Maritime CEO Issue Three 2020

ISSUE THREE 2020

The green blockchain pitch

BY

Vogemann and the art of capital raising in 2020

MANIFEST

3 At The Prow

Profiles

Economy

23 Cover Story Vogemann 25 2020 Bulkers 27 BULL 29 Asian Bulk Logistics 30 Torm 33 G2 Ocean 35 Gestion Maritime 37 Erasmus Shipinvest

4 US 5 EU 6 China 8 India 9 Brazil

Markets 11 Dry Bulk 13 Tankers 15 Containers 17 Finance

Recreation 38 Travel 40 Books 41 Gadgets

Executive Debate

Opinion

18 Just what is decarbonisation?

42 Charlie Du Cane 43 Andrew Craig-Bennett 44 MarPoll

38

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 New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully Shanghai: Colin Quek Singapore: Grant Rowles Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel Editorial material should be sent to sam@asiashippingmedia.com or mailed to 24 Route de Fuilla, Sahorre, 66360, France Commercial Director: Grant Rowles grant@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to 30 Cecil Street, #19-08 Prudential Tower Singapore 049712 Design: Mixa Liu Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2020’s four issues of Maritime ceo magazine.

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Copyright © Asia Shipping Media (ASM) 2020 www.asiashippingmedia.com

ISSUE THREE 2020

Efficiency and transparency

S

hipping could do with more far-sighted lobbyists. When it comes to the environment and the avalanche of regulations coming maritime’s way, those favouring the slow machinations of the International Maritime Organization (IMO), ie shipowners led by the International Chamber of Shipping (ICS), have been sideswiped in recent days by quicker witted other tranches of industry coming up with their own suggestions for how shipping ought to push ahead with cutting its carbon footprint.

There’s been plenty of calls for a carbon levy, which commodities giant Trafigura has said ought to be pegged at up to $300 a tonne, more than10 times higher than the ICS has proposed for its own touted decarbonisation R&D fund. Then there’s been the European Parliament diving ahead with plans to include shipping in the bloc’s carbon trading scheme within a couple of years.

Perhaps most amusing for those in the know has been the ICS’s reaction to the brand new Sea Cargo Charter, a global framework that allows for the integration of climate considerations into chartering decisions to favour climate-aligned maritime transport.

Founding signatories of the charter include big names such as Anglo American, ADM, Bunge, Cargill Ocean Transportation, COFCO International, Dow, Equinor, Gunvor Group, Klaveness Combination Carriers, Louis Dreyfus Company, Norden, Occidental, Shell, Torvald Klaveness, and Trafigura.

The move sees charterers leapfrog regulators and the shipping industry itself in terms of detailing how emissions reporting will be carried out.

Wincing at the prospect, Guy Platten, the ICS secretary-general, argued on the day the charter was launched to much fanfare that due process at the IMO ought to have been carried out rather than charterers pressing ahead with their own greenhouse gas (GHG) reporting schemes.

“The initiative has some interesting ideas but we believe that it would have a better chance of success if it was to be aligned with the reporting requirements set out by governments and even the Poseidon Principles, to be agreed at the IMO following significant consultation and review, to ensure that the reporting requirements are as efficient as possible,” Platten said.

When Platten says emissions reporting standards should be agreed at the IMO, so as to make them more “efficient”, it’s important to bring readers up to speed with the backstory on this.

Many countries and NGOs pushed for including actual cargo carried in the IMO’s Data Collection System (DCS), to enable calculating EEOI (gCO2/cargo t-nm), but the industry led by ICS fought against it, not liking such transparency.

So now we only have enough information in the DCS to calculate fleet annual emissions rates (AER), as measured by gCO2/dwt-nm.

However, now shipowners are wising up that AER is harder to accomplish, so ICS’s own backlash against transparent emissions reporting requirements is biting it in the proverbials.

If ICS et al had just gone down the more transparent route five years ago, there would have been no need for charterers to sidestep the IMO/ICS club and set up their own scheme. ●

3

ECONOMY US

Fevered promises Election time during a pandemic makes for heightened economic tension

G

iven the almost universally agreed opinion that the United States has not managed to get a grip on the coronavirus pandemic it is no surprise that the national economy is seriously tanking. The US economy contracted at a 32.9% annual rate from April through June, its worst drop on record. And things are not likely to improve any time soon given the lingering lack of action in many states. So America is now officially in recession for the first time in 11 years and any economic gains in the last five years - many of which were questionable, though some were real - have been wiped out. It is important however to note USA Jobs Crisis: Weekly New Unemployment Claims April-May 2020 Date weekly

new claimants (million)

April week 1

3.3

April week 2

6.8

April week 3

6.6

April week 4

5.2

May week 1

4.4

May week 2

3.8

May week 3

3.2

May week 4

2.9

Source: US Bureau of Labour Statistics

4

that January to March 2020 was not a good time for the US economy either with GDP set to contract anyway, though obviously the Covid-19 crisis has accentuated this situation significantly.

Most importantly perhaps is the sudden and vast unemployment problem that has hit America – 20m jobs disappeared in the US in April alone. Naturally there has been a significant rise in applications for welfare payments. The unemployment rate is likely to hit 10.3% or slightly higher shortly. Of course sectors such as hospitality, tourism and retail have all been hit hard by lockdowns, stay-at-home orders and nervous consumers generally travelling and spending far less. Retail alone contracted by a record 34.6% annualised rate in the spring while spending on services nosedived at a 43.5% annual pace. Some sectors remained robust – auto sales, for instance – though household spending dropped by 11.3% on average.

Despite the Covid crisis President Trump has continued his trade arguments with just about everyone. The US has reimposed 10% tariffs on Canadian aluminium while the administration’s relations with China on everything from autos to social media apps have deteriorated

to the lowest level since Maoism.

It is also important to note the importance of the state of the US economy to the global economy. For instance, Japan’s exports continued their double-digit slump into a fifth month in July as the coronavirus pandemic took a heavy toll on auto shipments to the United States, dashing hopes for a trade-led recovery from the deep recession.

Similar problems have been seen in other Asian economies – South Korea, Singapore etc, as well as in the European Union and UK. And so now we enter the unique situation of a major health emergency in a time of economic recession while the US goes into the heightened frenzy of its elections in November. Trump’s opponent Joe Biden says his top priority is a massive $3.5trn infrastructure, manufacturing, and clean-energy programme paid for by raising the corporate tax rate from 21% to 28% and increasing taxes on large real-estate investors. The bigger question perhaps is what Trump has to offer to get re-elected? The economic legacy the Republicans inherited now appears squandered and then smashed by coronavirus. However, Trump’s economic approval rating continues to hover near 50%. ● maritime ceo

ECONOMY EUROPE

Taking a hit The continent has varied massively in terms of the economic impact from Covid-19

T

wo major things have come out of the Covid-19 experience in Europe – firstly, Europe (especially the UK, Italy and Spain) got hit harder than they expected. Secondly, the EU has seemingly had absolutely no co-ordinated response to the pandemic either in its exterior diplomacy (NB: issues with China) or internally (NB: each country pursuing its own path from French total lockdowns to Swedish herd immunity). At the same time the politics of the union have opened wide and now range from the hard line authoritarianism of Hungary to the laissez faire approach of northern Europe. Additionally, early calls that the economic fall out costs of the pandemic across Europe would be shared equally out of the EU budget got (unsurprisingly) a lot of support in Madrid and Rome and luke warm responses in Paris and Berlin.

Meanwhile, the UK is now effectively out of the bloc and has stated that pandemic or no pandemic it does not wish to extend the Halloween 2020 deadline for a formal withdrawal Intra-European Trade (ex-UK), 2019 Country

% combined imp/ex intra

Germany

23

Netherlands

14

France

9

Belgium

8

Italy

8

Spain

6

Poland

6

Other EU states

27

Source: Eurostat

ISSUE THREE 2020

deal or no deal. Clearly Europe is now in recession – Brexit may give it a double dip and simply add to the overall costs. One could fairly ask the question of where the union in European Union is right now.

The biggest problem for a bloc as opposed to a single nation is uneven recovery. Paolo Gentiloni, a former Italian prime minister and now the EU’s economy commissioner, has stressed this hard recently. The overall EU economy (minus the UK) is expected to shrink by 7.5% in 2020-2021 – a harder crash than the 2008-2009 recession.

However, some member countries – Greece (low Covid infection rate but already essentially an economic basket case), Italy, Spain and Croatia particularly – face falls in economic output (GDP) in excess of 9% in 2020, while nations such as Germany and Austria are looking more at contractions of approximately 5 to 6%.

Even if Brussels can unite and agree a bloc-wide recovery package it is unclear what will be the relationship between loans and grants.

Unsurprisingly those member

nations keener on state roles in their economies, such as France, Spain and Italy are seeking some financial transfers, while those nations more inclined to keep government out of economies, such as Germany, the Netherlands and other northern countries prefer to give support through loans.

