Maritime CEO Issue One 2018

ISSUE ONE 2018

BY

Sing apo r S p e cial e The repu b i

li arit c’s v isio ime n futu of re

ts m

Basile Aloy

From wet to dry

MANIFEST

3 At The Prow

Economy 4 US 5 EU 7 China 8 India 9 Brazil

Markets 11 Dry Bulk 13 Containers 14 Tankers 16 Finance 17 Offshore

Executive Debate 18 Entrenched attitudes versus tech adoption

Profiles 22 Cover Story Ebe

25 Blystad 26 Dingheng 27 Saga LNG 29 Gold Star 31 Marnavi 33 HBA Offshore

Singapore 34 IMC status 35 SSA 36 Port 37 Digital

Recreation 38 Wine 39 Gadgets 40 Books 41 Travel

Opinion 42 Venkatraman Sheshashayee 43 Rachel Morgan 44 MarPoll

22

AT THE PROW

An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editor: Jason Jiang jason@asiashippingmedia.com Correspondents: Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Genoa: Nicola Capuzzo Hong Kong: Alfred Romann London: Paul Collins Mumbai: Shirish Nadkarni New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully 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 Editorial material should be sent to sam@asiashippingmedia.com or mailed to 24 Route de Fuilla, Sahorre, 66360, France Commercial Director: Grant Rowles grant@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to 30 Cecil Street, #19-08 Prudential Tower Singapore 049712 Design: Mixa Liu Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2018’s four issues of Maritime ceo magazine.

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Copyright © Asia Shipping Media (ASM) 2018 www.asiashippingmedia.com 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

Is LNG as a ship fuel a red herring?

P

art of my job as an editor of a daily shipping news title is to generate debate. So when an article popped into my inbox the other day entitled ‘Why LNG as the ship fuel of the future is a massive red herring’ I knew our site, Splash, was in for a busy day.

Written by Dr Tristan Smith from the Energy Institute at University College London (UCL), the article posited that while LNG helps reduce air pollution, it’s potentially worse than heavy fuel oil (HFO) in the context of greenhouse gas (GHG) emissions. This is because methane is a potent greenhouse gas, and only a very small amount needs to escape to cancel out the combustion CO2 benefits.

“LNG is a fossil fuel that just like oil produces about three tonnes of CO2 for every tonne of fuel consumed. This makes it an ‘impasse’ in a world committed to decarbonise,” Smith wrote in his widely read contribution to Splash.

Focusing on LNG as shipping’s fuel of the future starves attention and investment from what Smith argued are genuine sustainable

solutions that the sector desperately needs such as hydrogen, ammonia, bioenergy and electrification.

As expected Smith’s article detonated on social media.

Dr Roar Adland, shipping chair professor at the Norwegian School of Economics, concurred with his UCL counterpart, claiming LNG as a ship fuel was a “waste of money”. Solar, hydrogen or batteries were better options, Adland suggested.

Andre Marcano, chartering manager at Hamburg Bulk Carriers, chipped in, saying that hydrogen fuel cells will power ships far sooner than many believe.

Tobias Koenig, an occasional columnist for this publication, joined the debate on LinkedIn, describing LNG as an “interim fuel” for shipping.

If it is an interim, there are some companies out there – the likes of CMA CGM and Total spring readily to mind – who are investing huge, huge sums on something that is unlikely to meet climate demands set down in the UN’s Paris Agreement.

Shipping, it would appear, has yet to find its silver bullet when it comes to the environment. ●

Twitter: @Splash_247 LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News

ISSUE ONE 2018

3

ECONOMY US

Luck or judgement?

American economic statistics are rosy, but there’s a growing feeling we are closing in on the end of a cycle at just the wrong moment

S

ince the Trump administration took control there has been much talk of the bullish stock market that seemed to bear no relation to any policy outbursts from the White House. Naturally the president claimed the market highs were a sign of confidence in him; others suggested the cycle of the market and the president’s Twitter account were largely not connected. Now the market has dipped and so the White House has less to say. However, the independent Federal Rerserve is warning Americans not to link stock market dips to overall medium and long term national economic performance.

It’s hard, nevertheless, to see how declines in equity markets cannot but lead to reticence among investors and pull backs in risk taking and expansion plans.

So overall where is the American economy? Many point to the late 1980s and the Reagan era. The economy was performing well, unemployment was pretty low, the dollar was weak and the markets relatively buoyant. Today is pretty much the same – unemployment is at 4.1%, its lowest for 17 years, and American beef exports 2017 Destination

% of total

Japan

21.9

Korea

17.2

Canada

16

Mexico

13.9

Other

21.6

Source: USDA

4

average hourly earnings are rising at an annual rate of 2.9%, the highest in eight years.

The weak dollar makes imports more expensive but America is a continental economy and local equivalents are often readily available. Of course the weaker dollar makes exports easier to sell overseas. There’s the momentary hit of tax cuts but the timing is bad – tax cuts are better mid-cycle rather than now at what is clearly the end of a long cycle.

That’s where the Wall Street jitters come from – cycles. The end of a cycle is marked by household debt rising and consumers funding their spending by dipping into their savings or by borrowing more on credit – which is the case at the moment.

And so, the theory goes, President Trump has so far been lucky with the US economy. But now the long cycle (begun under Obama in 2009 following the massive dive of 2008) is ending just as tax cuts and greater protectionism are about to bite. The president’s luck may be about to run out.

Whatever happens this year it seems the dollar will remain relatively low which will be good for exports – if they’re left alone! Oil and energy as well as livestock (especially beef and pork) and commodities are all

“

Tax cuts are better mid-cycle rather than now at what is clearly the end of a long cycle

”

being exported at record levels due to their affordability (and in the case of energy, new legislation) but there’s a potentially very dark cloud for exporters – trade disputes with China and slow progress with the North American Free Trade Agreement (NAFTA). Recent arguments with China over solar panels and washing machines did not indicate smooth sailing. If the president decides to enter a series of bruising trade arguments and tear up some FTAs and NAFTA then America’s exporters could be jeopardised despite a favourable dollar rate. ● maritime ceo

ECONOMY EUROPE

Curious growth Despite much political tension the continent is posting solid figures

J

ust as Trump and Twitter don’t seem to affect the US markets and economy so the UK-EU spats do not seem to hamper the EU’s economy. The 28-strong EU (i.e. still with the UK) expanded by 2.5% in 2017, its strongest performance since 2007, when it grew by 2.7%. France, Germany and Spain all did well at between 0.6% and 0.7% in the last quarter of 2017 compared with the previous one. The overall growth rate was boosted by the Eastern European economies, with Latvia and Slovakia hitting especially high numbers albeit being much smaller economies overall.

The EU itself thinks the reason for its growth is the effects of the European Central Bank’s (ECB) stimulus programmes in the regionwide economy making borrowing more affordable and so more attractive.

Additionally, though still very high EU foodstuffs exports, by major destination (outside the EU), 2017 Destination

% of total

USA

21

China

7

Switzerland

6

Russia

5

Japan

4

Norway

4

Canada

3

Saudi Arabia

3

Hong Kong

3

Australia

3

Other

42

Source: Eurostat

ISSUE ONE 2018

in many southern and eastern European countries (particularly for younger workers) unemployment numbers are generally down over the highs of the 2008-2009 period. Bank analysts are less inclined to the ECB/ Brussels argument and believe that the EU is simply benefitting from global growth.

Of course, as ever with the EU, it’s politics that has analysts worried – Italy’s general election is looking hard to call; the UK may crash out of the single market without any transition deal in place; shifts to the far right in some eastern European countries (notably Poland and Hungary) worry the EU commissioners. Some analysts also urge caution – the last time the regionwide economy looked like this (particularly within the Eurozone) it ended with catastrophes in Greece and, to a lesser extent, in Ireland, Spain and Portugal.

The UK is the large EU economy struggling at the moment. To a degree the UK has always been and remains on a slightly different economic cycle to the rest of the union, but it can’t be denied that the current high inflation rates in

Britain are the lingering result of the fallout following the sharp decline in sterling following the Brexit vote in 2016. Hard on households (oddly particularly those in areas that voted for Brexit in greater numbers) but, so pro-Brexiteers would argue, good for UK exports over the medium term. Last month, a first official estimate showed the UK economy had expanded by 0.5% during the last quarter of 2017, taking growth for the year to 1.8%. Not as good as Germany or France perhaps, but not as disastrous as some of the ‘over the cliff edge’ headlines in UK newspapers might have suggested.

And exports do increase when currencies weaken – as America knows. The UK’s exports are up and both livestock and the service sector are cited as driving forces behind the increase, with exports up 8.7% to £274bn. Goods exports also rose strongly by 13.4% to £342bn. Best sellers including cars and mechanical and electrical machinery are going to market in countries such as the US and China.

And so Europe moves on to more contentious elections and more contentious Brexit debates. ●

5

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ECONOMY CHINA

Innovation vital for Belt and Road to succeed Ensuring exports remain buoyant is a priority in 2018

C

hina’s 2018 trajectory is an interesting argument. China, of course, says all is well and not to worry. China bulls say the economy will reaccelerate this year and growth will rise; the more bearish see a continued deceleration.

Whichever, what is sure is that China will remain one of the fastest growing economies in the world.

Those favouring the deceleration argument point to three factors – 1) 2017’s gains from the strong export growth China displayed is unlikely to be repeated; 2) new home sales are likely to slow in response to the reintroduction of policy restrictions; and 3) the growth rate of infrastructure investment will cool. In other words China’s economic performance is once again at the behest of both world cyclical trends and government lever pulling. Beijing has said two major things about the year – there will be a tighter monetary policy (including maintaining the ban on bitcoin) and they intend to try and ensure inflation remains moderate.

China’s now long running consumer story remains very positive.

Continued strong income growth, China’s e-commerce revenues, 2015-2021 Year

revenues ($m)

2015

298.86

2016

376.18

2017

470.06

2018

573.28

2019

673.50

2020

765.26

2021

839.54

(2018-2021 forecasts) Source: China Retailers Association

ISSUE ONE 2018

low household debt (the consumer story in China remains a cash-based phenomenon and not credit-driven), high household savings, fantastic growth in e-commerce (see chart below) and an optimistic consumer outlook. It’s a perfect consumer economy – happy shoppers, with cash, wanting everything the stores are trying to sell them. Inflationadjusted retail sales growth of 8% to 9% is likely for the first half of this year.

2018 will be all about President Xi Jinping’s Belt and Road Policy – which is good news for those in the logistics business (and remember there’s a strong maritime element to the Belt and Road too). Risky investments are either banned or discouraged – hotels (China doesn’t need any more hotels!), sports facilities, gambling, shopping malls (nor any more of these!). But Belt and Road related infrastructure – ports, distribution centres, rail, road, etc will all still find smiling regulators and state banks. Other than that the goals are the same as previous years – economic stability to support political and social stability and pollution to be tackled.

