Maritime CEO Issue One 2021

ISSUE ONE 2021

BY

Zero Hero

Erik Hånell on Stena Bulk’s path to decarbonisation

MANIFEST

3 At The Prow

Profiles

Economy

23 Cover Story Stena Bulk 25 BW Group 27 Pacific Basin 29 d’Amico 30 Teekay 31 Hartmann 33 Flex LNG 35 Carl Buttner 37 Future Proof Shipping

4 US 5 EU 6 China 8 India 9 Brazil

Markets 11 Dry Bulk 13 Tankers 15 Containers 17 Finance

Executive Debate 18 Port call collaboration

Recreation 38 Wine 40 Gadgets 41 Books

Opinion 42 Charlie Du Cane 43 Andrew Craig-Bennett 44 MarPoll

39

AT THE PROW

An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editor: Adis Adjin adis@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 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 2021’s four issues of Maritime ceo magazine.

Blue sky thinking about game changing moonshots

I

recently put out an all-points bulletin to PR firms to stop using the term ‘game changing’. Last month I added the term ‘moonshot’ to my growing list of comms terms that make me shudder and generally slam the delete button on a release in my inbox. I came across another doozy the other day where I audibly groaned – a Greek shipping conference that proudly trumpeted its ‘phygital’ capabilities.

I decided to open up this debate about god awful consultantspeak terms on various social media channels and it seems I am not alone – the guff trotted out by comms teams clearly irks many of you as much as it does me. So here then is a short list of other phrases that deserve a thick red strikethrough.

Facilitate when you mean help.

What’s wrong with admitting you need help?

Releases that start with “XXXX is pleased to announce”. No one cares

if you’re pleased or honoured. Get to the point.

Paradigm shift – get a grip, it’s not.

Pivot – my teeth always grate when I see this one anywhere.

Blue sky thinking – sends storms through my brain.

Any reference to ‘leading’ from boilerplate paragraphs in press releases. It seems literally every single company across the globe is the world’s leader.

Climate sobriety – pass me the bottle, fast.

The hyperbole churned out by today’s public relations teams has me almost yearning for simpler times, the days when everything was just plain old state of the art. ●

“

The guff trotted out by comms teams clearly irks many of you

”

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ISSUE ONE 2021

3

ECONOMY US

Clean departure Team Biden is trying to be as different to the Trump administration as possible

Y

ou may have noticed, there’s a new team in the White House – Team Biden. And they are extremely keen to differentiate themselves from the previous Team Trump in any and every way possible. But economically the times are tough – the toughest ever by some measures. The US economy is in contraction due to Covid-19, unemployment is high, welfare rolls expanding, investment down. The new president’s $1.9trn stimulus package should lift US GDP by up to 4%. Certainly it’ll pump some much needed money into the retail economy (providing everyone doesn’t use it to pay rent, pay down mortgages/ credit cards, or save it). Still, despite this it was a hard fought victory for Team Biden against Republican Party intransigence showing that the country is still significantly divided on economic policy as on most other things.

However, there are some bright spots on the horizon for the US. The US central bank expects much stronger growth this year than previously forecast, as vaccination rates rise and government relief funds start flowing into the economy. The Fed is forecasting 6.5% for this year - up from the 4.2% it predicted back in December. Bullish on vaccination rates, improved trade under Biden US corn exports to China – 2015-2020 Year

(metric tonnes ‘000s)

2015

747

2016

264

2017

807

2018

306

2019

256

2020

817

Source: US Grains Council

4

with China (which may or may not occur) and the EU and the country getting back to work and reducing the unemployment numbers.

America is of course central to global economic recovery – Chinese exports will not fully rebound without an improvement in American demand. Similarly Japanese exports fell much faster than expected in February as US- (and China) bound shipments weakened. Of course major suppliers to America, such as Mexico, are also largely dependent on America’s swift recovery.

Therefore the ultimate spill over effect of America’s stimulus package, vaccination programme and recovery are yet to be measured for the nation’s major trade partners and neighbours.

Some economists are less worried about whether or not, and when, recovery will occur as to what scarring will be left on the American economic landscape. Scarring refers to those things left behind by Covid-19 that will suppress growth

prospects over the medium or long term. For instance, small businesses have been hit hard by the pandemic, and a reduction in the number of such companies may cause the US economy to miss out on productivity gains that they often deliver.

Still, most economists are more bullish on the American economy than a few months ago.

The Organisation for Economic Cooperation and Development (OECD) said recently that the US economy is forecast to grow by 6.5% this year and 4% next year. What will be a major determinant of the resumption of American and global economics in 2021 is US-China relations. Anyone hoping for a swift improvement with Trump gone (see Trump era slump in farm exports to China below) will be disappointed by the US-China meeting in Anchorage, Alaska in March, the first high-level meeting between the two countries under the Biden administration.

Discussions did not go well or augur well for future US-China trade. ● maritime ceo

ECONOMY EUROPE

A time of turmoil

Bungled exits from the pandemic are seeing forecasts slashed for 2021

T

hings look economically grim for the European Union (now, of course, not including the United Kingdom following Brexit).

A rise in Covid infection rates meant new lockdowns for many in continental Europe dashing hopes of recovery and renewed economic growth. The pandemic will be prolonged in Europe. This combines with the far slower and seemingly more bureaucratic vaccine roll out on the continent. Consequently economists have cut growth forecasts for the Eurozone economy as a third wave takes hold, particularly for France, Italy and Germany. For instance, following the vaccine crisis and renewed high infection rates ING bank now expects the Chinese FDI in Europe, 2020 – The main recipients Country

Euro bn

UK

50.3

Germany

22.7

Italy

15.9

France

14.4

Finland

12.0

Sweden

7.3

Spain

4.6

Source: MERICS

ISSUE ONE 2021

Eurozone economy to shrink 1.5% in the first quarter of 2021, having previously forecast a lower 0.8% decline. The way out for Europe looks hard too – as of mid-March only about 12 people per 100 in the EU have received a first dose of a Covid-19 vaccine, compared to 37 in the US and 43 in the UK. Although the issues over the temporary suspension of the Oxford/AstraZeneca vaccine appear to be over the speed of the EU’s vaccine rollout is still lagging.

The Covid-19 situation also impacts and confuses the data on the immediate effects of Brexit to both the UK and the continent. UK exports of goods to the EU plunged by 40.7% in January, the first month of Brexit, but this was against the overall drop in trade caused by Covid-19 too. The UK’s Office on National Statistics (ONS) revealed that goods exports to the EU bloc fell by £5.6bn, while imports fell by 28.8%, or £6.6bn. Exports of food and live animals to the EU, which includes seafood and fish, were the hardest hit by Brexit, collapsing by 63.6% in January, again according to the ONS. It will not be until Covid19 recedes across Europe, and also the pre-Brexit stockpiles are run down (a situation obviously taking longer as the shops are shut) that

we will see the full effects of Brexit.

And, by then, some paperwork issues and various stumbling blocks may be removed or resolved. Either way, with Covid-19 confusing the trade numbers, the UK looking to have been much more successful at vaccine rollout than the EU and the predicted travel chaos not happening because nobody is travelling, the Johnson government has also largely dodged any potential any-Brexit fallout in the first four months of the year at least.

A looming issue for the EU is that the commission is poised to trigger its first sanctions on China since 1989 (the arms embargo following Tiananmen Square). Initially the EU-China Comprehensive Agreement on Investment appeared to be going through without any objections, even on the contentious issue of linking trade and investment to human rights. But this has changed of late and the EU is likely to place a range of sanctions against several countries (Russia, Myanmar and China primarily). The issues of Xinjiang and Hong Kong have become political hot potatoes in several EU countries, not least in France for Emmanuel Macron. The final ratification and form of the deal may well now be far more contentious than initially planned. ●

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ECONOMY CHINA

Stimulating debate Beijing is determined to achieve 6% growth this year come what may

C

hina is still hoping for a first in, first out approach to cCovid-19 and certainly the apparent non-reappearance of mass outbreaks bodes well. Initial indicators seem to suggest that China’s export economy is recovering relatively quickly and that Chinese goods exports have gained ground on the US and Eurozone, reaching 110% of pre-virus levels. However, that doesn’t mean there are no problems in the Chinese economy. Consumer demand and sentiment are lagging and, as we’ve frequently pointed out over the years, continuing consumer demand is the one constant Beijing has bet on repeatedly. So while retail sales are growing again, they are yet to return to the pace seen pre-pandemic.

Still, industrial production China’s global export numbers – H2 2020 Month

RMBtrn

July

1.68

August

1.65

September

1.66

October

1.61

November

1.80

December

1.81

Source: China Customs

ISSUE ONE 2021

output was over 30% stronger this lunar new year holiday than last (though the 2021 Chinese New Year break was significantly shorter than 2020’s). In many factories and sectors there was virtually no break in production output this year as migrant workers stayed in place and did not attempt the traditional long return home for the holidays. Of course this also played into the weaker consumer numbers as the holiday spend was down too.