“

The EU economy will decline by 8.3% over the whole of 2020

”

Across the Channel London, already in a pre-Brexit slow down and now with the highest death rate from Covid-19 in Europe, is faced with an economic contraction of 8.3% in 2020. However, clearly a failure to reach an agreement with the EU on a smoother, more orderly Brexit, would further dampen economic growth and may push it south of a 10% dip in 2021. Downing Street has ruled out any extensions to the talks; Gentiloni, for the EU, has said: “No deal is a lose-lose situation.” ●

5

ECONOMY CHINA

The past is a foreign country The PRC no longer has to rely on inward investment

T

he author LP Hartley once wrote, “The past is a foreign country: they do things differently there.” It’s a phrase that seems to suit China in 2020. The last 20 to 30 years has been characterised by a China that was keen to trade, ‘the world’s factory’, welcoming to investment – protective but basically open.

That is no longer the case. The twin issues of deteriorating US-China relations as well as the coronavirus pandemic have made China appear significantly more inward looking.

Spats with Trump, Huawei issues in Europe and elsewhere, fights with India… China is in an increasingly unfriendly place diplomatically.

However, China was first into the coronavirus epidemic and appears to be the first to exit the pandemic in many ways from reopening cinemas to getting ports up and open again. At time of going to press Covid-19 appears to remain largely under control in China. The PRC’s economy is now entering a V-shaped, post-Covid recovery, led by strong domestic demand. US-China relations remain tense and are likely to worsen as China digs in and America remains in electoral rhetoric to the end of the year. However, the political problems between Washington DC and Beijing, while China: Auto Sales – 2016-2020 Year

Million units

2016

25

2017

26.3

2018

27.2

2019

28.1

2020e

29.0

Source: AutoBook Research E=estimate

6

raucous, appear not to have had any significant impact on China’s economy or its investment environment at the moment.

China is now partly reaping the benefit of successfully having rebalanced its economy from being dependent on inward investment and manufacturing exports to one of domestic consumption. It seems likely that consumer spending will remain softer than usual until the middle of next year at the earliest.

On a relative basis China is likely to remain the world’s best consumer story. Some encouraging top line numbers include auto sales being up 16.4% year-on-year in July with Japanese carmakers doing exceptionally well. Residential property sales also continued their strong recovery.

Indeed, July was the fastest yearon-year growth rate over the last 24 months. Both these numbers would indicate that the wealthy and middle class segments of Chinese urban society at least still feel positive.

The Beijing government is bullish that the Chinese economy can grow this year. Chinese Premier Li Keqiang reported that the economy grew 3.2% year-on-year in the second quarter of the year, despite the severe coronavirus lockdown measures.

China has stepped up stimulus payment but not to the extent seen in 2008.

However, the old problem of China’s rather unreliable and sometimes politically inflated statistics is high at the moment. Xinhua, the state news agency, has claimed that employment rates have remained stable despite Covid-19 and lockdown. Yet, non-state journalists and anecdotal evidence indicates that many SMEs have indeed closed and unemployment has grown significantly which may mean that the government has to up its welfare payments to ensure social stability.

Something it has been reticent to do in the past but may now be unavoidable. ● maritime ceo

ECONOMY INDIA

The end of the rebound Covid-19 has put many things in reverse and it will be tricky to return to the previous growth path

T

he arrival of the Covid-19 pandemic spelt the end of India’s economic rebound. 2019 and early 2020 gains were wiped out in April, when 14 of the 16 macro-economic indicators considered in the government’s macro tracker were in red or below their five-year growth trend. Since the start of measures to fight coronavirus Indian manufacturing has witnessed a 40% drop with an even worse fall in the service sector. The overall Indian economy is expected to contract by 25% in the first quarter of FY21 both in terms of GDP and GVA (Gross Value Added).

The worst hit sectors - manufacturing, construction, and trade, hotels, transport, communication and services related to broadcasting – account for nearly 50% of the total India: Top Import Destination Countries for Machinery, 2020 Country

% of total

Germany

11.9

China

11.4

USA

6.8

Saudi Arabia

5.7

UK

5.5

Source: Indian Trade Statistics

8

Indian economy and all have taken major hits. Similarly, in June 2020, India’s exports lagged their June 2019 numbers by 12%. In July 2020, the gap over July 2019 was 10%.

Then there’s the problems at its borders. After skirmishing on the Sino-Indian border, relations between New Delhi and Beijing have plummeted to an all-time low, or at least since the 1962 Border War. Both sides accuse the other of dumping – notably of fibre optic cable -and have added duties to each other’s products.

Currently India-China bilateral trade is heavily weighted in favour of China.

According to trade figures released by the General Administration of Customs of China (GACC) in mid-January 2020, India’s trade deficit with China was $56.77bn in 2019; bilateral trade amounted to about $92.68bn last year, a 1.6% annual increase.

However, as well as anti-dumping and tariff measures India is also removing Chinese companies such as Huawei from national infrastructure projects. It seems unlikely that SinoIndian relations will be improving anytime soon.

India’s consumer economy – where so many hopes for more sustained economic growth have

ben placed in recent years – has been severely damaged by the Covid-19 pandemic. India’s emerging middle class consumers have cut back on everything from shampoo to car purchases. However, we should remember that India’s consumer spending and retail sales were showing signs of weakness prior to coronavirus.

Finally, there are concerns that coronavirus will lead to India’s environmental gains of recent years being reversed. Just as there are concerns for unchecked exploitation of the Amazon under Bolsonaro in Brazil, India has resurrected plans to clear 420,000 acres of forest in the central Indian state of Chhattisgarh to get at the estimated 5bn tonnes of coal underneath. The coal industry in India is state-owned, but this auction of 40 new coal blocks will see the creation of a privatised, commercial coal sector in India. Despite the United Nations call for ‘green recovery’ postCovid, India appears to be putting putting fossil fuel at the forefront of its strategy to turn the pandemic into economic opportunity. Such is the desperation faced by many poorer and developing countries in the aftermath of the pandemic. ● maritime ceo

ECONOMY BRAZIL

Exports remain robust Despite dire handling of the coronavirus Brazil is still shipping vast volumes of commodities around the world

C

learly Brazil, and in particular President Jair Bolsonaro’s, approach to Covid-19 has been quite radical – if you can consider denial and do nothing radical.

Brazil has registered more than 4m cases of the virus since the pandemic began making it one of the world’s worst coronavirus places. Certainly Brazil’s economy has taken, and continues to take, a massive hammering.

Statistics are harder to come by than usual in Brazil at the moment though a Reuters poll suggests the country’s economy contracted 9.4% during the second quarter, the worst threemonth period ever in recent Brazilian history.

Whether he wants to accept the reality of Covid-19 or not President Bolsonaro’s austerity driven economic policy is now shot full of holes.

Unemployment, business failures, falling tax receipts, companies holding back on capital spending and consumer spending have all combined to ensure a soaring budget deficit stoking concerns not just that the economy will continue to deteriorate but that the country’s Covid Brazil: World’s Biggest Beef Exporters, 2020 Country Beef & Veal metric tons million Brazil

2.5

Australia

1.4

India

1.4

USA

1.4

Argentina

0.7

New Zealand

0.6

Canada

0.6

Source: Brazilian Statistical Bureau

ISSUE THREE 2020

death rate will spiral upwards. All of this has also adversely affected the Brazilian currency which has been in freefall throughout the pandemic.

However, optimists believe that Brazil may have managed to reach the bottom of the Covid-related dip. And while Brazil has had to suffer millions of registered cases of coronavirus and thousands of deaths aggressive fiscal and monetary policies as well as lax quarantine measures have meant that business has continued, albeit in a reduced form. Therefore, there are indications that industrial output and retail sales are outstripping expectations amid the reopening of stores. The Bank of America now suggests Brazil’s gross domestic product may shrink -5.2%, versus its current forecast of -5.7%.

Meanwhile Brazil’s major regional peers, Mexico and Argentina, are forecast to shrink by 9.8% and 12.5%, respectively. Most other Latin American nations have taken very different approach to Covid-19 than Brazil. Lockdowns

were put in place in Chile and Argentina. Both capitals, Santiago and Buenos Aires, tried lifting quarantines in the early days of the pandemic only to enforce them again. Colombia and Peru kept their economies closed through April. And Mexico shuttered its entire construction and manufacturing industries for several months.

It also seems to be the case that, though damaged, Brazil’s exports have remained surprisingly robust throughout the pandemic crisis.

Brazil’s exports actually climbed 91% in volume and 83% in revenue year-on-year in July. According to Brazil’s Ministry of Economy’s Secretariat of Foreign Trade (Secex) the country’s sugar exports nearly doubled year-on-year in July (though average prices dropped somewhat dampening the growth in volume sales overseas). Brazilian wheat production and exports were all significantly up year-on-year. However, there were dips in iron ore exports, though volumes only dipped by just 0.69% year-on-year in July. ●

9

MARKETS DRY BULK

Chinese coal imports to rebound Jeffrey Landsberg from Commodore Research is seeing more positive signs from the People’s Republic

E

arly this year there was talk of the Chinese government desiring to have 2020’s coal import volume be capped at 2017’s total. Imports in 2017 totalled 271.3m tons, while last year they totalled 299.6m tons.

