Maritime CEO Issue Four 2022

An ASM publication

Editorial Director: Sam Chambers sam@asiashippingmedia.com

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London: Paul Collins

New York: Suzanne Smith

Oslo: Hans Thaulow

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Shanghai: Colin Quek

Singapore: Grant Rowles

Sydney: Ross White-Chinnery

Taipei: David Green

Tokyo: Masanori Kikuchi

Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel

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Although

rights

omissions

Shipping’s fastapproaching demographic time-bomb

There is a potentially epic demographic time-bomb coming shipping’s way that far too few of us are discussing regardless of where you might stand on the whole autonomous debate.

I’ve been fortunate enough to moderate two shipmanagement panels in the past month at our Maritime CEO Forums in Singapore and Monaco.

At the former, Carl Martin Faannessen, CEO of Manila-based crewing specialist Noatun Maritime, shocked delegates by relating how, according to studies he had been involved in, once a country’s GDP per capita per year enters the $12,000 to $15,000 zone on a PPP basis, this tends to be the moment where sourcing ratings becomes difficult.

“So for the Philippines, India and Indonesia that means we do not have a lot of time,” Faannessen warned, with all three countries on course to crack this GDP yardstick this decade. He added that it typically takes between five and seven years to to go from zero to a stable source of crew in a new sourcing nation. Acknowledging the needs to source crew with decent English, a high level of compatibility, in relatively stable countries, where high unemployment can be a bonus, Faannessen selected Kenya as his top pick for new sources of crew.

Over in Monaco, the subject

was debated with René Kofod-Olsen, the CEO of V.Group, telling invitees to exclusive shipowner retreat on the Côte d’Azur: “The brain drain in certain nationalities in not selecting a career at sea should keep us all awake at night.”

Henrik Jensen, who heads up crew manager Danica, warned delegates that other industries were coming in to take talent away from shipping, citing the IT sector in the Philippines as a good example.

“We have to have a real rethink about how we employ people. The competition for talent from other industries such as IT is a real threat,” Jensen said.

V.Group’s Kofod-Olsen argued that the stereotypical view of where ratings will come from in the future is set for change. “These barriers will break down,” he predicted.

How we have viewed the traditional crew sourcing powerhouses over the past decades is about to change rapidly, and we all need to be talking about it a great deal more. ●

Editor Maritime ceo

Sam Chambers

Liberia’s

Prevention Program

What the midterms tell us about the American economy

The midterm elections in the US are always in effect a referendum on the state of the economy and a judgement on the current administrations economic policies. Of course in America many other factors are at play too – social policy, Supreme Court decisions, culture wars. But economy is fundamental still.

The Biden administration and the Democrats were overall bouyed by the November results, having been at pains to point out to the electorate the apparent and significant third quarter bounce in economic performance this year – according to the commerce department gross domestic product increased 2.6 per cent on an annualised basis between July and September 2022. This is after a contraction in the first half of the year, but still good news. Up for the year and ahead of most analyst expectations for the quarter.

Job creation was good for the quarter with over 160,000 new posts available. Imports were down but

exports up, in large part due to sales from the oil sector in the wake of the war in Ukraine. Though perhaps war in Europe is concerning consumers. Again according to the commerce department, consumer spending was up by a measly 1.4 per cent, which given some wage rises and new jobs should have been better. Rising prices, higher inflation, mortgage pressures (in some cases seeing rises of seven per cent) and fears of overseas events may have combined to dampen American consumer confidence. And most consumers know that the Fed is expected to make additional interest rate increases before the end of the year and in early 2023 too.

Looking for political advantage the Republicans argued the economy under Biden is in recession. This is not altogether clear at all though some analyst talks of “technical recession” with two consecutive quarters of shrinking GDP. But third quarter number reverse that trend.

Aside from the war related increase in petroleum exports

boosting the numbers, other sectors have not done so well. The success of oil (and gas – with exports to Europe, in particular Germany, soaring) has largely led to some forgetting that the Biden administration’s ban on semiconductor exports to China is also one of the most important policy moves of the year and may not stop at semiconductors as the ‘tech war’ between Washington and Beijing intensifies. According to some estimates – chips are the sixth largest export category from the US (according to US trade data) and China by far the largest single destination for those chips.

Other sectors saw reduced exports due to global circumstances. For instance, plane maker Boeing is still in the Doldrums with the global tourist market still depressed and no new orders from once rapidly expanding markets such as China. Still growth was recorded in exports of plasma and vaccines, motor vehicle parts, medicines in pill form, and medical instruments – all major export categories. ●

It’s all about energy

Europe is all about the Ukraine War and so therefore all about energy as consumers fear high bills and shortages as the winter, and the war, progress. The pressure is immense. The Financial Times recently noted that, ‘The cross-border integration of its own members’ economies is the deepest in history. Internationally, it is the most open economic region.’ But, there are fractures when it comes to international trade – none more obvious than sanctions on Russia, arguments over how to respond to the US Inflation Reduction Act (which involves a subsidy to buyers of electric vehicles, but only those made in North America) and, most recently, German

chancellor Olaf Scholz’s go-it-alone visit to China with a business delegation. Germany’s heavy reliance on Russia energy and most significant exposure, among EU nations, to the Chinese market (as both exporter and importer) appears to mean that Berlin’s commercial interests are stronger than bloc-unity right now. President Macron in France was reportedly angry. The only other potential counterweight to Germany, the UK, now long gone from the bloc and its debates.

It’s all a new geo-political reality for the EU. Hence the European Commission’s proposed reforms to EU fiscal rules that could substantially change how much states can borrow. In the wake of Greece, covid borrowing deficits and the Ukraine war it’s a naturally contested idea that will have to be fought out in the European parliament and capitals.

Still, on the ground, Germany defied expectations by reporting another quarter of economic growth, though economic momentum has slowed significantly in both France and Italy (itself now with a new government). The new government in Rome of Prime Minister Meloni has already announced it will raise

government borrowing and its 2023 deficit/GDP target to 4.5 per cent from 3.4 per cent – almost totally in response to rising energy costs and pressure on ordinary Italian consumers. Despite this Italy still looks likely to slip into recession in 2023, if not the final quarter of 2022. France saw anaemic growth in Q3 2022 – 0.25 per cent for the quarterwith household spending stagnating as inflation reached record highs. Industrial output was down too while the French central bank is now revising its year end growth forecast down significantly.

And most economists believe that Germany only just ‘dodged’ slipping into recession itself in the third quarter thanks to boosted industrial production numbers. But supply chain frictions, logistics issues and high energy prices continue to weigh on German industry. Most economists seem to think that the ‘long slide’ into recession continues in Germany. Indeed Germany factory orders were reported as ‘decelerating’ as early as September last – reportedly around four per cent month-on-month and this will naturally become apparent in Q4 2022 and Q1 2023 numbers as they come around.

Covid versus the economy

How much long-term damage has Beijing’s pandemic stance done?

China will be not sticking with its harsh and strict zero-covid policy for the foreseeable future - extreme protests have seen to that. But what does this mean for the economy. China has been issuing rather bullish economic statements which many analysts have found it hard to credit. More recent export statistics seem to offer a different picture of the parlous state of China’s once robust economy. Officially, China’s exports and imports both unexpectedly contracted in October, the first simultaneous slump since May 2020. Now, while rising inflation and higher

interest rates have had an impact on trade, COVID-19 curbs at home have severely disrupted output and consumption. Exports had been a bright spot in the Chinese economic story – though reports of workers confined to factories did alarm some analysts as unsustainable and recent images of Foxconn workers in Zhengzhou, a major Apple supplier, leaving factories en-masse to walk back to their home provinces have also been worrying.

