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ACL
Standing tall among giants Stellar year for Singapore Feeders go from strength to strength
“Blockchain is white-hot and everybody is talking about it� Infor vice president of marketing Greg Kefer, see page 24
contents 1st Quarter 2018 volume 6 issue 1
04 08
Regulars 3 COMMENT 34 BEST OF THE WEB 36 LAST WORD
Operator profile 4 In a time when mega carriers dominate, ACL stands out as a small, independent and yet profitable player. Rebecca Moore spoke to its president, Andrew Abbott
Shipper profile
10
8 Digitising processes and creating a sustainable supply chain are top of the agenda for Kuehne + Nagel, one of its top executives revealed in an exclusive interview with CST
Regional analysis 10 Last year saw Singapore reassert its role as the top transhipment hub in the world, but that may not be all bad news for competitors. We examine Singapore’s position and its competitors within Asia
Trade route
24
13 The threat on the horizon of the mature transatlantic trade is a higher rise in supply versus demand, pressuring freight rates. We look at whether the supply and demand balance could be toppled
Ballast water management systems 16 The ballast water management systems market is more competitive than ever, while the approval process required is stifling product development. We speak to key players
Class 20 Class societies are focusing their efforts on boosting the use of LNG as fuel, honing cyber security and strengthening lashing software for box ships
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Container Shipping & Trade | 1st Quarter 2018
contents Digitalisation 24 After all the publicity surrounding blockchain, it could soon become a reality in the container shipping market, with Maersk leading the way
Port and vessel productivity
1st Quarter 2018 volume 6 issue 1 Editor: Rebecca Moore t: +44 20 8370 7797 e: rebecca.moore@rivieramm.com
26 New initiatives in ports and on ships are boosting the movement of containers
Contributor: Gavin van Marle t: +44 20 7394 7209 e: gavin.vanmarle@rivieramm.com
Fleet stats and analysis
Commercial Portfolio Manager: Bill Cochrane t: +44 20 8370 1719 e: bill.cochrane@rivieramm.com
30 Feeder trades are going from strength to strength, with charter rates hitting new highs
Market updates 32 Box ship trades started to recover last year – but the large number of ULCSs due for delivery for this year pose a threat
Next issue Main features include: • Trade route: transpacific. • Port regional analysis: Europe. • Top 20 carriers. • Ship operations: communications. • Ship operations: propulsion. • Panama Canal. • Fuel efficiency: coatings. • Digitalisation: environment/regulation.
Head of Sales – Asia: Kym Tan t: +65 9456 3165 e: kym.tan@rivieramm.com Senior Sales Consultant: Ed Andrews t: +44 20 8530 8322 e: ed.andrews@rivieramm.com Production Manager: Ram Mahbubani t: +44 20 8370 7010 e: ram.mahbubani@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Executive Editor: Paul Gunton Head of Production: Hamish Dickie Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK
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Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.
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COMMENT | 3
BLOCKCHAIN AND DIGITALISATION WILL COMBAT BOX SHIPPING CHALLENGES
T Rebecca Moore, Editor
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here has been a lot of talk about blockchain in box shipping but not much tangible action – but this has changed since the start of this year. There has been a strong movement from vague plans to concrete solutions with start dates, as our feature on the subject shows (see pages 24-25). Maersk and IBM are developing a global trade digitalisation platform and 300cubits plans to roll out a digital currency to be used as a booking deposit system in box shipping transactions in June this year. But this is not the only news on the blockchain front: the first Nordic shipping initial coin offering (ICO) has been announced by Blockshipping, creators of the first real-time registry of the world’s containers – and its Global Shared Container Platform (GSCP) is set to save millions of tonnes of CO2 and solve overcapacity issues. The platform will be based on blockchain and sensor technology. Blockshipping’s actions show that that it very much means business: not only is it already funded by Private Angels and The Danish Maritime Foundation but the ICO will further accelerate the development and adoption of the platform. Blockshipping platforms such as GSCP could be the key to unlocking a range of challenges and obstacles in the box shipping industry, from overcapacity, low freight rates and security threats to increasing environmental regulations. This is because the GSCP platform will be the first real-time registry of the world’s approximately 27M shipping containers. There has never before been a central registry of containers and, as Blockshipping founder Peter Ludvigsen explained, the lack of realtime tracking results has led to a “huge
number of empty containers being moved around unnecessarily”. The registry will prove a solution to this problem and result in reduction of the global CO2 emissions of 4.6M tonnes annually when fully utilised. It will also allow the global container shipping industry to save US$5.7Bn annually through smarter handling of intermodal freight containers. Blockchain is part of the wider digitalisation movement currently sweeping the container shipping industry – a movement getting stronger by the day. It has been embraced by container ports, leading to a range of benefits for their ocean carrier customers. There are too many port digitalisation projects to mention, but some of those that stand out include Port of Rotterdam Authority’s collaboration with IBM on an internet of things initiative. A centralised dashboard application is being developed that will collect and process real-time water and weather sensor and communications data, analysed through the IBM IoT platform. This will reduce waiting times, determine optimal times for ships to dock, load and unload and enable more ships into the available space (see pages 26-28). While the container shipping industry market outlook has become much more stable over the past year, there are challenges on the horizon: as our market updates report (pages 32-33) highlights, the large number of ultra large container ships (ULCSs) due to be delivered this year is a threat. Some 71 ULCSs at a total of 1.2M TEU are due to be delivered in 2018, according to VesselsValue. This is the highest year on record for ULCS orders. Blockchain and the wider digitalisation trend will help combat such challenges. CST
Container Shipping & Trade | 1st Quarter 2018
4 | OPERATOR PROFILE
ACL: SECRET OF ITS SUCCESS IN A TIME WHEN MEGA CARRIERS DOMINATE, ACL STANDS OUT AS A SMALL, INDEPENDENT AND YET PROFITABLE PLAYER. REBECCA MOORE SPOKE TO ITS PRESIDENT, ANDREW ABBOTT
Container Shipping & Trade | 1st Quarter 2018
A
tlantic Container Line (ACL) has entered 2018 by putting the teething problems that have troubled its new G4 fleet behind it. Its president and chief executive Andrew Abbott told CST in an exclusive
interview that its new fleet of ships has been “plagued with problems” over the past two years. But this is all set to change in 2018. ACL’s five G4 conros have replaced its entire previous fleet. The new fleet is bigger, faster, more efficient and greener than the previous
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OPERATOR PROFILE | 5
is brand new. “People were learning as they built the vessels because these are not standard off-the-shelf designs; they are unique. We knew we were going to have some teething problems,” Mr Abbott said. Second, while the vessels were built in China’s Hudong Zhonghua Shipyard, ACL wanted to use European manufacturers for the main components, “because if something breaks down I want to pick it up the spare parts in Europe and not wait weeks to get it delivered from Asia,” Mr Abbott explained. The problem was that, while those components were ordered from European companies, many were built under licence in Asia. “There was too much low-quality production and some of the components were not of the same high standards we had expected,” Mr Abbott commented. As a result, the shipping line is replacing as many of the affected parts as possible with components made in Europe. But despite these difficulties, Mr Abbott has heralded 2018 as the year when “we finally have everything working properly”. The full fleet will be in operation for the first time in two years.
G3 fleet. At 3,800 TEU they have double the capacity of the older ships but share the same footprint. The company started phasing the new vessels in at the start of 2016. The first three ships spent three months each in drydock in Germany for repairs and modifications and a fourth was in drydock at the time of our conversation in late January. Mr Abbott singled out two major reasons why the G4 fleet has needed repairs so early on. First, the design
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RELIABILITY BOOST Another matter will also help ACL with its service: from mid-January this year Sweden’s Gothenburg port has been converted from a direct call to a weekly dedicated container feeder service between the port and Antwerp. This a big change for the company because ACL had called at Gothenburg since it started operating 50 years ago. Instead, ACL is using public feeders between the other Swedish ports and Hamburg/ Bremerhaven. For Swedish
roro cargo, ACL has set up a relay service using the Grimaldi Euromed vessel between Wallhamn and Antwerp. Mr Abbott explained that due to ongoing issues between the terminal operator and labour union at Gothenburg, coupled with inflexible berthing times and spiralling costs, ACL had been experiencing significant delays of up to 12 hours and more, which had a knock-on impact on the rest of its service string. “Due to the combination of terminal problems at Gothenburg and other ports and ship repairs, our schedule went from being on time every week to very irregular, with lots of dropped port calls,” he said. But a combination of the change from a direct call to a feeder service and the deployment of the full G4 fleet in normal operation “will bring back the old ACL reliability to customers who have been patiently waiting for us to get our act together.” He observed “It makes things so much easier for our people to manage and gives planning-precision to our customers when our service is on time and there is no double-work anymore.” He pointed out that the new feeder vessel and mother ship connections must be strictly adhered to each week “or ACL will have empty ships.” ACL will operate this new service for six months and then review it. All the port’s stakeholders – customers, terminal operator and labour – will play a significant role in determining whether ACL maintains, expands or reduces this service thereafter. Previously, ACL had been studying the addition of a stop in the US South Atlantic states region once its G4 vessels came into service. It currently serves this area of the US by taking slots on Hapag-Lloyd vessels. The
carrier had been looking at Charleston, Savannah or Jacksonville because a lot of cargo moves from this region into Germany and Sweden and there is a big forestry export market. But Mr Abbott said this strategy is on a “back burner” now due to the focus of ACL in getting its service “running like clockwork” again. G4 ENERGY BENEFITS Despite teething problems, the new ships offer a host of advantages to ACL and its customers. The new conros have the same dimensions as the current ships but double the capacity (3,800 TEU compared to 1,850 TEU) due to their configuration of placing roro cargo in the centre of the vessels and containers fore and aft, as opposed to the normal configuration of roro freight placed under deck and containers on deck. “With the conventional configuration, all the weight is on top, meaning the ship must carry a lot of ballast water,” said Mr Abbott. However, the new ships have much lower ballast water requirements, as they use cargo as ballast. The new ships were designed with cargo handling in mind. The roro decks have only one set of centre columns, while the decks on the older vessels have two or three. Multiple columns required a lot of manoeuvring to park cargo so stowage is much easier on the G4s, Mr Abbott said. Also, the main roro decks are amidships, so the ramps are much shallower, making cargo handling faster and easier. In the old G3 ships the ramps were steeper, and it was much harder to get heavy cargo up and down. Furthermore, the car decks on the newbuilds are
Container Shipping & Trade | 1st Quarter 2018
6 | OPERATOR PROFILE
much higher, at over 2 m, compared with 1.6 m on the older ships. This means that ACL has no restrictions on high-sided sports utility vehicles and minivans, as it had on the G3s. The energy and environmental benefits are also strong: with the previous ships, for every tonne of fuel burned, ACL carried around 41 TEU on its transatlantic service. But with the new vessels, it will be about 90 TEU per tonne of fuel on the same service, even though they will travel at faster speeds and have twice as much capacity. Emissions per TEU are reduced by 65% and ACL’s environmental footprint will go down by more than 50% for every container carried, Abbott said. The new ships have been fitted with Alfa Laval scrubbers, meaning that fuel costs will be cheaper as they do not have to run on low sulphur fuel oil. Asked about the possibility of using LNG, requiring a big tank on board, Mr Abbott pointed out the challenges. “LNG equipment takes up a lot of space on the ship and the refuelling infrastructure is not there yet. We went with scrubbers, so we could use low cost fuel but have zero emissions.” But he did not rule out LNG in the future. “I am sure that as time goes by there will be technology advancements and more LNG refuelling stations – we will look at it again when that happens,” he said. Moving to market conditions on the transatlantic, Mr Abbott described them as “horrible.” He said that roundtrip container rates were now at their lowest point in history. “We turn away half of the stuff offered to us now as it makes no sense to carry it. Why a carrier would choose
Andrew Abbott (ACL) ACL president and chief executive Andrew Abbott started his career at ACL in 1977, when he joined the company as a marketing analyst before progressing to sales administration manager. He left in 1979 and held positions at Waterman Steamship Corp and Orient Overseas Container Line (OOCL) before returning to ACL in 1983 as vice president of US sales and marketing. He worked his way up the company to be promoted to president and chief executive in 2003. His education includes an MBA in international marketing from New York’s Columbia University and a degree in economics from Humboldt University in Berlin.