Often the Chinese government’s targets and predictions do not come to fruition, but if China’s coal imports were to total 271.3m tons this year, this would equate to a year-on-year decline of 28.3m (-10%). At present, there remains talk of capping coal imports at 2017’s 271.3m total, but we are also hearing from our sources in China that coal imports could easily be allowed to climb to as high as 300m tons.

Overall, we believe it is much more likely that Chinese coal imports will be allowed to climb to at least 300m tons as power plant and port stockpiles remain below 2019 levels, coal-derived electricity generation growth has been exceeding domestic coal production growth, and as

ISSUE THREE 2020

coal import quotas have already been increased in some northern provinces.

Going forward, we believe it is extremely likely that China’s coal imports will total much more than 271.3m tons this year. The first eight months of this year have seen Chinese coal imports total 220.9m tons, and a 2020 cap of 271.3mn tons would see imports in the final four months of the year total only 50.4m tons. This would equate to a monthly average of only 12.6m tons, while imports during the first eight months of this year averaged 27.6mtons. Already there is concern of winter coal shortages, and this is a significant factor behind our bullishness for coal imports. Power plant coal stockpiles are low and much more coal is needed to be stocked ahead of the winter. China’s power plant coal stockpiles have recently fallen to a level that is only able to meet 17 days of demand, which marks a low not seen since

January. Coal port stockpiles also remain below last year’s level.

Overall, an increase in Chinese coal imports would be very supportive to the dry bulk market. China’s iron ore import prospects for Q4 also remain very encouraging to us (and we remain particularly bullish for Brazilian iron ore exports prospects).

Also encouraging for the longer term is that it was recently reported that China will be building up its reserves of commodities as part of its next five-year plan in 2021 - 2025. We expect that this will include grain, iron ore, and coal. Already grain purchases have been surging in recent months and we do not expect that this will end anytime soon. We expect that China’s demand for coal imports will also rebound soon, and that both iron ore import demand and grain import demand will remain strong. China has remained a bright spot for the dry bulk market in recent months, and we anticipate that overall Chinese import demand will continue to be a significant driver of dry bulk strength. ●

11

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MARKETS TANKERS

Geopolitics or market fundamentals?

What’s really driving tankers to such extremes? BIMCO’s Peter Sand thinks he has the answer

T

o say that this year has been unpredictable would be an understatement, but the fact that for much of 2020 freight rates have taken little to no notice of the poor market fundamentals leads one to question whether or not fundamentals are still relevant and important to understanding the tanker shipping market.

The past 12 months have shown just how important geopolitics are for the tanker shipping market.

Twice freight rates have been sent soaring on the back of changes, not of changes to the fundamental market balance, but rather due to political posturing. On the whole from 1 September 2019 to 31 August 2020, average earnings for a VLCC stand at $70,000 per day, with noticeable peaks at$307,888 per day on October 11 2019 and$279,259 per day on March 13 this year.

Though October 2019 to many now feels like an eternity away, tanker owners are unlikely to have

ISSUE THREE 2020

forgotten the spike that was brought to freight markets by amongst other things US sanctions on certain shipping companies and tankers, as well as the high tensions in the Middle East at the time. Though the world was in a different situation in March 2020, it was once again political decisions that led to the second spike in tanker freight rates, as the oil price war broke out after the expanded OPEC+ alliance was unable to reach an agreement on supply cuts, leading to demand for oil and therefore tanker shipping being brought forward.

So, is the fundamental market balance still important? At BIMCO we believe it is. While geopolitics will continue to play an important factor, the fundamentals will kick in between these flare-ups, which will certainly still occur, but less frequently and likely having a more limited effect than the two we have seen in the past 13 months.

This could already be seen in early

September when freight rates for a VLCC fell to $6,103 per day, as the lower demand sets it.

BIMCO expects the freight market to remain challenging for the tanker shipping industry for the next 12 to 15 months, as demand will only return to pre-pandemic levels slowly.

In its latest report, the EIA estimates that global oil demand in 2021 will remain 1.8m barrels per day lower than in 2019. The oil price war also brought a lot of oil demand forward, bunching it up in the second quarter of the year, and leaving lower levels left for the rest of the year, as stocks built up then are now being drawn on.

These expectations are based on the fundamentals in the market, a fall in demand while the fleet continues to grow (as of 1 September +2-5% for the crude oil tanker fleet and +2.1% for the oil product tanker fleet), means freight rates will fall.

Could geopolitics once again swoop in and lift rates? Probably, but it is unlikely to have as dominating a role as it has in the past year. The world is in a different situation and with the US election in November we may once again see geopolitics return to the shadows where it has less of an effect on oil tanker shipping. â—?

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MARKETS CONTAINERS

Should regulators intervene?

Lars Jensen from Sea-Intelligence Consulting ponders whether liners have colluded to create today’s high freight rate environment

S

eptember saw Chinese regulators enter into the arena regarding carriers’ pricing and capacity management. Presently it is not yet fully clear exactly what the meeting between the carriers and regulators will result in, as there are apparently (at the time of writing this) not any specific written guidelines in place, and such may not be forthcoming either. Instead it appears to be a somewhat softer pressure to curb the seven-week string of record freight rates on the tTranspacific trade and introduce some guidelines on blank sailings.

What this will eventually amount to remains to be seen.

But it raises another, different, question: Should or will regulators intervene?

Let us first deal with perceptions. If you are a shipper, you will have been through a period of significant disruption of your supply chain. First in the form of a raft of blank sailings with limited advance warning. Then in the form of rapidly rising (spot) rates as well as rolled cargo. Not to mention the usual issue of quite low schedule reliability. On top of that you are seeing carriers publish quarterly results indicating

ISSUE THREE 2020

that 2020 stands to be much more profitable than 2019 despite the pandemic impact.

Add to this knowledge that the strength during the pandemic downturn stems from the carriers’ ability to manage capacity effectively – and that this position has been obtained through industry consolidation.

From some shippers’ perspective this looks very much like consolidation has led to collusion and price gouging. This is also why we should expect more regulatory bodies to step in and take a closer look – because appearances look like they warrant it.

However, should we expect this development to actually be foul play and hence warrant an intervention?

And what will be the consequence?

Intervention into pricing, and especially regulation related to advance notice and filing of rates, go against the digital development in the industry of instant and transparent pricing – it would serve to decouple rate formation from the actual market status rather than make the two more closely linked.

And as a consequence would pull the market more in the direction of the old ways of handling pricing rather than proceed with the new digital tools.

Should we expect to see carriers be investigated for potential collusion? This might well happen, simply because of the combination of rapid price hikes and the industry’s past history. However, we need to keep in mind that seen from the outside it cannot easily be discerned whether the increases are due to foul play or whether they are the result of each carrier making perfectly rational decisions. After all, if demand is

expected to drop it is perfectly rational to decide to cancel sailings.

If demand then increases faster than anyone expected, it is perfectly rational to increase prices as space is at a premium. Proving collusion would therefore require the ability to show carriers across alliances planned the current scenario – and whilst nothing is ever impossible, it would appear far more likely that the present situation is due to rational decisions by each individual carrier rather than from collusion.

This is a topic which is likely to continue to shape debate in the industry for a while to come and there are multiple additional nuances to the discussion which cannot be kept in the limited space of this text, however seen from an observer who is neither a shipper nor a carrier, it would seem that further regulatory scrutiny might well happen – but also that such scrutiny is unlikely to uncover foul play. Also, that if the current situation leads to regulatory intervention related to price formation or capacity management this could be seen to stabilise the markets right now, but is more likely to also make the markets more volatile in the long run as well as slow down elements of the digital transformation of the industry. ●

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MARKETS FINANCE

Shunned from on high Big banks will jettison shipping as they try to protect their depleted balance sheets post-Covid. That’s a shame, argues Dagfinn Lunde, as canny shipowners have been making tidy profits of late

F

or all the talk that shipping will escape 2020 as one of very few industries to have had an improved year financially, do not expect banks to fall back in love with our industry any time soon - they’re scarred from previous exposure to shipping and have far greater debt concerns to worry about.

As we go to print shipping looks set to be on course for improved average earnings by as much as 25% year-on-year, a tremendous achievement, but one that will receive scant attention from the biggest names in banking.

Ship finance post-Covid will start by an enormous reduction among banks because they are incurring losses in their overall businesses.

Shipping is a small industry that banks care little about in the grand scheme of things.

The situation is not helped by the fact that the cruise sector is posting stunning losses, as is the offshore

ISSUE THREE 2020

segment. An OSV, which originally cost $40m, is typically on the market for $3m or $4m these days - that is a worse situation than the horror show I remember all too vividly from the mid-1980s.

Whatever argument shipowners have for shipping, bankers are unlikely to buy in because of the industry’s notorious volatility. There’s few syndicates any more, just a handful of club deals. The big picture is brutal - banks are reporting losses, shipping is so marginal to them.