Official customs data indicates that outbound shipments in October shrank 0.3 per cent from a year earlier, a major downturn from a 5.7 per cent gain in September, showed on Monday, and well below analysts’ expectations for a 4.3% increase. It was the worst performance since May 2020. A perfect storm of declining overseas orders, international recession, protracted property weakness in China as well as continuing zerocovid measures mean recovery looks extremely unlikely.

Inbound shipments declined 0.7 per cent from a 0.3 per cent gain in September, below a forecast 0.1 per cent increase — the weakest outcome since August 2020. Imports of soybeans collapsed and coal imports fell too, as strict pandemic measures and the ongoing property slump disrupted domestic output. The overall trade figures resulted in a slightly wider trade surplus of US$85.15 billion, compared with US$84.74 billion in September,

missing a forecast of US$95.95 billion. Added to this news domestic and international inbound tourism is drastically down in the former and totally absent in the latter case.

Michael Pettis, a Senior Fellow and Carnegie Endowment long based in Beijing, has also noted rising wage pressure impacting manufacturing costs. Looking forward to 2023 many analysts note that many European and American retailers are sitting on substantial inventory and so new year orders may be restrained while it is clear that Christmas orders for 2022 have already been severely reduced due to both flat demand and inability to deliver on time this year.

Despite this Han Wenxiu, deputy director at the General Office of the Central Economic and Financial Affairs Commission, has maintained that GDP growth is still the country’s major economic priority. But this does not seem to be enough to calm the markets, already worried about the issue of political legacy in China and Xi Jinping’s control of the country and zero-covid, appear to have found the latest exports and imports news from China particularly worrying. It now seems that prolonged Zero covid measures combined with the global situation and domestic slump worries (especially in the key property sector) mean China’s economic performance will be less than stellar for the short to medium term. ●

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All change again

Luiz Inácio Lula is back, promising a big reversal of policies from the Jair Bolsonaro era

Economics is politics in Brazil this quarter and going into 2023. Jair Bolsonaro is gone; Luiz Inácio Lula da Silva is back. The left has trumped the right and that has potentially profound consequences for the nation’s economy. Bolsonaro’s was a chaotic four-year reign which witnessed nearly 700,000 Covid deaths, tens of millions plunged into poverty through austerity measures, continued eradication of the Amazon rain forest and no significant economic bounce. Lula’s re-election was also the result of a unified opposition against Bolsonaro. It will be interesting to see how, in economic terms, this coalition can hold together in the coming months to agree of policy. And, we should

remember, Lula’s Workers’ party (PT) was hardly scandal and corruption free in its previous incarnation running the country.

Lula officially takes office on January 1 2023. Lula has not yet said who will head the Finance Ministry, causing broad speculation in the markets of Latin America’s largest economy. Some reassurance though from the appointed transition team working for Lula (Persio Arida and Andre Lara Resende, who helped design the Real Plan that stabilized the economy in the 1990s) who have previously favoured more traditional economic theories than Bolsonaro’s more ‘experimental’ economics advisers. But one thing everyone agrees on is that there is much to be done to get Brazil’s economy back on any kind of positive track.

The major structural problem for Brazil’s economy is persistent slow growth. Real growth in GDP per capita has averaged zero since 2011. The domestic economy remains relatively closed by international standards while the country’s exports remain overly reliant on agribusiness and mining. Investment and productivity are low, skills training insufficient, business banking systems antiquated.

Still, though overly reliant

on certain key export categories, these categories are doing surprisingly well. According to National Association of Cereal Exporters (ANEC) Brazilian maize exports reached almost 32 million tons in the first ten months of the year, which is more than double the volume shipped in the same period in 2021. Shipments of corn were also substantially up. In part this is due to poor harvests and bad climate in 2021 but not entirely. The key category of soybean shipments is always closely watched. Anec reported that 3.56 million tons were exported in October 2022 compared to 2.98 million tons in October 2021.

Importantly, Brazil’s trade surplus in October was lower than forecast. The trade surplus reached US$3.9 billion in October, according to the Economy Ministry, and total exports grew by 27.1 per cent from the same month last year, to US$27.3 billion. Imports increased by 19.8 per cent, to US$23.4 billion. The Economy Ministry pointed to substantial demand from China as the main reason for the growth in most commodity sectors, mineral and agricultural. Iron ore, coffee and beef all saw imports rise faster than previously for seven straight months in October 2022. . ●

Dry bulk owners will be satisfied with 2022

Why this year has been better than many give credence

After the biggest annual increase on record, 176% in 2021, the Baltic Dry Index (BDI) is set for one of its biggest annual falls on record this year, being down 33% already, the biggest drop since the end of the previous cycle in 2015 when it fell 35%. Only a strong December can prevent this, but how certain is that? The BDI rose 5% in September to 1,487 points, and 22% in October to 1,814 points, but it has given up all these gains and more in a 29% fall during November to reach 1,292 on November 25.

As usual, the capesize segment has suffered the greatest volatility. Average earnings as recorded by the Baltic’s 5TC average fell 36% for the first 25 days of November to $11,292 compared to $17,560 in October. October has been peak seasonal for capes since 2014 and that’s still the case this year with earnings reaching 108% of the year-to-date average, but last year they were 194% of the annual average and in 2021 they were 181% of the annual average.

The capes are dependent on China. The government under its now emperor for life sails serenely on, and on November 21 announced $162bn in fresh credit to property developers, along with a reduction in banks’ capital reserve ratio requirements. These measures triggered a rally in property shares on the Shanghai exchange. Iron ore futures rose with physical prices. January delivery prices were up to CNY 758 ($105.84) a tonne by November 23, the highest since August 1, and December delivery up 3% on November 25 to CNY 706 ($98.6) a tonne. Capesize rates bounced on the news with the 5TC jumping from a low of $9,057

on November 22 to $13,373 on November 25.

Coal trade continues to be buoyant, with even the UK doubling coal imports to offset high gas prices, even as Indonesia, the biggest coal exporter, announced that it wants to switch the country from fossil fuels to battery power, helped by a $20bn handout from rich nations.

Grain trades remain disrupted by the war in Ukraine, with Arnaud Petit, executive director of the International Grains Council (IGC), telling journalists in October: “We are not necessarily looking for very positive trend of trade”’ and that importers are “looking for not necessarily the cheapest origin but trying to diversify, which might also develop a new trend of trade.”

In the face of such uncertainty, month on month falls in the panamax, supramax and handysize have been less dramatic than in capesizes, with panamax average earnings for October of $17,500 a day falling 24% to $13,242 for the first 25 days of November. Supras fell 26% from $18,210 to $13,427 and handies were down 20% from $17,722 for October to $14,238 in November to date.

These are all underwhelming

numbers in the context of the last two years since the markets sprang out of lockdown like an uncaged tiger. But average earnings for 2022 for panamaxes are just under $20,000 a day basis Baltic Exchange data, making this the second best year (after last year) since 2010. Similarly, average earnings for supras are just under $23,000 a day this year, lower than the $26,770 for 2021 but the second best year since the supramax 10TC was instituted in 2015. Handy earnings of $22,076 year to date may be down 14% from $25,702 in 2021 but are the fourth best year since the all-time high of $32,422 recorded in 2007 (second best was $29,282 in 2008). All in all, bulker operators can feel satisfied at how 2022 has turned out.

