Maritime CEO Annual Outlook 2024 by Splash

ANNUAL OUTLOOK 2024

The Oceans in 2024 Shipping’s fortunes in the Year of the Dragon

CONTENTS

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Editor’s Comment

Global Economy

China

Dry Bulk

Tankers

Containers

LNG

Digital Tech

Green Tech

Finance

Shipmanagement

Opinion

Data

“We are very far from a global recession scenario” —Pierre-Olivier Gourinchas The International Monetary Fund’s chief economist

“Anyone trading freight in 2023 based on reading all the pessimistic headlines and takes on China’s financial and macro conditions would have done rather poorly” — Dr Roar Adland head of research at SSY

“The rise of digital continues to be a powerful tool for our industry” — René Kofod-Olsen the CEO of V.Group

“Methanol will manifest itself as the short term bridge fuel of choice”

— Lasse Kristoffersen the president and CEO of Wallenius Wilhelmsen

“There are plenty of institutions lining up to lend to shipping”

For the best global shipping news coverage

— Dagfinn Lunde the chairman of eShipfinance.com

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EDITOR COMMENT

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EDITORIAL DIRECTOR Sam Chambers sam@asiashippingmedia.com CORRESPONDENTS Adis Adjin adis@asiashippingmedia.com Bojan Lepic bojan@asiashippingmedia.com All editorial material should be sent to sam@asiashippingmedia.com COMMERCIAL DIRECTOR Grant Rowles grant@asiashippingmedia.com GENERAL MANAGER Victor Halder victor@asiashippingmedia.com Advertising agents are also based in Tokyo, Seoul and Oslo – to contact a local agent please email grant@ asiashippingmedia.com for details. MEDIA KITS ARE AVAILABLE FOR DOWNLOAD AT WWW.SPLASH247.COM/ADVERTISING All commercial material should be sent to grant@asiashippingmedia.com or mailed to Asia Shipping Media Pte Ltd, 30 Cecil Street, #19-08 Prudential Tower, Singapore 049712 DESIGN Belinda Printed in Hong Kong Copyright © Asia Shipping Media Pte Ltd (ASM), 2024. Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact grant@asiashippingmedia.com.

The tricky business of forecasting

riting an annual outlook for shipping used to be easier. Good old fashioned supply and demand numbers could tell their own story without too much else interfering, bar maybe a nice quote from a Martin Stopford type. The 2020s have turned such simple forecasting on its head, first with the ginormous gyrations brought about by the pandemic, and then latterly with geopolitics and war, with a bit of climate disruption thrown in to boot. The amount of tonnage soaked up by all this disruption in the past 12 months is on a scale not witnessed for more than 50 years, and makes market forecasts for anything longer than a day full of caveats. The chaos has brought extra volatility to an industry already well known for its extreme swings in earnings. “The roller coaster of spot rate moves over the last few years has embedded an entirely new magnitude of peak-to-trough (and back) moves into the projection equation,” a recent Evercore ISI note to clients pointed out. For VLCCs, capesizes, and LNG carriers rates have moved by more than 600% since August 2022, while LR2s and VLGCs have topped out at more than 200% from trough to peak. Looking at data from Drewry, volatility for the container trades from August 2022, when rates were already down by nearly $4,000 from their peaks, the swings experienced have still been enormous, clocking in at nearly 400%. Shipping’s fortunes have never been so intertwined with geopolitics as today, something that is hopefully reflected in

our daily reporting on Splash. As far as this magazine goes, what I hope readers take away is that we are entering a period of transformative change brought about by the creation of an armada of greener, floating offices at sea. The next generation of ships coming out of yards in Asia promise radical improvements in terms of efficiency, while there is so much technology that today’s existing fleet can harness to transform these workhorses. It is an exciting time - no question about that - as befits the Year of the Dragon, the luckiest and most auspicious of the 12 animals in the Chinese zodiac.

Sam Chambers Editor Splash

Shipping’s fortunes have never been so intertwined with geopolitics

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GLOBAL ECONOMY

Cloudy prospects The world’s leading economists give readers pointers to what expect in the months ahead

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GLOBAL ECONOMY

he majority of economists surveyed by the World Economic Forum expect the global economy to weaken this year, saying that geopolitical fragmentation around the world will deepen. “Global economic prospects remain subdued and fraught with uncertainty,” WEF’s report, published in January, said. “While there are positive developments, such as easing inflationary pressures and advances in the field of artificial intelligence (AI), businesses and policymakers face persistent headwinds and continued volatility as global economic activity remains slow, financial conditions remain tight and geopolitical rifts and social strains continue to grow,” the report stated. The survey of 30 chief economists between November and December last year found that 56% of those questioned expect the global economy to weaken in 2024, while 20% expect it to remain unchanged and 23% forecast “somewhat stronger” economic conditions. Of particular concern to the economists was geopolitical rifts, with 69% of economists saying they expect the pace of geopolitical fragmentation to accelerate in 2024. About 87% expect recent geopolitical developments to stoke global economic volatility in the next three years, and eight out of ten expect it to heighten volatility in stock markets. It comes after a year of heightened geopolitical tensions, with Russia’s war in Ukraine continuing, China-US relations remaining fraught, and fears of a broader conflict in the Middle East due to the war between Israel and Hamas. 2024 is also a year that will see an unprecedented number of people vote in elections, with over 75 countries — including major economies like the US and UK — heading to the polls. A more positive outcome of WEF’s survey of economists was inflation expectations, with a loosening of financial conditions expected by 70% of respondents. The International Monetary Fund (IMF), meanwhile, has raised its outlook for global economic growth, with increases for both the US and China. The UN financial agency cited inflation easing

more quickly than expected, with its chief economist, Pierre-Olivier Gourinchas, saying in early February that a “softlanding” was in sight. “The global economy continues to display remarkable resilience, with inflation declining steadily and growth holding up,” Gourinchas told reporters. “We are very far from a global recession scenario.” The IMF is now forecasting global growth of 3.1% in 2024, up two-tenths of a percentage point on its October forecast. It expects unchanged growth next year, at 3.2%. From 2000 to 2019, global growth averaged 3.8%. The Paris-based Organization for Economic Cooperation and Development (OECD), meanwhile, reckons the global economy will expand by 2.9% this year. In its latest, cautiously optimistic Interim Economic Outlook global forecast, the OECD said it now expects the world’s economy to do slightly better than it anticipated previously, when growth of 2.7 percent was expected. The reason for the improved outlook, the OECD said in

early February, was its expectation that inflation in the US would continue to ease, and that the country’s national bank would, therefore, be able to cut interest rates later this year. The biggest threat to the global economy in the coming months is emanating from the Middle East, because of the ongoing conflict in Gaza, the report noted. “A widening or escalation of the conflict could disrupt shipping more extensively than presently expected, intensify supply bottlenecks, and push up energy prices if traffic is interrupted in the key routes for the transport of oil and gas from the Middle East to Asia, Europe and the Americas,” the report said. “The global economy has shown real resilience amid the high inflation of the past two years and the necessary monetary policy tightening. Growth has held up, and we expect inflation to be back to central bank targets by the end of 2025 in most G20 economies,” said OECD secretary-general Mathias Cormann, in a statement.