Container Shipping & Trade | 1st Quarter 2018
to carry cargo below variable cost for the purpose of market share is a mystery.” Indeed, one could infer from the market volumes that rates should not be so bad. While eastbound cargo has stagnated since Europe entered its austerity mode and people stopped buying construction equipment for roads and buildings, US imports have been remained relatively strong with the healthy US economy, despite a weaker dollar. Explaining what he believes is a large factor in dragging the rates downwards is that the larger container shipping lines have been so focused on putting together their new alliances (launched last April) that they are “not paying attention to the profitability of smaller trades.” He was concerned about the plans of some lines to add more services. “This goes against what is needed if we want profitability back – it worsens the supply and demand balance.” SMALL VERSUS LARGE In a period when mergers and consolidation have led to worries that the dominance of the larger container shipping lines will squeeze out smaller lines, Mr Abbott credits ACL’s profitability to being a smaller, independent player with unique services and tight management control. ACL was fortunate that it does not just carry containers but also roro cargo and cars. “If we were just a pure container line it would be difficult to make any money on the Atlantic,” he said. And there are other advantages. “We can watch every container and turn it around so that equipment utilisation is higher than the bigger carriers and our staffing is smaller, so we are more efficient.”
Mr Abbott said that ACL and its parent company, Grimaldi, have always made money compared to the big “highs and lows” of the large container shipping lines. He said that “with more mergers and ever-larger shipping lines, the more unique we become. Everyone else is in the same boat so how can they differentiate themselves?” Mr Abbott highlighted another factor that he felt helped the operator to be in a position of strength – ACL has historically called at unique ports that are different from those that the larger carriers go to. He mentioned Liverpool, Baltimore and Halifax as examples. “We have always sought out places that have something unique to offer. The ability to carry containers, oversized project cargo and vehicles to unique destinations makes us very attractive to certain customers.” Aside from the challenges on the transatlantic trade, Mr Abbott highlighted another challenge: new trade policies that the US government could potentially implement. “The US trade deficit has increased significantly, so will there be new protectionism measures? It is the unknown that makes the shipping environment more volatile.” Highlighting the difference between past and present when it comes to politics and its imapct on trade, he explained "Previously we had longerterm trade stability but now governments can decide matters on a whim, so things will change a lot faster.” ACL has managed to skilfully negotiate both operational and trade challenges so even if new obstacles are created by government measures, there is no doubt that the company will take these in its stride. CST
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OPERATOR PROFILE | 7
G4 VERSUS G3 G3
G3 1,850 TEU
G4 3,800 TEU
G4S’ CONTAINER CARRYING CAPACITY HAS DOUBLED
65% AMOUNT BY WHICH EMISSIONS PER TEU ARE REDUCED
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G4
G3 1.6 M
G4 2M
HIGHER CAR DECKS
G3 41 TEU
G4 90 TEU
PER TONNE OF FUEL BURNED ON TRANSATLANTIC SERVICE
G3 6.2 M
G4 7.45 M
RORO DECKS ARE HIGHER
50% THE AMOUNT ACL'S ENVIRONMENTAL FOOTPRINT WILL GO DOWN BY FOR EVERY BOX CARRIED
Container Shipping & Trade | 1st Quarter 2018
8 | SHIPPER PROFILE
Kuehne + Nagel:
digitalising and reducing the supply chain carbon footprint Digitalising processes and creating a sustainable supply chain are top of the agenda for Kuehne + Nagel, one of its top executives told Rebecca Moore
U
sing digitalisation to help customers to reduce their supply chain’s carbon footprint is a top priority for the world’s largest sea freight forwarder Kuehne + Nagel (K+N), its senior vice president, head of global trade Paolo Montrone told Container Shipping & Trade in a wideranging interview. Digitalisation has become something of a buzzword in the container shipping
industry. It is something that K+N has been focused on and promoting for nearly 25 years, ever since it rolled out its global K+N single operating system in the mid1990s. Mr Montrone also highlighted how the company has connected and highly integrated its systems with all major shipping lines since it bagan that activity 19 years ago through direct EDI and the electronic market place for international trade, Inttra. Highlighting the importance of digitalisation within the logistics company’s strategy, Mr Montrone said “We focus on two main things; having the best people in the industry and digitising and automating processes.” The company has integrated its processes with all carriers. These two pillars are crucial for the company when it comes to dealing with challenges. Mr Montrone pointed out “We are totally customer-centric and our teams are fully committed to care for our clients – it is about providing services in a very unreliable world, where carrier reliability indexes are dropping [and] labour relations are creating disruptions at ports. Within transhipment, there all kinds of issues.” Therefore, it is crucial to have “both people on the ground [using] best technology and making innovative use of digital resources” to manage all the challenges and ensure the outcome is what K+N clients and their clients expect. Speaking of the company’s current digital platform, Mr Montrone said “We have a truly global operating platform that drives standard as well as client-defined processes on a global scale, in every country – we are extremely standardised in systems, processes and integration.”
Forwarders must be digital
K+N sea freight customers are told the total CO2 emissions created by each shipment. (Credit: Kuehne+Nagel)
Container Shipping & Trade | 1st Quarter 2018
Being an early pioneer of the importance of digitalisation means that “we believe we know something about being digital,” he said. So he strongly believes that every forwarder must operate digitally to a certain degree and disagrees with the trend to differentiate between “digital forwarders” and “traditional forwarders”. “There is a lot of hype about new start-ups that label themselves as ‘digital forwarders’ but all forwarders are digital to some extent today.” Shipping’s problems remain the same as in the past and, to operate efficiently, forwarders need strong systems and platforms, as they always have, he said. But that is not sufficient now, he believes:
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SHIPPER PROFILE | 9
they also need networks into which all their key providers have integrated their processes and systems “and have motivated people with creativity and commitment to customer satisfaction.” K+N is moving forward with its digital strategy. Mr Montrone said that the company has a team of big-data scientists working for it that are looking at ways to integrate more customer data within K+N’s operational systems. Asked whether he felt that container shipping lines were progressing with being fully digital, he said “Carriers are stepping up to the challenge. They are at different levels in terms of progress but most of them are paying more attention today to improving digital communication and channels than they did two or three years ago.” This is helping the entire supply chain, including forwarders and shippers “as everyone needs to be committed to a digital agenda,” he said. Blockchain is a major trend in the container shipping industry. Mr Montrone said that K+N was looking at this “very seriously” and was looking at developing it with other partners. “If applied properly, it could fulfil certain areas around encrypted, very sensitive communications within supply chains.” But he said that, while the technology to do this existed, it still needed to be tested and “there is a need to ensure that it has the robustness and it is safe to be used across key processes within the transport chain such as document transmission.” As well as digitalisation, a major industry trend has been consolidation, in the form of mergers and acquisitions and in the new mega alliances that launched in April last year. Mr Montrone believes that consolidation has been a good thing. “It has been so far very well managed by the lines and we can see how companies are positioning themselves. It is early days and will take some time, but we are quite confident that the level of service and upgrades will improve with consolidation.” He said that if it led to an improvement in return on investment for carriers, it was good for everyone because if carriers “struggle financially as they have in previous cycles, they cannot look to new investments or new technologies.” He summed up “We believe a sound carrier community allows [its members] to make smart decisions for themselves and for the industry and to create competition – not just at price level but [at the] service level, too.”
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Supply chain developments
Asked about upcoming areas of development in the supply chain, Mr Montrone said that the inland infrastructure of ports would become more efficient and reliable. “It is not just about a port-to-port move,” he explained. “Every step of the way matters, from terminal connections to overland rail, barge and truck. All these systems must improve and many actions must be co-ordinated so that this works well. Digitalisation will play a key role in this area.” He summed up “This is an area that we are watching very carefully.” He believes that another area where changes bring opportunities is on the traditional backhaul trade lanes to Asian countries, which will eventually become as strong as the current head haul trade lanes. “The rate of growth in Asia and China and the level of consumption and appetite for, say, European products is creating strong demand. We believe that there will be great opportunities and quite some growth over the next five to ten years.”
Reducing CO2
One area that is of increasing importance to K+N is creating a sustainable supply chain. Underlining its commitment to sustainability is that it is part of the Clean Cargo Working Group (CCWG). CCWG describes itself as an initiative involving major brands, cargo carriers, and freight forwarders dedicated to reducing the environmental impacts of global goods transportation and promoting responsible shipping. Furthermore, each K+N transport invoice tells sea freight customers the amount of CO2 emission for that specific shipment. Mr Montrone continued “We will do more to challenge ourselves and all actors in the supply chain to increase focus and attention on becoming greener. Planning services and routes intelligently can have a large impact from a sustainability perspective.” He added “we can all make much more of a contribution to create greener and more sustainable supply chains thanks to improved visibility and transparency on CO2 emissions and by using analytical tools to enable smart decisions.” He said that K+N will further support its clients and business partners to provide better and more sustainable shipping, which he believes is not a priority for shippers. “Today it is not the prime concern for most customers and that is understandable,” Mr Montrone
commented. “The first step is to provide more transparency on this issue as before [there is any] concern, there must be visibility of the problem and pragmatic processes to manage a better outcome.” He said that K+N is in the front line to work with customers “to make the best choices to be greener” with more support through systems, tools and processes. CST
Paolo Montrone (Kuehne+Nagel) Kuehne+Nagel (K+N) head of global trade Paolo Montrone has 30 years’ experience in logistics and transportation management. In his current position he is accountable for the acquisition of all vessel capacity, matching capacity and services with customers and their requirements, yield management and carrier relations. Prior to his current position, he held senior management roles with K+N in Asia, Europe and the US. During his career, he has focused on supply chain and logistics efficiencies, innovation, digital transformation and industry challenges. He is an avid guitar player and lives in Hamburg, Germany, with his wife and daughter.
Container Shipping & Trade | 1st Quarter 2018
10 | REGIONAL ANALYSIS Asia
SINGAPORE SECURES ITS POSITION AS TOP HUB LAST YEAR SAW SINGAPORE REASSERT ITS ROLE AS THE TOP TRANSHIPMENT HUB IN THE WORLD, BUT THAT MAY NOT BE ALL BAD NEWS FOR COMPETITORS, REPORTS GAVIN VAN MARLE
L
ast year Shanghai increased its lead as the world’s largest container port while Singapore cemented its position as Asia’s dominant transhipment location, suggesting that the two leading ports had benefited from the structural shakeup that the container shipping alliance system underwent. At the time of writing in early February, an estimate by shipping consultancy Alphaliner suggested that Shanghai had become the first port to breach the 40M TEU barrier last year. Alphaliner expected it to handle a total of 40.2M TEU, a growth of 8% over 2016 and which in effect meant the port was processing an almost unimaginable 110,000 TEU per day. “With this amount of cargo, Shanghai, the world’s busiest container port, currently plays in a league of its own, well ahead of the second-ranked Singapore,” the consultant said. That news coincided with the opening of the port’s Yangshan phase four terminal, a “highly automated” facility that is capable
of handling 4M TEU per year. For the first time in Shanghai, the yard cranes are to be driverless, as are battery-powered automatically-guided vehicles that will transfer containers between the quay cranes and the yard stacks. It began operations at the end of last year with 1.8 km of quay, which is set to rise to 2.4 km (when this will happen has not been specified) and offer lines a handling capacity of 6.3M TEU per year. If the congestion seen at Shanghai during large parts of 2017 for this is anything to go by, that will be a welcome relief for carriers – at one point Maersk and MSC had to skip calls on one of their joint Asia-Europe services as the delay would have caused havoc with sailing schedules. Nonetheless, Shanghai remains a core port for every deepsea and intra-Asia carrier; no shipping line can afford to miss it out, given its position as the gateway for China’s containerised import and export trades. In contrast, Singapore’s business works
Singapore consolidated its leading position in the southeast Asia transhipment business in 2017
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Asia REGIONAL ANALYSIS | 11
according to a completely different dynamic and the alliance restructuring, as well as the merger and acquisitions activity that has taken place amongst its customers base over the last two years, had threatened to pose a real challenge to its business. However, 2017 was a stellar year for Singapore, as it consolidated its leading position in the southeast Asia transhipment business and strengthened its relationships with major carriers through new agreements to further develop the joint-venture facilities it operates in conjunction with a number of carriers.