One’s view of the future depends on how sanguine one is about the low orderbook and whether the Carbon Intensity Indicator will encourage everyone to slow down to reduce emissions, thus reducing the available tonne-mile-days availability per ship. If everyone slows down from an average of 11 to 10 knots, then demand could fall 10% next year and the freight markets would remain nicely balanced. ●

The double-decker tanker freight market

Maritime CEO ponders where the peak of this ‘crazy’ market will be

Oil prices have been drifting downwards. They fell 2% on November 25 as Brent closed at $83.63 a barrel and WTI sat at $76.28 a barrel, both near or at 10-month lows. The two-month ahead price dipped into contango, indicating current oversupply with near term delivery prices lower than the two-month out price.

Falling oil prices are down to two causes. First, OECD nations look set to stay in or enter recession, in part self-inflicted as Europe in particular seeks to disentangle itself from oil and gas supplies from Russia. Secondly, China continues to struggle to balance public health and the economy. Chinese oil demand is running about 1m barrels per day lower than seasonal expectations due to lockdowns as daily covid cases reached a record on November 25.

Against these worries, the oil price cap under discussion and the oil import bans, set for December 5 and February 5 for crude oil and oil products respectively, are expected to lengthen global supply chains as EU imports will have to come from further afield. If OPEC, following a meeting between Saudi Arabia and Iraq last week, decides to cut output to support prices, then there will be a scramble for non-OPEC, non-Russian supplies of crude and products.

For these reasons, and despite negative macro-economic indicators, bullish sentiment has presided over the tanker markets, driving up freight rates particularly for crude oil tankers during November, though products rates remain at historically high levels. Sentiment is also

based on OECD inventories sitting at their lowest levels since 2004. The IEA’s November report notes that short-term oil oversupply could quickly change as “approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances and, in particular, on already exceptionally tight diesel markets.”

Benchmark VLCC earnings as reported by the Baltic Exchange hit $57,504 a day for the first 25 days of November, up from $34,937 for October and marking six straight months of increases from a low of $-30,069 in June this year – that’s an increase of over $87,500 a day. You can get higher assessments from brokers, with Poten rating a modern, scrubber-free VLCC at $94,500 a day on November 23.

Suezmax operators are even happier than VLCC operators, with short tonnage availability in West Africa and for voyages from the Middle East via Suez into the Med continuing for the last month. These have driven the S2 average from $64,186 for October to $95,394 for the first 25 days of November. Aframax average earnings have also risen sharply from an average of $64,186 for October to $83,696 for the first 25 days of November, basis Baltic Exchange data.

The Baltic Dirty Tanker Index hit 2,496 points on November 23, an altitude not seen since December 8, 2004 when the index stood at 2,458 points, surpassing even the 2008 peak of 2,347 achieved on July 23 that year. The all-time peak of the BDTI was

3,194 points on November 17 2004. It is possible to find market bulls who believe that peak will be surpassed in the current cycle, mostly based on the very small orderbook for oil tankers.

Note though that the Baltic Exchange has stopped reporting Russian export freight rates which might mean that it is not possible to compare history with today’s market. The so-called ‘dark fleet’ of oil tankers circumventing sanctions is reported by some agencies to be nearly 200 strong, and may have been driving up the secondhand market for middle-aged oil tankers, as operators willing to carry Russian (or Iranian) crude at high risk-premiums get ready to operate in an uninsured, self-insured or Russian insured capacity.

Freight market excitement has extended to the product tankers with Affinity describing the LR2 market in particular as “crazy beyond all expectations”.

The BCTI average for the year stood at 1,168 as of November 25, which is more than double the 2021 average of 530 points and the highest since 1,155 points in 2008, which was also the last time the index stood at more than 1,000 points.

This double-decker tanker freight market, with the clean and dirty freight indices reaching heights not seen for nearly 20 years, has not quite set fire to tanker equities, but investors who did read the runes early are looking at big increases already this year. Once the investment bankers smell the breeze, the chances are that 2023 will see some M&A action. ●

Thanks for the container party, time to go home

Dim box prospects ahead

Container shipping demand is certainly facing an unseasonably weak final quarter if recently reported trends continue. CTS data suggests that US containerised imports have fallen back to their average levels for 2017-19, while European import volumes are below the average for 2017-19. European box exports fell to 2.32m teu in September, continuing a falling trend since a peak of 2.53m teu in May.

Containerised exports from North America fell from 1.15m teu in August to 0.99m teu in September. Not rounding the data up to 1m teu is important because it’s the first sub-1m teu month since 2016. North American containerised imports fell to 2.44m teu in September from 2.8m in August, making September the lowest month since May 2020 when the country was in partial lockdown.

Global container trade fell 10% in September to 13.51m teu compared to August’s 14.61m teu, the biggest month-on-month fall for years, excluding the original pandemic shutdown in April 2020, and the usual January / February seasonal reduction. It was also the biggest year-on-year fall for a single month, at 8%, since 2009 when the global financial crisis was biting.

Drewry data shows that cancelled sailings on the transpacific, transatlantic, Asia-North Europe and Asia-Med services will take out 105 of 725 scheduled sailings in weeks 48 to 52 this year. 59% of cancellations are on the transpacific trade. For comparison, between weeks 38 and 42, 122 out of a total of 750 voyages

were cancelled, of which 68% were transpacific. Wind the calendar back to July 2020 when container markets were starting to boom, and Drewry was reporting only 20 cancellations out of 468 scheduled voyages, just 4% of a smaller total.

The Freightos Baltic Exchange Global Container Index reflects recent demand conditions, falling throughout November to stand at $2,786 compared to $3,340 a month earlier and $9,351 a year earlier.

On the main headhaul AsiaEurope route, costs have fallen by a fifth from around $5,150 a month ago to $4,074, a long way from $14,350 or so at the end of November 2021. As European demand falls, congestion is tumbling, but shippers report problems with getting empty boxes back to Asia still, this time due to a lack of goods to fill them, leading to a slump in eastbound rates from Europe, which stand at $862 on November 25, having flatlined since mid-October but down from $1,200 as recently as early September.

Transpacific shipping costs reflect easing congestion and lower demand in the US. Rates for China-USWC have fallen to $1,935 by November 25, having flatlined for most of October and November around $2,500, and hugely down on $14,680 a year previously. On the all-water China-USEC service, rates were down to $4,585 as of November 25 compared after a slight increase to $6,300 or so early in the month, itself a brief respite from a year long fall from nearly $20,000 in November 2021.

In the Atlantic, westbound rates from North Europe to USEC have continued the trend after rallying in October to a peak of $7,750. By November 25 they stood at $6,527, compared to $ 7,451 a year earlier.

On the reverse route, rates have risen and fallen in October and November, first expanding a whopping 50%, from around $580 to $870 in the month to October 21, before losing 28% in the weeks to November 25, ending up at $623.