Only smaller banks still have an appetite for our industry, led by Greek, Cypriot and some Norwegian names.

We have to be realistic.

Newbuilds (remember them?) are no more a problem to finance as that comes from readily available export credit as has been the case for the last 10 years. But ship orders are increasingly rare with these uncertain times for future incomes as well

“

Bankers are unlikely to buy in because of the industry’s notorious volatility

”

as the very high risk that today’s shiny new vessel could become obsolete tomorrow.

Credit where it is due - the Greeks have been buying secondhand tonnage on a grand scale this year, which to my mind are working out as fantastic buys. Bear in mind breakevens in shipping are so low these days that pretty much any vessel purchase this year has proved profitable. Loan levels are so low, as is LIBOR; owners are only paying the margin, it’s next to nothing.

Combine that with the extraordinary low orderbook today and you would think that the markets are nicely poised for those who have been brave enough to expand their fleets during the pandemic, not that the banking community will appreciate this astute play. ●

17

EXECUTIVE IN PROFILE DEBATE

Shipping all at sea when it comes to defining decarbonisation The industry has no agreed definitions for what net-zero vessels and decarbonisation actually mean

S

hipping has no clear understanding of what decarbonisation means in real terms for the industry, a poll carried by this title suggests.

Prompted by Greg Atkinson, the chief technical officer at Japan’s Eco Marine Power, the latest MarPoll, our quarterly survey, gave readers seven definitions of of the word ‘decarbonisation’, asking them for the one that best matches their understanding of what the term means and/or encompasses. The first four available responses were taken from the websites of a university, a major automaker, a research paper and a safety and standards board. The last three available responses were definitions Atkinson proposed.

Atkinson’s argument made repeatedly in recent months has been to question how can targets be set for reducing emissions and achieving decarbonisation when terms such as

18

decarbonisation and zero emissions ships are not clearly defined.

For example what exactly is a zero emissions ship? Some would say it’s a vessel onboard which, propulsive power is provided by a solution that emits zero airborne emissions. But what about shore-based emissions?

Could a zero emissions ship using electrical propulsion and batteries still be considered “zero emissions” if the batteries are recharged from electricity generated by a coal-fired power plant? If the ship uses alternative fuels (including biofuels) are land-based emissions that result from the production of these fuels taken into account? Can a ship be deemed to be zero emissions if CO2 emissions are offset by planting trees or via carbon sequestration? Yes? No? Maybe?

Even the term “emissions” can mean different things. Does it mean all airborne emissions including for example lead emissions, or

“

How can targets be set for reducing emissions and achieving decarbonisation when terms such as decarbonisation and zero emissions ships are not clearly defined

”

greenhouse gas (GHG) emissions, or just CO2? What about discharges into the ocean? Are they not a concern?

Regarding decarbonisation this is defined in many different ways ranging from simply meaning the reduction of CO2 emissions to vague statements about removing carbon from economies and societies.

Therefore to gain some understanding of how people view decarbonisation Splash and Maritime CEO canvassed our readership.

With more than 700 votes cast maritime ceo

EXECUTIVE IN PROFILE DEBATE

the results (see chart, right) show no clear leader, albeit a majority going for Atkinson’s own created three unofficial terms. The lack of a uniform comprehension on the terminology highlights the trouble shipping – and its regulators – face as they get down to negotiating the best way forward to meet environmental goals laid down by the International Maritime Organization (IMO) for 2030 and 2050.

The IMO does not have its own formal definition for decarbonisation but has adopted a greenhouse gas (GHG) reduction strategy. In November, the IMO will hold an important gathering of its Marine Environmental Protection Committee (MEPC) to try and thrash out short-term measures to cut the sector’s carbon footprint.

Richard Klatten, CEO of Future Proof Shipping, a Dutch outfit that has plans to construct 10 zero-emissions inland and short-sea vessels in the next five years, has clear views on these all important green definitions for shipping.

“We understand the confusion too much information and too many interpretations, definitions and theoretical viewpoints can bring,” Klatten says.

Klatten’s company looks at zero-emissions through an operational and practical lens, and not so much from a theoretical viewpoint, because ultimately, they are in the

process of building a zero-emissions fleet.

“To set our sustainable boundaries, we have subscribed to the Global Maritime Forum list of zero carbon energy sources and align our energy sourcing with the hydrogen and synthetic non-carbon fuels category, which means zero GHG emissions,” Klatten explains.

To enable the transition to a decarbonised shipping sector, the phrase ‘zero carbon energy sources’ should be understood to cover energy sources and fuels that collectively have the potential to be scalable for supply of all of shipping’s energy demand in 2050,” the Dutch CEO argues.

With regards to the sailing and fuelling of Future Proof’s ships, zero-emissions means zero GHG emissions.

As shipping scrambles to find its future non-polluting fuel no official sustainability standards or related certification schemes are in place to ease the confusion.

This missing part of the fuel conundrum could be set to change however with news that the Sustainable Shipping Initiative (SSI) and Copenhagen Business School (CBS) are partnering to define criteria for new fuels’ sustainability credentials and to facilitate their certification.

The partnership will see the development of a set of sustainability

“

We understand the confusion too much information and too many interpretations, definitions and theoretical viewpoints can bring

”

criteria for marine fuels, applying these criteria to assess the alternative fuels currently being explored for zero-emission shipping. The criteria will also feed into a number of decarbonisation initiatives across the maritime and energy sectors.

SSI will subsequently engage with certification bodies to facilitate the development of a sustainability standard or certification scheme for marine fuels.

Andrew Stephens, executive director at SSI, says the new partnership will contribute thought leadership to the broader debate currently underway in the maritime sector.

“Today, we have no clarity nor consensus on the sustainability issues surrounding the fuels being explored for shipping’s decarbonisation, and the criteria to assess their sustainability remain undefined. This work will contribute to this debate and ultimately, inform the selection of one or more winning options for zero-emission shipping,” Stephens says. ●

Which of the following definitions of ‘decarbonisation’ best matches your understanding or perception of what the term means and/or encompasses?

The reduction of carbon inputs to socioeconomic metabolism or of greenhouse gas (GHG) emissions such as CO2 or CH4 13% The reduction of CO2 (carbon dioxide) emissions per unit of energy generated 9% The conversion to an economic system that sustainably reduces and compensates the emissions of carbon dioxide 16% The elimination of carbon from industrial use 4% Reducing, and ultimately eliminating, carbon dioxide emissions 18% Reducing, and ultimately eliminating, greenhouse gas emissions 24% The reduction of all carbon and carbon dioxide related to human activity 16% A total of 716 Splash readers took part in this survey

ISSUE THREE 2020

19

IN PROFILE

Magnus Halvorsen p.25

John Su p.37

Jens-Michael Arndt p.22

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

20

maritime ceo

IN PROFILE

Arthur English p.33

Jacob Meldgaard p.30

Bjorn Hojgaard p.22

Danilo Fumarola p.35

Kevin Wong p.27

Ika Bethari p.29

ISSUE THREE 2020

21

IN PROFILE

22

maritime ceo

COVER STORY

The green pitch Germany’s Vogemann has a novel way of seeking new investment

G

erman shipping firm Reederei H. Vogemann has a history of coming up with novel ways to attract new business.

Tracing its origins back to Hamburg in 1886, Vogemann today is an owner, a manager and a broker.

In July, the company debuted a new way of financing, using blockchain-based Green Shipping Tokens to expand its fleet of bulk carriers.

The company is looking to raise $50m via this novel green financing method with minimum investments set at $1,000.

“

In the end, shipping will not be able to decouple itself from climate targets

”

The raised capital will be used to purchase green geared handy bulkers.

Vogemann data suggests that currently worldwide there are just two handy bulk carriers, which meet the highest requirements for CO2 emissions. These requirements only apply to newbuildings that will be put into service from 2029. Both ships of the so-called Green Dolphin class were built for Vogemann and were put in service in 2019. These new ships, equipped with MAN engines, burn 40% less fuel than their predecessors.

Vogemann’s decision to invest in future-oriented ships is also in line with the company’s decision to use the still new financing instrument of a digital securities issue.

“The worldwide fleet of handysize bulkers is threatened with an extreme shortage as a large number

ISSUE THREE 2020

of these ships are too old, too uneconomical and therefore no longer competitive,” commented Patrick Schütze, managing director of Neofin Hamburg G, which is overseeing Vogemann’s digital securities issue.

“The purchase prices are currently at a low level. By acting with foresight, Vogemann is opting for an anti-cyclical investment and the oldest merchant’s motto in the world: the profit is in the purchase.”

On the Vogemann website, the company praises Greek shipping magnate Aristotle Onassis for his countercyclical investments, something the German shipping line is keen to emulate.

The issue will run on the Ethereum blockchain. The issuance and investor platform www.greenshiptoken.com is based on Ive.One, which was specially developed by the Frankfurt-based FinTech Agora Innovation for issues of digital securities via blockchain solutions.