China is aiming at 6% growth this year though some economists (mostly domestic Chinese, though Fidelity International in Hong Kong and the IMF have agreed with this assessment) believe it could surpass 8%.. That is achievable but there are some potential bumps on the road. Despite seeming a done deal the EU-China Comprehensive Agreement on Investment is starting to look decidedly more shaky as repeated human rights issues, primarily Hong Kong and Xinjiang, rear their problematic heads. Potential EU sanctions against Chinese officials and companies may lead to arguments. It is also the case that despite a generally positively received transition from Trump to Biden in the US, initial talks have not go to off a great start. Meanwhile, China

still has disagreements and disputes with many key trade and investment partners from Canada, to the UK and Australia. All of this may add to depressed trade.

Among the sector’s looking good at the moment China’s high-tech industry is particularly interesting.

The country’s IT services sector grew by almost 17% as demand for emerging products such as smart watches, civilian UAVs and integrated circuit wafers exploded rapidly. China’s position as a leading producer of electric vehicles has also increased somewhat due to heavy commitments in R&D in that sector.

Finally, we should note that China, as with most other developed economies globally, has pumped in enormous stimulus into the economy. In 2020, China’s central government allocated a sizeable RMB 8.39trn to local governments, up 12.8% on 2019. This money was used to subsidise the livelihoods of workers, either un-, under or partially employed in various ways as well as to prop up low pensions, social assistance and living allowances in 2020. Though not called a furlough, the effect has largely been the same though not promoted by Beijing in the same way as by western governments. ●

7

ECONOMY INDIA

Tricky to inject India is home to vast vaccine manufacturing hubs. Its political leaders are hoping for a shot in the arm

I

ndia’s economy could possibly grow by 12% in 2021 following a 7.1% contraction last year, as near-term prospects have turned more favourable, Moody’s Analytics said. Yet of all the major global economies India’s is perhaps the hardest to predict in terms of emerging from the Covid-19 crisis. While India has escaped the infection rates of some other countries, it has been hard hit.

Additionally it is a vast population to vaccinate. Still, Moody’s is by far the most bullish of the analysts and many see growth of 4% as ambitious (the UN says 5%), let alone a whopping 12. Such are the current divergences on the future of the Indian economy.

The main problems for the India’s importance in providing the vaccines Country million doses capacity (est) USA

4.69

India

3.13

China

1.9

UK

0.95

Germany

0.50

South Korea

0.35

Source: Statista

8

Indian economy have been hefty restrictions to people’s movement limiting internal migration for work, lost incomes through unemployment and reduced domestic consumption and retail sales. In part the UN stated that it believed that its “bullishness” of 5% in 2021 was partly due to the 2020 collapse of the economy.

The New Delhi budget for the fiscal year from this April 2021 to March indicates a shift towards demand-side stimulus, with an increase in public investment (notably particularly in transport infrastructure) for the coming financial year. As elsewhere economists are hoping that the anticipated recovery in global demand will also help buoy the export sector through 2021. However, there will be longer term problems for the Indian economy even if there is no further wave of Covid-19 in the country. There will likely be a return of austerity economics in the country, greater unemployment and massive calls on public welfare funds over the medium term.

Indian exports appear reasonably well positioned for recovery.

Engineering products, chemicals and

low value manufacturing are all in demand and some Indian exporters have reported up to 40% growth in demand, according to the Federation of Indian Exporters. Right now of course one of India’s major exports is Covid-19 vaccine. Some of the largest and most crucial vaccine factories globally are in India and they’re working round the clock to fulfil international orders as well as meet domestic demand. At the same time India is the world’s largest exporter of onions for which there is record global demand right now. India’s export economy is certainly varied.

But domestically things are tough. The Indian Retail Association says its members have taken a big hit and the emergence of nationwide retail brands has been stalled somewhat. According to the Indian Retail Association, sales in February 2021 were at -7% of last year’s sales on a year-on-year comparison and at -18% in a quarterly year-on-year comparison. Restaurants and catering remain seriously depressed although categories like footwear, beauty, wellness and personal care, sports goods and food and grocery are showing steady month-on-month recovery. ● maritime ceo

ECONOMY BRAZIL

Going backwards Latin America’s largest country has had a very bad pandemic

F

ew countries, if any, have been as badly hit by Covid-19 as Brazil – a hit not helped by the government’s seeming intent to continue to deny the existence of the virus. Brazil’s gross domestic product contracted 4.1% in 2020, according to Brazil’s official statistics institute, known as IBGE. Still, the result is better than the 5.3% plunge forecast by the International Monetary Fund in April last year. Brazil’s president Jair Bolsonaro has insisted throughout the pandemic that the country’s economy – already long ailing – remain open, arguing that restrictions and lockdowns would cause more hurt than the economic fallout from suspending operations.

With rates still increasing Brazil is faced with a public health system in complete collapse and a national economy approaching teetering on the edge.

Despite everything Brazil actually saw a fairly robust rebound in the back half of 2020, with 7.7% and 3.2% growth in the third and fourth quarters, IBGE data showed.

Family consumption buoyed results in both quarters, helped by a government stimulus programme, but that was discontinued at the end of the year. In actual fact Brazilian Brazilian agricultural exports (2014-2020) Year

US$bn

2014

96.66

2015

88.17

2016

84.94

2017

96.01

2018

101.17

2019

96.85

2020

100.70

Source: Brazilian Agricultural Ministry

ISSUE ONE 2021

unemployment fell by a short amount over the last two quarters of 2020.

Still, Brazil’s services industry has been particularly badly hit and a growth in new cases in the first quarter probably means that the country’s consumer and services industry will be depressed until the middle of 2021 at the earliest.

Covid-19 is only one of the problems hitting the Brazilian economy and, by extension, Brazil at the moment. Amazon expansion, environmental damage and climate change remain problems – Covid-19 or no Covid-19 – remain issues. Sales of wood from Brazil to China last year grew by 76% and show no signs of slowing, fuelling the environmental crisis in the Amazon and Cerrado regions. Indeed, if environmental concerns are ignored then Brazil’s agribusinesses are doing quite well at the moment. China’s demand for soybeans, as well as beef and other livestock is driving growth in exports. In 2020, Brazilian

agriculture and livestock exported $100.8bn, 4.1% more than in 2019.

The sector accounted for almost half (48%) of the country’s overall exports. The boost in demand from China is partly due to China looking for alternative animal proteins due to swine fever.

Brazil’s other seemingly quite reliable export category is iron ore partly due to the fact that the iron ore export price was 75.6% higher compared to a year ago, while volumes increased 10.9%. Iron ore appears to be remaining strong in 2021 -iron ore exports increased 84% year-on-year in financial terms in January and February.

Finally, one problem for both soybean and iron ore exports for Brazil is that shipping delays with queues at ports and crewing issues have slowed down shipments and available space. However, it is hoped that even though the Brazilian Covid-19 experience may continue to be grim, it will improve elsewhere and open up global shipping more. ●

9

MARKETS DRY BULK

Asian coal trading map transforms The Chinese ban on coal imports from Australia has shaken up coal trades in the east, writes BIMCO’s Peter Sand

I

n the absence of Australian coal exports to China, other exporters have been scrambling to fulfil China’s coal demand. As a result, some countries are lacking their usual coal imports, a gap which Australia on the other hand is trying to fill.

For the first time in many years, South Africa started exporting coal to China in December 2020. Since then, exports have averaged 760,000 tonnes a month, about a sixth of total South African coal exports in that period. On the other hand, exports to India and Pakistan, which together took almost 70% of South African seaborne coal exports in 2020, have slumped. Exports to the two countries have fallen by 44.5% in the first two months of the year to 5.6m tonnes.

Indonesian exporters have also increased focus on China. The country’s exports to China have risen significantly while exports to the rest of the world have fallen, in particular

ISSUE ONE 2021

to India. The drop in Indian imports from South Africa and Indonesia has been compensated for by Australia.

Shipowners have been fast to react to the changes in the coal trade, as importers and exporters have scrambled to find new buyers and new sources. In addition to South Africa and Indonesia, countries such as Russia and Mongolia are set to benefit from the Australian coal ban in China.

In terms of tonne mile demand, the changes almost cancel each other out. Looking at China in isolation, the average sailing distance so far this year for a cargo from Indonesia is about half that of a cargo coming from Australia, while coal from South Africa sails 1.5 times longer.

Imports from Russia provide a tonne mile boost compared to Australia if they come from the Baltic of Black Seas. However, the vast majority of Russian seaborne coal exports to China are shipped

from East Russia, lowering tonne mile demand. Any increase in imports from Mongolia is also bad news for shipping as they are all imported by land.

When looking at distances covered by Indian coal imports, distances sailed increase by respectively 1.9 or 1.5 times when Indonesia or South Africa replace Australian coal.