If the Belt and Road is to work as Xi imagines it will then China has to remain a major exporting nation (though presumably imports can enter China via the Belt and Road too). China is still exporting but the story in 2017 was imports – machinery, textiles, energy, food – all surging through the ports in record numbers. This is, of course, to be expected in an economy increasingly reliant on the domestic consumer market but Beijing wants exports too and these are currently problematic – high renminbi versus low dollar, countries like Vietnam taking the low end work. China has never more needed to rise up the innovation and value chain if the Belt and Road initiative is to really work. ●

“Container shipping is an inherently perishable service” — Gordon Downes, CEO, New York Shipping Exchange

7

ECONOMY INDIA

Optimism grows in New Delhi There’s still plenty of red tape frustrations, but the world’s largest democracy reckons its economy can double in size by 2025

W

hatever the overall policy goals and objectives of the New Delhi government’s demonetisation programme of September 2016 the process did the Indian consumer economy no good at all. Only now is consumer confidence gradually returning to pre-September 2016 levels. In between came the introduction (again, ignoring the policy rights and wrongs) of a goods and services tax (GST), which was bound to give Indian consumers, unfamiliar with such a surcharge, the jitters again.

However, otherwise the Indian economy looks quite healthy – industrial production is up year-on-year by an impressive 7.1% – chemicals related business performing particularly well. But still, demonetisation and the GST introduction show what a massive shock policy can be to consumer confidence over the medium term.

Prime minister Narendra Modi was in particularly bullish mood at the Davos summit. He claimed that India’s GDP will double by 2025 becoming a $5trn economy.

Admittedly Davos is about selling your country to the global financial elite but Modi may have been a bit too exuberant this year. But maybe Agricultural output by major sector, 2017 Sector

% of total output

Livestock

34

Grains

26

Horticultural crops

23

Speciality crops

9

Oilseeds

6

Pulses

2

8

not – the IMF has predicted Indian growth of 7.4% this year, which would make Modi’s target possible. If India was China we might not doubt it so much but Modi does not have the control of economic levers that Beijing does, nor will he be able to provide the stimulus levels Beijing has, or the successful state-owned enterprises to underpin private sector growth and, despite his vociferous claims, red tape is not being removed as fast as many had hoped.

True, there are now less restrictions on foreign investment in some sectors of the economy, including real estate brokerage and retailing, but much, much more roll back is needed.

Much of India’s growth, as China’s is today, will come from untapping the potential of the domestic consumer market.

However, India, unlike China in this instance, seems unable to emerge as a demon exporter. India still lags, not just its billion population rival China, but the US, Germany, Mexico

and Brazil as an exporter (in terms of exports as a share of overall economic performance). More exporting SMEs are needed and creating them goes back to the thorny red tape issue – making it easier for them to operate and raise finance.

The government says the agricultural economy is the main focus for the remainder of 2018. This will mean structural reforms to uplift the underdeveloped regions, said finance minister Arun Jaitle in his recent budget speech. Farmers are said to be desperate after two years of drought. The Modi government wanted to double farmers’ income by 2022. However, noble as these aims are and, given the importance of agriculture in India in terms of the village economy and food security, details of any structural reforms have not yet been significantly forthcoming. For the rest of this year analysts will be looking for evidence of structural reforms in the countryside as closely as India’s many beleaguered farmers. ● maritime ceo

ECONOMY BRAZIL

Reform still awaits Looming elections are seeing politicians make some very bold claims

P

olicymakers took heart from Brazil’s falling inflationary pressure to cut rates this last quarter in a bid to kickstart the fragile and stubbornly stagnant economy. Consumer price inflation in Brazil eased in December with the annual rate ending the year at 2.95%.

The IMF is forecasting the economy to expand 1.5% this year and there should be slightly better conditions for regular workers and consumers in 2018. But, the majority of analysts agree, more fiscal reform is needed if things are to improve in the medium to long term. These urgent reforms include changes to Brazil’s over-generous pensions system. The government has been attempting to whip votes in the congress but with general elections this October, legislators want to avoid deeply unpopular reforms that might see them ousted by their constituents.

Short-term political cycles are hampering long-term fiscal reform.

Politics also means politicians start to make big claims. Speaking at the World Economic Forum in Davos, the Brazilian finance minister (and former Brazilian central bank governor) Henrique Meirelles claimed the country’s GDP would grow by 3% this year – double the IMF estimate.

He thinks the Holy Grail of pension reform will happen and that the elections will see a clear out of corrupt politicians. Few others agree with him however.

As far as exports go it’s a pretty rosy picture. Take soybeans for instance. Brazil’s share of soybean exports to China, the world’s top

“

Brazil remains the world’s eighth largest economy

”

ISSUE ONE 2018

buyer of the commodity, grew to the largest on record in 2017 and looks set to expand again this year, helped by competitive prices and the high protein content of its crops. Chinese buyers mainly use soy to churn out cooking oil and ingredients for animal feed. That estimate, of enhanced soybean exports to China, is now politicking in the long run up to the October elections. Rather that’s the estimate of Tian Hao, senior analyst with First Futures in the Chinese city of Tianjin. Why do the Chinese love Brazilian soy beans so much? More than US equivalent beans? Well, the protein level is higher in Brazilian beans than US beans making them more desirable to farmers.

Brazil remains the world’s eighth largest economy but is overly reliant on commodities such as soybeans.

Agriculture is important and so a recent decision by a Brazilian judge suspending the export of live animals for slaughter, citing concerns that they are transported in cruel conditions, is not good news for cattle growers. Brazil competes keenly with the US and Argentina for beef exports from the region. And

The seesaw of Brazilian retail sales, H2 2017 Month

% growth

July

3.1

August

3.6

September

6.2

October

2.6

November

6.0

December

3.3

Source: Instituto Brasileiro Geografia et Estatistica

so diversification of the economy is always welcome. Interesting then to note – in general economic terms and for logistics providers – that Amazon has announced a massive new 50,000 sq m warehouse just outside Sao Paulo from which to launch itself into the Brazilian e-commerce market. 209m people have internet access in Brazil but, at present, e-commerce is only around 5% of the country’s roughly $300bn retail market — about half its share in the United States. Amazon intends to change that and greater consumer confidence thanks to a reduced consumer price index will definitely help. ●

9

MARKETS DRY BULK

The best has yet to come The worst has already passed in terms of monthly fleet growth this year, writes Jeffrey Landsberg from Commodore Research

J

anuary was a special month in the dry bulk market as it marked the worst in fleet growth having now come and gone (January often sees yearly surges in fleet growth).

Prior to this year, this decade had seen an average of approximately 115 newbuildings delivered to the dry bulk fleet every January. This time around, though, January 2018 saw only approximately 60 newbuildings delivered. Taking scrapping also into account shows that the dry bulk fleet grew by a net addition of only about 50 vessels in January, which also marks the lowest January net addition seen this decade. Also of note is that prior to this year, this decade had witnessed an average net addition of approximately 80 vessels added to the dry bulk fleet every January. Going forward, much lower monthly newbuilding delivery totals and net additions will be seen during the rest of the year.

Overall, the net addition of 50 vessels added last month were absorbed into what has remained a healthy dry bulk market, and rates in several vessel classes ended January at levels similar to where 2017 left off.

120

This was impressive considering how rates often fare in January. Panamax rates were even able to end up climbing in January due in part to the very robust global coal import demand seen that month. Going forward, the remaining months of 2018 are now likely to see net additions to the dry bulk fleet come in anywhere from five to 25 vessels per month (monthly dry bulk fleet growth will be lowest at the end of the year). There will certainly be significant volatility, however, but what is very encouraging is that nowhere near as high as 50 net additions are likely to be seen.

The worst in this year’s dry bulk fleet growth has already likely occurred, and that growth coincided with seasonally low overall cargo volume. What is new this year, though, is that the fleet growth was much lower than seen in previous Januarys – and the trend of lower than normal fleet growth remains set to be seen throughout this year. At the same time, near-term coal, grain, and iron ore trade prospects also remain very encouraging. While the worst has come in this year’s dry bulk fleet growth, for the immediate future it is

Brazilian soybean exports

100 80 60 40 20 0 (mt)

ISSUE ONE 2018

2017/2018 (projection)

Exports

End Stocks

also simply terrific that the best has still yet to come in South American grain exports. Approximately 69m tons of Brazilian soybeans are expected to be exported during the current 2017/18 grain trade cycle, which would far exceed the robust 63m tons exported during the previous 2016/17 cycle and would also dwarf the 54.5m tons exported two years ago. Most of the soybean cargoes will be shipped during the next six months, with the volume expected to be particularly strong during March through June.

Also significant is that, in total, Brazil and Argentina are expected to export around 64m tons of coarse grain during the current 2017/18 grain trade cycle. This would exceed the robust 62.5m tons shipped in 2016/17 and would dwarf the 39m tons shipped in 2015/16. South American coarse grain starts being shipped in earnest in June, and the vast majority of the cargoes are normally shipped in the second half of the year (with volume often peaking in September). Overall, near-term prospects for South American spot grain cargo volume are very encouraging. While the worst has come in monthly fleet growth, the best has still yet to come in South American soybean and coarse grain exports.

Together, the dry bulk shipping market stands to benefit greatly. ●

11

MARKETS CONTAINERS

SHIP happens (twice) Lars Jensen from Seaintelligence Consulting rifles through all the sudden raft of shipping initial coin offerings

L

ast year saw an explosion in the amount of money raised through so-called initial coin offerings (ICOs) and now that meteoric rise has arrived in the shipping industry as well, with a dozen ICOs launching and more to come.

First a brief, and clearly not comprehensive, explanation of what an ICO is for those who have not been following the vagaries of this new three-letter abbreviation. ICO stands for initial coin offering. In essence a company develops a new idea for a blockchain business solution. An integrated part of the solution is to design a ‘token’ or ‘coin’ which is to be used as part of the solution. These coins are being put up for sale in order to attract investment capital.

The buyers of the coins invest on the assumption that the solution will be successful, and hence the value of their coins will increase. The company selling the coin gets investment capital without giving away any ownership control. Most commonly, the companies performing an ICO publish a whitepaper describing their concept, but do not have a minimum viable product launched or even developed.

ICOs took off rapidly in 2017.

According to FabricVentures and TokenData, January 2017 saw $2m raised through ICOs. In December this had grown 600-fold to $1.2bn. In total $5.6bn was raised through ICOs in 2017. 2018 continues the trend with

ISSUE ONE 2018

more than $1bn raised through ICOs thus far.