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CHINA

Dragons roaring? No nation is more pivotal to shipping’s fortunes than the People’s Republic. Maritime CEO explores the prospects for the Chinese economy in the year ahead

hina in the 21st century has driven shipping’s fortunes. Pick a commodity and invariably China is its largest importer – whether its coal, iron ore, oil or gas. Likewise, as the manufacturing centre of the world, the People’s Republic handles one in two containers, and for those wanting to understand why the car carrier trades have been so profitable this year, look no further than China. The rise of China was voted by Splash readers as the story of the previous decade, beating out liner consolidation, green developments and digitalisation in the process. Come the 2020s, however, the Chinese economy has come under pressure and scrutiny , the double digit gross domestic product (GDP) growth of previous years is long gone. Nevertheless, the country is resilient, riding through many economic crises of late such as covid or the immense property bubble. GDP growth last year stood at 5.4%. Forecasts for 2024 are for slower growth. The World Bank and JP Morgan are suggesting 4.4% growth, Capital Economics’ latest prediction is 4.5%, the International Monetary Fund reckons

MARITIME CEO ANNUAL OUTLOOK 2024

4.6%, Macquarie Bank has pegged it as 4.7%, and slightly more bullish at 4.9% is HSBC. Burak Cetinok, head of research at brokers Arrow, points out that while at face value, forecasts ranging from 4.4% to 4.9% imply a slowdown in the Chinese economy in 2024, nominal GDP growth is likely to pick up slightly due to a higher comparison base in 2024. “State-led infrastructure investments, manufacturing, exports and consumption will likely be the drivers of growth next year,” Cetinok reckons, adding: ”The property market is showing signs of stabilisation but the road to recovery will be a long and bumpy one.” Overall, Arrow’s research team is constructive on the Chinese economy in 2024. “As such, “ Cetinok says, “commodity demand will likely show modest gains next year, after posting a very strong growth in 2023.” Following China’s GDP projections

too closely is a fool’s errand for global shipowners, argues Dr Roar Adland, global head of research at brokers SSY. “Anyone trading freight in 2023 based on reading all the pessimistic headlines and takes on China’s financial and macro conditions would have done rather poorly,” Adland notes, adding: “While GDP growth rates aren’t entirely irrelevant for global commodity shipping demand, the analysis can probably be simplified to a yes/no question: Do you think China will implode? We don’t think it will and aim for business as usual.”

US elections weigh heavily Abhishek Pandey, the global head of shipping finance for Standard Chartered Bank, tells Maritime CEO a key event to watch out for regarding the Chinese economy next year is something that will take place thousands of kilometres away on the other side of the Pacific, namely the US presidential election.

The twin processes of urbanisation and industrialisation in China have matured

CHINA

“US-Chinese trade seems to have stabilised since Biden’s presidential term in 2021 and this relationship has been consolidated following the recent BidenXi meeting at the APEC summit,” Pandey says. “Uncertainty to US-China trade could return if President Biden fails to win a second term.” Standard Chartered reckons China’s GDP growth will slow next year to 4.8% weighed by a sluggish housing market and weak domestic consumption.

China and dry bulk Focusing on China and dry bulk, Rahul Kapoor, global head of shipping analytics and research at S&P Global Commodity Insights, expects Chinese demand of steel and iron ore to have stable growth despite what he sees as a weak long-term Chinese growth trajectory. “Overall, after declining by 1.1% in 2022, dry bulk demand is expected to increase by 2.5% in 2023 with recovery in iron ore and grain shipments and settling at 2.5% in 2024,” Kapoor predicts. “It’s probably questionable if China can really come to markets and absorb as much or more commodities as it has done

last year,” says John Michael Radziwill, who heads up dry bulk pool C Transport Maritime. Drilling down to the two most important dry bulk commodities, Arrow’s Cetinok points out that China’s coal imports surged this year on the back of strong power demand, low hydro generation and strategic stock building. However, inventory levels have reached record highs, and hydropower generation has seemingly normalised. “There is a high risk of a decline in coal imports into China in 2024,” Cetinok warns, before turning his attention to iron ore, which has a more positive note for shipowners. “Iron ore inventories linger around the lowest seasonal levels in years while steel production remains healthy. Unless there is a sharp drop in steel output, which we do not anticipate, restocking is quite likely ahead of the seasonally strong Q2 and Q3,” Cetinok says.

China bear Among those polled by Splash Extra, Mark Williams, the founder of UK-based consultancy Shipping Strategy, is clearly

the most bearish about prospects for the Chinese economy. “China’s economy is deflating, triggering numerous factory closures,” he says, pointing to recent data from the East Asia Forum showing that factory productivity in China has fallen 4.8% this year. “Part of the problem is that President Xi’s anti-corruption drive has focused on the private sector, removing upstart magnates from Jack Ma downwards, so that private enterprise investment is tumbling. The state supports large, inefficient state owned enterprises,” Williams says. Deflation can lead to lower consumption as consumers put off buying decisions, leading to lower future demand. Monetary policy such as reducing interest rates can be ineffective in this context as the lower demand forces more factory closures, increasing unemployment, which is already running at over 20% for the under 25s. “Xi Jinping thought calls for a switch from export-led growth to a domesticled market, but the demographics are a distinct flaw in the reasoning. And China is facing headwinds in overseas trade. China lost first place in the list of exporters to the US this year, with Mexico taking the crown,” Williams points out, concluding: “The bottom line is that the twin processes of urbanisation and industrialisation in China have matured.” For Williams, China’s peaking demographics point to an economic experience like that of Japan, “but ten times bigger”.

Year of the Dragon Ending on a more positive note, SSY’s Adland reminds Maritime CEO that in February China has entered the Year of the Dragon. “In Chinese culture,” Adland explains, “the thinking around the cycle of zodiac animal signs goes something like ‘the bigger the animal, the smaller the problems’ – and the dragon is the biggest animal. More specifically, it also represents confidence and innovation, and if a billion Chinese buy into that positivity then we could be in for a better outcome than most expect.”

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DRY BULK

More of the same?

How will dry bulk fortunes differ from what materialised last year?

ny dry bulk forecast must start with the state of the Chinese economy (see page 8). In late January, a Hong Kong court ordered the liquidation of the Evergrande Group, bringing an end to two years of financial instability during which the company struggled to meet its debt obligations. This development underscores concerns about the economic challenges facing China, as the property sector represents about 25-30% of the nation’s GDP and approximately a third of the country’s domestic steel demand. Despite, or maybe because of the court ruling, broker SSY is constructive on the Chinese steel complex going into this year, contrary to most macroeconomists. For one, the property market correction in China has now been ongoing for nearly four years, which means that the sector is smaller relative to the other sectors driving steel demand - from approximately 40% share of domestic steel demand in 2020 to an estimated 33% in 2023. Secondly, the other sectors — notably

auto manufacturing, shipbuilding, infrastructure and manufacturing — showed strong growth throughout 2023 and have the continued support of Chinese policymakers for 2024.

Houthi impact For coal, SSY sees a decline in Chinese imports this year, but the London brokerage is predicting India and Southeast Asia will pick up that demand slack, leaving global coal trade stable at current record levels. The research team at SSY led by Dr Roar Adland sees overall dry bulk tonnemile demand growth moderating to 2.7%, which happens to be on par with SSY’s projected fleet supply growth at 2.6%. In BIMCO’s base scenario for the dry bulk sector as a whole, meanwhile, the shipping organisation expects cargo demand to grow by 0-1% in 2024 and 0.51.5% in 2025. Average sailing distances are expected to lengthen 0-1% in 2024 and in 2025, BIMCO forecasts. From

2024, it expects a decrease in shipments of coal – a commodity with below average sailing distances. Conversely, iron ore, bauxite and grain shipments from South America and Guinea, which have above average distances, could continue to rise. BIMCO has warned it expects the supply/demand balance to marginally weaken in 2024 and remain stable during 2025. Supply is expected to grow by 12% in both 2024 and 2025, while demand is projected to grow by 0.5-1.5% in 2024 and 1- 2% in 2025. “Overall, we believe that the dry bulk market can look forward to the next two years being similar to 2023,” BIMCO stated in its latest dry bulk review.

The $64,000 question becomes whether stronger rates for the larger sizes will pull up the smaller sizes or be capped by them

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DRY BULK

The dry bulk market can look forward to the next two years being similar to 2023

Capes to lead When looking at the individual size segments, capesizes look substantially stronger on paper, with SSY projecting 2024 tonne-mile growth of 3.3% versus a mere 1.3% forecasted fleet growth. Panamaxes are not far behind forecasted 4.2% tonne-mile growth against 2.7% fleet growth, while at the opposite end of the earnings spectrum geared vessels have a projected high 4.1% fleet growth and a modest 1% tonne-mile demand growth. In terms of chokepoints - arguably 2024’s biggest headline-grabbing topic for shipping - around 7% of the global dry bulk trade would ordinarily transit the Suez Canal, while prior to droughts, there was no sector that had a bigger presence along the Panama Canal - dry bulk ships

traditionally accounted for 23% of all dry bulk transits through the Central American nation, something that has been turned on its head thanks to El Niño in recent months with the handy segment especially hard hit. Peter Lindström, the head of research at Torvald Klaveness, reckons the Suez and Panama diversions have made for an increase in dry bulk utilisation of 2.6% this year, and 3.3% specifically for the panamax sector.

