Maritime Matrix March 2023

IRS & Dassault Systèmes to drive digital transformation and boost efficiency

Leading international ship classification society Indian Register of Shipping (IRS), has entered into a collaboration with

Dassault

Systèmes

to leverage virtual twin technology for driving its digital transformation and boosting operational efficiency.

Mr Arun Sharma

Deepak NG, Managing Director India, Dassault Systèmes

The collaboration involves the use of Dassault Systèmes’ 3DEXPERIENCE platform to optimize the performance and efficiency of complex marine and offshore projects. The platform will enable IRS to enhance and implement data-driven decision making, concept design, engineering, integrated operations, and maintenance processes. Through this initiative, IRS aims to enhance its capabilities, accelerate research and development, and monitor crucial key performance indicators (KPIs) of its customers’ assets. Additionally, the platform will enable IRS to create a virtual twin to enhance vessel lifecycle management, offer digital services on a unified platform, and provide end-toend digital traceability.

“Complex marine and offshore projects need new ways to leverage the advanced technologies that are defining a new era in shipbuilding and gain an edge in the industry,” said Deepak NG, Managing Director

India, Dassault Systèmes. “The 3DEXPERIENCE platform and our industry solution experiences like Program Excellence For Sea and Designed for Sea transform shipbuilding practices to support strategic objectives sustainably. The digital management of complex projects, collaboration across multisite ecosystems, efficient production planning, and virtually exploring alternative design scenarios all impact the delivery of high-quality vessels that meet – or better yet – exceed their customers’ expectations.”

“Following a thorough analysis of marketplace solutions, we selected Dassault Systèmes to execute our digital strategy and add value to our business,” said Arun Sharma, Executive Chairman, IRS. “This association will help us achieve our business objectives, improve the quality of services, and drive sustainability initiatives. We are committed to providing the highest quality services to our customers and this collaboration will enable us to achieve that goal.”

VLSFO extends gains

The spot cash premium for very low sulphur fuel oil (VLSFO) in Asia climbed for a seventh consecutive session on Wednesday, while Kuwait’s Al Zour awarded its latest tenders for April.

The refiner sold a 120,000-tonne cargo for April 3-4 loading at a discount of $15 to $17 a tonne to Singapore quotes, and another 120,000-tonne cargo for April 7-8 loading at a discount of $10 to $11 a tonne, according to trade sources.

Both cargoes could have been sold to a Western oil major, though this could not be confirmed.

Reflecting steady buying interest, Singapore’s spot 0.5% VLSFO cash premium (MFO05-SIN-DIF) rose to $11 a tonne, while two spot trades emerged on Wednesday.

Elsewhere, Taiwan’s CPC was also seeking lowsulphur fuel oil for May delivery. The tender closes on March 23 and remains valid until March 25.

Meanwhile, the 380-cst high sulphur fuel oil premium (FO380-SIN-DIF) also firmed in recent trading sessions, even as high-sulphur Russian fuel oil barrels continued to flood the East of Suez region.

“Fundamentally, the high-sulphur market remains firm with tight spot volumes despite the heavy Russian arrivals, as much of the arrivals to Asia are not slated to feed into the marine fuels market but to satiate the Chinese feedstock market,” said Emril Jamil, Refinitiv’s senior analyst for crude and fuel oil.

“We believe the emerging trend to China will persist, given the deeply discounted economics of the trade,” he added.

FUJAIRAH INVENTORIES

Residual fuel oil stocks at Fujairah climbed by 12% to 11.41 million barrels (1.80 million tonnes) in the week ended March 20, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

OTHER NEWS

– Oil prices slipped on Wednesday, as an industry report showed U.S. crude inventories rose unexpectedly last week in a sign demand may be weakening.

– Russian Deputy Prime Minister Alexander Novak said that Russia will continue a 500,000 barrels per day oil production cut until the end of June.

– The recent rout in bank shares will not have a knock-on effect on commodities, global trading firm Trafigura’s chief financial officer Christophe Salmon told the Financial Times Commodities Global Summit on Wednesday.

– In the oldest refining town in the American West, Phillips 66 is promising a greener future as it moves to halt crude-oil processing and build a massive renewable diesel plant, leading a global trend.

WINDOW TRADES

– 180-cst HSFO: No trade

– 380-cst HSFO: No trade

– 0.5% VLSFO: Two trades Agencies

IRS to provide Quality Assurance services for refit of Indian Navy’s submarine

The Indian Ministry of Defence, (MoD) has signed a contract with Hindustan Shipyard Ltd., Visakhapatnam, (HSL) on 13th March 2023, for undertaking the ‘Normal Refit’ of INS Sindhukirti, the third “Kilo” class submarine of the Indian Navy (IN). The shipyard has selected the Indian Register of Shipping (IRS) for provision of QA services, as the inspection agency for this refit. This marks the first occasion when a classification society has been entrusted with providing such services for the refit of a submarine in India. IRS shall undertake quality inspections of Hull, Machinery and Electrical systems on board the submarine in accordance with the approved QA plan.

According to the MoD, the refit of the submarine at HSL would develop additional capabilities for refit and repair of submarines in India, thereby enhancing the indigenous support for maintaining the IN’s operational readiness. This project would also pave the way for the undertaking of ‘Medium Refit with Life Certification’ of submarines at HSL.

Arun Sharma, Executive Chairman of IRS, said ‘With the provision of QA services for the submarine, IRS has added a new dimension to its role in support of the Indian Navy, in consonance with the spirit of ‘Atmanirbhar Bharat’. IRS will endeavour to add value to the quality of refit of the naval asset, thereby contributing to enhancement of the capabilities of the shipyard.’

Indian Register of Shipping (IRS) has secured an order for providing Quality Assurance (QA) services for Indian Navy submarine during refit. The order is a major win for the classification society and paves the way for a new vertical within its Defence sector business.