Enter the shipping industry.

Digitisation has been gathering pace in recent years in an otherwise traditional industry, with scores of new digital companies having entered the scene. However, all of these companies have been through the usual pain of attracting venture capital followed by the inevitable challenges of trading capital for influence at the owner and board level. The ICOs are now seen as an opportunity to change the game.

A review of the current landscape – which is not complete as some ICOs might have been overlooked, and some ICOs are known to become public in a matter of weeks but are so far staying out of the public eye – shows several handfuls of companies each launching their own tokens through ICOs. The most visible recent ICO must be the one by CargoX who managed to raise $7m in a matter of just seven minutes. CargoX is focused on bills of lading, but everything in shipping is becoming addressed through ICOs in Q1 2018. Additional concepts include Track and Trace by Shipchain, ship ownership and chartering by both BitNautic and Shipowner, freight payments by Prime Shipping Foundation, OpenPort and Morpheus Network, booking platform by Oceanus Foundation, enforceable contracts by 300Cubits, cost

reductions by Quasa and exchange traded funds by ShipBloc. Each of these companies are sure to have their own spin on how their business model is to be described.

All of these ICOs are either currently open, have just been completed or are about to open up for investments within weeks. The rush to get to market with an ICO also led to the interesting effect that we are already seeing two different coins named SHIP about to be launched by two different companies.

Will these companies be successful? That is far too early to judge. Clearly some have more solid business cases outlined in the whitepapers than others, but given the white-hot state of the ICO market, it is highly likely that the majority of these will be successful in attracting substantial amounts of capital, and hence have an opportunity to develop an actual product. ●

13

MARKETS TANKERS

Building for a better future BIMCO’s Peter Sand has some good news for hard pressed VLCC owners

A

total of 50 VLCCs were ordered in 2017. Was that a lot, or not enough? Only time will tell. But the fact remains that 2017 was the worst year for VLCC spot earnings since 1994. Still owners from Greece, Norway, Singapore, Japan and China knocked on shipyard doors in South Korea, Japan and China, ordering the largest crude oil carriers – mainly for delivery in 2019.

Speaking of 2019, that may be the first year of ending the oil supply cuts by OPEC and like-minded oil producing nations (unless a new deal extends it). Keeping that in mind, 2019 will surely see a reshuffling of some long-haul crude oil tanker trades if the oil supply cuts are discontinued.

So what changes will bring around upside potential, as well as downside for the tanker market? On the upside, increased oil demand from the US and Europe may switch some demand back to OPEC exporters in the Arabian Gulf, from present shorter-haul suppliers. On the downside, the all-important Far Eastern importers may go back to

the Arabian Gulf for supplies, at the expense of South American exporters like Brazil and Venezuela. Change will also come from the preferred crude slates of the most recent refinery expansions.

US crude oil exports are now more significant to the tanker market than exports of US oil products.

Much longer sailing distances for crude oil outweighs the higher volume – but shorter hauls – on oil product trades. Keeping crude oil flowing from the US to importers more than 7,000 nautical miles away is a key element for the recovery of the crude oil tanker sector earnings.

So, are 50 VLCCs a lot or not enough? In an oversupplied market, no new tankers are really needed from a fundamental market balance perspective. From a narrower perspective, it merely topped up the supply of crude oil tankers for 2019 to match that of 2018.

In the meantime, in the oil product tanker sector reality has surely hit home as new orders have been few since August 2017. The lack of a solid winter season in the freight

Oil tanker contracting activity

Crude oil tanker

Jan. 2018

Feb. 2018

Dec. 2017

Oct. 2017

Nov. 2017

Sep. 2017

Jul. 2017

Aug. 2017

Product tanker

Source: BIMCO, Clarksons

14

Jun. 2017

Apr. 2017

May 2017

Mar. 2017

Jan. 2017

0

Feb. 2017

0

Million DWT

0.5

Dec. 2016

0.5

Oct. 2016

1.0

Nov. 2016

1.0

Sep. 2016

1.5

Jul. 2016

1.5

Aug. 2016

2.0

Jun. 2016

2.0

Apr. 2016

2.5

May 2016

2.5

Mar. 2016

3.0

Jan. 2016

3.0

Feb. 2016

Million DWT

2016-2018

market to boost earnings as well as business confidence, made owners and investors shy away from newbuilding yards – just as fast as they returned – in December 2017.

Contracting activity for newbuilding in the oil product tanker sector has been relatively subdued since early 2016. This is positive from a freight market perspective, at it means that fleet growth in 2018 and 2019 will be at a five-year low – around 2.5%.

Since global oil stocks are still way above a level that supports tanker demand – fundamental market improvement can only happen with a slow growing fleet size.

Elevated stocks impact the tanker industry via a lower level of trading demand growth and a lower level of consumption-driven demand growth as stocks are drawn down.

The exact opposite of what is happening with stock building, which the tanker industry enjoyed from Q4 2014 to Q1 2016.

BIMCO estimates one target point to be approximately 1.4m bpd higher for global oil stocks than before the stock building started in 2014 if you adjust for the oil demand growth since then. Currently the global oil stocks are 2.9m bpd higher, down from 4m bpd in the second half of 2016. ● maritime ceo

MARKETS FINANCE

Capital conundrum

Dagfinn Lunde gives readers an overview of what to expect in 2018

T

here’s been some pretty big wake-up calls for traditional ship finance players in recent months with a raft of tech firms coming in trying to usurp their places. However, the editor has told me to write on that in the next issue and in this first column of 2018 to focus more on the big picture. All I will state on the matter of new tech companies emerging for the moment is this: I do feel the way banking is done today is outdated and is at risk of being picked apart by nimble, new entrants.

To the matter in hand, then, the overview of key themes in ship finance in 2018. Smaller banks in Europe are eying the gap left by departing big names while Asian giants are rapidly becoming the leaders in the field.

Maritime and Merchant Bank, Hellenic Bank, Amsterdam Trade Bank, Berenberg and the Bank of Cyprus are just some of the new entrants from Europe making a foray into ship finance.

The ongoing pullback by the larger European ship finance brands continues in 2018. My old bank, DNB, which has already gone through a significant retreat from shipping, has recently announced another $10bn move away from the sector. $10bn is a huge sum – something like 220 cape newbuild orders at today’s prices.

The typical wrong logic is still very prevalent among the leading

ISSUE ONE 2018

banks; there is no counter cyclical mentality, which I do find scary.

There are opportunities to be had in this market, but financiers are not willing to take the plunge. Most amazing for me was to see that in 2016 when values were at their lowest and you could lend against very low values, practically no bank was around to lend to shipowners who wisely invested in bulkers that year.

The other theme that is clearly continuing from 2017 is Asia, led by Chinese leasors, filling the gap left by departing European banks. I note on the final page how readers are wary of the growing power of Chinese leasors – sorry folks, you are just going to need to start accepting that they are here to stay as a serious force in shipping.

A nice thing to observe recently is that pricing in ship finance has finally become much more realistic. A five-year loan at 50% financing and a 4% or 5% margin is typical today Shipowners got too used to extremely low priced loans, which proved deadly for the banks – 70% loans at a 2% margin are mercifully impossible today. Down to 50% financing at double the price has, of course, come as a major shock to many owners. Luckily for them with LIBOR still so low that cushions the shock somewhat.

More and more credit funds are trying to do business in this field.

They might be more expensive but I

do not expect this growing trend to slow down this year.

I do wince at the volume of ship orders I am reading about on a daily basis. The equilibrium is still so tight.

Owners are naturally trying to catch the peak of the bulk cycle, something I am anticipating in around 12 months’ time maximum. Cycles are now shorter thanks to delivery capacity at the yards, but nevertheless it is important to bear in mind that the demand side for many sectors, notably dry bulk, remains fantastic.

As ever, the editor has put me on the spot asking where the smart money should go on this year. Handy bulk carriers remain a decent bet, I think. However, for the brave, I’d plump for smaller pure chemical carriers, a sector that has finally bottomed out and has little in the way of orderbook.

Now stay tuned for the next issue where I promise to deliver some fiery comment on tech and ship finance. ●

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MARKETS OFFSHORE

Old jackup gamble not paying off David Carter Shinn from Bassoe Offshore has some stark realities about many failings in the rig sector

T

hey’re cheap to stack and costly to scrap, but old jackups are finally moving off to scrapyards. The most junk-laden segment of the offshore rig market looks as if it’s starting to clean itself up.

In 2017, 14 jackups were sold for scrap (excluding mat and slot rigs).

This number is twice as high as it was in 2015 and 2016 combined, and we expect it to rise further this year.

But recent jackup scrapping activity hardly puts a dent in the number of zombie rigs with no future in the competitive drilling market (just 3% of the fleet scrapped so far). More than 130 non-competitive jackups still exist, and if you add these to the number of old jackups coming off contract over the next year, the pool of potential scrap jackups becomes well over 200 units.

So why, when owners have already scrapped over 100 floating rigs, is it taking so long to drain the swamp of old jackups?

Two years ago (or even six months ago), if you had a 30-year old cold stacked jackup, you could leave it somewhere and wait for that hyperbolic liftoff in rig demand.

Stacking costs were (and still are) low, and when the offshore drilling market returned to its peak, reactivation costs would only be a fraction of what they are for floating rigs.

Jackup owners had a cheap option to keep assets in play, a chance to get a piece of the jackpot.

Add this to the fact that, compared to floating rigs, jackups cost more to transport, have a lower steel value, have a smaller pool of

ISSUE ONE 2018

buyers and ship recycling facilities which can handle such assets, and may, in some cases, be difficult or unsafe to move from their locations if their jacking systems have lost functionality.

But as the jackpot dwindles, as the likelihood of higher utilisation and dayrates for old assets fades, and as rig reactivation costs rise due to longer-than-envisioned periods of stacking, there’s not much reason to stay in the game.

This is what rig owners have started coming to terms with.

Acceptance of reality takes time, though, and the process of actually scrapping a jackup takes more time.

It’s just not something rig owners want to spend their days dealing with.

That’s why, even if some owners want to get out of the game and scrap their assets, it won’t all happen in a day, or a year.

Most of the easy scrapping has been done now. Out of the pool of nearly 340 rigs in today’s fleet which are over 20 years old, only around 70 are floating rigs while 265 are jackups. And the need for fleet optimisation and scrapping is finally starting to eat into jackup rig supply.

The jackup scrapping trend is also being helped by transportation costs – the most influential variable in the rig scrapping equation – which have nearly halved over the past two years as more competition has driven heavylift rates down. At the same time, steel prices in Turkey and India have doubled since 2016.

