Maritime CEO Issue Three 2019

ISSUE THREE 2019

BY

cial e p S us Cy pr us owners, el Cy pr s and trav ger t mana e spotligh h in t

Paul Hexter

The case for methanol

MANIFEST

3 At The Prow

Economy 4 US 5 EU 6 China 8 India 9 Brazil

Markets 11 Dry Bulk 13 Tankers 15 Containers 17 Finance

Executive Debate 18 Macron and slowsteaming

Profiles 22 Cover Story Waterfront Shipping

24 CMB 25 Dee4 27 Express Holding 29 Shi.E.L.D. Services 30 Omegra 31 Van Dam

Cyprus 33 Maritime minister 34 Hub scorecard 37 Shipping Chamber

Recreation 38 Wine 39 Gadgets 40 Books 41 Travel

Opinion 42 Kamuran Yazganoglu 43 Marcus Magee 44 MarPoll

45

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

Why it often pays to be second

W

e’ve had some interesting debate from shipowners of late on the benefits - or lack thereof - from being a pioneer in our industry. The sad conclusion one can take from these comments is it often pays to adopt, not create, technology - an indictment of the lack of inventive zeal across much of shipping. To be fair, however, this trait is seen in many other industries; it tends to take courage and deep pockets to be a champion of change.

Alex Saverys and his shipping behemoth, Compagnie Maritime Belge, are unquestionably groundbreakers - investing huge sums in developing all manner of new technology, not least in the field of hydrogen propulsion. Nevertheless, as he points out on page 24, others could profit at his expense.

“A point of constant debate in shipping is whether it makes financial sense to be an early mover. Looking back in shipping’s history, one could say that late followers have actually been better off than pioneers or early innovators in many cases,” Saverys points out.

Another big Belgian owner, Euronav, touched on a similar theme while outlining its sulphur cap plans recently. Under new management with CFO Hugo De Stoop taking over as CEO from arch-scrubber critic Paddy Rodgers, the tanker giant hinted at having a change of heart of the controversial use of exhaust gas cleaning systems. The company stated that come next year scrubber investments could give it a “second mover advantage” in learning the flaws of the first round of installations, allowing it to take a decision based on facts without having to speculate.

This following the herd instinct is not something unique to shipping. In business, pioneering novel initiatives takes a great deal of resources just to get off the ground - and plenty more to sustain these developments. Of course, there are always visionaries, it’s just all too rare to see these leading lights have the cash to follow through with their ideas. Perhaps that’s where the helping, nurturing hand of state funding needs to step up. ●

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ISSUE THREE 2019

3

ECONOMY US

It’s all about the trade war, stupid There’s plenty of red flags being raised for next year

T

he US economy is still hanging in there and GDP expanded by 1.8% in the second quarter. Of course, President Trump believes the economy is thriving and that it’s thanks to his policies – tax cuts, tariffs, a tough negotiating stance, the roll back of ‘protectionist’ measures, etc.

Some stats are hard to argue with - unemployment is at a record low; consumer spending is holding up; the Fed raised rates four times last year; the IMF has downgraded its global growth rating for 2019, but raised America’s. Car sales may be down and home loans, but not worryingly so, indeed some analysts blame the slowdown in car sales to the phenomenal success of ride-sharing apps like Uber and Lyft.

However, the US-China trade war is now looming over everything.

In July, the Fed lowered rates for the first time in over a year. The IMF is blaming the global slowdown on the trade war. The US manufacturing sector is slowing and corporate investments have been low – both can be linked to the trade war.

The US manufacturing PMI fell to its lowest level since 2009 in the summer of this year. The combination of tax cuts and tariffs on Chinese-made goods and services has not, it seems, boosted the US

manufacturing sector to any significant degree. Indeed, due to higher costs of imports from China there is more evidence that the trade war is adding business and input costs to American manufacturing.

All this evidence is leading to a growing number of red flags being raised over the US economy’s performance in 2020 – if the trade war continues and escalates. This message may have got through to the White House with the recent announcement that the 10% tariff on certain Chinese goods planned for September 1had been delayed until December 15. These sanctions would have affected Chinese-manufactured

American GDP breakdown – July 2018 to July 2019 Personal consumption and expenditure

Category % of GDP 68.5

Gross private domestic investment

17.7

Government consumption expenditures & gross investment

16.6

Net exports of goods & services

-2.9

Source: US Government

4

mobile phones, laptop computers, video game consoles and certain categories of clothing and footwear.

President Trump himself admitted that this was partly to avoid any shortages in US stores in the long run-up to Christmas and the peak consumer spending period between Black Friday, Thanksgiving and the Christmas holidays.

The lead US indicator for the rest of the year for the global economy will be US exports. If these slow significantly due to the trade war then some countries – including Brazil, India and some European countries (especially the newly troubled German export economy) – are hopeful of boosts to their own export sectors. Other economies, such as Singapore and South Korea, expect to take a hit if the trade war escalates due to their role in America’s longer supply chain. Naturally the biggest loser in straightforward export terms would be China. ● maritime ceo

ECONOMY EUROPE

Brexit and the Germans The Eurozone’s largest economy shrunk by 0.1% in the second quarter setting off alarm bells

B

rexit is still sucking all the oxygen out of the room in Brussels, London and around the continent. The new Johnson administration in the UK seems unlikely, despite their own stated optimism, to be able to extract any significant new deal out of the 27 EU countries remaining and the Irish border question remains paramount.

The prospect of more negotiations or the emerging, and clearly economically disastrous, effects of a no deal Brexit will become more apparent.

However, the EU’s economic woes and problems extend beyond Brexit. The news that the German economy is ‘teetering on the edge of recession’ is alarming for all in the EU. The Eurozone’s largest economy shrinking by 0.1% in the second quarter, meaning that the economy grew 0.4% in the year to June, its slowest rate for six years, shows even the most seemingly robust of European economies is subject to the vicissitudes of the US-China trade war and a potentially chaotic Brexit.

Most worrying for German economic analysts is the poor performance of the country’s large car industry.

German car exports by country, 2018 Country

% of total exports

United States

15.0

United Kingdom

14.0

China

8.4

France

6.3

Italy

5.9

Benelux

5.7

Other

44.7

Source: German Auto Trade Association

ISSUE THREE 2019

Volkswagen announced in early August that its new car deliveries had fallen 3.3% year-on-year in July – both domestic and export sales were down.

There is no sign of a severe crash of the German economy, but its position within the wider EU economy (with France stubbornly sluggish and the UK poised to leave the bloc) needs addressing for confidence in the entire Eurozone to remain strong. Berlin is responding with tax breaks for SME companies, more investment in the digital economy, but not a major stimulus package.

To add to Germany’s woes there has been a noticeable slowdown in job creation.

For those involved in global shipping and logistics the news that German exports registered their steepest annual decline in three years in June – 8% down on the previous year – shows the fast impact

of the global economic slowdown on the country. Germany has an additional exports problem in that it is a major trade partner historically with Iran. German exports to Iran fell by nearly half in the first six months of 2019, suggesting companies were scaling back business ties with Tehran to avoid trouble with the United States after the Trump White House reimposed sanctions on the country.

So far in 2019 France has seen an even more negative situation with exports; similarly so Italy and the Netherlands. The UK’s exports were also somewhat weaker though bolstered by strong exports of armaments. Additionally there is little sign of recovery in export numbers in Germany or elsewhere in the Eurozone. The notion that China will accept a slowdown as inevitable and ‘bring in its horns’ would be bad news for both Berlin and Paris. ●

5

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ECONOMY CHINA

Ready to snap With first half GDP growth the lowest in nearly 30 years Beijing needs to make good with Donald Trump fast

I

t’s hard to see which way China will jump – engage in the titfor-tat trade war with the US or placate President Trump and reach some sort of accommodation to save global trade from some inevitable hurt.

It seems clear that China’s economy is suffering from the effects of the trade war. Factory production, domestic consumption, property investment and job creation all turned in numbers lower than expected. And all these sectors are key in China both economically and politically. Beijing sees domestic consumption and property as essential to rebalancing the Chinese economy away from inward investment and China’s major export destinations prior to the trade war Country

% of total exports

USA

18.4

Hong Kong

13.7

Japan

6.2

South Korea

4.5

Germany

3.1

Others

54.1

Source: China Customs Administration

ISSUE THREE 2019

low-end exporting to local consumption while the Communist Party sees full employment (and urban unemployment is now up above 5% – a historical all-time high) as key to social harmony.

Zhaopeng Xing, an economist with ANZ Bank, said that he believes the trade war induced slowdown is worse than that of 2008 following the global financial crisis. Analysts believe that Beijing will need to seriously consider extra stimulus policies to keep growth running at 6 to 6.5% in 2019.

Global shipping and logistics companies will have to take notice of the most recent industrial production numbers. China’s industrial production rose at its slowest pace since the beginning of 2009, increasing just 4.8% in July from a year earlier compared with a 6.3% rise in June, according to the National Bureau of Statistics. Imports should hold up as consumption remains strong, even if down to 7.6% growth as opposed to 9.8% last year. Part of this is down to slow car sales in the fist half of the year, which is a one-off situation linked to changing emission standards, clearing old stock

and awaiting new emission target vehicles. Beijing has tried cutting some taxes and fees but this has not helped get first half GDP growth much above 6% – now the lowest in nearly 30 years.

Of course at certain levels Beijing’s economy is opaque compared to the US, so divining quite how bad the trade war has affected the Chinese economy is problematic (except for the obvious currency changes). China International Capital Corporation (a leading Chinese investment bank with strong state connections) issued a research report over the summer that the nation’s industrial sector has lost a total of 5m jobs in the past year, attributing 1.8m to 1.9m jobs losses directly to the trade war with the US. President Trump’s decision to delay the 10% tariff on certain Chinese goods from September 1 to December 15 may, after previous tariffs and naming Beijing as a “currency manipulator”, indicate that there is a way to achieve an end to the trade war. However, both President Trump’s intentions and Beijing’s reactions are highly difficult to predict. ●

7

ECONOMY INDIA

Warning signs

The breakneck pace of growth is hitting a speed bump

I

ndia saw strong growth at just under 7% (6.8%) last year and is on course to achieve 7% again, according to the Reserve Bank of India. Economic strength is expected to be stronger in the second half of 2019 than the first half of 2020. Local economists seem to generally agree with the Reserve Bank’s estimates.

