Maritime CEO Issue Three 2021

ISSUE THREE 2021

Polys Hajioannou

BY

Bulk carriers for the 2030s

MANIFEST

3 At The Prow

Profiles

Economy

26 Cover Story Safe Bulkers 29 Hapag-Lloyd 31 Denholm 33 AET 35 Taylor Maritime 37 MSEA 39 Tsakos 41 HGK Shipping

4 US 7 EU 9 China 11 India 13 Brazil

Markets 15 Dry Bulk 17 Tankers 19 Containers 21 Finance

Executive Debate 22 Deepsea mining

Recreation 42 Wine 43 Gadgets 44 Books 45 Travel

Opinion 46 Martin Stopford 47 Andrew Craig-Bennett 48 Splashback

41

AT THE PROW

An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editor: Adis Adjin adis@asiashippingmedia.com Correspondents: Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Genoa: Nicola Capuzzo Hong Kong: Alfred Romann London: Paul Collins New York: Suzanne Smith Oslo: Hans Thaulow San Francisco: Donal Scully Shanghai: Colin Quek Singapore: Grant Rowles Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi Contributors: Nick Berriff, Andrew CraigBennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel Editorial material should be sent to sam@asiashippingmedia.com or mailed to 24 Route de Fuilla, Sahorre, 66360, France Commercial Director: Grant Rowles grant@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to 30 Cecil Street, #19-08 Prudential Tower Singapore 049712 Design: Mixa Liu Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2021’s four issues of Maritime ceo magazine.

Email sales@asiashippingmedia.com for subscription enquiries.

Copyright © Asia Shipping Media (ASM) 2021 www.asiashippingmedia.com Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner.

For reprints of specific articles contact grant@ asiashippingmedia.com Twitter: @Splash_247 LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News

ISSUE THREE 2021

Fuel chicken and egg solutions

R

ewind 15 years ago, back when LNG was tomorrow’s clean, aspiring fuel. That particular chicken and egg race took plenty of time to materialise as many port authorities - both major and more obscure outposts - mulled deploying suitable LNG infrastructure, no small undertaking in terms of outlay. The disjointed, disparate fuelling options that emerged at a slow pace stymied owners from taking the plunge and ordering these gas-powered ships earlier.

Now if we look at today’s fuelling dilemmas facing shipping we’re at a similar moment in time - scant infrastructure shoreside for the likes of ammonia, methanol and hydrogen, and obscene prices as there’s next to no take up for these new bunkering forms thus far.

There is a way to overcome this - as rather brilliantly outlined by the International Energy Agency (IEA) in a big report issued in October just ahead of COP26, this year’s major international climate summit.

Looking at both aviation and shipping, the IEA suggested the best plan to hasten the take up of alternative fuels was to focus on the world’s largest ports and airports.

Today, more than 360,000 flights have used biofuels, but only six airports have regular biofuel distribution, the IEA report pointed out. Less than 5% of all airports handle 90% of international flights.

Likewise, for shipping, the 20 largest ports in the world account for more than half of global cargo.

“

More than 360,000 flights have used biofuels, but only six airports have regular biofuel distribution

”

“There is a huge opportunity for the international aviation and shipping sectors to focus on the main demand clusters until low-carbon technologies become more costcompetitive,” the IEA urged.

It’s a brilliant idea - and one that shipping and the powers that be ought to embrace fast if they want to avoid the mistakes from the wasted LNG fuelling outlays and remain on track to decarbonise the industry. ●

Sam Chambers Editor Maritime ceo

3

ECONOMY US

‘The virus is the economy’ We’ll need to wait until 2022 for a strong American recovery

I

n many ways despite the hard punch the American economy has taken with Covid-19 it has also appeared surprisingly resilient.

However, recovery appears to be a little stop/start with July job growth not being repeated as robustly in August, perhaps due to the emergence of the more transmissible Delta variant. Leisure and hospitality are obviously flat due largely to the pandemic and consumer spending is not overly exciting either for many of the same reasons. In manufacturing supply chain issues remain a drag on manufacturing growth (one aspect being the seemingly widespread issue of truck driver shortages affecting the UK and EU, as well as the US). There is also some inflationary economy, though the Federal Reserve expects this to be only temporary.

