Indian-made cars
to reach the European markets, a
Nissan ofcial said, adding: As of
now, our order book fromEurope
is still strong.
Most of the exports fromFord
India go to non-European
markets, with the Figo going to
about 30 countries.
Toyota has expressed a desire
to start exporting fromits Indian
car plants by March 2012, with
sales of the Etios to countries
including SouthAfrica.
Asia is the shipping power-
house. In this rebranded
edition of Fairplay, readers will
nd a expanded markets data
section including a page
specically for the Asian
markets. Drawing on the Baltic
Exchanges index reports
published in Singapore and
added to from other indices,
both dry and wet shipping are
represented.
Across the shipping markets
pages readers will nd more data
and graphs.
The principle indices of the
Baltic Dry Index (BDI), Baltic
DirtyTanker Index (BDTI) and
Baltic CleanTanker Index
(BCTI) are still reported along
with the same averages shown
in the routes tables. Now,
however, each principle index
has its own two-year graph.
The graphs have changed and
they present data for the
previous year with the current
year as a solid line. This allows
the reader to see seasonal trends
or cycles within a year.
Another key improvement is
the addition of tables of rates
for tankers (clean and dirty) and
drybulk shipping. This additional
data gives the closing values for
the index or route as well as the
past monthly, year-to-date and
last year averages. This will allow
readers to see at a glance what
the current state of the market
is (see illustration).
In the S7route, the weekly
close for 28September was
$11,863/day. Compare this with
the previous months average of
$11,188/day and its easy to see
theres been some improvement
in the rates. However, overall for
the year (2011) to date, the
average for the route has been
$12,481/day. The rate and
averages compare poorly to the
previous year average of
$23,109/day (2010), which was
nearly twice as much as ships are
earning now.
Whenever
possible, the
information is
reported in dollars
per day, but
exceptions are
dollars per tonne ($/
tonne) and tanker
routes for which no
time charter
equivalent in dollars is available.
In the oil trades, it was felt that
reporting the TCEand averages
allowed a better comparison
with the previous year. Worlds-
caleAssociation rates change
fromyear to year, making
comparison with previous years
more difcult.
Asian shipping is important
and, recognising this, there is
nowanAsianshipping markets
page. In drybulk shipping, this
includes rates for Supramax and
Handysize routes reported by the
Baltic Exchange.
Fairplays market data
pages have been
expanded and revised
Welcome Asia to the markets
The current state of the market at a glance
> There are expanded listings
in the markets section of the Fairplay
website, www.fairplay.co.uk/
markets, or by using your smart
phone and scanning the QR code at
the top of data double-pages.
Any comments about the data
pages are welcome to
michael.jones@ihs.com
10
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3 November 2011
shipping markets
Weekly summary of all the
key industry indices and data
BDI Baltic Dry Index; BCI Capesize; BPI Panamax; BSI Supramax; BHSI Handysize; C3 ($/t) Tubarao - Qingdao, 160,000t; C5 ($/t) Western Australia - Qingdao, 160,000t;
P1A_03 Del. & redel. Skaw/Gibraltar range, 45-60 days, trans-Atlantic RV inc. ECS America; P3A_03 Del. & redel. Japan/S Korea, trans-Pacifc RV, 35-50 days, via Australia or Pacifc,
not Vostochny/Japan; S1A Del. Antwerp/Skaw, 60-65 days, redel. Singapore/Japan range inc. China; S3 Del. Japan/S Korea range, 60-65 days, redel. Gibraltar/Skaw; S4A Del. USG,
about 30 days, redel. Skaw/Passero; HS1 Del. Skaw/Passero, 35-45 days, redel. Recalada/Rio de Janeiro; HS4 Del. USG, 35-45 days, via USG or NCS America, redel. Skaw/Passero
TC1 75,000tonnes, Ras Tanura to Yokohama, CPP/UNL naphtha condensate; TC2_37 37,000tonnes, Rotterdam to NewYork, CPP/UNL; TC3_38 38,000tonnes, Aruba to NewYork,
CPP/UNL; TC5 55,000tonnes, Ras Tanura to Yokohama, CPP/UNL naphtha condensate; TC6 30,000tonnes, Algeria to EuroMed, CPP/UNL; TC8 65,000tonnes, Gulf to UK/Continent,
CPP/UNL middle distillate; TC9 22,000tonnes, Baltic to UK/Continent, CPP/UNL middle distillate
VLCC = TD1 280,000tonnes, Ras Tanura (Gulf) to LOOP (US Gulf); TD3 260,000tonnes, Ras Tanura (Gulf) to Chiba (Japan); TD4 260,000tonnes, off-shore Bonny (Nigeria) to LOOP
(US Gulf); TD15 Serpentina FPSO or off-shore Bonny (West Africa) to Ningpo (China); Suezmax = TD5 130,000tonnes, off-shore Bonny to Philadelphia; TD6 135,000tonnes,
Novorossiyk (Black Sea) to Augusta (Mediterranean); Aframax = TD7 SullomVoe to Wilhelmshaven (North Sea-Continent); TD9 70,000tonnes, Puerto La Cruz (Jose PlatformTAECJ)
to Corpus Christi; TD17 100,000tonnes, Primorsk to Wilhelmshaven (Baltic to Continent); TD19 80,000tonnes, Ceyhan to Lavera (cross-Mediterranean)
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1Q 2Q 3Q 4Q
2010
2011
0
250
500
750
1,000
1,250
1,500
1,750
2,000
1Q 2Q 3Q 4Q
2011
400
500
600
700
800
900
1,000
1,100
1,200
1Q 2Q 3Q 4Q
2010
2011
1Q11 2Q11 3Q11 4Q11
200
5,200
10,200
15,200
20,200
25,200
30,200
100
226
352
478
604
730
B
a
lt
ic
E
x
c
h
a
n
g
e
B
a
lt
ic
E
x
c
h
a
n
g
e
B
a
lt
ic
E
x
c
h
a
n
g
e
B
a
lt
ic
E
x
c
h
a
n
g
e
Averages
Indices 28 Oct 11 Prev Month YTD 2010
BDI 2,018 1,371 1,490 2,758
BCI 3,274 1,990 2,040 3,480
BPI 1,939 1,682 1,744 3,115
BSI 1,545 1,437 1,744 3,115
BHSI 786 688 731 1,124
C3 $28.71 $20.19 $21.20 $26.36
C5 $10.91 $8.05 $8.40 $10.40
Container ship Timecharter Assessment
Type
Last week
20 Oct
This week
27 Oct
Change
1,100teu 6,827 6,512 -315
1,700teu 8,719 8,384 -335
2,500teu 11,949 11,471 -478
2,700teu 12,293 11,875 -418
3,500teu 12,632 12,350 -282
4,250teu 14,012 13,535 -477
Averages
Indices 28 Oct 11 Prev Month YTD 2010
P1A_03 $17,596 $14,014 $15,163 $26,545
P3A_03 $13,875 $12,662 $11,990 $23,288
S1A $25,078 $21,620 $20,931 $31,318
S3 $8,144 $8,458 $8,125 $12,923
S4A $30,206 $26,590 $26,704 $36,487
HS1 $10,771 $6,856 $7,006 $12,720
HS4 $17,872 $12,310 $16,043 $23,340
28 Oct 11
Time charter
equivalent averages
Type WS
TCE
($/day)
Prev
Month
YTD 2010
BCTI 731 672.82 715.46 732.04
TC1 W107.27 $3,628 $10,648 $8,514 $123
TC2_37 W178.96 $11,277 $5,543 $9,700 $9,800
TC3_38 W176.04 $13,403 $6,697 $10,427 $7,373
28 Oct 11
Time charter
equivalent averages
Type WS
TCE
($/day)
Prev
Month
YTD 2010
TC5 W110.21 -$2,338 $6,085 $4,379 $7,701
TC6 W153.33 n/r W140.61 W160.93 W172.90
TC8 W26.82 n/r W31.23 W29.48 W27.17
TC9 W214.50 n/r W183.05 W197.37 W204.53
28 Oct 11
Time charter
equivalent averages
Indices WS
TCE
($/day)
Prev
Month
YTD 2010
BDTI 781 - 685 778 896
TD1 W34.39 -$15,400 -$13,619 -$8,127 $11,743
TD4 W34.39 n/r W47.33 W55.58 W74.62
TD15 W54.70 n/r W43.02 W51.74 W72.03
TD5 W78.21 $12,979 $8,913 $14,367 $24,604
28 Oct 11
Time charter
equivalent averages
Indices WS
TCE
($/day)
Prev
Month
YTD 2010
TD6 W101.92 $24,294 $9,433 $7,838 $26,871
TD7 W105.63 $9,955 $5,252 $8,936 $16,289
TD9 W102.27 $890 -$3,040 $4,211 $12,543
TD17 W85.21 $7,752 $1,245 $16,842 $8,292
TD19 W96.67 $2,980 -$136 $11,627 n/r
Outlook: Boxship owners took further knockdowns
on period rates last week as fxing activity was too
low to make an impact on the abundant supply of
tonnage. The ConTex class sizes fell 1.3-4.0%, with
12-month durations for the gearless 2,700teu type
bringing up the rear. The 4,250teu Panamax class,
which saw rates fall by one-third in the past month,
recorded higher demand but stagnant rates of about
$8,000/day basis 12 months. Pressure on feeder
and midsize tonnage keeps growing.
Baltic indices & dry routes BDI: 2,018 -135
Baltic dirty tanker index BDTI: 781 -68
Baltic clean tanker index BCTI: 731 45
Container indices Contex: 455 -17
3 November 2011
|
Fairplay
|
11
The global lndependent authorlty on marlne fuel and shlpplng prlce lndlces, news analysls, lnformatlon
& counterparty credlt rlsk lntelllgence. Por more lnformatlon please vlslt www.bunkerworld.com
www.bunkerworld.com
00k0fN0fl0
Call: +44 l753 4l0 940
for enqulrles
shipping markets
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EUROPE 380CST 180CST MDO MGO
D ANTWERP
D FALMOUTH
D GREAT BELT
D HAMBURG
D ROTTERDAM
D ST PETERSBURG
MEDITERRANEAN 380CST 180CST MDO MGO
W AUGUSTA
D FOS/LAVERA
D GIBRALTAR
D ISTANBUL
W OFF MALTA
D PIRAEUS
AFRICA 380CST 180CST MDO MGO
D ARZEW
D CANARY ISLANDS
W DURBAN
D OFF NIGERIA
D DAKAR
MIDDLE EAST 380CST 180CST MDO MGO
D DAMMAM
D FUJAIRAH
D JEDDAH
D SUEZ
ASIA 380CST 180CST MDO MGO
D CHENNAI
D COLOMBO
D HONG KONG
D KAOHSIUNG
D SINGAPORE
D SOUTH KOREA
D SYDNEY
D TOKYO
AMERICAS 380CST 180CST MDO MGO
D BUENOS AIRES
W HOUSTON
W LOS ANGELES
W NEW YORK
W PANAMA
D SANTOS
W SEATTLE
D VALPARAISO
W VANCOUVER BC
W VENEZUELAN PORTS
Bunkerworld prices Source: Bunkerworld
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
2010
2011
I
n
d
e
x
1Q 2Q 3Q 4Q
Bunkerworld index
BW380, BW180 in centi Stoke
BWDI for distillate fuels
> For online bunker information:
www.fairplay.co.uk/markets or
www.bunkerworld.com/prices
> For online bunker information:
www.fairplay.co.uk/markets
or visit
www.bunkerworld.com
Outlook: Global bunker prices saw
signicant gains last week on the back
of crude futures contracts gaining
momentum after initial plans took shape
to stem the eurozone crisis. WTI crude
oil futures contracts on the New York
Mercantile Exchange for December
reached $93.32/barrel by Fridays
close, a 6.77% week-on-week rise. The
average price of IFO380 centistokes
(cSt) bunker fuel gained by 2.19%.
In Singapore, bunker prices were
most responsive to crude oil price
spikes. A 25-month high for IFO380 cSt
was reached at $692.00/tonne, $19
above the same grade of fuel in Fujairah.
Bunker prices in the city state are likely
to ease as fuel oil stocks continue to rise
following arbitrage inows after a dearth
in imports in September.
Bunker prices in Fujairah were
comparatively low. IFO380 cSt reached
$677.50/tonne on Friday, a 1.43%
rise on the previous week. In the same
period, marine gas oil (MGO) saw
an upward momentum of 0.52% to
$1,051/tonne. BPs reported chartering
of one of the worlds largest bunker
tankers, Splendor, for use in Fujairah
to facilitate its operations at the bunker
supply hub suggests increasing
competition as market players have
sought to take up volume previously
lled by other established players.
Rotterdams bunker market also
rmed in reaction to changes in the
price of crude oil. The average delivered
price of IFO380 cSt increased by 1.33%
on the week to $645.50/tonne. A more
subdued gain was seen for low-sulphur
380 cSt, which increased by 1.14% to
$665.50/tonne. Bunker price lows seen
in October led to heavy bunker delivery
schedules and, as the month ended,
tight availability.
Bunker prices in the rening and
bunker supply hub of Houston saw a
reverse trend to other markets. The
price of IFO380 cSt declined throughout
the week, to close at $660.00/tonne.
The price differential from crude oil
futures widened to $51.10/barrel.
Bunkerworld Indices BW380: $667.50 $14.50 BW180: $698 $13 BWDI: $991.50 $16.50
$646.50 $667.00 n/a $968.00
$693.00 $735.00 n/a $1,023.00
$664.50 $696.50 $969.50 $1,007.00
$653.50 $674.00 n/a $995.00
$644.50 $666.50 n/a $964.00
$419.50 $432.00 $708.00 $813.00
$676.00 $714.00 n/a $1,004.50
$666.50 $695.50 n/a $997.00
$673.00 $705.50 $990.00 $1,006.00
$695.50 $719.50 n/a $1,012.00
$672.50 $694.00 n/a $984.50
$670.50 $699.50 n/a $982.00
$702.50 $727.50 n/a $1,017.00
$689.50 $706.00 $1,001.50 $1,011.50
n/a n/a $1,133.50 $1,143.50
$708.00 $720.00 n/a $1,028.00
n/a n/a n/a $1,070.00
$672.00 $702.00 $1,104.00 $1,110.50
$665.00 $696.50 $980.00 $988.50
$668.50 $696.50 $958.50 $1,007.50
$663.50 $690.00 $987.00 n/a
$685.00 $727.00 $1,083.00 $1,054.50
$700.50 $722.00 n/a $998.50
$656.50 $685.50 $1,049.50 n/a
$713.50 $762.50 n/a $1,172.00
$671.50 $720.50 $1,113.50 n/a
$685.00 $724.50 n/a $1,053.00
$710.50 $765.50 n/a $1,107.50
$762.50 $771.00 n/a $1,056.50
$697.50 $709.00 $951.50 $961.50
$719.00 $725.00 $988.00 $1,003.00
$685.00 $695.00 $931.50 $940.50
$696.50 $711.00 $959.50 $969.50
n/a $772.00 n/a $1,075.00
$707.50 $716.00 $1,000.00 n/a
$675.00 $685.00 n/a $1,070.00
$677.50 $698.00 n/a $1,047.50
$705.00 $750.00 n/a $1,113.00
$691.00 $722.50 n/a $1,094.00
Latest end-of-week prices listed in $ as at Monday 31 Oct 2011.
D=delivered, W=ex-wharf. Ports listed alphabetically by region.