To add to this good news Morgan Stanley has predicted that, though there will be a global economic slowdown over the next 12 months, India will be largely “sheltered” from the worst effects of the projected slowdown.

Still there are issues in the Indian economy. Consumer spending (consumption is approximately three-fifths of the Indian economy) is a mixed picture - home loans are growing though builders are still building new houses at a faster pace than people are buying them. Meanwhile, car sales are falling. Actually Indian car sales are in free-fall – dropping over 23% between April and June year-onyear alone. According to the Centre for Monitoring Indian Economy, this is the largest contraction in car sales since 2004. Naturally this hits everyone down the line to rubber and

8

Vehicle sales in India, April-June 2019 Category

% decline in growth

Passenger Cars

-23.3

Two-wheeled vehicles

-11.7

Tractors

-14.1

Commercial Vehicles

-9.5

Source: Centre for Monitoring Indian Economy

steel manufacturers, gas stations, car showrooms, etc. There are indications that the car industry may not recover sales growth for some time and that a level of saturation may have been achieved given that vehicle loans growth have slowed down to 5.1%, the slowest in five years.

Motorcycle sales haven’t done much better; nor tractors and agricultural vehicles (an important component of the vehicles sector in India).

Finally FMCG sales are slowing too.

For instance, Hindustan Unilever’s growth this year so far is five%, compared to 12%over the same half year in 2018.

So does all this mean the consumer economy is stalling; that a certain saturation point has been reached – i.e. all those who can afford to buy a car, or toothpaste,

detergent etc, have been reached? It does appear so. Indeed India does seem to be now in an economic slowdown driven by reduced consumer expenditure from house furnishing to cars to take-away food.

Yes, still GDP growth is amongst the highest in the world and certainly the highest for any major economy.

Well, exports are holding up at approximately the same rate as last year, while imports have not grown significantly. The government is still spending on infrastructure and is gradually increasing its tax intake.

Last year tax revenues jumped by over 22% (thanks largely to the introduction of a Goods and Sales Tax – GST) and have continued to grow, though only now by 1.4%, but still improving. India is not predicted to suffer too greatly from the US-China trade war and, according to some analysts in both Delhi and London, may actually benefit from Brexit.

Still, the major problems is that despite overwhelming evidence of an economic slowdown and the general acceptance of that in economic analyst and business circles, the government is refusing to admit that this is the case and so therefore currently doing very little to mitigate it. ● maritime ceo

ECONOMY BRAZIL

No signs of improvement President Jair Bolsonaro has failed to enact many electoral promises

B

razil’s economy activity index, which is an effective proxy for gross domestic product (GDP), fell 0.13% in the April-June period compared to the first three months of the year (and just 1% growth for the whole of 2018), according to the country’s central bank. This would indicate that Brazil most probably fell into recessionary territory in the second quarter. The bad news of these numbers are added to by persistently high unemployment and weak inward investment in the face of the global slowdown. Estimates for 2019 full year GDP growth have now been scaled back to under 1% and from to 2.5% to 2.2% for 2020.

A big problem for President Jair Bolsonaro’s administration is severely weakened consumer demand. The government’s plan to try and boost spending is to give workers access to cash from a severance fund combined with a cut in the benchmark interest rate by the central bank. The bank has indicated that further rate cuts may be on the way over the rest of the year. The real has dropped close to 3%, largely on fears of what the ongoing US-China trade war will mean for Brazil’s economy. The weaker currency could potentially fuel future inflationary pressures later in the year by making Brazilian exports by major category – July 2018 to June 2019 Category

% of total

Commodities

50

Manufactured Goods

36

Semi-manufactured Goods

13

Other

1

Source: Brazilian Ministry for Industry, Foreign Trade and Services

ISSUE THREE 2019

imports more expensive and most major companies report instituting a hiring freeze for the rest of the year.

Many of Brazil’s structural problems remain undealt with, despite the many pre-election pledges of the Bolsonaro team and economy minister Paulo Guedes. Little to nothing has been done to deal with the country’s infamous bloated pension system, necessary measures to control debt and initiatives to attract inward investments. All of this indicates that more bad news may be forthcoming at the end in September when the latest economic numbers are indicated while leading economists in Brazil believe that the failure to enact pension and other economic reforms will keep business confidence and investment subdued through to next year.

To boost the economy Bolsonaro is hopeful that the trade deal between the South American Mercosur trade bloc and the European Union after two decades of

negotiation will help lift the economy and also have a ‘domino effect’ that will spur a faster trade deal with the US. However, as a member of Mercosur, Brazil can’t sign an agreement with the US on its own Argentina, Paraguay, and Uruguay must also agree the terms. Yet Brazil is the leading economy in the group comprising 75% of the Mercosur’s GDP; 67% of its imports; and 71% of its exports. Bolsonaro has been preparing for a US-Mercosur trade deal by getting rid of some outdated regulations that could hold up trade talks, including multinational telecom investment regulations and legislation involving streaming TV shows.

It is important to highlight some Brazilian success stories this year. Car production in Brazil has jumped 14.2% and sales grew by 9.1% in the year to July 2019. This is both a domestic consumer and export story as Brazil’s car exports to Argentina rose sharply. ●

9

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MARKETS DRY BULK

Lights out in China Steel production around the world is sluggish while electrify consumption stats in China are ominous. Jeffrey Landsberg from Commodore Research reports

D

ry bulk prospects remain promising for this year (particularly for capesizes), but ongoing global headwinds still cannot be ignored. Global crude steel output outside of China most recently totalled 71.5 million tons in July. This has marked a 100,000 ton increase from June’s production but is 1.8m tons (-2%) less than was reported last year for July 2018’s production. There have been only two months this year where there has been any growth in global crude steel output outside of China. This remains concerning and continues to reflect weakness in the global economy outside of China.

Among the poorest performing major steel producers recently has continued to be the European Union.

The European Union produced 13.6m tons of crude steel in July.

This is 900,000 tons (-6%) less than was reported last year for July 2018’s production and marks the eighth consecutive month where EU steel production has contracted on a yearon-year basis.

Also continuing to perform poorly lately has been South Korean crude steel production. South Korea produced 6m tons of crude steel in

ISSUE THREE 2019

July. This is 200,000 tons (-3%) less than was reported last year for July 2018’s production and marks the second consecutive month where South Korean steel production has contracted on a year-on-year basis.

Brazil’s steel production has continued to perform extremely poorly as well. Brazil produced 2.5m tons of crude steel in July. This is 500,000 tons (-17%) less than was reported last year for July 2018’s production and marks an extremely large contraction. Brazil’s steel production has now contracted on a year-on-year basis during four of the last six months.

Overall, July’s latest contraction in steel output outside of China remains concerning, as does the ongoing contraction continuing to be seen in industrial production in many major economies. China’s steel output has at least stayed robust and is well on its way to setting another record this year, but there remain significant concerns in China as well.

Most recently, China’s electricity consumption increased year-on-year by only 2.7% in July — and, in total, this year has seen China’s electricity consumption grow by only 4.6%.

4.6% is the lowest annual electricity consumption growth seen in China since 2015, which is when China was experiencing a mini-recession that lasted through March 2016. As we have continued to highlight, electricity consumption (and production) data continues to add to the confirmation that China’s economy has been undergoing a significant slowdown this year.

July’s most recent decline in

Chinese electricity consumption growth to 2.7% is worrisome — and if low growth is sustained then this will likely be a strong indicator of sustained distress in the overall Chinese economy.

Electricity consumption growth is faring the worst in China’s industrial sector. According to China’s National Development and Reform Commission, electricity consumption in China’s primary industrial sector grew year-on-year through the first seven months of this year by 5.2% and consumption in the secondary industrial sector grew year-on-year by 2.8%. In comparison, residential electricity consumption in the first seven months of this year grew year-on-year by 8.8%.

In July, electricity consumption in the primary industrial sector grew year-on-year 5.4%. Electricity consumption in the secondary industrial sector grew year-on-year by 1.2%.

Electricity consumption in the residential sector grew year-on-year by 4.6%. Overall, significant economic headwinds continue to exist both inside and outside of China. ●

11

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MARKETS TANKERS

Record VLCC fleet growth sparks concern 40 VLCCs delivered from January to August, likely keeping a lid on freight rates, writes BIMCO’s Peter Sand

I

2017-06-01 2017-06-22 2017-07-13 2017-08-03 2017-08-24 2017-09-14 2017-10-05 2017-10-26 2017-11-16 2017-12-07 2017-12-28 2018-01-19 2018-02-09 2018-03-02 2018-03-23 2018-04-13 2018-05-08 2018-05-29 2018-06-19 2018-07-10 2018-07-31 2018-08-21 2018-09-11 2018-10-02 2018-10-23 2018-11-13 2018-12-04 2018-12-25 2019-01-15 2019-02-05 2019-02-26 2019-03-19 2019-04-09 2019-04-30 2019-05-21 2019-06-11 2019-07-02 2019-07-23 2019-08-13

USD per metric tonne

The obvious conclusion will n the tanker shipping industry, then be – too many tankers have particularly the oil product come around too fast to pick up the tanker sector, and amongst selltendered cargoes even as IMO 2020 side investment bankers, we are only is looming and may deliver a bit of a waiting for an IMO 2020 best case demand boost. Arguing against that, scenario to play out. As is if there are you only need to observe the spot no alternative scenarios. The best market freight rates sitting around case being where the transportation $35,000 per day for much of August. demand will grow steeply as clean Make up your own mind, but it’s cargoes of compliant fuel are distribnot a fundamentally strong market uted, while the entire fleet is slow which is delivering in my eyes. It may steaming and capable of passing on demand on this trade did not recover come down like a rock soon, if global all the extra fuel costs to clients. until December 2018. Fast forward refineries don’t keep the pedal to the What goes on in the oil market to mid-2019, tonne miles demand metal – keeping crude oil imports is tricky to measure but getting your now exceeds 100bn, and this trade massive and strong. head around the all the action in the accounts for about 10% of total tonne Does the escalated trade war oil tanker market is truly demandmiles in the seaborne crude oil marmake a difference? We all know who ing. Nevertheless, that is the thrill of ket. Buckle up. does the talking and who does the analysing it, as few obvious concluNet fuel oil exports are still a big walking in the US-inspired trade sions can be drawn. business out of Russia and Western I will try anyhow. VLCCs are the wars. In the one involving China, Europe. Most of it is heading for Far crude oil has already taken the main prime movers of crude oil globally Eastern destinations. As shipping’s stage without being an officially and the fleet holds 55% of all crude demand for fuel oil with a high sultariffed commodity until last week. oil cargo carrying capacity. As of phur content declines – where will As China went from importing 1.6m the the end of August – the fleet it go? Where are those power plants tonnes in July 2018 to zero in August has grown by 40 units in less than and industrial facilities to be found through October last year. Will we eight full months. Never has the fleet that may step in – buying a product see a repeat of that? Most likely. grown that fast. Only if you look at which is no longer in high demand Crude oil tanker tonne miles 2016 as a full year, 48 units entered by the shipping industry? Most likely from US exports took a nosedive a sinking market back then – as the also in the Far East with a limited in August 2018, slipping 28% from demand boost provided by the 2014 impact on trading lanes. The dark the previous month.