So, it seems a strong recovery in 2021 is unlikely and all hopes will be pinned on 2022. Looking at this situation Justin Wolfers, an economics

professor at the University of Michigan, noted that, in America, “the virus is the economy”.

Still, on the bright(er) side wages have grown which will hopefully translate into improved consumer sentiment and spending, and interest rates remain low (due in large part to the Fed buying $120bn in government-backed bonds every month!). It actually seems that inflation, rather than Covid concerns by consumers, is the main drag on consumer spending in the States right now – spending was up just 0.3% in July over the previous month, a negligible gain. Some key spending sectors struggled that had an impact on manufacturing and imports - a decline in motor vehicle purchases for instance (partly due to the global shortage of semiconductors right now). And with consumer spending accounting for more than two-thirds of US economic activity spending slumps are particularly bad news in the country.

Breakdown of the US trade deficit with China, 2020 Total US imports from China

Total US exports to China

$393.6 bn

$110 bn

Largest US imports:

Largest US imports:

1. Computers

1. Commercial aircraft

2. Cell phones

2. Soybeans

3. Apparel & footwear

3. Autos

Source: United States of America Census Bureau

4

Exports showed some recovery in the last quarter, according to the US Commerce Department the trade gap fell 4.3% while imports slipped marginally at just a 0.2% monthon-month decline as exports picked up by 1.3%. Global trade arguments benefitted US farmers who have picked up some of the slack from China’s bans on Australian beef and super-high tariffs on Aussie wine, but neither of these may be long term gains if Beijing and Canberra ever make up and play nice again (of which there is not much hope in the immediate to short term).

And just because Trump is no longer in the White House does not mean there are not still a raft of outstanding disagreements on trade between Beijing and Washington DC. The US is still detaining imported solar panels from China it believes may have been produced wholly or in part by forced labour in Xinjiang.

However, one hopeful development of the second half of 2021 between America and China should be the resumption of more calm trade talks. China has been rather on the Biden backburner since his rise to office, but US trade representative Katherine Tai said recently that the Biden administration is conducting a comprehensive review of US-China trade policy. ●

maritime ceo

Pioneering cyber resilience at sea inmarsat.com/fleetsecure

ECONOMY EUROPE

Which way now?

The bloc is bullish as vaccines speed up

B

rexit is done; Covid-19 hopefully fading; trade wars easing somewhat. So which way for the European Union (EU) and the Eurozone bloc now? Most economies in the bloc have spent massively propping up their economies during the pandemic and trying to save jobs and public spending. Now there is a public debt balloon to be dealt with and some key decisions as to which way the economic bloc leans going forward in terms of monetary policy – to increased and ongoing spending or a reversion to austerity? The UK, now outside the bloc of course, appears to have decided to continue to prop up the economy in key sectors but to continue the austerity programmes of the last 10 years as well. So far the Conservative administration is not being punished in either the press or polls for

this strategy which may give some continental European right-of-centre administration some indication of what European electorates will stomach in the second half of 2021.

According to the EU’s stability and growth pact, a set of rules on budget spending that ties member states – at least on paper – to public debt of just 60% of gross domestic product. Yearly deficits must stay below 3%. But in the nineteen states that use the Euro single currency, the average debt is expected to reach 102% of GDP at the end of the year.

Those old rules are clearly out the window when Greece is at 200% of GDP and Italy 160%. However, cutbacks in public spending and austerity will have a political price and many countries have impending elections.

Still there does seem to be a

The EU’s position in global trade, 2020 Country

Global exports %

Global imports %

China

16.1

13.2

EU*

15.6

13.9

USA

10.8

16.0

Japan

4.6

4.8

Rest of World

52.8

52.1

Total

100.0

100.0

Source: Eurostat *=excluding UK

ISSUE THREE 2021

general economic rebound in the EU. However, Brexit is having an effect on trade between the former island member and the continent with the UK’s trade deficit with the rest of the continent at a high and rising monthly. Of course the slowdown in cross-border trade between the EU and UK affects many sectors and many countries. Exports are problematic continent-wide though due to the pandemic. For instance, Spanish fruit and vegetable exports saw a 21% fall in volume and 24% drop in value for the opening half of the year. This, according to the Spanish, was to do with a drop in Brazilian and Chinese demand (though Canadian demand rose slightly to offset the decline). The point to be made here is that the EU’s trade is still highly global and affected by global shifts despite a degree of navel-gazing at internal trade over the last few years.