Mr Arun Sharma

Tepid demand for larger vessels

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, extended losses on Wednesday and marked its biggest one-day fall since mid-February due to weaker demand for larger vessels.

The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, fell 56 points, or about 3.7%, to 1,456, its biggest daily percentage fall since Feb. 15.

The capesize index was down 129 points, or about 6.7%, at 1,752.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $1,073 to $14,528.

Dalian and Singapore iron ore futures extended losses on Wednesday, with demand prospects temporarily weighed down by China’s consideration to cut its crude steel output by around 2.5%.

The panamax index fell 52 points, or about 3.1%, to 1,606, its biggest one-day dip since Feb. 7.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $465 to $14,454.

Despite some weakness, “fundamentals for both sizes remain in a good shape assuming that activity took a short break before resuming a positive track as the Q2 launch”, shipbroker Intermodal wrote in a weekly report, referring to Capesize and Panamax segments.

Among smaller vessels, the supramax index rose 2 points, to 1,337. Agencies

EcoPilot gets the desired CII value for any voyage

Swedish marine tech company Qtagg is releasing an update to its voyage optimization system

EcoPilot that introduces a CII mode. Using the CII mode, the ship arrives at its destination with a predetermined CII rating.

In the fuel optimization system you can select different Control Mode. By selecting Carbon Intensity Index Mode. You move a slider and select the desired Carbon Intensity Rating for the planned voyage. EcoPilot calculate the optimized propulsion plan that achieves the selected rating.

EcoPilot is already an established solution that saves fuel, decrease emissions and optimizes propulsion efficiency on ro-ro, ro-pax and cargo ships. Using the just-in-time arrival mode, proven fuel savings are about 7%. Using interactive on time arrival, it is possible to achieve an additional 20%. This means better CII rating and predictable result for each voyage.

Who will benefit from the EcoPilot CII mode?

Ship owners and operators that want to control CII ratings of theirs ships, while not overcompensate by slowing down too much. They will be able to choose a CII value for every voyage and reliably target that outcome, says Tomas Lindqvist, CEO of Qtagg. Operators will be

another targeting model.

Tomas Lindqvist explains the main principles: The propulsion plan is calculated based on the desired outcome and acknowledged by the captain. EcoPilot is connected to the governors and pitch controller for automatic execution of the propulsion plan. The plan is recalculated continuously, based on updated weather reports and ship progress. Changes in schedule can be sent directly to the system from onshore fleet operations center and once acknowledged by the bridge, the propulsion plan is optimized and updated.

Automated propulsion control provides better results

able to better maintain their yearly revenue per ship and be in full control of fleet performance.

Eco-driving with a track record

EcoPilot has been in operation for more than 10 years. It has different operational modes: arrival time, fixed ship speed, lowest fuel consumption or desired CII value.

The CII mode is the latest addition, developed in response to the new IMO regulations. The demand for our solution has been increasingly rapidly, and since the whole optimization algorithms were already in place, the addition of a CII mode was mainly about implementing

What are the benefits with automated propulsion plan optimization?

It is impossible to reach the same result trying to manually follow advice on ship speed, says Tomas. It is our integrated propulsion power control system that provides fuel savings, and predictable arrival times and CII values – all at the same time. Also, this is not a tool for simulations – it is an actual working control system.

Agencies

The EcoPilot Shaft View gives a full overview of the engines RPM and Pitch, the real time fuel consumption and the ETA for the selected CII setpoint. The intuitive user interface makes it easy to select between more detailed view for each engine or an overview of all engines simultaneously.

IEA expects China will drive world oil demand to record levels

“Reaching 116.1 million tonnes, Chinese refineries’ output hit a new high for the first two months of the year. Increases in exports and domestic transportation

demand, following higher export quotas and the lifting of COVID restrictions, are driving growth,” says Niels Rasmussen,

Chief Shipping Analyst at BIMCO.

Compared to 2022, total refinery output during January and February grew by 3.1 million tonnes. Kerosene and diesel oil output led growth and grew by respectively 26% y/y and 15% y/y. Compared to December 2022, average monthly output was down 3%.

Since COVID restrictions were rolled back in December 2022, transportation activity in China has rebounded quickly. According to Fitch Ratings,

then, exports have averaged 6.6 million tonnes and equalled 11% of refinery output, up from 7% during the first nine months of 2022.

Shipping has naturally benefitted and according to data from Signal Ocean, Chinese exports contributed on average 80% more tonne miles to the clean tanker trade from November 2022 through February 2023 than during the first nine months of 2022.

urban traffic has recovered to pre-pandemic levels after the Chinese New Year holiday and the International Energy Agency (IEA) believes domestic flight activity has also exceeded prepandemic levels. Despite recovering quickly, international flights, however, remain below normal.

“Despite the increase in domestic demand, exports of refined products grew faster than overall refinery output. Refineries have taken advantage of the larger export quotas that have been available since October, and total January and February exports grew 74% y/y,” says Rasmussen.

During the first ten months of 2022, the Chinese commerce ministry kept export quotas low as they focused on securing domestic supply and containing prices. Exports therefore averaged only 4.0 million tonnes per month and fell 25% y/y. Since

“China will be key to the tanker shipping markets during the rest of 2023. In fact, the IEA expects that China will drive world oil demand to record levels during the 2nd half of the year,” says Rasmussen.

Agencies

Team Matrix

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SETTING A COURSE FOR THE FUTURE

Encouraging Women’s Workplace Success

Mitsui O.S.K. Lines, Ltd. announced the company has been selected as a “Nadeshiko Brand” for the third consecutive year under a joint initiative by Japan’s Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TES) to promote women’s success in the workplace.