Tonne mile drop in oil prices vanished.

Date 380cSt HSFO180cSt HSFO

VLS FO, $/mULS FO, $/m

MGO, $/mt MGO LS, $/mton Spread (ULS v 180) Date 380cSt HSFO180cSt HSFO

2017-06-01 284 302 419 432 117 2017-06-01 293 303 horse being – what will the price be 2017-06-02 279 297 403 417 106 2017-06-02 294 304 Singapore, Fuel prices 2017-2019 2017-06-05 281 299 405 420 106 2017-06-05 289 299 of this residual? Arbitrage trading in 800 278 296 398 415 102 2017-06-06 295 303 2017-06-06 278 296 398 413 102 2017-06-07 289 297 oil products will still, one year from 2017-06-07 700 273 291 395 407 104 2017-06-08 291 300 2017-06-08 277 295 394 404 99 2017-06-09 288 296 now, be an important part of what oil 2017-06-09 2017-06-12 276 294 395 408 101 2017-06-12 288 295 600 277 295 396 409 101 2017-06-13 296 303 product tankers do.

2017-06-13 277 295 396 409 101 2017-06-14 298 305 2017-06-14 500 268 286 385 402 99 2017-06-15 301 321 2017-06-15 In conclusion, alternative 269 287 390 405 103 2017-06-16 297 317 2017-06-16 400 271 289 389 403 100 2017-06-19 298 318 buyers are still hiding it seems – as 2017-06-19 2017-06-20 272 290 385 404 95 2017-06-20 301 321 300 266 284 378 396 94 2017-06-21 299 319 the bunker price spread between 2017-06-21 267 285 370 392 85 2017-06-22 298 318 2017-06-22 200 269 287 375 392 88 2017-06-23 295 315 high-sulphur fuel oil (HSFO) and 2017-06-23 273 291 378 396 87 2017-06-26 293 320 2017-06-26 274 292 381 399 89 2017-06-27 296 323 low-sulphur fuel oil (LSFO) have 2017-06-27 100 2017-06-28 276 294 385 404 91 2017-06-28 297 325 282 300 400 414 100 2017-06-29 298 326 widened significantly during August 2017-06-29 0 284 302 402 420 100 2017-06-30 301 330 2017-06-30 290 308 405 425 97 2017-07-03 304 334 to zoom way above $200 per tonne in 2017-07-03 288 306 414 434 108 2017-07-04 309 340 2017-07-04 287 305 414 433 109 2017-07-05 308 339 both Rotterdam and Singapore. ● 2017-07-05 2017-07-06 280 298 410 431 112 2017-07-06 307 338 380cSt HSFO, $/mton

2017-07-07 275 2017-07-10 267 2017-07-11 269 2017-07-12 279 2017-07-13 276 ISSUE 2017-07-14THREE 284 2017-07-17 284 2017-07-18 279 2017-07-19 281

293 285 287 297 294 2019 302 302 297 299

180cSt HSFO, $/mton 395 387 395 410 400 412 412 409 410

415 406 414 429 415 426 433 427 428

MGO LS, $/mton

102 102 108 113 106 110 110 112 111

Spread (ULS v 180) 2017-07-07 2017-07-10 2017-07-11 2017-07-12 2017-07-13 2017-07-14 2017-07-17 2017-07-18 2017-07-19

303 298 299 294 298 295 301 303 307

334 329 330 325 329 326 321 323 325

13

MARKETS CONTAINERS

End of the road for big vessels?

3% demand growth gives liners little rationale to break new ship size records, writes Lars Jensen

T

Hence ordering a new generation of ‘large’ 6,000 teu vessels to replace the state-of-the-art 4,500 teu vessels makes perfect sense. Unit costs will be much lower, but it will also result in a 33% capacity injection. From time of ordering to delivery it is two years. And then an additional 12 months until the final vessel of the series is delivered. In those three years, market demand will have grown 30% essentially matching the 33% capacity injection the new vessels – it all adds up.

Fast-forward to 2019. Ordering 20,000 teu vessels to replace 15,000 teu vessels is the norm. This is again a 33% capacity injection. But at a measly 3% demand growth, it will take 10 years for demand to catch up to this. The only option left to the carriers is to reduce service frequency. And this is exactly what has been going on. Over the past eight years the number of weekly AsiaEurope services has dropped from 41 to 29. And with more 20.000+ teu vessels due for delivery in 2020-22 First of all, demand growth used this number will drop further.

What is then the scope for to be almost 9% onof average every No services Projection, (13w average) no of services ordering a new generation of 25,000 year.Aug-11 Initially fuelled by containerAug-11 to 27,000 teu vessels? It would isation itself and later by the waves Aug-11 to distant locations. constitute another 25-35% capacity of outsourcing

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Aug-11 Aug-11 Number of weekly Asia-Europe services Sep-11 ProjecEon based on exisEng orderbook Sep-11 Sep-11 45 Sep-11 Oct-11 40 Oct-11 35 Oct-11 Oct-11 41.61538 30 Oct-11 40.76923 25 Nov-11 40.76923 Nov-11 40.76923 20 Nov-11 40.69231 Nov-11 41.07692 Dec-11 41.15385 Dec-11 41 Dec-11 40.84615 Dec-11 40.46154 ISSUE THREE 2019 Jan-12 40.38462 Jan-12 40.15385 Jan-12 40

1

he past six decades of container shipping have been all about scale advantage. Scale in the sense that larger vessels led to lower unit costs for transportation.

Lower transportation costs made it more attractive to outsource manufacturing – or start importing new goods from far-flung origins.

This additional demand spurred the establishment of ever more liner services – and ever larger vessels – lowering costs even more in turn creating more demand. A virtuous cycle lasting decades, dramatically changing consumer patterns, manufacturing locations and supply chain strategies.

If it has worked well, shouldn’t the industry then simply forge ahead to the next generation of 25,000 to 27,000 teu vessels? After all, if it ain’t broke, don’t fix it.

But here it is important to recognise that the underlying premises for the scale advantage are no longer the same.

increase – requiring either another 8-10 years of demand growth to fill.

Or alternatively a potential reduction down to 16-18 services per week in total. In a hypothetical scenario where we again see all carriers upgrade to the new generation, each alliance would have to remove three to four services from their current Asia-Europe networks.

And this is before we contemplate the impact on terminal and hinterland costs. The past few years indicate that elements of terminal productivity do not increase materially with the ultra-large vessels, hence we are reaching the endpoint here of scale benefits. And the constant reduction in service frequency in favour of large vessels lumps huge amounts of cargo into very narrow time-slots creating congestion problems not only in the ports but also in the road and rail networks beyond the port.

Historically, whenever a carrier ordered a new generation of ultralarge vessels the other carriers followed suit within a year or two. It is an economical arms-race of lower unit costs per vessel that competitors can ill-afford to ignore. However, going to the next generation now could very well be likened to the oil companies’ ill-fated scale-up of oil tankers in the 1970s.

Big vessels have clear scale advantages – something that has been proven time and time again over the past six decades. But the new normal of much lower demand growth has shifted the economical balance between unit costs on the individual vessels and the impact on service frequency and hinterland efficiency and leaves no room for a positive holistic view on taking another step up the size-ladder.●

15

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Beyond 2020 Dagfinn Lunde uses his quarterly column to offload a few irritations

T

he editor told me to try and tie all the main themes of this issue into a coherent column - a tricky challenge given the breadth of topics covered in these 50 pages, but a challenge I’m willing to accept.

First up, let me get something off my back. I am increasingly fed up with every Tom, Dick and Harry giving such disastrous outlooks for the global economy. Stop and look at the stats. The fact is the world is in good shape with 3+% growth likely this year, a reduction over 2018, but still a very healthy figure, largely based on the development of the middle classes around the globe.

What’s noticeable is how trade spats are boosting many economies - and also the ton-mile picture for many shipping segments. China outsourcing production to Southeast Asia, a region that is booming, has spurred the global economy - and is noticeable too in, say, the latest results from Cosco. For all the worries about the tariff wars, remember world trade is flexible, it flows freely in different directions when hitting an obstacle, like water tumbling down a river. I predict no major economy suffering an economic catastrophe, certainly not before the elections next November in the US. So, with that rant out of the way, onto specific shipping matters

ISSUE THREE 2019

- and top of the agenda is IMO 2020.

Frankly, I can’t wait until 2021 so that I don’t have to read/hear any more about the sulphur cap. I am tired of it - and tired of shipping’s excuse book.

With barely 100 days to go, it’s still as if this a newly promulgated rule - it is not; it’s been in the works from nearly the start of the decade. And it’s only now that people are stressing, typical of this industry where people tend to leave things to the very last moment.

Still, while IMO 2020 might be frustrating, it is the renewed calls for slow steaming that are driving me more crazy over the past month.

Regulating how fast vessels should go is not clever, and those promoting it do not fully grasp the fundamental calculations of how shipping actually functions. Obviously, this rule would not work for many ship types.

Slowing down is a natural thing to do when the freight rate versus the bunker price is below a certain level but there is an exponential curve on the speed so even just one knot completely changes all calculations.

You cannot interfere and command speeds on voyage and ballast trip calculations. People need to understand how voyage calculations and their brutal curves actually work — they are so sensitive.

Another big topic making headlines in shipping has been the

“

World trade flows freely in different directions when hitting an obstacle

”

Poseidon Principles, a commitment by many western banks to promote credit lines to greener leaning shipowners. Commendable, yes. New and groundbreaking? Not so much. We used to do this to a large extent back in my DVB days, but we didn’t boast about it. It’s more about forward facing. If banks did not have any principles before they certainly need them nowadays - it’s what their clients and society in general are asking for. Ethics and principles are so vital for so many in shipping these days.