Japanese and South Korean imports both see higher tonne miles generated by imports from South Africa compared to Australia, while tonne miles fall if the imports instead come from Indonesia.

Seaborne coal has traditionally had the lowest average haul of the major dry bulk trades, and the changes currently happening are unlikely to change that, as some trades are replaced by longer hauls and other by shorter ones. It will be more important to see how demand for Chinese coal imports develops and how tensions between China and Australia unwinds in the future. ●

11

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MARKETS TANKERS

Calling the rebound Tim Smith from Maritime Strategies International looks at how, where and when a recovery might materialise

Q

1 2021 saw the oil tanker market hit rock bottom with earnings very similar to mid2018. MSI believes, for spot earnings, Q1 21 will represent the low point of the market downturn, with improving levels seen across the rest of 2021 and potentially much better rates in the second half of the year. For the period market we see limited further loss of altitude in a market which has already been severely downgraded.

The tanker market could see conditions improve above and beyond the MSI Base Case as well.

MSI has begun publishing extended quarterly tanker spot forecasts on the MSI HORIZON platform. These spot projections do start to see significant upside movement before the T/C rates, but they are coming from a very weak position early in 2021.

As the market transitions from a low environment at the start of the forecast to a more solid footing and (eventually) strong conditions, we see the spot earnings exceed T/C rates.

What could make this recovery happen faster? In terms of fleet dynamics, the most likely impact would be from temporary factors.

ISSUE ONE 2021

Following the OPEC+ announcement in March, it isn’t likely that we will see an extreme oil surplus in the market in the near-term, and certainly not on the scale seen in 2020.

High oil prices are not conducive to floating storage, and so at present this source of tightening is unlikely.

With the ongoing uncertainty around COVID-19 and the events of the last 12 months, we don’t rule it out though.

Geopolitical friction remains another potential driver of fleet restrictions. By its nature though this type of event is not going to be a sustainable source of upside.

Nonetheless the tanker market is arguably the most exposed shipping sector to geopolitical volatility, and this usually works in its favour. The recent blockage of the Suez canal has had a positive impact on spot rates, but its duration was short lived.

What about more sustainable sources of recovery on the demand side? Although our Base Case incorporates a positive view on oil demand recovery, we could see it rebound even faster. Given the sluggish start to 2021 that is unlikely to happen this year but 2022 offers more potential for out-performance.

Such a scenario would require a lot to go right in the world’s ongoing battle against Covid-19.

Accelerating and widespread vaccination, sustained and strong protection against new variants, rapid recovery in air travel, and an explosion of pent-up travel demand unleashed with e.g. vaccination passports or similar, a mass return to working from ‘work’ etc would be among the waypoints required.

We can see jolt in oil demand next year with 2022 significantly exceeding 2019 levels.

The rapid change in the refining landscape could also herald more buoyant markets. This could come not just from import demand but changing trade patterns. Regional refinery contraction and expansion changes the balances of required crude and supplied products, driving global trade in both oil’s raw and refined forms.

For the world’s largest crude exporting region, the Middle East, more crude will be used in its expanding domestic refining facilities—reducing export potential, but significantly increasing products output.

Conversely, in the US, reduced refining capacity will potentially free up even more shale crude for export.

This will add a further dimension to the ongoing contest between OPEC and US shale crude, which is likely to resume in earnest when we see a strong and sustained recovery in oil demand following the pandemic. ●

13

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MARKETS CONTAINERS

Container shipping could go carbon neutral right now $5.1bn. That’s the surprisingly small cost for the whole liner fleet to go carbon neutral today. Vespucci Maritime’s Lars Jensen explains

T

he container shipping sector is clearly beginning to take step towards the IMO 2050 goals of reducing carbon emissions by 50% - and that is 50% of the total emissions, not unit emissions per teu*mile. In practice this means that most of the vessels operating at that time would have to be carbon neutral.

The technology is not yet ready for large vessels, but for smaller vessels it is already here, as evidenced for example by Maersk’s latest statement that they will launch a methanol-fuelled feeder vessel in 2023. The fuel producers are not quite ready either and building carbon-neutral vessels obviously requires that carbon neutral fuel is available. Something of a chickenand-egg situation.

Furthermore, even if we magically invented the technology to build a carbon neutral vessel at any size tomorrow, and even if the fuel was available, no-one would envision a scenario where more than 6,000 container vessels are scrapped overnight – much less that you could build that many ships in a hurry.

It would therefore seem that aiming for 2050 as a carbon neutral target is more realistic despite hopes and aspirations to do it sooner. But we could also be thinking about this the wrong way.

The IMO Digital Collection System is set up for shipping lines to report CO2 emissions. For 2019 they arrive at total emissions of 614m tons, hereof 30% from container shipping. This means 184m tons for the container shipping lines.

In round numbers, the industry

ISSUE ONE 2021

moved 170m teu loaded with cargo in 2019, which makes for emissions of 1.08 ton of CO2 per teu. Of course, containers on longer trips caused more emissions than containers on short trips. Containers on small fuel-inefficient vessels caused more emissions than containers on larger more modern vessels. But that is simply a discussion of how to apportion the emissions to the individual containers. The totality is the same regardless of how it is then split on single containers.

Increasingly the market is seeing the use of carbon offsets – investing money in projects which have proven to reduce carbon emissions. This approach is even used in container shipping as well – just as two examples, MSC offers to offset emissions this way through collaboration with South Pole and Kuehne+Nagel has their Net Zero Program also using carbon offsets with a range of providers.

What does it cost? Clearly, that depends on the projects being supported with some being more or less expensive and some being more or less effective. And, yes, one should be cautious about pure greenwashing projects. As an example, German Atmosfair has a price for offsetting the 1.08 tons matching a teu of approximately $30.

Scaling this up to a global perspective, the entire container shipping industry could go carbon neutral as of right now at a cost of $5.1bn.

Whilst that sounds like a high number, it is instructive with some context in the container shipping industry. In 2020, the added cost

of low sulphur fuel from IMO2020 was $5.7bn – which was incidentally much less than the $10bn to $15bn anticipated prior to 2020. But one should be clear here: This added cost is not shouldered by the carriers – it is passed onto the shippers and, ultimately, to the consumers. The same would be the case of a carbon offset.

Hence, we are at a point where the industry in a very real sense could go carbon neutral tomorrow.

But it would entail three things.

First, the shippers would need to shoulder part of the cost – and eventually get this passed onto the consumers. This should of course be seen in the context of the normal rate levels and not from the extremely elevated rate levels in the currently warped market.

Secondly, it would in essence require all carriers to start doing it, as otherwise carriers not doing it would have a distinct cost, and hence pricing, advantage.

Thirdly, whilst you can buy offsets for smaller emissions, doing it at this scale would need careful thought in terms of the projects’ short and long term viability. ●

15

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MARKETS FINANCE

Regulatory purgatory is heaven for rates Dagfinn Lunde, an economist by profession, gives readers his engineering tips

W

ell, what a wonderful position shipowners find themselves thanks to regulatory purgatory.

The waiting for confirmation of the next stage of environmental regulations has put an incredible clamp on ordering new ships - the markets are set to reap lovely returns this year and next from the minuscule orderbooks - though I do concede liners have shot the golden goose and will once again rue their ordering binge over the last eight months come 2023.

The lack of newbuildings in dry bulk is especially glorious. After so many false dawns since 2008, this does look like a solid upcycle.

Bear in mind too, the best thing owners can do now to lower pollution is a retrofit, not opt for a newbuild - ship repair yards ought to be highly busy for the coming years.

Retrofits seem to make the most sense to me as you then also avoid building new ships immediately with the environmental negative effects.

Slot methanol such as the engine pictured instead of heavy fuel and

ISSUE ONE 2021

it’s job done, no? Some very smart owners are cottoning onto this simple fact this year - others will surely follow suit.

This brings me neatly onto one of this year’s topics du jour, the International Maritime Organisation’s Energy Efficiency Existing Ship Index (EEXI), which is looking like it will give scrubbers a run for their money in terms of wasted column inches deliberating every possible scenario this new rule might bring to bear on the business of shipping. EEXI works on a per ton per mile basis, but not on how much of the time the ships are laden, which seems a crazy omission to me.

Instead of demanding mechanical, technical changes to the global merchant fleet, just slap a charge on fuel. Put a $250 a tonne levy on fuel and watch ships slow down and alternative fuels gain immediate traction. Pollution from shipping would reduce dramatically within a year, I reckon, but what do I know, I’m just an economist not an engineer.

Banking is my metier and what

“

Put a $250 a tonne levy on fuel and watch ships slow down and alternative fuels gain traction

”

I can tell you is Basel III, due to come into effect in 2023 - the same year as EEXI funnily enough - this will have a simply enormous effect on the shipping industry. Basel III aims to strengthen the regulation, supervision and risk management of banks.