And, despite some calmness of late, trade spats, particularly with China are likely to occur again.

Indeed, the rift may become deeper if the basis of the trade disputes is now tariffs, subsidies and tit-for-tat accusations of dumping but rather human rights violations, China’s policies in Xinjiang, Hong Kong, etc which may lead to trade being affected by deeper and longer lasting political arguments. ●

7

Liberia’s Detention Prevention Program ≈

Liberia is the only registry to provide this vital service and does so free of charge.

≈

An Industry leading innovative system using LRIT and algorithmic risk analysis to ensure vessel compliance and preparedness for port state control inspections.

≈

Over 5,200 vessel arrivals analyzed each month, with multiple detentions prevented due to early intervention globally.

PSC Detention Reduction 2019-2020 ≈

USA: 74% Reduction

≈

Paris MoU: 19% Reduction

≈

Tokyo MoU: 28% Reduction

≈

China: 83% Reduction

ALL FLAGS ARE NOT ALIKE www.liscr.com

ECONOMY CHINA

The China challenge Foreigners doing business in the People’s Republic face ever greater hurdles

F

or foreign businesses China has perhaps never been more challenging – shipping restrictions due to Covid, power shortages, difficulty of actually getting into the country and the seeming attacks on many sectors from hi-tech gaming to home tutoring are all causes for concern. None of these though are necessarily enough in the short-term to dampen the country’s Covid19 rebound or pose problems for shippers of manufactured goods and commodities. Still it’s hard not to see the tech crackdown in China as a big black cloud over ongoing economic reforms and, arguably, part of a strategic ‘decoupling’ of China from the wider world economy (as the World Trade Organization termed the China’s thermal coal imports,2020 Country of origin

% of total

Australia

57.4

Indonesia

22.6

Russia

15.0

Mongolia

2.1

Canada

1.1

Columbia

1.7

Other

0.1

Source: China Customs

ISSUE THREE 2021

moves recently). Some economists believe that apart from the negative messages to both the Chinese tech sector and its international joint venture partners the restrictions also hit a major area of job creation and high wages thereby potentially stalling the growth of the high consuming urban middle class. But others disagree and time will tell.

Those simply looking at the big economic headline numbers can, for now at least, not worry too much about games and tutoring firms. Exports are strong and strengthening further as global demand rebounds and the world needs China’s manufacturing power.

The shortage of containers, semiconductor shortage and high raw material prices are all problems, but not (China hopes) major ones at the moment if they can be offset by great productivity gains (hence China’s focus on IT, AI, robots etc etc).

Shipments from China in August rose 25.6% year-on-year, picking up speed from a 19.3% gain in July, according to Chinese Customs data.

Naturally the reopening economies of North America and the European Union (placing Christmas orders in the second quarter) are crucial but it should also be noted that exports

to regional countries, particularly in the second quarter to South Korea, have all gained strength and momentum.

Imports into China are up 33.1% in the first two quarters of 2021 over 2020 – a disastrous year when China simply closed its borders to many shipments that could not be delivered while significantly longer than usual factory shutdowns after the Covid-19 breakdown at Chinese New Year in 2020 meant less orders placed. Coal imports are up nearly 36% followed by a steep pick up in iron ore shipments inward to China too. China posted a trade surplus of $58.34bn in August, according to local customs department data.

All this should be tempered by a couple of factors – we do not know how far Xi Jinping intends to go with his current crackdowns that have hit many sectors from celebrity culture to multi-role playing computer games. There are many other sectors that could come under greater scrutiny still. Also China’s factory gate inflation hit a 13-year high in August and it looks like the prices of many key raw materials will remain high for some time while shipping rates and container shortages appear to be persistent for a while yet. ●

9

YOUR TRUSTED PARTNER

IN SHIP MANAGEMENT SERVICES

Singapore | India | Philippines | Hong Kong | USA South Korea | Denmark | Myanmar | China | Dubai

www.synergymarinegroup.com

Synergy Marine Pte. Ltd. 1 Kim Seng Promenade #10-11/12 Great World City West Tower Singapore - 237994

ECONOMY INDIA

Restarting the engines India is bouncing back faster than most economies

A

number of leading economists and organisations, including S&P Global Ratings, believe that India’s economy is bouncing back after the second wave of Covid-19 in the country much faster than initially anticipated. The numbers show a near 21% rebound on a sequential 17% decline.