As a seller, a year ago, you’d

be lucky to break even on a scrap jackup sale after accounting for transport costs, administrative time spent, and legal fees. Today, owners still don’t really make money off selling rigs for scrap, but the economics have improved enough to make the process more palatable.

A 6,000 dwt jackup in the US can now fetch between $500,000 and $750,000 depending on whether it’s sold ‘as is, where is’ or delivered to the yard by the owner. For rigs in the Middle East which are sent to India, these numbers rise to $1.5m and $2.5m.

Recent, and increasing, pressure from authorities and vessel owners has led to improvements in recycling procedures at many yards. As owners continue strengthening their recycling philosophies, they’ll likely spend more time and effort ensuring that they promote and comply with Basel Convention (or similar) regulations.

The effect of this, which derives from a necessary change in the industry, is that scrapping could take longer as there are not enough ‘real’ green recycling facilities around the world.

While cleaning up the jackup fleet will take years, and while there are a number of factors slowing it down, at least the reluctance to scrap we’ve seen from owners is abating. The rate of scrapping is, and will continue, increasing. And we expect 2018 to be another record year for jackup attrition. ●

17

EXECUTIVE IN PROFILE DEBATE

Entrenched attitudes versus technology adoption Is the mindset of those working within maritime holding the industry back from becoming tech pioneers?

T

echnology has always been the driving force promoting the development of various sectors in human life and business.

The pace in overall technology development in the world has been unprecedentedly fast in the past few years and many predict that the golden era of technology is coming with several key technologies like big data, artificial intelligence and virtual reality taking hold to benefit various business sectors. However, there is concern that the shipping industry will be slower to adopt new

18

technologies due to some of its traditional characteristics.

Are entrenched attitudes stymieing new technology adoption in shipping? That’s the view held by Bhupesh Gandhi, managing director of brand new Group Nautical, a Singapore maritime tech consultancy.

“Entrenched attitudes and traditional ways of working, these

“

habits are difficult to change and do not match the pace of change of the technology adoption itself,” Gandhi says.

People need to also learn new skills – “learning how to learn,” Gandhi explains – which he maintains is not traditionally given the highest priority within shipping.

“Top it up,” he continues, “with the commonly heard excuse of

”

We need a new attitude to business model efficiency

maritime ceo

EXECUTIVE IN PROFILE DEBATE

reluctance to adapt as the industry is not doing well. It won’t until we learn to accept and adapt to the reality that is now and be ready for the future.”

Others interviewed for this feature do believe the workforce in shipping has the ability to adapt to technology change.

Frank Coles, the high profile CEO of equipment manufacturer Transas, reckons attitudes are changing – and they have to for the industry to flourish.

“Technology is an enabler, simply painting it over the top of the creeking, old fashioned business model and processes is a waste of time and resources. We need a new attitude to business model efficiency, training, safety and recognition of smarter decisions coming from better use of data and decision support.

This impacts every element of the current maritime discussions,” Coles maintains.

“So the entrenched ostrich who lives in a CAVE (citizens against virtually everything) is making maritime a dinosaur industry,” he adds.

Bjorn Hojgaard, CEO of shipmanager Anglo-Eastern Univan Group, believes that despite some people undoubtedly having old school attitudes, the shipping industry is full of adventurous self-starters and risk takers, who don’t back down when facing technological challenges.

Hojgaard firmly believes that two areas in particular – propulsion systems and big data – will see huge leaps forward in the next 10 years.

“The kinds of fuel we use, the mix of means for energy storage, conversion to propulsion and auxiliary needs, etc; all are up for disruption and it is not clear which technologies will emerge winners and the timeline for the race ahead,” says Hojgaard.

Hojgaard reckons it is likely that the industry will face a multipronged world a few years from now, where

ISSUE ONE 2018

trading areas and types of ship will dictate different approaches to all these questions but he has no doubt that the decarbonisation agenda will only accelerate in the years to come, and it will change shipping profoundly.

“

Ørbeck-Nilssen says.

It’s not entrenched attitudes that delay new technology adoption, argues another top shipmanager, it’s more down to the complex nature of multiple stakeholders in the industry.

The ship of the future will require more sophisticated skillsets from seafarers than is the case today

“I do think that most of this development is driven by innovative and progressive thinking inside the industry, often in response to regulatory requirements, but also simply because behind the headline rule-set is a backdrop of rapidly changing expectations from a demanding public,” Hojgaard says, adding that the use of smart sensors and gauges, artificial intelligence and connectivity will also lead to rapid changes in the way ships are operated.

“I don’t believe we will see mainstream deepsea ships become autonomous – in the meaning of no people onboard – for at least a generation, but I can easily envisage a world where the roles and jobs of the people onboard change in response to technological advances. In fact, I think the ship of the future will require more sophisticated skillsets from seafarers than is the case today, and I embrace that wholeheartedly,” Hojgaard says.

Knut Ørbeck-Nilssen, CEO of the maritime division of classification society DNV GL, does not believe entrenched attitudes will stand in the way of maritime innovation as he has seen a rapid cultural change going on in many shipping companies and this has to do with younger generations coming into shipping as well as professionals from other industries.

“It is clear that digitalisation will continue to gradually transform shipping and change the way classification societies work,”

”

“I don’t believe that it is entrenched attitudes that delay adoption of new technology, it is the fact that there are so many stakeholders with interests in the industry that it makes getting agreement a very lengthy and tedious process,” says David Price, managing director of Wallem Shipmanagement.

“A good example of this is the ballast water treatment convention which took many years to reach agreement and even now there are some port states that have gone their own route. If the industry were less fragmented I have no doubt that decision making could be speeded up and the adoption of new technology would be faster,” Price reckons.

Thomas Wilhelmsen, group CEO of Wilh. Wilhelmsen Holding, disagrees with the saying that the maritime industry is conservative, although he hears it often.

“If you are conservative in the maritime industry, you will not make it, full stop,” Wilhelmsen maintained in a recent speech given at a conference in Oslo.

“With the amount of data available now, combined with technology providing new opportunities, our options and possibilities to create value for our customers are different today than just one year ago,” Wilhelmsen said, concluding: “It is more fun to be in in the forefront of developing the maritime industry, than to be just someone who comes in later and adopts what everyone else are doing.” ●

19

IN PROFILE

Basile Aloy p.22

Domenico Ievoli p.31

In profile this issue Maritime CEO’s 17 correspondents around the world have been in touch with many of the world’s top shipowners. Highlights are carried over the next 13 pages

20

maritime ceo

IN PROFILE

Arne Blystad p.25

David Wu p.27

Li Duozhu p.26

Danny Hoffman p.29

Hassan Basma p.33

ISSUE ONE 2018

21

COVER STORY

In vino veritas, in aqua sanitas Basile Aloy, part of the famous Saverys clan, has turned his back on the family vineyard to develop new dry bulk outfit, Ebe

T

his title – edited by a glugging Francophile in the Pyrénées – has always mixed wine with shipping although we do not condone doing both onboard at the same time. Rather, every issue we carry the witty, erudite thoughts of wine columnist/shipping PR merchant Neville Smith (do check page 38 for his take on the Rhône). Similarly, this issue’s cover star is someone for whom wine and ships have flowed throughout his career.

Basile Aloy, a younger member of the famous Belgian Saverys family, ditched running his family’s vineyard in Italy in favour of launching a career in what the Saverys’ do best, namely running ships.

Spot on

Ebe Founded in 2016 by Basile Aloy as a small, independent owner of Japanese dry bulk tonnage. Four-strong fleet today with two more on order.

22

Aloy formed Ebe in 2016, after his mother sold her 16% share in Compagnie Maritime Belge (CMB) to his uncle Marc Saverys. He has since set about building a fleet of high quality Japanese bulker tonnage, which today comprises a capesize, two kamsarmaxes and a supramax.

Ebe also has two 62,000 dwt ships on order at one of Japan’s finest bulker builders, Oshima Shipbuilding, for delivery in the second half of 2019.

While his family still owns Avignonesi, the well-regarded Tuscan vineyard, and is still very much involved in the day to day running of the company, for Aloy work is now totally focused on developing Ebe. “To be honest,” he tells Maritime CEO, “I don’t regret leaving wine. It was a wonderful experience but shipping is very much what I enjoy to do.”

To get a knowledge of shipping, Aloy worked for a while with Swiss brokers Ifchor before setting up Ebe in Antwerp two years ago.

Throughout 2016 and 2017 he scoured the markets, picking up well-priced Japanese tonnage, and now he feels the dry bulk sector is set fair for a couple of years.

“We are very positive for 2018 and 2019, anything further is reading

tealeaves,” he says, adding: “We believe the market is poised for an increase this year and we’ve prepared ourselves to take advantage of this upturn.”

Ebe is however by Aloy’s own admission very conservative, something likely honed from being part of a family who have known shipping peaks and troughs for more than a century.

“Ebe has no leverage as we felt that in such a high-risk industry it is best to prepare yourself for the worst while hoping for the best,” Aloy explains. “Therefore if the market goes up, excellent. If not, we can hold out a very long time.”

Aloy reckons timing investments in dry bulk has become a lot more tricky in recent years.

“

If there is an upturn I think the cycle will be much shorter than we expect and we’ll need to get out sooner than we think

”

maritime ceo

IN PROFILE

“We’re in a fundamentally different market these days wherein I believe the cycles are much shorter,” he explains.

Across shipping segments ordering is, despite an uptick in the last 12 months, still quite low and prices are, in Aloy’s words, “still aggressive”.

All the shipyards that have closed down or reduced production can start up again or increase production quickly, Aloy warns. Should dry bulk pick up aggressively this year, he points out that the yards have a lot of capacity to fill orders, especially as they do not have a lot of work on other vessel types.

“So if there is an upturn I think the cycle will be much shorter than we expect and we’ll need to get out sooner than we think,” Aloy says.

The only positive for now as he sees it is that financing is either difficult to obtain or expensive.

Aloy might be a scion of a family with huge shipping empires such as CMB and tanker giant Euronav, but he is content to keep Ebe small and focused on dry bulk.

“We are currently very happy with our position in dry bulk which we built up over the course of 2016 and 2017,” he says. Looking at the tanker sector, his exposure to Euronav tells him that increasingly this is a sector where scale is vital following a series of massive merger and acquisitions in the last couple of years.

“Our holding company is one of the major shareholders in Euronav where we are very happy to own shares rather than ships. Tankers are consolidating and there is no room for small players such as ourselves, best to leave it to the big boys,” he says.

For Aloy then for the time being the plan is – just like his Sangiovese reds – to keep making subtle, yet fruity plays in the improving dry bulk market. ●

ISSUE ONE 2018

“

We felt that in such a high-risk industry it is best to prepare yourself for the worst while hoping for the best

”

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IN PROFILE

Arne Blystad’s box fleet hits double figures An exclusive interview with one of Norway’s most famous shipowners

T

he year 2017 marked a new high for the S&P sector in shipping with smart money betting on a rebound for many segments. Few people are more adept at reading the highs and lows of shipping cycles than Arne Blystad, the Norwegian who helped in no small part chalking up last year’s sales and purchase record.