The Harper Petersen Harpex Index of 12-month time charter rates has stabilised at around 1,500 points in November, having peaked at around 4,500 points in March. That translates into a 12 month time charter rate of $58,000 a day for a modern 8,500 teu vessel, $26,000 a day for an older panamax dimension 4,250 teu ship, and $21,000 a day for a 2,700 teu feeder. If the liner companies find their gloomy prognostications for 2023 to come true, then they will be negotiating next year’s time charter renewals at lower levels than this. ●

Whatever happened to Chinese leasing?

Let’s start this column by asking one of the biggest questions in ship finance this year - one I am not necessarily able to provide readers with an answer.

What is going to happen with China leasing? It seems like all the top names in this sector have been arrested. When the banks were reducing their shipping exposure over the past decade, it was Chinese leasing which filled the gap. Now there’s a noticeable hole. Sure, Japanese operating licences are increasing as are Taiwanese ones, filling a bit of the gap, but it will prove impossible to fill this huge gap.

Maybe we might look to the West for some financing salvation. Are the German banks coming back, for instance? There’s been plenty of indications this year that some famous old names in German finance are reacquainting themselves with our industry.

It’s also worth noting the huge amount of American capital coming

in via private equity and funds.

Historically private equity has a tendency to enter shipping when the sector is beyond its cycle peak, but I’d argue not this time though, private equity is entering more cautiously.

What is fantastic - and headline grabbing - is the yield in shipping now. Dividends are enormous, and shipping shares have often doubled in the space of a year.

Dagfinn Lunde ponders the huge hole in ship finance following a series of arrests in Beijing “ I’d like 2023 to be a bit more mundane”

The value of old ships is remarkable, redolent of the skewed newbuild orderbook, and the strong markets most shipping segments have enjoyed this year. The highest prices are for ice class tonnage, and they are astronomical, with Russia seeking ships urgently to get exports out through the winter.

I will finish my final column of the year with the shocking development of LIBOR or SOFR. Interest rates that were 4 to 5 %, incuding the margin, are now 8 to 9% - this I can tell you is a huge shock for many

people with many owners I talk to everyday genuinely incredulous about this. The effect on cash flows is huge.

As ever in shipping, the year 2022 has proven never dull. In a strange way - maybe it’s my age - I’d like 2023 to be a bit more mundane. ●

Should shipyard waste be added to shipping’s carbon footprint?

It’s remarkable how much wastage and emissions goes into building a vessel. Sooner or later this will come into the spotlight

Although the majority of carbon emissions from shipping currently occur during a ship’s operational phase as a result of fuel combustion, the industry’s decarbonisation is expected to shift this balance, with carbon emissions from components, building, and recycling accounting for a larger share of a vessel’s total lifecycle emissions.

Lifecycle assessment is a technique to assess environmental impacts associated with all the stages of a ship’s life, from raw material extraction through materials processing, manufacture, waste, running life, repair and maintenance, and recycling.

Nicolas Duchene, chief operating officer and vice president at French carbon emissions verification company Verifavia Shipping, observes that more and more people and organisations are interested in the carbon footprint lifecycle, well-towake emissions and carbon intensity aspects of transporting cargo.

“The all-inclusive carbon emissions from ships, not only from operations but also design, construction, repairing and recycling, is an emerging issue for institutions, organisations and sectors regarding carbon-neutral growth,” he says.

Shipbuilding is known as one of the hardest metal industries with several chemical and hazardous material exposures and is termed

as a high energy, high material consumption, and high pollution industry. The whole process is said to be responsible for more greenhouse gas (GHG) emissions than ship repair and recycling combined, with emissions from steel production at the top of the ladder accounting for nearly 90% of the total CO2 emissions.

The industry aims to build cleaner vessels, and it is likely that this trend will continue. The term “green shipbuilding” has been used for a while, wherein in addition to designing more “eco-friendly” ships, shipyards should ensure the high efficiency of materials and energy in shipbuilding, reduce harmful emissions and smooth the process of integrated hull construction, outfitting and painting.

However, Karl Rugen from Worldwide Marine Technology argues that the vast amounts of construction waste involved with the entire shipbuilding process should also be considered.

“Even well-run shipyards in Korea and Japan have dozens of containers filled daily with massive piles of scrap cuttings, plastic, wrappings, wood and packaging, rubber, caballing, paint cans and on and on and a large portion of which is not recyclable and therefore taken to landfills, he observes.

When contacted by Splash Extra, a spokesperson for the

International Maritime Organization said: “I am not aware of this being raised at IMO so far, so we cannot really give a comment or opinion.”

Petter Heier, the former head of Norwegian green recycling consultancy Grieg Green and now founder and CEO of maritime life cycle services firm Calmocean, believes that when it comes to shipping’s carbon footprint, newbuilding, repair and recycling activities should also be part of that and not only waste disposal.

“The entire carbon footprint for the construction, repair or recycling of a vessel should be calculated. It is, of course, about the waste generated but also the processes that are used, which can have a very different impact on the environment,” he stresses.

Shipbuilding has been growing fast, but a huge volume of energy, waste and pollutants being released during the construction of vessels poses a major risk to human health and the environment that could add further pressure on shipowners and the industry in general to clean up its act and take action.

Comparing shipbuilding with never-ending discussion around producing e-cars and the overall environmental effect, Henning Gramann, the CEO and founder of ship recycling consultancy GSR Services, points out that much

more energy and raw materials are required for building a ship.

“A lot of steel is required, which then has to be connected by kilometres of welding lines. Most of us know how this smells and then the paint job comes on top. Not all is CO2, but there are many more emissions that must not be forgotten. Light, noise, gases, liquids and solids, not to forget the wastes caused during ship construction,” he points out, asking: “Should all these be added to shipping’s carbon footprint as well?”

A study published in the International Journal of Global Optimization and Its Application finds that the waste in the production process occurs without the company’s realisation because it is not considered a cause of significant losses. Meanwhile, the emergence of operational cost components that are not needed in the production process is due to the company’s inability to control waste in the production process leading to suboptimal productivity and cost-efficiency in shipbuilding, the study said.

Steen Lund, CEO of shipping risk management organisation RightShip, reckons that while this is an issue to be tackled by the right industry owners, he would encourage a larger debate around the lifecycle analysis of vessels inclusive of building, operating and scrapping vessels.

For Lund, waste at shipyards would be a subset of that transparency, while the end-to-end lifecycle assessment would span not only that “relatively small” element but many more complex aspects contained within recycling standards.

“The circular economy would demand a far wider review of recycling opportunities held against newbuildings versus extending the lifespan of an existing vessel, that at the face of it might emit more than a newly built vessel, but when assessed in totality for its cradle to grave and back into usefulness via recycling might have a different lifecycle emission than first meets the eye,” he tells Splash Extra.

The topic of newbuild waste

came up at this month’s Maritime CEO Forum held at the Monaco Yacht Club. Danilo Fumarola, CEO and chairman of Gestion Maritime, said that extending the life of existing ships makes the most sense as 40% of the emissions of an entire lifecycle come at the newbuilding stage.

Chris Waddington, technical director at the International Chamber of Shipping, agrees that life extension will be an option that some shipowners may take up, as this will be driven both by the GHG regulations, and also economic considerations.

In many cases repairing is more sustainable and saves resources than purchasing new. This has been ignored more and more in the last decades, GSR Services’ Gramann also believes.

Additionally, in Monaco, Michael Parker, chairman of global logistics, shipping and offshore at Citi and the main man behind the Poseidon Principles, noted that shipbuilding comes under the domestic contributions countries emit, but he reckoned IMO will be looking at it soon, while Alan Hatton, CEO of Foreguard Shipping, said that when it came to energy used to build new ships - “we need to be looking at the entire lifecycle.”