The initiative aims to introduce investors to TSE-listed enterprises that make noteworthy efforts to help women succeed in the workplace and accelerate the initiatives of each company, making these enterprises attractive investment targets that emphasize improving mid- and long-term corporate value. This is the third consecutive year that MOL was selected, although the selection process has become more stringent compared to the previous year due to integration of industry categories in the brand selection and a reduction in the number of certified companies (from about 50 in the previous fiscal year to about 20).

Based on its Diversity & Inclusion Management Basic Policy, established in April 2021, MOL Group has supported an improved balance of work with various life event such as childcare and nursing care according to each life stage, promoted training plans for female managers as future management candidates, and teamed

up with other companies to co-sponsor a presentation to mark “International Women’s Day” designated by the United Nations. Through these measures, the group has continued to implement various initiatives related to the promotion of women’s empowerment and more active participation in the workplace.

In September 2022, MOL President & CEO Hashimoto endorsed the objective of the “Women’s Empowerment Principles” (Note 1) and signed a statement to act based on those principles. The same month, Hashimoto joined the “Male Leaders Coalition for Empowerment of Women” (Note 2), an initiative of Japanese Cabinet Office. MOL top management proactively communicates the promotion of expanded workplace participation for women, both internally and externally.

MOL Group will continue to create a workplace environment and corporate climate in which every employee can maximize their enthusiasm and vitality and combine their diverse personalities and abilities.

MOL Group 5 Sustainability Issues

MOL Group will contribute to realizing a sustainable society by promoting responses to sustainability issues, which are identified as social issues that must be addressed as priorities through its business.

We anticipate this initiative to contribute especially to the realization of “Human & Community -Contributing to the growth and development of people and communities-“.

Agencies

Transforming the Indian Road Logistics Sector

Cap Karan Shaha CEO and Co-Founder, Vahak

In 2019, IITians Karan Shaha and Vikas Chandrawat co-founded Vahak with an intent to digitise the Indian logistics industry, which now accounts for approximately 14% of the country’s GDP. This logistics tech company is fostering India’s largest ecosystem of transport MSMEs, shippers, lorry and fleet owners on its website and app, amid the rapidly growing $250 Billion Indian Logistics Sector.

The last decade has seen key sectors transforming digitally and Vahak is leading this transformation for the Indian road logistics sector with its artificial intelligence (AI) and machine learning (ML) backed mobile app that acts as a community-driven open marketplace for load and lorry booking pan India. Through its load-lorry matchmaking feature, Vahak has improved profitability for truckers with increased runs with less dependency on personal networks, larger geographical reach and easy return load booking. Vahak has also created a onestop shop by bringing financial services like vehicle

insurance, safe and secure payments and trucking related value-added services (VAS) to the platform.

In addition to the company’s core AI and ML enabled marketplace, Vahak is coming up with premium services for manufacturers, shippers / load owners and OEMs requiring bulk transport, and new VAS features like cargo insurance, in the next couple of months. These services on top of the existing features of vehicle insurance, GPS, brand and network building, will provide online accessibility and ease of doing business for both, the demand and supply side of the road logistics sector, which carries 80% of the Indian freight traffic. Addressing the roundtable, Karan Shaha, Co-founder, and CEO at Vahak, said, “Our vision is to build a trusted transport community platform that looks out for transporters, fleet owners, and truckers’ growth and well-being. The trucking community is a major contributor to the Indian economy and we have captured less than a per cent of the $250 Billion market. Over the next 4-5 years, we aim to capture 10-20% of the market, in line with deeper internet penetration and growing technology adoption at the last mile.”

With a total of $20.3 Million funding till date, Vahak manages over half a million monthly active load bookings on its app. Detailing about the transactions on the platform, Karan elaborated, “With the transport community directly impacted during the pandemic, our app witnessed 20x growth with physical transport networks moving online. Backed with intuitive UI/UX and translations in 7 languages, transaction volume on the recently launched Vahak Payments platform is showing 100% quarter on quarter growth. Our aim is to achieve $1Million ARR by Dec 2023 backed with positive investments in road infra by the government, higher demand in tier 3 and tier 4 cities and faster adoption of internet at the rural last-mile.”

Vahak, India’s most trusted transport community platform, today organised a roundtable to highlight the present state of the road logistics sector and key technological interventions needed to bring ease of doing business.

Alfa Laval’s fluidic air lubrication technology to benefit shipowners

Alfa Laval announces the completion of its acquisition of Marine Performance Systems B.V., a Rotterdam-based maritime technology company that has developed the first fluidic air lubrication system on the market. The move will enable Alfa Laval to bring this environment-friendly technology to market contributing significantly towards improving ship efficiency, reducing fuel consumption, and minimizing emissions from ships.

Empowering energy-efficient and sustainable shipping

Having acquired a minority stake in Marine Performance Systems B.V (MPS) in the year 2021, Alfa Laval has now taken the final step to fully integrate the company under its own brand. The acquisition will accelerate the advancement and introduction of the patented fluidic air lubrication system, FluidicAL into the market to support vessels to sail sustainably.

A ship’s friction when sailing is the most significant driver of its fuel consumption representing up to 60 per cent of a vessel’s operating expenditures. The advanced fluidic air lubrication system from MPS combines fluidics and air lubrication technologies to offer significant reductions in the ship’s friction when sailing. The system is unique in its use of fluidics to generate micro air bubbles with a high

LINDMARK President,

degree of control, maintaining an air layer that covers the full flat bottom area of the vessel for maximum effectiveness. The reduction of frictional resistance working on the ship’s hull results in reduced fuel consumption.

“By adding air lubrication system into our portfolio, we are thrilled to further expand our offering of energy-efficient and sustainable solutions to our customers,” says Anders Lindmark, Business Unit President Heat & Gas Systems, Alfa Laval. “Since 2021, we have been closely supporting the development of MPS’ air lubrication technology and we are impressed with the performance of the fluidic air lubrication systems, we have installed on board vessels.”