And this looks to be, in the short term anyway, sustainable growth growth is forecast to have continued to improve over the July-September 2021 quarter. GST receipts and car sales certainly seem to indicate consumer sentiment and subsequent spending are returning rapidly in the urban middle class. Of course India is still behind where it should be due to Covid-19, about 17% down on GDP expectations, but that was largely Top destinations for Indian textile exports, 2020 Destination

% of total

USA

24

UAE

7

Bangladesh

6

UK

6

Germany

4

Rest of World

53

Total

100

Source: Indian government

ISSUE THREE 2021

to be expected – the sharp rebound was not and so is therefore doubly encouraging. S&P Global Ratings are particularly bullish on the postCovid period forecasting 9.5% growth in 2022 and 7% in 2023.

HSBC is broadly in agreement on India’s rebound and future shortand mid-term growth prospects and points particularly to the leap in digital adoption and greater high-skilled exports. Certainly e-commerce, which has lagged other emerging markets (notably China) severely, has started to gain traction. A young and relatively abundant labour force and growing urban middle class with spending power are fuelling this trend. But demand for mobile phones and associated technology, hi-tech machinery, advanced pharmaceuticals and IT services and support all showed strong growth in the first two quarters of the year, pandemic withstanding.

Most interesting to shippers and logistics firms is that exports are also part of the general economic rebound – pharma up 14%, chemicals 13%, engineering products 24%, textiles 11% and electronic goods 17%, for instance. Sectors that have shown even higher growth in exports include steel and sugar.

This has led some media in India to

describe exports as the country’s economic ‘White Knight’, up nearly 10% despite Covid restrictions.

Outbound shipments in August from India were tentatively reported to be extremely strong. Textile and apparel orders from the important US and EU markets were almost back to normal levels some manufacturers reported. It has been a consistent six months of growth for textile/apparel exports after the disaster of 2020 and collapsing orderbooks. Gems and jewellery – smaller in volume but obviously of significant value have also rebounded to pre-Covid export levels. The Indian Express newspaper pointed out that India’s exports to the US surged 55% during JanuaryJuly 2021, higher than Vietnam’s 18%, Bangladesh’s 29%, China’s 28% and Mexico’s 31%.

Covid is still a major factor, however. One of the reasons textiles/ apparel appears to have outperformed many other sectors is not simply returning demand in key overseas markets but also that the ports of the southern states such as Tamil Nadu and Karnataka – well placed for textile/appeal exports – had less severe lockdown restrictions that other ports around the country meaning shipments got away in both great volume and in timely fashion.●

11

marine lubricants

trust chevron to keep you on course solutions for your journey

As a world-leading integrated energy company we are constantly developing the right thinking to ensure operational excellence, with the reliability and responsibility that’s essential to a sustainable future for maritime shipping.

Our solutions-based support offers technical expertise, quality performance lubricants and a range of monitoring tools to provide the clariity you need.

Chevron Marine Lubricants. Solutions for your journey. chevronmarineproducts.com

© 2020 Chevron. All rights reserved. All trademarks are the property of Chevron Intellectual Property LLC.

ECONOMY BRAZIL

Overcoming stagnation There’s a risk the country is heading for another lost decade

E

ven compared to other BRIC and emerging markets, Brazil has had a tough Covid for a variety of reasons. Now it seems that the economy is not rebounding (as in India, China and most other places) but is stagnating. The second quarter of this year saw the economy slip a marginal 0.1% on the first quarter – virtually no movement in six months.

Economists mostly believe that some traction will return in the second half of the year and Brazil may top out at 5% GDP growth for the full year 2021, after the slightly over 4% Covid-related contraction of 2020.

Worryingly perhaps for those expecting bounce back is that agriculture has remained highly sluggish and in decline. Between April and Brazil: Soy production, 2017-2021 Year

Tons

2017-2018

5,600,000

2018-2019

5,500,000

2019-2020

3,589,037

2020-2021

2,748,594

Source: ProTerra Foundation

ISSUE THREE 2021

June industrial output slipped 0.2%, but agriculture declined by nearly 3%, largely due to a poorer than expected coffee harvest. The dip in industrial production was put down to shortages of key raw materials rather than empty orderbooks.