STELLAR YEAR FOR SINGAPORE
PSA handled 33.35M TEU in Singapore last year, a growth of 9%, while its international operations saw greater growth of 10.4% and handled just under 41M TEU. This is important, as it has substantially reduced the risk exposure of its Singapore facilities. Group chief executive of PSA Tan Chong Meng said in a statement in January “In 2017, the global economy saw some recovery and bright spots of growth although the shipping industry continued to face challenges as the huge wave of consolidation and alliancing in 2016 began to manifest its full effects operationally. The word ‘disruption’ has moved from being a buzzword to being the norm for most industries, reflecting the accelerated pace of change and leaving no industry untouched.” But he said that the PSA group “has demonstrated resilience and performed reasonably well against the challenging backdrop and tough competition. Amid the many business and technological forces and IT security threats buffeting us, we remain unwaveringly committed to our core focus of adapting to and pre-empting the changing needs of our shipping line customers. In addition, we are also preparing for a future where logistics and supply chain needs are transformed by new technology, trade, manufacturing and e-commerce dynamics.” But its gains have meant others lost – principally Malaysia’s leading terminal operator Westports, which saw 2017 throughput at its Port Klang terminal register 9M TEU, a decline of 9% compared with 2016, which can almost singularly be attributed to CMA CGM’s takeover of Singapore line APL. One of the stipulations of the sale of state-owned APL was that CMA CGM also take on APL’s Singapore terminals, the net result of which was that the line adopted a dual-hub strategy for southeast Asia and transferred a large number of Ocean Alliance volumes from Klang to Singapore. In fact, it is likely that Singapore is set to become the senior of the two ports, given last year’s doubling capacity of the joint-venture CMA CGM-PSA Lion Terminal in the port from 2M TEU to 4M TEU per year, which was marked in the opening ceremony of the newly-expanded terminal, which was attended by France’s then-president Francois Hollande. CMA CGM senior vice president Asia Jean-Yves Duval tellingly said at this official opening event “This is another exciting milestone for CMA CGM as part of the Group’s continuing efforts to make Singapore our main hub in the region, while reiterating the importance of Singapore to our global strategy.” Given CMA CGM’s membership of the Ocean Alliance, Singapore’s role as the grouping’s key Asian transhipment hub is likely to be further strengthened by January’s launch of operations at the third berth of the COSCO-PSA Pasir Panjang Terminal 5 in Singapore. In March 2016, COSCO and PSA agreed to relocate that facility from its two original berths at Pasir Panjang Terminal 1 to three new and larger berths at Pasir Panjang Terminal 5. The first two
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new berths began operations in January last year, with an annual handling capacity of 2M TEU per year, and the third berth has added another 1M TEU per year capacity. The facility is “supported by an automated yard, allowing for more efficient berthing arrangements, enabling the terminal to increase productivity and greatly enhance its service capability and quality.”
WESTPORTS TRANSITION
While the loss of volumes is always a blow to a port, it could actually be a blessing in disguise for Westports, which reported a net profit increase of 2.3% for 2017 over 2016 to RM652M (US$165M) as a result of its focusing on more profitable importexport traffic and an “investment tax allowance following the capitalisation of assets” following its more recent expansion of its CT8 and CT9 terminals last year. In a statement in early February, Westports group managing director Datuk Ruben Emir Gnanalingam said “The container shipping industry went through unprecedented realignment changes that affected almost all major liners in 2017 and witnessed a wave of mergers and acquisitions, in which some of our clients were involved. These changes adversely affected our total transhipment volume last year but Westports has transitioned successfully towards serving new services under the Ocean Alliance.” The loss of the Ocean Alliance transhipment volumes has meant that Westports’ traffic mix is far less unbalanced – in 2017 transhipment volumes amounted to 6.2M TEU, while gateway traffic increased by 10%. In addition, its largest trade is now intra-Asia, which saw growth of 8% and accounted for 57% of its traffic in terms of trade mix. And the massive CT8 and CT9 expansion programmes mean the port has secured its future capacity for long-term growth, Mr Datuk Ruben added. “The construction work at CT8 and CT9 has now been completed. With the added deep-water wharf, our fleet of new terminal operating equipment and additional staff hired to strengthen our human resources, Westports’ total container handling capacity has now increased to 14M TEU per annum. “The added capacity will further strengthen Port Klang as the pre-eminent port for the nation’s gateway trade, while also being one of the main transhipment hubs in the region,” he said.
Westports CT8 expansion project was completed last year, taking the operator’s capacity to 14M TEU per year
Container Shipping & Trade | 1st Quarter 2018
12 | REGIONAL ANALYSIS Asia
CMA CGM Centaurus was the first vessel to call at PSA’s new Bharat Mumbai Container Terminals
PSA OPENS A NEW GATEWAY TO INDIA India appears to be on the verge of finally getting much-needed container terminal capacity to support its strong economic growth, after global terminal operator PSA opened its new facility at the country’s largest container gateway of Jawaharlal Nehru Port (JNP). The first vessel, the 3,426 TEU CMA CGM Centaurus, arrived at the newly opened Bharat Mumbai Container Terminals (BMCT) on 5 February, including it as a new call on the line’s Swahili Express (SWAX) service linking India and East Africa on a fixedday weekly schedule. The rotation is serviced by three sister vessels from CMA CGM and one from its service partner, Emirates Shipping Line. The week before, the terminal had begun receiving CMA CGM containers by road and rail, and arrival of CMA CGM Centaurus brought BMCT’s facilities into full operation. The terminal’s management said then that further regular service calls are “expected in the coming weeks”. JNP has long been a by-word for chronic container terminal congestion and its standing as the premier Indian port has come under mounting threat from new facilities built further north in Gujurat by AOM Terminals at Pipavav and the Adani Group at Mundra – the latter, in particular, has had significant success in luring major customers via developing joint-venture facilities that have guaranteed capacity to carriers. Both MSC and CMA CGM have dedicated facilities at the port (Mundra), which is ideally located to serve India’s northwest industrial corridor that stretches to Delhi, and reported that overall quarterly container volumes at the port in the last three months of 2017 grew by 8% year-on-year. As a result, JNP’s market share has been steadily eroded within India but that has mostly been because other ports have been
Container Shipping & Trade | 1st Quarter 2018
able to cater for the country’s surging demand. With the opening of BMCT, it may finally be able to begin to recapture market share as India’s container trade inevitably rises over the coming years. BMCT opened with 1,000 m of berth, six super-post-Panamax cranes and the largest rail yard in the port. It can accommodate some of the largest container vessels afloat – although few of them currently make direct calls to the country, preferring to tranship through Colombo or Dubai – and the opening of BMCT could well induce carriers to introduce larger tonnage to the country’s shipping trades. Three more quay cranes are due to arrive in the first half of this year and three more in 2019, which will coincide with the start of Phase 2 construction that will ultimately lead it to offering annual handing capacity of 4.8M TEU, effectively doubling the entire port capacity of JNP and making it by far the largest container terminal in India. It cannot come soon enough, for some. Audrey Dolhen, managing director of CMA CGM India, said “We are delighted to be the first to anchor at BMCT. The launch of this facility was eagerly awaited to facilitate the much-needed capacity addition and infrastructural boost in Nhava Sheva.” PSA is a global partner of the CMA CGM group and Dolhen welcomed this extension of their collaboration into India. “We wish all success for the start of BMCT,” she said. A January 2018 forecast by the International Monetary Fund (IMF) suggested India’s GDP would grow at 6.7% in 2017, by 7.4% this year and by a further 7.8% in 2019, making it the fastestgrowing of the world’s major economies for this year. The IMF expected GDP of its only rival, China, to reduce from 6.8% in 2017 to 6.6% in 2018 and to 6.4% in 2019. CST
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TRADE ROUTE | 13
TRANSATLANTIC: CASCADING COULD TOPPLE THE BALANCE THE THREAT ON THE HORIZON OF THIS MATURE TRADE IS A HIGHER RISE IN SUPPLY VERSUS DEMAND, PRESSURING FREIGHT RATES, REPORTS DEAN DAVISON*
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he transatlantic North Europe trade links key ports in the Hamburg-Le Havre port range and UK with the east and west coasts of North America. Between January 2017 and January 2018, the route has developed: • US East Coast – a total of 445,190 TEU slots in January 2018, giving an average vessel size of 4,497 TEU, with the largest units at 8,586 TEU. This reflects growth since January 2017 when 393,664 TEU were offered, with average/largest ships of 4,631 TEU/8,814 TEU respectively. • US West Coast – limited activity of just 49,355 TEU slots offered in January 2018, reflecting no change on the 2017 position. The average ship size remains static at 4,936
TEU, as does the figure for the largest units of 5,087 TEU (even though these are no longer limited by the Panama Canal). The transatlantic trades operate relatively small vessels and, with the current orderbook focusing strongly on ultra large container vessels, little impact on ships deployed on this trade is anticipated from those deliveries. However, there is a possibility of some minor upsizing of units through the cascade process, which will pressurise rates. Loaded box volumes for the whole transatlantic trade, to both East and West Coasts of North America, saw demand increases of around 6% per annum between 2013 and 2017, with the US East Coast remaining dominant. For 2018, total loaded box activity is
expected to increase by 5% to surpass 4.6M TEU, with low/ high variables seeing a small differential of between 4.5M and 4.8M TEU. Volume growth in both sub-routes is continuing, but there is no shortage of vessel space. This was reflected in spot rates during 2017, which softened by around 7% compared to 2016 for the head-haul trade from North Europe to US East Coast, although the smaller return leg remained firmer as good US export demand continued. The 2018 position in the head-haul route is unlikely to see spot rates continue to be eroded to this extent, as demand improves and increases vessel utilisation. Nevertheless, vessel upgrading could threaten this position.
ALLIANCE CHANGES
Stability of capacity and cargo demand is expected to remain in the transatlantic for 2018. The new mega alliances that were launched in 2017 will bring some structural amendments to services in Q2 2018. As part of its portfolio of 33 global services and 250 vessels, THE Alliance has announced a total of seven dedicated strings covering both sub-routes in the transatlantic: • AL1, AL2 and AL3 link North Europe with the North Atlantic ports. • AL4 is a dedicated service from North Europe but running into the US Gulf and Mexico. • AL5 sails from north Europe, via Panama Canal to West Coast North America, running as far north as Vancouver.
HOW US EAST COAST PORTS ARE PREPARING FOR BIGGER SHIPS PORT
CURRENT DEPTH (M)
KEY CHANGES
Halifax
11.9 – 16.8
None confirmed, but deeper water up to 16.8 m exists
New York/New Jersey
12.2 – 15.2
50ft deepening project completed 1 September, 2016 according to US Army Corps of Engineers
Baltimore
11.0 – 15.2
No depth changes but width for safety issues – due for completion from 2018
15.2
Southern Elizabeth River channel only – 10.7/12.2 m deepening to 12.2/13.7 m from 2018 (earliest) – benefits Portsmouth Terminal, others already at 15 m+
Charleston
12.3 – 13.7
Dredging commenced (October 2017) for 16.2 m – due within 40-76 months
Savannah
12.8 – 14.9
Savannah Harbour Expansion Project (SHEP) – 14.3-14.9 m estimated to be available by 2019
Miami
15.3 – 16.0
Recently completed dredging to offer 15.2-15.8 m
Virginia
Tidal depths are excluded (Source: ClipperMaritime)
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Container Shipping & Trade | 1st Quarter 2018
14 | TRADE ROUTE
• AL6 and AL7 are dedicated Mediterranean loops to North Atlantic and South Atlantic ports. While exact sizes of ships are yet to be announced, it is assumed that existing-sized units ranging from 4,200 TEU to 5,000 TEU will again be used. These changes will follow cancelled sailings throughout
January, notably by THE Alliance (AL2, AL4 and AL6 services) and Ocean Alliance (TAT1 and TAT2 strings). Cancelling sailings is an unusual trend for this trade but does indicate that there is a threat of excess vessel supply related to demand – a view further endorsed by the relative lack of additional vessel space expected
to be added. There has been relatively little change among the major operators in the transatlantic trades – unsurprisingly, given the mature nature of the routes. Linking north Europe to US East Coast, Maersk Line, NYK Line, MSC, Hapag Lloyd and CMA CGM remain the biggest suppliers
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Portland, ME Providence San Diego Savannah Tacoma Tampa Vancouver, WA Virginia Wilmington, DE Wilmington, NC
of vessel TEU slots, although NYK Line, MOL and K Line also run additional, smaller services to the West Coast. The forthcoming alliance changes are not expected to greatly alter the status quo.