12
|
Fairplay
|
3 November 2011
asian shipping markets
www.fairplay.co.uk
Baltic Asian dry routes
Asian dirty tanker indices
S2 Del. S Korea/Japan for Australian or trans-Pacifc RV, redel. S Korea/Japan; S6 Del.
SKorea/Japan trip via Australia, redel. India; S7 Cape Comorin/Haldia inc. Sri Lanka, redel.
China, iron ore; S8 Del. Hong Kong/Shanghai inc. Taiwain, trip via Indonesia, redel. Chen-
nai/Paradip; HS5 SE Asia trip via Australia redel. Singapore/Japan range including China;
HS6 Del. S Korea/Japan range, trip via North Pacifc, Redel. Singapore/Japan range
TD2 Ras Tanura to Singapore, 260,000tonnes crude; TD3 Ras Tanura to Chiba,
260,000tonnes crude; TD8 Kuwait (Mena al Ahmadi) to Singapore, 80,000tonnes
crude and/or DPP heat 135F (57C); TD14 Seria to Sydney, 80,000tonnes crude
TC4 30,000tonnes, Singapore to Chiba; TC10 40,000tonnes, South Korea
to North Pacifc West Coast; TC11 40,000tonnes, South Korea to Singapore;
TC12 35,000tonnes, Naptha Sikka (WCI) to Japan;
0
250
500
750
1,000
1,250
1,500
1,750
2,000
1Q 2Q 3Q 4Q
2011
1Q 2Q 3Q 4Q
100.0
112.5
125.0
137.5
150.0
162.5
175.0
187.5
200.0
2011
TC12
Route
B
a
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ic
E
x
c
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6,000
7,500
9,000
10,500
12,000
13,500
15,000
16,500
18,000
1Q 2Q 3Q 4Q
2010
2011
TC10
Route
B
a
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ic
E
x
c
h
a
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g
e
-3,000
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
1Q 2Q 3Q 4Q
2010
2011
TD14
Route
B
a
lt
ic
E
x
c
h
a
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e
-3,000
-1,500
0
1,500
3,000
4,500
6,000
7,500
9,000
1Q 2Q 3Q 4Q
2010
2011
TC11
Route
B
a
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ic
E
x
c
h
a
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e
0
2,500
5,000
7,500
10,000
12,500
15,000
17,500
20,000
1Q 2Q 3Q 4Q
2010
2011
H6 Route B
a
lt
ic
E
x
c
h
a
n
g
e
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1Q 2Q 3Q 4Q
2010
2011
S7 Route B
a
lt
ic
E
x
c
h
a
n
g
e
-40,000
-20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
1Q 2Q 3Q 4Q
2010
2011
TD3
Route
B
a
lt
ic
E
x
c
h
a
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e
-3,000
-1,500
0
1,500
3,000
4,500
6,000
7,500
9,000
1Q 2Q 3Q 4Q
2010
2011
TC4 Route
B
a
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E
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Asian clean tanker indices
Baltic LPG index Baltic Exchange
BLPG1 44,000t LPG, $/tonne, Ras Tanura to Chiba, fully refridgerated
10
20
30
40
50
60
70
80
90
1Q 2Q 3Q 4Q
2010
2011
10
20
30
40
50
60
70
80
90
Averages
Route 28 Oct 11 Prev Month YTD 2010
S2 $14,042 $13,161 $11,926 $19,595
S6 $13,809 $12,903 $12,027 $19,463
S7 $11,863 $11,188 $12,481 $23,109
S8 $15,116 $14,170 $12,794 $19,108
H5 $9,039 $10,696 $10,360 $15,470
H6 $8,963 $10,496 $9,826 $14,897
28 Oct 11 Averages
Route WS
TCE
($/day)
Prev
Month
YTD 2010
TD2 W51.18 n/r W44.93 W52.37 W72.36
TD3 W51.18 $2,823 -$2,826 $7,838 $32,006
TD8 W110.23 $1,062 -$659 $3,476 $8,457
TD14 W99.33 $1,202 -$130 $2,606 $8,292
28 Oct 11 Averages
Route Rate
TCE
($/day)
Prev
Month
YTD 2010
TC4 W151.21 $787 $1,948 $1,488 $1,872
TC10 $32.00/t $11,657 $12,483 $11,452 $11,913
TC11 $10.45/t $160 $579 $444 $3,148
TC12 W139.29 n/r W148.10 W147.67 n/r
3 November 2011
|
Fairplay
|
13
Mar|t|me Research Inc.
Fixture Reports via email
Spreadsheet, Database or PDF formats
499 Emston Rd
Par|in NJ 08859 USA
Phone. (732} 727-8040
Fax. (732} 727-0243
Emai|. mri499@ao|.com
Website. www.maritime-research.com
Historical data dating back to 1951
lndexes and statistical analysis
Supp|y|ng the mar|t|me |ndustry w|th comprehens|ve and |ndependent xture |nformat|on for over 50 yearsI
Fixtures Maritime Research Inc / www.maritime-research.com
shipping markets
www.fairplay.co.uk
> For more information
on fxtures see:
www.fairplay.co.uk/markets
Dry Fixtures
Cargo Vessel From to tonnes Date $/tonne Chart terms
Coal Steamer, (Cargill) Puerto Drummond Hadera 150,000-10% Nov 11/20 20.75 NCSC FIO;25,000tShinc/30,000tShex
Coal Steamer, (Hanjin) Richards Bay Boryeong 125,000-10% Nov 16/30 25.00 Kepco FIO;ScLd/30,000tShinc
Coal Steamer, (Alpha) Samarinda Taiwan 80,000-10% Nov 17/26 6.98 Taipower FIO;ScLd/22,000tShinc
Coal Steamer, (Glencore) Gladstone EC India 75,000-10% Nov 20/30 21.00 SAIL FIO;25,000tShinc/25,000tShinc
Coal Steamer Baltimore Yuzhny 70,000-10% Nov 1/10 24.50 Arcelor-Mi FIO;25,000tShinc/14,000tShinc
Iron ore Ocean Queen, 04 Tubarao Qingdao 160,000-10% Nov 25/30 30.50 SwissMarin FIO;ScLd/30,000t
Iron ore Martzoukos A, 95 Pt Dampier Qingdao 160,000-10% Nov 3/10 12.50 Rio Tinto FIO;ScLd/30,000t
Wheat Bulk Victory, 07 Rouen Algeria 20,000-5% Nov 1/2 35.00 ACTI FIO;8,000t/2,50t
timeCharters
Consumption Vessel From to Dwt Date $/day Chart terms
14k/52t Anangel Seafarer, 11 Del Amsterdam Redel Atlantic 179,754 Oct 22/25 33,000 NobleChart 2LadenLegs
14.5k Bulk Indonesia, 11 Del Pt Talbot Redel UK/Continent 95,740 Oct 27/29 18,500 Windrose ECSoAmRd
14k/36t Yasa H Mulla, 11 Del US Gulf Redel Sing/Japan 83,482 Nov 8/13 27,000 Aquavita Trip+$700,000BB,Grain
14k/36t Nuri Bey, 11 Del Vado Redel India Via EC US 80,459 Oct 30/31 25,000 Torm Trip out
13.8k/31t Renuar, 93 Del US Gulf Redel India Via Aden 70,156 Nov 2/7 27,000 Copenship TripOut+$700,000Bonus
13k/26t Annoula, 89 Del Pt Said Redel Egypt Med 69,406 Oct 29/30 15,250 Aquavita BlackSeaRd
14.2k Toxotis, 10 Del Altamira Redel Sing/Japan 57,000 Oct 30/31 32,000 Oldendorff TripOutViaUSGulf
14.5k/39t Mobilana, 98 Del US Gulf Redel Sing/Japan 50,655 Oct 29/31 28,250 CNR Trip out
14k Palau, 03 Del Ravenna RdlIndiaViaMedOrBlckSea 31,837 Oct 21/22 19,000 CNR Trip,Marmagoa$100,000BB
14k/52t Nord Power, 05 Del Xingang Unrptd 176,346 Oct 24/26 23,500 Bergebulk 4-6MoTrdg
14k/34t Prabhu Satram, 04 Del Niihama Unrptd 75,926 Oct 23/24 15,500 Hanjin 3-5MoTrdg
14.2k Blue Marlin 1, 08 Del Tianjin Unrptd 57,000 Nov 1/2 14,500 Allied 4-6MoTrdg
Wet Fixtures
Cargo Vessel From to tonnes Date rate Chart terms
Oil dirty Maritime Jewel, 00 Ras Tanura US Gulf 280,000 Nov 11 W34 Vela
Oil dirty Front Vanguard, 98 Rotterdam Singapore 270,000 Nov 7 $3,400,000 Cargill PtC;Lump Sum
Oil dirty Kasagisan, 06 ME Gulf Japan 270,000 Nov 10 W55 Shell
Oil dirty Blue Aquamarine, 11 ME Gulf Ningbo 270,000 Nov 13 W46 Zhenrong Part cargo
Oil dirty Bunga Kasturi Dua,05 W Africa US Gulf 260,000 Nov 9 W55 Shell
Oil dirty Besiktas Dardanelles, 05 Novorossiysk UK/Continent Med 140,000 Nov 4 W125 Petraco
Oil dirty Donat, 07 W Africa US Gulf 130,000 Nov 9 W75 ExxonMobil
Oil dirty Pink, 10 W Africa UK/Continent Med 130,000 Nov 9 W82.5 ExxonMobil
Oil dirty Sea Wave, 91 ME Gulf Mumbai 90,000 Nov 7 W115 SCI Part cargo
Oil dirty Pacifc Galaxy, 09 Black Sea Mediterranean 80,000 Nov 9 W110 Vitol Part cargo
Oil dirty Barents Sea, 00 Kertch Singapore 80,000 Nov 2 $2,750,000 Lukoil PtC;Lump Sum
Oil dirty Aegean Nobility, 07 EC Mexico US Gulf 70,000 Oct 27 W110 ExxonMobil Part cargo
Oil dirty Ice Base, 08 Baltic US Gulf 55,000 Nov 1 W125 Colonial
Oil dirty Mare Ambassador, 05 AntRottAmsterdam France 30,000 Nov 2 W167.5 ExxonMobil
Oil dirty Edith Kirk, 04 Black Sea Mediterranean 30,000 Nov 3 W182.5 Clearlake
Oil clean Elka Athina, 04 ME Gulf UK/Continent 90,000 Nov 7 $2,425,000 BP Lump Sum
Oil clean Champion Prosperity, 09 ME Gulf Japan 75,000 Nov 7 W112 Daelim Part cargo
Oil clean Yamilah-III, 11 ME Gulf Japan 55,000 Nov 5 W112.5 Vitol Part cargo
Oil clean Dubai Star, 07 US Gulf UK/Continent 38,000 Oct 28 W132.5 Valero Part cargo
Oil clean Kastav, 09 UK/Continent US Gulf 37,000 Nov 4 W130 Koch Part cargo
Oil clean Emerald Star, 05 AntRottAmsterdam Mediterranean 33,000 Nov 1 W140 Shell
Oil clean Valle Di Castiglia,01 Tuapse Mediterranean 30,000 Oct 28 W167.5 Clearlake
14
|
Fairplay
|
3 November 2011
shipping markets
www.fairplay.co.uk
Sale & purchase All details given in good faith but without guarantee
Newbuildings Source: IHS Fairplay
> For full listings of sale and purchase deals or
newbuilding orders and deliveries visit
www.fairplay.co.uk/markets
CoNtaiNer & MultipurpoSe
SANKO SUPREME: (general cargo ship) sold by The
Sanko Steamship, Japan, to undisclosed interests,
$16.50M. 1999. 50,655dwt, 29,688gt. Built Namura,
Mitsubishi/16kt.t
bulkerS
CRYSTAL SEAS ex-Espania: sold by Paragon Shipping,
Greece, to undisclosed interests, Greece, $14.00M. Last
sale: $29.00M (2007), 1995. 43,222dwt, 25,503gt. Built
Hyundai HI, B&W, 10,576bhp/14kt.
ENERGY ROSE ex-Energy Poseidon: sold by Keymax
Group, Japan, to undisclosed interests, China, $15.00M.
1997. 70,257dwt, 36,551gt. Built Sanoyas Hishino
Meisho. Sulzer, 10,881bhp/14kt.
FULL CITY: sold by China Ocean Shipping Group, China,
to undisclosed interests, United Arab Emirates, $10.60M.
1995. 26,758dwt, 15,873gt. Built The Hakodate Dock,
Mitsubishi/14kt.
OCEAN SUNRISE: sold by San-E Maritime, Japan,
to undisclosed interests, China, $16.90M. 1999.
48,203dwt, 26,586gt. Built Oshima, Mitsubishi/14kt.
taNkerS
GENT: (LPG tanker) sold by Exmar, Belgium, to
Gas Master Shipping Investment, Turkey, $8.00M.
1985. 26,820dwt, 18,155gt. Built Boelwerf, Sulzer,
11,237bhp/16kt.
MOGAMIGAWA: (crude oil tanker) sold by Kawasaki
Kisen Kaisha, Japan, to Sinokor Merchant Marine, South
Korea, $35.50M. 2001. 299,999dwt, 160,229gt. Built
Imabari, B&W/15kt.
FRONT FIGHTER (crude oil tanker) ex-Edgeless:
sold by Frontline, Bermuda, to Avin International,
Greece, $12.40M. Last sale: $59.00M (2005), 1994.
147,048dwt, 78,843gt. Built Harland & Wolff & HI,
B&W/14kt.
SAGA AGNES and SAGA JULIE: sold en bloc by Arne
Blystad, Norway, to Centrofn Management, Greece,
$62.00M. SAGA AGNES (crude oil tanker) ex-Songa
Agnes: 2000. 299,089dwt, 157,831gt. Built Daewoo HI,
Sulzer, 31,419bhp/15kt. SAGA JULIE (crude oil tanker)
ex-Songa Julie: 2000. 299,089dwt, 157,831gt. Built
Daewoo HI, Sulzer, 31,419bhp/15kt.
SINGAPORE RIVER: (crude oil tanker) sold by Kawasaki
Kisen Kaisha, Japan, to Cyprus Maritime, Greece,
$21.50M. 2002. 107,132dwt, 57,943gt. Built Imabari,
Sulzer/15kt.
TRANSGAS I (LPG tanker) ex-Norgas Victory: sold by
Transgas Shipping Lines, Peru, $2.87M (525.00/ldt),
1982. 11,772dwt, 8,592gt. Built Drammen Slip &
Verksted, Sulzer/14kt.
Sold For deMolitioN
BOSFO (refrigerated cargo ship) ex-Bosfor: sold by
Leo Shipping Pvt, India, $3.88M (480.00/ldt), 1979.
13,283dwt, 13,486gt. Built GP Sudostroitelnyy Zavod
im. 61 Kommunara, B&W/14kt.