Bullish Dragons Reasons to be bullish going into the Year of the Dragon include the fact that capesize spot rates are at 15-year highs for this time of year. “The Atlantic market remains the

main driver of such an astonishing yet surprising performance, while the reasons behind the current strength all point to inadequate vessel supply in the western hemisphere,” Breakwave Advisors noted in a recent report, which predicts a spot market that remains strong for a long period of time. Freight futures have already priced-in such a scenario, with the next two years now showing above 20,000, a stretch of strength that has not happened since the late 2000s for capesize vessels. Returning to SSY in conclusion, the London broker mused recently: “The $64,000 question then becomes whether stronger rates and market sentiment for the larger sizes will manage to pull up the smaller sizes or be capped by them. While we lean towards the latter from a fundamental point of view, the market action of last November and December showed how positive Capesize sentiment can quickly cascade down into the smaller sizes, lifting rates across the board.”

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TANKERS

Auspicious signs in the Year of the Dragon More than healthy earnings are on the cards for tanker owners in 2024

potential scrapping of much of the dark fleet, belated ordering en masse, and a highly profitable year. That’s the tanker outlook in the Year of the Dragon without even taking into account the shut-out of the Red Sea. McQuilling’s prevailing view for the crude tanker markets favours mid-sized tankers over VLCCs in 2024 as major VLCC hubs – Middle East and West Africa – reveal tighter crude balances. McQuilling’s base case 2024 TCEs is $45,900 a day for VLCCs, while aframaxes and suezmaxes outperform at $55,000 a day and $50,200 a day respectively, basis eco tankers without scrubbers. McQuilling calculations amid Red Sea developments reveal a negative impact (-$8,300 a day) on VLCC earnings should Saudi Arabia maximise its East-to-West Pipeline throughput, while aframax TCEs may increase by $42,400 a day from the base case. Turning to product tanker earnings McQuilling projects LR2s to earn $56,500 a day in 2024, basis eco tankers without scrubbers, out-earning MRs by 40% excluding Red Sea impacts. Secondhand values for aframax and LR2 tankers have the most upside over the next two years, McQuilling is forecasting.

Red Sea bonus The Middle East continues to be a vital part of the global oil market, both in terms of production from nations in the region, and a bottleneck in global seaborne oil supply chains. By mid-February, roughly one in two tankers on routes between Asia and Europe had opted to give the Houthi missiles a miss, adding significant tonnemiles to a sector that is already running at very high utilisation levels. At 12 knots, the journey time for a Jubail-Rotterdam voyage via the Cape of Good Hope increases by 16 days to around 39 days compared with the same route via the Suez. “This is creating greater fleet inefficiency and that will continue to underpin rates in the short-term until owners and charterers deem that the risk on Red Sea transits has lessened,” broker SSY noted in a recent report. In Clarksons Research’s stretch case scenario, the London broker assumes

the disruptions will be ongoing with 90% re-routing on all affected trades and drive 5.5% uplift in global tonnemiles; container and crude to rise 10% and product tankers by 20%, with bulk seeing just 2% uplift. However, Clarksons believes that the tanker segment will see more shifts in trade flows to offset the re-routings. The tanker vessel class most impacted by the Red Sea diversions is suezmax, likely leading to a spike in earnings. However, if the Red Sea crisis is prolonged charterers may well look to parcel two suezmax cargoes onto one VLCC. Diverting via the cape adds about 4,900 nautical miles to the voyage and over two weeks in voyage length. This increases tonne-miles for a single voyage by around 70%, according to Vortexa. Using 2023 data, Vortexa has projected the impact to this vessel class if this rerouting continues. On a monthly basis, tonne-miles for suezmaxes carrying crude

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TANKERS

from the Middle East to Europe would increase about 130% if transits occur via the cape instead of the Bab el-Mandeb strait. With the incremental increase from the extra tonne-miles for these specific cargoes, monthly global suezmax tonnemiles would increase by around 10%. However, analysts at Gibson warn that at some point charterers will look at the economies of scale afforded by larger VLCCs if the Red Sea lock-in remains in place for months rather than weeks. Another chokepoint, the Panama Canal, is expected to keep daily transits to no more than 24 a day, down from a maximum of 40, until deep into Q2 likely impacting clean tanker trade flows in the near-term. Analysts at SSY suggest the west coast of the Americas may seek more refined product supply from Asia to meet a shortfall in supply from US Gulf refiners.

total global tanker fleet. In the opening weeks of the 2024, hard pressed shadow tanker operators, struggling under stricter sanction regimes, have started to scrap ships. The peaking of the shadow fleet is also reflected in the sale and purchase market recently with prices for vintage VLCCs coming down noticeably in January and February.

Belated newbuilds With one announcement from China, the tiny global VLCC orderbook swelled by

60% on February 7. Dalian Shipbuilding Industry Co (DSIC)scooped orders from two famous European owners for up to 14 VLCCs worth a total of $1.8bn. John Fredriksen-led Seatankers contracted the Chinese yard for six firm conventionally fuelled VLCCs with options for two more, while Evangelos Marinakis’s Capital Maritime & Trading has come in for four firm LNG duel-fuel VLCCs in a contract that comes with options for two more. All the ships will deliver from the end of 2026 and heading into and throughout 2027. Prior to these bumper orders, the VLCC orderbook was one of the smallest of all sectors in the world, with Clarksons Research listing just 23 VLCCs on order as the start of February. Across the tanker segment, the restraint in ordering is expected to ease this year with owners keen to renew their fleets despite the high newbuild price environment. Uncertainty over future fuels, high asset prices and yards previously being full with gas and container orders had capped tanker contracting to the point whereby this year will see scheduled newbuilding deliveries hit lows not seen for more than 20 years.

Shadows wane Analysts at Vortexa issued a recent report showing that tankers operating in opaque markets reached a record high in Q2 last year and have since declined. The latest data from BRS suggests there are a total of 675 tankers in what it terms as the grey fleet, representing 7.4% of the

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CONTAINERS

Red Sea crisis unlikely to keep liners in the black all year The sheer volume of newbuilds hitting the water in 2024 will erode gains made in Q1

he Houthis have saved container shipping’s bottom line for now. In what was supposed to be an annus horribilis for container shipping with more than one newbuild delivering each and every day in 2024, the overcapacity spectre has been shelved thanks to the Red Sea shut-in. No sector reacted faster - and more en masse - than container shipping when the Red Sea shipping crisis exploded with some 90% of all tonnage on the AsiaEurope tradelane rapidly redeployed to take the longer route around southern Africa. Clarksons Securities believes continuing Red Sea disruption could be a “game-changer” for container shipping in terms of newbuilding deployment. With the average haul length jumping by 9%, Clarksons stated: “If this trend continues, it has the potential to absorb all newbuilds scheduled for delivery in 2024, which would be a game-changer for the industry.”

Some semblance of order has been restored The Red Sea crisis sent ocean freight rates through the roof to highs not seen in history bar the pandemic years. However, there are already signs that a plateau has been passed. Emily Stausbøll, a market analyst with Xeneta, comments: “Unlike during covid-19 when disruption continued to wreak havoc, shippers and carriers now know what they are dealing with in terms of ships being diverted around Africa to avoid the Suez Canal. Rates are still elevated so the impact of this crisis is far from over - and the situation can still change at any moment but perhaps some semblance of order has been restored.” The Houthi attacks on Red Sea shipping could easily prove transitory, something Maersk touched upon at its full-year earnings issued in February in which the Danish carrier suggested

freight rates will revert to pre-disruption levels as record new-vessel deliveries make their way into service even if the Red Sea problems persist for the whole year. Avoiding the Red Sea probably absorbs an additional 5% of global shipping capacity, more or less, according to HSBC.