Blystad has kept his cards close to his chest in terms of fleet buildup but in an exclusive interview with Maritime CEO he reveals his container fleet, made up of smaller tonnage, has now hit double figures.

Set up less than 12 months ago Songa Container now has 10 ships afloat with more likely to join the fleet soon.

Blystad has also been very aggressive snapping up dry bulk bargains in the past year, something Blystad believes will pay dividends in the months ahead with the sector poised for growth.

Songa Bulk was founded in 2016 by the Blystad Group. Herman Billung, former CEO of John Fredriksen’s Golden Ocean, was tapped to run the company and in a short space of time Songa Bulk has

Spot on

Blystad Group Diverse business conglomerate with tankers, semi-submersibles and new additions Songa Bulk and Songa Container.

ISSUE ONE 2018

“

There is the scare again of too many people being tempted to contract new vessels

built up a 15-strong fleet comprised of three capesizes, 10 kamsarmaxes, one ultramax and a supramax.

“I believe 2018 will be a decent year for many segments within the shipping space, but not all,” Blystad tells Maritime CEO, adding: “I do believe dry bulk and the container feeder market will maintain their steady improvement.”

Blystad’s sprawling shipping investments also include crude, chemical and product tankers while his heavylift vehicle, Offshore Heavy Transport, has five semi-submersible heavylift vessels.

Blystad, 63, has been through enough cycles to remain cautious while others talk up the markets.

Financing of assets remains tricky for many, he points out, while the uncertainty brought about the sulphur cap looming in 2020 could be a serious headache for many

”

owners, he believes. What worries the seasoned owner the most though is the prospect of a new avalanche of ship orders killing off any nascent recovery.

“There is the scare again of too many people being tempted to contract new vessels within segments with a good potential,” he says. For now, Blystad is content scouring the markets for more secondhand bargains. ●

25

IN PROFILE

Chemical tanker giant in the making China’s Dingheng Shipping has mapped out a fleet growth plan to hit 100 ships in the not too distant future

S

hanghai Dingheng Shipping, a chemical tanker operator in China, has commenced an ambitious expansion plan to build a fleet of 100 chemical tankers with an IPO also on the cards.

According to Li Duozhu, president of Dingheng Shipping, the new chemical tankers the company plans to build are mainly medium and small tankers with capacity ranging from 2,000 dwt to 15,000 dwt.

Dingheng will use the vessels to expand its own fleet and also sell and charter to other owners and investors globally.

“It will be a brand new business model in the international petrochemical logistics market,” Li says.

Currently the company is in talks with a consortium led by Tunku Ismail, the crown prince of Johor in Malaysia, on plans to establish joint ventures to meet the potential demands from the petrochemical development plans of Malaysia.

Li says part of the rationale for the giant expansion plan now is down to the very competitive prices offered by domestic private yards.

“We have formed close

Spot on

Dingheng Shipping Shanghai-based chemical tanker owner with 20 ships on its books and plans to have a 100-strong fleet within the next six years.

26

“

Our goal is to get into the top 10 in the chemical tanker sector in the world

”

collaborations with shipyards, equipment providers and material providers to make good use of their extra capacity and inventory, which have lowered the ship price substantially and also lowered the financing cost in the deals,” Li says.

In October last year, Dingheng ordered a total of 16 chemical tankers at Ningbo Xinle Shipbuilding and has since been negotiating for an additional 10 tankers.

“Comparing with large size chemical tankers, the supply/ demand in medium and small is more balanced and the profit ratio is relatively stable,” Li claims.

There is a history of Asian companies making big chemical tanker plays – often without success.

The Japanese in the 1980s and more

recently Indonesia’s Berlian Laju Tankers spring readily to mind.

Dingheng, led by Li, however promises to deliver on its goals. Its history shows the company is quite a fighter.

Dingheng was once on the verge of bankruptcy in 2010 when the company was hit by a financial crisis with huge liabilities and also in the same year, one of the company’s vessels was kidnapped by Somali pirates.

The company paid a huge amount in ransom despite the financial difficulties and managed to get all 19 Chinese crew back.

The magnanimous act by Dingheng helped the company win the support from government, banks and business partners who together helped it get through the difficult times at the start of the decade.

Currently Dingheng operates a chemical tanker fleet of over 20 vessels with total capacity of 120,000 dwt. The company plans to add another 40 vessels in the next four years.

“Our goal is to get into the top 10 in the chemical tanker sector in the world,” Li says, adding that an IPO plan is also well on track. ●

“Shipmanagers are expected to be at the forefront of the digitalisation wave” — Carl Schou, president of Wilhelmsen Ship Management

maritime ceo

IN PROFILE

New LNG containment system stirs interest A revolutionary new gas ship will deliver later this year. Saga LNG’s David Wu explains its significance

T

owards the end of this year a new type of LNG ship will deliver from a yard in China, the culmination of years of design work, and a moment that could revolutionise the gas trades.

The 45,000 cu m gas carrier will deliver in just over seven time from China Merchants Heavy Industries.

It features the brand new patented LNT A-Box, self-supporting IMO Type-A tanks mounted within an insulated hold space that creates an alternative gas containment system to the existing established favourites such as the Moss and membrane designs.

The project is the brainchild of David Wu, a former doctor with strong ties in Norway, who has become one of the best-connected names in the Chinese offshore scene.

“We are working hard to get the charter and we are going to trade in Asia,” Wu tells Maritime CEO about plans for this debut ship.

An option for an additional vessel will be exercised as soon as the charter of the first ship is fixed, Wu reveals.

Wu says that interest for this new gas containment design has been strong with many potential clients – both trading houses and sizeable shipowners – visiting the yard in China to check out the system for themselves.

While the LNT A-Box design initially focused on smaller gas carriers, Wu and his team are now eyeing larger ship sizes too.

“We are considering to move to relatively big size LNG ships in the range of 60,000 to 80,000 cu m based

ISSUE ONE 2018

“

We are looking for industry partners who can join in us to build more ships in the small and mid size LNG sector

”

on our LNT A-Box. We are also studying FLNG, FRSU and FRSPU now,” Wu says.

Like readers of this title, who have voted that LNG has the best prospects among all sectors this year, Wu is confident 2018 will be kind to those in gas transport.

“I do believe that 2018 will be very interesting year in LNG sector, especially we will see more activities in small-mid size of LNG sectors. We will also see more projects in gas-topower projects too,” Wu says.

Saga LNG Shipping, the gas carrier vehicle behind this debut gas ship, is owned by Landmark Capital – a company led by Wu and Norwegian investor Paal Utvik.

Going forward, Landmark Capital is keen to add more investors to expand the new gas concept.

“We are looking for industry

partners who can join in us to build more ships in the small and mid size LNG sector. Based on the experience gained from the first ship, we do believe that our LNT A-Box has lots of advantages: simple design, easy to build with competitive building costs and future operation costs,” Wu concludes. ●

Spot on

Saga LNG Gas shipping vehicle owned by Landmark Capital controlled by David Wu and Paal Utvik. Developed brand new gas containment system.

First ship delivers later this year.

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IN PROFILE

More sophisticated vessels needed on intra-Asia trades Danny Hoffman has just taken the reins at Hong Kong’s Gold Star Line. Here he discusses how regional trades are changing

H

ong Kong-based Gold Star Line turns 60 this year and has its eyes set on more sophisticated vessels.

In his first interview since becoming managing director at the containerline, Danny Hoffman discusses with Maritime CEO key issues affecting intra-Asia trades as well as how his line is expanding to new territories.

“Intra-Asia trade will continue to grow both for reefer and freight and I believe that upward trend will continue but in a modest way,” Hoffman says.

“We are also planning to expand our activity in Africa, meanwhile last year we launched a new Middle East service which is an extension of our expansion plans in the Indian Sub-Continent,” Hoffman says. More Indian Sub-Continent feeder services are also in the offing, he adds. Last year it launched a service to West Africa with Chinese giant, Cosco.

Gold Star is now looking at South Africa while it also mulls entering the Australian tradelane too.

The fleet at the ZIM subsidiary

Spot on

Gold Star Line Sixty-year-old intra-Asia boxline, based in Hong Kong. A subsidiary of ZIM with 19 ships totalling 78,521 teu.

ISSUE ONE 2018

“

I don’t see so many options for consolidation on intra-Asia trades

”

now stands at 19 ships totalling 78,521 teu.

“Our fleet on the intra-Asia routes is changing with more sophisticated vessels being deployed,” Hoffman says, adding: “I believe that due to port congestion and geographical obstacles like shallow draft, the fleet will move to a widebeam design for those ports, like Bangkok and Chittagong require the maximum sized wide beamed vessels or other regular B-1700 vessels will continue to dominate but will be improved.”

Unlike other sectors of container shipping, Hoffman believes there’s little room for consolidation among

intra-Asia operators – cooperation is the name of the game in this particular niche.

“I believe that more cooperation in this region will be the way forward. I don’t see so many options for consolidation,” he concludes. ●

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IN PROFILE

Trucker of the sea faces challenges head on Domenico Ievoli stands out in Italian shipping for his forthright, old school views – and for his solid financial position

N

aples-based Marnavi is one of the few shipping companies in Italy, which has not been involved in any restructuring processes in recent years even though the chemical, liquid bulk and offshore markets in which it is active were particularly challenging. The company is managed by its president and chief shareholder, Domenico Ievoli, in close cooperation with his two sons and vice presidents Attilio and Gennaro, in charge of different commercial and technical functions.

As of today Marnavi owns and operates some 30 vessels serving four markets: chemical, offshore, edible products and anti-pollution services.

In petrochemical transport the company operates a fleet of vessels with capacity ranging from 5,400 up to 26,500 dwt in the Mediterranean, on the continent and on the transatlantic runs. Offshore is the most recent initiative with the the company investing heavily in recent years to build up a modern fleet of anchor handling towing vessels classified and arranged also for salvage operations, a shuttle tanker and some barges with deadweight ranging

Spot on

Marnavi Naples-based line. Owns and operates some 30 vessels serving four markets: chemical, offshore, edible products and anti-pollution services.

ISSUE ONE 2018

from 7,000 to 9,000 tons.

“The company’s strategy is to work as much as possible with long-time contracts in order to offer our clients integrated sea transport services with our vessels,” says Ievoli, emphasising that he is not used to charter out to or charter in vessels from other owners.