GERMAN POWERHOUSE
Looking at the countries that are leading the movement of goods on this trade, Germany continues to drive the transatlantic North Europe route, with a solid 2018 expected. Meanwhile, Italy has a primary role in the transatlantic Mediterranean trade. Based on the most recent data available (YTD November 2017), the following synopsis of activity for loaded containers is applicable for the transatlantic North Europe route: • Leading load country is Germany, reaching almost 793,500 TEU. • Belgium is second largest, with almost 349,000 TEU. • The Netherlands is third biggest, with 247,000 TEU. • These countries are reflective of key container ports in the region – Hamburg, Antwerp and Rotterdam. The leading unloading ports in North America on this trade route for the same period were: • New York/New Jersey with 532,200 TEU. • Montreal with almost 329,700 TEU. • Charleston with 256,650 TEU. The highest-volume ports are noted for retaining long-standing deep connections with North Europe and the transatlantic container trades. The growth of demand from Germany to the US reflected a year-on-year increase of 4.5% in the November 2017 YTD figures, indicative of the trade overall. The country also noted an increase in activity to Mexico, rising 13.3% (to just over 127,400 TEU) so a growing market is being served. Any possible political uncertainty after elections in 2017 did not appear to weaken development of the German
TRADE ROUTE | 15
2017, total country exports were reportedly up 10% yearon-year, with strong demand for metals/metal products. For 2018, some concerns exist over consumer spending and pressure remains on the banking sector. Planned national elections in March could further dampen
development, although IMF projections of economic growth of 1.5% are noted. Leading unload ports for Mediterranean cargo for YTD November 2017 are New York/ New Jersey (almost 362,300 TEU), Savannah (109,500 TEU) and Houston (just under 85,000 TEU). These are relatively small
volumes, but reflective of calls at key ports in each sub-region of North Atlantic, South Atlantic and US Gulf, respectively. CST *Dean Davison is a consultant at ClipperMaritime. See ClipperMaritime Horizons Container February 2018 newsletter, for more on this trade
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Picture © Huhu Uet
Visit us at Sea Japan, Tokyo Big Sight Exhibition Center, Japan, booth no. JPN-165 (with Nakashima Propeller), 11th - 13th April 2018
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economy. Continued growth into 2018 has occurred due to a strong labour market and low interest rates. Household expenditure, supported by rising wages, will fuel further growth in 2018, although the strong euro could impact export potential. IMF GDP growth estimates for 2018 of 2.3% are noted. Other strong year-on-year growth to November 2017 is seen from Poland to the US (up 24.8%) and from Belgium to Canada. Poland enjoyed a buoyant Q4 2017, driven by rising industrial production. With the new government also gaining a vote of confidence in Q4 2017, further positive economic developments are anticipated for 2018, with GDP potentially rising by 3.8%. A deteriorating relationship between the US and the EU remains the largest potential political challenge that could yet impact economic growth. For the link between Belgium and Canada, ostensibly cargo into Montreal, this port’s ability to continue to improve its hinterland reach into key US Midwest regions remains an attraction for cargo from north Europe. In 2017, Montreal’s total throughput surpassed 1.5M TEU and continued investment in terminal facilities, maintaining good access on the St Lawrence River and the unique trade dynamics offered (in which ships can gain a highly balanced full discharge, full load, operation) will continue to appeal. For the transatlantic Mediterranean routeing, Italy, Spain and Turkey remain the biggest locations for loaded boxes moving to North America. Italy is the dominant country, with just over 496,000 TEU in the YTD November 2017 period, with Spain (185,000 TEU) and Turkey (170,500 TEU) some way behind. There were positive economic trends in Italy during 2017, with rises in fixed investment and accelerating industrial production. In Q4
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16 | BALLAST WATER MANAGEMENT SYSTEMS
BWMS MANUFACTURERS
BATTLE CHALLENGES THE BALLAST WATER MANAGEMENT SYSTEMS MARKET IS MORE COMPETITIVE THAN EVER, WHILE THE APPROVAL PROCESS REQUIRED IS STIFLING PRODUCT DEVELOPMENT
Hyde Marine’s BWMS being installed
Container Shipping & Trade | 1st Quarter 2018
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ype-approvals required in the US and by IMO for ballast water management systems (BWMSs) discourages innovation and improvement, said a leading BWMS manufacturer. Hyde Marine executive director Chris Todd told Container Shipping & Trade “We have to go through painstaking testing work to get equipment type-approved and once it has been approved, a manufacturer cannot make modifications and improvements without another round of expensive testing, therefore this discourages innovation and improvement as the testing process is so long and expensive.” He said that on average the full test process cost US$4M for the two-year process. “Innovation is discouraged because if you spend US$4M to get the solution approved, you do not want to spend that again.” Hyde Marine has been outspoken about this issue within the market, but Mr Todd said that there was not much manufacturers could do to make any changes to the process. But one thing that would lead to “positive change” is for shipowners, once they have installed a BWMS, to call for improvements further down the line. Hyde Marine is currently retesting its system to receive US Coast Guard (USCG) type-approval after its request that its Most Probable Number (MPN) technique – used by a number of UV-based system manufacturers – was rejected by the USCG as an alternative test method. The USCG requires organisms to be killed and to confirm whether their systems comply but in December 2015 the USCG decided that MPN is not an acceptable testing method because it believes that it does not measure the efficacy of a BWMS to kill organisms. “Innovation is discouraged because if you spend US$4M to get the solution approved, you do not want to spend that again.” Chris Todd, Hyde Marine In order to reach compliance, Hyde Marine is increasing its system’s UV dose
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BALLAST WATER MANAGEMENT SYSTEMS | 17
capability by using larger UV lamps. Testing is expected to finish in Q3 this year and the technology will then be submitted for approval at the end of 2018. Mr Todd pointed out that a benefit of being later in the type-approval process has meant that Hyde has been able to tweak its system and carry out improvements. An example is that it has added a flow-limiting valve that limits UV flow and ensures that it will not exceed type-approval requirements. Asked if the company would keep selling its older BWMS once it gained type-approval, he said that the company would “let the market decide”. He pointed out an obstacle to this: shipowners say that they want USCG type-approved systems but he believes some shipowners “do not understand the implications for UV technology; they need a higher UV dose to meet the type-approval, which means higher power consumption.” Hyde has been trying to communicate this to the market “for a long time,” he said. He highlighted how cargo-carrying ships, including container vessels, had been slower to install BWMSs than other ship sectors. Although Hyde Marine has installed BWMSs on 23 box ships, he said the company “has not seen much activity there because IMO implementation has been delayed for two more years, so there is nothing driving these shipowners.” FRUSTRATION AT DELAY Meanwhile, IMO’s Marine Environment Protection Committee (MEPC) decision last July to delay installation dates for ballast water management systems by another two years has been met with frustration by BWMS manufacturers. Evoqua Water Technologies global vice-president, electrocatalytic business, Ian Stentiford told Container Shipping & Trade “There is some disappointment across the industry. The regulation is there because there is an environmental problem and the delay by two years will not help this. “It is important that we stick to the new date, so that everyone can get on with meeting the new requirements.” The delay decreed by MEPC means that there is not much business, if any, in the retrofit market, Mr Stentiford said. However, he expects this business to pick up by about the middle of this year. He said that the BWMS market was very competitive, with especially fierce competition in China, Korea and Japan. To this end, Evoqua has focused on making its treatment system smaller and cost less; since
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“INNOVATION IS DISCOURAGED BECAUSE IF YOU SPEND US$4M TO GET THE SOLUTION APPROVED, YOU DO NOT WANT TO SPEND THAT AGAIN” CHRIS TODD, HYDE MARINE
“WE THOUGHT IT WAS TIME TO DEMONSTRATE OUR LONG-TERM FAITH IN OUR SYSTEM AND ABSOLUTE COMMITMENT TO THIS SEGMENT” TORE ANDERSEN OPTAMARIN
it launched in 2014, Mr Stentiford said its next generation had become 76% smaller and 85% lighter. This will be a skid-mounted, plug-inand-play ballast water treatment system that uses the same approved electrochlorination technology, as previous models. Evoqua has remodelled its SeaCURE BWMS to provide what it believes is optimum high flow rate performance from what it says is now one of the smallest electrochlorination systems on the market. To achieve this, the company has reduced the number of components to create a modular system that can be mounted on a 2m x 1.5m skid, making it one the of smallest BWMSs available capable of treating flow rates of up to 6,000 m3/h. Evoqua has finished two years of biological efficacy tests needed before submitting its US Coast Guard (USCG) type-approval application for its SeaCure BWMS. It is hoping to receive this before the end of the year. The shipboard testing was carried out on Seaspan-owned COSCO Fortune container ship. ‘GAME-CHANGER’ FIVE-YEAR GUARANTEE As the various deadlines for compliance with IMO’s Ballast Water Management Convention get nearer, the market for ballast water management systems (BWMSs) is becoming more and more competitive. This was dramatically demonstrated in September 2017, when Norwegian ballast water management system manufacturer OceanSaver filed for bankruptcy. Many believe it will not be the last to do so. In such an environment, what the industry needs is ‘a gamechanger’ according to BWMS manufacturer Optimarin chief executive officer Tore Andersen. He believes his company has now delivered it, in the form of the Norwegian company becoming the first manufacturer to offer a five-year parts and servicing guarantee. “We thought it was time to demonstrate our long-term faith in our system and absolute commitment to this segment,” Mr Andersen explained. “No other manufacturer offers a guarantee of this nature, but we can. So if a shipowner signs a framework agreement with Optimarin for installation on multiple vessels, we will provide them with a five-year contract that covers all parts and servicing, worldwide. This is our promise of reliable, safe and effective operations, and, with our total regulatory compliance, complete peace of mind.” The impetus for this move came from
Container Shipping & Trade | 1st Quarter 2018
18 | BALLAST WATER MANAGEMENT SYSTEMS
an ABS report that suggested that only 57% of systems currently installed on the vessels of operators surveyed were being operated and that the remaining systems were either deemed inoperable or considered problematic. “We found this an extremely sad rumour for our industry to have,” said Mr Andersen. “More to the point, it’s ammunition for everyone in the industry to delay uptake and, as a maker we obviously don’t like that. So with this system that we know works, we’re seeking to take that burden of worry from the owner on to ourselves.” Mr Andersen hopes this move will force competitors into a situation where they have to do the same, because “that’s part of the game. I would expect to see the big makers follow suit. But those makers with limited experience won’t dare to do this,” he told Container Shipping & Trade.
Mr Andersen was emphatic about the need to change shipowners’ attitudes towards ballast water management systems, which he appreciates are a grudge purchase about which there are still numerous suspicions. He said “What I want to ensure is that when a shipowner buys one of these systems from a maker, they’re sure it will work. Because we need to change the game. Up until now, shipowners have hardly used the systems. They don’t want to, because there’s been no impetus to do it. But now if you have a system on board, you have to use it.” PORTS MOVE CLOSER TO COMPLIANCE Sovereign states and their port authorities are taking clear steps towards ensuring compliance with IMO regulations for ballast water. Although IMO’s Marine Environment Protection Committee
Tore Andersen (Optimarin): The attitude of shipowners towards BWMSs needs to be changed
Container Shipping & Trade | 1st Quarter 2018
(MEPC) decided last July to delay installation dates for ballast water management systems by another two years, compliance with the convention’s D-1 standard – achieved by carrying out ballast water exchange – was not affected. Because of this, Chelsea Technologies Group (CTG) managing director Brian Phillips warned “The floodgates are opening. Regardless of IMO’s delay, concerned parties, including port authorities, around the world are stating that it is a good thing to get on and test ballast water for compliance.” The UK-based company, which manufactures ballast water testing kits, has over 50 years' experience monitoring phytoplankton and the ocean and responded to a call from the US Coast Guard to develop a method for measuring very low concentrations of phytoplankton cells to test if ballast water management systems on board ships are working effectively. As a result, CTG’s FastBallast Compliance Monitor was developed and is able to determine the phytoplankton cell density of ballast water at the IMO D-2 discharge standard (10 to 50 µm range) that is defined for treatment systems. The kit can be used on board to test compliance and is said to have accuracy rivalling sample analysis in a shorebased laboratory. From August 2017 all ships calling at Saudi Aramco ports have been required to provide ballast water samples for test and it has selected some portable testing equipment to check those samples. Among them is FastBallast, which CTG has said is being used as the benchmark monitoring device and to conduct spot checks on indicative sampling undertaken by third-party sampling companies. Other countries, including China and the USA, are currently evaluating FastBallast for possible inclusion in future programmes of ballast water compliance testing. Dr Phillips added “There could be a huge impact for shipowners if many other countries follow Saudi Aramco’s lead and instigate a ballast water compliance testing programme.” He said “Sovereign states are taking a stance that even though IMO are granting extra time, they wish to know now that ballast water discharge in their regions is safe. Speaking as an environmentalist, this can only be a good thing.” He summed up “It’s a wake-up call for shipping globally.” CST
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20 | CLASS
Understanding large container ships
allowing operators to optimise cargo capacity, not just in terms of being able to add more containers, but also in how the containers are distributed within each stack. This has the potential to save significant sums of money – and time,” Mr Segretain said. The revised design wave loads that now underpin container ship rules have optimised ship structures. But an additional and highly significant consequence of their application is that they now also allow for optimised container lashings, offering operators much more flexibility. Within the new rules, there is now a chapter about carrying out lashing calculations based on new acceleration calculations. And to enable operators to apply these calculations as efficiently as possible, BV has created container securing and lashing software, VeriSTAR Lashing, the culmination of more than two years’ work. “The strength of VeriSTAR Lashing is that it is linked to direct and powerful computation using state-of-the-art hydrodynamics and real sea states – the same design wave computation that underpins the structural rules. In the past, calculations for lashing were based on empirical formula,” said Mr Segretain. “Today, better calculations mean reduced accelerations and more flexibility.” A key feature of the software is that it takes account of the additional forces on the lashing bars and rods resulting from vertical and horizontal gaps in the twist locks and between containers. “The influence of gaps is now clearly understood, though previously it had been disregarded,” Mr Segretain said.