The so-called Green Deal created

by Vogemann comes with 8% interest plus profit sharing for investors.

Jens-Michael Arndt, managing partner at Vogemann, says the plan is to keep adding new green geared bulk carriers, taking the plunge while other owners remain by and large averse to ordering new tonnage.

“It is quite possible that the orderbook will remain at a historically low level for some time because the price ideas between shipowners and shipyards are simply too far apart,” Arndt tells Maritime CEO. Arndt wishes authorities would better support the likes of Vogemann with their fleet

renewal, which has seen investments focus on far improved carbon footprints for its ships.

“Unfortunately, we currently do not see any incentivisation of these efforts in Germany,” Arndt says, adding that the European Parliament’s recent decision to include shipping in the bloc’s carbon trading system is an “important step in the right direction”.

“In the end,” Arndt argues, “shipping will not be able to decouple itself from climate targets.”

As to the whole future fuels debate, Arndt is not laying down any bets just yet as to which way the industry will head.

“I believe it is very likely that even in 25 or 30 years from now merchant ships will still be powered mainly by diesel engines,” he says.

With regard to the fuel used, the prognoses are much more difficult to make, he says. “Ammonia is very toxic, which obviously causes major acceptance problems. With hydrogen it will depend on how sustainable the energy required for hydrogen production is,” Arndt points out, adding that he expects biofuels to gain in importance in the years ahead. ●

Spot on

Vogemann Hamburg shipowner, manager and broker. Owned fleet today consists of 12 handysize bulkers and two product tankers.

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IN PROFILE

The case for newcastlemaxes Magnus Halvorsen explains why 2020 Bulkers is so focused on largesized tonnage

N

orwegian pure play dry bulk vessel owner 2020 Bulkers is sailing full swing after completing its newbuilding programme this year.

Magnus Halvorsen, CEO of 2020 Bulkers, reckons that now capital discipline with regards to new investments is key to survival and profitability in the bulker market.

“We ordered our vessels at historically low levels in September 2017 and now that the full fleet is delivered, our focus is on managing these assets as well as possible for the benefit of our customers and shareholders,” says Halvorsen, adding that the company is not looking to further grow the fleet presently and is focused on returning capital to shareholders in the form of dividends.

Halvorsen used to serve as a partner at Pareto Securities from 2003 and in 2009 he participated in the build-up of Platou Markets, which was later merged into Clarksons Securities. He left Clarksons Platou in 2017 to join Tor Olav Trøim’s Magni Partners, where he worked on establishing 2020 Bulkers and later became the CEO of the company.

2020 Bulkers has invested a total of eight 208,000 dwt newcastlemax newbuildings and took delivery of the last of the ships in June this year.

All the vessels have been fixed with time charter contracts.

“With our low cashbreak even levels, combined with the earnings premium a newcastlemax is achieving versus a standard capesize we are optimistic on our ability to generate dividends going forward,” Halvorsen says.

According to Halvorsen, the company has spent a lot of time

ISSUE THREE 2020

trying to deploy a sensible chartering structure with a sound balance of fixed and variable charter coverage to ensure it can weather the inevitable weak spots in the market.

“So far it has worked well as we have been profitable every quarter since the delivery of the first vessel,” Halvorsen says.

Talking about the rationale behind the investment of newcastlemaxes, Halvorsen believes the larger bulker segment is where the market sees the biggest upswing in rates and values as the cycle improves.

“We believe the earnings premium generated by a modern newcastlemax, compared to a standard capsize is undervalued compared to the price difference between a capesize and a newcastlemax, both in the newbuilding and secondhand market, which is why we preferred newcastlemaxes. We see that we are able to capture a significant premium, so that strategy is so far playing out well,” Halvorsen explains.

Halvorsen argues the low orderbook, combined with historically low ordering activity, should limit the supply growth in years ahead.

“2020 is a somewhat heavy delivery year for large bulkers, and we think the supply side dynamics will be very attractive in the coming years. The uncertainties around what may be the optimal propulsion systems for the future in light of increased environmental focus, combined with traditional lenders reducing their volumes, we believe will keep ordering limited going forward,” Halvorsen says. He reckons the biggest challenge this year has been the low export volumes out of Brazil, which hurt the market as a round voyage from Brazil to China is around 95 days versus approximately

35 days for an Australia-China round voyage and the lack of Brazilian volumes has hurt utilisation.

“The biggest risk going forward as we see it is potential disruptions both on the supply and demand side in case we see a worsening of the Covid situation in either the key importing or exporting markets,” Halvorsen warns.

“We are having the same issues as the rest of the industry when it comes to conducting crew changes on regular intervals. We take the wellbeing of the seafarers onboard our ships very seriously and are working closely with our technical managers to protect the safety and wellbeing of our crews while minimising potential disruptions for our charterers,” Halvorsen concludes. ●

Spot on

2020 Bulkers Scrubber-fitted newcastlemax play with eight just delivered newcastlemaxes led by Magnus Halvorsen.

25

IN PROFILE

Indonesia’s fastest growing owner Kevin Wong presides over the appropriately acronymed tanker player, BULL

A

s we went to press the fleet of fast growing Indonesian tanker owner PT Buana Lintas Lautan (BULL) will number 33 vessels totalling 2.3m dwt, making the 15-year-old company one of Asia’s larger tanker owners.

The fleet is a mix of aframaxes, handysizes, an FPSO, a VLGC and smaller tankers. Since 2013, the company has grown by around 12 times in deadweight terms with a focus on mid-cycle vessels.

“Ship prices reflect ship earnings, and we have found that given our focus is only on mid-cycle vessels even a one-year contract would remove most of the risk of such an investment,” says Kevin Wong, BULL’s president director.

Although tanker rates have been strong this year, Wong argues that values have not followed suit, something he reckons is largely down to the dearth of financing curtailing buyers.

Under Wong, who worked for Berlian Laju Tanker for 15 years prior

Spot on

BULL Jakarta-headquartered Buana Lintas Lautan is a tanker firm with a mix of aframaxes, handysizes, an FPSO, a VLGC and smaller tankers in its fleet, eyeing an entry into dry bulk.

ISSUE THREE 2020

“

We are looking for selective opportunities in dry bulk not only as a growth opportunity, but also importantly as a hedge

”

to taking over BULL in 2014, there are new potential directions for the fleet.

Wong tells Maritime CEO in an exclusive interview that the company is now looking at entering the dry bulk market where prices for secondhand tonnage are deemed attractive.

“We are looking for selective opportunities in this sector not only as a growth opportunity, but also importantly as a hedge,” Wong says.

Conceding that what he is about to say are “strong words indeed”, Wong makes the case for why he is so bullish for the unique prospects BULL has in front of it.

“What makes us very different from any other shipping company in the world is that BULL is the only company that can not only build on a very stable and fast growing Indonesian cabotage market, but also benefit from the much better rates in the international market,” Wong says, explaining that the stable Indonesian market can guarantee his company stable cash flows, allowing it to get funding much more easily.

To further protect the downside

BULL always has at least 80% of normalised revenues under contracts.

“As the downside is protected, we can then have the confidence to seek additional returns from the international market,” Wong says, claiming that helps explain why BULL’s Q1 net income was 4.8 times higher than that of the same period in 2019. Moreover, BULL’s EBITDA has consistently increased every year since 2014, even during some weak tanker markets such as 2017-2018. ●

27

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IN PROFILE

Beyond coal An Indonesian owner is diversifying aware of long-term trends for its main cargo

H

aving just bought its first panamax, Indonesia’s coal transfer specialist, Asian Bulk Logistics (ABL) is now looking at entering the gas trades.

The Jakarta-headquartered firm has nine coal transfer ships on its books and nearly 100 barges to go alongside panamax bulker Bulk Batavia which it acquired last month, fixing it on a long-term charter to haul coal around Indonesian waters.

As well as its coal operations in Indonesia, ABL has a growing business assisting bauxite exports from Guinea in West Africa.

Under Ika Bethari, ABL’s president director, the company has been moving away from its coal origins, aware that the commodity is increasingly being shunned.

Diversification of business lines has been ongoing for a number of years now, with a growing focus on nickel as well as overseas acquisitions.

“We don’t want to spend capex with high investment risks,

Spot on

Asian Bulk Logistics 10-year-old diverse Jakartaheadquartered firm with interests in ports, barges, blending and latterly panamaxes.

ISSUE THREE 2020

“ ”

We don’t want to spend capex with high investment risks

however we don’t want to miss any good opportunities,” Bethari tells Maritime CEO. The Indonesian government is also cutting its reliance on coal, announcing plans to transform 52 power plants to gas, something where Bethari can see a clear opportunity for ABL to branch out further with a possible entry into the feeder gas tanker trades. ●

“Technology is always ahead of regulations, but we have to use it if we want to stay ahead of regulatory pressure” — Søren Andersen, CEO of StormGeo

29

IN PROFILE

Tankers post-pandemic Torm’s CEO discusses what will drive the markets and his own company in the coming 12 months

N

orwegian pure play product tanker company Torm, is continuously looking to maintain and renew its fleet as the company rides through significant volatilities in the market.