ANDERS

Business Unit Heat & Gas Systems – Alfa Laval

Maximizing cost savings and minimizing emissions

With its ability to provide shipowners with numerous benefits in one solution, the fluidic air lubrication technology is expected to have a significant impact on shipping decarbonization. By reducing the friction, air lubrication not only supports emission abatement but provides substantial fuel cost savings and improvement in overall ship efficiency, at a vessel’s normal service speed and a payback period below 3 years.

“In today’s maritime industry, solutions that lower the operational costs and minimize emissions are more critical than ever. The air lubrication system from MPS is designed keeping in mind the needs and challenges of the shipping industry. It offers shipowners access to an easy-to-install solution that provides a perfect balance of operational and financial flexibility, while significantly reducing environmental emissions,” says Anders.

The patented FluidicAL system requires no structural modifications or vessel recertification, which makes it ideal for retrofitting as well as

for newbuilds. Having a minimal footprint and maximum flexibility, the system can be configured and optimised to the specific vessel’s design and operational profile ensuring integration with existing onboard technology seamlessly.

Enabling adherence to environmental regulations

Air lubrication technology is recognized by the International Maritime Organization (IMO) as an “Innovative Energy Efficiency Technology” to lower carbon emissions. The technology supports compliance with Energy Efficiency Existing Ship Index (EEXI), Energy Efficiency Design Index (EEDI) and the reduction of carbon intensity to meet IMO’s carbon Intensity Indicator (CII) requirements. Besides this, the innovative fluidic air lubrication technology minimizes CO2 emissions thereby helping in limiting CO2 tax.

Agencies

The general cargo vessel M/V Tharsis with air lubrication technology onboard

Could mass flow metering solve bunkering industry’s fuel theft cost of $5.2 bil/year?

The bunkering industry is losing as much $5.2 billion of fuel annually to quantity shortages because of outdated methods used to measure deliveries, according to Tyler Baron, the CEO of the world’s largest physical bunker supplier Minerva Bunkering.

Unlike many commodity markets that have transparent price discovery and universal quantity measurements, the bunkering industry still widely uses manual measurement and various calculations including temperature and density to determine how many metric tons have been delivered, Baron said in an interview with S&P Global Commodity Insights.

With some theft or overstated consumption by the ship crew itself along with short deliveries by bunker suppliers, fuel theft is relatively easy to carry out unnoticed, costing the industry up to 9 million mt/year of lost bunker fuel out of a total of 230 million mt of delivered product last year, he said.

“The vast majority of quantity measurement is done by rolling a tape down into a cargo tank of a bunker vessel and measuring the height of the fuel line before and after delivery,” Tyler said. “It’s manual, it’s archaic, and it’s highly subject to manipulation and human error.”

The lack of universal standards across markets is resulting in even the largest bunkering traders deciding not to compete at some locations, he said.

“We have some peers who have similar advantages to us in terms of having scale on cargo sourcing, having economies of scale in terms of the cost of capital and financing,” Baron said. “And they’re seeing the same thing. ARA [Amsterdam-Rotterdam-Antwerp] is a 15 million ton market, Fujairah is a 7.5 million to 8 million ton market. These are big markets and despite the significant advantages of scale some of us have, we can’t really compete on price with certain small local independents who sell at or below cargo cost because they have different business practices.”

Solving the problem

Mass flow metering that includes regulations and enforcement of rules is one solution that has been adopted at Singapore, the world’s largest bunkering hub. The port mandated the use of mass flow meters for fuel oil deliveries in 2017 and for all distillate bunker deliveries in 2019. MFMs measure the flow rate in the pipe and gauge the quantity as well as the mass and density of the fuel.

Alongside the uptake of MFMs, Singapore has adopted strict guidelines and regulations, making it a model for other ports to follow, Baron said

“In Singapore, if you get caught violating the regulations governing the use of MFMs you go to jail,” Baron said. The MFM alone isn’t enough without the regulations and enforcement, he said. “I’m not sure other authorities have the regulatory will to do what Singapore has done.”

The port authorities of Rotterdam and Antwerp-Bruges in December last year said they will mandate mass flow meters to mitigate bunker quantity dispute problems amid widespread concerns about volumes supplied, but no firm start date was announced.

In March 2021, Minerva began the commercial offering of its new Advanced Delivery Platform, or ADP, in Fujairah, Singapore and ARA as another solution to quantity shortages. ADP digitizes delivery documentation and

is integrated with mass flow metering technology to provide complete transparency.

Minerva has since extended the service to an additional seven ports and has also spun out the ADP technology into an independent company to offer it to other suppliers and stakeholders in the industry.

“ADP solves the problem” of theft, Baron said. More than 1 million mt/year of bunker fuel is moved over the platform, with around 25 of Minerva’s 1,000 customers on board, Baron said. “One million tons is pretty significant even to our business,” he said.

“We see more customers shifting to a total cost of procurement approach. They want to lower the cost of moving their vessels around the world and that includes the price they pay on paper for the fuel, it includes having no quantity shortages, it includes saving time in the operation itself which can be worth $7 to $15 per ton, and avoiding quality issues. It is a shift in thinking for some large buyers and one that we want to continue to support in the industry.”

Alternative fuels

In terms of alternatives to traditional bunker fuels, the prospects for LNG are mixed, according to Baron.

“There are two sides of the LNG coin. One is that you’re getting more LNG vessels that are coming out of the yard, about a quarter of the total order book, so this is a positive potential demand driver,” Baron said.

“The negative for LNG is exposure to volatile gas markets, and the logistics costs. LNG last year cost many multiples of conventional fuels. I think there will be a window in which LNG will be helpful to decarbonizing the shipping industry but depending on the methodology you use it offers a relatively modest reduction in lifecycle emissions. As you get past the next handful of years, we’re seeing a growing focus on fuels with lower emission profiles.”