SeleCted NewbuildiNg orderS reported week eNdiNg 28 oCtober 2011
Shipbuilder No owner/operator delivery type Capacity
Daewoo 2 Stena 2014/2 LNG tanker 145,000m
Guangzhou Shipyard 1 Gotland 2013/2 Chem/oil products tanker 39,000dwt
Oshima 3 Archer-Daniels Midland 2014/1 Bulk carrier 95,000dwt
Oshima 2 Fednav 2014/6 Bulk carrier 55,160dwt
SPP Shipbuilding 2 Eastern Mediterranean 2013/6 Chem/oil products tanker 52,000dwt
Yangzhou Dayang 4 Ciner Ship 2012/8 Bulk carrier 63,500dwt
SeleCted deliverieS reported week eNdiNg 28 oCtober 2011
vessel Shipbuilder owner/operator delivery type Capacity
Besiktas Daehan Besiktas 2011/10 Bulk carrier 180,000dwt
Blue Aquamarine Daewoo Korea Line 2011/10 Crude oil tanker 321,225dwt
Centrans Aphrodite Jiangsu Jinling Centrans Ocean 2011/10 Bulk carrier 92,500dwt
Conti Lapislazuli Taizhou Sanfu Conti Holding 2011/10 Bulk carrier 57,000dwt
Desert Glory Hyundai Mipo Atlantic Bulk Carriers 2011/10 Bulk carrier 57,412dwt
Dubai Attraction Hanjin Emarat Maritime 2011/10 Crude oil tanker 115,459dwt
Glovis Prestige Hyundai Mipo Stamco 2011/10 Vehicles carrier 3700cars
Hyundai Success Hyundai Samho Hyundai Merchant Marine 2011/10 Bulk carrier 179,500dwt
Las Tortolas Oshima NYK 2011/10 Bulk carrier 51,300dwt
MSC Rapello Daewoo Claus-Peter Offen 2011/10 Container ship 13,050teu
Nordic Bremen Sainty Jiangdu Nordic Hamburg 2011/10 Container ship 1,036teu
Orient Trail Samjin Interorient 2011/10 Bulk carrier 33,500dwt
Taipower Prosperity VIII CSBC Taiwan Taiwan Power 2011/10 Bulk carrier 93,300dwt
UBC Olimbus Yangzhou Dayang Hartmann 2011/10 Bulk carrier 118,000dwt
Ursual Essberger Eregli Essberger 2011/9 Chemical/oil products tanker 5,300dwt
Wan Hai 271 CSBC Taiwan Wan Hai 2011/10 Container ship 1,805teu
markets
www.fairplay.co.uk
Negative sentiment continues in
the sale and purchase market as
weaker prices and a poor
immediate outlook for both
tankers and dry bulk sap the
enthusiasmof buyers. Activity on
the buying side has been
dominated by Greek interests,
while most of the realistically
priced sales candidates are
coming fromJapanese owners,
who continue to sell despite a
massively unfavourable dollar-
yen exchange rate.
While some of these owners
are said to be frustrated by the
lack of support fromtheir
nanciers, so far there have been
very fewJapanese casualties of
the downturn, with banks
strongly preferring to restructure
debts and defer liabilities than to
create more distressed assets.
One of the last large tankers
ever built in a UKshipyard, the
Suezmax Front Fighter (built 1994
Harland &Wolf, 147,048dwt)
has been committed at $12.3Mto
Avin International of Greece. The
last recorded sale price for the
vessel was back in November
2005, whenTopTankers was
reported to have paid $59Mfor
FredOlsens Knock Dun, as it was
then named. Today, in such a
diferent market, the vessel is
worth little more than scrap.
K Lines autumn tanker sell-of
has continued, with the widely-
reported sale of another Aframax,
RainbowRiver (built 1999Koyo,
107,160dwt) at $20.5Mto Bumi
Armada of Indonesia. The price is
relatively strong, with brokers
ofering a lengthy buyers board
subject as the explanation.
Another Tokyo operator, Sanko
Steamship, is progressing with its
latest round of balance-sheet-
related disposals. Latest to go
have been the MR-type product
tanker sisters Sanko Lynx and
Sanko Libra (both built 2010
Onomichi, 47,378dwt), in a
$62Men bloc sale. The buyers are
rumoured to be either Empire
Navigation or newUS-based
investment vehicle Diamond S
Tankers, which recently agreed
the purchase of 30 product
tankers fromCido Shipping.
While the values are in line
with the current market, the
ships, delivered last year, were
contracted during the freight
boomat yen prices equivalent to
more than $50Meach. Overall,
values for MRtypes have recently
remained remarkably steady,
withTop Ships Ioannis P (built
2003 Hanjin, 46,349dwt) said to
have been sold at $21.5Mlast
week to Laliotis.
Japanese brokers are marketing
yet another stainless chemical
tanker fromthe eet of operator
Dorval Kaiun. GoldenTopstar
(built 2010 Fukuoka,
19,735dwt), which is controlled
by its nancier, Tokyo Star Bank,
is expected to achieve a price in
line with recent sales, which
would be in the region of $28M-
29M. Yet again this is a level far
belowits original contract price.
Nigerian purchases
Nigerian buyers, taking market
weakness as an opportunity to
modernise their tanker eet, are
thought to have purchased
German-built chemical/products
tanker Rheinstern (built 1993
MTW, 17,080dwt) for about
$7.5M. With 20 epoxy-coated
tanks, the price seems to be
relatively healthy given the ships
vintage, especially as the buyers
are unlikely to require ice class.
Greek buyers are thought to
have paid $16.5Mfor the
Capesize Royal Oasis (built 1995
Hyundai, 161,192dwt). Based
on IHS-Fairplay gures, prices
for mid-1990s-built Capes have
nowfallen by at least 30% since
Japan leads vessel sales
Sale and purchase activity
reects poor outlook in
charter markets
summer 2010.
Meadway Shipping has
reportedly achieved a rm
$20.5Mfor its Handymax Bonasia
(built 2001Mitsui, 46,509dwt)
fromfellowGreek buyer Anbros
Maritime. The vessel comes with
four-six months balance of a time
charter at $14,000/day.
Ukrainian interests are
reported as the buyers of Vietnam
Sea Transports Japanese-built
small Handysize VTCStar (built
1990Saiki, 22,237dwt). Brokers
say the price paid will be $7.7M,
which is probably about right for a
four-hold, four-hatch ship of this
vintage in the current market.
With the recent decline in
rates, buy-to-charter investors
have disappeared fromthe
container sector, leaving only re-
nance deals ships with
attractive time charter employ-
ment attached and purchases
against employment require-
ments. Falling into the latter
category, Canadian interests are
thought to have purchased the
366-teu gearless feeder ship
sisters Jin Man Hai and Jin Man He
(both built 1997 Kroeger Werft,
4,900dwt) en bloc at $2Meach.
With the withdrawal of
Bangladeshi buyers fromthe scrap
market once again, prices available
fromrecyclers remaining open for
business have predictably fallen.
Alang breakers last week
committed the bulker Good Light
(built 1979Sanoyas, 10,690ldt)
for $480/ldt, basis delivery as is at
Sri Lanka, while their Pakistani
rivals took STXPanOceans sisters
OceanFriend andOceanHost (both
built 1982Korea SBand about
11,680ldt) for a slightly rmer
$510/ldt each, although the prices
paid included a substantial
quantity of bunkers in each case.
Prices on ofer by Chinese
recyclers have also come down,
fromthe previous mid-to-high
$400s to the $430/ldt paid last
week for CRhapsody (built 1983
Mitsui, 8,370ldt).
Keen interest in K Lines
Rainbow River prompted a
rm price Kevin Finnigan
3 November 2011
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Fairplay
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15
> K Line:
Autumn tanker sell-off
continues
This page
> Sanko Steamship:
Balance-sheet-related
disposals
This page
markets
www.fairplay.co.uk
> Tokyo Marine:
Asia is a strong driving force
for freight levels
This page
> Rickmers Marine Trust:
Leaseback is on the rise
This page
Chem tankers target MidEast-Asia
Operators focus on
emerging markets to lift
freight levels
Chemical tanker operators are
banking on a resurgent Asia and
other emerging markets to lift
freight levels even as the OECD
countries appear to be heading for
another recession.
Tokyo Marine, Mitsui OSK
Lines chemical shipping arm,
told Fairplay that Middle Eastern
exports toAsia are a strong
driving force, with shipments
forecast to growyear-on-year
between 2011 and 2014.
World GDP growth is 4.3%,
according to the International
Monetary Fund. However, BRIC
[Brazil, Russia, India and China]
growth is higher than this world
average, the company said.
Chinas economy grewby an
average of 9%in the past three
years and growth is expected to
hit 9.4%this year. Because of
this, we deemthat chemical
demand continues to be strong
and, as a result, freight markets
will be strong as well.
Japans biggest chemical
shipping company added that
year-on-year growth in Middle
East-Asia chemical shipments is
estimated at 10% next year, 21%
in 2013, and almost 34% in
2014. EitzenChemical CEO
Terje Askvig agreed and observed
that methanol is highly sought-
after by China. Generally, the
Middle East-Far East lane is
experiencing above-average
growth, outstripping the Middle
East-West lane.
Opening an ofce in Singa-
pore to manage all our Asian
businesses was a strategic move.
Methanol is also among the
specialises in securing long-term
charters for container ships. The
pressure on liners earnings,
combined with substantial
newbuilding orders, would result
in more vessel sales and lease-
backs. Some operators might be
more encouraged to capitalise by
selling their ships and channel-
ling the capital to their new-
building projects, to cover the
nancing no longer provided by
banks, said Hansen.
After the leaseback, the owner
can either renewthe lease or seek
newcharterers. Bareboat charters
usually include a buyback option
and are more temporary.
At the moment, we see some
liners selling ships that are to be
replaced by the ultra-large
Poor freight market sees
operators liquidating
container ship assets
The Middle
East-Far
East lane is
experiencing
above-average
growth
Eitzen Chemical
CEO Terje Askvig
chemicals that must be shipped
on IMOIII or better tankers so
that efectively reduces the
eligible tonnage. Chemical
Markets Associates analyst Cathy
Wang commented that last year
China imported 5Mtonnes; this
year imports are set to rise to 6M
tonnes. Traditionally, methanol
has been used to make other
chemicals for the manufacture of
plastics, she explained. More
recently, methanol has been used
as a fuel substitute as China
battles rising oil prices.
Chemical tanker pool Navig8
in Singapore told Fairplay that
Asian chemical demand increased
by about 5%between 2009 and
2010, with many shipments
coming fromnon-Asian countries.
Inter-Asian trade decreased by
2.5%, increasing tonne-mile
demand and improving freight
rates, said Navig8, which
manages 47 chemical tankers.
While spot freights have
improved, the rise has been
Leaseback on the rise
E
it
z
e
n
C
h
e
m
ic
a
l
container ships. Those ships are
too young to be scrapped, so the
owners get more value from
selling themfor further trading,
Hansen commented.
PhilipClausius, CEOof First
Ship LeaseTrust is in discussions
with shipowners operating in all
segments, including container
shipping. He told Fairplay that
leasing thrives at times of
uncertainty. Operators dont have
as many funding choices as they
might have in more normal times
so, obviously, they are shopping
for alternative solutions.
We do have a lot of meetings
with quality operators who are
looking at funding solutions over
the next two years and are talking
to companies like us because the
funding market is so tight.
On 11October, Hamburg Sd
sold Cap San Nicolas, Cap San
16
|
Fairplay
|
3 November 2011
Sales and leasebacks of container
ships are set to rise as shipping
companies seek better liquidity at
a time of ever increasing
economic uncertainty.
Rickmers Maritime Trust CEO
Thomas Preben Hansen told
Fairplay in Singapore last week
that he anticipated more
deals as over capacity
continues to threaten
container shipping.
The trust, which
is linked to
Germanys
Rickmers Group,
Thomas Preben
Hansen anticipated
more leaseback deals
Rickmers Maritime
> High barriers to entry present silver lining
3 November 2011
|
Fairplay
|
17
markets
www.fairplay.co.uk
> Other recent deals
On 20 September, MSC sold MSC Viviana (renamed MSC Messinia), a
6,730teu ship, to Costamare in Greece for $60M, with a 10-year time
charter back at $29,000/day.
MSC also sold MSC Ulsan, a 4,132teu ship, also to Costamare, for
$30M, with a 5.25-year time charter back at $16,500/day. While MSC
would not comment on the transactions, Costamares head of fnance,
Gregory Zikos, said the purchases would maintain the companys post-
IPO feet expansion and revenue stream. Costamare has also extended
charters for fve sub-Panamax vessels and one Panamax ship to MSC at
$10,000-$13,500/day.
Zikos said: The recent fxtures on a forward basis have minimised our
re-chartering risk and further enhanced our fnancial stability. In the
past two months, Hong Kongs Orient Overseas Container Lines sold OOCL
Britain, OOCL Singapore, OOCL Netherlands and OOCL Japan (5,344teu
each) to Greeces Technomar for a total of $128M and four others OOCL
China, OOCL Hong Kong, OOCL America and OOCL California reportedly
for $124M to Diana Containerships.
Technomar time-chartered the ships to OOCL at $27,800/day for 2.5
years, while Diana has reportedly bareboat-chartered the ships to the
Hong Kong-based operator at $16,000/day.
Marco, Cap SanAugustin, Cap San
Antonio, Cap San Raphael and Cap
San Lorenzo for a total of $201M.
Abroker in Hamburg said the
buyers were Euroseas, Tsakos and
Seachange, each picking up two
vessels with three-years charter
back to the German operator at
$22,500/day.
$201M
En bloc price of six Hamburg Sd
ships, with time charter back at
$22,500/day
The broker agreed that interest
in box ship sale and leasebacks is
rising. The transactions give
themliquidity and ensure they
can continue using the ships. At
the same time, there are buyers
who are interested in purchasing
ships of any size if the ships are
not too old. The leasebacks give
buyers guaranteed income over a
period, froma good charterer, as
the rates are very much linked to
the value of the transaction, not
the open market.
Greek buyers are preferred over
German tramp owners as the
former have more liquidity. The
Greek buyers [mostly supported
by their IPOs] can raise funds
faster and obviously more
favourably in respect of the price
they can ofer [in relation to the
charter-back rate]. German tramp
owners, who may in principle
wish to enter such deals, are
usually unable to raise sufcient
equity and bank fnancing, which
makes it difcult with local
shipping banks.
all the main markets.
Malaysian carrier MISCis
positive about newrefneries in
the Middle East and Southeast
Asian vegetable oil exports.
Methanol, monoethylene glycol
and methyl tertiary butyl ether
are the main chemicals exported
fromthe Middle East.
The demand is fuelled by the
transport, automotive and
construction sectors. Further,
increasing edible and non-edible
(such as biofuels) consumption
will stimulate more vegetable oil
demand worldwide.
Indonesia and Malaysia are the
biggest vegetable oil producers.
MISC is planning to restructure
its feet in the coming year. That
will leave it with 31 ships, of
which 19 will be owned,
aggregating a little under 1M
dwt. With a stable and modern
feet to serve critical trade
routes, we will be able to better
establish our presence to service
our target customers, the
company said.
Although the chemical tanker market remains volatile,
high barriers to entry offer some relief.
Increased consolidation in recent years is an
important development, a Navig8 spokesman said.
Smaller players fnd it hard to compete in a tough
shipping and economic environment. Larger feets
have a better chance of achieving superior returns.
While only a small percentage of the global feet is
controlled by big players, smaller players can partake
in pools such as Navig8. German owner Bernhard
Schulte has placed eight chemical tankers in the
Navig8 pool. It was in both parties interests to con-
solidate our strengths in order to achieve better market
share, scale and, ultimately, better earnings. Some
pools have managed to demonstrate over time that
feet size, a global network, an entrepreneurial trading
mentality and good planning can have a signifcant
impact on owners bottom line.