Amen to that. ●

17

EXECUTIVE IN PROFILE DEBATE

Macron puts go-slow movement back on the agenda

The French president has demanded ships must slow down.

Not everyone is convinced

B

iarritz, the French Atlantic resort town, is normally packed with high-spending holidaymakers in late August. Not this year, as security descended to this southwest corner of the country, sweeping the area for explosives, clearing many of the famous surf beaches in preparation for the annual G7 summit with Donald Trump et al bound for this posh slice of seaside. Despite the immense security operation, the host, Emmanuel Macron, was able to detonate one massive bombshell for the shipping industry as the summit was set to get underway.

In a televised statement just

18

as the G7 talks were set to get underway, the French president said getting mandatory speed limits in place for world shipping was his number one environmental goal, reigniting a debate that had been high up the agenda when the Marine Environmental Protection Committee met at the London headquarters of the International Maritime Organization (IMO) earlier this year.

“

“Very solemnly, for the first time, we will engage with shipping companies to reduce the speed [of merchant ships],” Macron said, adding that he would be discussing the measure with other heads of state.

“It is one of the most effective ways to reduce greenhouse gas emissions globally and this measure would be a real change,” Macron insisted.

In April this year France made

Simply introducing a mandatory speed limit can have negative impacts on the efficiency of an engine

”

maritime ceo

EXECUTIVE IN PROFILE DEBATE

a submission to the International Maritime Organization (IMO) urging for a swift global speed limit for shipping in a bid to slash the industry’s emissions.

Under Macron, the architect of the 2016 Paris Agreement on climate change, France has become one of the most aggressive advocates of society moving quicker to decarbonise. France believes that in order to meet climate goals set out in the Paris Agreement shipping needs to act faster than goals set out by IMO to get decarbonisation regulations moving by 2023.

Reducing speed for most ship sectors would work as an “excellent transitionary and early measure”, France stated in its April submission, albeit admitting it would be merely a temporary measure. The French submission concedes that for certain ship types the measure would not work. These ship types included passenger ships and vessels carrying time sensitive cargo that would be forced to go on greater polluting forms of transport if a speed ban came in.

Greece has also joined France in calling for speed limit proposals.

The original architect of the go slow movement in shipping is Philippe Louis-Dreyfus, the 74-yearold president of Louis Dreyfus Armateurs. The French tycoon has been calling for ship speed regulations for most of the past decade and he was able to get the support of the French president when he went for a lunch with Macron at the Élysée Palace in January this year.

“I am particularly proud to see France taking the lead of such an important question,” Louis-Dreyfus tells Maritime CEO. “Reducing/ optimising speed is by far the easiest, most efficient, and simplest, solution to reduce ship emissions.”

Jean-Marc Roué, president of Armateurs de France, the French shipowners’ association, applauds Macron’s televised statement, telling Maritime CEO: “Today, the most relevant solution is also the most manageable and readily accessible,

ISSUE THREE 2019

and that is to reduce the speed of bulk carriers, which make up two thirds of the world’s fleets.”

Armateurs de France and the Ministry for the Ecological and Inclusive Transition of France worked together to submit the initial speed limit proposal to the IMO in April.

“As with all regulatory measures for shipping, ship speed regulations must be applied globally. Diplomacy should be used to bring all countries onboard and the IMO must follow through with action,” Roué says.

Olaf Merk, the Paris-based ports and shipping expert at the Organisation for Economic Co-operation and Development’s (OECD) International Transport Forum (ITF), also supports Macron’s move, saying it was necessary while the industry grappled with finding the right future technologies to slash its carbon footprint.

“Shipping – like other sectors – urgently needs to reduce emissions.

Regulating ship speed is a good measure that can be implemented in the short term, in anticipation of the roll out of zero-carbon ships that will take some more time,” Merk says.

Other short-term measures taken forward at IMO for further discussion in November are a goalbased operational efficiency metrics proposal championed by Denmark and a Japanese idea to install shaft power limits on all ships.

Faig Abbasov, shipping programme manager at the NGO, Transport & Environment, says speed limits represent the most immediate and effective measure to cut ship greenhouse gas emissions.

“The November meeting of the IMO will be key to make substantial progress on this. At stake is not only climate climate, but also IMO’s reputation as a capable authority to help clean up the sector,” Abbasov says.

The world’s largest two shipping bodies have made their positions clear on the ship speed debate, distancing themselves from Macron’s call.

Guy Platten, secretary general

“

Ship speed regulations must be applied globally.

Diplomacy should be used to bring all countries onboard

”

of the International Chamber of Shipping (ICS), says his lobbying group is not in favour of the French proposal.

“Simply introducing a mandatory speed limit can have negative impacts on the efficiency of an engine, in the worst cases resulting in increasing emissions,” Platten tells Maritime CEO. Reducing the speed of ships can negatively impact developing economies, Platten argues, pointing out that reducing speed can result in developing economies being even further from their markets and their potential customers due to increased journey times.

BIMCO’s deputy secretary general, Lars Robert Pedersen, also says his organisation is against legislation on ship speeds.

“BIMCO agrees that sailing at lower speed generally means lower emissions,” Pedersen concedes, before adding: “Setting mandatory speed limits is however not the right tool to achieve the emissions reductions that we all seek. Emissions correlate narrowly to the power output of ships’ engines and regulating how much power a ship can utilise under normal operating conditions would achieve the goal of reducing emissions while also being enforceable from a regulatory perspective.”

Marin Dorsman, the secretary general of the European Community Shipowners’ Association (ECSA), reckons the go-slow movement needs “careful consideration”.

“The shipping industry is a very diversified industry and mandatory speed reduction might have different and perhaps unwanted consequences,” Dorsman warns.

November’s IMO gathering in London promises to be heated. ●

19

IN PROFILE

Alex Saverys p. 24

Jan van Dam p. 31

Paul Hexter p. 22 Corrado Cuccurullo 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 11 pages

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maritime ceo

IN PROFILE

Freddie Lee p. 25

Paolo Favilla p. 27

Lukasz Ogryczak p. 30

ISSUE THREE 2019

21

COVER STORY

The case for methanol Maritime CEO recently attended the naming ceremony of a pair of revolutionary chemical tankers

V

ancouver-based methanol shipping specialist Waterfront Shipping is at the vanguard of the alternative marine fuel debate. The company is the maritime guinea pig utilising methanol as a power source for ships, and has recently showed off to the world just how this can be done.

Waterfront and Swedish shipowner Marinvest held a naming

“

ceremony in August for two landmark chemical tankers at Hyundai Mipo Dockyard in South Korea.

The two 49,000 dwt ships, named Mari Couva and Mari Kokako, are equipped with dual fuel engines that are capable of running on methanol, heavy fuel oil (HFO), marine diesel oil (MDO), or marine gas oil (MGO).

Waterfront will deploy the vessels to support growing demand

This safe, simple, highly versatile alcohol has the ability to support the shipping industry’s transition to a cleaner future without delay

22

”

for methanol transportation around the world.

Paul Hexter (pictured, fourth from right), president of Waterfront Shipping, believes methanol fuel is now a commercially-ready technology as a proven clean-burning fuel that meets stringent environmental regulations.

“Methanol is an economically viable alternative marine fuel over the cycle and has potential for short payback as modest incremental capital costs can be recovered over a short period of time in periods when oil prices are moderate to high,” Hexter says.

The Waterfront boss points maritime ceo

IN PROFILE

“

Methanol is an economically viable alternative marine fuel over the cycle and has potential for short payback

”

out that methanol has a global 6% discount to MGO and the discount is expected to rise post-2020 and some regional markets are even more competitive, including India, where methanol has over 20% discount to MGO. Additionally, the ships have

ISSUE THREE 2019

three fuel options - HFO, MGO and methanol, which offer flexibility in many price scenarios. Other advantages of adopting methanol-fuelled ships include cleaner cylinder chambers and the ease for engineering crew to transfer their knowledge from conventional engines.

The company chartered seven newbuild vessels with methanol dual-fuel engines in 2016 and two years later the company teamed up with Marinvest, Iino Kaiun Kaisha, Mitsui & Co and Nippon Yusen Kaisha for an additional four methanol duel-fuel vessels, which will all be delivered this year, through a joint-industry project.

Waterfront Shipping is a subsidiary of Methanex Corporation, the world’s largest producer and supplier of methanol to major international markets. The company currently operates a fleet of 28 vessels, including seven methanol dual-fuel vessels with four more on order. Following the delivery of the newbuildings, 40% of Waterfront Shipping’s tanker fleet will be methanol-fuelled.

According to Hexter, NOx saving alone from operating the methanol-fuelled ships by the company so far is equivalent to taking 3,710 heavy duty trucks off the road for an entire year He adds that methanol-fuelled ships also offer low-cost bunkering and low capital cost as they can use existing supply chains and infrastructure. There is just a modest incremental cost to convert or build new engines to operate on methanol.

Going forward, Hexter says the company is in a constant fleet renewal program which could involve retrofitting the rest of its existing fleet into methanol-fuelled or ordering more ships to serve future demand.

Research by Singapore-based Methanol Institute finds that methanol is already available in over 88 ports in the world.

Marine propulsion specialist MAN has already developed a system that is capable of handling mixtures of methanol and water without modifications.

Spot on

Waterfront Shipping Vancouver-based methanol shipping specialist. A subsidiary of Methanex Corporation, the world’s largest producer and supplier of methanol. The company currently operates a fleet of 28 vessels, including seven methanol dual-fuel vessels with four more on order.

Besides Waterfront Shipping, companies including Stena Line, ScandiNAOS, Viking Line have also run separate pilot methanol projects on other ship types including ferries and smaller boats.

In May, the Green Maritime Methanol consortium, formed by a consortium of major Dutch maritime companies, selected nine ships for research on the application of renewable methanol as a marine fuel.

New designs, newbuildings as well as existing ships of Boskalis, Van Oord, the Royal Netherlands Navy and Wagenborg Shipping were selected.

Chris Chatterton, chief operating officer, at the Methanol Institute, concludes this cover story by telling Maritime CEO: “By itself, methanol is not going to decarbonise the shipping industry but this safe, simple, highly versatile alcohol has the ability to support the shipping industry’s transition to a cleaner future without delay. It can also support the adoption of new technologies such as fuel cells without any of the issues holding back hydrogen.” ●

23

IN PROFILE

‘Hydrogen is clearly the most promising solution for shipping emissions’ CMB’s Alex Saverys is leading the way on developing new fuel possibilities

I

n August Compagnie Maritime Belge (CMB) bolstered its position as shipping’s hydrogen leader.