Before and after applying VeriSTAR Lashing Bureau Veritas reports that its BV Lashing 3.0 gives the ability to optimise cargo capacity, minimise container movements and have greater flexibility in weight distribution. Heavier cargo can now be loaded higher in a stack than previously and calculations can be made for specific sea state areas or for worldwide trading.
New BV box ship structural rules deal with the challenges presented by the hull structures of large container ships
The results of research and development work carried out by Bureau Veritas (BV) structures and hydrodynamic experts have led to a better understanding of the forces at play in large container ships – in terms of hull structures, cargo stowage, and propulsion systems. The class society explained that this work enables greater flexibility in container loading and allows for heavier containers to be loaded higher in a stack than was previously possible. Due to their long, slender hulls, which result from their operating speed requirements and the need for large deck openings to accommodate container bays, large container ships present specific structural challenges, BV technical director Jean-François Segretain, told Container Shipping & Trade. As container ship size increases, so too do these structural challenges, he said. New BV container ship structural rules and VeriSTAR lashing software are the result of a better understanding of the physics and engineering requirements of large container ships, Mr Segretain said. He explained that acceleration loads applied in the new rules (arising from the surge, sway, heave, roll, pitch and yaw motions of the ship) have been more precisely determined and, usually, reduced. “Reduced accelerations mean less force acting on the lashing rods,
Container Shipping & Trade | 1st Quarter 2018
Two single stack examples (18,000 TEU, 400 m LOA, 54 m beam ULCS): Bay 42 (midships) + 6 tonnes 11 tier stack of *FEUs allowing 166 tonnes instead of 160 tonnes Bay 90 (aft) + 11 tonnes 11 tier stack of *FEUs allowing 171 tonnes instead of 160 tonnes *FEU: Forty-foot equivalent unit
DNV GL boosts LNG and digitalisation focus DNV GL is helping to bridge the LNG bunkering gap, while its Veracity platform is continuing to develop. The box ship sector is increasingly focusing on LNG as the cost gap compared to using a scrubber has narrowed and bunkering infrastructure development has gathered pace,
DNV GL director of business development in Hamburg and executive vice president Jan-Olaf Probst told Container Shipping & Trade. He explained that the upfront costs of building a box ship designed to use LNG used to be considerably more than installing a scrubber – but the
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CLASS | 21
cost gap is now narrower due to new regulations that dictate that a scrubber must be installed with a selective catalytic reduction system. Furthermore, the return on investment of applying LNG versus a scrubber is “much faster”, with an average six to seven years for LNG versus 1012 for scrubbers. He also pointed out that the price gap between LNG and heavy fuel oil was narrowing. And the “final obstacle” – that of creating an LNG bunkering infrastructure – is on its way to being erased. “The oil industry is now committing to supplying LNG as fuel.” Mr Probst added that the use of LNG by CMA CGM’s 22,000 TEU newbuilds would help boost the growing infrastructure,
allowing other box ship operators to follow suit. DNV GL is helping to bridge the LNG bunkering gap by assisting shipowners with their LNG bunkering demands and plans. “We calculate their ships’ round trips, looking at the ports and locations where they will need to bunker.” DNV GL is working with container ship owners in this area. “We are talking about newbuilds but also about retrofits,” Mr Probst commented, pointing out that a refit was logical for a vessel of 10 years old or younger. Meanwhile, developments are continuing apace with DNV GL’s Veracity industry data platform, which was launched last year. It is designed to help
companies improve data quality and manage the ownership, security, sharing and use of data. One of its main purposes is to allow ship operators to share data anonymously and therefore be able to benchmark their own operations and equipment to increase the efficiency of their ships’ operations. “A lot of ship operators want to compare their data with the market but to do so anonymously,” Mr Probst commented. “DNV GL’s role is impartial as we are not a ship operator. We can compare the data and share the research but make it anonymous.” This is important for ship operators as they can share the data they select but keep “gold nuggets” of information to themselves.
Some 50-60 container shipowners are using Veracity. “We cross-check the data and make sure it is correct,” commented Mr Probst. Wilhelmsen has teamed up with Singapore’s PSA on Veracity’s platform to make port entry procedures more smooth and efficient. Currently, Wilhelmsen Group, PSA and DNV GL are testing a pilot project on Veracity. Wilhelmsen has created a secure data container on Veracity where it can collect compliance, condition and other relevant data on their vessels. Through the platform, it is then able to grant PSA access to this data, reducing paperwork and speeding port entry.
Cyber security boost in box shipping COSCO Shipping Aries is the first container ship to receive Lloyd’s Register’s (LR) cyber-enabled ship (CES) descriptive note Cyber AL3 Secure Perform for its energy management system. The 20,000 TEU ship was built by Nantong COSCO KHI Ship Engineering and COSCO safety and technology department general manager Shi Yongxin described it as “not only one of the largest container ships in the world, but also a ship with high cyber functions.” He added that COSCO has “always attached great importance to a cyber enabled fleet to enhance fleet management, reduce energy consumption and control emissions.” The ship complies with the revised version of LR’s cyber-enabled ships ShipRight procedure, issued in December 2017. The descriptive note gives an Accessibility Level (AL) for autonomous/remote access for the system. This ranges from the information-only AL0 (no access) and AL1 (manual
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access) through AL2 (cyber access for remote or autonomous monitoring) up to the highest AL5 (autonomous monitoring and control, with no onboard permission required or override possible). AL3 is defined by LR as ‘cyber access for autonomous/remote monitoring and control (onboard permission is required, and onboard override is possible)’. COSCO is now hoping to apply LR’s CES descriptive notes to some of its other vessels. LR innovation strategy and research director Luis Benito told Container Shipping & Trade “The significance here is that operators have a way of ensuring that their energy management system integrates with the rest of the systems on the ship with no side effects. Therefore, it checks that it works in harmony with the rest of the ship and has a foundation level of [cyber security]. Clients rely on such systems for business decisions, so it is important that they can rely on the data >>>
Luis Benito (LR): Today’s smart ship must have the same safety levels as a non-connected ship
Container Shipping & Trade | 1st Quarter 2018
22 | CLASS
being cyber secure.” He said that the AL3 note means that the ship’s energy management system is certified to operate in an autonomous way without human intervention. “Once the owner sets the parameters, the system is left to operate the ship within these parametres automatically
and will deliver what it needs to without human intervention.” However, human involvement is kept in the loop, as the system is set to allow crew to override it if needed, then reset to be autonomous again. Mr Benito expanded “This is so new to everyone, including ourselves. Many ships have
KR unveils next generation e-fleet management programme
Korean Register (KR) has launched KR e-fleet v2 – the second edition of its one-stop fleet management program. Since e-fleet’s launch in March 2011, the programme has delivered key information in real-time to shipowners and operators, covering all necessary preparations for a ship survey and the details of international convention audits. KR said that this upgraded version provides a “wide range of online application functions, an increased selection of content options and a more user-friendly interface.” In addition, KR has now completed the digitisation of all previous paper documents submitted by shipowners. The result is a searchable database enabling shipowners to manage their ship survey
>>>
been using energy management systems for decades, but what is new is that in the past no one paid attention to the risks of having a connected ship streaming data.” But, as he explained, there is now an industry realisation that ship operators should look at the risk of data streaming
and connected assets. This is reflected in an increased interest in this area and Mr Benito said there had been inquiries about its note coming from all over the world. He summed up “We need to ensure that the smart ship has the equivalent level of safety as a non-connected ship.
and audit processes more efficiently. A new management function called Survey Planner now provides survey information covering a company’s entire fleet. KR has also created a platform for each vessel’s greenhouse gas monitoring plan, allowing verification from KR in accordance with the new EU MRV regulations which came into effect in January. KR chairman and chief executive Lee Jeong-Kie said “Designed for their convenience and to support their efficient fleet management, we are now working to provide a cloud server for our clients in the US and Europe, which should be operational in the first half of 2018.”
ABS boosts visibility with new module ABS announced a new release of its Nautical Systems (NS) Enterprise fleet management software in January. It includes NS Insight, a new business intelligence module. This will provide visibility into safety, operational and financial trends, ABS said. Vessel managers can use it to create KPIs, generate quarterly management reports, complete root cause analyses and gain key insights on vessel operations across an entire fleet. NS is designed to provide complete capabilities to plan, execute and document all compliance work processes. This latest release
ClassNK launches latest checklist for ‘good maintenance’
includes a new cloud-based NS Voyage Manager, the latest mobile applications, an expanded NS Autologger, and enhancements to NS Health, Safety, Quality and Environmental (HSQE) Manager. “Effectively managing compliance is a core business objective for our clients,” said ABS chief digital officer Howard Fireman. “This release offers the industry’s most comprehensive compliance solution, which includes EU MRV and USCG Subchapter M, as well as readiness for IMO DCS – giving our clients an easier and more efficient way to manage ever-changing compliance requirements.” CST
ClassNK released the latest version of Good Maintenance Onboard Ships in October, 2017. The checklist is designed to be used by ship masters, crew, shipowners and other key personnel to ensure vessels are safe, well-maintained and comply with regulations. ClassNK said that it has incorporated its knowledge and experience gained through surveys and audits, feedback from port state control (PSC) inspections and comments from shipowners and mariners to provide the most up-to-date checklists for routine maintenance, PSC inspections, safety management systems and ship security management systems. Its guidance also includes photos of the most common deficiencies. The latest edition now also includes a checklist for the Maritime Labour Convention, 2006.