“We are not looking for financial speculations but our main target is to have an industrial approach to the business in close cooperation with the shippers we work for,” Ievoli says.

Shipping is the sole activity Marnavi wants to do in the best possible way, no diversification is planned. The company is discussing with some shipyards about possible new projects. “We are interested at making new ships as versatile as possible and this is part of the constant renovation process of our fleet,” Ievoli says. The owner wants to build new vessels able to work in several market segments. That’s exactly what it did in the offshore avoiding standard OSVs or PSVs but ordering ships with special equipment.

Further confirmation of the traditional and industrial approach of the Naples-based shipping group, Marnavi is not looking at all for investment funds or new shareholders to grow.

“We have been always working with traditional lenders with mutual satisfaction and we are confident that the banks will go on supporting our projects also for the future,” says the seasoned shipowner. “We used to define ourselves as sort of the truckers of the seas since our main focus is just to transport goods in the

“

We have never been interested at having a speculative approach

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best possible way and that’s enough.

That’s why we have never been interested at having a speculative approach neither in the business nor on the financial side of the business.”

Looking at how the shipping industry is changing, the head of Marnavi considers new regulations are probably the main issue shipowners have to deal with today.

“The big challenge for the next few years will be to make new ships ready for the next market period and I’m thinking about new regulations coming for ballast water treatment, LNG as an alternative fuel, scrubbers, and so on. The good part of the story might be that those requirements probably will phase out older tonnage in some segments which today are suffering from overtonnage,” the Marnavi boss concludes. ●

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IN PROFILE

IPO on the cards for new Singapore offshore firm Offshore veteran Hassan Basma on how to navigate the sector’s choppy cycles

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BA Offshore, a Singaporebased integrated solution provider in the offshore sector, is well prepared to stride across the doldrums in the sector and compete in new markets.

Hassan Basma, founder and chief executive officer of HBA Offshore, a veteran of the sector, looks at the current recession as just another cycle to overcome.

“In my career I have seen six cycles so far, there’s almost a cycle every six to seven years,” says Basma.

Basma has over 35 years of experience in the oil and gas industries, of which the last 22 years were spent in Asia. Basma’s last position was as CEO of Malaysian oil service provider Bumi Armada.

The main reason offshore lurches from one crisis to another is that owners fail to learn from past mistakes, according to Basma.

“As soon as the market is up, people start to build lots of ships again, sometimes recklessly I would say, and hence we end up with all the overcapacity, overleveraged balance sheets, stretched P&L and so on,”

Spot on

HBA Offshore New offshore player based in Singapore founded by offshore veteran Hassan Basma.

ISSUE ONE 2018

Basma says, adding that financial prudency during the good times and the ability to read and understand the trends are what is needed to survive full market cycles.

“We have a saying in the offshore sector, the second time buy makes money, not the first time,” Basma maintains.

With the offshore vessel sector so fragmented, consolidation is unlikely to help much with the overcapacity issue.

“This fallacy or misconception of consolidation is ridiculous. Even if you consolidate the top 10 players, you cannot consolidate more than 30% of the fleet,” Basma points out.

Basma reckons that the oil price crash means the industry has changed forever. The recovery when it comes will result in a paradigm shift with new players poised to be the winners.

HBA Offshore provides bespoke shipmanagement services with a focus on offshore and marine sectors, and it also provides tailor-made solutions on specialist infrastructure assets such as FSOs, FPSOs, FSRUs and FLNGs. In addition, the company has also tapped into big data analytics and automation.

HBA Offshore is now leading a newly set-up private entity, Asia Strategic Turnaround Ventures, to buy out Swissco Holdings’ offshore support vessel fleet. The deal has already received approval from the listed group’s judicial managers.

Basma is bullish when it comes to FPSOs. “The large scale project in Brazil

“ ”

I have seen six cycles so far

and the smaller projects in Southeast Asia countries including Malaysia, Indonesia and Vietnam are relatively well defined now, which leaves the middle ground – the $300m-600m projects, where we think the next consolidation battles will take place, it is also where HBA Offshore is focusing,” Basma says. “There are not so many established players in there, I think the opportunities are right for us to go into the segment, which is why I set up HBA Offshore, we see this segment as very attractive.”

Looking at HBA Offshore’s future, Basma says the company will enhance technologies and competence in order to compete with new players in the market and the company is planning an IPO by 2021, which would be the second IPO in his career. ●

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SINGAPORE IMC STATUS

Connectivity, innovation and talent

The republic has identified three key themes to keep it ahead as a leading maritime cluster through to 2030

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ot likely to rest on its laurels anytime soon, Singapore has mapped out its maritime future for the coming decade.

Widely polled as the world’s most vibrant maritime centre, Singapore unveiled its Sea Transport Industry Transformation Map (ITM) this January, which aims to add 5,000 jobs and $3.4bn in maritime-related revenues by the middle of the next decade.

Connectivity, innovation and talent were the three key themes outlined by senior minister of state for transport Lam Pin Min while unveiling the ITM at an event in mid-January.

“While 2017 was a better year than the last, the road ahead remains challenging. Indeed, we have to continue to paddle hard to stay ahead,” said Lam, during the annual Singapore Maritime Foundation (SMF) New Year cocktail reception.

SMF’s chairman, Andreas Sohmen-Pao, the boss of BW Group, commented that the new strategy looks to strengthen intangible assets and capabilities, and is not just about

34

building physical assets.

“You may have noticed the key words in the ITM are connectivity, innovation, and talent,” Sohmen-Pao said. “This new emphasis – which includes non-physical flows like data and technology – will require new forms of collaboration.”

The three themes were first identified by the International Maritime Centre (IMC) 2030 advisory committee, established by the Maritime and Port Authority of Singapore (MPA) in 2016, which submitted its IMC 2030 strategic review report to the Singapore government in September last year.

Sohmen-Pao, chairman of the IMC 2030 advisory committee, commented at the time, “The successful growth of Singapore’s maritime sector over the past decade has been founded on a clear strategy, effective implementation, and strong alignment between the government and the maritime community. These factors are even more relevant at a time where the outlook is less certain and where the emphasis is shifting from physical to virtual

flows. Connectivity, innovation and talent are seen as the best ways to remain responsive to changing conditions, and the report provides action-oriented recommendations to be ready for future challenges and opportunities.”

Singapore in recent years has regularly topped multiple maritime hub polls, however both the private and public sectors in the Lion Republic continue to stress that they need to continue to innovate their maritime offering to stay at the top of the pack.

The committee reckons Singapore can further widen and deepen its IMC cluster by harnessing both physical and non-physical trade flows. On innovation the thought leadership team urged closer alignment of public and private sector R&D efforts, while in terms of talent the need for a future-ready workforce with relevant skills and a global mindset was deemed essential.

“As maritime is a global industry, Singapore will need to continue to attract its share of global talent.

Greater efforts are also needed to attract more Singaporeans into this industry, which offers many exciting opportunities,” the report noted.

Human resources have been regularly cited as the Achilles’ heel in Singapore’s maritime make-up. ●

For unrivalled coverage of Singapore shipping and offshore

maritime ceo

SINGAPORE SSA

Cash raising exercise Esben Poulsson, the president of the Singapore Shipping Association, is determined to make the republic a stronger base for ship finance

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here’s no air of gloating when Maritime CEO calls in to interview the president of the Singapore Shipping Association (SSA).

Yes, the Lion Republic might be by common consent – and multiple polls – the most vibrant maritime cluster in the world. However, for Esben Poulsson there’s no time to celebrate, it’s more important to bolster some weaker parts of Singapore’s maritime jigsaw.

The area the SSA president wants to boost the most is in finance. Going forward, Poulsson wants to make it as easy to raise cash in Singapore as it is in leading ship finance centres, Oslo and New York.

“On finance we are still not there,” Poulsson admits. “We all know perfectly well where the weak spots are.”

The city republic needs more capital markets activity and more analysts to cover shipping. The problem is that in recent years poor performing offshore stocks and shipping trusts have taken the shine off the sector.

“Money can be raised in Oslo and New York, we want to be able to raise commensurate levels considering we are regularly voted the number one shipping centre,” the SSA boss says.

To this end, SSA helped convene a capital markets forum last November where around 20 shipowners were able to have one-on-one meetings with a series of investors.

Despite the finance shortfall, there’s no denying Singapore remains the top maritime centre in the world.

For Poulsson this is largely down to the joint vision and partnerships fostered between government bodies and companies based in the Southeast Asian nation.

“It’s no secret that why maritime

ISSUE ONE 2018

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Cluster building has been done via coordination among all the stakeholders

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Singapore works well is the level of coordination among the key stakeholders, both public and private,” Poulsson says. He relates how when he first moved to Singapore 14 years ago there were around 30 shipping lines based there. Today there are more than 140.

“Cluster building has been done via coordination among all the stakeholders,” he says.

Going forward, SSA, and other maritime bodies in Singapore, are looking at developing tech leadership in maritime.

“Digital is a constant theme in shipping right now,” says Poulsson.

“This is an aspect you have to get stuck into or you will be left behind.”

In his opinion, Singapore ranks with Norway and Denmark when it comes to digital development in maritime.

The nation’s terminal operator,

PSA, and its port authority both now have living labs. “We must coordinate well so we don’t duplicate efforts,” Poulsson says.

When it comes to the digital race sweeping through shipping, Poulsson is aware, like in so many other strands of maritime, there is no time for Singapore to rest on its laurels.

“Everywhere in the world there are beavers trying to be the next Mark Zuckerberg of shipping,” the SSA boss points out. ●

“Banks need to start thinking about doing stuff that they were created for in the first place – allocating capital efficiently to the best projects and doing that in fully a transparent, fair manner” — Mitul Dave, co-founder of new blockchain ship finance platform, Shipowner.io

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SINGAPORE PORT

Terminal velocity Andy Lane from CTI Consultancy gets a glimpse of new shoreside technology while visiting an exhibition in the Lion City

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ontainer handling commenced in Singapore on June 23 1972 at the Tanjong Pagar Terminal (closed during 2017) loading roughly 300 containers onto the MV Nihon for Rotterdam. The first phase of development was funded by a S$45m ($34m) loan from the World Bank. By 1982 PSA Singapore was handling 1m containers per year, which increased to 5m in 1990, and now stands at over 33m teu per year. The new Tuas terminal is expected to have capacity for 65m teu per year at full build and will span an area of 1,339 ha. The reclamation works for phase 1 are expected to be completed by 2020, and alone will cost an expected S$2.4bn.

PSA has exploited technology for many decades. In 1984 it launched PORTNET (on Windows), the world’s first nationwide B2B port community system, serving the needs of its direct and indirect customers, and the entire logistics ecosystem. In 2000, the first phase of Pasir Panjang was opened, featuring remote controlled overhead bridge cranes in the yard.