Already owning the world’s first sea-going hydrogen-fuelled ship, 124-year-old CMB made a series of recent announcements that firmly push the company towards a hydrogen-based future, investing in engine makers, building a dual-fuel hydrogen powered ferry as well as winning a first order for its design of a hydrogen-powered crew transfer vessel.

Driving this change is Alex Saverys, CEO of the Antwerp-based shipping line – the latest generation to take the helm at one of Europe’s best known shipping brands.

“We don’t claim that hydrogen is the solution for shipping, but with what we know today, it’s clearly the most promising solution for shipping emissions in general, and greenhouse gas emissions in particular,” Saverys tells Maritime CEO in an exclusive

Spot on

CMB 124-year-old bluechip Belgian owner controlled by the Saverys family. Runs dry bulk concern Bocimar and containership operator Delphis.

24

interview.

However, the 41-year-old is well aware that being a pioneer in shipping is not necessarily a path paved with gold.

“A point of constant debate in shipping is whether it makes financial sense to be an early mover. Looking back in shipping’s history, one could say that late followers have actually been better off than pioneers or early innovators in many cases,” Saverys concedes.

“Maybe this time it’s different, the future will tell.”

CMB Technologies, the brains trust of the company’s green propulsion development efforts, is also working on other breakthroughs including ammonia, batteries and wind power, with Saverys stressing, “We are not putting all our eggs in one basket.”

While to date, CMB’s hydrogen development projects have all focused on smaller tonnage, Saverys is confident that bigger ships – even capes and VLCCs – powered by this new fuel are years away, not decades.

“A lot will depend on the progress made on engine development

“

and hydrogen storage,” Saverys points out. “The more people invest in this technology, the faster we will be able to fit a hydrogen system onboard of large ships.”

For the time being all eyes are on Antwerp’s pioneers. Who will join them? ●

A point of constant debate in shipping is whether it makes financial sense to be an early mover

”

maritime ceo

IN PROFILE

Short-term market dislocations coupled with long-term value Freddie Lee and Carsten Mortensen created Dee4 Capital Partners this year with an initial focus on product tankers

C

arsten Mortensen is back, hunting product tanker opportunities with a new fund.

The former CEO of both BW and Norden has teamed with well-known shipping private equity professional Freddie Lee to create Dee4 Capital Partners, which started off in the summer by closing a $41m capital raising exercise, with further capital to be raised during 2019.

“The fund’s core strategy is to identify and execute transactions where Dee4 Capital sees short-term market dislocations coupled with long-term value, and hence a superior risk-reward balance. The short-term investment focus is on the product tanker market, given the attractive supply and demand dynamics,” the company stated in a release upon first closing.

Dee4 Capital pounced immediately to acquire three product tankers, a sector it is squarely focused on at present. The tankers were

Spot on

Dee4 Created this year by Freddie Lee and Carsten Mortensen as a shipping investment vehicle with three product tankers to its name so far.

ISSUE THREE 2019

bought from Japanese owner Nissen Kaiun and financed by DNB. “We are delighted to have received the support from DNB to finance these vessels, and look forward to a long collaboration with them and other financing institutions as we grow”.

“Product tanker investments are a core target for us at the moment and we will do more in that sub-sector,” Lee tells Maritime CEO. Other maritime opportunities and related sectors are not being ruled out however, as the mandate for the fund is fairly broad.

Lee has to date spent more than 18 years in the private equity investment industry, including as an investment committee member of Barclays Natural Resource Investments (BNRI), with whom he led investments inter alia in shipping, logistics and energy. Whilst with BNRI, he co-founded Hafnia Tankers and was an advisor to the company until 2019, helping to complete the merger with BW Tankers; he also co-founded CIG Logistics, a Texasbased energy infrastructure group.

It was during the merger process between Hafnia and BW Tankers where Lee first came across his new business partner, Mortensen, who is one of the best known names in Danish shipping.

“Carsten wanted to create a new investment entity with a Danish flavour to it. He is very well respected and liked, particularly in the shipping

community and this was critical in terms of getting Dee4 up and running,” Lee explains.

Dee4’s first fund will be relatively small and that was deliberate as Lee explains.

“We did not want to be on the road fundraising for months,” he says.

“The idea was to get off to a running start deploying capital immediately with the acquisition of three product tankers and develop a track record, proving to our investor base we can complete attractive transactions and prove the investment thesis, whilst operating in a professional and transparent manner.”

Dee4’s investors to date are broadly split into two categories: senior business people, mainly from the maritime community, and family offices or foundations.

“We are extremely proud of all those investors who have committed to Dee4, and the faith they have placed in us. In a very short period of time, we have raised a fund, hired colleagues, found an office, acquired our first assets and we are now on the hunt for additional attractive opportunities. We are all highly committed to the business and we are having fun!,” Lee says.

Once the first fund is largely deployed, Dee4 intends to start raising capital for Dee4’s second fund, which will be targeted at a significantly higher level, Lee admits, giving Dee4 “more firepower”.. ●

25

IN PROFILE

Italy’s newest shipping platform The CEO of Express Holding is promising to act differently to the other financial players who have transformed the local shipowning scene

E

xpress Holding is the latest financial player to enter the shipping industry in Italy, promising to operate in the market with a different approach.

“We don’t act as the traditional NPL managers are used to do. We are an innovative shipping platform as we look at financial exposures capable of giving us a majority share of the company to be restructured. No minority stakes are considered. We look also at the goodwill of the business and not only the asset value and we prefer to invest in niche markets,” says the CEO, Paolo Favilla.

He is also founding partner of the financial advisory firm KT Finance and has some past experience in shipping since he was top manager and shareholder of Aldo Grimaldi’s Grandi Navi Veloci and Grimaldi Holding.

This new phase in the maritime transport business started with the acquisition of the Savona-based

Spot on

Express Holding Italy’s latest financial player to enter the shipping industry. Taken over chemical tanker specialist Finbeta and now eyeing dry bulk.

ISSUE THREE 2019

“

Our idea would be to use Finbeta as a new investment platform for other assets or companies

”

liquid and chemical tanker specialist Finbeta, which has a fleet of five vessels and was rescued from a non-performing loan of over €60m ($68m) with Banca Carige. The company is now 95% controlled through Chemtank (the remaining 5% stake remained in the hands of Luca and Alessandra Bertani, members of the founding family) but Express Holding in the recent past also purchased a further two bulk carriers, the supramax Iris Express and the handysize Apuana D. “Our idea would be to use Finbeta, which is currently looking at two vessels in Turkey to renovate its fleet, as a new investment platform for other assets or companies active in the liquid bulk market to be purchased,” Favilla says, adding: “With Express Holding we would be ready to make a similar deal in the dry bulk in 2020.”

Describing the business model adopted, Express Holding’s top man

highlights that the ideal approach would be to find companies in financial difficulties but with a strong reputation and commercial position in small markets as is the case of Finbeta in the Baltic Sea. When possible, the company prefers to maintain the same top management and to get it restructured and with no debt and headed by a shipowner.

Favilla thinks that banks do not have the skill to directly manage fleets and the restructurings take too many years.

“The consequence is that time passes, fleets become aged and there is a loss of value either for the company and for the lender. NPLs’ management created a sort of new clearing house between finance and business and it’s exactly in that space that we see space for a new platform as Express Holding intends to be.

We want to avoid that companies like Finbeta, well structured and positioned on their markets, have no choice but closing down or seeing all the assets liquidated,” Favilla concludes. ●

27

IN PROFILE

Mine owners take control of commodity logistics Shi.E.L.D. Services has taken over from where Coelcerici Logistics left off, providing transhipper services across the world

L

imited port facilities in developing countries is giving an Italian company a chance to upscale an old business model.

Corrado Cuccurullo is the CEO of Shi.E.L.D Services, the newly born management company specialsed in transhipper units, created when Coeclerici decided to exit the coal logistics business after more than 15 years. He’s bullish there’s still plenty of business left in the movement of coal.

“In some areas of the world, some commodities can be exported only by using transhippers. These kinds of vessels help a developing country to start with their commodities exports and imports because it is the cheapest and most efficient way to get trading,” the Milan-based executive tells Maritime CEO. Shi.E.L.D. Services employs all the people dismissed by Coelcerici Logistics, thus maintaining both the know-how and the expertise.

Spot on

Shi.E.L.D. Services Italian transhipper specialist focused on helping delivering commodities from mines in developing countries. Took over operations from Coelcerici Logistics.

ISSUE THREE 2019

“

Transhippers help a developing country to start with their commodities exports

”

“We started to manage the fleet sold by Coeclerici, being the ones who designed, built and operated the fleet since the very beginning. The new owners were more than happy to be served by us to continue to manage their fleet,” Cuccurullo says, mentioning companies like Trans Coal Pacific, Asian Bulk Logistics, Adani, Vale and InterGen as counterparts today.

The Italian management company started its activity on January 1 2018, managing the Indonesian fleet owned by Asian Bulk Logistics and Transcoal Pacific, then a further two vessels operated by Vale Mozambique in Beira were added. As of today the company is engaged in Indonesia as technical and operation manager, meanwhile it is also making design services for LDA and

another mine owner that can’t be disclosed for a transhipping project in Guinea for bauxite. But Shi.E.L.D Services is also looking at countries like Vietnam, Pakistan, West Africa, East Africa that are starting to develop export and import of commodities using this kind of transhipper.

Transhipper vessels are effectively floating production lines and the sophisticated machinery onboard and continuous operations puts additional pressure on operators to ensure that there are no breakdowns and that the vessels operate safely, hence the need for niche expertise, such as from Cuccurullo’s team.

Cuccurullo reckons increasingly a majority of mine owners are deciding to own the assets used for their exporting activities.

“In this way mine owners have more control on the logistics activities involved in their business, but not having the expertise to operate such types of vessel, they are giving to third party companies like us the duty to operate and manage their own assets,” the Italian explains.

Cuccurullo’s latest client is Adani and a mining concession the Indian giant has in Indonesia.

The Italian transhipper manager can also provide design and consultancy services in the offshore logistics business, giving the opportunity for customers to own and control their assets. ●

29

IN PROFILE

The benefits of being nimble Dry bulk operator Omegra has grown fast since its launch in 2013

O

megra was conceived in 2013 in Singapore as an independent dry bulk shipping company sitting alongside sister company and commodity trading house, Enerfo. From the outset, the aim was to be nimble, snatching opportunities in what has been an incredibly volatile market this decade.