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CONTAINERS

However, it’s important to bear in mind utilisation was hovering around 70% last year, according to estimates from DNB Markets. That is well below levels in recent years which have consistently been over 80%. Maersk expects global container volumes to grow 2.5%-4.5% in 2024. But new container shipping equal to about 11% of the current fleet will enter the seas, according to DNB. Maersk chief executive Vincent Clerc said that eventually the oversupply in shipping capacity will lead to price pressure and affect the firm’s results. Maersk downplayed the impact of events in the Middle East: despite the boost from the crisis in the Red Sea, around twice as many new vessels were being delivered to the market compared to the extra capacity required to send ships around Africa. In 2023, shipyards delivered 350 new containerships with a total capacity of 2.2m teu, beating the previous record from 2015 when 1.7m teu was delivered. The 2023 record is now likely to be soundly beaten this year.

The container fleet capacity is expected to grow by 10% in 2024 “Although owners, as well as the liner operators, are currently benefiting from the irregular events in the market out of the Red Sea as well as the Panama Canal, then it may be prudent to remember the 3.1m teu in extra capacity that is expected to deliver in 2024, with around 140 vessels due in the first quarter,” analysts at brokers Braemar noted, a topic which has subsequently been picked up by Niels Rasmussen, chief shipping analyst at BIMCO. “In 2024, 478 container ships with a capacity of 3.1m teu are scheduled for delivery, beating the 2023 record by 41%. The container fleet capacity is therefore expected to grow by 10% in 2024,” said Rasmussen. Extrapolating the BIMCO data shows 1.31 boxship newbuilds are delivering each day, every day this year. BIMCO expects recycling of ships to increase in 2024 but the fleet could still grow by nearly 2.8m teu and by end 2024 exceed 30m teu for the first time in

history. While BIMCO is forecasting the container fleet capacity will grow 10% this year, the shipping organisation has warned that container trades are expected to grow significantly slower, increasing the demand for ship capacity by 3-4% in 2024. In the meantime, the average sailing speed of container ships has reduced from 14.3 knots in 2022 to 13.9 knots in 2023 and could fall further in 2024, according to Rasmussen.

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LNG

Tonnage tsunami Vast amounts of new gas ship tonnage will flood the market this year, likely keeping a cap on rates

he year 2024 promises to be a remarkable one for the LNG trades, setting multiple records. January 17 marked the first time this century that no single LNG carrier was present in the Red Sea, a significant sign of how rapidly and tremendously the global seaborne map has changed in the months since the Houthis from Yemen – backed by Iranian intelligence and weaponry – came out in support of Hamas in the ongoing war with Israel. For the LNG market, an extended shutin of the Red Sea route from the Middle East poses a supply risk to Europe, although the price impact will be delayed until Europe’s gas storage has been drawn down sufficiently. In 2023, around 15.5m tonnes of LNG was sent through the Red Sea from the Middle East to Europe accounting for 12.9% of the continent’s LNG supply last year. Re-routing vessels through the Cape

of Good Hope adds around 12.5 days to the voyage each way at 16 knots – which could require an additional 15-20 vessels to deliver the same volume over the year, analysis from Rystad Energy shows. This could prove a useful soaking up of tonnage at a time where all-time high volumes of new ships are hitting the water. The pace of LNG newbuild deliveries will smash records this year, beating the previous annual gas ship delivery peak of 2021 by 48%. Data from Clarksons Research shows 89 LNG ships – with a combined 14.9 cu m capacity – are due to deliver this year, more than double the 10-year average, representing a 48% increase on the current record of 10.1m cu m delivered three years ago. Another year of very firm deliveries is expected in 2025, with 14.5m cu m initially projected to hit the water, while

131 vessels of 22.9m cu m are already on order for 2026-2027 delivery. “With c.90% of vessels on order already committed to projects, although project slippage is always a risk,

The orderbook-to-fleet ratio stands above 50% 22

MARITIME CEO ANNUAL OUTLOOK 2024

LNG

The overriding sentiment from 2026 onwards is one of enormous positivity for LNG shipping expectations remain for record start -ups and rapid trade growth across 2025-27 to absorb strong deliveries as the sector enters a major phase of expansion,” Clarksons noted in a recent weekly report. Nevertheless, the Biden administration’s recent decision to temporarily halt new US LNG export approvals has injected “new uncertainty” into global gas markets, according to new analysis from Greek broker Intermodal. With America emerging as the top LNG exporter in 2023 ahead of Australia and Qatar, the policy shift clouds projections of future supply, demand and price dynamics, Intermodal argued.

While currently operating US projects can continue to export, the pipeline of proposed export capacity will be stalled as the government reviews the climate and economic impacts. “Shipping companies are possibly preparing for weaker long-term demand for tanker capacity, amidst a time when the orderbook to fleet ratio stands above 50%, and with the majority of them being delivered either this year or the next,” Intermodal noted. Freight rates on the spot market to date this year have followed the seasonal pattern of the last five years, with rates peaking before winter and then softening. Analysis from rival broker is SSY is

initially bearish, but Red Sea exclusion could help prop up earnings. SSY gas experts also point out that 2024 will see more attention paid to the new emissions regulations that have come into effect for the market with CII and EU ETS being key talking points for any chartering discussion. “In these initial stages, the older steam turbine tonnage has begun to slow down (engine performance limitation systems are now commonplace), and this has impacted the desire to consider these ships as chartering options,” SSY noted in a recent report. Concluding, SSY observed: “If the analysts are correct and the market looks to be weak over the next two years, then it is not a long period to wait, as the overriding sentiment from 2026 onwards is one of enormous positivity for LNG shipping.”

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DIGITAL TECH

The threshold of a transformative era? How pivotal will digital advances be in the Year of the Dragon?

n 2024 the shipping industry stands on the “threshold of a transformative era”, blending digital and human intelligence prowess in aid of optimal management, says Captain HS Swaminathan, co-CEO of shipmanagement at Synergy Marine Group. “The rise of digital continues to be a powerful tool for our industry, from using it to plan more efficient routes to creating decarbonisation plans,” says René Kofod-Olsen, the CEO of V.Group. Thomas Zanzinger, CEO of Ocean Technologies Group (OTG), tells Maritime CEO that the Year of the Dragon will be a time when a a lot of emerging technologies start to accelerate at an exponential rate. “Connectivity is the number one enabler of real time data exchange,”

Zanzinger says. “The growth in and predictions around the number of owners that are planning to roll out low Earth orbit satellites (LEO) in the short term, will lead to significant opportunities in terms of how the world fleet operates.” Peter Schellenberger, the founder of Novamaxis, a shipping consultancy, believes that the disruption of communication improvements through LEO satellite providers and their adoptions by all major shipowners and managers around the world will bring about a raft of new services and products which he says will finally provide similar conditions to onshore, assisting communications, crew welfare and health and improved vessel operations. In 2024, the maritime industry is set to witness an even more pronounced surge

in data usage onboard. Inmarsat Maritime witnessed a 31% surge in data usage by commercial maritime vessels in the first half of 2023, on top of a 56% increase from 2021 to 2022, and this trend will continue to move upwards, according to Marco Cristoforo Camporeale, a senior director at the company. “Ship operators are realising they can use enhanced speed capabilities for vessel operational improvements in ways we have not seen before,” says Camporeale. “This trend toward the concept of a floating office will accelerate with implementation of cloud-based applications and streamlined data transfer between vessels and onshore facilities.” The maritime tech landscape is

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DIGITAL TECH

The trend toward the concept of a floating office will accelerate witnessing a consolidation as start-up software companies begin to merge to achieve global scale in digitalisation. “We will see larger incumbent organisations, like class societies, to partake in joint ventures or acquire these start-ups, amplifying their capabilities and scaling up industry-wide digital transformation,” Camporeale predicts, suggesting that this trend indicates a broader shift towards holistic solutions preferred by shipowners and managers.