Less experienced operators also fnd it harder to
compete because chemical tanker operators rely
crucially on oil majors approval. Some new players
have found it diffcult to pass oil majors inspection,
which reduces the eligible feet, said Japan-based
Tokyo Marine. We have in-house ship management
companies with a good record of oil majors approval.
That makes us confdent and committed.
negated by pricier bunkers.
Average freight rates for
10,000dwt tankers were $24.89/
tonne for Gulf-WCIndia in 2010.
That increased to $32/tonne last
week but over the same period
Fujairah bunker prices have risen
by 42%, resulting in a net freight
rise of just 8%. High costs for
armed security and insurance
premiums for transits in the
pirate-infested IndianOcean and
Gulf of Aden also afect earnings.
Navig8, however, thinks its
not all doomand gloomfor the
west-of-Suez market. Signifcant
volumes are being moved into
and out of these areas, providing
potential proftable voyages.
There are numerous intra- and
inter-regional opportunities
resulting fromimbalances and
arbitrage movements, the
company said.
Navig8 Chemicals ofces in
Westport, London, Shanghai,
Singapore and Seoul provide 24-
hour worldwide coverage,
enabling it to take advantage of
opportunities arising from
changing trading patterns. Our
approach has been to be a global
operator with local presence in
18
|
Fairplay
|
3 November 2011
&
trade commerce
> Business at the heart of shipping > For more visit www.fairplay.co.uk
> DFDS/ Louis Dreyfus
Armateurs
SeaFrance on the brink
This page
The Tribunal de Commerce
(commercial court) in Paris has
given itself until 16 November
to make a decision on whether
or not ailing Dover Strait ferry
operator SeaFrance has a future
as a going concern.
At a hearing on 25 October,
the court was given an update
on the companys position after
17 months in legal protection
but opted not to give an
immediate decision.
The court heard details of the
two ofers that have been made
for the company one from
Danish ferry operator DFDS in
partnership with Frances Louis
Dreyfus Armateurs (LDA) and
one froman employee co-
operative led by the majority
CFDT union at the company.
However, CFDT ofcial Didier
Cappelle told Fairplay that, on
the strength of what it heard last
week, there was a strong
probability the court would put
the company into liquidation.
He indicated that this would
not necessarily signify the end of
the company, since the court
could allowit to continue in
business for a specied period
SeaFrance on the brink
rather than ordering an immedi-
ate cessation of activity.
The union, which argues that
the rival DFDS-LDA bid for
SeaFrance is unlikely to be
accepted by the court, is pressing
for this to happen to enable it to
raise the 20M-25M($28-35M)
it estimates it needs to support
the bid for the company by the
employee co-operative. We
need the maximumamount of
time to complete the nancing of
the project, said Cappelle.
He said the union was
canvassing local authorities, state
nancial institutions and even
SeaFrances owner, public sector
rail operator SNCF, to provide
nancial backing for the bid.
He is convinced SNCF could
support the bid despite the
European Commissions recent
rejection of its 259.5M
recapitalisation plan for
SeaFrance on the grounds that it
was contrary to European Union
rules on state aid.
Cappelle was adamant,
A court must choose
between liquidation and
accepting one of the two
tabled offers, writes
Andrew Spurrier
however, that there could be no
question of the union supporting
the DFDS-LDA bid.
These two companies, which
have increased their token 3 bid
for the company to 5M, have
ofered to keep three of its four
ships in service and take on 460
of its 820 employees.
Cappelle said the union, which
wants to keep all four ships in
service and provide jobs for all,
could not accept additional job
cuts. He also claimed DFDS and
LDA were unwilling to commit to
maintaining the company in
business for more than two years.
DFDS has committed itself to
nothing, he said. It came across
as a real predator.
DFDS president Niels
Smedegaard told Fairplay the
unions position was under-
standable, given the long period
of uncertainty SeaFrance
employees had been through,
but said it was clear that changes
needed to be made at the
company. We cant save all of
SeaFrance, he insisted. We
have to face the reality of the
situation. SeaFrance has been
losing 30Min each of the past
three or four years.
He was careful not to attack
the credibility of the unions
projected employee co-operative
takeover of the company, saying
that if it was accepted by the
court, DFDS would congratulate
the union and make its exit.
But he added: We just think it
will be very difcult for anyone
to come up with something as
meaningful as we have.
We cant save all of SeaFrance.
We have to face the reality of the
situation DFDS president Niels Smedegaard
M
a
lt
e
C
la
s
s
e
n
s
DFDS with Louis Dreyfus
is targeting SeaFrances
newer tonnage
30M
SeaFrances annual losses in
each of the past three years
3 November 2011
|
Fairplay
|
19
trade & commerce
www.fairplay.co.uk
> Studio Legale Lauro:
Bankers, lawyers and
Chinese investment
This page
AnAmerican guest at the second
annual Shipping and the Law
conference held in Naples on 24
October summarised the
situation shrewdly: I dont see
howtheyre going to get funding
for all these plans if they dont
trust their own banks.
The Naples conference was the
brainchild of Neapolitan lawrm
Studio Legale Lauro, set up in
1993 and active in all shipping
matters, particularly mergers and
acquisitions (M&A), partnerships,
joint venture agreements and
special-purpose vehicles.
The emphasis of the confer-
ence was not the lawper se but
the extent to which modern legal
constructs can successfully limit
investor risk. However, with
Western banks and bankers now
posing the greatest threat to the
wealth of nations, delegates had
the feeling that many of the
speakers were looking through
the wrong end of the telescope.
In this context, the presenta-
tion given by a teamfromChina
Development Bank, led by Zhang
Rong Rong, was listened to
attentively. Zhangs literal
message was lost in translation
but the meaning was clear: China
is willing to invest part of its
foreign reserves in streamlining
its access to European markets.
Whether this is achieved through
partnership with government
ofcials or private enterprise is
not yet clear, but there should be
no doubt about its determination.
The conference, which
attracted about 250 delegates,
was held near Castell dellOvo,
believes progress will not get
bogged down in bureaucracy.
The conference was held in
English, which must have
involved a lot of arm-twisting but
worked very well. Francesco
Lauro, the organiser and
moderator, is uent and so, too,
were the owners and operators
who spoke. Sensibly the
organisers gave the keynote
speeches to Italys most travelled
members of the shipping
community, including Paulo
dAmico, chairman of the Italian
shipowners association, Paolo
Costa, former Italian minister for
public works and nowpresident
of the Port Authority of Venice,
and Emanuele Grimaldi, MDof
Naples largest shipowner
and operator.
Alfons Guinier, a past master in
this kind of international setting,
invited Mark Love QCto speak,
so standards were high.
And for a venue held in a
venerable setting, the technicians
did an excellent job. Microphones
worked, slides came up when
asked for and the interpreters,
when needed, were up to the job.
The organisers also had the
foresight to hire a UK-based press
liaison service.
If there was a hitch, it had
nothing to do with the organisa-
tion. It came fromthe news,
being ashed through on
participants mobile phones, of
the increasing difculties facing
Italian and Spanish banks as
European governments searched
desperately for a convincing
means of shoring up the system.
Reading between the lines, it
looked likely that the delegates
fromChina were not in Naples as
willing merchants but as
reluctant bailifs. What the
Norman builders of Castell
dellOvo would make of that is an
interesting question.
Bankers, lawyers and Chinese investment
China wants better access
to European markets, a
conference in Naples was
told last week. Rod Lee
listened in
There should be no doubt about
Chinas determination to streamline
its access to European markets
the Norman castle defending the
old port. It provided a suitable
setting for a discussion of the
piracy nowplaguing the eastern
approaches to the Suez Canal.
Only a fewdays earlier the Italian
bulk carrier Montecristo had to be
rescued by a combined US and
British taskforce acting under the
orders of Italys AdmGualtiero
Mattesi, who commands the
NATOOcean Shield anti-piracy
task force in the area.
The topic at the conference
was the Italian governments
agreement to allowItalian
troops to be made available to
national-ag merchant shipping
transiting the area. Furio
Samela, a partner in the Rome
ofce of Watson Farley &
Williams, spoke on the nancial
consequences of piracy in terms
of total loss in loan agreements.
On the practical side, US Navy
commander SeanCantwell told
shipowners to stick as close as
possible to best management
practice and carefully vet private
security companies. In the M&A
session, Diego Pacella, MDof
Grimaldi Group, and Fabrizio
Vettosi of Venice Shipping and
Logistics chaired a uent
discussion led by Claudio
Cattabriga of Terra Nova
Advisors and Bruno Castellini of
the Milan ofce of Jones Day.
Understandably, the blame for
the present inactivity in the
market was laid, politely but
rmly, at the door of the banks.
The discussions on infra-
structure centred on EUdecisions
on key routes and the efect these
would have on the aspirations of
individual ports. The map that
emerges on applying this
criterion would appear to favour
Spain ahead of Italy, especially
where rail links are concerned.
The assembled port dignitaries
also heard the challenge thrown
down by Gianandrea Rizzieri, the
former Cliford Chance lawyer
who is leading a bid to fund
development projects inTurkey
and the Balkans, where he
Castell dellOvo in Naples: the
Normans have long gone but the
Chinese are coming Shutterstock
20
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|
3 November 2011
trade & commerce
www.fairplay.co.uk
> Shipping Corp of India:
Parity calls for domestic
shipping industry
This page
The powerful Indian Shipowners
Association (INSA) wants similar
levels of preferential treatment
of domestic carriers of national
cargo transport as is enjoyed in
competitor shipping nations.
It has called on the government
for one-third of total trade to be
reserved for Indian agged ships,
especially for export-import of
commodities such as crude and
rened products, thermal coal,
coking coal, fertiliser and iron ore.
At present, Indian shipping
companies enjoy the right of rst
refusal incase the price diference
between the Indian agged vessel
and the lowest rate quoted by
foreign shipping companies is
10%. This means that if the price
diference is 10%, Indian shipping
companies can match the price
ofered by foreign vessel owners
and pick up the cargo contract.
S Hajara, chairman and MDof
Shipping Corp of India (SCI) and
president of INSA, told Fairplay
the right of rst refusal was not
enough to boost Indian shipping.
Countries such as the US,
China, Brazil and Indonesia all
have reservation of cargo for
their domestic-agged vessels. In
China, 50%of crude is reserved
for domestic-agged vessels. All
emerging economies have
adopted policies to protect their
national interests. The Indian
government must also do
something to boost Indian
tonnage. INSAis proposing that
the government should develop a
national eet in the energy sector,
similar in concept to the United
States Sealift Command. The
national eet should consist of
Indian-agged vessels to ensure
uninterrupted transport of
essential cargoes such as crude oil,
petroleumproducts and gas,
while ensuring national and
energy security, the proposal
argues. It has been suggested that
long-termcharters of ve-seven
years could be given to Indian
companies with the ofer based
on public tenders open only to
those companies. The proposal
states that Transchart, the
chartering wing of the shipping
Indian shipowners want
Delhi to help its members
compete against foreign
carriers of national cargo,
writes Christina George
Cargo reserves demanded
Indias shipowners are
projecting two faces
foreign trade and greater
domestic share Joachim Affeldt
Without domestic
cargo reservations, it
will be difcult for us
to sustain our trade
ministry, could evaluate the
existing Indian eet capacity and
stipulate the percentage of cargo
that should be reserved for
carriage by national ag carriers.
This is not the rst time that
INSAhas raised this issue but the
government has not addressed
the demand. As the share of
Indian ships in the countrys
foreign trade is steadily going
down, now8-9%frommore than
40%three decades ago, we have
requested the government to
look at this issue seriously, said a
senior INSAofcial. KMohandas,
shipping secretary, conrmed
that he has received the proposal.
We have sent it to the various
ministries of petroleum, steel and
power [for coal]. The proposal is
under discussion. We would like
Indian cargo to be carried by
Indian ships but the right type of
proposal has to be worked out and
then a decision can be taken, he
told Fairplay.
At present, Indian ships carry
only 36%of imported crude oil.
Apart fromSCI, other leading
INSA members include Essar
Shipping, Varun Shipping and
Mercator Lines. Without such
reservations, it will be difcult
for us to sustain our trade, said
Hajara. As of now, Indias total
national tonnage stands at
10.8Mgt. The idea is to enhance
Indian tonnage and seek energy
and food security for the country,
as in the case of most developing
countries. Foreign companies can
set up their subsidiaries in India
and ag their ships here. India
allows 100%foreign direct
investment in shipping, said
another INSA ofcial.
He said the all charter xtures
could be linked to international
indices such as BDI (for drybulk)
andWorldscale (for crude).
World over, xtures are very
transparent. There is no question
of Indian companies forming any
cartel and xing rates clandes-
tinely, said the ofcial.
36%
Indian ships carry only 36% of
imported crude oil
3 November 2011
|
Fairplay
|
21
trade & commerce
www.fairplay.co.uk
> Norbridge:
Foreign hubs or smaller ships
This page
The prospect of a boom, for either
foreign hub ports or smaller ship
newbuildings, has been raised as
belief grows that many US East
Coast (USEC) channels will not be
dredged in time to accommodate
larger vessels when the Panama
Canal expands in 2014.
US Congress remains at a
virtual standstill and politics may
groweven more partisan as the
2012 presidential election
approaches. Current sentiment
inWashington is squarely
focused on austerity, not
expenditures. Federal budget
constraints on dredging are being
compounded by environmental
setbacks, as seen in Savannahs
recent permit rejection.
Shipping lines are concerned and
are already considering contin-
gency plans for their higher-
capacity boxships. Edward
Dekkers, the US representative of
the Port of Antwerp, disclosed to
Fairplay that we have been
approached byAsian shipowners
about using Antwerp as a hub for
smaller container ships going to the
East Coast if things dont change.
The [USEC] ports are not ready.
Fairplay has also conrmed
that talks have begun with
Caribbean terminals, including
Freeport Container Port, about
possibly using island hubs to
serve the USECwith feeders.
Caribbean Shipping Associa-
tion (CSA) president Carlos
Urriola believes there is a great
opportunity for the Caribbean
to play a larger role in the Asia-
USECtrade as a result of
American infrastructure
shortfalls. Urriola sees two
possibilities: lines could use US-
bound feeders fromCaribbean
hubs, and lines could unload
some boxes in the islands,
allowing partially laden vessels to
service shallower US ports.
It is not just a dredging
problem, Urriola believes, but a
broader deciency withAmericas
inland transport system. The
quality of US roads, railways and
bridges is also being waylaid by
cash-strapped budgets.
There are
indications that
US ports may
not be ready
Acore business premise of the
Panama Canal expansion hinges
on whether USECports can
accommodate larger ships.
Canal planners have pointed to
a hypothetical dividing line
through the middle of America. To
the left of the line it is more cost-
efective to bring boxes into Los
Angeles/Long Beach and rail east.
To the right, its more economical
to use the all-water route through
Foreign hubs or smaller ships?