“For any operator, success derives from the constant evaluation of market opportunity and a management structure that promotes the fast and clear decisions required to capture it,” explains Lukasz Ogryczak, a director at Omegra.

By the end of July this year, Omegra’s annualised cargo volume grew by 1.2m tonnes to 4.5m, outperforming the market by generating average daily earnings of just over $15,000 per day on panamaxes and $11,000 on supramaxes.

Currently, Omegra has 35 vessels – a mix in size ranging from kamsarmax down to handysize – under commercial control with a combined deadweight capacity of close to 2.5m tons.

There are no immediate plans to enter ship ownership, but Ogryczak says the company might change its

Spot on

Omegra Dry bulk shipping operator founded in Singapore in 2013 by trading house Enerfo. Fleet today stands at 35 ships

30

“

Success derives from the constant evaluation of market opportunity

”

stance in this department as the markets evolve.

“To date, Omegra has benefitted financially from being asset-light with a versatile time-charter fleet,” Ogryczak tells Maritime CEO. “So, the near-term answer to shipownership is no. However, with ever-changeable freight market conditions we will maintain an openmind and keep an eye on sale and purchase pricing.”

On dry bulk shipping prospects through to the end of the year, Ogryczak reckons the solid summer end should percolate though to Q4.

“We believe bulk rates will remain buoyant for the balance of the year,” Ogryczak says, explaining: “The IMO 2020 situation points to an effective reduction in capesize capacity and any slow steaming in a higher cost environment may also tighten

supply. The intra-market spreads should perform to some degree and at least sustain freight rates for the smaller sizes. The shift to MGO in Q4 – and VLSFO beyond – should also contribute to an increase in voyage and, ultimately, time-charter rates.”

The wildcard remains the US-China trade wars, Ogryczak admits. ●

“Shipping analysts have been blown out of the water year after year” — J Mintzmyer, lead researcher at Value Investor’s Edge

maritime ceo

IN PROFILE

The flying Dutchman Jan van Dam has taken the plunge ordering a brand new wind propulsion system. Here he explains the difficulties of being a small owner with innovative ambitions

V

an Dam Shipping has signed a contract for the installation of an eConowind supplied wind assisted propulsion system on its 3,600 dwt general cargo vessel Ankie. The Spijk, Netherlandsbased company will take delivery of the Ventifoil system in the final quarter of this year.

For eConowind, located in Groningen, Netherlands, it is the first commercial order of its Ventifoil system which successfully completed sea test trials earlier this year. The wind-assist system was developed over the past three years supported by an EU-backed grant.

“We are seeking ‘econology’ for shipping: good for ecology but must be economical as well. After several years of development and testing we are very happy to take this next big step: a first commercial installation to show that saving energy and emissions can mean saving money at the same time. We are confident that such an innovative company as Van Dam Shipping will manage to get the most out of the system and we are really excited to share the results in the coming months.” Says Frank Nieuwenhuis, CEO of eConowind.

The modular Ventifoil units are in the form of a non-rotating wing with vents and an internal fan that uses boundary layer suction for maximum effect. This installation will feature two, 10 m wings along with two extensions of 6 m that will generate significant force allowing the vessel to reduce motor power and thus save energy.

“We expect the reduction in fuel

ISSUE THREE 2019

costs over a period of approximately three years will equal the costs of the system and thus fulfill our dream of using the wind again in modern shipping, which has been 40 years in the making,” says Jan van Dam, owner of Van Dam Shipping Van Dam Shipping will participate in further testing the concept in the new EU-backed Wind-Assist Ship Propulsion (WASP) research program, which from October will study practical use of wind-assisted systems in day-to-day operations as well as actual savings over an extended period of time.

“

This system will fulfill our dream of using the wind again in modern shipping, which has been 40 years in the making

”

Van Dam Shipping is a family-run business with eight vessels in its fleet, six of which are focused on the Finnish trades.

The company’s owner, Jan van Dam, discusses with Maritime CEO the difficulties of being a small owner with innovative ideas.

“We have a fully new concept ship ready but it is very difficult to get it built. The market is tough and to find finance for newbuildings without bigger parties is very difficult,” van Dam says.

“For us, it is not important to be first. It’s more important for us to go

ahead with new designs of ships and put all the technology into them so we can reach together a new target and show the world that shipping is not dirty but cleaner per ton/mile.”

As well as owning, the group has a number of other services including crew support and shipmanagement.

The Dutch outfit is truly a hands on family-run business, with van Dam currently sailing on one of his ships in Africa (pictured), and his three sons are also working onboard his ships while his daughter is involved on the crewing side of the business and his wife is heavily involved on the administration side of the business. ●

Spot on

Van Dam Shipping Family-run Dutch owner with eight small general cargo vessels. Also involved in crewing and full technical management.

31

CYPRUS GOVERNMENT

A seat at shipping’s top table An interview with Natasa Pilides, deputy minister of shipping, the lady reinvigorating maritime on the island

L

ast year Cyprus made shipping a cabinet position within government, with Natasa Pilides charged with taking shipping to the next level. A whirlwind of events, incentives and regulations have since passed and Cyprus is now widely seen as among the most energetic maritime centres in Europe.

“It’s certainly been a busy first year,” concedes Pilides in an exclusive interview with Maritime CEO. “In terms of growing the register of Cyprus ships and the Cyprus maritime cluster, we’ve worked hard to increase awareness on a global stage.”

This has been underpinned by a rebranding exercise which has enabled Cyprus to better represent itself, as well as clearly articulating the benefits of Cyprus and the opportunity it presents. Through roadshows, attendance at industry events and other promotional activities, Cyprus has intensified its presence in key shipping hubs across the world such as Athens, London, Hamburg, New York, Hong Kong, and Singapore.

Cyprus is still best known for its shipmanagement strengths. Today some 3,500 vessels - around 80m dwt - is managed from the island representing about 20% of the world’s third-party managed fleet and 4.5% of the world fleet.

The Cyprus flag, meanwhile, is growing fast with 1,110 ships on its books making it the 11th largest in the world. Plans thave been tabled in parliament to abolish initial ship registration fees to boost sign ups for the register.

“We have a strong maritime services infrastructure spanning the breadth of insurance, legal,

ISSUE THREE 2019

“

We offer a unique combination of qualified professionals, unrivalled quality of life, and an ideal location

”

accounting and shipmanagement to bunkering and technical services, all offering a professional and reliable 24/7 service. In tandem with the growing number of ships under the Cyprus flag, more and more companies are choosing to expand their presence in Cyprus as we offer a

unique combination of highly qualified professionals, unrivalled quality of life, and an ideal location in terms of time zone and access to emerging markets,” Pilides insists, opinions backed up by a host of owners and managers based on the island covered overleaf. ●

33

CYPRUS GOVERNMENT

Public and the private sectors singing from the same hymn sheet There’s a rich mix of maritime ingredients on the island pointing towards a bright future as an international maritime centre

T

here is a noticeable buzz about Cypriot shipping these days.

The public and the private sectors are singing from the same hymn sheet. Incentives are proving popular, ship finance is growing and the marketing machine is in top gear.

Few places in Europe have been more proactive in promoting their shipping hub credentials in the last 18 months.

The results are beginning to pay off with a growing maritime cluster on

34

the island.

“There are shipowners, shipmanagers, charterers, ancillary service providers, ship financiers, legal and accounting expertise and so on. If you combine that with the reputable, efficient and affordable Cyprus flag, this creates an environment that can compete with any maritime centre globally. There is expertise, knowledge and the skills available that any cluster needs in order to be able to

“

We can compete with any maritime centre globally

”

thrive,” argues Themis Papadopoulos, CEO of Interorient Shipmanagement.

“Shipping is a very volatile industry, thus it is important for stakeholders to invest in a safe environment for their business to grow,” says Gina Panayiotou, global head of maritime ceo

CYPRUS GOVERNMENT

system is among the most competitive in the world and yet fully EU approved, points out Captain E H Adami, the head of Mastermind Shipmanagement. On top of that the republic has in excess of 60 double tax treaties.

Recent developments on the academia side are equally encouraging as Cyprus is becoming known as a location for maritime education.

All positions onboard as well as all positions in shore-based maritime companies are lectured at the universities and colleges across the island.

Then there is the actual surroundings that have lured many here as described by Yvonne Tsanos, group director at marine services company Epsco Cyprus.

“It’s a multicultural environment

that has successfully maintained and married modernisation growth and development with its beauty, traditions and history,” she says.

Concluding, Tsanos returns to one of the central pillars that has created the maritime success currently being enjoyed in Cyprus.

“One must also keep in mind a paramount factor; the public and private sectors talk and listen to each other to overcome any potential issues affecting the industry,” she says.

Indeed, for Maritime CEO, the last time an island republic so wholeheartedly embraced maritime and aspired to rise to the top, one would have to go back to Singapore at the turn of the century, and we all know how that played out. ●

The to-do list

shipping and energy at local law firm, Michael Kyprianou & Co. “Cyprus shipping has proven time and time again that it’s competitive operational and taxation framework can be relied upon at time of changing regulations and uncertain global political risks, with a solid network of service providers that can firmly support companies through these changing times.”

Cyprus’s tonnage tax

ISSUE THREE 2019

THE SIGN OF a true maritime hub is one that does not sit still.

Planning ahead and solving what shipping wants is the key to staying relevant in today’s competitive maritime scene.

Cyprus has lofty ambitions and has come a long way in a short amount of time, yet there is much it needs to do to plough ahead.

“The greatest challenge of the shipping industry in Cyprus remains the Turkish embargo, which, of course, is politically complicated but certainly any resolution in that area would be a huge boost to the shipping industry,” says Themis Papadopoulos, CEO of Interorient Shipmanagement.

Quite so, concurs Yvonne Tsanos, group director at marine services company, Epsco Cyprus.

“There’s huge support toward Cyprus and voices raised at international level, political and pragmatic for this embargo to be lifted have yet to yield a result. Obviously, the lifting of this ban would have a very positive effect and trade would subsequently increase,” she says.

Gina Panayiotou, global

head of shipping and energy at local law firm, Michael Kyprianou & Co, says additional steps to strengthen the island’s attractiveness should include the provision of even greater incentives, as well as reformed and simplified, user-friendly legislation and digitalisation of procedures, all of which are already high on the list of the government’s agenda.