Today it operates AGVs (automated guided vehicles) and automated RTGs (rubber tired gantry cranes) on parts of the new Pasir Panjang development. It is further exploring truck platooning to serve the needs of the high volumes of inter-terminal transfers required between the city terminals and Pasir Panjang.

This January, PSA showcased its further exploitation of technology for the highly advanced Tuas Container Terminal at an open exhibition in Singapore. It is expected that the yard will be almost people-free, through the deployment of automated yard cranes and internal vehicles to connect the yard to the quayside.

The quay cranes are expected to be

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remote controlled, where a single operator can handle multiple cranes simultaneously from the comfort of a modern office – and therefore where the need to transport people several kilometres and then 50 m into the equipment cabins will become redundant. Further innovation will likely see automated twistlock fitting/ removal.

Technology being explored does not stop there however. Lashing guns are already in place, reducing the physical exertion required to open and close the turn-buckles of onboard lashing-rods. Smart wearables will also further enhance the quality of the job for those who still need to work outside, such as: helmet mounted hands-free voice communications, AR glasses, body-worn cameras and wrist-worn biosensors, to name just a few. For work requiring strenuous dexterity, the use of powered exoskeletons is also being explored.

In terms of big data, this will be used to track micro-metrics (instead of macro ones, such as moves per hour), allowing operators and analysts to review and improve the sub-elements of processes getting nearer to root-cause issues. For maintenance the shift is from preventative to predictive and will facilitate a more just-in-time approach. Additive layer manufacturing (3D printing) will also be used to create many of the spare parts, which the machines need to have replaced periodically.

So with all this technology and automation, what happens to the jobs?

Well the thing is, Singapore is already overly reliant on a quantity of labour, which without immigration, simply does not exist. All industries

need to be far more productive, and container terminals are not an exception. The jobs which remain will be greatly enriched, and significantly safer to perform – the number one priority for any terminal manager. So the jobs of the future will need to be focused on automation and system management, using more data analytics with a higher technology quotient and through greater cross disciplinary integration – different skills will need to be acquired as a direct result.

For the customers of the port, they can look forwards to increased efficiency and greater consistency of vessel operations. The new terminal at Tuas should therefore have many competitive advantages over its neighbours. ● maritime ceo

SINGAPORE DIGITAL

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Innovation takes flight The republic is at the forefront of digital trials set to transform maritime

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cross many Singapore bodies, institutions and companies there is a drive to develop digital solutions for shipping. Indeed, for Esben Poulsson, the president of the Singapore Shipping Association (SSA), only Norway and Denmark can match the Southeast Asian nation for their maritime digital developments.

Over at the Maritime and Port Authority of Singapore (MPA) much resources have gone into a living lab, while the authority is trialling many novel solutions to simplify day-to-day shipping operations such as e-certificates and drones for surveys.

At a conference in Singapore last November, MPA’s chief executive Andrew Tan said: “IoT, digitalisation and new technologies such as blockchain and smart drones are changing the way we work. To stay ahead, the Singapore Registry of Ships needs to embrace these technologies to offer value-added services to its customer.”

The digital lead Singapore is building is drawing in companies to relocate. Wilhelmsen Ship Management, for instance, has recently decided to shift headquarters from neighbouring Kuala Lumpur to Singapore, in no small part down to Singapore’s digital dominance.

“Singapore is an established maritime hub, and a driver of digital innovation that will play a significant part in the company’s ongoing transformation,” a statement from the company read.

Few local shipping lines have mapped out a more clear digital future than the republic’s last homegrown containerline, Pacific International Lines (PIL). In February PIL, along with terminal operator PSA International and IBM, successfully carried out a blockchain trial to track and trace cargo movement from Chongqing to Singapore via the Southern Transport Corridor – a key route in China’s Belt and Road initiative.

The partners believe that there is now sufficient evidence to show that the concept can be taken to the next stage. The scope of the blockchain platform will be widened and the partners are eager to engage more participants from across the supply chain.

SS Teo, managing director of PIL, said, “We are highly committed to this idea because we as a company believe the wider application of blockchain across the global logistics and shipping businesses will lead to much greater operating efficiencies, security and transparency. It is the future for our industry.” ●

WINE

Choose your river wisely

We’re at the confluence of the year’s three great En Primeur campaigns but there are hazards to navigate downstream, writes Neville Smith

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t’s the time of year when the mismatch between bank balance and vinous desire hits an early peak.

The bills from pre-Christmas are in and there is light at end of the tunnel, only for the En Primeur season to announce itself like the first cuckoo of spring.

The Burgundy En Primeur campaign is close to done and dusted for the main merchants but there are still wines available.

The tiny 2016 vintage finds itself the piggy in the middle between the generous and high quality 2015s and a similar quality/quantity profile of 2017s when the worst of the weather was avoided. Burgundy vignerons being a canny bunch, prices were increased for last year’s release and will likely be up again next year, so prices for 2016s have not risen that much despite the perilously short supply.

Sadly, ‘not that much’ is a bit of a relative term since international collectors decided to extend their interest from Bordeaux to Burgundy, pushing the prices of the best wines, made in small quantities even in good years, beyond the means of many drinkers.

In a couple of months’ time the 2017 Bordeaux En Primeur campaign will get underway, sparking another feeding frenzy. But Bordeaux in 2017

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experienced a similar battering to Burgundy in 2016, resulting in a total harvest down 40% according to the winemakers’ association, CIVB. Late frosts at the end of April mean that some chateaux lost so much of their yield they will make or release no wine this year, though the damage was uneven.

The Bordeaux producers do have a card to play: releasing stocks held back from 2015 and 2016, both of which were generous vintages of high quality. The fly in their ointment is that prices had already increased for these wines, so they are unlikely to be able to repeat the trick in such a tricky vintage.

But we like trade in solutions not problems on this page and would urge anyone with a taste for wines that span the earthy, full and rich to the refined and delicate to consider a

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Despite being home to some of the world’s greatest whites and storied reds, the Rhône just doesn’t have the cachet of Bordeaux or Burgundy

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third way: The Rhône.

So good is the 2016 vintage that the normally sedate Wine Society says that rarely has it seen wines in which “elegance and concentration come together in such a stunning way as in the 2016 Rhônes,” suggesting “buyers would probably have to go back to 1990 to find a vintage of similar quality”.

Yet the Rhône’s trump card is also its Achilles heel. Despite being home to some of the world’s greatest whites and storied reds, it just doesn’t have the cachet of Bordeaux or Burgundy. That means that the wines are, euro-for-euro, great value even at the very top end, which are also made in tiny quantities and fought over by connoisseurs.

It’s appeal lies in its sheer diversity; from the luscious whites of Condrieu through the sleek Syrah-based reds of CrozesHermitage, St-Joseph and Cornas to the warming, life-affirming southern villages and the legendary Chateauneuf-Du-Pape.

These are wines made with the stubbornness of the Burgundians and finesse of the Bordelais that will age gracefully and put on some value too if you buy the best. In fact, now I come to think of it, don’t buy any 2016 Rhône. It will leave more for the rest of us. ● maritime ceo

GADGETS

Desk clutter solution

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e start the year with perhaps the lowest-tech gadget we’ve ever covered. It is, however, an elegant solution to a problem the Gadget Cupboard has struggled with for years: cables and their propensity to move around on and fall off tables when left to their own devices — or rather when they’re not plugged in to said devices. The Peel Base is a handmade walnut block with a strong magnet inside it, and a stylish cure to the ever-expanding desk spaghetti of modern living.

They come in circular, square, triangular and pentagonal shapes.

Peel Base buypeel.com $35

Climate changer

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ith weather getting erratic and pollution an ever greater problem, the Dyson’s Pure Hot + Cool Link is a great idea. It acts as heater, fan and air purifier all in one. The heater function comes with a thermostat, meaning you’ll be toasty rather than cooked, and it has a quiet nighttime setting with dimmed display (no need to tape over the LEDs!). It is programmable too with timed sleep functions. It’s HEPA filter traps 99.97% of particles as small as 0.3 microns and lasts about a year of daily use, and you can even link it up to your phone to get the room warm or cool before you get there.

Dyson Pure Hot + Cool Link www.dyson.com $600

Whirring travel

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here are other ways to get a bit of fresh air of course — Composite FX can help you out with its Mosquito XET. It’s a single seat helicopter powered by a modified T62-T2A Solar Turbine, which gives you 95 hp, for a maximum air speed of 160 kph, a cruise speed of 128 kph and an estimated climb of 365 m per minute. The helicopter is 4.8 m long, 2.08 m high, and 1.57 m wide, with a rotor diameter of 5.95 m and weighs 190 kg empty. It has enough fuel capacity for over an hour’s flight, or two hours with an auxiliary tank.

Mosquito XET www.composite-fx.com $52,000

ISSUE ONE 2018

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REGULAR BOOKS

Collecting intelligence Paul French looks at how best to mesh human brains with machines

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ast issue we took a look at a range of books on the phenomenon of big data – using super computers to capture vast amounts of data that hopefully shed light on anything from HR trends to weather.

Collective intelligence (CI) is slightly different – it looks at why, even with all the big data we can amass in corporations, governments, NGOs, we still get things wrong so often? Collective intelligence simply helps us be smarter, now, fast. Think Google Maps, compared to dragging out all those old Ordnance Survey maps, or the latest language learning apps that at last for the basics reduce learning time quite significantly.

Healthcare is certainly an area where collective intelligence is seen as really starting to make a difference but logistics, retail and transportation can also find benefits in CI. Geoff Mulgan’s book Big Mind: How Collective Intelligence Can Change Our World is really the best starting point to try and get a handle on CI. Mulgan accepts that without big data collection we can’t even start to collect real intelligence. Essentially CI is what happens when machines and the human brain start working together. Mulgan’s book is really useful if you want to work out a simple question (and we’ve all asked it, at least quietly, to ourselves) – how come I work with so many really smart people who often make dumb mistakes?

Writ large this question is how come brainy people with access to the biggest

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Big data may gather the information but we need to use our critical functioning human brain to sort it all out

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of big data didn’t see the 2008 financial crash. Well, Mulgan says, they were over reliant on data and didn’t apply their brains enough.

Pierre Levy’s Collective Intelligence: Mankind’s Emerging World in Cyberspace accepts a truism – we all, to a greater or lesser extent, spend a lot of time on the internet. This is good, Levy believes, if we use the internet sensibly to increase our intelligence. However, the furores over ‘fake news’ and bogus statistics also show us how careful we need to be.

Big data may gather the information but we need to use our critical functioning human brain to sort it all out and spot the problems. Levy is a professor in the department of hypermedia at the University of Paris and has thought deeply for a long time about how we interact with machinery.