Loans from banks will become super expensive as a result. Banks will be expected to have a credit loss scheme in place. Loans from banks will naturally become less attractive. Big banks today have priced down loans while trying to get other business from clients. I do wonder if they can afford continuing dishing out all these cheap loans. Shipping’s traditional finance landscape will be changed dramatically by Basel III. Definitely time for other capital sources to pour into ship financing - of which I guess we have only seen the beginning. ●

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EXECUTIVE IN PROFILE DEBATE

Opening the silos: datasharing is key in port call collaboration Change of industry mindset needed for ship voyage optimisation to curb costly port congestion and cut emissions, industry forum is told

G

reater collaboration and information-sharing is needed among stakeholders to optimise ship route planning and curb congestion at ports that is spurring pollutive emissions and raising costs for shipping companies.

“Data transparency is the oil in the machine to make port call execution more efficient,” Captain Ben van Scherpenzeel, director of nautical developments, policy and plans at the Port of Rotterdam, told a recent Immediasea forum of industry participants hosted by Blue-C.

18

Waiting time due to port congestion leads to increased ship emissions as well as higher operational costs for the shipowner from idle vessel time and increased fuel consumption, while cargo owners run the risk of demurrage charges if cargoes cannot be offloaded within the contractual time-frame.

This has increased pressure on ports to improve the efficiency of their logistics, as well as expand their infrastructure and workforce, to speed the flow of global maritime trade.

Inchcape Shipping Services chief executive Frank Olsen told the forum that increased interaction among the myriad parties involved in port calls – including port authorities, shipowners, ship agents, different cargo interests and service suppliers – is vital for end-to-end voyage optimisation to reduce port gridlock.

“

Acting in a sustainable way should attract a market premium

”

maritime ceo

EXECUTIVE IN PROFILE DEBATE

“

Data transparency is the oil in the machine to make port call execution more efficient

‘Giant puzzle’

Better access to such information for route planning purposes is necessary to achieve just-in-time (JIT) arrival so that a vessel also arrives at port at the right time when cargo-handling capacity is available, as well as other services such as bunkering, provisions and maintenance, he explained.

Olsen said such efforts represent “low-hanging fruit” that can make a difference to environmental pollution in the near term through lower fuel use as sailing speed is reduced to avoid the “rush-to-wait” at ports, thereby cutting NOx and SOx air-particle emissions.

To this end, Rotterdam port has joined forces with 10 other ports and six major carriers and agents, including Inchcape, to draft a business process for end-to-end planning of voyage execution from chartering of a ship to final berth, according to Scherpenzeel, who is also chairman of the International Taskforce for Port Call Optimisation.

Shipping body BIMCO has now drafted a Port Call Data Exchange Clause to support the IMO’s efforts to promote a common platform for information-sharing between ports, shipowners and other stakeholders, according to its head of contracts and clauses Grant Hunter.

This is alongside BIMCO’s newly published JIT arrival clause for charter contracts that is intended to reduce waiting times and inefficiencies at ports, as well as cut emissions.

”

Need for incentives Hunter emphasised that contractual safeguards need to be in place both for the shipowner, if reducing a ship’s sailing speed results in failure to meet the due despatch obligation to deliver cargoes as fast as possible, and for the cargo owner in regard to the bill of lading.

“There is a need for flexibility between the contract parties. At the same time, there have to be incentives for such a JIT clause for owners and charterers, such as fuel and demurrage savings,” he said.

Similarly, Inchcape’s Olsen believes there has to be a regulatory regime of incentives and penalties to incentivise the right type of behaviour among players across the value chains. “Acting in a sustainable way should also attract a market premium,” he said.

Product tanker operator TORM’s head of global operations Andreas Greve Jørgensen told the forum that a lot of entities need to come together to make a change on port calls.

He pointed out that reducing greenhouse gas emissions makes “sound business sense” with synergies for shipowner and charterer.

But Jørgensen said: “It is only when we reach the tipping point that GHG can add value and not compromise earnings for shipowner or client that things will start to happen.” ●

“We have to find ways to share information and communicate. Right now, there is too much silo thinking where parties are not willing to share information that they think may give them a competitive advantage,” Olsen said.

He added “it is all about thinking holistically to bring together all the relevant information” so that the “giant puzzle” of port calls can work effectively.

ISSUE ONE 2021

19

IN PROFILE

Alfred Hartmann p.31

Richard Klatten p.37

Thorsten Mackenthun p.35

Kenneth Hvid p.30

Rome Paolo d’Amico p.00 p.29

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 17 pages

20

maritime ceo

IN PROFILE Oystein Kalleklev p.33

Erik Hånell p.22

Mats Berglund p.27

Andreas Sohmen-Pao p.25

ISSUE ONE 2021

21

IN PROFILE

New look tankers Stena Bulk is leading tankers towards a net zero future

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maritime ceo

COVER STORY

A

cross the various divisions at Stena exciting transformations are underway. Witness plans to become the world’s first decarbonisation exploration driller or the Stena Elektra, a futuristic looking hybrid ferry.

Over at Stena Bulk, there’s also plenty of work going on to ensure the Swedish company’s tankers of tomorrow will be both pioneering – as is the company way – as well as future proofed, all backed by the group’s marine technology experts at Stena Teknik.

Stena Bulk has a long history of bringing out eye-catching new tanker designs.

Stena’s reputation as pioneers is not lost on Erik Hånell, the president and CEO of Stena Bulk, who has been with the company for 22 years including nine years in the top post.

In recent weeks Stena Bulk has laid out a roadmap to be net zero by 2050 as well as unveiling a hybrid zero-emissions concept design. Its InfinityMAX concept vessel design (pictured) can carry both dry and wet

cargoes in modular compartments, something Stena Bulk claims could have as big an impact on shipping as the advert of containerisation in the 1950s.

“By 2050, the growing need for transportation of energy from areas with abundant renewable supply to areas with large energy demand – carried as hydrogen, methanol, methane, and ammonia – will be a defining part of international trade,” Stena Bulk predicted in a release last month. “This, combined with the requirement to transport sustainable, edible oils and chemicals, and carbon dioxide from carbon capture facilities, as well as bulk commodities, requires a vessel design that is up to the challenge of a radically reformed global economy.”

“We like to see ourselves in the forefront of development together with a few others,” Hånell says. “We are a very curious company in culture as is Sweden.”

Hånell is a big believer in collaboration if shipping is to meet its environmental targets.

The challenge right now, he says, is who takes the first step in developments, taking biofuel testing as an example, something the company has carried out successfully recently.

“It costs more to be first,” Hånell concedes.

A future fuel Stena Bulk is placing significant emphasis on is biomethanol.

Steel cutting on the first of three methanol-fuelled tankers Stena is building with partners Proman Shipping started last month at Guangzhou Shipyard International in China.

Moving shipping to greener pastures will require incentives, the shipowner says.

“Incentives for shipowners to do things will be very important so they don’t have to rely on the markets, so that they will get something from day one,” Hånell says.

For the opening weeks of 2021, Hånell has been fighting dire markets with most tanker segments in loss-making territory. Any sign of an improvement is a way off, he cautions.

“Quite a few fundamentals are suggesting the second half could be better, but it is still hard to see a stronger trend,” the Swede says.

In terms of fleet developments, Hånell says Stena Bulk will not order any new traditional ships with traditional propulsion again as technology is moving so fast.

The company only recently came out of a major shipbuilding programme so has no need right now for any serious injection of new tonnage.

“Patience is a good word to use right now,” Hånell stresses. “The tanker industry does not need new ships right now.” ●

Spot on

Stena Bulk One of the world’s largest tanker owners with 75 ships totalling 3.7m dwt on its books.

ISSUE ONE 2021

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IN PROFILE

Andreas Sohmen-Pao on the characteristics tomorrow’s shipowner must possess An exclusive interview with one of the world’s largest shipowners

W

ith the accelerating pace of change, businesses have a lot of things to consider. Few have been so proactive to ensure they’re in charge of their own destiny as BW Group by investing across the energy value chain.

Andreas Sohmen-Pao, chairman of BW as well as chair of the Singapore Maritime Foundation, tells Maritime CEO: “ Environmental issues mean that one needs to have the right assets for the future: the right ships to meet future cargo demand, and the right ships in terms of propulsion and carbon footprint.”

BW Group has made its position clear on the future fuels debate with Sohmen-Pao revealing his company is looking at methanol, ammonia as well as biofuels on its path towards decarbonisation. It has made some clever investments to back up this move to alternative fuels.

For instance, Hafina, the Michael

Spot on

BW Group BW Group controls a fleet of over 420 ships transporting crude oil, oil products, and dry commodities, and comprises one of the largest gas fleets in the world.

ISSUE ONE 2021

Skov-led product tanker arm of the BW Group, is investing in a methanol production facility in the US, fixing a 19-year deal to ship the product around the globe too. Similarly, BW Group has recently become a major shareholder in Ductor, a European biogas producer.

Regulatory changes mean that shipowners need the technology to be able to measure and optimise performance, Sohmen-Pao points out in conversation with Maritime CEO. On top of that, changes in availability and cost of financing mean that owners will need to have a resilient capital structure for the future.