Islands may ll gap if
USEC ports dont dredge,
reports Greg Miller
The Panama Canal widening
may pay the Caribbean an
unexpected dividend GNU
Deulsche Bahk
db.coh/Ix4cash
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approved ahd/or cohhuhicaled by Deulsche Bahk AC. The services described ih lhis adverlisehehl are provided by Deulsche Bahk AC or by ils subsidiaries ahd/or aIIiliales ih accordahce vilh appropriale
local legislalioh ahd regulalioh. Deulsche Bahk AC is aulhorised uhder Cerhah Bahkihg Lav (cohpelehl aulhorily: BaFih - Federal Fihahcial Supervisory Aulhorily) ahd aulhorised ahd sub|ecl lo lihiled
regulalioh by lhe Fihahcial Services Aulhorily. Securilies ahd ihveslhehl bahkihg aclivilies ih lhe Uhiled Slales are perIorhed by Deulsche Bahk Securilies Ihc., hehber NYSE, FINFA ahd SIPC, ahd ils
broker-dealer aIIiliales. Lehdihg ahd olher cohhercial bahkihg aclivilies ih lhe Uhiled Slales are perIorhed by Deulsche Bahk AC, ahd ils bahkihg aIIiliales. Copyrighl 2011 Deulsche Bahk AC.
FX4Cash lhe slahd oul choice Ior
Shippihg ahd Marilihe Crgahisaliohs.
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the Panama Canal, then bring
boxes westward fromUSECports.
It is not unanimously believed
that USECdredging shortfalls will
translate into more Caribbean
transhipment. Big ships are not
necessarily a transhipment
operations friend, Norbridge
partner James Brennan told the
recent CSAconference in Barbados.
He noted that a 10,000teu vessel is
much more difcult for a tranship-
ment hub to handle.
Brennan also asked: Where
does a 10,000teu ship go after
transhipment in the Caribbean?
Does it go to East Coast South
America? Does it go to Europe?
If it goes on to Europe, it
would be operating as an East
Coast SouthAmerica-Caribbean
Basin-Europe service, explained
Brennan. He does not believe
European importers, who have
access to myriad direct services
fromSouthAmerica, would
instead book cargo on a
10,000teu vessel that tranships
in the Caribbean.
Nor does Brennan foresee
shipper demand for future Asian
services to major US markets,
such as NewYork, that must rst
unload in the Caribbean and use
feeders for the nal leg, given
higher transit time. Rather, he
believes the future market will
favour vessel sizes that can
handle USECdraughts.
trade & commerce
www.fairplay.co.uk
Russias state-owned United
Shipbuilding Corporation has
completed its takeover of the
Baltic Shipyard and Northern
Shipyard facilities in St Peters-
burg under a trust arrangement.
Alexei Kravchenko, spokesman
for RomanTrotsenko, CEOof
USC, confrmed to Fairplay that
the deal for the yards had fnally
been concluded with the Central
Bank of Russia, which is owed
more than 32Bn roubles ($1Bn)
by the yards majority stake-
holder Sergei Pugachev.
The takeover has been dogged
by disputes and 10 months of
delays, Trotsenko explained,
because a $1Bn loan fromthe
central bank to Mezhprombank,
controlled by Pugachev, intially
was unsecured. In fact, it was a
fnancial bailout of the bank
during the global fnancial crisis
[of 2008].
Later, the central bank
transformed [the bailout] into
the category of secured loans.
Companies controlled by the
family of Sergei Pugachev
strongly resisted.
The trust transfer, which
includes Pugachevs Iceberg
Construction Bureau, is the
subject of a reviewby the
MoscowArbitrationCourt, which
is considering applications from
creditors, including a claimby
state atomic energy agency
Rosenergoatom, that Baltic
Shipyard is obligated for unful-
flled, but paid-for, work on the
governments pilot programme
for foating nuclear reactors.
$1Bn
default payment that triggered
Baltic Shipyards transfer
Trotsenko said Baltic Ship-
yards location on the River Neva
precluded expansion to accom-
modate larger vessels, especially
oil and LNGtankers, for which
there is domestic demand. USC
will seek to limit Baltic to hull
and component construction,
even though, in terms of cost,
hull construction is cheapest at
the Vybord andAdmiralty yards
in the St Petersburg region.
According toTrotsenko, Baltic
has been operating at a loss, while
Northern has been proftable.
Trotsenko said USChad now
acquired the yards it wanted. We
wanted a platformin the Caspian
Sea, so we have acquired the
Caspian Energy group.
We were interested in an
assembly platformfor technologi-
cally complex projects, so we
acquired the Helsinki shipyard in
the formof a joint venture with
STX. He added: We have no
additional acquisition plans. [For
further expansion] we will have
to build fromscratch.
United Shipbuilding Corp
fnally acquires yards and
plots new way forward
Russias USC gets wished-for acquisitions
Yards tighten their belts
Croatias approval of millions of
dollars in state assistance to
restructure the countrys
subsidised Brodotrogir shipyard
is part of a broader privatisation
process. The yard, in the southern
Adriatic port of Trogir, is one of
fve going through major
overhauls that will, once under
newownership, see themshrink
to help themsurvive and free
themfromheavy subsidies.
The plan for Brodotrogir, drawn
up by Jadranska Ulaganja of
Zagreb, involves the yard
receiving grants, state guarantees,
write-ofs and debt assumption by
the Croatian government worth
more than 2.8Bn kuna ($495M).
Jadranska Ulaganja has been
More independent, but
leaner, times ahead for
Croatian shipyards
involved in bidding for several
Croatian state-supported yards.
Croatian anti-trust regulator
AZTNsaid: The restructuring
costs under the plan are estab-
lished at the level of more than
4.6Bn kuna, with the shipyard
making a contribution of 1.8M
kuna, or 40%. The grants and debt
write-ofs cover the period from1
March 2006to the end of 2016.
The agency said Brodotrogir
cannot receive any other aid
during that 10-year period.
Local observers told Fairplay
that although at frst glance the
move by Zagreb to award such
large sums to Brodotrogir would
appear to fout strict EUanti-
monopoly regulations, the
opposite is the case.
While negotiating its
accession to the EU, Croatia
agreed to restructure the
shipyards and privatise themvia a
tendering process, said Miroljub
Macesic, senior partner at law
frmMacesic &Partners in Rijeka.
The tenders have been published
and bids submitted, as have
restructuring programmes for all
the shipyards. These need to be
approved by both the European
Commission andAZTN.
He added that all state aid
received by Brodotrogir since 1
March 2006 is considered
restructuring aid, granted to
companies in difculty.
Howthe funds will help the
yard become a success will depend
on the newowners, said Macesic.
The same will apply to Brodo-
trogirs counterparts along the
Adriatic coast. The reality is that
they are all about to become a lot
leaner, whether or not this makes
themftter in the longer term.
Capacity at Croatias shipyards
is certain to be reduced, with the
total annual limit being 323,600
in compensated gross tonnage,
Macesic said. Individually, the
yards may agree to reviewtheir
production limits on the basis of
the binding agreements resulting
fromprivatisation.
The capacity at
Croatias shipyards
is certain to be
reduced
22
|
Fairplay
|
3 November 2011
> Brodotrogir shipyard:
Yards tighten their belts
This page
> United Shipbuilding Corp:
Russias USC gets wished-
for acquisitions
This page
3 November 2011
|
Fairplay
|
23
> Huttons:
Suppliers are being used
as banks
This page
trade & commerce
www.fairplay.co.uk
In a sense, commented Joe Borg,
former EuropeanCommissioner
responsible for maritime afairs,
ship supply is more than a
business. It has always been an
activity based on trust, through
which suppliers look after the
necessities of the master and crew
and establish solid, sometimes
lifelong, commercial relation-
ships. That trust is being
seriously tested as some shipman-
agers are delaying payment for
several weeks. Suppliers are
being used as banks, saidAlex
Taylor, MDof UK-based supplier
Huttons. It seems to be a
fundamental mindset in shipping:
when times are hard, dont pay.
He says managers all over the
world are using several ways to
slowpayment until funds are
available, beginning with the loss
of documentation, seeking to
clarify exactly what the payment
terms mean and demanding
copies of invoices that have not
been requested before. It has
become incredibly difcult to get
money out of shipmanagers. I
believe pressure is being put on
these companies to stretch out
payment, but we have become the
squeezed middle. Suppliers are
pay or delaying payment, but
owners are paying themtoo.
He said the ISSAdirectors were
trying to fnd a way to get
customers to honour the agreed
terms. The frst thing is to
highlight late payment from
customers and there are indica-
tions that shipowners do want to
meet the agreed terms. However,
Olsen urged member suppliers to
take responsibility for the
situation, calling onthemto make
use of all the information they
have available.
We have never used a blacklist.
This is a relatively newproject and
we are working on a series of
initiatives that will help the
industry, he added. He said he
believed any move would be more
a warning than a blacklist. The
ISSAquality standard could be a
solution to the problem.
Ship suppliers dont like
being used as banks as
managers delay paying
>> sector focus:
Ship agency & supply
Cant pay, wont pay
expected to provide branded
products and pay upfront but
their costs are not being promptly
covered. He suggested that little
had been done by BASS or ISSA,
the British and international
suppliers associations. Its not
being publicised, even if it has
been discussed.
Taylor would like to see a
worldwide name and shame
campaign, with a widely
distributed list of managers that
have failed to meet payments,
although he agreed such a project
would need to be carefully
thought through. Jens Olsen,
president of ISSA, acknowledged
that non-payment is a major issue
and he has written several articles
to that efect. Managers ask for
service, quality and branded
products and they fully under-
stand the implications of failing to
Port Agency Services at Your Service
Vopak Agehcies oIIers high qualiIy agehcy
services Ior all possible Iypes oI vessels,
ihcludihg Ihose servihg Ihe oIIshore ihdusIry.
The NetherIands
PoIIerdam - AmsIerdam - Terheuzeh - Flushihg
BeIgium
AhIwerp - GhehI - Zeebrugge
France
Le Havre - Poueh
Germany
Hamburg - PosIock
www.vopakagehcies.com
24
|
Fairplay
|
3 November 2011
trade & commerce
www.fairplay.co.uk
> Conti Reederei:
Delays at Chinese yards
allows for cut in newbuilds
This page
> Novorossiysk:
Rail monopoly puts squeeze
on port prots
This page
German shipping banks, KG
houses and private investors are
seeing light at the end of the
tunnel after a spate of charter
party defaults by embattled dry
bulk operator Korea Line earlier
this year.
The largest German businesses
claiming compensation fromthe
Korean group, which went into
receivership in February, say
they have made signicant
headway on nancing and
orderbook restructurings
necessitated by the shock
insolvency. KGhouse Conti
Reederei in Munich has con-
rmed to Fairplay that its
newbuilding programme for bulk
carriers has been pruned back
from34 to 28 vessels after the
frustration of 10 of 16 charter
parties with Korea Line. Conti
said performance problems by
Chinese yards allowed it to
legitimately cancel six of its
newbuilding projects and a full
refund of all installments paid for
the ships can be expected.
Its remaining charter parties
with Korea Line had seen the
delivery dates for the ships
pushed out by one year as well as
the addition of a charter rate
bonus tied to Baltic Exchange
index rates. Any earnings
shortfalls incurred in the spot
markets during the one year
suspension period will be
balanced by Korea Line, while any
option periods in favour of the
charterer have been removed.
Four ships are already in
service under these arrange-
ments, two of themowned by
public KGfunds and two
privately held by Conti and other
partners. Crucially, the two KG
fund vessels have avoided the
need for additional capital calls
on their investors, which would
have dented Contis reputation.
Despite the nancial
strains of the shock
insolvency, big funds have
managed to avoid an
investor bail-out
KGs contain Korea Line fallout
Novorossiysk Commercial
Seaport Company (NCSC) is
caught in funding crossre
between two powerful transport
factions close to the Moscow
political machine.
The ght centres on several
hundred million dollars worth of
funding for newrail lines.
State monopoly Russian
Railways must soon decide if it
will or wont divert proposed
budget spending next year on
lines serving Russias Gulf of
Finland oil ports fromPrimorsk
to the Ust-Luga oil terminal.
Primorsk, Russias main oil
export facility, is controlled by
Nikolai Tokarevs Transneft and
Ziyavudin Magomedov-owned
Summa Capital group. Mago-
medov is also Novorossiysk
chairman. Ust-Luga is controlled
by Gennady Timchenko, owner of
Gunvor andTrans Oil.
The Tokarev-Magomedov and
Timchenko groups have warm
relations with Russias senior
ofcial in charge of oil and ports,
deputy prime minister Igor
Sechin. The rift is the rst public
break between the two groups.
Industry sources describe the
ght as bad news for NCSC,
which owns and operates both
Primorsk and Novorossiysk.
A report to Renaissance Capital
Russias Novorossiysk
port looks like being
squeezed in a turf war
Port at mercy of rail monopoly
I
v
a
n
M
e
s
h
k
o
v
Interorient-operated Conti Harmony:
light at the end of the tunnel
clients by transport analyst Ivan
Kimwarned it is potentially
negative for the port company.
The proposed newrailway [to
Primorsk], planned for construc-
tion in 2012, would allow
[Primorsk] to increase the
turnover of oil products and,
thus, would be supportive for
NCSPs operating performance.
The 2012 budget does not
provide additional nancing for
the Ust-Luga railway, so Russian
Railways is pushing for funds to
be reallocated.
Both sides in the dispute
Timchenko and Russian Railways
3 November 2011
|
Fairplay
|
25
trade & commerce
www.fairplay.co.uk
vs Transneft and Summa Capital
have bargaining power.
Novorossiysk was recently
hurt by a temporary, conges-
tion-driven, ban on shipments
of grains to the port by Russian
Railways. The lifting of the ban
on 7 September has seen an
upturn in grain exports from
the port, especially to Egypts
state-owned General Authority
for Supply Commodities, which
has bought most of Egypts
wheat needs fromRussia this
year. Novorossiysk is the
authoritys principal export
port. The grain trade upsurge
should help mitigate a forecast
dip in revenue fromdiminished
exports of crude oil fromthe
port. Rosneft, the worlds
biggest oil producer, is said to be
cutting its daily crude exports
fromNovorossiysk.
One news report suggested
the company might reduce oil
lifts to their lowest level in
more than three years.
Novorossiysk posted 1H11
net proft of $222Mon
revenues of $494.1M its frst
results since acquiring
Primorsk but operating costs
almost doubled.
Unlike most other KGhouses,
Conti has so far managed to
steer clear of fund restructur-
ings that required contributions
frominvestors.
However, the companys
balance sheet is facing obvious
strains as the Korea Line default
forced it to take six possibly
going up to eight ships partly
on its own books. The possible
implications for the loan
agreements for its newbuilding
programme remain elusive, as
MDJosef Obermeier explained.
He said the company was in
advanced negotiations for a
Chinese shipping loan but
refused to comment on whether
this was related to existing debt
requirements or to planned new
projects. Ten bulk carrier
newbuildings, most of them
covered by long termcharters,
are still scheduled for delivery at
a time of challenging conditions
in the KGmarket. However,
Contis management is
confdent it can raise the equity
for most of the ships from
private investors the way it has
been juggling the Korea Line
default. Notably, the volume of
its KGequity placing is forecast
to reach 80-90Mthis year,
only slightly less than in 2010,
said sales executive Wolfgang
Menzl. Meanwhile, Nordcapital,
the KGhouse of Hamburg
shipowner Erck Rickmers, said it
had completed the restructuring
plan for its Bulkerfotte 1 fund
with the deployment of the last
of eight Supramax vessels in a
pool managed by Norways
Klaveness Group.
Aninth ship that had been
scheduled to join the fund was
cancelled and all payments
already made to its construction
yard resigned.
Nordcapital also said it was
close to an agreement with
Korea Lines receiver over its
claims for charter losses. Korea
Line had violated agreements by
unilaterally suspending seven
charter parties with ships in the
Bulkerfotte 1 fund, it said. The
fund had to be bailed out with
more than $30Mby its investors,
Nordcapital and lender Deutsche
Bank in 3Q11.