However, inability to fill orders does encourage customers to look elsewhere for their needs. Some, looking closely as power, fuel and waste management numbers, believe the industrial sector took a bigger hit in the first half of the year that will only emerge in the second half of 2021 as the numbers come out.

Those looking for good news in Brazil can point to transport, which recorded strong growth. This, it can be argued, indicates movement of goods around the country that may help the raw materials and inputs problem as well as stock shops for consumers to go buy stuff in thereby helping the slack consumer economy.

Where economists are not so pleased is with president Jair Bolsonaro’s administration. The bad handling of Covid-19, the persistently high unemployment rate (over 14%),

the hikes in consumer prices hampering a consumer-led recovery and the prospect of significant inflationary pressure in the second half of the year are all economic issues laid at the government’s doorstep.

And there may be some problems ahead as regards exports.

In early September Brazilian beef exports to China were halted due to concerns over mad cow disease problems and the rising prices of both soybeans and iron ore may hamper export orders of these two key commodities for the wider economy. Drilling down though it does seem entrepreneurs in newer export sectors are doing well (though their numbers can’t replace beef, soybeans and steel but still…) – organic honey, the sugar cane spirit cachaça and other alcoholic beverages, and fashion all saw significant growth.

Economists worry that without headway in economic reform from the top, a solution to endemic unemployment and the recovery of key export sector, notably iron, soybeans and coffee, Brazil may be heading into another lost decade. ●

13

MARKETS DRY BULK

Still playing the waiting game Champagne corks are popping but adjust for the impact of China’s port delays and the outlook shows greater fragility, writes Will Fray from Maritime Strategies International

T

he dry bulk freight market has gone from strength to strength with spot earnings increasing to over $30,000 a day for all benchmark vessels on average for much of the summer. This is the first time this has happened since August 2008, notwithstanding changes to the benchmark vessel and route compositions since then.

Given rising sentiment and surging freight markets, it would be natural to assume that trade in dry bulk commodities this year had exceeded previous estimates.

The reality, however, contrasts with expectations; our estimate for trade growth in 2021 has been cut from 6% year-on-year to 4%.

The largest downgrade has been made to iron ore trade, now forecasted to rise by just 1.4% yearon-year, from over 6% previously.

Coal trade growth has also been cut, to 3.6% year-on-year from 5.4%, and minor bulks trade has also seen a

ISSUE THREE 2021

marginal downgrade, mainly due to a downwards adjustment for bauxite.

Bucking the trend has been more positive grains trade, however a 6m tonnes uplift, driven by strong shipments from the US to China, is heavily offset by the 80m tonne cut to iron ore, 21m tonne cut for coal and 12m tonne cut for minor bulks.

The change to MSI’s view for China’s imports this year stems from several factors. Perhaps the most powerful signal is the recent historical trend. China’s 2021 iron ore monthly trend is now on a downwards trajectory, although we note that the second half of the year is usually stronger than the first.

Lower cargo growth in 2021 means our estimate for tonne-mile demand growth has declined from 6.3% year-on-year in our view to 4.6% year-on-year. Notably, our headline dwt demand outlook is barely changed at a robust 6.4% year-onyear as we have again increased our assessments of days in port for 2021.

The chart carried shows the average days spent waiting to discharge in China for the panamax, handymax and handysize bulker segments according to data from Oceanbolt. Since this time last year, time spent waiting has been far higher than any period since 2015.

Note that with China accounting for such a high concentration of cargo, increasing time in port there has leveraged the impact of cargo

volumes on the requirement for ships.

To understand the impact of higher port days, we ran a scenario with port days in 2021 at the 20152019 historical average.

The outcome is startling – in this scenario the dry bulk fleet employment rate would be 81%, similar to the weak markets of 2015 and 2016. Handysize one-year T/C rates would be only $7,800 per day in 2021, compared with $18,000 per day in our base case.

This is critical to understanding the drivers of the current freight market strength, and to build an informed sense of its likely direction.

To put it more clearly, port congestion is a major reason behind high freight earnings.

The outlook for port delays, therefore, remains a critical factor in assessing the outlook for the dry bulk earnings. ●

15

MARKETS TANKERS

Abnormal supply, changing demand For both tanker supply and demand, deviation from the trends of the last two decades is likely to be pronounced, writes Tim Smith from Maritime Strategies International

C

ritical to an accurate understanding of the tanker market is to realise that 2019 and 2020 were abnormal not just for demand but also from a supply-side perspective.