When it comes to managing the global fleet, technology will allow data capture and analysis that opens up a wide range of possibilities. These include fuel and emissions management, predictive maintenance, safety mechanisms, remote surveys

and transparency with customers and regulators, Sohmen-Pao says, warning: “Companies which don’t embrace this development could be left behind.”

However, above all else, companies need the right talent to adapt to these trends and new technologies, Sohmen-Pao argues. ●

25

IN PROFILE

The tramp trades must wait for green tech to filter down Pacific Basin’s departing CEO on the future fuels debate

A

fter nine years in the job, Mats Berglund announced this January he’s stepping down at the end of July from his role running one of Hong Kong’s largest shipping lines, joining a growing exodus of expatriates from the Special Administrative Region.

Berglund, 57, will return home to Sweden on quitting as CEO of Hong Kong-listed Pacific Basin, with the CEO of Ultragas, Martin Fruergaard set to take the reins at the dry bulk giant.

As he prepares to step down, Berglund, always vocal on shipping’s most important issues, has had plenty of time to reflect on the future fuels debate.

Pacific Basin, a member of the Getting to Zero coalition, has been keeping an eye on all the new technology and fuels coming to the market, but it is the company’s specific trades in the handy to supra bulk business that will likely mean it will need to be patient for any big green breakthrough to percolate down to its level.

“I do think it will be many years though before this new technology

Spot on

Pacific Basin Hong Kong’s largest dry bulk company, operating 286 ships, a mix of handies and ultras, of which 114 are owned.

ISSUE ONE 2021

“

It will be many years before this new technology will be both practically and commercially viable for tramp trading tankers and bulkers will be both practically and commercially viable for tramp trading tankers and bulkers since you need to also build out the bunkering infrastructure,” Berglund tells Maritime CEO. Prototype ships with new fuels will be ready 2024 and 2025, Berglund says, but they are likely to operate on a few fixed routes where the infrastructure to refuel will be available, something that is easier to arrange for ferries and liner ships.

The larger volume of ships for the tramp sectors requiring a global refuelling infrastructure may come eight to 10 years from now, the Pacific Basin boss reckons.

In the interim, to reduce emissions from shipping Berglund is calling for some optimisation and fuel saving devices on existing ships but first and foremost, slower speeds.

“Slower speed is a win-win – better for the environment and better for

”

the market,” Berglund says, pointing out that the International Maritime Organization (IMO) will force slower speeds with their Carbon Intensity Index metrics starting 2023.

“After a decade of weak markets, we have to make some money now so that we can afford the new technology ships that will be much more expensive and consume a lot more fuel,” Berglund says.

The other take away from the Swede is that it is impossible to even think about ordering a new ship today with a fuel oil engine.

“You would have to depreciate it over 10 to 15 years instead of the traditional 25 years making it financially impossible,” Berglund says, advising that it is much better to buy a secondhand ship for half the price with substantially the same technology, improve it a bit and make money on it whereby it will be more than depreciated well before 2030. ●

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IN PROFILE

The challenge of decarbonisation Paolo d’Amico ponders how best to navigate through IMO’s 2030 and 2050 goalposts

P

aolo d’A mico, chief executive officer of d’A mico International Shipping and d’A mico Società di Navigazione group, has no doubt what is the the next big issue to be faced by the industry.

“The next challenge for the future? Decarbonisation for sure. We are already thinking at the next stage of fleet renovation taking in mind the emissions will have to be significantly reduced before 2050,” he says in conversation with Maritime CEO. D’A mico is investigating alternative solutions and technologies for new ships to be compliant with the new rules in the long term but the shipowner admits current ideas are still not really clear today.

“What I can say is that 60,000 vessels, the entire merchant fleet at sea nowadays, will have to be scrapped and rebuilt in the next 30 years in order to be compliant,” d’A mico stresses, underlining that it will be a game changing moment for the whole shipping industry.

Looking at the liquid bulk market conditions in the mid to short

Spot on

d’Amico One of the best known shipping brands in Italy. Founded in 1952 with sizeable dry bulk and product tanker fleet in operation today.

ISSUE ONE 2021

term the Italian seasoned shipowner notes global oil demand fell by 8.8% year-on-year in 2020 to 91.4m barrels a day. In 2021, the International Energy Agency expects oil demand to rebound by 6% year-on-year, driven by the easing of Covid-19 restrictions as vaccines are rolled out across the world.

“However, the emergence of several new more contagious strains of the disease pose a significant risk to the oil demand recovery in 2021,” d’A mico cautions. “Although floating storage has been mostly reabsorbed, we expect it will take a while longer still for the markets to fully recover, and a stronger rebound in demand is a prerequisite, which will stimulate the required increase in oil supply and refinery throughput. Therefore, we remain cautious about the first part of 2021.”

In the longer term the Romebased shipping group remains very positive since the fundamentals of the industry continue to be strong.

“The expected global recovery in the post-pandemic world, fuelled by large fiscal stimulus by the top world economies, should increase oil demand and benefit the product tanker market. Also, Covid-19 put unprecedented pressure on refineries by significantly squeezing their margins. This accelerated the closure of the older and less competitive refineries, located mainly in Europe, in the US, in Australia and in New Zealand” d’A mico explains.

He adds that there are approximately 1.9m barrels per day of confirmed capacity closures/

conversions announced since the onset of the pandemic, of which 60% are expected to occur this year, with an additional 0.6m barrels per day of capacity closures currently under assessment.

“The lost output from these refineries, will be replaced by the new more efficient units mainly in Asia and the Middle East, leading to an increase in ton-mile demand for product tankers,” the Italian observes.

There’s also good news on the supply side according to d’A mico.

“Growth is expected to be extremely constrained,” he says.

“The newbuilding orderbook is at historical lows, mainly thanks to capital constraints and to significant uncertainties regarding technological developments to meet the IMO 2030/2050 emission reductions targets. New environmental regulations and technological advances should also lead to an increase in demolitions of older tonnage, which have been minimal this year since demolition yards were closed most of the time. This should contribute to an even slower fleet growth over the next years.”●

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IN PROFILE

Teekay on tankers Kenneth Hvid discusses the markets, pinning his hopes on the second half of the year

T

eekay, one of the largest tanker operators in the world, is gearing up during the current market downturn to better position itself for the next tanker market upcycle.

Kenneth Hvid, CEO of Teekay, admits the market faces several challenges in the first half of 2021 due to the ongoing impact of Covid-19 on oil demand and the continued efforts by the OPEC+ group of oil producers to limit supply in order to draw down global oil inventories and support oil prices. He expects the headwinds will continue to impact the tanker market in the near-term.

“However, the longer-term outlook for the tanker market appears much brighter,” Hvid says, expecting oil demand to increase significantly during the the second half of the year in tandem with the rollout of mass vaccination programs across the globe while the supply side of the tanker fleet also continues to look very favourable.

“More importantly for the tanker market, we expect average voyage distances to increase over the next decade as an increasing surplus of

Spot on

Teekay The consolidated Teekay entities manage and operate total assets under management of approximately $9bn, comprised of approximately 135 liquefied gas, offshore, and conventional tanker assets.

30

crude oil in the Atlantic basin – for example, from the US and Brazil – is shipped to destinations in the AsiaPacific region where both end-user demand and refining capacity is rising,” he adds.

According to Hvid, over the past year and half, Teekay has significantly deleveraged its balance sheet, creating a resilient financial position that provides significant financial flexibility, enabling the company to position itself for the next tanker market upcycle. The company has started a fleet optimisation programme which includes selling some older vessels and replacing them with more modern tonnage.

On the LNG markets, Hvid reckons the LNG demand growth will continue during the next several decades as gas continues to displace coal and is a key component in the energy transition and more projects are coming to market that will require new LNG carriers on long-term contracts and he reveals that the company is looking to bid on a series of LNG carrier projects including Qatar’s LNG expansion project, which is expected to start production in 2025, as part of the next phase of growth and fleet modernisation.

“The world is going through an energy transition, with renewables gaining an increasing share of the overall energy mix. However, we expect oil and gas will remain key to meeting the world’s energy needs for the foreseeable future,” Hvid says.

Teekay is now making efforts on reducing the environmental footprint of its fleet.

“Currently, we are focused on

preparing its fleet to comply with new IMO regulations coming into effect in 2023 which require a 20-30% improvement in vessel efficiency,” Hvid says, claiming that the company’s LNG carriers operate on LNG fuel produces approximately 20% fewer GHG emissions compared to conventional marine fuel, and its latest LNG carriers produce about 50% less CO2 per cu m of cargo delivered compared to older generations of LNG carriers.

Looking ahead, Hvid says the company’s strategic planning is guided by the changes expected in the global energy mix as well as how the company can further reduce environmental footprint.