Artificial intelligence The trend most people surveyed for this article are keen to highlight relates to artificial intelligence (AI), something that is clearly going to be one of the hottest topics in maritime tech this year. “These technologies promise a seamless, personalised customer

experience, automating tasks beyond booking services reliant on manual documentation,” says Jeremy Nixon, the CEO of Japanese containerline Ocean Network Express. Setting the scene for the endless possibilities afforded by AI adoption, Vikrant Gusain, the CEO of Hong Kong’s Dockendale Ship Management, muses, “Imagine a ship where ChatGPT becomes a virtual crewmember, continuously analysing vast datasets, weather patterns, traffic patterns, and navigational hazards. This AI companion not only enhances real-time decision-making but also serves as a tireless assistant, offering insights, suggestions, and predictions that empower the crew to navigate with unparalleled precision.” “Even though AI is still at a relatively nascent stage in shipping, all stakeholders - ranging from shipmanagers, financiers,

shipowners to classification societies - they all find AI technologies to help them create more efficiency in the supply chain,” says Gautam Chelleram, the chairman of KC Maritime. “In shipping we have produced more and more data but have rarely managed to really capitalise on its potential,” points out Zanzinger from OTG. “Very quickly we will start to see AI powering data analytics and being an enabler to data-based decision making.” Grigoris Lamprou, CEO of Procureship, a Greek online marketplace, reckons that this year shipowners and managers will increasingly turn to data to inform their decision making capabilities, particularly when it comes to costs. Lasse Kristoffersen, president and CEO of Wallenius Wilhelmsen, tells Maritime CEO: “Generative AI will in shipping start to deliver real impact and many

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companies will start utilising technology like Copilot from Microsoft.” Wallenius Wilhelmsen has been part of an early adaptor program with Copilot with Kristoffersen reporting a “real impact” already. Enhanced use of AI and big data in predictive maintenance, route optimisation, and cargo management can improve operational efficiency and reduce costs, according to Arthur English, the CEO of Norwegian owner, G2 Ocean. At Hafnia, the world’s largest product tanker player in the world, last year saw many repetitive tasks handed over to AI. The company is also heavily involved in working on AI-powered predictive maintenance. Hafnia has just established an AI start-up. “It’s an operational AI streamlining system integration, enhancing knowledge sharing, and reducing manual system connections. We expect to see other shipping companies coming onboard regarding investment into this,” says Mikael Skov, the CEO of Hafnia. The incorporation of predictive

maintenance is a “game-changer” in ensuring vessels operate seamlessly, claims Lene Normann Olsen, chief commercial officer at VesselMan, a Norwegian provider of SaaS solutions. Voyage planning is also experiencing “exciting developments” according to Hafnia’s Skov. “New tools powered by advanced algorithms and real-time data analytics are helping us chart the most efficient routes, considering variables like weather, fuel consumption, and port congestion,” Skov says.

Robots running ships Autonomous shipping, while steadily progressing, will be concentrated in selected countries, according to Inmarsat Maritime’s Camporeale, who tells readers to keep an eye out for developments in Japan in particular where plans are underway for fully autonomous cargo ships operating by 2025 through a consortium of stakeholders including class, shipyards and operators.

Danilo Fumarola, the CEO of Monaco shipowner Gestion Maritime, reckons robotics will find large applications in two main areas; safety and energy efficiency. Cargo operations, cargo hold cleaning, and cargo ventilation will be some of the examples where robotics will have roles to play. Enhanced use of blockchain technology is expected by G2 Ocean’s English, who also thinks that electronic bills of lading - with or without use of blockchain - will have a major uptake in 2024 due to recent legislation. Many people polled for this survey see increased deployment of Internet of Things (IoT) sensors for real-time monitoring of cargo conditions, vessel performance, and environmental factors to improve decision-making processes. “While all these technologies have been in development for some time, a combination of maturing technologies, regulatory changes, environmental pressures, and evolving industry needs could make 2024 a significant year for widespread adoption within our sector,” concludes English from G2 Ocean.

The seafarer viewpoint

n the 49 years that Pradeep Chawla has been involved in the shipping industry, he cannot recall a time when the seafarers have had to deal with the number of challenges that they face today. “The vagaries of geopolitics are directly affecting the mental health of seafarers in an unprecedented way,” says the founder of maritime e-learning company MarinePALS. “It was bad enough,” he says, “dealing with armed robberies, piracy, and hijackings, but facing the possibility of being struck by missiles or worry about getting captured because the ship is in some way connected to the warring nations is an entirely different paradigm.”

For Peter Hult, who heads up Vikand Services, an expert in maritime medical matters, the most pressing issue facing shipping is a looming labour shortage, with a shortfall of 90,000 officers expected by 2026. “In the near term, the maritime industry should focus on retaining experienced officers and adopting a crew asset management strategy,” he advises. With current technology and preventative health care models, Hult reckons the industry can improve

seafarer wellbeing and operational safety, whilst reducing P&L costs, through a holistic approach that encompasses mental and physical health, as well as the environment in which seafarers live. “2024 for the seafarers will be a busy year as they manage the multiple challenges of learning new knowledge and skills while hoping that sense will prevail in the world to stop wars and get back to making the world a better, cleaner place to live for future generations,” concludes Chawla from MarinePALS.

The vagaries of geopolitics are directly affecting the mental health of seafarers

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GREEN TECH

Towards a zero emission fleet What can shipping expect in terms of green technology breakthroughs in the months ahead?

he year 2024 will be the first year in which it will become clear what can be achieved in the short term and what can only be achieved in the long term in environmental efforts in the shipping industry,” argues Jeremy Nixon, the CEO of Japanese containerline, Ocean Network Express (ONE). Shipping companies are entering a period of change in 2024, he says, marked by the launch of the European Union emissions trading scheme (EUETS) and significant decarbonisation efforts. “Transformative change is imminent,” he predicts. Last year’s 80th gathering of the Marine Environment Protection Committee (MEPC) has set the tone for fundamental changes in the industry

which will unfold this year and beyond. Even if the detailed work has yet to be done, the commitment is there now with a net-zero target for the middle of this century, as well as interim targets for the end of this decade. “The implications are twofold,” says Matthieu de Tugny, president of Bureau Veritas, Marine & Offshore. “Firstly, 2024 must be a year of action; and secondly, finding ways to reduce the greenhouse gas (GHG) impact of existing ships and ship operations must be a priority.” “Sustainability and the drive towards decarbonisation are at the forefront of shipowners’ and shipmanagers’ minds,” says René Kofod-Olsen, CEO of shipmanagement giant V.Group. Around 80% of reductions in

emissions over the next decade will come from optimisation of current assets, he reckons. BV’s de Tugny expects that interest in and development of wind powered solutions will continue to grow this year, and key to their further expansion will be performance data as it emerges from the ever-increasing number of projects. Kim Diederichsen, CEO of one of the leading providers of wind power, Anemoi, is happy to hear the BV prediction. “Wind propulsion and rotorsails have found their place in modern shipping in 2023,” Diederichsen says. “With pressure growing on ship owners to go green, rotor sails are a visible, viable and costeffective decarbonisation technology for all types of vessels as they look to

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GREEN TECH

Data verification will matter much more than in the past improve their carbon intensity ratings.”

Performance data The mention of performance data above is something many polled for this green tech survey highlight as a central theme this year. “All stakeholders will need an undisputed data truth when it comes to fuel consumption , i.e. carbon emissions,” says Friederike Hesse, cofounder of zero44, a digital solution to manage environmental regulations such as EU ETS. “Data verification will matter much more than in the past, and it can’t happen in retrospect on an annual basis

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MARITIME CEO ANNUAL OUTLOOK 2024

only, it has to be voyage per voyage,” Hesse says. “Today, transparency emerges as imperative,” argues Yanis Souami, the CEO of Sinay, a maritime data provider. “The furniture of real-time data insights into environmental impacts will act as a guiding compass for shipping companies to optimise routes, curtail emissions, mitigate noise pollution, and safeguard critical biodiversity hotspots,” he argues.