A good example of this is the recent announcement that Cyprus will host an independent, international, scientific and business center of excellence in marine and maritime activities, the Cyprus Marine and Maritime Institute (CMMI), driven by the needs of industry and society.

Like Panayiotou, Captain E H Adami, the head of Mastermind Shipmanagement, thinks Cyprus can drive home its advantages by investing more focused resources into research and development projects.

Much of these suggestions will be under the microscope in early October as the republic gets its annual maritime week underway. ●

35

Listen to the sea

Posidonia 1-5 June 2020 Metropolitan Expo, Athens Greece

The International Shipping Exhibition

Organisers: Posidonia Exhibitions SA, e-mail: posidonia@posidonia-events.com

www.posidonia-events.com

CYPRUS SHIPPING IN PROFILE CHAMBER

Landmark year An interview with Philippos Philis, president of the Cyprus Shipping Chamber

P

hilippos Philis, the founder of local shipowner and manager Lemissoler, was appointed president of the influential Cyprus Shipping Chamber in May 2019, a year the body celebrated its 30th anniversary.

“This was a landmark year for the chamber as it celebrated 30 years of successful operation in promoting and safeguarding the interests of its member companies both locally and internationally,” Philis says.

The chamber started out with 17 founder members in 1989, bringing the local shipping industry under one association in order to speak as one voice.It has since grown to become one of Europe’s most powerful shipping lobbies.

“With over 200 shipping and shipping related companies, Cyprus is considered one of the top global hubs for shipowning and shipmanagement services and is the largest third-party shipmanagement centre in Europe, while the country’s international ship register is the third largest in Europe and one of the largest in the world,” Philis says.

Like others interviewed for this Cyprus report on the previous pages the Lemissoler boss identifies solving the political Turkish wrangle as vital for the continued growth of the island’s maritime fortunes.

“The longstanding challenge that

“

With over 200 shipping and shipping related companies, Cyprus is considered one of the top global hubs for shipowning and shipmanagement

”

ISSUE THREE 2019

the shipping industry faces and the government is expected to manage is the issue of lifting the Turkish embargo on Cyprus ships, which will make a substantial contribution to the further increase of the Cyprus Registry and the development of the Cyprus ports,” Philis says, going on to add: “It is therefore imperative for the Cyprus state to follow a multiple-level campaign both at the EU and internationally for the imposition of maximum pressure on Turkey to immediately lift this illegal trade restriction.”

The other big area the Cypriot shipping leader is keen to focus on during his tenure at the chamber is maritime education. The chamber has been emphasising for a number of years, via various campaigns and initiatives, the importance and the need to educate young people who have

a keen interest in professions linked with the maritime sector, as well as the need to urgently recognise that modern maritime education is the key to stabilise and grow the shipping industry and be able to maintain its pace of progress and expansion. ●

“The stigma attached with mental health causes many colleagues to be averse to talk about the challenges they are facing” — Manish Singh, an investor in seafarer wellness app, Tlero

37

WINE

Summer is dead, long live the autumn The season of mists and mellow fruitfulness is on the way and not before time, writes Neville Smith

T

here are those among us, not including our esteemed editor, for whom summer is not the best of seasons. While he is wild swimming in crystal mountain streams, others of us are mapping our lives by distance to the next aircon.

And clearly this summer has been hot pretty much everywhere we expected and some places that we didn’t but finally, the heat is falling away and the wine lover emerges like a sleepy mole, blinking into the soft light and looking forward to the seasons to come.

Wine suits the kind of weather that still allows you drink a cocktail and then move onto something serious while you eat. Summer

Two (more) to try FOR YEAR’S END, consider Little Tacker GSM Barossa Boy 2016, South Australia (£19.95, Corney & Barrow).

There’s a great backstory to how this Rhone blend came to be, but the front story is it’s a very smart and appealing bottle of wine.

38

barbecues and salads are fine for quaffing in volume but it’s hard to get into anything interesting with one eye on the braai.

It’s also a time that is a bit more for wine lovers than collectors.

Granted there is no end to the torrent of offers assailing the inbox from an increasing number of brokers and vintners but buying now is less about what you might miss en primeur and what you have time to enjoy á maison, now that the kids are back at school.

I put this to the test, the other week, ordering a mixed case of gems and oddities. I sourced white Ribeira Sacra, a white Assyrtiko from Crete a red Xinomavro/Mandilaria blend from Greece, a South African While the light lingers, try Pinot Blanc, Les Jardins, Domaine André Ostertag 2017, Alsace (£19.50 Berry Bros & Rudd). It has all the hallmarks of a classic ‘nu-wine’; funky label, biodynamic viticulture, lees-aged and rule-breakingly oak-aged for persistent apple-driven depth. ●

Chenin Blanc, a red and a white from Tenerife, together with a white Burgundy and a Savignan from Jura.

I’m more than half way through it and haven’t hit a duff bottle yet.

The point is not that you should follow fashion, though I do admit to being a bit of a wineslut, but that only the presence of a few old friends is needed when you are making new wine experiences.

Granted, there are two bottles of good Provence rose in the bottom of the fridge that probably won’t be drunk this year but them’s the breaks. This is the time to snag a few bottles that can be safely tucked away to calm down for Christmas and even the New Year when Hygge is in short supply.

Before we get too modish, here’s a classic ‘new breed’ Aussie drop, Beginning Chardonnay The Lane 2017, South Australia (£20.95, Corney & Barrow) which – praise indeed – feels very French, such is its restraint and balance.

Cabernet Franc’s spiritual home is the Loire and Chinon Rouge, Domaine de la Semellerie, 2017, Loire Valley (£12.25, Berry Bros & Rudd) is to my mind, a properly classic example, blending dark red fruit and spice with pretty firm tannins. ● maritime ceo

GADGETS

Cycle vision

N

owadays many drivers have dash cams and rear cams too, for insurance and legal purposes. Cyclists are very much at risk of getting hit, but sadly don’t have the locks to prevent people stealing a dash cam.

Enter Cyclevision with their Edge Helmet, which has two cameras mounted front and rear to capture any accidents or just the fun of a ride. The cameras are water resistant, wide angle lensed 1080p and record up to four hours on a MicroSD card. You can also connect through wifi and view it live — so you could at a pinch use your smartphone as a rearview mirror.

Cyclevision EDGE Helmet $310 cyclevision.com.au/products/cyclevision-edge-helmet

Harder disk

M

any of us have external drives these days to expand older smaller hard disks, to back up or to keep everything in one place but mobile.

But what if you forget that disk? Your files are at the mercy of whoever picks it up. Software encryption is an option, but it slows down read/ write speeds and usually requires a proprietary single OS file system. The Apricorn Aegis Fortress L3 range has you covered: it’s hardware encrypted using 256-Bit AES XTS Encryption, USB 3.2 or lower with USB A or C connectors and is encrypted by a keypad on the front of the disk (a handy deterrent too). HDD or SSD versions are available from 500GB to 5TB in HDD and 512 up to 16TB in SSD. Aegis Fortress L3 Portable Drive $239–$9,999 https://www.apricorn.com/portable-hdd/aegis-fortress-l3

The ultimate home entertainment system

I

t may not be a shark, but it does have laser beams attached to its head.

The Lasercube is an amazing piece of kit. It can do outrageous light shows that react to music, become a musical instrument, engrave your name into an apple. You can play video games on your wall or you can simply content yourself with setting fire to the curtains. In short, it’s everything we’ve ever wanted in a home entertainment system: pretty flashing lights, music, gaming and a frisson of danger. It even runs on batteries, so you can take this anywhere. In the immortal words of Philip J. Fry: “Shut up and take my money.”

Lasercube $500-$600 https://www.laseros.com

ISSUE THREE 2019

39

REGULAR BOOKS

Reading the trade war Two leaders promising to make their countries great again are finding it difficult to step back, writes Paul French

P

resident Trump’s trade war with China started in 2018 and already there are any number of people trying to make sense of it – both from the globalist and the protectionist position. A prolonged trade war has sustained negative effects for the global economy, numerous countries and their national economies as well as many in the shipping and logistics industry.

If you’re mystified on why PresidentTrump started this battle with China, or what it really means, then Michelle Klieger, the president of Stratagerm Consulting, has written a very useful book, The Demise of Free Trade: The U.S.-China Trade War Explained. This book explains how tariffs work and their impact on the economy in plain English with easy-tofollow examples. It includes a summary of the tariff and non-tariff actions taken by both sides up until now and it analyses cultural, economic, and political reasons why the two sides have not reached an agreement yet. Finally, an appendix includes a useful case study that brings all of these ideas together showing the complexity and danger of

40

the current situation.

The Hong Kong economics professor Lawrence J. Lau argues that a major cause of the trade war is the growing battle between China and the US for global economic and technological dominance. Lau argues in his book The China-US Trade War and Future Economic Relations: “It is also a reflection of the rise of populism, isolationism, nationalism and protectionism almost everywhere in the world, including in the US.” Lau explains what he terms the “Thucydides Trap”: the idea that, since a rising power will challenge the dominance of an established one, a China-US trade war will be inevitable. Being the largest and the second largest trading nations globally, the US and China are in fact each other’s most important trading partners, among many aspects of their complex interrelationships.

The director of Harvard University’s Belfer Center for Science and

“

International Affairs, Graham Allison also looks at the notion of the trade war though the lens of the ‘Thucydides Trap’ in Destined for War: Can America and China Escape Thucydides’s Trap?.

Allison argues that, today, as China approaches an immovable America, and both Xi Jinping and Donald Trump are promising to make their countries “great again”, they both then have problems with backing down in any disputes. A trade conflict along with the possibilities of cyber attack, a crisis on the Korean peninsula, or an accident at sea could easily spark a major war, argues Allison.

Global fund manager and author of several books on the art of investing, Tony Pow, in his short book Trade War with China sees Trump’s trade war with China as linked to other battles with the EU, Japan and Mexico too. Pow also sees a consequence of the trade war as being a closer alliance between China and Russia. ●

Thucydides Trap: a rising power will challenge the dominance of an established one

”

maritime ceo

TRAVEL

The lure of Limassol Few shipping cities in Europe make for such an enjoyable stay as this Cypriot enclave

L

imassol lies on the south coast of Cyprus, midway between the airports of Larnaca and Paphos, and is the island’s second largest city after capital Nicosia. For shipping folk it holds the additional distinction of being the world’s largest third-party shipmanagement centre.