Jacob Meldgaard, CEO of Torm, has noticed that after the initial stock building period, which was characterized by increased long-haul trade,

30

floating storage and inefficient trade patterns, the market has entered into the stock drawing period, which poses headwinds to the product tanker market as local inventories are replacing some of the trade.

“This includes drawing from both onshore and offshore inventories, whereas the latter is, to a large extent, done now with most of the vessels

“

We are continuously looking to maintain and renew our fleet in the most profitable manner

”

maritime ceo

IN PROFILE

tied up in floating storage having returned to the market. We believe the market has already absorbed most of the effects from the unwinding of floating storage,” Meldgaard says.

Meldgaard believes in the short term the biggest challenge to the market will be the impact of inventory draws while in the longer term,

ISSUE THREE 2020

the current weak demand and uncertainties related to COVID-19 are strongly impacting refinery economics.

“However, it must also be said that not all of the currently high inventories will replace imports to meet local demand, some of these will be exported. A good example here is high diesel inventories in the US, which is a diesel net-exporting country,” he adds.

On the supply side, Meldgaard reckons the orderbook as a percentage of the fleet is currently the lowest in at least 20 years, mitigating the negative effects from stock drawing in the short term and meaning favorable tonnage supply side over medium/longer term.

“We are continuously looking to maintain and renew our fleet in the most profitable manner. This can be done through the purchase of modern secondhand tonnage, contracting newbuildings, or selling off older tonnage. Further, we maintain our fleet through scrubber investments,” Meldgaard says, adding that so far this year, the company has taken delivery of four newbuildings, sold seven older vessels, ordered two newbuildings, and conducted 16 retrofit scrubber installations.

“The recent sale of seven older vessels in the second quarter at attractive prices is supporting us to actively pursue attractive opportunities in the market as they arise,” Meldgaard says.

Torm currently operates a fleet of about 80 vessels and has two vessels on its orderbook.

Talking about the current Covid19 situation, Meldgaard believes the pandemic will continue for the foreseeable future and the crew change challenge will remain a headache.

According to Meldgaard, at its peak, around 40% of the company’s crewmembers were overdue to head home, a figure that has since dropped to around 10%, something the CEO and his team are justifiably proud about.

Despite the strong market volatility, Torm achieved a profit of $128m for the first six months of 2020.

“We are as always focused on optimising our performance under the prevailing market conditions and with Covid-19 still very much a part of our daily life and an important factor both commercially and technically, we have to pay special attention on our operations,” Meldgaard says.

As well as his Torm duties, Meldgaard is chairman of Danish Shipping. Previously he was in charge of Norden’s dry bulk division and before that held various positions with J Lauritzen and Maersk. ●

Spot on

Torm NASQAQ-listed Danish shipowning bluechip. Formed in 1889 and one of the top names in product tankers today.

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IN PROFILE

Walking the walk on diversity G2 Ocean is rightly proud of its employee mix

F

or all the talk of getting more women to work in shipping, especially at board level, few lines are doing more to make this a reality than G2 Ocean, the threeyear-old Norwegian joint venture between Gearbulk and Grieg Star.

According to the Maritime HR Association’s 2019 Gender Market Analysis report, which captured data for over 30,000 employees working in shore-based positions around the globe, the number of women working in the sector increased by 7% last year, but still remains far behind most other industries. .

“There has been quite a bit of talk about gender diversity in shipping recently,” concedes Arthur English, the CEO of G2 Ocean, adding: “We are pleased to have ensured a diversified organisation in terms of gender, age and nationalities.”

Currently, 50% of G2 Ocean’s 12-person executive management team, and 40% of its overall workforce, are women.

G2 Ocean’s open hatch pool, at any time, consists of about 95 vessels.

The pool is made up of a core fleet of

Spot on

G2 Ocean Three-year-old bulk and open hatch pool created by Gearbulk and Grieg Star more than 100 ships.

ISSUE THREE 2020

“

We are pleased to have ensured a diversified organisation in terms of gender, age and nationalities

approximately 85 ships, committed via partners Gearbulk and Grieg Star, and a further 10 vessels taken on short term or trip charter from the market.

In its bulk pool, G2 Ocean has approximately 25 vessels, of which 20 are committed long-term to the pool through Gearbulk and Grieg Star, and the remainder chartered in on shorter durations.

“We are looking at bringing a few more ships into the bulk pool, possibly from third party owners,” English says in an exclusive interview with Maritime CEO. English stepped up from his role as chief commercial officer to take over from Rune Birkeland as CEO of G2 Ocean in December last year.

English has worked for the past 26 years for Gearbulk and G2 Ocean.

”

Covid-19 is making for a “challenging” year, English admits with disruption likely to continue. For open hatch, the company has been exposed to port delays as nearly all voyages call multiple load and discharge ports.

“All of this is leading to ongoing volatility, though we do expect pockets of opportunity,” English says.

Putting a brave face on the current tricky circumstances brought about by the spread of coronavirus, English says he is seeing some robustness from customers in terms of volume projections.

“If we don’t see significant shutdowns in industrial production, we expect to be able to navigate the uncertainties in the main by substituting cargo types as and when necessary,” English concludes. ●

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IN PROFILE

Towards an investment fund Gestion Maritime is set for a change of focus

F

rom a family-based shipping company to a private equity firm focused on ships and maritime transport. That’s the way in which CEO Danilo Fumarola plans to transform Monaco-based Gestion Maritime in the near future. After having closed another deal with a big capital gain with the sale of the newly built bulk carrier Giovanni Corrado, Fumarola is now focusing on the next step of evolution for the company he heads.

Thanks to an excellent track record of ship purchase and sales in the last decade in terms of profitable deals, Fumarola reveals his new idea of making Gestion Maritime not only a shipping company but also mainly an investment firm very similar to an investment fund.

“We have been working at this project for a long time and in the next months it will take shape. The idea is to build up a new model of a shipowning company, something

Spot on

Gestion Maritime Founded 112 years ago, Monacobased Italian shipping venture with focus on bulk and gas carriers.

ISSUE THREE 2020

more similar to a private equity fund, which both controls and manages ships, but mainly the investments,” Fumarola explains.

Every decision will be based on detailed quantitative and statistics analysis supported by a risk management model for each investment, Fumarola says.

Gestion Maritime has been prepping for this transition for years.

Internal audits, track records, high profile corporate governance, risk management, social responsibility and avoiding conflicts of interest will be key drivers for the new venture.

Gestion Maritime is a shipping investment company founded in 1908 in Italy but headquartered in

“

The idea is to build up a new model of a shipowning company, something more similar to a private equity fund

”

Monaco since 1976. Shipping activity has always been focused on dry and wet bulk as well as gas carriers. “ “We want to become the private equity fund with a promoter and other investors,” concludes Fumarola specifying that all of Gestion Maritime’s fleet will be put into the new venture.”●

35

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IN PROFILE

Handy opportunities John Su’s Erasmus Shipinvest has been busy covering all dry bulk bases

J

ohn Su, the wily Athens-based Chinese shipping entrepreneur, has spent the last couple of years building up a handy fleet to go alongside his larger bulkers. In conversation with Maritime CEO, he says he’s on the hunt for more Japanese tonnage as and when the right opportunity comes his way. The aim is to navigate dry bulk’s notorious volatility and become a comprehensive dry bulk tonnage provider in all sizes.

“In my personal opinion, volatility will continue in the dry bulk shipping market for the next 12 months but overall I’m cautiously optimistic,” says the founder and president of Erasmus Shipinvest.

Covid-19 lockdowns and the growing trade tensions between the US and China are very much on Su’s radar as two things that could pour “cold water” for the dry bulk market.

On the plus side, Su, a Dalian Maritime University graduate, points to the historically low dry bulk orderbook combined with the scarcity of ship financing options as keeping a lid on the supply/demand picture.

Erasmus recently expanded its handysize fleet through the acquisition of the 2015-built 34,500 dwt bulker Pegasus Ocean from

Spot on

Erasmus Shipinvest Athens-based dry bulk player led by Chinese national, John Su. Mixed fleet today stands in excess of 20 ships.

ISSUE THREE 2020

Mitsubishi Corporation’s MC Shipping.

Su’s company first entered the handysize segment at the end of 2018, adding to its traditional gearless larger bulker business. As of today, the company controls 12 handysizes, including several pending deliveries.

Su says the motivation behind this handy move was to establish a presence covering all segments of dry bulk shipping, opening the company to a more diverse set of cargo possibilities.

“We’ll still maintain our existence in the ultramax, panamax and capesize fields for further expansion when we see a feasible project in demand from our major commodities customers,” Su says.

Today, the Erasmus fleet stands in excess of 20 ships with a total capacity close to 1.5m dwt.

Su uses the Maritime CEO platform to lash out at the many nations who have prevented crew changes in recent months and yet punished owners and managers for having staff onboard for too long.