Calmocean’s Heier acknowledges that, from a general perspective, the longer a ship can trade, the better it is from a financial and environmental perspective. But in saying that, he indicates that the equation is not that simple when it comes to the environment. “It is crucial to measure the total impact of the entire value chain in order to be able to compare,” he says.

Gramann adds that forecasts see many ships heading for the torch due to new emissions requirements, which will need to be replaced with new, more environmentally friendly and efficient ships to ensure sufficient transport. Still, despite many different approaches showing positive results when looking at emissions per ton-mile, daily fuel consumption, fuel used and so on, he

questions the overall equation.

He warns that whatever we do causes disturbance and emissions. “We´re still far away from an environmentally harmless economy and style of living. When we want to change for the better and most urgently protect the climate, we need to consider the whole lot, including how and what we produce.”

As shipbuilding is a very complex activity and requires high standards, scientists at the School of Environmental Science in Jakarta, Indonesia suggested in a recent study that shipyards should collaborate with the community in managing production waste to be reused by providing training related to waste management.

Chief executive of class society Lloyd’s Register, Nick Brown, feels that all maritime stakeholders should be aware of the overall carbon footprint over which they have influence.

Verifavia’s Duchene asserts that usually only direct emissions (scopes 1 and 2 of shipping’s carbon footprint) are considered, but lately people have realised that some sources of emissions under scope 3 must be included in carbon neutrality targets.

The surplus of emissions because of scrapping old or designing new ships (scope 3) is difficult to estimate and compare to scope 1 reductions, as it relates more to a lifecycle approach.

“This is a complex topic in its infancy and we are at a pioneering stage, where there is no legal requirement or standard associated with it,” he says.

It’s something that industry leader Maersk has recently taken action on. Earlier this year the Danish carrier joined SteelZero, a global initiative to procure, specify, or stock 100% net zero steel.

Maersk has committed to using 100% net zero steel by 2040, with an interim target of using 50% responsibly produced steel by 2030, something well ahead of the curve for shipping. Others will have to follow sooner or later. ●

Flagship makes return to Monte Carlo

October saw shipping’s version of Davos making plenty of headlines from the Monaco Yacht Club

A new attitude to shipmanagement

Kicking off coverage of this autumn’s Maritime CEO Forum held at the Monaco Yacht Club are key takeaways from our wide-ranging debate on how the shipmanagement sector is set to undergo significant change in the coming decade.

Featuring the heads of a number of the best known shipmanagers in the world, the panel debate discussed shipping’s long held reticence to outsource, the fierce competition for talent, and where future crew might hail from.

Shipping sticks out compared to

many other industries for its unwillingness to outsource, with just 16% of the global merchant fleet handled by third party managers, with major owning nations such as Greece especially tough markets to crack.

However, panellists reckoned the situation was changing, with John-Kaare

Aune, the CEO of Wallem Group, going so far as to predict the volume of ships under third party management could double by the end of the decade.

“There is a big change. We have very different companies coming knocking on our doors,” said Finn Amund Norbye, the CEO of OSM Maritime Group,

“ The brain drain in certain nationalities in not selecting a career at sea should keep us all awake at night”

Senior executives need a big change in thought leadership when it comes to shipmanagement

saying even large shipowners were now seeking out managers, thanks to the increased complexity of the business and rising overall costs.

“It is extremely challenging for owners to stay on top of all the regulations,” said Wallem’s Aune.

René Kofod-Olsen, the CEO of V.Group, said that shipping needed to overhaul its mindset when it comes to outsourcing, something that could be achieved via proper auditing.

The panel all called for greater longterm partnerships between managers

and owners with Kuba Szymanski, secretary-general of managers association InterManager, hitting out at owners who see the role of managers as merely “plugging gaps”.

Discussion then turned to crew welfare, something that has been in sharp relief during the covid pandemic.

“The brain drain in certain nationalities in not selecting a career at sea should keep us all awake at night,” warned Kofod-Olsen who oversees one of the world’s largest shipmanagement operations.

Working out how to ensure crew can see a long term career was deemed vital by panellists and delegates alike, with shipmanagement veteran Roberto Giorgi questioning from the floor just how many managers were willing to give incentives to retain crew.

“What is coming are a lot of ships propelled in a totally different fashion. We are not ready for that. If we don’t invest in people, and if they don’t have line of sight of where they can go they might not choose a career at sea,” said Kofod-Olsen, adding that shipping

had also failed to get women to work onboard.

“How do we figure out to get a more inclusive crew?” Kofod-Olsen mused. “We have not been good enough to ensure as an industry that life onboard is safe.”

From the floor, Henrik Jensen, who heads up crew manager Danica, warned delegates that other industries were coming in to take talent away from shipping, citing the IT sector in the Philippines as a good example.

“We have to have a real rethink about how we employ people. The competition for talent from other industries such as IT is a real threat,” Jensen said.

V.Group’s Kofod-Olsen argued that the stereotypical view of where ratings will come from in the future is set for change. “These barriers will break down,” he predicted.

The panel debated about where new sources of crew might come from with InterManager’s Szymanski surprising the audience by revealing that the UK is by some distance the most dynamic country in Europe in terms of new seafarers per year because of tax. Around 1,000 youngsters are joining maritime colleges for free in the UK every year. ●

“ The competition for talent from other industries such as IT is a real threat”

Why tankers can withstand a recession

Why this tanker cycle is different and how even a global recession might not knock the sector off kilter were the central thrusts of the tanker panel.

Getting proceedings underway for a lively tanker panel in Monaco, moderator Robert Clancy, the managing director of Arrow Shipbroking, set the scene, telling delegates how the orderbooks for VLCCs,

suezmaxes, aframaxes and MRs are only 5, 4, 8 and 6% of the existing fleet, respectively. Moreover, the number of ships in each sector over 20 years of age now exceeds the size of the orderbook in each sector.

“ Our industry will face underinvestment at some point”

“It’s possible the tanker fleet might even shrink,” Clancy said, adding: “What makes us optimistic about the tanker market today is that the current situation has almost all the drivers that catalysed the previous cycles – they are all converging on the market now.”

Global oil trade routes are being redrawn, leading to higher tonne miles and stronger tanker demand, while there are just weeks to go before a series of environmental regulations come into force, which Clancy said would ultimately restrict tonnage supply.

Turning to his high-level panellists Clancy then sought their take on the markets – and like the Singapore forum two weeks prior – the mood was decidedly bullish.

Quizzed on the potential demand destruction as Europe shivers and suffers from rising energy prices this winter, the assembled tanker owners suggested the freight markets could easily absorb this.

During past recessions, demand falls, but the effect on freight market this time will not be felt as the tonne mile demand will “by far” exceed this drop in demand, argued Mikael Skov, the CEO of Hafnia, the world’s largest product tanker owner. When it comes to looking at the overall tonne-mile picture, Skov told attendees it was important to keep in mind growing ballast times. Hafnia’s ballast times were 40 – 45% longer between Q2 and Q3 this year.

“Trade on the big ships into Europe has increased over the past few months, and this is just the beginning of it with VLCCs trading over a longer distance,” said Svein Moxnes Harfjeld, the CEO of New York-listed DHT Holdings, discussing the looming December 5 EU ban on Russian crude.