“This is an interesting time for our world and with our nearly 50 years of company history, we want to be relevant industry players also for the next 50 years,” Hvid concludes. ● maritime ceo

IN PROFILE

Ammonia champion Alfred Hartmann is pioneering the industry’s energy transition

T

he ammonia as fuel of the future bandwagon leapt forward in March with news Dutch fuel provider OCI had signed a memorandum of understanding with engine manufacturing giant MAN Energy Solutions and Germany’s Hartmann Gas Carriers, under which OCI intends to charter ammonia carriers built, owned and operated by Hartmann and its commercial arm, GasChem Services.

These new ships will feature ammonia-fuelled engines designed by MAN. “The partnership aims to propel the commercialization of ammonia-fueled vessels and accelerate the energy transition and decarbonization of the shipping industry,” the three companies stated in a release.

Compared to hydrogen and LNG, ammonia is widely used and easier to store with extensive global distribution and storage infrastructure in place, OCI claimed.

Converting all long-distance shipping fuel to ammonia would require approximately 750m to 900m tonnes of ammonia annually by 2050, which is four to five times the current total

Spot on

Hartmann Group Established in 1818 and involved in shipowning and shipmanagement, the Hartmann fleet today is in excess of 150 vessels, a mix of gas tankers, product tankers, bulk carriers, container vessels, MPPs and cement carriers.

ISSUE ONE 2021

“

Fuels like ammonia pave the way for the sustainable energy transition in the shipping industry global ammonia production, according to data from OCI. Captain Alfred Hartmann, chairman of the supervisory board of the Hartmann Group as well as president of the German Shipowners’ Association , says his company convinced of the opportunities that ammonia-fuelled vessels will offer to the environment.

“Ammonia is one of the most promising carbon-neutral fuels for the future of the industry,” Hartmann tells Maritime CEO. “At the moment,” he continues, “it is mostly obtained from natural gas. However, the goal must be to produce green ammonia only by using renewable energy sources like wind, solar or hydro power.”

In the long term, green ammonia will enable shipping to reduce its carbon emissions significantly − to

”

nearly zero, Hartmann believes.

“It’s still a long way to go from here, for example when it comes to infrastructure, but fuels like ammonia pave the way for the sustainable energy transition in the shipping industry,” he says.

With his German shipowners hat on, Hartmann is optimistic that the nation’s shipping community has now finally passed the worst of the downturn that saw so many bluechip names wiped off the map over the past decade.

“We have largely put the crisis that has preoccupied us since 2009 behind us and, in many segments, we have surprisingly also navigated through the pandemic unscathed so far,” Hartmann says, concluding: “We have kept sailing, and we have delivered in the truest sense of the word.” ●

31

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IN PROFILE

Flexible by nature Flex LNG’s Oystein Kalleklev on priorities to meet client requirements

N

orwegian LNG shipping specialist Flex LNG is eyeing a new round of expansion, taking advantage of the promising outlook of the LNG market and the ongoing green fuel transition in the maritime industry.

Oystein Kalleklev, CEO of Flex LNG, watched as the LNG market started off 2021 on a high note, which pushed up LNG prices to unsustainably high levels.

“The market has now normalised and with inventories in Europe being run down over the winter we see more pull from Europe resulting in less tonne mile and tonne time and thus softer rate environment given the flurry of newbuildings being delivered at start of the year of which several ships were delayed from 2020 to early 2021,” Kalleklev says.

Kalleklev is optimistic on the prospects of LNG shipping market due to several strong market drivers.

“In the short-term, weather plays a big role as we have certainly experienced this past winter. Then we have economic growth which we do expect to bounce back with vaccines being rolled out coupled with tons of fiscal and monetary stimuli,” Kalleklev elaborates.

Spot on

Flex LNG Oslo-based Flex LNG runs a fleet of 12 large LNG carriers with another newbuilding set to join the company later this year.

ISSUE ONE 2021

“Then we have the political aspect which is more a long-term factor with increasingly higher focus on both cleaner air like we have seen in China with their Blue Sky initiative, but also less greenhouse gas emissions with US now joining the global community under the Paris Agreement. Last factor is pricing meaning LNG needs to be competitive with other fuels and with higher carbon prices we do expect LNG to continuously grab market share together with renewables as flexible gas fits well with intermittent renewables,” he adds.

To sum up, Kalleklev is relatively upbeat short term while remaining particularly optimistic about the long term prospects as the new ships offer huge efficiency improvements compared to the older generation of ships.

The company has a mix of some term contracts, some ships under variable index hire and the rest on spot.

“Our aim is to increase our backlog by putting more ships under longer term contracts as we do have the most efficient ships in the industry. Furthermore, we have built up a first-class in-house shipmanagement company both technical and commercially, so we are very well positioned to carry out our business strategy as we have the right ships, at the right time and under the right management in our view,” Kalleklev says.

In Kalleklev’s opinion, LNG is the best marine fuel available today when considering technical, economically, environmental, and logistical parameters. “Sure, LNG is not perfect, but it is a great improvement

particularly when it comes to local air pollution, but also when it comes to greenhouse gases. Fuel is however just part of the solution so it needs to be coupled with smarter ship designs and operationally improvements. Down the road LNG also offers a pathway to further reduction of emissions by drop in fuels like biomethane or e-LNG or using carbon capture equipment,” Kalleklev explains.

Going forward, Kalleklev says the company’s top priority remains building longer term commitments with customers.

“Having a greater revenue backlog, will de-risk our portfolio.

This will enable us to focus on new growth opportunities again as we are keen to take an active role in the expansion of LNG shipping. We are also open to consolidation if that makes sense as the industry is rather fragmented given the capital intensive nature,” Kalleklev concludes. ●

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IN PROFILE

165 not out Bremen’s Carl Büttner has just celebrated another anniversary with a makeover

T

he Carl Büttner shipping company celebrated its165th anniversary in March with a subtle rebrand, fresh from taking on its largest newbuildings to date - a quartet of 38,000 dwt chemical tankers. The company’s trading outlook has also just expanded from its traditional European focus to go worldwide thanks a tie-up with Ardmore to market four of its other tankers.

Büttner is still a family-owned company today, now in the fifth generation with siblings Maike and Jörn Büttner closely connected to the company as shareholders and on the advisory board. Management responsibility has been delegated to experienced executives outside the family since 2002.

Thorsten Mackenthun, managing director of the Bremen tanker name, has the anniversary out the way and is now watching Covid levels clearly, keen for some form of normality to return to life.

“As a tanker shipping company, we are an energy transporter. For us, it is crucial that the economies of the countries recover and start up again as soon and as quickly as possible.

Every lockdown or every extension of a lockdown is an emergency brake on our business activities. We rely on a quick vaccination of the European nations so that the politically

Spot on

Carl Büttner Founded in 1856 originally in Leer.

Now headquartered in Bremen with a fleet of 10 product/chemical tankers ranging in size from 15,000 to 38,000 dwt.

ISSUE ONE 2021

“

Every lockdown or every extension of a lockdown is an emergency brake on our business activities

responsible people can open the markets again by easing measures and companies can actively conduct their business again,” Mackenthun says.

The newbuilds Carl Büttner took on recently set a new high watermark for the company in terms of environmental performance, outperforming the International Maritime Organization’s EEDI by 33% using HFO or LSFO, Mackenthun says.

The tanker boss is now looking at another trip to the yards with further environmental stipulations high up on the checklist for any further newbuilds.

“The next generation we are thinking about will be at least dual

”

fuel vessels,” Mackenthun says. “We are investigating at all ends which will be the best for our home and future trading areas.” ●

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IN PROFILE

Hydrogen first Europe is leading the way in deploying hydrogen powered vessels

A

n inland container vessel will be running exclusively on hydrogen power by the end of this year.

Future Proof Shipping (FPS) has contracted Holland Shipyards Group (HSG) to retrofit the 110 m long Maas to run off a zero-emissions hydrogen propulsion system.

Retrofitting will involve replacing the internal combustion technology with hydrogen technology, removing both the main engine and gearbox, and installing a new modular propulsion system. This will consist of electric motors, hydrogen tanks, a PEM fuel cell system needed to convert hydrogen into electricity as well as a battery system. The compressed hydrogen tanks, the fuel cells and the battery system are separate units that can be removed for maintenance or replacement purposes.

The hydrogen and fuel cell system will be installed in the cargo space of the vessel, with the hydrogen being placed above the fuel cell system in two feu weighing approximately one tonne at 300 bar.

The fuel cell system will be triple redundant with 825 kW capacity to supply propulsion and auxiliary power and a 504 kWh lithium-ion battery pack for peak shaving, secondary and bridging power. The system will contain a 750V DC bus bar and an e-motor for propulsion.

“This future-proof ship will truly be a zero-emissions vessel, a vessel to forge the way for a greener and more sustainable inland shipping industry,” comments Richard Klatten, CEO of Future Proof Shipping.

On the specifics of the ship, Klatten says: “Based on the operational profile, readiness, and price, we chose PEM fuel cells and compressed hydrogen.” Details of the

ISSUE ONE 2021

hydrogen supply deal are expected to be revealed shortly.