“As we all know, it’s not the owner or manager who doesn’t want to make crew changes even with huge extra costs, instead it’s largely due to each individual country’s own immigration policy during the pandemic,” Su maintains.

Greater collaboration among key maritime nations is needed to solve the issue, Su says.

Su reveals that Erasmus has been working closely with its commodities trading customers to find locations in Asia in which to deviate to in order to get crew moving.

If only more charterers were willing to go the extra mile for the people delivering their goods. ●

37

TRAVEL

Old school Graeme Somerville-Ryan on his top picks for what do with 48 hours in and around Athens

O

kay, I, like many of you, am disappointed that Posidonia will not be happening now until 2022. Nevertheless, if you are in shipping, sooner or later you’ll need to be passing through Greece, as the country remains the number one shipowning nation in the world, owning one in five merchant ships sailing today. And Greek shipowners appreciate people coming to see them.

I have now been resident in Athens for nearly two years and, over that time I’ve come up with a couple of basic eating and drinking rules.

Rule 1: It is hard to find bad food, it really is. I still vividly remember the very few bad meals I’ve had.

Rule 2: Ignore TripAdvisor reviews in English. Tourists dominate here but they have low standards and are easily fooled (who doesn’t love moussaka in summer on the beach!).

You’re in Athens, where to eat, what to do? These are the places on

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my five-star list for one reason or another.

Restaurants (Piraeus) Varoulko Seaside: Great location at the marina, fantastic food. Possibly the best value starred Michelin restaurant you’ll eat at.

Papaioannou: Seafood, just up the road from Varoulko, playing in the in the same league with all the same positives.

Margaro: Seafood, more of a local feel. Highly rated as simple and inexpensive by people in the know.

Restaurants (Athens) GH Attikos Restaurant: Probably can’t beat the views of the Acropolis.

Highly recommended by locals.

Strofi: A second option on the on the Acropolis route - famous for its good Greek food. When the Chancellor of Germany last visited

Athens, the Greek PM took her there for dinner. Good choice Mr Mitsotakis.

There is so much good food out of the city center. If you’re visiting shipowners in the northern suburbs and the timing is right, consider El Jiron and Villa Disokouri (both on Dim. Vassiliou, Neo Psichiko). Or the nearby Biftekakia & Souvlakia, a well-known and popular souvlaki restaurant (202 Kifissias Ave).

Bars: Where to start?

Brettos: Start at the beginning.

Athens’ oldest distillery. In Plaka, the old shopping district. Near the Acropolis. Great ambience with seemingly original barrels. A range of in-house spirits, but you must have the ouzo.

Baba Au Rum: You’re hanging out with shipping folk, possibly sailors, you should be drinking rum.

A bar that’s probably too cool for you maritime ceo

TRAVEL

or me.

The Clumsies: See above. One of the world’s Top 10 Bars according to some (if you believe these sorts of things).

Dos Gardenias: So good it doesn’t need a website. Cuban bar.

Great drinks, great location, great food. Highly recommended. (Ήβης 21 &, Navarchou Apostoli 17, Athina 105 54)

Time out: Sights near Athens Trust me, I’m an archaeologist. Though it was in a previous part of life. The Acropolis, the Archaeological Museum, and the other sites of Athens are ‘must-see’.

But out of the city there are some great trips to be had. All times based on a drive from Syntagma Square.

Cape Sunio/Temple of Poseidon: A large temple. Go and make a sacrifice to Poseidon that the deal you struck at Brettos was as good as

ISSUE THREE 2020

it seemed at the time. (Just over an hour’s drive time). Short visit (1 hour) but a nice drive.

Archaeological site of Thorikos: Out in the direction of the airport, about an hour’s drive to an ancient settlement/theatre (525–480 BC) designed for an orchestra. Great condition and you are likely to find yourself alone (or at least without flocks of tourists). One of my favourite sites (doable in an hour).

Corinth (the Canal, the Citadel, and Ancient Corinth): Pretty much a complete package about 90 minutes from Athens. The canal is worth a brief stop. The mountain top citadel dominates the area and gives you stunning views of the region. Just below lies ancient Corinth, at the edge of new-ish Corinth. A great day-trip.

Delphi (2hr 30mins): Home of the oracle, whose existence possibly explains the success of Greek shipping. One of the great archaeological

sites. Temples, a theatre, a stadium, cliffs, and views. Stunning in so many ways. Get up early to beat the crowds (even in high season), depending on the foot traffic it may be worth doing the site first and the museum second. Take half a day at the site/museum. Full-day trip.

Arachova: On the way to/ from Delphi is well worth a stop (Instagram pics don’t take themselves). Grab lunch/dinner at Phterólakka/Ffterolakka (traditional grilled meats).

Livadia: On the way to/from Delphi. This was one of those random stops by accident that turned up a hidden gem. The town has seen better days but boasts a little river with picturesque water wheels, hidden groves, and a church embedded in a cliff (as you walk along the river). Not for me, but you can make the climb up. Greeks will possibly laugh at you if you say you are going here, but tourism is what you make of it. ●

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REGULAR BOOKS

Tomorrow’s human resources demands Paul French picks out some books for people to prepare for postpandemic recruitment realities in shipping

T

he world of human resources (HR) is undergoing fundamental changes in the wake of the Covid-19 pandemic. Remote and working at home has changed the traditional office environment while the pandemic has thrown up multiple challenges from crew change formalities to ensuring non-transmission from exported goods.

Perhaps now is the time to both revisit HR in the industry as well as plan for the ‘new normal’ HR future. Of course, each industry faces unique human resource management challenges and opportunities and in shipping/logistics these include a global labour market and global unionism, long periods spent at sea, and health and safety issues resulting from a variety of risks.

Editor Jiangang Fei’s Managing Human Resources in the Shipping Industry explores all the key aspects of human resource management in the shipping industry and how they specifically relate to the shipping workforce.

Fei also discusses the practices and issues associated with recruitment, training and development, and retention of personnel and knowledge in the shipping industry. In addition, the book addresses the human resource management challenges faced by the industry, including achieving work–life balance, maintaining employee health and wellbeing, managing risk and crisis, and applying knowledge management principles. The authors of each chapter are specialists in their particular sectors.

Many are Chinese and Asian academics with a strong understanding of the

40

region’s specific HR requirements.

Edmund Gubbins’s Managing Transport Operations moves from shipping to a more general overview of all forms of transport – rail and road specifically. The strength of the books is its clear, jargon-free language to explain the wide range of skills demanded of transport managers, who must understand the economic, social, political and technical aspects of road, rail, air and sea transport, while, crucially, ensuring that levels of safety and reliability are not compromised. Individual chapters discuss modal characteristics; ownership and organisation; management functions and policy formation; transport marketing; safety regulations; economic regulation; logistics and transport; urban transport and new technology.

Martin Starr’s Global Supply Chain Management for HR is another useful book to have on the shelf for reference.

Supply chain management can essentially be defined as the managing all the activities that go into putting commercial products in front of consumers.

Global supply chains have a large number of diverse participants that must act in concert, which poses a greater challenge than regional supply chains.

Analysis of actual supply chains reveals cascades of materials, cash flows, and information moving between interacting

suppliers, producers, and customers.

Bottlenecks in supply chains diminish throughput rates, creating queues of work waiting for service. Unexpected changes in demand levels can distort normal supply chain ordering patterns, resulting in costly oscillations of inventory levels, or the ‘bullwhip’ effect, described by oscillations that shift between out-of-stock and overstock conditions. The reverse supply chain is concerned with the logistics of returning customer purchases to their producers for reclamation or disposal.

None of these books of course deal with the pandemic as yet. But reading them now, in light of Covid, does prompt thoughts of how best to adapt to the new world of global logistics. ●

“ ”

Now is the time to plan for the ‘new normal’ HR future

maritime ceo

GADGETS

Enhanced reality

V

R has been around for a while, but the technology is still a bit shaky. Text has been really hard to read. For games, it’s not a major problem, but in flight or driving sims, it’s a serious issue: readouts need to be read at a glance. Finnish company Varjo has changed that with its VR-2 Pro headset. The bionic display touts “human-eye resolution” (60 pixels per degree) in the “sweet spot” centre, with a more standard resolution on the peripheral vision where the human eye gets blurrier. The VR-2 Pro also has advanced hand tracking as well, tracking individual fingers, which means you don’t really need hand controllers. All this is SteamVR and OpenVR compatible. At $6,000 it is aimed more at companies then gamers, but if you have the cash, it’s the best VR in town.

Varjo VR-2 Pro $6,000 www.varjo.com

Digital notebook

M

oleskine has been making nice notebooks for years, and it’s now moving into the digital side of life with its Smart Writing Set Ellipse, which consists of a special notepad and a smart pen. The notepad paper has tiny dots on it to aid the pen to record your handwriting exactly and transfer it in real time to your phone. The phone app can add colours, and also has an OCR function to turn your handwritten notes into searchable text files. It can also record the audio going on during the note taking.