Container Shipping & Trade | 1st Quarter 2018
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24 | DIGITALISATION
BOX INDUSTRY: ENTER BLOCKCHAIN AFTER ALL THE PUBLICITY SURROUNDING BLOCKCHAIN, IT COULD SOON BECOME A REALITY IN THE CONTAINER SHIPPING MARKET
T
here has been plenty of talk about blockchain in the industry but until recently little sign that any fully-formed concrete solution has been applied. Alphaliner said in its newsletter at the start of January that, while a number of blockchain initiatives involving container shipping have been launched since 2017, “the actual application of this new technology remains limited.” It added “while several potential blockchain applications have been identified, none of these products has been released so far.” CST spoke to the vice president of marketing of the business software company Infor, Greg Kefer, who also highlighted that blockchain had not properly entered the container shipping market yet. He said that
blockchain is something that Infor is focused on but pointed out the ‘hype’ surrounding it. “Blockchain is very hyped, it is white-hot and everybody is talking about it,” he said. “We think it has great potential in the supply chain and are investing in it. We believe blockchain, delivered in conjunction with the GT Nexus Commerce Network, has immense potential as it continues to mature.” The GT Nexus Commerce Network is a cloudbased platform that provides visibility and process automation capabilities across the supply chain. However, he singled out some drawbacks – while it is ‘exciting’ and ‘disruptive’, it is still ‘early days’. Mr Kefer explained “We believe that blockchain is not a fad and it will be part
of supply chain innovation in some form, the question is, what form? There are some interesting innovation opportunities in the areas of trade finance, traceability and visibility.” Looking at the impact it might have on the container shipping industry, he said “What we will see over the next five or six years are new-use cases around how blockchain is fused into global logistics management. I don’t see companies dumping current technology and just moving to blockchain. “Rather, if companies have already digitised their processes, they will be better positioned to take advantage of blockchain and bring it into their current technology. Supply chain information networks will continue to be a critical element of any blockchain strategy.” The lack of application of blockchain could be about to change though, as in January this year Maersk and IBM announced a joint venture that will provide more efficient and secure methods for conducting global trade using blockchain technology. This could open the doors to the widespread use of blockchain in box shipping because the global trade digitisation platform that Maersk and IBM are developing is not being developed just for Maersk’s use but for the global container shipping industry. As Maersk explained, the aim of the new company will be to offer a jointlydeveloped global trade digitalisation platform that will address the need to
BLOCKCHAIN INITIATIVES IN THE CONTAINER SHIPPING INDUSTRY COMPANIES
300cubits
PIL, PSA & IBM
MOL, NYK, K-line with 11 Japanese companies
EY, Guardtime with Maersk and five partners
BLOCKCHAIN APPLICATION
DATE ANNOUNCED
PRODUCT ROLL OUT PLAN
Digital currency for use as booking deposit in container shipping transactions
1 Aug 2017
15 Jun 2018
MOU to trial blockchain-based supply chain business network innovations chain and trade finance
15 Aug 2017
not available
Consortium to develop trade data sharing platform using blockchain technology
15 Aug 2017
not available
Blockchain platform for marine insurance industry
6 Sep 2017
2018 onwards
(Credit: Alphaliner)
Container Shipping & Trade | 1st Quarter 2018
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DIGITALISATION | 25
provide more transparency and simplicity in the movement of goods across borders and trading zones. Maersk and IBM will use blockchain technology to power the new platform alongside other cloud-based open source technologies including artificial intelligence (AI), IoT and analytics, delivered via IBM Services, in order to help companies move and track goods digitally across international borders. “The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge and all players across the supply chain stand to benefit,” explained Maersk Line chief commercial officer and future chairman of the board of the new joint venture Vincent Clerc. “By joining our knowledge of trade with IBM’s capabilities in blockchain and enterprise technology, we are confident this new company can make a real difference in shaping the future of global trade.” IBM and Maersk began their collaboration in June 2016 to build new blockchain and cloud-based technologies. Since then, multiple parties have piloted the platform including DuPont, Dow Chemical, Tetra Pak, Port of Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands and the US Customs and Border Protection. Additional customs and government authorities, including Singapore Customs and Peruvian Customs, will explore collaborating with the platform to facilitate trade flows and enhance supply chain security. Global terminal operators APM Terminals and PSA International will use the platform to enrich port collaboration and improve terminal planning. The new company initially plans to commercialise two core capabilities aimed at digitalising the global supply chain from end-to-end: • A shipping information pipeline will provide end-to-end supply chain visibility to enable all actors involved in managing a supply chain to securely and seamlessly exchange information about shipment events in real-time. • Paperless trade will digitise and automate paperwork filings by enabling end-users to securely submit, validate and approve documents across organisational boundaries, ultimately helping to reduce the time and cost for clearance and cargo movement. Blockchain-based smart contracts ensure all required approvals are in place, helping to
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speed up approvals and reduce mistakes. Upon regulatory clearance, solutions from the joint venture are expected to become available within six months at time of writing ( January). The platform is built on IBM Blockchain technology, which is provided through the IBM Cloud and powered by Hyperledger Fabric 1.0, a blockchain framework and one of the Hyperledger projects hosted by the Linux Foundation. Another company that also has a concrete
plan to roll out its blockchain solution is 300bcubits, a start-up company launched in July 2017. It will be the first to roll out a blockchain solution for the container shipping market with a booking deposit system that is due to start 15 June 2018. According to Alphaliner, the system will deploy blockchain technology and a crypto-currency to address the problem of cargo ‘no-shows’ and ‘rollovers’ that 300cubits said are key challenges in the container shipping industry.
Tracking solution gives ‘complete control’ Valmet launches container tracking solution that will slash supply chain costs Valmet is launching a real-time solution to track the movement of containers and manage their pressure and temperature as they move through the supply chain. The company completed a pilot at the end of last year with gas containers – the most “demanding container type,” Valmet director of process automation Jani Hautaluoma told Container Shipping & Trade, explaining that the solution is especially relevant to containers containing chemicals or high value goods, where tracking and monitoring the container is a benefit and where ensuring the pressure and temperature is correct is critical. Called the Virtual Real-Time Pressure Transmitter, the solution allows supply chain stakeholders to read the pressure from the container in real-time without any physical measurement device installed on the container. Mr Hautaluoma explained that containers are equipped with a GPS module that provides temperature measurement and location availability. Software automatically calculates the pressure based on the product within the container (gas or liquid) and temperature measurement. When the container reaches the next point in the supply chain where the process data is available, the system automatically compares the virtual pressure and real pressure measurement and adjusts it accordingly. The solution is part of the Valmet DNA Integrated Operations (IO) container management application. IO collects process data as the container moves on its journey and integrates the latest process values into the container’s GPS module, which acts as the container’s ID. CST
Valmet’s Virtual Real-Time Pressure Transmitter tracks containers and manages their temperature and pressure
Container Shipping & Trade | 1st Quarter 2018
26 | PORT AND VESSEL PRODUCTIVITY
BOX TERMINALS AND SHIPS:
THE PRODUCTIVITY PUSH NEW INITIATIVES IN PORTS AND ON SHIPS ARE BOOSTING CONTAINER MOVEMENTS
B
ig strides have been made in boosting the efficiency of loading and unloading cargo both within container terminals and on the actual box ships themselves. Ports are spending a lot of time and money investing in their productivity levels and increasingly, this has involved not just new equipment but also the deployment of
data and digitalisation strategies. Indeed, Port of Rotterdam Authority is boosting the productivity and efficiency of its container terminals’ operations with a strong digitalisation strategy, ranging from a new communications platform to the use of internet of things (IoT) technologies in the cloud. In January this year it announced
its collaboration with IBM on the IoT initiative. A centralised dashboard application is being developed that will collect and process real-time water and weather sensor and communications data, analysed through the IBM IoT platform. Previously the port relied on traditional radio and radar communication between captains, pilots, terminal operators, tugboats
Port of Rotterdam Authority is using IoT to boost the efficiency of container movements through its terminals (credit: Freek van Arkel)
Container Shipping & Trade | 1st Quarter 2018
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PORT AND VESSEL PRODUCTIVITY | 27
and others to make decisions on port operations. Now, sensors are being installed across 42 km of land and sea along the port’s quay walls, mooring posts and roads. These sensors will gather multiple data streams including water and weather data about tides and currents, temperature, wind speed and direction, water levels, berth availability and visibility. This data will be analysed by IBM’s cloud-based IoT technologies and turned into information the Port of Rotterdam can use to make decisions that reduce waiting times, determine optimal times for ships to dock, load and unload and enable more ships into the available space. The Port of Rotterdam will use the data to predict the best time based on water level to have a ship arrive and depart Rotterdam. Port of Rotterdam Authority chief financial officer Paul Smits told Container Shipping & Trade “We will be able to pass on real-time water depth information to the client; when they know the depth of the port is deeper, they will be able to put more cargo on their ships.” With the new initiative, Port of Rotterdam operators will also be able to view the operations of all parties at the same time, making that process more efficient. It said shipping companies and the port stand to save up to one hour in berthing time which can amount to about US$80,000 in savings. Another digital project the port has launched is its Navigate inititiative (which went live this January but will be fully implemented in the next few months) which aims to speed up the process of ships entering the port. “When the ship enters port, there are at least 10 to 15 parties coordinating the movement of the ship which is done manually, by phone and email. The actual timings given by the parties is not always very accurate,” Mr Smits told Container Shipping & Trade. Therefore, the port has devised a communications platform where all parties involved with the entry of the ship input their own data, which is available to everyone that wants access. Therefore, “everything becomes transparent and that increased transparency of what is happening around the ship” leads to a “significant reduction in time, which saves a lot of money for the shipping company,” Mr Smits said. Explaining the port authority’s digitalisation strategy, Mr Smits said “There is a definite acceleration for the application of new technologies like IoT, big data and
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cloud to increase efficiency and safety in the maritime chain. We saw this coming and wanted to invest in this a few years ago.”
INCREASING COLLABORATION
Navis’ big focus is on using big data to enable terminals to make better decisions and improving collaboration across the supply chain, its EMEA vice president and general manager Chuck Schneider told Container Shipping & Trade. “The collaboration between ocean carriers and terminals is really what pushes the needle on performance. We are focused on improving the ocean container supply chain through collaboration,” he said. Navis’ N4 terminal operating system (TOS) enables terminals to optimise their operations and move cargo more efficiently. Mr Schneider emphasised main themes that needed to be focused on to improve the productivity of terminals. “The people building terminal operating systems can’t just look between the four walls of terminals.” Rather, they need to look at how to gain better quality data and use this to make better decisions. “Using information from outside the terminal means much better decisions.” Mr Schneider said Navis was looking at developing this further and therefore carrying out a lot of work on how terminals can use vessel data to optimise the ocean carrier call. “If you are able to collect really good data about the vessel, such as what positions the containers are in and where they are bound, the port processes can be much more efficient as opposed to not having the information or having incorrect information and so slowing down the processes.” Having in-depth knowledge about incoming box ships allows terminals to match their people and processes to manage the vessels and work expected. He singled out an example: If a terminal knew that a vessel was going to be late, it would perhaps allow them to handle another vessel and change where it placed containers in the yard. “It would completely change the terminal’s strategy,” he elaborated. “This concept of big data allows the terminal to better predict what is needed.” But despite this, there are not enough terminals using big data. “The use of big data by terminals is still a little way off – I don’t believe terminals are quite there yet,” Mr Schneider acknowledged. Therefore, he said that the first phase was how to get good data and how to provide the tools to sift
Chuck Schneider (Navis): The collaboration between ocean carriers and terminals will improve productivity performance
“There is a definite acceleration for the application of new technologies like IoT, big data and cloud to increase efficiency and safety in the maritime chain” Paul Smits (Port of Rotterdam Authority)
Container Shipping & Trade | 1st Quarter 2018
28 | PORT AND VESSEL PRODUCTIVITY
through this data. Towards that end, XVELA, an independently operated subsidiary of Navis, has developed a collaborative maritime network to improve data flow and visibility between terminals and ocean carriers. Guy Rey-Herme, XVELA’s president and chief executive explained to Container Shipping & Trade “The various planning roles and processes across the container supply chain are currently disconnected, with each stakeholder operating in a silo. XVELA provides an open, neutral network to connect these processes into a holistic framework, so that each party in the supply chain can get the information they need, when they need it.” XVELA is working on new products to help optimise port calls, including coordinating berth planning and predicting when vessels will arrive. “Building on collaborative stowage planning as the core of the solution, XVELA is building the next generation of berth planning tools,” Mr Rey-Herme stated. “By removing uncertainty and vagueness around ships’ schedules we can improve the accuracy of the ship’s ETA. And our integration with N4 provides real-time visibility on the progress of
terminal operations and the possibility of improving the accuracy of the estimated time of completion.” Mr Schneider summed up what the new berth management solution was all about “If the ship is late, what impact will this have on the terminal yard?” Navis is looking at what the yard can do now to ensure that there is not a “huge negative effect” on operations.
SHIPPING TECHNOLOGY BOOST
Boosting container port productivity is not just about what goes on port side but also about technologies used on the ship. Hoppe Marine’s Flume roll-damping system can boost the efficiency of loading and unloading containers off the ship. It consists of an anti-roll tank that is usually placed behind or below the deckhouse. With its software, it adapts to changes in load and operation conditions and counteracts the roll of the ship by a change in the liquid level of the tank. This can reduce the roll of the vessel by up to 50%, Hoppe Marine sales manager Bastian Marquardt told CST. Maersk Line has installed the system across 48 ships in its fleet – and more
are to follow. Mr Marquardt explained that this means the lashing forces on containers are reduced, giving more flexibility to where the containers are stowed, allowing heavier ones to be stowed higher and allowing more containers to be carried on the ships. “Heavier containers used to be placed deep in the vessel, but with the Flume system they can be placed higher up as the lashing forces are still ok.” This is of benefit when loading and unloading in port as there are options to place containers for an earlier port stop higher up, saving both time and money in port. “The best logistics with the lowest effort,” as Mr Marquardt put it. There is another advantage to installing the system – the Flume system is considered as a usual ballast water tank, it just needs to be a special shape in order to act as an anti-roll mechanism. Mr Marquardt said “Compared to investment costs the ROI is tremendous as the tank is not very expensive on the shipyard side. Not a lot of construction material is needed, we just need to carry out the engineering to create the shape needed and provide the hard- and software system. This is also possible for retrofits.”