Finally, it’s worth considering that without collective intelligence we wouldn’t be moving increasingly

towards the so-called ‘intangible economy’ whereby developed economies are now investing more in intangible assets, such as design, branding, R&D, or software, than in tangible assets, such as machinery, buildings, and computers.

Jonathan Haskel’s Capitalism Without Capital: The Rise of the Intangible Economy is a readable and fascinating guide to this new economic world.

Success is now concentrated in things we can’t see or touch often. Some call it the ‘disembodied economy’ – value but not in a physical form. Apple is perhaps the best example – all its value is in design and software. This might seem irrelevant to a shipowner – surely tankers are the epitomy of tangible assets? But, of course, we all know it’s the backroom operations, the software systems, the logistics programmes that are adding the value and the profits today. Yes, even shipping is part of the intangible economy. ●

maritime ceo

TRAVEL

Taipei for taipans Lonely Planet author Joshua Samuel Brown provides an exclusive rundown of what to see and do in Taiwan’s capital

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he time when Taipei was considered a hardship post is now a distant memory, and these days the city stands toe-to-toe with more well -known Asian luxury destinations like Hong Kong, Shanghai and Singapore.

Whether your travels bring you to Taipei for an afternoon or a week, you’ll have no shortage of luxurious venues from which to choose.

If there’s any single thing for which Taipei is renowned, it’s an abundance of excellent dining choices. We’ll avoid the obvious suggestions (night markets, hotels and so forth) and instead skip right to three suggestions for restaurants currently on the cutting edge of the city’s ever-evolving culinary scene Niu Baba Beef Noodle Restaurant has gotten a lot of attention recently for serving a very exclusive version of Taiwan’s signature dish. What makes their presidential beef noodle soup justify the hefty $325 per serving price are four different types of well-marbled imported beef, braised and frozen for 72 hours prior to cooking served in a savoury broth blended from six different stocks.

ISSUE ONE 2018

On the other end of the spectrum, Naked Food features a wide selection of beautifully plated handcrafted dishes that are both vegan and raw, prepared in small batches with fully organic ingredients. The dining environment is equally sumptuous, and the restaurant often hosts gatherings for visiting business groups looking for healthy fare.

Seafood lovers flock to the oddly named Addiction Aquatic Development, which isn’t as much a single restaurant as a collection of equally impressive seafood places under one roof. Here you’ll find Taipei’s best crab, lobster and sushi, as well as an excellent wine bar.

Taipei is not a city conducive to boredom, and even the most scaled down list of must-do experiences would exceed this article’s word count.

Catering to English-speaking visitors, MyTaiwanTour offers day tours in and around Taipei, with the two

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Taipei is renowned for an abundance of excellent dining choices

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must luxurious being its Private Taipei 101 Sunset Luxury Tour ( featuring a VIP tour of the skyscraper Taipei 101) and its Bath of the Gods Tour (which offers a private visit to one of the city’s most exclusive Japanese-era hot spring resorts). The company also offers fully customised tour and travel packages.

Next to Taipei 101, Grand Hyatt Taipei is a five-star hotel with 850 rooms and suites boasting spectacular views of the surrounding city and mountains. The hotel has hosted numerous American presidents, Asian tycoons and international celebrities. The hotel’s Oasis Spa offers a variety of amazing wellness packages including massage, mud wraps, body scrubs and more for individuals and couples.

Visitors looking for a more traditional experience will want to stay at Taipei’s famous Grand Hotel. The palatial structure boasts high crimson columns and a golden tiled roof reminiscent of imperial China. In days gone by, the Grand was where Chiang Kai-shek entertained visiting dignitaries while planning his reconquest of China.

Though the dream is history, the splendour remains. ●

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OPINION

Hire a chief technology officer, now!

OSV veteran Venkatraman Sheshashayee bemoans our lack of digital preparation

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es, we can discuss the price of oil and its peregrinations. Or the pressing need for and surprising lack of moves to consolidate.

Or even analyse to death the supply overhang and how this is expected to play out in different scenarios. All these are important topics.

There is one much more pressing issue that needs airing – our industry’s current luddite state and the concomitant need to pull ourselves along and up the technology curve.

Information technology revolutions seem to pass our industry by without even a mere howdedo.

I know of companies at which ‘technology’ means an accounting software or, at best, a basic PMS coded in the eighties. I have dealt with others where manual invoice registers are maintained. Some of our websites limp from page to page arthritically. The term ‘cloud’ is often seen only in daily weather reports.

Yes, there are some (very few!) companies who have recognised the need for and benefits accruing from embracing technology and are doing some wonderful things. But, on the whole, we are well behind the

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current curve.

And this curve is only going to become sharply steeper, very rapidly.

At the very least, the next few years are going to see: • Centrally managed smart machinery using artificial intelligence • Self-diagnosing and correcting equipment using machine learning • Distributed, unified contracting of services and supply chains using blockchain • Unmanned and autonomous vessels, leading to vessel-swarms • Fully-automated ports and supply bases using robotics • Commoditisation of assets and services due to data-democratisation These changes are not going to be incremental. Nor are they going to be optional. There is a tsunami coming; we can either catch the wave or capsize.

Out of the 18 companies in the maritime and offshore sector I have spoken to over the last two months, not one has a team focused on business technology. There is no

one driving an understanding of the changes that are barrelling our way, and no one preparing to adapt to and respond to these changes. Some teams do not have the bandwidth to even evaluate a technological solution proposed by a service provider.

This is short-sighted. We need to invest now in girding ourselves for the future. We need to understand which aspects of technology will lap at our feet, and which aspects will inundate us. We need to prepare our investment strategies, our systems and processes, and our people not just to react, but to ride the wave and use it to build a future-proof business that will be spared the tumult of the storm.

Maritime and offshore companies should waste no time in investing in a capable chief technology officer (and a business technology team). This role, working closely with the board and the marketing, technical and operations teams, will help develop a roadmap for the future, harnessing and leveraging technology to guide the company safely and effectively into the first of many tomorrows. ● maritime ceo

REGULAR OPINION

Mind the gap Rachel Morgan from recruitment firm Spinnaker Global takes on the issue of gender inequality in shipping

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omen who work in the shipping industry get paid 45% less than men.

The BBC gender pay gap is around 10%, the same as the UK’s Home Office. It’s not quite Easyjet’s 50% pay gap, but it’s not far off – and it’s not good enough.

The shipping industry is tough on women. It is very male-dominated, which is entrenched in many parts of the industry. It’s notoriously a ‘boys club’ – sons inherit shipping empires from their fathers and grandfathers; from its founding in 1744, women were not allowed on London’s Baltic Exchange trading floor. It took one pioneering woman in the 1960s, Inge Mitchell, to be ‘allowed’ in, and even then, they only let her in through the kitchen. She is now in her 90s, and still working hard to promote the maritime industry as one of the first female faces of shipping, and was recently named Woman of the Year by the Women’s International Shipping and Trading Association (WISTA).

For many years, women have only made up 2% of the general seafaring workforce. Of 6,500 engine officers at sea, only 1% are female.

Last year it was reported that a massive 50% of female seafarers said sexual harassment on board ships is ‘an issue’, and 40% of female seafarers do not have access to sanitary bins onboard ships. The industry has a responsibility to take these issues very seriously indeed.

Things are not all bad. WISTA have over 3,000 members worldwide, a network of women in shipping, where they have events and conferences where, importantly, women and men are welcomed. In early 2018, a new Women in Maritime taskforce

ISSUE ONE 2018

was launched by Maritime UK to address fairness, equality and inclusion in maritime.

The great imbalance within shipping has got to change, and that means at all levels, from deck cadets to the boardroom. Looking at the shore-based women in shipping, less than 20% progress to executive boardrooms. The Maritime HR Association, which collates and analyses shipping salary data and is dedicated to revealing the shipping pay gap, found that 0.17% of the women studied were on executive leadership teams.

Geography plays a part in equality for women in shipping, just like any other industry. In every country recorded, women on average earn less than men. Women make up just 25% of the shipping workforce in the Middle East, Africa and India.

In Eastern Europe however, more women are employed than men, but mostly across support functions, so are paid less.

If all this is sounding depressing, it is, but finally, people are sitting up to take notice. In the US, nearly 20% of director-level positions are now filled by women. In the UK, the new pay gap legislation means

that large companies – which a lot of shipping companies qualify as – have to publish their pay gap data. Transparency is coming. Every year, the Maritime HR Association gathers salary data so will be able to compare year-on-year. While they don’t publish raw data – the association is a membership body and their salary data is classified – the data is presented in aggregated percentiles which can still give a true sense of where discrepancies lie. Gender data wasn’t even reported on until a couple of years ago, but now it is an essential part of what the Maritime HR Association communicates.

So how else can things change?

The maritime industry, although massive, is often ignored. There is poor visibility in schools about maritime careers. Great effort has been made so young girls are encouraged into STEM subjects now, so hopefully what will follow suit is telling young women that they can grow up to be master mariners, naval architects, maritime lawyers, and CEOs. There are organisations who are going into schools and colleges and talking about maritime as an exciting career option. And for the wider world, shipping needs positive press. ●

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MARPOLL REGULAR

Your views More than 450 of our readers have cast their votes in our latest survey that looks at the markets in the year ahead. Results plus key comments below Will freight rates for dry bulk be higher in 2018 than in 2017?

Will freight rates for container shipping be higher in 2018 than in 2017?

Will freight rates for tankers be higher in 2018 than in 2017?

Yes 72% No 28%

“

Vessel off hiring may contribute with lesser tonnage being available in the market

”

Which sector will perform best in 2018?

“

Yes 54%

Yes 49%

No 46%

No 51%

They will have to be given higher bunker costs

”

Are Chinese leasors a good thing for shipping?

“ ”

Too much new supply on the horizon What’s more important to attend in 2018?

Containers 23%

Yes 48%

Posidonia 57%

Dry Bulk 29%

No 52%

SMM 43%

Tankers 8% LNG 32% LPG 3% Offshore 5%

“

The future is about finding alternative cleaner fuels

”

Do you think private equity is gearing up for another round of shipping investments soon?

“ ”

“ ”

“

They seem to be the only people Rapid technology advancement with cash in hand right now will be better reflected at SMM

Will Cosco overhaul Maersk as the world’s largest containerline in the coming 10 years?

Are you aware of cases of sexual harassment within your workplace?

Yes 54%

Yes 66%

Yes 20%

No 46%

No 34%

No 80%

Other markets are far more interesting

“

This will happen within the next five years. The strength of having government backing alone will ensure they take over from Maersk

”

44

”

“

If bosses do make undue advances then, if proven, they should be sacked without any benefits

”

maritime ceo

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