Moleskin Smart Writing Set Ellipse $150 www.moleskine.com

Temporary tattoos

P

rinters have branched out a lot recently, with machines that will print 3D objects and even waffles. The Prinker S is another ground breaking paradigm shift: it prints temporary tattoos on skin. The tattoos are in cosmetic ink and will last for a day or more (if you don’t wash it), but they will come off with makeup remover or good old soap and water. You simply load up a tattoo image from your phone and print away. Choose from hundreds or make your own. Print in black or colour (colour requires an extra ink pack). We in the gadget cupboard realise it’s thoroughly daft and we want one. Badly.

Prinker S $420 www.prinker.us

ISSUE THREE 2020

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OPINION

’Don’t over think it.

Shipping is simple’ Fifteen years into his career, Charlie Du Cane, commercial director at Seastar Maritime has just been provided with valuable advice while chewing over matters ad infinitum during lockdown

H

ow can shipping be simple? There have never been more complicated times in the world, and by extension in the shipping industry. Technology is changing everything from the bill of lading, the way we handle insurance, crewing and, aided by the climate crisis, will lead to fundamental shifts in ship propulsion in the near future. Black swans seem to swarm overhead like the flying monkeys in the Wizard of Oz, as dam collapse blends into trade war, which merges into global pandemic. This sense of permanent flux is added to by the permanent revolution of who does what in shipping. The emergent superpowers of the Chinese leasing houses have overtaken everyone in ship financing, as the Europeans have largely run for the hills. In my little bit of the business, the Danish dry bulk operators seem to change staff or name so often that sometimes I think they are all on a carousel in the Tivoli Gardens, a constant confusing whirl of brown pointy shoes, and floral lined shirt collars.

But most confusing of all is the information flow. In July 2005, on my first day in the shipping industry, I was told that the average person read more in one day than they had done in a lifetime in 1905. I remember 2005 as an era

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of blissful simplicity. History had ended, shipping was profitable, and people still read Lloyd’s List.

How times have changed. No one is certain of anything anymore, but the flow of analysis, broker reports, bank reports, environmental reports, trade reports, etc flows across the desk of the frazzled shipping exec like a river that has multiple often contradictory currents. Recently in one day I read a broker stating that dry bulk is about to receive a massive shot in the arm from China, and a banker’s analysis that was so dire it actually gave me heart palpitations. The waters have never been muddier in shipping.

So, I was slightly bemused when one respected shipping veteran who I speak to regularly said to me the other day: “Your problem, Charlie, is you over think it. This business is simple.” Surely the opposite is the case? How can anyone with his experience describe the current state shipping finds itself in as simple?

Locked down in London, it has given me time to (over) think about things, and I fell to pondering this idea of simplicity, and I had one of those eureka moments when my own understanding of this business took a step forward. Actually, he was right, when you strip away all the layers, the noise and the occasional downright panic we feel today, simplicity is best, and over thinking always gets

people into trouble.

Take for example the eco-ships debacle of 2013. Smart people came up with great predictions as to why these ships were necessary to save the planet (or was it fuel bills?), but they forgot some of the simple fundamentals of shipping: supply goes up, market goes down; if it isn’t a good deal on the day – don’t buy it.

Equally how many people are feeling a bit sheepish about scrubbers these days, especially on secondhand ships? Scrubber mania was interesting, as people thought they could beat heavy handed regulations, and beat the market too. But every decision was made based on not having access to the key metric in all of this: what the spread between low sulphur and high sulphur fuel oil would actually be. As far as I can tell on secondhand vessels most people presumed a spread of $250 lasting for two years. Five months in we are at $50 dollars, and it has already dipped to parity. The lesson? Only act on what you actually know.

The next decade is going to be fascinating in our business, if possibly traumatic, as geopolitical decoupling, technological change, and the imperatives of the green revolution dominate everything. Those that will thrive in this market are those that never forget to just keep it simple. ● maritime ceo

REGULAR OPINION

The ship of the future, 2020 edition Andrew Craig-Bennett ponders novel vessel designs

O

ne of the few bright sides for those at sea during the pandemic is that there are no superintendent’s visits any more.

You might think this is a bad thing, because the expletive deleted super cannot be shown what is wrong and what needs doing in person. But if we think more carefully, we can see that it is a good thing. As the ocean greyhound that the now-invisible super thinks he is in charge of gets less and less like the heap of rust that the crew are actually driving from no-shore-leave to no-shore-leave, the crew learn to relax and get on with making the best of the ship they have actually got, as opposed to the ship that the super thinks they are aboard, and instructions to do this, that, and the other with equipment that stopped working months ago when the super crossed out the indent for the spares, and was fixed in quite an innovative way, can be safely ignored. Or unsafely ignored, but either way, ignored they will be.

Most ships can go on for quite a long time like this – indeed, most of them are doing so – which is just as well, because otherwise the world’s people would not get fed, clothed and kept warm.

Eventually, the ships and the men who man them will fall over. But let’s not think about that, because we will have time to design and build the ships for the new normal.

Like many of us, I had the pleasure of going onboard some of the ships built under the German Schiff

ISSUE THREE 2020

der Zukunft programme in the 1980s.

We need to do that again, but rather differently.

Let us assume for a moment that the prophets of doom are correct, that a vaccine for Covid-19 is not found, and we have to go on like this for a while. What does a ship for the new normal look like?

There won’t be an accommodation block. There will be two, and both will be very large. Since the crew won’t be getting off for years at a time, they may as well have their families with them Well, quite different. There won’t be an accommodation block. There will be two, in the manner of the oldstyle tankers; one aft and one under the wheelhouse, and both will be very large, because whilst the crew will be large, to include some spare ABs, a chief thief and a deputy ETO, we will still want lots of spare cabins.

Since the crew won’t be getting off for years at a time, they may as well have their families with them, and when Wife A no longer gets on with Wife B, she can decamp to the other end of the ship. For similar reasons, there will be at least two galleys and at least two dining rooms.

The stores and spares, and the workshops and tools, will be beyond the dreams of chief engineers, because few more spares will be supplied for the life of the ship. There will be an entire hatch filled with cylinder liners, given the rate at which low sulphur fuel oil gets through them, and everything else in proportion.

The main engine, on the other hand, will be tiny, because if 11 knots was good enough for a Liberty ship, it’s good enough for us. This means that the fresh water capacity will be vast, because we won’t ever make enough.

There will be a separate weathertight door at the weather deck level, leading to a separate stairway to a hermetically sealed area of the wheelhouse, for pilots, with a similar hermetically sealed area of the ship’s office for agents, port state, surveyors and others. There will be a small airlock that doubles as a sterilisation chamber through which papers can be passed, and a coffee machine so they can make their own.

We will make a gesture towards green propulsion. Only a gesture. We are, after all, shipowners. ●

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MARPOLL REGULAR

Your views

Our quarterly survey saw more comments from readers than ever before. Results plus spicy remarks below Who is most to blame for the crew change crisis?

“

When will crude tanker volumes return to 2019 levels?

“

All of them. It’s a collective failure of will and means

”

Only God knows...

”

Owners

13%

2020 5%

2023 13%

Managers

10%

2021 29%

Later 13%

Regulators

26%

2022 18%

Never 22%

Politicians

51%

Following Covid-19 does the industry need to find new ways of lobbying and voicing its views/ position?

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We are the invisible industry.

When paying tax, this suits us.

When we need help, not so much

”

Yes 86% No 14%

Have you attended any webinar this year that was genuinely worth your time?

“ ”

They make bad speakers worse Yes 45% No 55%

When will container volumes return to 2019 levels?

“

Smaller shipping companies with cash flow on the lower side will be the most affected ones 2020 3%

2023 15%

2021 26%

Later 26%

”

In terms of size and scale have we passed the peak shipping exhibition period?

“

What’s the point? Go to one and you’ve been to them all. Same old, same old Yes 71%

”

No 29%

2022 30%

When will dry bulk volumes return to 2019 levels?

“

Energy and grains will still be needed for a long time, so this segment will potentially experience the fastest bounce back 2020 5% 2021 42%

”

Is shipping finally making a concerted effort to address its diversity issues?

“

Just attend any webinar to see how woefully behind shipping is in addressing diversity

2023 8%

Yes 19%

Later 17%

No 81%

”

2022 28%

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maritime ceo

“

Information sharing just became more efficient We improved collaboration and information sharing between vessel and office by implementing Dualog® Drive. Processes that were previously email-based and labour intensive were replaced with integrated, digitised, literally “hands-off” solutions. We can now spend less time worrying about cybersecurity, data management

NAME

Jan Erik Rogde POSITION

VP, Head of Fleet Management COMPANY

and bandwidth bottlenecks and focus on additional business

Klaveness Ship Management, Oslo, Norway

improvements. #DUALOG CUSTOMER STORIES

SCOPE

Dualog® Drive rolled out on 21 ships in less than 24 hours

Photo: CF-Wesenberg/kolonihaven.no

.

Email | Smart Internet | Cybersecurity | Data Transfer

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