Echoing what Harfjed said, Emanuele Lauro, CEO of Scorpio Group, told delegates tonne-miles will be impacted when it comes to product tankers and a further EU product ban due in February.

“We will have to find a million barrels a day that had been coming from Russia. It will be tough to source,” Lauro said, pointing out that voyages from Primosrk and St Petersburg to Rotterdam take 10 days, while they take four times longer from the Middle East and two and a half times longer from the US Gulf.

The Middle East is not just serving Europe, but Asia too where inventories are low, Lauro pointed out. Likewise, the US Gulf is serving a “very thirsty” South America market, making for very tight markets that are overall more tonne miles-wise.

“It is a different recession we are facing,” suggested Burak Cetinok, Arrow’s head of research, speaking from the

floor. As energy prices have been so high for so long, reserve inventories have been hit and they will need to be replaced soon, he pointed out. Even in the event of energy prices easing, refining margins are way above their historical average, which will incentivise refiners to keep running above normal despite what happens in the world economy, Cetinok said, painting a favourable demand picture for the coming 18 months.

Marco Fiori, CEO of Premuda, argued that the imminent arrival of the EEXI legislation will be “very beneficial” for the tanker markets as it will increase tonne-miles due to ships going slower.

Quite so, concurred Hafnia’s Skov, who reckoned EEXI would push product tankers towards full utilisation, pushing up rates, and importantly the bottom level of rates.

On CII, the other big IMO regulation coming to shipping soon, DHT’s Harfjed suggested its impact would be limited to begin with, given the threeyear introductory phase of the new rule. Nevertheless, he predicted that eventually older ships would struggle to power down to meet CII requirements.

“Our industry will face underinvestment at some point,” Harfjed said pointedly, with all owners present keen not to add to the low orderbook at present.

“If we look at the last cycles in shipping, even the down cycles, demand has never been an issue – we always have to focus on supply,” said Scorpio’s Lauro, who hit out at politicians for failing to invest properly in hydrocarbons in recent years, leading to today’s energy crisis. Nevertheless, oil and gas projects are now massively expanding, Lauro said, especially in the Middle East where notably oil and gas assets such as liftboats and accommodation barges are being absorbed on long term contracts for the first time with these assets being taken in the Gulf for up to five years..

●

“ It’s possible the tanker fleet might even shrink”

ESG front and centre when it comes to finance

The growing primacy of ESG dominated much of discussion at the ship finance panel during the Maritime CEO Forum held at the Monaco Yacht Club. While panellists conceded the outlook for the markets remained “fantastic”, delegates were warned that financing options could become thinner for those in shipping who have not fully taken onboard ESG into the day-to-day operations of their companies.

“ESG is the only angle that can drive investment going forward,” argued Danilo Fumarola, CEO and chairman of Monaco-based owner Gestion Maritime, pointing towards the growing power of the backers of the green banking Poseidon Principles, a group now with 31 signatories representing

more than $200bn in ship finance, but whose benchmark to measure customers are meeting their targets – the AER – was, like the upcoming CII, branded as problematic by the shipowner.

Sitting on the same panel was Michael Parker, Citi’s shipping chairman and architect of the principles,

“ ESG is the only angle that can drive investment going forward”

Senior executives need a big change in thought leadership when it comes to shipmanagement

who admitted that while CII, EEXI and AER are not perfect, they will likely be tinkered with and improved. The goal will be for the IMO to merge CII and AER, something Parker is confident will happen in the coming few years. Parker also updated delegates on the new trajectories banks and insurers signed up to the principles agreed to last month, whereby signatories will now report climate alignment with the aim of the UN and the latest available climate science to limit global warming at 1.5C.

“The IMO is being too slow,” Parker said, explaining the need to move quicker than the UN body’s current 50% cut in emissions from 2008 levels.

Parker said signatories to the Sea Cargo Charter, a de facto sister chartering body to the principles, would likely follow the Poseidon Principles in upping their green targets too.

“Watch this space many more insurers and charterers will sign up,” Parker

said, stressing that once auditing of Scope 3 emissions comes in the shipping industry will have to transform rapidly.

Parker also had a warning for those contemplating investing in tonnage with LNG as a fuel, telling delegates the IMO will soon regulate for all greenhouse gas emissions, not just carbon dioxide.

“On a well to wake basis, LNG will lose its advantages,” Parker said.

On the overall markets, Dagfinn Lunde, chairman of eShipfinance.com, described them as “fantastic” with very low supply, few newbuildings and little chance of demand disappearing.

Quite so, concurred Parker, saying it was the first time he could recall in his 36 years of being in shipping that the industry was facing a global recession with a “lowish” orderbook.

Discussion then turned to Chinese leasing, something the panel agreed

had peaked for the time being, “Chinese leasing has plateaued,” said Gestion’s Fumarola, observing Chinese companies today made up 40% or $70bn of the $160bn ship leasing market. When markets are good, there is less need for leasing as more traditional forms of lending are readily available, Fumarola pointed out, going on to discuss the recent sizeable clampdown in corruption at Chinese leasing houses.

“On the coalface in Asia, there has been retraction from Chinese leasing, partially as banks come back, and there has been a lot of leasing houses who have had issues,” said Alan Hatton, CEO of Singapore shipowner Foreguard Shipping.

The final part of the session focused on coming up with ways to finance retrofitting, something panellists felt will be a growing business in the coming years.

Scrubbers were easy to finance, pointed out eShipFinance.com‘s Lunde, with owners either increasing their first mortgage or fixing a leasing structure for the scrubber itself. Similar financial arrangements will be made for a variety of new kit onboard, including carbon capture technology, Lunde predicted.●

“ Chinese leasing has plateaued”

For all the latest ship finance news

The dangers of complacency for dry bulk

Complacency creates a listless market, delegates attending the dry bulk session were told at the Maritime CEO Forum held at the Monaco Yacht Club.

“The best things we can do for

ourselves in dry cargo is to be selfless and not selfish and cooperate and not be complacent,” said John Michael Radziwill, CEO and chairman of GoodBulk.

While the markets have come

down, they remain at a “not unreasonable place historically”, with relatively attractive fundamentals, suggested Andrian Dacy, managing director, Global Transportation Group at JP Morgan.

Why has the dry bulk sector been so directionless of late?

“You are not going to knock the cover off the ball in the short term, but you will make a reasonable return for a reasonable level of investment,” Dacy said at the exclusive shipowner retreat on the Côte d’Azur.

“Yes, the fundamentals are there,” agreed Alex Albertini, CEO of Marfin Management, “but there are wars and things that are scary and this has ensured the market is led by a high level of sentiment change so it is not driven by the full fundamental game and this is what worries me short-term. Long-term it does look good.”

In the specialised market Arthur English, the CEO of G2 Ocean operates, namely open-hatch bulkers between 40,000 to 50,000 dwt, half the tonnage is over 20 years old, he told delegates.

“There is some uncertainty with where we are in the global economy, but if you look at minor bulks a lot of those commodities are safer bets whether for food production or forest products and the move away from plastics, or wind power and the need to move components for that,” English said.

English also touched upon the

great deal of recent reports on China decoupling from the West, something he said would see demand for smaller ships spike in both the Atlantic and the Pacific if it ever happened.