Agencies

Global freight movements continue to dwindle

Container flows fell further in January and February compared with the same months a year earlier, showing the inventory-liquidation cycle was not over yet: Singapore’s seaborne container shipments were down 6% in February compared with a year earlier, one of the steepest falls since the first wave of the pandemic.

Japan’s air cargo through Narita airport, used for higher-value and more time-sensitive merchandise, was down 33% in January after a 24% year-on-year drop in December.

London’s Heathrow handled 6% less air cargo in January than a year earlier after moving 11% less in December.

In response, freight rates have slumped to the lowest level since the first wave of the pandemic, which peaked in April and May 2020, as volumes have shrivelled and excess capacity has emerged.

In the spot market, the cost of moving a box from China to the West Coast of the United States by sea has tumbled to just over $1,000 per forty-foot equivalent unit (FEU) down from almost $16,000 a year ago.

The spot rate from China to North Europe has fallen to less than $1,400 per FEU from almost $14,000 a year ago, based on the Freightos Baltic Exchange index.

Most shipping containers are moved onwards inland by road or rail so there has also been a sharp drop in the number of units transferred.

In the United States, the number of containers hauled on the major railroads in the first 10 weeks of 2023 was down by 9% compared with the same period in 2022.

Some of the drop in freight has been driven by the rotation back to spending on hospitality, travel, leisure and other services and away from merchandise after the pandemic.

The extent of that reversal has caught manufacturers and retailers by surprise and left them holding an enormous volume of excess raw materials, work-inprogress and unsold products.

More recently, persistent inflation, rising interest rates and a darkening economic outlook have begun to weigh on sales of expensive, interestsensitive items such as vehicles, computers and housing-related products.

Since the start of the March, the eruption of a banking crisis in North America and Europe is likely to tighten credit conditions and deepen the pull back in the short term.

Postponing purchases of durable goods is one of the easiest ways for businesses and households to reduce spending and conserve cash.

As a result, it now seems probable that inventory liquidation and cautious buyer behaviour will continue to weigh on freight movements through at least the second quarter.

Thereafter a freight recovery depends on the United States, Europe and the other major economies averting a full-blown recession.

Global freight movements continued to dwindle in the first two months of 2023 as manufacturers and distributors struggled to reduce excess inventories and cope with rising interest rates and increased caution among buyers.

Agencies

VentoFoil wind support can save up to 15 per cent on fuel consumption

Making shipping more sustainable is high on the agenda of shipping companies, shippers and policymakers. The IMO is developing international regulations and standards with a view to achieving a 40% CO2 reduction by 2030. eConowind contributes to this with its VentoFoil concept: a flexible, vertical ‘wing’ that converts wind

into extra thrust. With this, ships can already save up to 15 per cent on their fuel consumption on an annual basis. As the first VentoFoil users are impressed, they now start to share their experiences with the market as official ambassadors.

With the start of the CO2 tax in 2024, it becomes important for ship owners to accelerate the green transformation. Especially now that industry and shipping are under the magnifying glass. International shipping accounts for 3 per cent of

global CO2 emissions. Nevertheless, this mode of transport is still the most efficient per tonnekilometre.

Frank Nieuwenhuis of eConowind says: “It is great to work in the energy transition and I am grateful for the efforts of these four innovators. With all the pooled knowledge and experience, we can make the wings more widely available. There is momentum and our order pipeline is well-stocked. Several shipping companies have closely followed the innovators and ordered their own VentoFoils. With the increased production capacity, we can now serve the market even better. We are continuing to develop as a scale-up and advanced discussions are ongoing with several investors.”

‘Wind assisted propulsion’ (WASP) on existing vessels not only reduces CO2 emissions, it also brings significant fuel and cost savings. With eConowind’s VentoFoils, shipowners can already profitably reduce CO2. Users see a positive contribution immediately after installation. The low-maintenance system can be installed within two days.

Wind pioneers become ambassadors

Four Dutch shipowners have worked closely with eConowind and gained experience with the first 2 generations of VentiFoils. They will now pioneer the 3rd generation of ‘VentoFoils’ and become active Ambassadors of eConowind. This generation of wings delivers demonstrable savings enabling ships to meet tightened environmental requirements.

Johan Boomsma of Boomsma Shipping says: “For us, energy efficiency is key, which is why we are always open to new developments. I think the three key factors – unit cost, fuel prices and European ETS legislation – are converging in such a way that wind-assisted propulsion will soon become one of the standard solutions. eConowind will succeed in making a significant contribution to reducing shipping emissions.”

Why become an eConowind ambassador?

“Besides the above,” continues Boomsma, “we want to show customers and competitors that shipowners can reduce their fuel consumption with a proven, affordable system. For the crew, it is easy to use; with the push of a button you can deploy and lower the sails again. Finally, and very importantly for us, eConowind speaks our language. As an exponent of the Dutch maritime manufacturing industry, it supplies high-quality

equipment to shipowners. At Boomsma, we include the VentoFoils in all our new construction plans.”

According to Jan van Dam, of Van Dam Shipping, the installation has become a no-brainer: “As the first user of the VentiFoil system, we see how the system is developing in a positive way. We will have to go green as an industry and wind-assisted propulsion is a ‘quick win’. With our 4,000-tonne vessel, we consume about 1,250 tonnes of fuel a year. With current fuel prices, you will earn back the VentoFoils within four years. When the CO2 tax comes into force, it will go faster. Together with Tata Steel, we are looking at developing a hydrogenpowered ship. With that kind of expensive fuel, we will earn back the VentoFoils even faster.”