Fuels Undoubtedly the year ahead’s green tech news will be dominated by the future fuel debate. In 2023, half of the ordered

tonnage was capable of using LNG, LPG, or methanol, according to Eirik Ovrum, principal consultant at DNV and lead author of the Maritime Forecast to 2050, who also highlights the many ongoing projects for ammonia-fuelled ships. “Methanol will manifest itself as the short term bridge fuel of choice and we will see a significant increase in orders and production capabilities,” predicts Lasse Kristoffersen, the president and CEO of Wallenius Wilhelmsen. This year is predicted by many polled in this survey to see more mature conversations about how shipping can source the renewable energy that will be required to produce green hydrogen, ammonia and methanol, and make them available at the global scale needed. Of the main sectors, dry bulk stands out as the least willing to invest in green new tonnage. According to data from AXS Marine, so far only 3% or 915 vessels are equipped with dual fuel propulsion from the total global bulk, tanker and

GREEN TECH

containership fleet of 30,487 ships. Clarksons Research data shows that strongest uptake for alternative fuels outside of LNG carriers and VLGCs where cargo can be utilised as fuel, has been in the container sector, now standing at 61% of the orderbook and car carriers at more than 90%. For the bulk carrier orderbook take-up is just 10% and for tankers it is 19%.

Nuclear It’s only been from this decade that the prospect of nuclear propulsion being widely adopted by commercial shipping has gained any traction. “We may hear a lot more about atomic energy in the year ahead as realisation about the scale of the challenge builds,” says BV’s de Tugny, a point of view backed up by Harry Vafias, the Greek owner running SteathGas, who tells Maritime CEO: “I also believe that we are going to see nuclear power slowly becoming the only viable solution for zero emission shipping.” Mikal Bøe, arguably the world’s most high profile proponent of nuclear as shipping’s green bullet, in his role as CEO of CORE POWER, maintains: “There is simply no net zero without nuclear.” CORE POWER is a UK-based marine atomic propulsion developer.

Carbon capture This year is set to be a landmark one for pioneering projects involving carbon capture with the technology being tested on 31 in-fleet vessels, plus 22 newbuilds, according to Clarksons Research. The industry as a whole will be watching carefully how well Singaporean yard Seatrium completes the world’s first

Only 3% or 915 vessels are equipped with dual fuel propulsion full-scale, turnkey carbon capture and storage (CCS) retrofit of a 7MW Wärtsilä CCS system on Solvang’s 21,289 cu m ethylene carrier, Clipper Eris, scheduled to commence in the third quarter of this year. The project will use amine cleaning technology to capture 70% of the carbon dioxide in the exhaust gas from the main engine, involving the entire value chain for handling CO2, including liquefaction and storage onboard the vessel. The technology will be piloted onboard the vessel over a year while it is operating commercially. If the pilot project is successful, Solvang intends to install the technology on some other vessels, including newbuilds, giving the rest of the industry the confidence to follow suit. “As shipbuilders, we recognise our pivotal role in technology integration, and it is important that we ensure that our products remain relevant for future tonnage,” says Chan Eng Yew, the CEO of another Singapore shipyard, Strategic Marine. On the topic of carbon, Jeroen van Heiningen, founder of 123Carbon, is adamant that carbon insetting will grow in popularity this year. “Carbon insetting is the most impactful instrument for transport companies seeking to share the cost and environmental benefits of their low carbon activities,” he argues. Jens Martin Jensen, the CEO of Athenian Tankers, hopes that the coming year will see far greater investment in shore power to ships. “I am simply amazed why IMO or other governmental bodies have not made this mandatory long time ago and it is such a

low hanging fruit in the race for reduced emissions,” he says. Another significant trend Frederik Pind, managing director of Njord, anticipates this year is the emergence of further green financing options, especially for retrofitting projects. “This development will be a gamechanger for small and mid-sized owners which make up the majority,” says Pind, whose company offers advice to owners on energy saving devices.

Note of caution Tim Huxley, chairman of Hong Kong’s Mandarin Shipping, is not predicting any big green breakthroughs this year. “The technology for the green transformation seems to be there, the big challenge is how to pay for it,” he says. Quite so, agrees Marco Fioro, the CEO of Genoa-based owner Premuda. “I am sorry to say but I believe that in 2024 there are going to be a lot of talking about the bunker of the future but I doubt there are going to be any major events,” the Italian says. “We are obliged to improve the carbon footprint of the existing fleet, but we must also be realistic in expecting changes to happen gradually.” This, Fiori believes, is not because people do not want to do it. “Everybody is convinced that things have to change,” he concedes, “but it is difficult to make a 180 degree turnaround after more than 100 years of using oil. Things will change, the question is how fast we will be able to make it happen.”

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FINANCE

What keeps shipowners up at night? A lively finance session at the most recent Monaco Maritime CEO Forum gave delegates an idea of how and where to source capital

hat are we worried about that we shouldn’t be worried about, and what are we not worried about that we should be worried about?. This was a question posed from the floor at the Monaco Yacht Club at the latest Maritime CEO Forum by Richard Diamond from Dallas-based Castlewood Capital Partners and it was one that got panellists at the event’s Money & Ships session thinking hard. Billed as the ultimate quick-fire ship finance and investment panel, the Money & Ships session, moderated by Holly Basile from Moore Stephens, gave delegates a unique grasp of where and how to access capital and what fleets make the most attractive investment case at the moment. Grabbing the mike first to answer Diamond’s existential question was Dagfinn Lunde, the chairman of eShipfinance.com, telling delegates not to worry about what future ships will

MARITIME CEO ANNUAL OUTLOOK 2024

look like. More of a concern for him was the available capacity to retrofit today’s existing merchant fleet. Quite so, concurred Alan Hatton, the CEO of Singapore-based shipowner Foreguard Shipping. “I’m less concerned with the things that the markets can fix such as green ships. Markets and regulators will come together and find solutions,” he told the 125 senior executives attending the exclusive, byinvite-only event. For Hatton, the risks of geopolitical uncertainty becoming contagious were more of a worry. “There is a lot of worry about fuel, engine technology but shipping is incredibly innovative in finding solutions,” said Burak Cetinok , head of research at broker Arrow Shipbroking, alluding to how the industry had successfully handled the phase-out of single-hull tankers as well as the transition to low sulphur fuel. “What I am worried about is that we

should be prepared for disruptions in the future, not just geopolitical, but environmental,” Cetinok said, citing the many weather disruptions making shipping headlines over the last couple of years. Also, he warned shipping needs to keep abreast of the rapidly changing global trading patterns, many of which are appearing in an “unpredictable manner”. For his part, Diamond said he was not worried about peak oil, a point of view shared by panellist Marco Fiori, the CEO of Italian owner Premuda, who cited ExxonMobil’s recent decision to go for the largest acquisition in its history, something that has since been followed up by Chevron’s $53bn purchase of Hess. In terms of what concerns him more, Fiori said: “Cycles have shrunk and volatility has increased exponentially. We have to be prepared for huge volatility.” From the floor, Andrian Dacy, the managing director of the global

FINANCE

transportation group at JP Morgan, described the exchange on the stage as “hugely impactful”. “What I worry about is the impact of the Poseidon Principles as well as the impact of Basel IV and the implications for traditional banks to lend against older ships. This will be significantly curtailed,” Dacy said, advising fellow owners flush with cash to not order ships but pay down debts. In terms of where to invest Arrow’s research head, Cetinok, was favourable towards dry bulk, and smaller ships in general, picking out ultramaxes and MRs when pressed while Lunde picked out the hugely underinvested offshore segment as an attractive proposition. The panel was lukewarm at best when it came to the attraction of IPOs with Lunde quipping: “Shipping is full of money so there’s no need for IPOs.” On financing in general, Fiori advised owners to seek several ways to raise cash whether it be via bank lending, debt financing, or long-term charters. “You always need alternatives. The

Cycles have shrunk and volatility has increased exponentially really successful ones are the ones who are always tapping the markets,” Fiori said. All panellists agreed that while traditional shipping banks might not be so ready to do business as in the past there was no shortage of available lenders.