As with any dry bulk discussion, considerable time was spent on China. As and when Beijing does come out of its zero-covid phase, Radziwill told attendees to look out for a “coiled spring effect” in terms of seaborne movements of dry cargo goods.

Maybe, but longer term, JP Morgan’s Dacy cautioned that with the population projected to peak in the People’s Republic in the not too distant future, the dry bulk industry will need to accept demand growth from there will also peak.

Moderator Tim Huxley, the CEO of Hong Kong-based Mandarin Shipping, pointed out that while India will be a bigger population than China in a few years, it has been a disappointing market for shipping for a long time with panellists suggesting Southeast Asia was the region with the most exciting demand growth this year and in the near future.

Turning to future ships, G2 Ocean’s

English said that on the fuel side there continues to be a disconnect between owners and charterers with not a close enough dialogue.

Albertini from Marfin Management, who is in the process of prototyping solar technology he has created for his ships, hit out at shipping’s slowness to innovate its own green path.

“As shipowners we are waiting for the suppliers and shipyards to come up with innovations. We are always playing a wait and see game just because being a first adopter has never paid off and therefore we became lazy, waiting for others to come up with the solutions and us becoming the followers,” Albertini said, leading moderator Huxley to question whether that was simply because shipowners were not paid to be inventive, something Albertini conceded was certainly part of the reason for such “laziness”.

The next Maritime CEO Forum takes place Singapore on April 24 next year with a return to the Monaco Yacht Club confirmed for October 12. ●

“ Be selfless and not selfish”

Wines to drink with Christmas dinner

Some hearty recommendations for December 25

Whether you’re going traditional with a threecourse turkey dinner, cooking up a seafood feast or making veg the star of the show, what to drink with Christmas dinner is the ultimate conundrum for wine lovers.

No matter what is on the menu for the main event, whether it’s something for the starter, an accompaniment for the big centrepiece, or a mellow glass to see off the cheese and see you slipping onto the sofa for a nap, there’s a lot of bottle choices to be made.

When you sit down at the Christmas table, the first duty of the wine is not actually to go with the food but to go with your mood: it must be festive and celebratory. The best advice is therefore to drink the wine you quite fancy at the time. Maybe it’s classic, reassuring claret, or maybe it’s

a sturdy, hairy Chilean carmenère.

Here are a couple of crackers to ensure your party gets off to the right festive, celebratory mood.

To start, offer everyone a glass (or three) of rosé Crémant de Limoux. Pure Emotion from Antech is dry, bubbly with the subtlest flavour of wild strawberry.

For the main event, go big: Barolo from Piedmont in Italy. Made from pure Nebbiolo: a grape renowned for its powerful tannins and complex flavours, Barolo often commands a high price because it’s aged for up to 10 years to let the flavours develop and become mellow.

Each mouthful brings an overpowering mix of dried black fruits, sweet spice, smoke, leather and tobacco. It’s no wonder so many Italians choose this wine for special occasions – after all, it basically tastes like Christmas. If we had to pick one, go with anything from Francone, just make sure it is at least six years old.

And to finish, why not have a limoncello to help digest all those tons of food you’ve just wolfed down - one with a bright citrus nose and zesty palate, and best served ice cold from the freezer? More than 1,800 lemons are hand-peeled for each 160-gallon batch of Fabrizia Limoncello, which the makers infuse for at least 45 days before topping it off with house-made simple syrup and packaging 775 bottles in house. ●

“ The best advice is to drink the wine you quite fancy at the time”

E-noteworthy

Amazon’s latest Kindle is their first foray into the e-note market. Whilst still first and foremost an e-book reader, the Kindle Scribe’s e-note features are good first outing. It boasts a 10.2 inch front-lit e-ink screen with 300ppi which is Wacom-certified, so you can use almost any e-note stylus. You can take notes, draw, edit PDFs and you can make notes in kindle books (although you can currently only see these in the Scribe). It comes in 16GB, 32GB or 64GB of RAM versions, with WiFi, a USB-C charging port and a battery-free stylus.

Amazon Kindle Scribe Amazon.com US$340–500

Foodfight victor

Buying gifts around the holidays can be a stressful affair. We all have that one person who has everything and is nigh on impossible to buy for. Vancouver’s MMX may well have the solution: A marshmallow crossbow. Confused? So were we, but it is exactly what it says: a sturdily crafted wood and metal crossbow that fires marshmallows in place of the traditional bolts, allowing the wielder to get an order of magnitude more serious in a food fight. The possibilities are both endless and foolish.

Marshmallow Crossbow mmxvancouver.com US$100-140

Cleansed

For outdoorsy types, staying hydrated is very important, but lugging around litres of water is tiring to say the least. Grayl have come up with an ergonomic solution — the UltraPress Ti Purifier is a half-litre water bottle and filter. It’s inner bottle filters the water you collect in the outer sleeve, a bit like a French press, to make almost any water drinkable, removing viruses, protozoa, bacteria, particulates, chemicals, pesticides, herbicides and heavy metals. You can also use drink mixes like electrolytes in it and the outer sleeve is made of titanium so it can used to heat water on a stove or campfire. The filter is rated for 300 presses, and the whole thing weighs just 400g.

Grayl UltraPress Ti Purifier grayl.com US$200

Asia’s maritime ‘gray zone’

Paul French assesses the danger threat in the waters of East Asia

Periods of tension across the Korean peninsula, and the surrounding seas, come and go. Right now it seems we are in a moment of heightened volatility with North Korea firing a series of missiles which have caused some panic in Japan and concern in Seoul, Beijing and Washington DC. As well as the missiles and jets flying close to South Korean and Japanese air space and angry rhetoric from Pyongyang, recently a DPRK-flagged merchant ship crossed the countries’ sea border, causing both sides to fire warning shots. The South Koreans said the merchant ship’s incursion was intentional; the North Koreans said it was a simple accident to which Seoul overreacted.

Whatever the truth the fact is the regional tensions have clearly spilled over from the military arena to commercial shipping. Combined with similar tensions involving China, the USA and regional countries from the South China Seas, the Taiwan Straits, Malacca Straits and across the Pacific perhaps it is good timing to publish

Maritime Gray Zone Operations: Challenges and Countermeasures in the Indo-Pacific (Routledge, October 2022). Edited by Andrew S Erickson, Professor of Strategy at the Naval War College’s China Maritime Studies Institute in the United States and a Visiting Scholar in the Department of Government at Harvard University, the book is a fascinating collection of essays addressing the issues raised by Chinese and North Korean maritime ‘gray zone’ activities in the Indo-AsiaPacific region.

The various authors consider the actions of China and North Korea, and the reactions to them, constitute what Erickson terms ‘maritime gray zone’ activity - a state of sea-borne conflict that falls somewhere between peace and war. Other authors have seen such ‘gray zone’ actions as a form of ‘hybrid warfare’, blurring the lines between military, economic and diplomatic arguments. While much has been written on the South China Sea and Taiwan Straits, the Yellow Sea has been comparatively quiet. That is until

the recent merchant shipping related gun battles, which the book considers ‘carefully-calibrated provocations’ by the DPRK.