Once the company has cracked how to work inland ships, the next aim is to move on to short-sea vessels with studies for both container and bulk designs now underway.

Future Proof Shipping aims to build a fleet of 10 zero-emissions inland and short-sea vessels based on longterm time charter contracts over the next decade.

“We are focused on complete zero GHG emission pathways – for now electric drivetrains powered by fuel cells plus 100% green hydrogen and/or batteries. We constantly follow research and developments in other fuels and technologies to see if other fully zero-emissions prospects emerge,” Klatten says.

Once back in service, the Maas will carry on shipping containers

between Rotterdam and Antwerp. It is expected to reduce greenhouse gas emissions by 2,000 CO2 equivalent tonnes annually.

Future Proof Shipping now finds itself in a race with another European company to see who will be the first to deploy a hydrogen powered merchant ship this year.

European innovation project Flagships will deploy the world’s first commercial cargo transport vessel operating on hydrogen later this year, plying the river Seine in Paris, gliding passed the Eiffel Tower.

The hydrogen cargo transport vessel will be owned by French inland shipowner Compagnie Fluvial de Transport (CFT), a subsidiary of the Sogestran Group. The company is currently developing a new business for urban distribution using vessels in the Paris area. ●

37

REGULAR WINE

Why cheap cava ought to be a smash hit with shipping Sam Chambers looks at the traditions of bashing booze against newbuilds

B

efore a ship slides from its berth into the water, it must first get hit on—by a bottle of booze, usually champagne.

The tradition of christening a new ship for good luck and safe travel goes way back. Many ancient seafaring societies had their own ceremonies for launching a new ship. The Greeks wore olive branch wreaths around their heads, drank wine to honour the gods, and poured water on the new boat to bless it. The Babylonians sacrificed an ox, the Turks sacrificed a sheep, and the Vikings and Tahitians offered up human blood.

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These events almost always had a religious tone to them, and the name of a favoured god or god of the seas was often invoked. In the Middle Ages, two friars would often board British ships before their maiden voyage to pray, lay their hands on the masts and sprinkle holy water on the deck and bow.

The religious aspect of ship christening died off in Protestant Europe after the Reformation, especially in Great Britain. Some member of the royalty or nobility would instead join the crew for a secular ceremony of drinking from the ‘standing cup’—a large goblet, usually

“

Cheap cava creates a more spectacular display as it is much bubblier that champagne

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made of precious metal and fitted with a foot and a cover—and solemnly calling the ship by her name. After taking a drink, the presiding official would pour what liquid was left onto the deck or over the bow and then toss the cup over the side of the vessel, to be caught

maritime ceo

WINE

“

Champagne bottles have to stand up to the enormous pressure the wine creates inside them

by a lucky bystander (or sink into the ocean). As Britain became a maritime power and its growing navy required more ships, the practice of discarding the expensive cups fell out of favour. For a while, they were caught in a net for reuse, but eventually, the whole ceremony was replaced by the breaking of a wine bottle across the ship’s bow.

Ship christening in the young United States borrowed from contemporary English tradition. The launch of the USS Constitution in 1797 included the captain breaking a bottle of Madeira wine on its bow. Over the next century,

ISSUE ONE 2021

the ritual of breaking or pouring of some ‘christening fluid’ remained, but the fluid itself varied wildly. The USS Princeton, Raritan and Shamrock were all christened with whiskey. The USS New Ironsides was double-christened, first with a bottle of brandy and then with Madeira. Other ships were teetotalers, and launched with water or grape juice. The USS Hartford was christened three times, with water from the Atlantic Ocean, the Connecticut River and Hartford Spring. The USS Kentucky was launched with spring water by her official sponsor, but as the battleship slipped into the water, onlookers gave her a baptism more fitting of her namesake state and bashed small bottles of bourbon against her sides.

It’s not clear how champagne came to be the favoured fluid. The Secretary of the Navy’s granddaughter christened the USS Maine, the navy’s first steel battleship, with champagne in 1890. The shift to that particular sparkling wine might have been meant to coincide with the new era of steel, or it may just have just come into vogue because of association with power and elegance. In the UK, Queen Victoria is recorded to have first bashed a champagne bottle against a ship the following year.

When Prohibition went into effect in the US, ships went sober again and were launched with water, juice or, in at least one case, apple cider. Champagne came back with the passage of the 21st Amendment and has stuck around since.

Champagne bottles are basically booze-filled tanks. They have to stand up to the enormous pressure the wine creates inside them, so their glass is very thick, and breaking them is no easy task hence why much of the ceremony these days is automated with the switch of a button. But it only takes a small defect, a slight imperfection in the glass, to compromise a bottle’s strength.

Bigger bottles have a higher probability of a natural defect, but any size bottle can be prodded along towards breaking

”

if the wine has bigger bubbles, and hence more internal pressure. Many shipbuilders insist that cheap cava creates a more spectacular display as it is much bubblier that champagne.

In Japan, meanwhile, elaborate ship launch ceremonies tend to involve sake.

In non-Covid times, the public are often allowed to attend these grand affairs, something not to be missed when you next have a chance to visit East Asia. ●

Camilla’s Curse TODAY, IT’S CONSIDERED bad luck if the bottle of champagne doesn’t break on the ship. In 2007, the duchess of Cornwall attempted to smash a bottle of champagne against the hull of the Queen Victoria cruise ship in the UK, but the bottle didn’t break. A few weeks later, nearly 80 passengers became sick with a contagious stomach bug. They called it ‘Camilla’s Curse’ and pointed the finger at the duchess for failing to break the bottle against the ship properly, thus dooming the ship’s passengers to a bad case of a stomach bug.

Maritime CEO has been at one ship naming ceremony where the bottle failed to break repeatedly - presciently it was for the first ship of Hong Kong owner John Koo’s short-lived Orient Steamship venture, a company that was quick to obliterate.

Obviously, it’s all superstition, but to avoid the bad luck, people have come up with a variety of ways to ensure that the bottle breaks. Scoring the bottle beforehand with a glass cutter is one common way to ensure the bottle will bust on the hull of the ship. ●

39

GADGET

On page

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e’ve gone rather old skool at the gadget cupboard this time. Much as we love Kindles and their ilk, real books still have a tactile edge over their electronic successors. They also give your colleagues something to gawk at during Zoom meetings. They do have their downsides though — keeping the page open during that anti-social solo lunch is annoying and makes it very hard to read.

Multiple gadgets have been made for this, but this is the first we’ve seen with a pleasingly nautical theme. www.page-anchor.com $50

Taking flight

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JI has just made drones even cooler, with a supremely accessible FPV Drone system, and a rather splendid new controller. You wear a VR-style headset to experience a first person view of flying in rather impressive 720p low latency video to control it. The drone’s camera also records in 4k. The matching racing drone is no slouch either with a top speed of 140 kmh, and there is a semi autopilot and collision detectors to aid drone survivability. And they’ve also introduced a splendid VR-style motion sensitive stick controller. The light that shines brightest also burns fastest, and the drone has a flight time of about 20 minutes (coincidentally the average life expectancy of a fresh WWI RFC pilot). www.dji.com $1,500

Geek central

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or those of us who like to see how things work, the modern wireless age can be rather opaque and uninspiring. But not for much longer, thanks to the Flipper Zero, a wired and wireless multitool billed as a Tamagochi for hackers. It covers radio protocols such as NFC Bluetooth and RFID, access control systems, hardware, IR signals and more. It’s fully open-source, customisable and Arduino IDE compatible so the sky is the limit as to what it can do. It even has a MicroSD card slot to transfer programs and data to other computers. Essentially, if you’re a geek, you almost certainly desire one of these. They are currently accepting preorders which for a $10 down payment gets you a discount of $40 off the product. flipperzero.one $169

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maritime ceo

BOOK

Great power competition at sea Paul French looks at the rush to control key sea lanes in the 21st century

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o Rule Eurasia’s Waves: The New Great Power Competition at Sea (is a new book from Geoffrey Gresh, a professor of international relations at the National Defense University in Washington, DC. The book considers the rise of Russia, India and China as major shipping nations, transporting containerised goods crucial to our trade relationship, as well as becoming increasingly involved in protecting those international sea lanes.

For those in shipping and logistics To Rule Eurasia’s Waves explores the strategic maritime shifts under way from Europe to the Indian Ocean and Asia Pacific – the shift east.

Gresh also considers how the melting of the Arctic ice cap will create new shipping lanes and exacerbate a contest for the control of Arctic natural resources. Both these issues together have received a new impetus as China’s government recently approved exploration of sea lanes including the Northwest Passage – what some have called the Polar Maritime Silk Road. China is indeed heavily investing in an icebreaking fleet and Chinese naval strategists have written that “whoever controls the Arctic Ocean will control the new corridor for the world economy”.

Gresh notes a change of power relations across the world.