Lease construction for positive cash flow

By deploying modern leasing structures, VentoFoils are readily available to ship owners. With this financing option, the wind-assisted propulsion units deliver positive cash flow from day one. Thomas van Meerkerk of Vertom Group also sees the VentoFoil system as part of the sustainability roadmap: “With this solution, you can make the existing fleet more sustainable. As Vertom, we will deploy the system on 3 ships. We are investigating whether we can equip even more ships with these wind wings. We are also investigating if VentoFoils can be deployed on sustainable new-build ship designs in combination with, for example, hydrogen or methanol. Through the lease construction, we can deploy the VentoFoils in a cashflow-neutral way. This allows us to learn, do research and share our experiences with fellow shipowners.”

Fuel-independent

Wind is an inexhaustible and free source of energy. VentoFoil systems can be deployed regardless of whether a vessel runs on traditional or green fuels. It can boost renewable fuels such as hydrogen, ammonia, methanol and/or electricity. After all, these are often relatively expensive fuels, reducing the ROI of eConowind’s systems. Captain Gerrit Schram of Vertom sees future-proofing shipping as an important task: “You will need these kinds of systems in the near future to keep running your business.”

The early adaptors’ conclusion is therefore that wind-assisted propulsion is cost-effective, sustainable and future-proof. That is why they have now become active ambassadors.

Agencies

Republic of the Marshall Islands Sets New QUALSHIP 21

Milestone

The Republic of the Marshall Islands (RMI) has again been recognized as a highquality registry, achieving an unprecedented 19 consecutive years on the United States Coast Guard’s (USCG’s) QUALSHIP 21 roster as noted during today’s INTERTANKO meeting in Connecticut which took place prior to the kick-off of the CMA Shipping Conference 2023.

The RMI is the only one of the world’s three largest registries to consistently achieve QUALSHIP 21 status. More than 1,350 RMI flagged vessels were enrolled in QUALSHIP 21 as of 14 March 2023, representing approximately one third of the QUALSHIP 21 vessels worldwide.

“We take our commitment to high-quality and safe vessel operation seriously. It is the focus of everything that we do,” said Bill Gallagher, President of International Registries, Inc. and its affiliates (IRI), which provide administrative and technical support to the RMI Registry. “We work closely with our owners, operators, and teams around the world to facilitate high levels of compliance, and actively engage in supporting our clients’ compliance efforts,” he continued.

With the industry’s significant attention on sustainability and decarbonization, IRI has enhanced resources and capabilities in key technical and customer service areas to support RMI owners and operators in compliance with forthcoming regulatory changes.

Two key personnel changes in North America: the hiring of Rafael Riva, Vice President, Client Relations, and the promotion and shifting of

Tom Bremer to Vice President, Fleet Quality and Compliance, underscore the importance IRI is placing on enhancing compliance and technical capabilities for the future. Mr. Riva comes to IRI after nearly 19 years with Lloyd’s Register where he specialized in LNG and LPG and moved around the world to support their strategic interests and business development. Mr. Riva supports RMI owners and operators from the Houston office, working closely with IRI’s Renewables and Oil and Gas teams.

“It’s clear that the market will continue to explore and develop alternative and renewable energies,” said Simon Bonnett, Chief Maritime Officer. “Our clients need to know that their flag has the in-house technical experts and client support capabilities to answer questions and provide guidance as they determine their path to 2050. We are expanding our team to ensure we have experienced and knowledgeable resources available to them worldwide.”

Mr. Bremer, originally hired in 2013, previously supported the fleet as Vice President, Investigations. Based in the Baltimore/Annapolis office, Mr. Bremer serves as a liaison between the worldwide fleet operations teams and clients, with a focus on supporting clients’ compliance especially for fleets calling on ports in the United States. Prior to joining IRI, Mr. Bremer served with the USCG for nearly 10 years in a variety of port State control and investigative roles.

“Compliance continues to become increasingly complex, and we saw an opportunity to provide enhanced support to our clients by creating a new position,” said Brian Poskaitis, Senior Vice President, Fleet Operations. “Tom serves as a dedicated link between operators and the flag State, not just to support individual operators, but also to be proactive in anticipating and addressing the clients’ changing needs as the compliance environment shifts,” he continued.

“Compliance is not a static achievement,” noted Mr. Gallagher. “We constantly review our processes, procedures, teams, and capabilities to find ways to enhance and strengthen our fleet’s compliance. That constant striving to do better is how we have achieved this new milestone, and I am exceptionally proud of our team, owners, and operators for the collective efforts that led to this recognition,” he concluded.

Agencies

DeepOcean charters offshore support vessel, Olympic Ares

Ocean services provider

DeepOcean strengthens its offering to the offshore renewables and oil and gas industries by entering a two-year time charter agreement for the Olympic Ares multi-purpose support vessel (MPSV).

DeepOcean is chartering the Olympic Ares from Fosnavaag-based shipowner Olympic Subsea.

The vessel is a modern construction support vessel equipped with a 250 Te crane and will provide subsea inspection, maintenance, and repair (IMR), light construction and recycling services to DeepOcean’s customers in the offshore renewables and oil and gas industries.

“Operators of offshore wind farms and oil and gas assets approach DeepOcean because they know we have a 300-strong engineering hub with extensive experience from planning subsea inspection, maintenance and repair operations. The vessels we charter are necessary platforms to execute the work. Adding Olympic Ares to our fleet allows us to

Øyvind Mikaelsen, CEO of DeepOcean

further enhance our capacity within this field,” says Øyvind Mikaelsen, CEO of DeepOcean.

The charter contract will commence in the first quarter of 2023 and have a firm hire period until the end of 2024, with option to extend the contract.

Moreover, Olympic will upgrade the vessel’s DP system during 2023. This will optimize DP performance and energy efficiency which enables further reduction of the vessel’s carbon footprint in line with DeepOcean CO2 emission reduction strategy.