“There is no lack of money,” Lunde said, adding: “There are plenty of institutions lining up to lend to shipping.” Quite so, agreed Fiori. “Finding money is never a problem. It is a lack of good ideas that is the problem. There will always be new sources of financing for shipping,” he concluded.

Six in 10 investors considering divestment from maritime sector amid ESG concerns

ustainability and communications consultancy Woodrow has published a report showing that 64% of senior finance professionals in the UK are contemplating reducing their investment in the maritime sector due to ESG risks. The report sheds light on key areas of ESG risk perceived by lenders and investors, including labour rights, climate change, and regulatory compliance. It also assesses risk perceptions in specific maritime sectors such as shipping, ports and terminals, and offshore activities such as drilling. The survey engaged 100 senior finance professionals from various segments of the UK capital markets, including commercial and investment banks, asset managers, development and multilateral banks as well as private equity firms.

Two-thirds (66%) of respondents believe that the maritime sector faces greater ESG-related financial risks compared to other industries. This perception is particularly strong among those managing debt capital (73.5%) and among large institutions with assets under management ranging from £10bn ($12.7bn) to £100bn ($127bn) – around 75%. Perceptions differ according to the type of financial institution and its exposure to maritime assets. Investment banks were the most concerned (83.3%), whereas multilateral banks and IFIs were less aligned, with only 40% sharing this view. High maritime exposure led to higher concern (69.7%), compared to limited exposure (52.9%). The report unveils widespread scepticism about the maritime sector’s ESG awareness and transparency, with 57% considering the sector less aware

and 56% criticising its transparency. This scepticism is heightened among those handling equity capital – 66.7% questioned the sector’s awareness and 64.1% its transparency. Larger institutions which manage between £10 – £100bn generally agreed with these negative views, while smaller institutions, which manage under £1bn, were less convinced. “This report reveals a paradox: while capital markets consider the maritime sector to be ahead in managing ESG risks, they also find it lacking in transparency and slow to integrate sustainable practices. This inconsistency is alarming, particularly when most financial institutions are mulling over divesting from or reducing exposure to maritime assets due to ESG concerns,” Henry Kirby, head of Woodrow’s sustainability practice, said.

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SHIPMANAGEMENT

Competing visions for the future of shipmanagement Top names discussed the future of the sector at the recent Monaco edition of the Maritime CEO Forum

ow the ashipmanagement sector is changing, and offering solutions to shipping’s complex future formed an hour of debate at the recent Maritime CEO Forum gathering held at the Monaco Yacht Club. On stage were five CEOs who between them look after more than 2,000 ships – each executive with diverse views on how they see the sector flourishing. It’s rare to attend an industry event where there is a clear frisson among panellists, but it was evident on stage at the yacht club. Take Mark O’Neil, for instance. The head of Columbia Shipmanagement is also president of InterManager, the sector’s global association. He found himself alongside many other leaders who have opted steadfastly to not be part of his association. O’Neil’s recently published general principles that he

wants his members to adhere to were met with a lukewarm reception. Claiming the old days of thirdparty management were out, and that second-party management was a better description of the business these days, O’Neil said his association’s new general principles were designed to ensure managers deliver the same levels of quality in operation as large owners, to raise the standards of the management industry as a whole to make a compelling case to the naysayers. Bjorn Hojgaard, the head of AngloEastern Univan Group, the world’s largest shipmanager, and not an InterManager member, responded: “Shipmanagers are as different as shipowners are. It’s horses for courses, there’s no one size fits all. I like to spend my time with owners working out what is best for them.” He went on to say: “The job is to

convince owners to use us through the delivery of supremely good services – that ought to be the benchmark rather than principles.” More conciliatory was René KofodOlsen, the CEO of V.Group, who said the principles were “great”. “We are not an island within shipping. It is up to us to prove to shipping we can run ships safe and reliably across the world,” Kofod-Olsen said.

Dearth of talent There was much discussion between the panel and delegates from the floor on the perceived looming skills shortage among the global seafarer workforce. Finn Amund Norbye, the CEO of OSM Thome, warned: “The seafarer shortage is something we should be very worried about.”

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Nordbye said it was important to have a large global footprint to access seafarers from all over the place. “We cannot be complacent, we have to be on the front foot. We will see some new countries popping up in terms of sourcing crew,” he told delegates attending the by-invite-only forum. Columbia’s O’Neil argued that while there will always likely be enough crew for the world fleet, the problem is there are not enough qualified crew, noting the huge loss of seafarers post-covid. “We need to bring a more effective human resources management onboard in the same way our offices have. Shipping is so far behind other sectors on this,” O’Neill said. V.Group’s Kofod-Olsen conceded that getting the right crew to handle new fuels and digital tools would be a challenge, but it was up to the industry to make life at sea more comfortable. “We need to look into how we design ships,” Kofod-Olsen said. “We need bandwidth up. Seafarers need to have a life onboard that is commensurate with what is ashore.”

Diversity issues The V.Group boss then pointed out that shipping had thus far failed to “crack the code” on 50% of the potential workforce. “We have not done well with how to deploy females at sea,” Kofod-Olsen said, neatly bringing the discussion to the floor where Heidi Heseltine, founder of the Diversity Study Group, hit out at the sector for its general lack of diversity. “It’s something we have to work on,” admitted Nordbye from OSM Thome, adding: “Gender is still a bit behind and I also see we are a bit too homogenous in terms of our onshore staff.”

Seafarers need to have a life onboard that is commensurate with what is ashore While agreeing fostering diversity was very important, Anglo-Eastern’s Hojgaard cautioned: “We have to remember to temper that drive with principles of meritocracy and equal opportunities. We are not hiring for specific genders or races.”

Pricing The panel were in agreement that the old shipmanagement contract was increasingly redundant and that a more results-orientated type of pricing mechanism works better for clients. “We have to give a non-commoditised service where as the traditional shipmanagement contract tends to be commoditised so it is outdated,” argued O’Neil.

Giving his thoughts from the floor, Manish Singh, an ex-V.Group highflier and current head of AboutShips, a boutique maritime investsment advisory, looked at the upcoming challenges posed by decarbonisation and digitalisation. “I can’t imagine how all of these operations can happen smoothly without greater collaboration among all of you,” he said to the panel in front of him. “The G7 – or better the G20 – of shipmananagement have a collective common obligation to each other because your ship does not operate in isolation,” Singh said, while also calling for more consolidation within the sector in order to help it move at greater scale. “Compare us to any other industry and we are woefully fragmented,” conceded O’Neill.

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OPINION

Green priorities this year Dr Simon Bullock with analysis from researchers at the Tyndall Centre, University of Manchester on shipping’s green goals in 2024

023 was a year of savage and unrelenting climate disasters, further reinforcing the increasingly urgent need for far greater action to cut global greenhouse gas emissions. This was acknowledged at December’s United Nations Climate summit COP28 in Dubai, which signalled for the first time the need for the “end of the fossil fuel era”. This has big implications for the shipping sector – as a third of the goods it transports are coal, oil and gas, and because it relies almost entirely on fuel oils as an energy source. The sector has already recognised it needs to do more – the International Maritime Organization (IMO) set a new climate strategy last summer, strengthening its previous targets. However, although some commentators hailed this strategy as a monumental achievement, others argued it was still insufficient. Two key questions therefore remain. First, are these new targets strong enough for the sector to play its fair part in meeting globally agreed climate goals? Second, how quickly does the sector need to act? New research from the University of Manchester addresses these questions. The new IMO strategy sets “indicative checkpoint” and “strive” targets for 2030 and 2040, on a pathway to zero emissions by around 2050. Our research concludes that the checkpoint targets of 20% cuts by 2030 and 70% by 2040 are not sufficient, but, under generous assumptions, the “strive” targets of 30% reductions by 2030 and 80% by 2040 are compatible with the Paris goal to prevent global heating exceeding 1.5°C. These strive targets should be considered the minimum level of ambition for the sector. The research also concludes that any further delay in cutting shipping emissions would push compatibility with 1.5°C out of reach. Therefore, it is actions to cut emissions this decade that must be prioritised. It is imperative that policy makers and the industry focus on accelerating deployment of known

technologies and practices to meet at least the “strive” goal of a 30% cut by 2030. This is only six years away, and will require all hands on deck to achieve. For the IMO, there are two clear priorities. First, to tighten the Carbon Intensity Indicator (CII) targets to be inline with absolute cuts of at least 30% by 2030, and strengthening CII enforcement and compliance mechanisms. Second, agreeing as soon as possible a strong 1.5°C compatible global carbon price on carbon in fuels, which increases over time, with revenues used to ensure a just shipping transition is possible for developing nations. But because IMO processes are slow, complementary actions are essential from national and regional policy makers, and industry itself, to accelerate and broaden initiatives and policies already agreed. For industry, although deployment of new low-carbon fuel sources is imperative, this will largely deliver emissions reductions in the decade 2030-2040. To meet the 2030 target, it is operational and efficiency measures on the existing fleet that matter most.