MACGREGOR LIFTS BOX SHIP MONEY-MAKING CAPABILITIES MacGregor, part of Cargotec, has also put a lot of effort into optimising loads carried by container vessels to boost the amount of containers they can carry. At the start of this year it received orders to optimise the container carrying capabilities of 31 MSC vessels from six different ship series. The work is designed to optimise ships' cargo system productivity and earning potential. The orders were booked into Cargotec's Q3 and Q4 2017 order intakes and deliveries are planned towards the end of 2018. Upgrade work on the vessels will be carried out under a MacGregor Cargo Boost service, part of its PlusPartner concept, which is designed to improve the earning potential of existing container ships. The upgrades include an individual plan for each vessel, with a focus on improving earning potential and efficiency. The Cargo Boost process starts by studying the ship’s cargo system with the customer and reviewing it against anticipated routes and cargoes. MacGregor uses its own software where it models and analyses the earning possibility for vessels using different cargo systems. Liaising with the operating team of the shipowner is an important part of the process. MacGregor director of customer solutions Tommi Keskilohko explained to Container Shipping & Trade “We try to increase the earning potential (more cargo on board) for the shipowner
Container Shipping & Trade | 1st Quarter 2018
by means of upgrading the cargo system on board.” He pointed out that a ship built three to six years ago was built on “slightly different criteria” than vessels built today. “In order to compete against modern vessels, those older vessels need to be upgraded, including upgrading the cargo system,” he said. While Mr Keskilohko said the optimal time for making a cargo system upgrade was on a scheduled drydocking, some upgrades were possible without taking vessel out of service. It is a good alternative to having to invest in new ships. As Mr Keskilohko said “Cargo Boost helps upgrade ships and gives additional capacity rather than investing in a new ship and having to wait for a few years before it is delivered.” He said some container operators saw “great value” in boosting existing ships rather than buying new ones. He said – depending on the design of the ship – the application of Cargo Boost would ‘quite easily’ lead to a 5% increase in cargo and in some cases much more. The payback time for smaller box ships is less than one year and for bigger container vessels, two years. Mr Keskilohko said that while the main idea of Cargo Boost is to load the maximum amount of cargo onboard, so that shipowners can earn the maximum amount of money, it was an element, along with systems such as those launched by Navis, in ensuring the efficient loading and unloading of cargo. CST
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30 | FLEET STATS AND ANALYSIS
BULLISH MARKET FOR FEEDER CONTRACTING FEEDER TRADES ARE GOING FROM STRENGTH TO STRENGTH, WITH CHARTER RATES HITTING HIGHS, WRITES BARRY LUTHWAITE
W
hile all the headlines seem to concentrate on larger sizes in the box business, the past year has seen a phenomenal rise in feeder contracting as ports gear up for an improvement in global trading. That recovery has been a long time coming but the recession in deep-sea trades has not impacted on the feeder trades. They continue to go from strength to strength as the container giants have been forced to cut the schedules for economy of scale and employ more feeder links to cover. After a year of drought, ultra large container ship orders have resumed, with the highest capacity so far of 22,400 TEU. Within a more bullish market the situation has changed again for feeders that, if anything, has improved their fortunes still more. In January it was almost a ‘name your price’ scenario with charter rates hitting some of the highest recorded in many months. Even smaller 1,000 TEU range feeders touched US$67,000 a day on the spot market or on short duration charters. Existing deep-sea ships of around 8-9,000 TEU are unable to reach this figure and are becoming an endangered species. Owners know this and the current orderbook does not even show one vessel under construction between 5,200 TEU and 9,450 TEU. The market will undergo profound change in the next two years and this has seen a preparatory run on contracting
resulting in newbuilding feeders and shortsea traders reaching 249 vessels since the start of 2017. This bullish situation will continue, mainly because of economies of scale, with port calls by the majors centred more on port hubs, and an anticipated rush of vessels for recycling by 2020. New mandatory emission control legislation at the start of that year will force many older or non-compliant deepsea vessels out of business. This shake-out has been a long time coming but is badly needed for a more stable market that will benefit all. Despite the KG debacle, German owners remain among the strongest in the business in spite of a decimation of fleets and traditional owners. Consortiums have been formed giving such alliances a more competitive framework, especially in Europe. Hitherto, such plans have never worked due to owner-protection of individual fleets and trading relations but sweeping mergers, bankruptcies and distress sales have dramatically changed today’s perception. German banks still stuck with KG-financed tonnage have decided to part with them and the low prices on offer brought a record number of sales in the box ship market overall topping 1M TEU throughout 2017. Banks cut their losses but predators know a bargain when they sense one. For feeder owners, they must balance both asset positions of newbuilding and secondhand acquisitions.
Container Shipping & Trade | 1st Quarter 2018
Some argue that newbuilding is still a risky business but prices remain low and are bound to rise giving the opportunity of asset play at a later date for a higher price often with charter employment. Then there is the “certainty” of much scrapping by 2020 forcing charterers to employ more modern tonnage. A big mover in asset play is MPC Container Ships (MPCC), of Germany, which was only formed in April 2017 but already controls a feeder fleet of 57 ships in the space of just nine months. The company has its sights set on 100 feeders. In business you need good planning and luck and MPCC certainly struck the latter. Since April 2017 there has not been a single month without it making acquisitions, all taken on a secondhand basis and largely from distressed companies. Large injections of finance were raised in Norway and an Oslo listing is projected with an IPO in New York under consideration. Investors have been encouraged by the current market prospects and prompt delivery of acquired vessel assets. In some cases whole fleet purchases were involved and, no doubt, previous customers re-engaged. Such consolidation in the feeder trades has bred confidence and MPCC has a foot in Asia as well as Europe. The big mover in newbuildings is China with 59 feeders currently on order occupying almost a quarter of business. The country has finally got to grips with the
necessity to improve port infrastructure and acquire feeders to serve its hinterland and cut congestion in ports. Some of these are low air draught river/sea types, including a contract recently placed with WUT Guangha for six 1,140 TEU units that will be equally shared by COSCO Shipping, Sinotrans & CSC and Zhonggu Shipping. More self sufficiency, though, will eliminate some overseas feeder charters. One reason behind 1,000 TEU vessels proving so popular is accessibility to smaller ports and, for callings in Japan up to 10,000 gt, reduced port dues apply. One of the biggest casualties in recent months was Bertram Rickmers, which was forced to declare insolvency when bank support was withdrawn. Now the proud owner has bounced back with private family money to finance the purchase four of six 1,162 TEU feeders under construction at Fujian Mawei, China, for Germany’s MarLink Project Management. Six vessels are still held on option. The vessels are so called Bengalmax designs from MarLink with two more on order for MTT Shipping, Malaysia. Zeaborn of Germany, which purchased some of the liquidated Bertram Rickmers stock, was also involved in the acquisition of shipmanager ER Schiffahrt (Erck Rickmers) and management of its container ships, mainly in the feeder category. Sentiment is high in
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FLEET STATS AND ANALYSIS | 31
the feeder sector for now. Altogether 52 container ships in excess of 20,000 TEU are on order with 23 of these due for delivery in 2018 and a further 18 in 2019. The remaining 11 are due to commission in 2020 and 2021. All will need feedering and serve the Asia/Europe lucrative service. The biggest reefer container ships now reach 10,600 TEU aided by a deeper and wider Panama Canal lock system. Some of the feeders on order are designed with reefer slots to cater for demand, especially in South and Latin America regions. In recent months there have been complaints from the big operators of port congestion as the largest ships were taking 48 hours to discharge and load, which was disrupting their schedules – much to the advantage of feeders. This has partly accounted for feeders’ freight rates well above normal but likely to be sustained. Another bonus for feeder operators is a lack of barge provision for internal port delivery to local destinations. In addition to feeders, much attention is being paid to replenishment of barge fleets in the form of zero emission targets and cleaner propulsion such as LNG and battery power. Several are on order to serve the low countries and hinterland. So can the feeder boom continue? On the surface, there is no reason why not and, as in Europe, congestion also applies in Asian ports. This is partly why China is attracting so many feeder orders, including from overseas owners. Much depends on increased scrapping in the next two years and charterers being forced to take emissioncompliant tonnage. Either way, the challenges are there to be met but, for once, where owners rightly complain of too much legislation and interference from politicians in the maritime industry, in this instance it may prove to be a winning hand. CST
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FEEDER SHIPS ON ORDER BY COUNTRY OF SHIPOWNER CHINA
59
GERMANY
30
TAIWAN
19
UNITED KINGDOM
19
JAPAN
17
OTHERS
17
USA
16
UNDISCLOSED
12 FRANCE
10
GREECE
9
INDONESIA
7
SINGAPORE
7
DENMARK
6
CROATIA
4
NETHERLANDS
4
THAILAND
4
TURKEY
4
VIETNAM
ICELAND
3
2
Based on data provided by BRL Consultants
Container Shipping & Trade | 1st Quarter 2018
32 | MARKET UPDATES
ULCS deliveries threaten 2018 market conditions Box ship trades started to recover last year – but the large number of ULCSs due for delivery this year pose a threat
T
he markets have been looking up within the container shipping sector – but the large number of ultra large container ships (ULCSs) due to be delivered this year is a threat to the delicate recovery that started last year. According to VesselsValue data, 71 ULCSs with a total capacity of 1.2M TEU are due to be delivered this year. This is the highest volume on record for ULCS deliveries – and vastly outstrips the ULCSs due to be delivered next year (20 at a total TEU of 376,300) and in 2020 (24 at a combined 466,450 TEU). It also towers over the 467,291 TEU delivered last year. VesselsValue analyst Court Smith told Container Shipping & Trade “The total outstanding orderbook for container ships shows a significant amount of capacity yet to be added to the global fleet.”
He noted that the quantity of carrying capacity which is aged 15 years and older is small compared to the newer and larger ships. “It is hard to imagine a sustained rate recovery based on fleet supply fundamentals, but industry consolidation is a plus.” And this year’s number of ULCSs is head and shoulders above orders for other categories of container ships – the secondlargest sector is the sub panama box ship with 56 ships due for delivery (VesselsValue). As Mr Smith said “Order activity has been concentrated around small ships and larger units. There has been little interest in acquiring ships between 4,000 and 11,000 TEU. The current fleet profile has a larger concentration of ships under 11,000 TEU.” The deliveries of ULCSs due this year means that more cascading of ships on to other trades is likely. As ClipperMaritime’s Horizons February newsletter pointed out, many of these ULCSs are headed for the Asia-North Europe trades, with 26 ships of 525,000 TEU with a nominal capacity of 20,000 TEU due to be delivered. It said should all these ships be delivered this year the Ocean Alliance will need to redeploy 21 vessels of 14,000 TEU to make room for the newbuilds; 2M will have five big ships to redeploy across its networks; while THE Alliance has deployed its latest ULCS – MOL Treasure – on its FE2 string.