“Our target is to reduce our CO2 emissions by 45 percent by 2030. Reducing emissions from offshore vessels and operations is a key part of this strategy. Collaborating with shipowners such as Olympic Subsea, who operates one of the world’s most modern and flexible fleet of subsea IMR and light construction vessels, enables us to drive down operating expenditure and harmful emissions to air,” adds Øyvind Mikaelsen.

The Olympic Ares will be equipped with 2 x Schilling HD ROVs together with DeepOcean’s dedicated infrastructure.

“We are excited to start this new partnership with DeepOcean with the contract for Olympic Ares, our modern and energy-efficient subsea vessel for operations in both the renewables and oil and gas markets. We are glad to see that DeepOcean shares Olympics’ strategy when it comes to enabling the energy transition and we look forward to developing this relationship into fruitful offerings for the renewable energy markets in the years to come. We believe that investing in innovative technology and efficient operations is crucial for the future of the offshore industry,” says Stig Remøy, CEO of Olympic Subsea

DeepOcean is a world-leading ocean services provider, enabling energy transition and sustainable use of ocean resources. The company delivers subsea services within oil and gas, removal and recycling of subsea infrastructure, offshore renewables, mining of marine minerals, and to other ocean-based industries.

Agencies

Olympic Ares

Supply chain innovation central to LISW23

Supply chain innovation and resilience will be central to discussions during the week-long event, particularly as the shipping industry addresses international environmental concerns and evolves to deliver innovative answers to global challenges.

Ernst Schulze, UK Chief Executive of DP World said: “We are delighted to be supporting London International Shipping Week. After the disruption of recent years, shipping lines and cargo owners are looking for capacity, reliability and growth opportunities. We are providing it, enabling customers to move goods smoothly and efficiently in and out of the UK and across their supply chains.

“Over the past 10 years DP World has invested £2 billion in the UK, supporting thousands of jobs. Over the next 10 years we have earmarked a further £1 billion of investment, with a £350m new fourth berth at London Gateway now well under construction.”

DP World saw a 5% rise in the volume of trade handled by its two hubs in the UK last year, as the leading provider of smart logistics solutions continued to extend its reach further into the supply chain. London Gateway alone reported a 14% rise in volumes to 2,053,000 TEU, consolidating its position as Britain’s second biggest container terminal. Together with Southampton, the two terminals handled a record 3,850,000 TEU.

DP World exists to make the world’s trade flow better, changing what’s possible for its customers and the communities it serves globally. It is pushing the sector further and faster towards a

seamless supply chain that’s fit for the future. By uniting global infrastructure with local expertise, it is also creating stronger, more efficient end-to-end solutions.

Welcoming DP World’s involvement, LISW cofounder Sean Moloney commented: “DP World’s global view of international supply chain dynamics and its experience in innovation and trade will be of great benefit to LISW’s industry-leading discussions as we contemplate crucial issues which will influence the shipping industry’s future development.”

Now in its 10th year, London International Shipping Week has become synonymous with thought leadership, providing a high-level platform for the maritime world to examine crucial issues and identify solutions. LISW23 will consider how the shipping industry reframes ‘risk’ in what has become a complex marketplace. London plays a pivotal role in global trade and is home to key hubs for many sectors of the international maritime community. During the week, LISW23 will scrutinise the world’s seaborne supply and demand dynamics as well as driving debate on how to manage commercial risk on a global scale. Decarbonisation and achieving Net Zero 2050 will also be a central topic and leading international experts will consider where are the next, tangible, opportunities for the industry to contribute to energy transition while also generating profits.

London International Shipping Week 2023 (#LISW23) will take place from September 11 to 15 throughout various locations in London and the UK. The LISW23 Headline Conference will be held at the London headquarters of the International Maritime Organization on Wednesday 13 Sept, while the glittering Gala Dinner on Thursday 14 Sept is hosted for the first time beside the River Thames at ‘Evolution London’ in Battersea Park and is scheduled to go on late into the night.

Agencies

The smooth flow of world trade will be a central topic at this September’s London International Shipping Week 2023 (LISW23) thanks to support from DP World, the leading supplier of smart logistics solutions and a significant UK investor, which has come onboard as the event’s exclusive International Logistics Sponsor.

Calculations of damages in Marine Insurance claims

The aspect of seaworthiness of a vessel is one that is implied within a maritime insurance policy. In fact, it was a rule in the eyes of the law that the warranty of seaworthiness was implied in every contract of insurance. A second implied warranty is that of deviation, and the third is that of legality. All in all, these implied warranties ensure that the vessel is seaworthy, that the assured has followed his chartered course of voyage, and that the vessel completes its voyage without engaging in any activity that could be construed to be unlawful. (1884) 97 N.Y. 350) while these implied warranties place on the shipowner accountability and ensures that a voyage is completed and the goods aboard are secure, encouraging shippers to engage in trade via maritime vessels, it also places shipowners/ the assured in a fragile state where they are dependent on the strictness of the applicability of these implied warranties to be able to make a claim under their insurance policies (Staring, 1991).

Considering that the wordings of contracts of insurance are to be construed strictly, it leaves shipowners with little room to deviate from their obligations even if it is, at times, necessary to do so. There are two schools of dealing with breaches, one that involves allowing an insurer to void his liability to pay a claim made by the assured, and one that involves changes to the contract or a proportionally less claim amount paid without fully allowing the insurer to avoid his responsibilities. This paper seeks to highlight the pros and cons of either.