28
Contis bulk carrier newbuilding
programme (trimmed from 34)
26
|
Fairplay
|
3 November 2011
trade & commerce
www.fairplay.co.uk
> Auld Alliance Trading:
Alleges its owed for
unpaid bills
This page
After successfully restructuring
Dubai Worlds $25Bn debt last
year the most challenging
portion of Dubais $110Bn debt
pile all eyes are now on
Drydocks World (DW).
Of the $2.2Bn loan DW had
secured from 15 lenders in
October 2008, $1.7Bn matures
next month. Until now, the ship
repair division of Dubai World
has not yet agreed on anything.
The initial proposal was to
pay off the bondholders in full
and term out bank loans over
10 years, which DW hopes to
renance through asset sales.
The proposal includes no hair-
cuts on the principal amount.
However, three major hurdles
put the talks into a virtual
standstill: creditors demands
for government support;
hesitance of government
ofcials to make a nal decision;
and DWs legal rows with trade
creditors in Southeast Asia for
non-payment of bills.
Talks have been going back
and forth for quite some time
and they seem to have fallen
apart after lenders asked for
government support, which
presumably the government is
reluctant to provide, Ahmad Al
Anani, an associate director for
the Middle East and North
Africa at Exotix, told Fairplay.
The outcome of DWs
litigation in Southeast Asia may
have also some serious
ramications for the overall debt
restructuring, he added.
Although DW denied it is
being sued in Singapore, the
Singapore High Court con-
rmed that three Singapore
companies were suing the ship
repair company for non-
payment of bills.
DW is also facing a legal case
before the Dubai World Tribunal,
where Auld Alliance Trading
alleges DW owes it $980,000 in
unpaid bills for the services of
four of its employees.
To top this legal battle list,
US-based hedge fund Monarch
Alternative Capital has also led
a $45.5M default suit.
While this has raised
questions about whether it
could ignite a debt default
With $1.7Bn in loans maturing, Suzanne Hart looks at the likely next moves
$110Bn
Dubais total debt pile
> Insight:
Drydocks Worlds debt
moves into the spotlight
domino effect in the emirate,
many nancial analysts are
optimistic that both parties
(DW and its creditors) will sit
down again and negotiate in
good faith.
This optimism is based on
the fact that, unlike hedge
funds, banks, which are the
big majority of creditors, are
not in the business of suing
people. Besides, the majority
are foreign banks with strong
commercial ties to the region
and the rest are a few major
local banks.
A second factor is that
Dubai has managed to deal
with its liabilities during the
peak of the debt crisis, so it is
unlikely the emirate will default
today. Third, after the $2.2Bn
debt is taken care of, the rest
of DWs liabilities are smaller
bilateral loans.
In the meantime, nancial
experts and industry observers
are positive that the existing
facility will get a temporary
extension while nal payment
terms are being negotiated.
DWs debt restructuring might
be seriously affected by
lawsuits in Singapore Frank Behling
3 November 2011
|
Fairplay
|
27
> Iridium
Wi- looks to the skies
This page
> MEC Intelligence
LNG to fuel 5% of
eet by 2020
This page
technology
> Practical applications for protability > For more visit www.fairplay.co.uk
Smartphones, laptops and tablet
computers can nowbe con-
nected to the Iridiumsatellite
telephone network thanks to a
wi- hotspot accessory the
company has developed.
Iridiumlaunched a suite of
what it calls AxcessPoint products
and services last week, including
a wi- hotspot accessory, free
Mail &Web optimisation
software and the Connect
downloadable application.
Iridiums vice-president for
product management, Joel
Thompson, said the suite enables
smartphones and laptops to work
anywhere in the world, easily and
efciently over the Iridium
network. He claimed it was the
rst time this has been possible
and that it made the worlds
furthest-reaching network more
accessible and cost-efective
through devices that customers
already use daily.
One long-time satellite
communication industry watcher
told Fairplay that this develop-
ment would not replace
broadband satellite communica-
tion systems on ships. It does
not compete, he said, with the
Inmarsat FBB or Iridium
OpenPort systems that are used
for ships business and prepaid
crew-calling services. He
believes its strongest maritime
markets are likely to be in the
passenger shipping sector and
on shing vessels. Crewwho
carry personal satphones will
also be able to benet.
BlackBerries, Androids and
other smartphones operate on
totally diferent frequencies and
waveforms fromIridium.
AxcessPoint provides a mechan-
ismfor connecting those
smartphone devices into the
Iridiumnetwork indirectly by
interfacing themwith the
Iridiumhandset wirelessly.
BlackBerry andAndroid
smartphone users can register and
obtain set-up instructions to use
their devices withAxcessPoint.
Iridiumplans to make software
for Apple iOS devices available by
the end of the year.
It is selling its wi- hotspot
accessory for less than $200 and,
coupled with the downloadable
applicationAxcessPoint Connect,
this connects smartphones or
laptops to the network via an
IridiumExtreme or 9555 satellite
phone. This enables wi--
compatible devices to synchro-
nise and respond to email or use
the internet, the company says.
Some free mail and web
software is also being ofered.
This includes optimisation and
compression capabilities that
will make web browsing ve
times faster and email 15 times
faster, Iridiumsays.
As many as 10,000 ships could
have been built or converted to
use LNGas fuel by 2020,
according to a forecast published
last month by Indian consultancy
MECIntelligence.
Its general manager, Sidharth
Jain, told Fairplay that the
estimate is based on the
assumption that IMOwill not
delay ratication of the SOx NOx
regulations. If it does, he went on,
the projected size of the market
will be about 5,000vessels.
The organisation notes that
this represents more than 5%of
the world eet, providing
opportunities for companies in
all aspects of the maritime value
chain. Oil majors, terminals,
ports, bunker suppliers, service
companies, component produc-
ers, vessel owners and charterers
need to rethink their oferings.
The analysis assumes ship-
owners will adopt LNGas an
option to meet the stringent
emission limits due in 2020, as it
ofers lowemissions at a lowfuel
cost. Total ownership cost over
the lifecycle of a newbuild LNG-
propelled vessel is expected to
be up to 40%lower than that of a
fuel oil and MGO-propelled
Emissions rules will make
widespread use of LNG
fuel attractive
LNG to fuel 5%of eet by 2020
Conventional phones and
laptops can now be used
with a satellite network
vessel,the company says.
Jain said the MECforecast used
some of our proprietary forecasts
in eet development and
interviews with shipping
companies. It identied the
types of vessels for which LNG
would be attractive froma
compliance point of view and
used that to predict trafc ows
and likely eet developments.
> The report, LNG Propulsion
2012 and Beyond, costs $1,200.
For more details, visit
www.mecintelligence.com
Wi- looks to the skies
An Iridium phone connected to the
AxcessPoint hotspot accessory
I
r
id
iu
m
28
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regulation
> Setting the ground rules for our industry > For more visit www.fairplay.co.uk
> SafeMed
Looking for change in
Tunisias maritime policy
This page
> Indian Private Ports and
Terminals Association
Objection to reforms
This page
> European Scrutiny
Committee
Concerns about directive
P 29
With the elections last week in
Tunisia and the expected drafting
of a newconstitution, it is
important to reafrmthe
commitment of the [inter-
national] maritime community,
believes Albert Bergonzo, project
ofcer for the EU-funded
SafeMed Project.
Speaking to Fairplay two days
after the election, he said it was
too early to see concrete signs of
change inTunisias maritime
policy and its level of commit-
ment to its maritime obligations.
Support Tunisia, says SafeMed
When a country goes through
a political revolution like the one
witnessed inTunisia in January,
maritime transport may not be
the rst priority and this is
perfectly understandable,
Bergonzo said. So the SafeMed
Project will support and
strengthen the eforts of the
maritime authorities and take the
opportunity of the changes in the
country to progress further.
SafeMed exists to promote
implementation of the relevant
EU project offers support
to the revolution-torn
country as it strives to
develop a constitution,
writes Paul Gunton
international conventions and
rules aimed at better protecting
the marine environment in the
Mediterranean region, Bergonzo
noted at a workshop it organised
inTunis in October to support
the Voluntary IMOMember
NewDelhis eforts to imple-
ment the Indian Ports Act 2011,
by discarding two archaic acts,
have drawn ak fromvarious
stakeholders in the country,
including state maritime boards,
port workers unions and private
ports and terminals.
They are opposed to aspects in
the proposed bill that they fear
will take away their inuence and
herald a newregulatory authority
that has powers to x tarifs and
monitor performance.
The draft bill, posted on the
shipping ministrys website, has
received comments froma
number of bodies and is now
under review. It would merge the
existing Indian Ports Act (1908)
and Major Port Trusts Act (1963),
into a single consolidated act.
We have made an efort to
combine the two old acts, by
removing obsolete parts and
updating it with all recent
developments in the maritime
world, Babu Rajeev, former
chairman of Cochin Port Trust
and chairman of the committee
that drafted the bill, told
Fairplay. The primary aim was to
convert government-owned
major ports from port trust to
Indian port reform opposed
Planned Ports Act angers
port stakeholders, reports
Christina George
Tunisias commitment to
maritime obligations will need
support as it develops its new
constitution Martin Wright
corporate entities so they can
raise their own funds, he said.
Port trust workers associations
fear corporatisation would lead
to privatisation and implement-
ation of hire and re labour rules.
Coastal state governments
believe the proposed Port
Regulatory Authority would
usurp their control over minor
ports. All minor ports, about 190
at present along the two coasts of
India, are governed by state
governments, while all 13 major
ports are governed by New
Delhi, said an industry ofcial.
3 November 2011
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29
regulation
www.fairplay.co.uk
Aproposed EuropeanCom
mission directive on sulphur
content for fuel goes beyond the
measures contained in [MARPOL]
AnnexVI and gives rise to a
number of concerns, says the UK
parliaments European Scrutiny
Committee (ESC) in a report
published last week. It has
assessed the directive as being
politically important.
The report followed the
committees most recent
meeting, last month, when it
considered two European
Commission documents
relating to sulphur content in
fuel, one of thema draft
directive that proposes
amendments to its existing
Directive 1999/32/EEC.
The newversions aims
expressly include aligning it
with IMOrules on fuel stand
ards, the report notes, yet there
are a number of areas where the
Commissions proposal deviates
fromthe international
measures, the report says and
lists four such areas.
These include a proposal for
passenger vessels which goes
beyond [Annex VI] in that it
introduces a 0.1%sulphur limit
for ships operating outside ECAs
[emissions control areas] on
particular services and a
provision that would give the
Commission the power to
specify the frequency and other
details of fuel sampling.
Non-availability worry
The crossparty committee
heard fromthe UKs shipping
minister, Mike Penning, that the
government also has concerns
about the draft, in particular
that the proposal does not
include a reference to non
availability of fuel, as this
represents the removal of one
element of a hardwon compro
mise package.
Penning also told the
committee that the govern
ment recognises there is
serious concern on the part of
some elements of the ferry and
shortsea shipping industry at
the cost impact of the revised
sulphur limits and that there
might be a shift frommaritime
to land transport in some parts
of Europe, such as Scandinavia
and the Baltic.
The government plans to
commission an impact
assessment setting out the
costs and benefts so far as the
UK is concerned and the ESCs
report says it will await this
information before taking a
defnitive viewon howthese
documents should be handled.
However, Bill Cash, the ESCs
chairman, addressed the
International Maritime
Industries Foruma fewdays
after the committees meeting.
A Conservative MP and well
known for his Eurosceptic
views, he agreed with one
guests viewthat the proposed
directive would be disastrous
for shipping.
And, speaking to Fairplay, he
said his committee, which
considers the full spectrumof
European matters, would
welcome information fromthe
industry about its concerns
over European matters.
> Read the report
(pp44-50) at
www.tinyurl.com/ESC-Sulphur
UK concern over fuel directive
All-party committee of
UK MPs says EU plans
on sulphur go beyond
MARPOL rules. Paul
Gunton reports
Among the maritime states,
Orissa has taken the lead in
opposing the bill and its chief
minister Naveen Patnaik has
written to his counterparts in
Gujarat, Maharashtra, Andhra
Pradesh, Tamil Nadu and
Karnataka urging themto support
a united protest against it.
As per the provisions of the
draft bill, provincial governments
cannot decide the limits and
operational area of the ports
under their territorial control, he
said. Currently, these decisions
are made jointly between state
and national authorities but the
proposed legislation efectively
transfers the role to the national
authorities by giving themthe
power of an arbitrator. This is
unacceptable to us, Patnaik said.
We need a
facilitator, not a
regulator
Indian Private Ports and
Terminals Association (IPPTA)
has also raised serious objections
to the newregulatory authority
proposed in the bill. What we
need is a facilitator to support
Indias growing foreign trade and
not another regulator, a senior
IPPTAofcial told Fairplay.
He said India needed a single
coordinating authority to
develop the port sector. As of
now, NewDelhi plans facilities
such as container and bulk
terminals at major ports while
state governments plan mega
facilities in minor ports. There is
no coordination and it is going to
hurt some private investors, said
the IPPTAofcial.
The bill also talks about
stringent rules for port entry,
wreck removal and discharging
of ballast and punishment for
wilful negligence.
If a vessel is wrecked and
impedes navigation or damages
the environment, a port
conservator will get involved.
If the vessel owner or agents
refuse to pay the bill, the ship will
be sold to meet expenses. And if
rubbish is thrown overboard in
ports, punishments will include
fnes and imprisonment,
according to the draft bill.
State Audit Scheme (VIMSAS).
This was attended by more
than 30 participants fromthe
Direction Gnrale de la Marine
Marchande, Ofce de la Marine
Marchande et des Ports,
environnement ministry, coast
guard and defence interests as
well as magistrates and govern
ment legal advisers. This wide
participation showed that the
Tunisian authorities have fully
realised that the audit scheme
commits the state as a whole and
not only the maritime sector,
Bergonzo said.
But it must be a longterm
commitment, he warned.
Tunisias interest inVIMSAS is
good news, he said, but progress
in fag state and port state
performance is, by nature, more
of a marathon than a sprint and it
will take a fewyears to see the
results of the changes.
Tunisia is one of 14 nonEU
Mediterranean countries
benefting fromthe SafeMed
Project that were defned in
1995 at the start of the project.
Asked whether Libya might now
be added to that list for the next
phase of the project, Bergonzo
said that was a decision for the
EU. Nonetheless, is clear that
there is a strong case in favour of
integrating Libya in the project,
he said.
The present port of Bilbao in
Spains Basque region is a
relatively newentity, developed
only in the past 15 years. The
citys ancient inland port became
redundant with the arrival of
bigger ships and its docks have
been central to a city regenera-
tion programme, which included
the opening of the Guggenheim
MuseumBilbao at the old port
site in 1997. The newport is
located a fewmiles to the
northwest, at the mouth of the
Bilbao estuary.
According to a presentation in
London on 19October, Uniport
Bilbao, the name used by the
ports cluster of shipping-related
businesses, took the blank
canvas opportunity it was ofered
to create a brand newport with a
healthy attitude that is forward-
thinking and attuned to the
wishes of customers. Unsurpris-
ingly, the words that dominated
the event were logistics,
diversication and exibility.