TOTAL CONTAINER VESSELS ON ORDER 2018 VESSEL TYPES
NUMBER OF VESSELS
TOTAL TEU
TOTAL VALUE $M
FEEDERMAX
26
26,326
$342
HANDY
37
60,724
$683
NEW PANAMAX
20
230,167
$1,443
PANAMAX
11
38,222
$434
POST PANAMAX
35
179,590
$1,322
SUB PANAMAX
56
143,688
$1,494
ULCV
71
1,225,195
$8,125
256
1,903,912
$13,842
GRAND TOTAL
Container Shipping & Trade | 1st Quarter 2018
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ClipperMaritime said it believes most of the 26 ships needing to be redeployed will be cascaded to Asia-Mediterranean, AsiaWest Coast North America and Asia-Middle East trades. This could destroy the more balanced supply and demand situation achieved last year when there were fewer ULCS deliveries. As ClipperMaritime pointed out, ULCS additions to the orderbook “will likely delay overall supply/demand unbalancing for some trade lanes as the continued cascade adds more pace.” The delivery of so many ULCSs could also negatively impact freight rates. ClipperMaritime noted that considerable deliveries of ULCSs during Q3 2017 coincided with declines in spot freight
rates – something that could be repeated in 2018. Despite the gloomy outlook, some of the ULCS newbuilds due this year have been pushed back – and more could follow (known as slippage). COSCO and Yang Ming have delayed delivery of mega box ships from 2018 to 2019. Alphaliner said in its January 2018 newsletter that COSCO was reported to have deferred 10 of the 28 ULCS due to be delivered this year. Yang Ming has also delayed three 14,000 TEU ships from this year to 2019. Chief executive at SeaIntelligence Consulting, Lars Jensen said COSCO and Yang Ming’s delivery delays are “a positive sign for market developments in 2018.” CST
TOTAL CONTAINER VESSELS ON ORDER 2019 VESSEL TYPES
NUMBER OF VESSELS
TOTAL TEU
TOTAL VALUE $M
FEEDERMAX
13
12,574
$155
HANDY
16
29,136
$359
NEW PANAMAX
9
102,200
$745
PANAMAX
-
-
$-
POST PANAMAX
3
20,011
$161
SUB PANAMAX
12
30,606
$324
ULCV
20
376,300
$2,793
GRAND TOTAL
73
570,827
$4,537
NUMBER OF VESSELS
TOTAL TEU
TOTAL VALUE $M
FEEDERMAX
2
1,600
$515
HANDY
6
11,200
$1,178
NEW PANAMAX
-
-
$2,188
PANAMAX
-
-
$434
POST PANAMAX
2
7,240
$1,746
SUB PANAMAX
2
5,050
$2,004
ULCV
24
466,450
$14,470
GRAND TOTAL
36
491,540
$4,155
TOTAL ON ORDER CONTAINER VESSELS 2020 VESSEL TYPES
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Container Shipping & Trade | 1st Quarter 2018
34 | BEST OF THE WEB
BEST OF THE WEB
containerst.com
Container Shipping & Trade’s website covers the latest technology and market developments within the container ship sector. Our news coverage is now exclusively online and free to read. Here are some of the most popular stories covered over the last few months
Maersk – is it developing an IT venture arm? A digital project launched by Maersk in 2016 has not received much attention – could it lead to Maersk developing a new business arm which is an IT venture firm and not a transportation firm? These are the thoughts of leading container shipping analyst Lars Jensen, chief executive and consultant at SeaIntelligence Consulting. He pointed out that the Maersk/IBM blockchain initiative has received more coverage than other initiatives, such as Maersk’s company Fromtu, created in December 2016. He said “First, unlike many of Maersk’s other digitisation projects, this appears not to be mainly focused on transportation. Rather it is a marketplace for trade in certain commodities in Africa – and as such a competitor to platforms such as Alibaba, although the market scope clearly differs. This
indicates that Maersk’s digital ambitions range much wider than transportation.” He added that Fromtu’s banner includes the statement “An AP MollerMaersk Digital Venture.” He highlighted the potential significance “This is a phrasing not seen (at least not yet) in any of the other digital initiatives launched by Maersk. However, if we assume this phrasing is not accidental, it does directly imply that Maersk is beginning to see their digital ventures as a business portfolio in itself.” He said while it is “too early to draw conclusions solely based on this, it does raise the thought whether Maersk is seeing themselves gradually develop a new business arm which is an IT venture firm and not a transportation firm.” Fromtu is 100% owned by AP Moller-Maersk, according to the Danish Business Registry. http://bit.ly/MearskITarm
MPCC acquired Cido Shipping fleet as part of ‘ambitious expansion plans’ Cido Shipping Group has been named as the seller of 10 container ships for US$130M to MPC Container Ships (MPCC) by law firm Watson Farley & Williams (WFW ) – a deal that demonstrates MPCC’s “ambitious expansion plans.” WFW advised Oslo-based MPCC on the acquisition of the entire container ship fleet of South Korea’s Cido Shipping Group. WFW said following the signing of the sale and purchase agreements for the takeover of the fleet in late 2017, most of the vessels have been delivered to MPCC. MPCC is the owner of container vessels with a focus on the feeder container market. Listed on Oslo Stock Exchange’s Oslo Axess, the company currently owns a portfolio of 44
To view more whitepapers visit the Knowledge Bank on www.containerst.com To upload a whitepaper to the Knowledge Bank, please email Kirsty Mash at kirsty.mash@rivieramm.com www.containerst.com/s/knowledgebank
Editor’s selection: Zero-emission vessels 2030: how do we get there? By Lloyd’s Register and UMAS To test shipowner requirements, seven technology options applied to five different case study ship types are examined in this white paper. These options consist of various combinations of battery, synthetic fuels and biofuel for the onboard storage of energy, coupled with either a fuel cell and motor, internal combustion engine or a motor for the conversion of that energy store into the mechanical and electrical energy required for propulsion and auxiliary services.
Container Shipping & Trade | 1st Quarter 2018
Editor’s comment: The first milestone in the IMO Greenhouse Gas roadmap is approaching: MEPC 72, which is in April 2018. The world is watching to see if an ambitious reduction strategy in line with the Paris Agreement can be delivered. To achieve this ambition, zero-emission vessels will need to be entering the fleet in 2030 and form a significant proportion of newbuilds from then on. This paper looks at how this can be achieved in practice.
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BEST OF THE WEB | 35
container ships. WFW said that since its foundation in 2017, MPCC has raised US$425M in equity and US$200M via a bond issuance for its activities. Among MPCC’s initial investors were several institutional investors and Hamburg’s MPC Capital Group as initiator. WFW said “The acquisition of Cido Shipping's fleet clearly demonstrates MPCC’s ambitious expansion plans and execution capabilities.” WFW also advised MPCC on previous acquisitions to expand its fleet. http://bit.ly/MPCCCido
Port-Liner to construct battery-powered barges Port-Liner plans to construct up to 11 fully electric-powered inland container vessels for service between the Netherlands, Belgium and Germany. These emission-free barges are nominated for construction at Asto Shipyard, according to BRL Consultants. The European Union has provided a €7M (US$8.6M) grant for the vessels, which will be able to achieve automated sailings without crews. They will serve the ports of Rotterdam, Antwerp, Amsterdam and Duisburg. The barges will be battery-powered and capable of transporting 20 to 280 containers. Netherlands-based Port-Liner has also created its own battery pack technology that will enable retrofitting of existing barges with conventional power into zero-emission units. Six larger newbuildings will be 110 m long and 11.4 m wide accommodating 270 containers and can remain underway for 35 hours with power from four container batteries. Five consorts will be 52 m long and deployed between Budel on the Belgian Dutch border and Antwerp port. Large companies have already booked the barges for employment, BRL Consultants said. Lack of an engineroom has provided a loading area some 8% larger than comparable conventional barges and even fully-fledged feeder ships. The four containers holding the batteries can be recharged or exchanged in four hours while loading or unloading. Onshore recharging is provided by Eneco, which uses sources from renewables, windmills and solar power. The barges are designed by Frank Laupman of Omega Architects. The six larger barges are estimated to remove the equivalent of 23,000 trucks annually from the roads. http://bit.ly/Port-Linerbatterypower
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CMA CGM unveils energy-saving features of new 20,600 TEU flagship CMA CGM has announced the arrival of its new flagship and world’s biggest container ship flying the French flag: 20,600 TEU CMA CGM Antoine De Saint Exupery. CMA CGM highlighted environmental and energy saving features on its latest ship: • A Becker Twisted Fin to improve the propeller’s performance, with a 4% reduction in CO2 emissions. • A new-generation engine (X92 engine designed by Winterthur Gas & Diesel) that significantly reduces oil consumption (-25%) and fuel consumption for a 3% average reduction of CO2 emissions. • A system for the treatment of ballast water by filters and UV lamps. The container ship will enter service in February on the FAL 1 service (French Asia Line 1), which connects Asia to northern Europe. http://bit.ly/CMACGMAntoine
PIL, PSA and IBM to take blockchain concept to ‘next stage’ Pacific International Lines (PIL), PSA and IBM have finished a successful blockchain trial from Chongqing to Singapore – and believe the concept can be taken to the next stage. The three companies signed an MOU in August 2017 to collaborate on blockchain-based supply chain business network innovations. After signing the MOU, the companies worked on a proof of concept (POC) exercise, built on the IBM Blockchain Platform, applying and then testing a blockchain-based supply chain to track and trace cargo movement from Chongqing to Singapore via the Southern Transport Corridor. The trial successfully achieved the following objectives: • Transparent and trustworthy execution of multimodal logistics capacity booking. • Regulatory-compliant execution of multimodal logistics capacity booking process. • Real-time track and trace. • Permissioned access control for ecosystem participants. A statement said “The partners believe that there is now sufficient evidence to show that the concept can be taken to the next stage. The scope of the POC will be widened and the partners are eager to engage more participants from the different
nodes of the distribution network that form the supply chain logistics ecosystem.” PIL managing director Teo Siong Seng said “We are highly committed to this idea because we as a company believe the wider application of blockchain across the global logistics and shipping businesses will lead to much greater operating efficiencies, security and transparency. It is the future for our industry.” PSA regional chief executive northeast Asia, Roger Tan said “PSA’s collaboration alongside our partners and relevant stakeholders in this blockchain trial demonstrates our efforts to enhance physical and digital connectivity, as well as to improve efficiencies along the global supply chain. Ultimately, we hope to create value for our customers along the Southern Trade Corridor – a key route in the Belt and Road initiative.” http://bit.ly/PILPSAblockchain
TOTE not extending Philly Shipyard LOI for LNG box ships TOTE’s plans to enter the US mainland– Hawaii trade have been put on hold and therefore it will not extend its letter of intent (LOI) with Philly Shipyard for two container ships. TOTE announced it had placed its plans to enter the trade on hold because of the Phase 1 technical review of Piers 1 and 2 in Honolulu Harbor. In September 2017, the Hawaii Department of Transportation earmarked TOTE access to Honolulu Piers 1 and 2 and exclusive use of the adjacent 45 acres beginning in 2020, to coincide with TOTE’s new service. TOTE said it subsequently conducted a preliminary study of the site’s infrastructure which indicated that upgrades and improvements will be required to accommodate the new operations. It said in a statement “Due to the scope and timing of the upgrades and improvements, TOTE will not renew the letter of intent with Philly Shipyard that expires on 31 January 2018.” TOTE said it “continues to be open to working with the Hawaii Department of Transportation to update plans and a timeline for access to a Honolulu deepwater terminal that would allow commencement of TOTE’s service to Hawaii.” The LOI was signed on 21 July 2017 for the construction of two 3,700 TEU LNG-powered container ships plus two options designed for the Hawaii trade. http://bit.ly/TOTELOIPhilly
Container Shipping & Trade | 1st Quarter 2018
36 | LAST WORD
CYBER ATTACK RISKS MUST NOT BE UNDERESTIMATED Hill Dickinson law firm’s head of global shipping Julian Clark explains that, even though awareness of cyber security has increased ‘significantly’ due to the Maersk cyber attack, far more needs to be done
I
t is without doubt that cyber risk is increasing in every sector of industry. The maritime sector is particularly vulnerable both due to the high number of access points for a cyber attack and the huge potential damage that could result. The attack on Danish shipping giant Maersk last year has resulted in an estimated cost to the company in excess of US$300 - 400M, but even that significant amount of money pales into insignificance when compared to the potential danger and damage to life and the environment as a result of a cyber attack to a trading vessel. Ironically the NotPetya attack on Maersk has done a tremendous favour to the maritime industry. If a company as well organised and sophisticated as Maersk can face such a significant
attack, then no one is safe. It is in fact a considerable credit to the organisation of that company that its managers were able to deal with the attack so efficiently and ensure that it did not compromise their fleet. Having said that, the financial loss and disruption caused was still significant. I believe that the Maersk attack has significantly raised awareness within the sector: for some time there has been a great deal of under-reporting. This has lulled people into a false sense of security. But while awareness has increased dramatically over the past 18 months, far more still needs to be done. Leading insurance providers have commented that the current levels of cover need to be increased tenfold. While the world’s leading maritime organisations and insurance providers are all now providing cyber guidance, there must not be a reduction in the steps taken to make all involved in the marine arena aware of the considerable risk. Shipping companies and all those involved in the sector must remain vigilant to ensure they have as much information as possible about the risks that they face. This is particularly the case for cyber risk since the game changes not only every day but often every hour as new systems are developed by hackers and others (including criminals and those who simply see cyber crime as a live video game) to disrupt systems. One of the greatest
Container Shipping & Trade | 1st Quarter 2018
Julian Clark, (Hill Dickinson): If a company as well organised and sophisticated as Maersk can face such a significant attack, then no one is safe
dangers faced by the shipping industry is the huge range of potential access points for a cyber attack. This could be by crew members, passengers or other third parties who are allowed access to vessels, who could infect systems either intentionally or innocently via their own flash drives, laptops and even mobile phones. Externally, systems are exposed to infiltration not only by sophisticated hackers but by relatively low-skilled individuals who can infiltrate systems often with equipment that is easily obtained for very low sums of money. Smart containers, ballast water management systems, engine monitoring systems, AIS and ECDIS and any system that links back to shore are potentially vulnerable to attack. There are a number of security protocols that can be introduced to ensure that ship communication to shore is through a secure and independent system that can be isolated immediately should it become apparent that a company is under attack. Companies are certainly doing far more to protect against infiltration but there is still some hesitance to move this risk from the IT department up to the level of the boardroom. It is only those companies that do address cyber risk at the highest level of management that will be able to put in place the forms of security that will adequately protect their businesses. CST
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