There’s also a useful information in Maritime Gray Zone Operations – background on both Beijing and Pyongyang’s activities in the region as well as a comprehensive and fully updated fleet force structure for China’s Coast Guard. Another article considers how the PRC’s Coast Guard and Maritime Militia are likely to develop in the future, and how Beijing sees the issue of safeguarding Chinese coastal sovereignty - subjects that should be of keen interest to anyone sailing vessels through the South China and Yellow Seas, as well as calling at the strategically important ports of the Bohai Gulf. Additionally, there is also a detailed assessment of North Korean ‘maritime gray zone’ activities and the likelihood of their expansion which could add considerable risk to any merchant shipping sailing close to the northern portion of the Korean peninsula. ●

The holy trail for powder hounds

Jackson Hole in Wyoming is one of America’s greatest ski terrains

Famed for its challenging terrain, raw nature — you may see moose on the pistes — and cowboy culture, Jackson Hole in Wyoming is one of the US’s most famous ski resorts. It’s also within day-tripping reach of Yellowstone National Park, for some additional offskis adventure.

Until the mid-80s, few people had heard of the cult ski area of Jackson Hole. Tucked into the top left-hand corner of Wyoming, with a Teton mountain range backdrop, it is now one of North America’s foremost resorts.

While originally famed for its tough terrain, these days Jackson Hole has plenty of facilities, lifts and terrain aimed at intermediates, families and beginners.

With elevations ranging from 6100 to 6800 ft, Jackson Hole has an alpine climate – even more so when you consider that the surrounding peaks rise an additional 7000 ft from the valley floor. Winters are long and cold here,

with snow sometimes arriving as early as October, although more typically late November or early December. The ski season runs from late November through April, with the area’s three ski resorts – Jackson Hole Mountain Resort, Grand Targhee and Snow King Mountain – each maintaining separate opening and closing dates.

Jackson Hole Mountain Resort’s ski area is made up of two mountains. Rendezvous provides most of the powderkeg runs, while Apres Vous has more accessible slopes. Altogether (but not counting the extensive backcountry) the two mountains share 2,500 acres of in-bounds terrain, with a vertical drop of 1,260 m – one of the biggest in the US.

Powder hounds will be perfectly happy with these conditions, of course,

but non-skiers will find plenty to occupy them as well, from snowshoeing and snowmobiling to sleigh rides, dog sledding and fat-tire biking.

A quintessential winter activity, sleigh riding is a must when visiting Jackson Hole during the holiday season. In this horse-drive sleigh ride, passengers will be able to get up close and personal with the elks at the National Elk Refuge in Jackson Hole.

The town of Jackson Hole lights up the long winter nights with holiday cheer and there are plenty of fine dining options.

The Four Seasons is the smartest place to camp as the only ski-in, ski-out property. Essentially, staying here means you can roll out of bed and onto the mountain. ●

Welcome to cowboy country ”

of change

You could argue that innovation through multiple start-ups, protocols, different GUIs, etc, should be helpful in the development of change and modernisation of the industry. Multiple competitors and different approaches should lead to innovation. Survival of the best or mergers should then find their way to an adopted standard.

However, is this really the approach a global industry, which the world relies on in delivering 80% of trade, should be adopting technology, creating change and moving into the next era?

The maritime industry has a United Nations body, the International Maritime Organization (IMO), charged with regulating the industry. It is a limited market (66,000 ships) which makes it niche. With comparisons in the aviation industry of rigorous standards, the counter argument is that maritime should be following a more regimented style of change, technological implementation and standardisation.

Those that would disagree will argue that this stifles competition and doesn’t allow for innovation beyond the strict regulatory and design requirements. I have several thoughts on this point.

First, maritime is facing several large challenges in the next few

years, so it must be incumbent on the leadership to develop a professional, standardised approach to solving these challenges. The current fragmented behaviours will only lead to continued confusion and a disparate approach to solving the problems.

Second, in large part, the technology is already available for automation, for monitoring emissions, for machinery monitoring from ashore etc.. This is not a technology issue. For instance, maritime communications is undergoing disruption with multiple choices available. There are also plenty of weather products, a plethora of engine monitoring systems and great strides are being made in automated ships.

The true innovation (or change) required is in how the industry approaches technology implementation. This is no different to any company undergoing change. If the leadership does not execute, support and police the transition, the change fails. For maritime to improve its visibility, reputation and to transition into a professional industry it needs to have leadership, tight regulation and most importantly, effective enforcement of the management of change. These principles should apply to the enforcement of the ESG requirements where self-governing inside the industry should not be an answer.

They apply to emissions monitoring, and to a need for a rapid solution to the decision on fuel of the future. It is too easy to avoid enforcement of regulations, be they for crew welfare, ESG compliance or, other safety and operational regulations.

The fact is there has been a general failure of management of change in maritime, especially maritime operations. History has shown, such as in the ECDIS debacle, that regulations that are not tight enough create a confusing array of solutions, which is not acceptable for safety equipment. Now we see the same things being repeated through a lack of leadership at the IMO and elsewhere.

It is a niche industry with a growing infamous reputation for poor environmental impact. The industry doesn’t need multiple start-ups all doing the same thing, it needs clarity of leadership. It needs proper and effective oversight and enforcement of the regulations. It needs clear laser-focused realisation that leaving the regulations too broad, not taking charge and not providing for tight oversight will not create the change necessary in the coming years.

●

As someone who has always been a proponent of standardisation, the current state of affairs in maritime technology and solutions continues to be a source of weakness argues Frank Coles

Leadership

“ There has been a general failure of management of change in maritime”

Your thoughts

Splash readers are never shy espousing their opinions

This is your pilot speaking

As ever when a pilot gets the blame for any shipping incident, our readers pile in. News that the pilot of the Ever Forward, which grounded in Chesapeake Bay in March (pictured) had had his licence suspended over way too much use of his mobile phone had many of you writing in.

‘Daton’ maintained mobile phone usage by pilots is a “big problem”, not only in the US.

“Pilots in US have a tendency to be arrogant and non-touchable. If you attempt to take them off, then you get threatened with big delays, loss of turn, and so on,” our reader claimed.

Solutions are at hand, argued Robert Gordon. Preventing recurrence requires a dramatic mindset change from the current pilot and master/bridge team hierarchal relationship, he argued, pointing out that Carnival Cruises have borrowed an airline industry Navigator (pilot) and Co-Navigator (master/ bridge team) system which focuses on roles, not ranks. It obligates full communication of Navigator intentions and mandates immediate challenge by the Co-Navigator if there is a deviation from the passage plan.

All things green

It feels like another busy quarter in terms of green legislation news with COP27, the European Union and the International Maritime Organization’s Marine Environment Protection Committee all deliberating on the matter. But is shipping being unfairly singled out?

Reader Phil Mortimer had this to say: “The shipping sector seems to have been the target for draconian emissions interventions. In reality road transport (cars, vans, buses and trucks) are much larger emitters but governments are either unable or unwilling to take action to constrain this major source of pollution. Car owners have votes. Shipping is invisible and does not have much political clout.”

Scrubber controversies

Finally, we might be nearly three years into the global sulphur cap, but the scrubber debate still ticks off many readers.

On calls for a Baltic scrubber ban this autumn, Pieter Melissen hit out at what described as the “cynical nature” of the shipping industry.

“If we can’t pollute the sky anymore, we will just dump it into the sea,” Melissen wrote, adding: “Only a global ban on open loop scrubbers seems to be the only solution. A proposal to do so will of course be met by complaints of shipowners and dozens of maritime layers will be ready to defend the case of the shipowners, delaying urgently needed new measures by a much longer period than the sea is able to cope with.”