Compared with the big ports
of Rotterdam, Antwerp and
Hamburg, the port of Bilbao is
medium-sized, but thats where
its strength lies. Its smaller size
allows it to ofer ample specialisa-
tion, said Camilolvarez,
chairman of ATMcontainer
terminal in Bilbao. This, he added,
has allowed it to become a leader
in shortsea shipping in the
EuropeanAtlantic trade.
According to Luis Gabiola,
Bilbao Ports logistics manager,
another strength is that it has
developed purely through
modern-day trade demand and
did not have to adapt old facilities
to newneeds. The cargo we
handle is extremely diverse,
Gabiola said. Apart from
containers, iron ore and steel, we
handle products such as paper
we are the main importer of
paper in Spain and at our cold
terminals we handle foodstufs
and are a leader in project cargo.
When asked by Fairplay
whether Bilbao Spain being a
major wind turbine manufacturer
will benet fromthe UKwind
ofshore boom, Jaber Bringas,
Uniport Bilbao vice-president,
replied: Of course. Were
involved in wind ofshore and
want to expand our role in this
sector. He pointed out that
leading wind turbine manufac-
turer Gamesa, which is involved
in the UKs push for ofshore
wind power, is a Basque company.
Its headquarters are right next
to Bilbao. Once the global crisis is
over, I predict our project cargo
handling will increase, he said.
Speaking of Bilbaos role in
logistics and supply chains, Bilbao
Ports operations manager,
Cristina Lopez, said: Our
immediate hinterland is not
enough for our development. We
want to expand it and to do so we
are developing our rail
connections, which will increase
our competitiveness.
Lopez noted that Port of Bilbao
is a shareholder in several inland
dry ports, including Burgos,
Zaragoza, Jundz and Pancorbo,
all in the northern half of Spain.
In Pancorbo, in the province of
Burgos, the port built its own rail
terminal, Lopez said.
According tolvarez, every
terminal in Bilbao is served by
rail. We cant highlight enough
howimportant we think logistics
is, he stressed.
Were very keen to get cargo
ofthe road and on to rail,
logistics & supply chain
www.fairplay.co.uk
> Port of Bilbao:
Exploiting a blank canvas
This page
30
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&
logistics supply chain
> Rail > Road > Inland waterway > For more visit www.fairplay.co.uk
Diversication, a deep
hinterland and good
knowledge of logistics
will attract customers, the
port of Bilbao believes
Bilbao exploits its blank canvas
Port of Bilbao
Shutterstock
We cant highlight
enough how important
we think logistics is
Camilo lvarez
3 November 2011
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31
logistics & supply chain
www.fairplay.co.uk
> Port of Riga:
Riga takes a Baltic gamble
This page
With plans to build four new
terminals in the next six years,
the Latvian port of Riga is
announcing its intention to up
the ante against other facilities
in the Baltic Sea, particularly
those in Russia.
The irony of Rigas expansion
plan is that trade with Russia
will fuel the investments, with
some local media estimating
that 60%of the goods handled
at the port are Russia-bound.
The plan to construct the
terminals, at a cost of 150M
($207.3M), will involve
increasing the ports capacity
two-fold, Andris Ameriks,
chairman of the board of the
Riga port authority, said in early
October, adding that he
expected much of the money to
be provided by the EU.
Each of the newterminals
will be able to process a
maximum7.5Mtonnes of
cargo/year. Multiplied by four,
that means 30Mtonnes, which
is what we currently handle, he
said. So that will, in essence,
double the current capacity of
the port.
One company behind the
investments is Russian fertiliser
concern Uralchem, which has
begun building a terminal, which
is due to be in operation by
1Q14, at a cost of 45M.
The companys choice of Riga
is a curious one, particularly as
Russia itself has plenty of ports
to choose fromalong the Baltic
coast. But Uralchemis adamant
it has plumped for the right
location for its newfacility.
We need specialised port
facilities, specically on the
Baltic Sea, Aleksey Ismailov,
Uralchems press secretary, told
Fairplay. It is across the Baltic
that we supply products to our
most important markets,
notably Scandinavia, northern
Europe, the UK, Ireland and
Spain. Russia lacks such ports.
He added that the ambitious
initiatives under way at the port
of Ust-Luga in Russias north-
west are happening too late to be
of interest to his company.
It will only start tranship-
ping operations in ve or seven
years and the other ports
waters are too shallow. Of all
the ports in the Baltic region,
Riga is most suitable for us,
Ismailov said.
Yet some observers point to
the potential limitations of the
Latvian capitals port. Capacity
does not always mean cargo,
Yulia Shishova, editor-in-chief
of St Petersburg-based news
service SeaNews, told Fairplay.
InTallinn [Estonia], for
instance, Muuga is already
capable of handling
500,000teu, with plans to
expand to 850,000teu, but the
actual throughput in 2010 was
only 150,000teu. There is also
the issue about whether the rail
and road infrastructure can cope
with the increase in trafc.
She added that there was
recent evidence to think along
such lines. Last winter, the
Baltic states ports failed to take
over any signicant share of
Russian imports, which were
hampered by severe ice in St
Petersburg, because land-based
carriers were not prepared to
handle larger volumes.
Riga is expanding with
Russian customers in
mind but some doubt it
can draw cargo, reports
Colin Graham
Bringas said. In particular, we
are pushing for more cargo to be
carried between Spain and the UK
by sea. Asingle voyage by sea
takes 500 trucks ofthe road.
Bilbao believes its reputation in
the near future should be
logistics-based, Bringas added.
The keywords are regularity,
reliability and smoothness.
Customers want a reliable supply
of containers. Also, by operating
on weekends and by ofering
bonded warehouse and a border
inspection post we guarantee
smooth operations.
Trafc volumes between the
UKand Spain are not insigni-
cant, Bringas pointed out. We
handle 25%of Spains general
cargo trafc with the UK, while
one of every four tonnes in
containers handled at Bilbao is for
or fromthe UK. Its important to
note, he said, that the UKexports
twice as many goods to Spain as it
does toChina.
25
percent of Spains general
cargo trafc with the UK handled
at Bilbao
Ultimately, the message
Uniport Bilbao wants to get
across is that a medium-sized
port on Europes Atlantic coast
should be satised with its size
and not seek to match its bigger
rivals. Being smaller means it
can be nimble and adaptable.
But above all, Uniport Bilbao
was keen to showthat it is a
tightly knit, customer-focused
cluster that knows its logistics
all important elements for
success today. As a result,
Bringas concluded, there is no
doubt Bilbao has great intra-
European potential.
Riga takes a Baltic gamble
Port of Riga
Shutterstock
The Benelux branch of Yusen
Logistics has begun a new
operation that will involve the
storage and regional distribution
of solar power components for
Chinese manufacturer Shan-
dong Linuo.
The operation is carried out at
Yusen Logistics European
Distribution Centre at the
Japanese companys bonded
warehouses in Rotterdam. Yusen
Logistics will also be acting as
Limited Fiscal Representative
for Shandong Linuo in Europe,
with the aimof saving on import
costs for the company.
Alex Okamoto, managing
director of Yusen Logistics
Europe, said: The environmental
equipment industry is one in
which Yusen Logistics is
particularly strong. As solar
power is an increasingly
important part of the energy
mix in Europe, it is also a hugely
exciting growth area for us.
Shandong Linuo is part of the
Linuo Group, a leading player in
Chinas burgeoning solar power
industry, exporting components
around the world. In Europe, it
is primarily involved in the
markets of Germany, France,
Italy, Poland, the UK and Greece.
Indicative of the growing
importance of solar power in
Europe is that it has been
suggested that Greece export
solar power as a way of reducing
its national debt.
Shandong Province, south of
Beijing and where Shandong
Linuo is headquartered, is home
to Chinas solar power industry.
Hundreds of solar power
companies are based in the cities
of Jinan and Dezhou, producing
nearly a quarter of the worlds
32
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logistics & supply chain
www.fairplay.co.uk
> Cochin Port Trust:
Seeking a private partner
This page
> Yusen Logistics:
Takes on Chinese solar
panel exports
This page
Cochin Port Trust (CPT) is
setting up a free trade warehous-
ing zone (FTWZ) to cash in on
the cargo boomat the port. It is
in the process of choosing a
private rmthrough global bids
to set up the zone on a build-
operate-transfer (BOT) basis for a
concession period extending to
30 years.
We are hoping to cash in on
the cargo [generated by] the new
DPWorld-operated International
Container Transshipment
Terminal, Unnikrishnan Nair,
CPT trafc manager, told Fairplay.
The terminal at Cochins
VallarpadamIsland is projected
to handle about 2.5Mteu by
2014-15. Nair admitted that the
terminal was going through
teething troubles but believes it
will pick up. We want at
least the civil work of the FTWZ
to be ready by the time Vallar-
padamterminal picks up
volumes, he said.
The FTWZ will be built on
412,000m of port land. The
company that wins the tender
will be ofered co-developer
status. In its ForeignTrade Policy
2004-09 document, Indias
government invited ports to set
up FTWZs to facilitate the export
and import of goods and services.
As of now, there is only one
functional FTWZ in India, in
Mumbai, while four others are in
various stages of completion. The
FTWZ inCochin will be the sixth.
The aimof the zone will be to
provide world-class facilities for
warehousing various types of
products and function as a
logistics and distribution centre,
with the support of handling and
transport equipment. It will ofer
one-stop clearance for import
and export of goods and should
be a key link in logistic and global
supply chains, servicing India
and beyond.
The FTWZ in Cochin can
cater for various export-import
trades such as tea and cofee,
cashews, spices, electronics, food
and beverages, said Nair.
The zone will bring in many
benets, the main one being the
deferment of duty, which will
have a positive impact on
working capital for goods
requiring longer storage times.
There are other incentives such
as local tax exemption and
service tax exemption on all
activities within the zone. The
A private partner is being
sought to build one of
Indias rst free trade
warehousing zones,
Christina George writes
Solar venture for Yusen Logistics
Port of Cochin where a
FTWZ may ease delays
Cochin to set up warehouse zone
Yusen Logistics becomes
involved in the Chinese
solar product exports
solar energy components.
However, the use of solar power
in China is expensive and 99% of
solar products made there are
exported, ofering shipping and
logistics companies plenty of
opportunities to get involved in
this growing industry.
With improved logistics and
connectivity, delivery time will
be reduced Unnikrishnan Nair
Y
u
s
e
n
L
o
g
is
t
ic
s
3 November 2011
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33
logistics & supply chain
www.fairplay.co.uk
> Maersk Line:
Daily service puts
punctuality rst
This page
Even as container carriers are
embroiled in a debilitating price
war, Maersk Line hopes to
compete in the reliability stakes
after the launch of Daily Maersk
on 24October.
The engine behind Daily
Maersk is 70vessels operating a
dailyAsia-North Europe service
between Ningbo, Shanghai,
Yantian andTanjung Pelepas in
Asia and Felixstowe, Rotterdam
and Bremerhaven in Europe.
Current industry norms involve
weekly sailings that mean
containers wait in ports for a
week if shippers miss the weekly
cutoftimes. Maersk Lines MD
for Singapore, Malaysia and
Brunei, Bjarne Foldager, called
Daily Maersk a newproduct not
only for Maersk, but also for
container shipping.
If you look at the industry,
about 44%of boxes are late, 11%
arrive more than two days late
and 8%arrive more than eight
days late. So its not a very
reliable industry, said Foldager.
Shipping is often the weakest
link in the supply chain and we
hope to make it one of the
strongest links. If we can make
this more robust and reliable, we
add value to our customers.
Maersk is guaranteeing the
initiative by ofering compensa-
tion of $100/container for delays
of up to three days and $300/
container for delays of four days
or more. Trial runs showed 99%
reliability. Transport time is
always 26days, regardless of
when shippers get their cargoes
to the port, said Foldager.
Think of it as a big conveyor belt
connectingAsia to Europe. Just
put your cargo on the conveyor
belt and its ready to go.
We have a back-up plan in
case of unforeseen circum-
stances, he added. For every
container we move, theres a
primary vessel assigned to it. If
there are delays for some reason,
the box just gets on the next ship
in line. Thats what I mean by a
conveyor belt.
Asked why Singapore is
excluded fromDaily Maersk
when it is the worlds busiest
transhipment hub, Foldager said
it is indirectly covered, via
feedering toTanjung Pelepas.
He said: We are starting Daily
Maersk with ports where the
majority of our cargoes are
moving fromAsia to north
Europe. Maersk has a lot of
cargoes moving fromTanjung
Pelepas toChina and, fromthere,
to northern Europe.
When the rst few18,000teu
Triple-E ships are delivered in
2013, those are expected to be
deployed on the Daily Maersk
network. We hope that Daily
Maersk adds so much value to
shippers that they will ofer
more cargoes to us and we can
expand port coverage, Foldager
said. The focus is on what value
we can add to customers, not
about attracting cargoes away
fromour competitors.
Maersk is unfazed even as it
and its liner peers are headed for
losses amid a weak peak season
and a bruising price war.
Shippers main concerns were
whether we could actually
execute Daily Maersk and if
there is a premiumto pay, which
is not the case, said Foldager.
Today, we talk about price all
the time because its the easiest
thing to compare. Nowwe hope
we can start a war of reliability.
That would be very interesting.
We think there could be greater
focus on reliability.
At present, he revealed, liners
tend to accept overbookings in
the same manner as airlines,
because of concerns that certain
containers may not materialise.
Its a spiral because shippers
also tend to book more slots than
they need because box shipping
is not reliable, said Foldager.
With Daily Maersk, theres
no need to overbook so that
would break the spiral.
Maersk condent in daily service
Maersk Lines MD in
Singapore explains
how the Daily Maersk
service puts punctuality
well above price
developers and users of the zone
will be given a 100%income tax
exemption. The exporter will
have the advantage of upgrading
the valuation of the goods and re-
exporting themwithout a duty
implication. The importer can
import without any tax implica-
tions. It can pay at the time of
delivery, said Nair.
An export business in Cochin
said it would be able to reduce
capital expenditure by sharing
warehousing and equipment.
The zone has also promised to
reduce time in customs clearing
and, with improved logistics and
connectivity, the delivery time
will be reduced.
Cochin Port has an advanta-
geous location by virtue of lying
on the busy direct sea route
fromEurope to Australia and the
Far East.
Other companies involved in
the manufacturing of solar
energy components in China
include Himin Group and
Esso Solar.
Qingdao Port, one of the
Chinas top hubs, serves
Shandong Province.
Container
shipping is not
a very reliable
industry
Bjarne Foldager
Maersk
2.5M
teu: projected cargo to be
handled at Cochin by 2014-15
Solar power is
an increasingly
important part
of the energy
mix in Europe
Alex Okamoto
26
days: standard Daily Maersk
transport time
34
|
Fairplay
|
3 November 2011
decision-maker Paolo dAmico
www.fairplay.co.uk
Family pride
> Paolo dAmico is at the helm of
Italian shipowners association Conftarma at
a critical moment in its 110-year history.
Owners face problems similar to the rest of
Italian industry: difculties in obtaining
credit for investment and a transport
infrastructure and bureaucracy in dire need
of modernisation. As elsewhere in Europe,
howto recover economic growth is their
major preoccupation.
DAmico, has been involved in the family
business dAmico Societ di Navigazione,
which now specialises in product tankers
and dry bulk, for about 40 years. This has
armed him with experience enough to steer
Conftarma through stormy economic
times and provide Fairplay with an insight
into how decisions are reached in Italian
family businesses.