Speaking with him from his office in Washington Gresh notes, “The 2017 establishment of a Chinese military base in Djibouti signalled just how important China viewed the Horn of Africa and the Middle East…Djibouti is just one connection among many that the Chinese are

ISSUE ONE 2021

developing. Further to the north and east of Djibouti near the opening of the Strait of Hormuz and the Persian Gulf, for example, China is developing Gwadar, Pakistan. Gwadar’s development has experienced significant developmental and security obstacles of late, but Gwadar could one day offer another vital maritime logistics hub and potential base for easier access to the Gulf, as well as a starting point along the ChinaPakistan Economic Corridor.”

As well as geopolitics Gresh has looked at the concurrent rise of China as a major port location.

China’s investment in its domestic port facilities was partly based on projections of around 5% per annum growth in containerised trade out of China. But with trade disputes, a decoupling from China in some areas and the traumatic shock of Covid-19 are these projections still valid? Is it possible China has over-invested in its Maritime Silk Road strategy?

Gresh thinks not and that with 90%

of world trade still seaborne it’s been a wise investment. Certainly neither of the other Great Powers in competition with China – Russia or India – have invested to the same level.

One problem with trying to analyse this area called Eursasia is that we are talking about so many places - the Baltic and Black Seas, the Mediterranean Sea, the Red and Arabian Seas, the Indian Ocean, the Bay of Bengal, the Andaman Sea, the Java Sea, the South and East China Seas, the Yellow Sea, the Sea of Japan, the Sea of Okhotsk, and the Arctic Ocean. All of these sea lanes have their own issues from control to ownership to who gets to patrol them or defend them. Ultimately To Rule Eurasia’s Waves is a good read to start off any numbers of conversations about the future of the sea – conversations, from the tensions in the South China Seas to the environmental challenge of the polar routes, that need to be had to avoid any disputes from becoming tragedies. ●

41

OPINION

Shipping is a drug.

Just say no There’s absolutely no need to order new ships this year or next, argues Charlie Du Cane, commercial director at Seastar Maritime

O

ne of the advantages of working for a small company is that one gets to do everything from make the tea to take the decisions that matter, or at least be involved in them, and everything in between. In the build-up to the existential crisis that struck shipping in 2016 I was a medium-sized commercial cog in a very large machine, and frankly didn’t see it coming. Equally the early rounds of IMO 2020 passed me and many chartering managers by as it was an issue handled initially by senior management and technical departments. Luckily the most interesting challenge shipping has faced in my decade and a half in the business cannot pass me by because, as one of a team of four that does everything for our little fleet, there is no one else for it to bypass.

This time I am paying attention, and what I see concerns me especially when you set it in the context of the current spikes in bulk and container shipping. We are possibly in the first half of a period of stronger markets in shipping. Unlike the supercycle of 2003 to 2008 this is not being caused by the emergence of an economic superpower like China, but rather by several years where much potentially shipping-focussed capital, battered as it has been by the decade-long depression that followed that earlier bonanza, has remained unallocated (at least in shipping).

The result – a firming market that has been anticipated for several years, but has surprised everyone in its intensity.

Of course, this has begun to

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affect the prices for secondhand vessels, which have firmed sharply in recent months. Traditionally we would begin to see owners pile in to newbuildings around about now in the cycle. The only barrier to that ordering is that 2023 is fast approaching, by when the industry will need to have a clear roadmap in place for how it is reducing carbon emissions by at least 30% between then and 2030.

This gets to the heart of my argument – this barrier should be seen as, at least temporarily, insurmountable for owners whose instincts are to speculate now because the market is booming. Why? Even if we can see that the end will most likely be some kind of ammonia-based solution, it is not clear how we are going to get there and any investment in interim solutions such as dual-fuel runs not only the normal risks of mistiming the market, but also misallocating capital to a technology that becomes redundant or uneconomic before it has had a chance to fulfil a lifetime of earnings.

To those looking at retrofitting

existing ships with various technologies to reduce carbon emissions, I say bravo, because, you are spending today to protect and enhance the remaining earning potential of a vessel already on the water. On the other hand, to anyone ordering a newbuilding on a speculative basis, and with a ‘transitional’ propulsion like dual fuel or LNG, I hope I am wrong, but I think you are nuts. The boss of CMA CGM, who is ordering such units for actually quite good commercial and ESG reasons, summed it up when he admitted that such ships “may not be the ships of the future”. We can go further and say that they may quite quickly become expensive commercial anachronisms – consigning precious capital to the literal and metaphorical scrapyards of history.

Getting involved in shipping can be a heady but addictive drug, especially when times are good. To anyone thinking of ordering ships now I have a simple message: in this decade of transition and accompanying confusion, unless you really have to, just say no. ● maritime ceo

REGULAR OPINION

The Andy Warhol moment Andrew Craig-Bennett reflects on shipping’s 15 minutes of fame

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here were no wrecks, and nobody drowned – fact, nothing to laff at at all…”

(Stanley Holloway’s monologue about the boy Albert, who was eaten by a lion). Nobody was hurt, no property was damaged (this is important!) and there was no pollution. A quick calculation (15% of world trade by sea goes through the Suez Canal, and it was delayed by a week) suggests that 0.3% of world trade by sea was slightly affected. Cue stock market panics and miles of wittering in the financial press.

That was our industry’s 15 minutes of fame. It’s over. We will now go back to delivering boxes, so far as the people of the world are concerned.

Some may remember that we also deliver food and fuel, but most will not. Everyone now knows what a 20,000 teu container ship looks like.

It’s a rectangular box piled up with rectangular boxes.

How did we do? We performed according to type. Everyone ducked.

Evergreen: “Well, its not really our ship…” (why has it got your name on the side if you are not taking responsibility for it?).

Shoei Kisen: Held one press

ISSUE ONE 2021

conference. In Japanese.

Bernard Schulte: Told the press to talk to their ‘crisis management’ people – who do not manage crises, they try to massage the public relations – and told their staff not to answer their phones.

The Suez Canal Authority: “Nothing to see here, just a routine grounding, move along please.”

Nippon Salvage: Said nothing to anybody. In fairness to Nippon, whose lawyers I worked for back in the dawn of time, they never do say anything, they just get on with it, because they don’t have shareholders that they need to talk to – they are owned by a syndicate of Japanese marine insurance companies, in one of those devastatingly sensible arrangements that Japan, Inc goes in for.

Boskalis: Well, after a shaky start, in which Smit-Wijsmuller had to remember who owns them at the moment, there was, as usual, no stopping Smit’s PR department, who have been running the company since Jan Hartog published his salvage tug novel, Holland’s Glorie, in 1940. Since which time the Dutch salvage industry and its public

relations have been one and the same thing.

The UK P&I Club did the usual P&I Club Cheshire cat trick. All you get is the smile.

No human interest stories about the ship’s invisible crew, or indeed her two canal pilots. The last century produced three master mariners whose name made it into popular memory – Edward Smith of the Titanic, Henrik Kurt Carlsen of the Flying Enterprise and Joe Hazelwood of the Exxon Valdez. The master of the Ever Given is not joining them, because his employers are hiding.

Still, the Ever Given was stuck, and then unstuck, so well done, everyone, and it might be a five percenter at most.

And I rather think that’s the end of the story. There was no property damage, and since there was no property damage, claims for pure economic loss are, in most legal systems, not recoverable in tort, so the UK Club can carry on smiling.

The delay costs will be absorbed by the carriers, but freight rates are going up anyway, so we will all live with that.

Fame over! ●

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MARPOLL REGULAR

Your thoughts Eight questions posed, 932 votes received. Your verdict on topical issues plus spicy comments Will shipping face a seafarer shortage post-Covid?

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Do you believe we’re entering a commodities supercycle?

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I suspect that they will be tempted back Yes 67%

The demographics do not warrant such a case

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”

Yes 46%

No 33%

No 54%

Will regulators take long-term action against record-breaking liners this year?

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Is the delisting of shipping companies likely to become a trend over the next two years?

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It would be wrong to place a ceiling on rates without a corresponding floor

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Yes 32%

Yes 45%

No 68%

No 55%

What percentage of newbuilds contracted in the 2020s will be dual fuelled?

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The added capex is not covered by the spot rates

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It will fluctuate depending on the appetite of investors to invest on something they do not really understand and on the needs of shipping companies for capital sources

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Are the days of the 25-year lifecycle of a ship over?

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We are still building cheap junk

Less than 20% 17% 21 - 50%

28%

Yes 56%

51 - 75%

35%

No 44%

Above 75%

20%

Are you in favour of shipping being included in the EU’s emissions trading scheme?

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Emissions trading schemes are a fraud on the public and often a rip off for those involved

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”

Do you think you will attend a physical shipping event with more than 200 people present this year?

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Too many conferences are not necessary, so the weaker brands will not be successful, the stronger ones will flourishy

Yes 68%

Yes 28%

No 32%

No 72%

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maritime ceo

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