Implied warranties exist to ensure that legally, one naturally assumes that a shipowner or charterer would comply with these pre-conditions set forth in any marine policy irrespective of their explicit presence in that policy. That one, the vessel is fit to carry the goods it has agreed to carry, that it will carry said goods on a fixed path determined beforehand to ensure safety and maximise risk prevention and that a shipowner or charterer would carry out their duties in a manner that is legal and upholds the rule of law and does not commit any illegal act during the time of the voyage. Marine underwriters proposes of marine insurance policies often presuppose that these warranties are complied with, and a calculation of premium on these implied warranties are not done (Staring, 1991). This is because the above mentioned three implied warranties are supposed to be duties imposed upon shipowners either through statutory obligation, or by legal precedent or maritime custom.

It is important to understand that as an underwriter, the risk assumed is great, especially in cases of marine insurances, where claim amounts can be in the many millions of dollars for the insurer to pay out in cases of damage caused to the assured. (Wang, 2006) Therefore, implied warranties act as a sort of way to ensure that in any case, a shipowner or an operator of a vessel does not act in a manner that may change the quantum of the risk that would have been pre-determined by the insurer at the time of the beginning of

the voyage (Wang, 2006). The largest pill for a marine insurer to swallow is that the quantum of risk on the high seas cannot be fixed or calculated, it can only be assumed based on existing information of the sea, the vessel and the nature of the waves and the sea at that point of time (Staring, 1991). By controlling the route of the voyage, the cargo worthiness of the vessel and the legality of the activities of the vessel, insurers can at least mitigate this variability of risk on the high seas to a certain extent (Wang, 2006).

Over the years, American courts have developed various ways of remedying breaches of warranties (Staring, 1991). However, it oftentimes places a stringent burden on the assured to prove that the breach was immaterial to the contract, les which it could be repudiated by the insurer. For example, the Pennsylvania rule developed in courts in Pennsylvania states that if an assured ship has caused harm via collision after a breach or the navigational warranty, then the breach is automatically assumed to be the reason for the harm caused. This method directly puts the assured at risk of losing out on claim amounts because they would have to prove that the breach did not cause the harm, which is difficult, especially on the high seas where evidence is hard to collect, and then prove (Staring, 1991).

To hinge a policy on such a rule is detrimental to shipowners who embark on voyage with the assurance that they will be covered in the case of damage caused to the vessel. While these methods of evaluating breaches and the effect to the risk in the policy is effective as it allows insurers to avoid contracts where the risk has altered to such a degree that they may not have ever entered such a contract had they known the risk was this great, it also causes the contract to fall through and expose vulnerable assured parties of having to pay for the entire damage themselves. (Staring, 1991). The maritime industry is not one where risk is fixed, and factors such as the conditions of the sea and wind heavily determine how risky a voyage may or may not be. Therefore, giving the insurer discretion to completely avoid paying out claims cannot said to be wholly just for the assured party.

not completely remedy a breach through avoidance produce results where the contract still stands and the assured can, upon certain changes to the contract or by accepting a smaller claim amount can still avail themselves of the benefits of a contract of insurance (Staring, 1991).

Wholly repudiating contracts at times based on a breach of an implied warranty can seriously harm the interests of the assured, especially if such a breach was unintentional or it was done in times of emergency. For example, seaworthiness by itself places a huge burden on a shipowner, and is difficult to prove, especially with courts favouring shippers over shipowner’s when it comes to nature of judgements passed with regards to how it must be proved. In some parts of Europe, a method of “proportionality” has been developed which seems to remedy breaches without wholly repudiating the contract or needing to change or alter the terms of a contract every time there is a breach. It involves assessing the change of the risk after the breach and involves a calculation of a new premium that would have been charged by the insurer keeping the new risk in mind. It then involves having the insurer pay the assured a proportion of the claim amount as if it was a proportion of the new increased premium. (Staring, 1991)

Bibliography

- Van Wickle v Mechanics and Trader’s Bank (1884) 97 N.Y. 350

- Wang, “On the Legal Consequence of Breach of Warranty in Marine Insurance” (2006) 12 Annual of China Maritime Law 65, 71 (in Chinese).

- Staring GS, “ADMIRALTY AND MARITIME LAW: SELECTED TOPICS” (1991) 26 Tort & Insurance Law Journal 538 < https://www.jstor.org/ stable/25762276> accessed March 2, 2023

- Jing, “Warranty and Doctrine of Alteration of Risk during the Insurance Period” (2014) 25 Insurance Law Journal 183, 191

While this practice is only exercised in some parts of Europe, it is growing in popularity and has been promoted as an alternate remedy where neither the assured or the insurer are burdened or made to undertake arduous tasks to prove their case, and involves no repudiation or avoidance of contracts, ensuring the safety of the assured at least to some degree. While this method allows for an insurance policy to remain after a breach by completely terminating the option that insurers have to avoid the policy, it allows for claims to be paid either wholly or partially after an amendment to terms or by a recalculation of a premium. (Staring, 1991) This ensures that marine insurances become more reliable and trustworthy, prompting more parties to want to assure themselves on the pretext that they know their risk will at least be partly covered by the policy.

It is implied in every contract of insurance that an insurer covers only a fixed quantum of risk at the time of issuance of the policy. When a shipowner who is assured breaches a warranty that is implied within a policy, the risk is meant to be altered to such a degree that it changes the circumstances of the contract of insurance between the parties for the insurer to (Jing, 2014). A method to assess if such an alteration has occurred is to measure if the risk after the breach had increased to such a degree that an insurer would have not initially entered a contract at all because the circumstance of the contract had fundamentally been altered to such a degree (Jing, 2014). However, what if it is the case that the breach was absolutely necessary, or was done without the knowledge of the crew onboard the vessel? Completely voiding a contract or exhausting a contract of insurance on these grounds makes it difficult for assured parties to rely on their policies of insurance at all (Jing, 2014). Methods that do

Advocate Capt Rahul Varma

Founder, Ally Maritime and Legal Services and Ship Recycling Specialist

Mr Shreyas Acharya Intern, Ally Maritime And Legal Service

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