While Nicosia’s main tourist attraction is arguably the UN-patrolled ‘green line’ buffer zone with Turkishcontrolled northern Cyprus, Limassol offers the discerning business traveller a more laid-back opportunity to combine a spot of R&R with back-to-back shipping meetings all within an easy 10-minute taxi ride of each other.

Accommodation is reasonably priced, luxurious and plentiful at a whole line of hotels stretching out several kilometres to the east of the city, typically offering sea-view rooms, outdoor pools, indoor spa/gyms and private beaches.

Here business travellers happily rub shoulders with discreet tourist families, mostly from former colonial overlord the UK or Russians for whom Cyprus offers the novelty - among EU countries at least - of visa-free entry.

One welcome result of the Russian influence is no shortage of visiting ballet troupes and classical orchestras,

ISSUE THREE 2019

some holding performances in the spectacular open-air Curium, a Roman-built stone amphitheatre on cliffs overlooking the sea nearby the Bay of Aphrodite - where the mythical Greek goddess of love and beauty is meant to have been born, a sure sign of the natural attractions of the place.

Lulled by the island’s lotus-eating ambience, some shipping company incomers have diversified into the leisure sector themselves. Prime example is Columbia, which now has a city-centre mall (Columbia Plaza), pool bar and restaurant (Columbia Beach) and nearby beach resort in Pissouri village, as well as manages the popular Londa boutique hotel.

Over the past few years Limassol has seen a surge in new developments, with new office and residential towers springing up; at the same time the surrounding hills are now overlaid with residential developments targeted at rich overseas buyers, mostly Russian or Asian, who for the price of a private villa get an EU passport thrown in for free.

But those of more limited means can still spend a very enjoyable few days on the island, mingling a spot of business with soaking up the sun, sea and plentiful quantities of fresh fish and seafood at quiet restaurant tables overlooking

the sea.

Particularly recommended would be the La Isla Beach Bar, which provides a contemporary twist on the island’s traditional fish mezze with sharing platters stacked high with calamari, octopus, mussels and prawns, all set amid a fashionable décor of driftwood furniture and statement lighting displays.

Another success story has been the redevelopment of the old harbour site into the new Limassol Marina, where luxury condos with superyacht moorings jostle side-by-side with popular bars and eateries. Shipping types tend to gravitate to the Epsilon bar - which must serve the best cocktails in town and is home to social group the Cyprus Marine Club - and the Pixida fish restaurant just opposite.

More sporting types can enjoy the host of water sports and sailing activities that Limassol has on offer, or even head inland to the Troodos mountains for a spot of gentle skiing during winter months.

In short, Limassol offers a kind of ‘Athens lite’ experience - a high concentration of shipping activity set against a distinctly Greek backdrop…but without all the big-city aggro and with a small helping of affordable luxury on the side. ●

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OPINION

‘Constant change is the new normal’ Our sector has long held a mindset that change happens in slow intervals over long periods of time. That’s no longer the case writes Castrol’s Kamuran Yazganoglu

O

ften hard to define but generally seen as a marker of positive progress, ‘change’ in shipping has dominated the headlines in recent years. Innovation seems ceaseless, with the industry on the cusp of realising the exciting benefits of digitalisation, operational efficiency and sustainability.

Change is everywhere, as it impacts everything from procurement planning to the technical detail of engine room operations.

One very tangible example of change is the 2020 sulphur cap, which is forcing a period of transformative operational shifts.

Impending measures on NOX and eventually carbon, combined with the ongoing innovative spirit taking root at the heart of the industry, are all combining to create a complex landscape for the sector.

Change can have benefits. If appropriately navigated, we may well be moving towards that more efficient, more connected and more sustainable sector that we all strive for. Given the sheer level of transformation at play, it is vital that shipping comes to terms with what promises to be a ‘new normal’ for

42

how we do business.

Key to this is understanding that regulatory, technological or operational change can ripple across an organisation and its operations for months, even years. Choices being made today in an office may raise issues with fuel compatibility, including cat fines and contaminants which may not rear their heads until a year from now at sea. Take the sulphur cap for instance, we need to remember that January 1 2020 is when issues around compliance start, rather than end.

For 2020, we must refocus on the full ramifications of choosing any given compliance option – including what it means for crews, the longterm health of assets and overall profitability.

However, more broadly, we must take responsibility as a sector and acknowledge that constant change is the new normal, for at least the foreseeable future. How can we meet the challenges of digitalisation

“

and decarbonisation in a way that maintains operational integrity and maximises profitability?

It is imperative that we come together and answer this question.

We must take a more collaborative approach, adopting an agile and adaptable mindset, and embrace change, no matter how small that change may be. Marginal efficiency gains are there to be realised everywhere, so we must take them onboard as we navigate the uncertainty. This strategy has worked in other industries, such as the automotive sector, when they were faced with their own major regulatory change.

Fundamentally, now more than ever, the next few years will call for an industry that is correctly tooled up to make the most of the change that is afoot. Our sector has long held a mindset that change happens in slow intervals over long periods of time. With the sulphur cap, and beyond, the reality is now vastly different. ●

Marginal efficiency gains are there to be realised everywhere

”

maritime ceo

REGULAR OPINION

Isn’t it time for better conferences?

Marcus Magee, managing director of new agency Uncommon Conferences, sets out a challenge today to shake up the staid shipping calendar

W

hen was the last time you went to a maritime or energy conference and thought: “Wow, that was a fantastic use of my time!”? Judging by the survey overleaf it would appear to be depressingly rare.

Sadly, the reality is that business conferences these days, and not just in our industry, simply have not kept up their end of the bargain. As attendees we continue to pay thousands, fly hundreds of miles, hole up in below-average hotel rooms only to suffer through hours of PowerPoint sales pitches and awkward networking breaks. Let’s not start on the hopeful sponsors and the amount of time, effort and dollars they plough into these supposedly lucrative activities.

According to Wake Media, there are roughly 1,700 conferences, exhibitions and events every year, globally, that the maritime industry can choose from. Where would you even begin to start the process of filtering?

Our quick survey of sales and marketing departments across a range of shipping companies revealed the following typical responses: “We simply must be there, or the market will think we’re going under.”

“It’s to see and be seen.”

“Our competitors are going to be there!”

“How else will we get our message across?”

“It’s not all about digital. This industry is still very much about relationships and relationship-building.”

It is within these responses we can find the solutions for making

ISSUE THREE 2019

conferences better. If these are the true objectives of those who need conferences, then it’s no wonder we often leave feeling underwhelmed and disappointed.

Most conferences organisers (understandably) slip into complacency quicker than you can say ‘early-bird discount’ and the process of putting together next year’s conference is less about fulfilling customer needs and more about re-signing sponsors as quickly as possible. We get it, everyone’s here to make a buck and that’s fair. What’s not fair is rolling out the same (literally and metaphorically) tired speakers, agenda, tirade of unvetted PPTs and yesterday’s muffins.

Wouldn’t this be more rewarding and enjoyable for everyone involved if we always start over and more importantly start with why?

Let’s re-visit the reasons companies invest in conferences and our take on what they’re actually looking for: PROFILE: “We simply must be there, or the market will think we’re going under.”

PROFILE: “It’s to see and be seen.”

PROFILE: “Our competitors are going to be there!”

EDUCATION: “How else will we get our message across?”

CONNECTIONS: “It’s not all about digital. This industry is still very much about relationships and relationship-building” If we simplify (and yes, it’s bordering on over-simplification, but that’s not always a bad thing) it’s about profile, education and connections. So how can conferences deliver

these without putting everyone to sleep – or have them trawl the internet on their phones for hours while they’re there?

For every company that’s on the speaker or sponsor list, there’s another 10 that haven’t been considered or approached. We need to bring rigorous research back into conferences. No more recycling. This will ensure a fresh and ever-growing list of companies that can profile themselves and benefit from the profiling of others. Check that your speaker list represents a diverse range of experience, backgrounds and viewpoints.

Learning can and should be an interactive and enjoyable affair.

Putting the best minds of the industry in the same room should result in ‘A-ha moments’ and collaborative efforts that continue far beyond the realm of the conference room (which as a default should have access to natural light, by the way). Most importantly, true learning comes from immediately applying a new idea, even if it’s just conceptually, rather than passively listening.

With the wealth of behavioural science that is available today at the click of a mouse, it should be easy to come up with new and innovative ways for your participants to engage, interact and form meaningful relationships. Offering a free flow of (house) wine and (watered-down) beer at the end of the day maketh not for an effective networking affair.

Last but not least, we need not rely on the existing choices available to us. We can and should challenge the status quo. It’s time for better conferences. ●

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MARPOLL REGULAR

You decide

Something clearly sparked your thoughts with our latest survey with record numbers nudging 1,000 voting. Results and key comments below With increasing rates across many sectors, is ship finance becoming more readily available?

New ship orders hit decade lows in Q2. How to explain this?

“ Yes

34%

No

66%

While it seems more ubiquitous, it is definitely not as accessible as is made out to be. This is especially true for smaller players and startups

”

“

In reality a combination of all three, but mostly finance

”

Lack of available finance 7% Concerns over unclear regulatory/environmental framework 37% Markets not solid enough 56%

Has Chinese leasing peaked?

“

Is shipping worse than other industries in attracting and retaining millennials?

“

Chinese leasing is the new subprime of shipping

Shipping is still in the majority controlled by old men with a traditional mindset

”

Yes 52% No 48%

Yes 74% No 26%

Is it inevitable that soon all ship emissions data will be made available to the public?

What’s the best five-year-old ship investment today?

“ Yes 72%

“ ”

There should be more transparency to further drive the industry faster towards implementing clean fuel solutions

MRs are hot with 2020 in mind

”

No 28%

Capesize 23%

“ 44

Feeder boxship 31%

MR tanker 46%

The 11 banks behind the Poseidon Principles, who have vowed to take climate considerations into ship lending decisions, greenwashing or a game changer?

Long on hope, short on detail

”

”

When was the last time you went to a maritime conference and thought: “Wow, that was a fantastic use of my time!”?

“

Auto-mute a speaker’s microphone after 30 seconds to prevent tedious soliloquies

”

This year 18%

This decade 14%

Greenwashing 74%

Last year 8%

Never 51%

Game changer 26%

Two years ago 9%

maritime ceo

SAFER VESSELS CLEANER SEAS STEERING A PATH TOWARDS A SAFER AND CLEANER MARITIME ENVIRONMENT RIGHTSHIP.COM