Collaboration between container companies and cargo owners is needed to lower speeds. Archaic chartering practices need overhauling, to eradicate the practice of “sail fast then wait”, as advocated by the Blue Visby Consortium. Wind propulsion retrofits are deployable now, can deliver emissions cuts averaging around 17% in combination with route optimisation, and need far more rapid roll-out. Finally, national and regional policy makers can complement IMO actions. The EU has led the way with its inclusion of maritime in the EU ETS, and the broader FuelEU package. But nation states can act as well. One strategy to look out for is the imminent revision of the UK’s Clean Maritime Plan. The UK was one of the “high-ambition” advocates last summer at the IMO – their new domestic strategy should commit to higher 2030 targets than the global average, alongside strong new policies. 2023 was the year the shipping sector agreed new targets. 2024 is the year it needs to start bringing its emissions down, and fast.

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OPINION

Will the Year of the Dragon spring some surprises? Pierre Aury on the four big topics shipping needs to be aware of in the coming months

o where is the market headed to this year? Sorry to disappoint you but we will not be answering this question. Instead we will look at four topics with two of them likely to have an impact on the shipping market and two highly unlikely to have any. These four topics are a financial crisis, the geopolitical situation, global warming and the AI ‘revolution’. It is debatable whether there is an AI revolution or not but what is not debatable is the fact that AI is making the headlines on a daily basis with claims that it is going to solve all of our problems. In shipping however AI is not about to create new cargoes nor is it about to shrink the fleet so it will have no impact on the shipping market. The only market which will be impacted by AI will possibly be the shipping job market with new skills required and some job losses to be expected. Now on to global warming which is starting to shape our daily lives as the Panama Canal is reminding us. But what is really shaping our daily lives in the

short term is the ongoing and so far unsuccessful decarbonisation of our economy which will continue unabated. Why indeed change policies which are not working. So expect more ill-conceived policies to be implemented by our politicians but none of these are likely to impact the shipping market neither in a bullish nor a bearing way at least short term. They might just make things more expensive. I give you the EU’s wonky ETS as a prime example. The geopolitical situation is probably worse than it’s ever been since the end of World War Two. There is a real risk of an extension of the Israel-Gaza war. Israel is fast losing the international support it had back in October last year and could be tempted to get this support back in the context of a wider conflict. At the same time Iran is in the midst of a deep economic crisis having seen its GDP shrink 40% since 2012 and could be tempted to apply the diversionary theory of war and territorial conflict according to which unpopular leaders generate foreign

In absolute and relative terms the global debt situation is much worse today than it was back in 2008 42

MARITIME CEO ANNUAL OUTLOOK 2024

policy crises to both divert the public’s attention away from the discontent with their rule and bolster their political fortunes through a rally around the flag effect. Now throw in the mix the fact that 5% of the US GDP is related to defence and arms sales (as opposed to 2.5% for the EU) and you have a case for another party having an interest in an extension of the conflict which will then have an impact on the shipping market. Bullish or bearish we leave it to you to decide. We will finish with the plausible scenario of a financial crisis happening in the short term. The main reasons for the 2008 great financial crisis were too much liquidity created by too much debt, banks being too big to be understood by the regulators and a trigger, the US subprime market. Fast forward to 2024 and the amount of debt has increased by 87% while over the same period world GDP has increased by 64%. So both in absolute and relative terms the debt situation is much worse today than it was back in 2008. Regarding the size of banks, suffice to say that a lot of banks have disappeared since 2008 (Bear Stearns, Lehman Brothers, Merril Lynch, Crédit Suisse…) making the remaining ones much bigger in relative terms. We leave it to you to find out what could be the trigger this time.

OPINION

What I’d like to see happening in shipping this year Andrew Craig-Bennett with a wish-list and a reality check

tarting from the top, let’s have a small revision of the Maritime Labour Convention (MLC) to make it quite clear that every seafarer has the right, by law, enforceable in every port, to free access to the internet in port and at sea except during her or his working hours. The actual wording of the MLC on this contains enough waffle for a coach and horses to be driven through it, twice, at full gallop. Let’s see that sorted. Once it is sorted, the union power of seafarers will increase to the point where the unions comprising the ITF will be able to take real care of their members. Yes, I know that’s the real reason that owners and managers don’t want it. Everyone else does. Next, I was going to repeat my long standing plea for a revision – a major revision – of the Collision Regulations, which would at last at last recognise that commercial sailing ships have been a thing of the past since the 1950s, but on reflection I will scrap that, as, in my dreams at least – and I hope in reality – real sailing ships may be coming back. Real ones, please, with the sort of sail area needed to generate the horse power needed to drive them at commercial speeds – 12 knots to 14 knots. I do not mean greenwash.

No more hurry up and wait in the bulk markets. I mean, really, this is sailing ship practice from two centuries ago. It’s absurd and actually shameful. Now let’s have an end to dishonesty in the tanker business, which we all thought had done such a good job of cleaning itself up. Just like in the days of the Iran -Iraq war, the shadow fleet of tankers, despite its old ships having very dubious access to repairs, spares and insurance, is having rather few accidents. This is because its manned largely by older officers and crew who are looking to make a pile to retire on, who are happy to get much better pay. They don’t care about revalidating their certificates, thank you, because they don’t intend to come back. Well, who did you think was manning these ships of utter shame? Wake up, people!” And the big one. I hope that in 2024, at least one big shipowning company – it will have to be a big one, for this – will order a string of nuclear-powered containerships. Because we need them. Now, what is really going to happen? Despite shipowners everywhere quietly muttering the shipping version of the Roman army’s toast – “Send us a war or a plague and a quick promotion!” – which

is of course, “Please may someone close the Suez Canal!”, it isn’t going to happen. If the Houthis think it is, they will be popular practice targets. Despite all the sturm und drang, the IMO CII and the EU ETS will slot quietly into place. They are well drafted and well understood, and BIMCO and the IACS members have done a good job. The little bit that will become exciting is the bit that I haven’t seen remarked on – and I apologise if I have missed it – and that is the level B, level C, level D, business, with owners of ships trying to stay at the front of the alphabet, whilst their charterers try to shove them down it and over the cliff marked ‘Three years of D and you’re scrap!’ in order to command the ships on their charter to do more damage to the environment than they want to. Owners will start to take ‘greenery’ more seriously, because not only their customers – who are easily fobbed of with a can of greenwash – but their crews, who are not, will start to insist on it, and the people who will really be under the gun are the shipbuilders, who cannot just change flag and decamp at the stroke of a pen, and who will not only mean it but will look forward to building ships where more value is added in the yard.

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DATA

Key stats heading into the Year of the Dragon Sector Earnings

Share Perform

Orderbook as a % of the Existing Fleet

Vessels over 20 Yrs Old as a % of the Total Fleet

Sales Liquidity

Net Fleet Development

Forecast 1 Yr TC Rates

Forecast 5 Yr Old Prices

MARITIME CEO ANNUAL OUTLOOK 2024

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