As company chairman, he is fortunate to
have a good working relationship with his
cousin, CEOCesare dAmico. We work in a
very easy way because we are a family
company run by two guys me and my
cousin. My cousin talks to me and we take the
decisions, Paolo dAmico explained.
When asked howmuch help comes from
external specialists, he acknowledges that the
senior teamknows its limits. Certainly
when we have an idea, we examine its
limitations with various specialists, fscal,
fnancial and so on. When it comes to taking a
decision, its a question of looking at each
other and saying: Do we do it or not?
Although as a model of decision-making it
seems to an outsider unsystematic and almost
too casual, dAmico pointed out that more
than half of the worlds shipping companies
are dynastic and certainly most big companies
inGreece and Italy, excluding Costa.
In the fnal analysis, this is the way my
cousin and I are accustomed to working,
he refected.
He is the frst to admit that family
decision-making has its pluses and minuses.
On the plus side, decisions can be taken
swiftly if the family isnt too large; if there
were too many people involved, it would
probably be better to go public and bring in
directors from outside. On the
negative side, in families you
fght as much as you do in
other businesses and some-
times more, he commented.
Patronage can be a problem.
DAmico named no names but
cited an Italian example of a
family business where the
rule was that all members of a
huge family should have a job
in the frm no matter how
incompetent or ill-suited they
were. Gradually the business
lost money and fnally the
company had to be sold to an
outsider, he recalled.
DAmico Societ di
Navigazione has dabbled in
more modern business
practices but these have yet to
become second nature to the
cousins. We listed a part of
our tanker company and, of
course, that way of doing
business is diferent since
there are strict rules and
regulations and you are
required to convene the board
and discuss decisions even
when certain decisions,
although not taken, are clear
in your mind, he said.
My cousin and I have been placed in a
diferent world and we have had to work our
way through it for ourselves, even if it was
not so obvious for us, because the teachers in
our business school were our fathers, he said.
DAmico says the Conftarma committee
were very generous when they appointed
him chairman, but afterwards they present
you with the bill and you have
to deliver. Conftarma has to
be number one in my
thinking, he explained. Im
fortunate to have a cousin
who handles the company
very well but I try to do as
much as I can. So its 50%
Conftarma and 50% dAmico;
everything else comes
second, he said.
DAmico Societ di Navigazi-
one was launched in 1953 as a
liner service but nowspecial-
ises in two sectors. Bulkers
and product tankers have
always been in our feet but we
are much more limited nowas
we also had crude carriers in
the old days. Its true that
having a diversifed business
makes sense sometimes, but
not always, because often both
the product and bulker sectors
are performing badly at the
same time.
Unsurprisingly, neither
sector is currently doing
particularly well. On the
product side we are struggling
in tough times because what
we need is [a healthy] America.
On the dry side we are lucky
> In the spot light:
Paolo dAmico
Paolo dAmico joined
dAmico Societ di
Navigazione in 1971, being
appointed director in 1981
with particular focus on the
product tanker sector.
He is currently chairman
of the company and of
dAmico International
Shipping, as well as
being a director of a
number of companies in
the dAmico Group.
He is involved in a
number of non-group
companies, including
as director of Milano
Finanziaria Immobiliare.
He is chairman of
Italian owners association
Conftarma, member of
the Intertanko council.
DAmico obtained a
degree in economics and
fnance from Rome Univer-
sity La Sapienza in 1978.
He lives in Rome.
Italian shipowner believes family businesses must keep
clear of blind patronage. Jem Newton meets him
Paolo dAmico decision-maker
www.fairplay.co.uk
enough to have China, without which the
problems would be far larger.
Paolo dAmico has strong international
links. This cannot be said of all Italian owners.
Apart fromhaving business interests in at
least four other countries, he is a member of
the Intertanko council. An international
dimension is important to me for two
reasons. Our rst master is not the Italian
government but the IMOin terms of
technical and policy matters. Secondly our
work is global only one contract in several
hundred is with an Italian company. We are
based in Rome because we like it here but we
might do better in Singapore, he admitted.
DAmico Societ di Navigazione sold most
of its container interests over the past 20
years but has retained what dAmico describes
as a cross between a liner service and a feeder
service for other lines. Damighreb operates
between Italy and Morocco with calls in
Spain and Tunisia.
If the Arab Spring consolidates, dAmico
sees huge potential in northAfrica. We have
another China on the other side of the
Mediterranean. There is huge potential in
northAfrica and I think it will be a great
opportunity for Europe, he predicted.
We are based in
Rome because
we like it here
but we might
do better in
Singapore
3 November 2011
|
Fairplay
|
35
C
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Fairplay
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3 November 2011
reviews
www.fairplay.co.uk
> Why would someone risk millions to
own ships? Well, for the sober, textbook
answer, you could try Martin Stopfords
Maritime Economics but for an explanation
involving shipowners punch and Jger-
meister, The Shipping Man, a novel by
MatthewMcCleery, ts the bill nicely.
William Faulkner once said that the best
ction is far more true than any journalism.
The Shipping Man, while ctitious, tackles a
pivotal business question raised by Stop-
fords textbook: Can shipowners really be
so irrational?
Stopford found that over time, shipowning
is a high-risk, low-return investment with
only rare opportunities for massive gains. He
concluded that traditional shipping investors
were, nonetheless, enticed by extreme
volatility and faith that once in a while, they
could make fabulous prots.
McCleery portrays this motivation through
a tale of todays shipping crisis. The protagon-
ist, Manhattan hedge fund manager Robert
Fairchild, views the market chaos as an easy
target for a distress deal. Fairchild is summarily
suckered, while drunk inAthens, into buying
a 35-year-old bulker froma Greek owner
named Spyrolaki.
After trials by re involving a failed coast
PP|CL
ALLAS1 WA1LR NANACLNLN1
3rd Ldfon
4 Dunlop Square, Llvlngston, Ldlnburgh, LH54 8S8, Scotland, UK. Tel No: +44(0)l506 463 227 Pax No: +44(0)l506 468 999Lmall: lnfoQemallws.com web: www.wltherbys.com

P
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guard inspection in NewOrleans and a
thwarted Somali piracy attack, Fairchild is
drawn into the circle of Viking Tankers
Norwegian owner Coco Jacobsen.
Jacobsen is facing a regulator-induced
default fromhis long-time UKbanker,
Alistair Gooding. Ultimately, Fairchild and
Jacobsen teamup to bring Viking to the US
junk bond market. All of which sounds very
familiar to those in the real shipping world,
which is not surprising because author
McCleery is the president of Marine Money.
The Shipping Man is already generating
buzz within the international shipping
crowd. One Greek owner has made it
mandatory reading for associates. Insiders are
nding that McCleery is not just trying to
entertain but to impart uncensored wisdom
on the down-and-dirty reality of ship nance.
Banker Gooding explains lenders amend-
and-pretend strategy: As long as a ship isnt
going for scrap, there is always a chance to
make good. You just keep rolling the loan
maturity and no-one needs to lose money.
Cure the default? You must be joking.
Spyrolakis summation of the Greek ethos:
There are only three ways to get an advantage
over your competitors in this business. Pay less
for your ships, pay less to operate themor pay
less for your capital. The only thing that really
matters is price, he says, touting a 1976-built
bulker as nicely seasoned.
Spyrolakis telling assessment of Fairchild:
You are going to be successful in this
business because you are a little crazy and you
need to be a little crazy to be a shipowner.
In the shipping business, everything is
negotiable all the time, an agent advises
Fairchild. A word is only a mans bond if the
market is moving in his direction.
According to Norwegian magnate Jacobsen,
a personication of todays leveraged tanker
owner: I amnever happy. When the freight
market is high, I never have enough open
ships. When the freight market is low, I have
too many open ships. Stable markets are the
worst. It is so boring. I amworking full time
for my lender when the market is stable.
I never count the money when I amlosing
the money, continues Jacobsen. It makes
me really sad. I only count the money when I
ammaking the newmoney.
Never sell when things are bad, asserts
the tanker owner. When it comes to
shipping, investors only lose money when
they lose patience. Those who believe they
must cut their losses shouldnt invest in
shipping in the rst place.
The deeper theme of The Shipping Man
recalls Stopfords viewon owners high-risk,
low-return model and nds a positive
meaning buried in a seemingly irrational bet.
There will always be many good reasons
not to do things in life, but people who
achieve the great things are the ones that
nd reasons to do the things, even when
sometimes they do things
that are not smart,
concludes Jacobsen.
The people who nd
reasons to say yes are the
real winners.
> Price: $19.95. Published
by Marine Money. Available
from online bookshops
Matthew McCleery, author
of The Shipping Man and
president of Marine Money
How shipowners roll
You need to be
a little crazy to
be a shipowner
C
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r
is
P
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M
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in
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3 November 2011
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Fairplay
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37
movers & shakers
www.fairplay.co.uk
Movers & Shakers from the worlds of energy, mining,
manufacturing, industry, commerce and agriculture all
affect shipping. Fairplay reports on the great and the good
Recognising talent
An NVQ Level 2 Port Operations pro-
gramme that enables freight operatives
to gain industry-recognised certica-
tion has successfully produced its rst
six graduates. Pembrokeshire College
delivered the programme in collaboration
with Milford Haven Port in Wales. The
programme of nine modules included:
vessel berthing; working safely near
water; environmental good practice for
ports; and health and safety.
B
M
T
G
r
o
u
p
Banking giant turns to insurance
Xiang Junbo, who last week resigned as chairman of Agricultural Bank of China,
has been appointed the countrys insurance regulator. As chairman of the China
Insurance Regulatory Commission, Xiang will oversee a sector that includes the
worlds two biggest life insurers China Life and Ping An. He takes a conserva-
tive approach of business operations, and played a critical role in AgBanks risk
control and anti-corruption drive.
Xiang is reported to have become a farmer in his teens, before joining the Peo-
ples Liberation Army, leaving with a Second-Class Merit for bravery. In 1981 he went
to Renmin University in Beijing to study nance, adding a masters degree in econom-
ics from Nankai University. He also holds a doctorate in law from Peking University.
He has served at Chinas central bank and the National Audit Ofce, but
his most highly regarded achievement is taking AgBank from near-insol-
vency to being one the worlds top 10 banks by market value. During
that time he cleared out 810Bn yuan ($210Bn) in bad loans to a
government-backed asset management company and guided the
lender through what was, at the time, the worlds biggest IPO.
Chinas rapidly expanding maritime trade has led to an equally
dramatic increase in disputes concerning marine insurance. Xiangs
no-nonsense approach should bring stability to a sector that is vital
to the shipping industry.
NY port leader faces productivity challenge
Patrick Foye has been approved by the Port Authority of New York and New Jersey to
take over from Chris Ward as executive director.
Ward will become an adviser until the end of the year. Foye was most recently deputy
secretary of economic development for New York governor Andrew Cuomo, who recom-
mended him for the post.
The board is looking forward to working with Pat on re-evaluating the port authoritys
priorities and on improving efciency, board vice-chairman Scott Rechler said.
Productivity is expected to be one of the more controversial issues discussed when
contract talks between labour and management begin early next year, a dockworkers
spokesman told Fairplay. Corruption and low productivity are claimed to have long
increased the cost of doing business at the port.
R
e
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t
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r
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3 November 2011
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Fairplay
|
37
Red wins BMT
managing director role
Marine engineering con-
sultancy BMT Group has
appointed Per Red as
MD of its subsidiary BMT
Asia Pacic while Anil
Thapar has been made
deputy MD. Red rejoins
the company after six
years at AP Mller-Mrsk, where he was
head of vessel newbuilding in Singapore.
Ecker Line CEO resigns
In a surprise move,
Ecker Lines CEO David
Lindstrm is to leave by
the end of 2011. During
Lindstrms four years,
Ecker has two ships, a
ferry and ro-ro operating
between Helsinki and
Tallinn. The service has grown rapidly,
with crossings rising to 28/week this year,
delivering a 52% cargo volume growth.
J
o
h
n
P
a
g
n
i
APL appoints veteran
to north Asia post
Wong Siew Loong has been named APLs
North Asia regional head, responsible for
commercial activities in China, Japan and
Korea. A 15-year veteran of the rm and
praised by company president Kenneth
Glenn for his leadership qualities, he was
most recently vice-president of Asia-
Europe trade after being MD of the Tai-
wan ofce. He has also held positions in
strategic planning and investor relations.
C
o
m
i
n
g
S
o
o
n
:
S
u
b
s
c
r
i
b
e
:
shipping in
numbers
$
6
2
M
En bloc price for two MR
tankers delivered last year at
a combined $100M
1
,
6
5
0
190
Indian ports controlled by
state governments 13
ports controlled by Delhi
Ship supplier
members of ISSA
10,000
Ships fuelled by LNG in 2020, according to recent forecast
55,000teu
Capacity withdrawn from
Asia-US West Coast routes:
14 services, 18% trans-Pac
capacity (Alphaliner)
Reefer containers set
aside by Maersk Line
after three refrigeration
units exploded in
Vietnam, killing three
workers 844
6M
Tonnes of methanol to be
imported by China this year
(2010: 5M tonnes)
2.8%
Jump in currency-adjusted
net yields/passenger posted
by NCL in the third quarter
$230,000
Filipino seafarer wages
secured by Nautilus
International from one
double book-keeping scam
139
Double-hull VL and
Suezmax tankers more than
15 years old
Copyright IHSGlobal Limited, 2011. All rights reserved. Nopart of this publication may be reproducedor transmitted, in any formor by any means, electronic, mechanical, photocopying, recordingor otherwise, or be storedin any retrieval system
of any nature, without prior written permission of IHSGlobal Limited. Applications for written permission should be directed to Jon McGowan, jon.mcgowan@ihs.com. Any views or opinions expressed do not necessarily represent the views or
opinions of IHSGlobal Limitedor its affiliates. Disclaimer of liability: Whilst every effort has been made toensure the quality andaccuracy of the information containedin this publication at the time of going topress, IHSGlobal Limitedandits affiliates
assume no responsibility as to the accuracy or completeness of and, to the extent permitted by law, shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained in
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error, omission or inaccuracy in any advertisement and will not be liable for any damages arising fromany use of products or services or any actions or omissions taken in reliance on information or any statement contained in advertising material.
Inclusion of any advertisement is not intended to endorse any views expressed, nor products or services offered, nor the organisations sponsoring the advertisement. Trade Marks: IHSFairplay and Fairplay are trade marks of IHSGlobal Limited.
China powerhouse
10 November issue
In the weeks ahead of Marintec,
our China content manager
gets behind the news about the
countrys maritime services to
assess the real state of shipbuild-
ing, nancial and services sectors;
and we look at the emerging
maritime cluster across China and
ask whether it has the depth to
compete at the global level
Fairplay is not just a
magazine, its a complete
multi-platform resource:
solutionsmagazine.co.uk
ihs.com IHS Fairplay Solutions
JUNE 2011
ISSUE 176
Update: Arctic Operations
New approach needed for DP in ice conditions
News: Cool Challenge
How to tackle an oil spill in ice
Newsbuildings: Ro-PAX
Fleet growth for diverse breed of ships
Accolade for
Environship
Rolls-Royce wins prize at Nor-Shipping
Daily Shipping News email
Fairplay 24 online
Weekly magazine
Weekly news round-up email
Newbuildings online
Solutions monthly magazine,
covering shipping technology
News & digital magazine archive
To subscribe call:
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(
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20 8676 2237
Or email us at: subscriptionssales@ihs.com
38
|
Fairplay
|
3 November 2011
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