Scrubber retrofit and floating storage applied the brakes on available fleet growth for two years.

In the depths of the demand shock of 2020, the market effectively got a ‘free pass’.

A supply hiatus on this scale had not happened since the start of the millennium. Since then fleet growth has been consistently positive with tanker capacity doubling over the same time. However, what is crippling the market now is that underlying capacity growth did not stop – but rather kept rising at a similar rate to its trend pace throughout 2019 and 2020.

In 2021, the music has stopped on this supply-side buffer and conditions are dire as a result. This downturn may persist longer than we expect. We have lowered our outlook modestly in our current Base Case but the prospect of a continued weak

ISSUE THREE 2021

market in 2022 is real.

What is interesting is the supply-side outlook continues to be abnormal. Recent history, and our projections, see an end to the trend in fleet growth. While available capacity has been the cause of deviation from the trend in recent years, we see actual capacity start to move away from the growth trend in 2023-25.

This move is forecast to be relatively sharp and sustained, as scrapping activity increases to levels not seen since the 1980s. The supply-side becomes the engine of the tanker recovery, with demand doing very little of the ‘heavy lifting’ beyond the Covid recovery phase.

Although our scrapping forecast may seem overly optimistic or even outlandish, in the context of the evolving fleet age profile, and with respect to a fleet that has doubled in size in 20 years, it does not look so stark.

Forecast scrapping volumes are huge, but as a percentage of the fleet, annually they remain below 5% across the forecast. This is significantly lower than the 1980s, which in the middle of the decade reached 10%, and the early 2000s which saw scrapping exceed 5% of the fleet for four years.

What is more, this still sees the aged proportion of the fleet rise well above its recent historical range.

In the 2010s the 20+ year-old fleet

averaged 4-5% of total capacity. In the first half of the 2020s this will rise to 7-8%, even with all the scrapping predicted.

Even though we cannot predict with certainty the precise timing of the scrapping wave headed this way, the trend is almost guaranteed. This gives the tanker sector an unusual (looking at history at least) level of support from the supply-side. The demand-side is subject to far more uncertainty, both due to its nature – it is much more complex – and because we are moving into a period of transition.

This market can no longer rely on ‘reverting to trend’. With both supply and demand, deviation from the trend of the last two decades is likely to be pronounced. Several key questions therefore present themselves when we look at tanker markets over the longer-term from a demand-side perspective.

Firstly, the question most people want to understand is, how quickly will oil demand growth decelerate from historical trend and then reverse direction? Secondly, how will tanker demand fare relative to underlying oil demand?

Out to 2025, we expect two phases for oil demand. Firstly, the recovery from Covid-19, which will involve a period of strong demand growth, followed secondly by a deceleration to sub-trend growth rates in 2024-25. ●

17

ORCHESTRATE YOUR SUPPLY CHAIN WITH THE BEST FROM PSA AND GeTS

LEVERAGE PSA’S NETWORK OF MORE THAN 50 LOCATIONS IN 26 COUNTRIES BENEFIT FROM GeTS‘ CONNECTION TO 60 CUSTOMS NODES GLOBALLY JOIN OUR COMMUNITY OF MORE THAN 10,000 FREIGHT FORWARDERS

CREATE A NEW HARMONY WITH US TODAY.

SOLUTIONS BEYOND THE PORT DRIVING BUSINESS INNOVATION FOR SUPPLY CHAIN RESILIENCE

ADVANCED TRANSHIPMENT MANAGEMENT

ACCESS THE INTERNATIONAL LAND-SEA TRADE CORRIDOR

TRADE ADVISORY IN 180+ COUNTRIES

SUPERIOR COLD CHAIN INTEGRITY

THE INTERNET OF LOGISTICS

AN ECOSYSTEM OF CONNECTED AND INTEROPERABLE LOGISTICS NODES ACROSS THE PHYSICAL, REGULATORY AND FINANCIAL

DIMENSIONS, ENABLING SMARTER AND MORE VISIBLE CARGO FLOW

FAST & FUSS-FREE FINANCING SEAMLESS AIR-SEA CONNECTIVITY

ALERTS ON PORT EVENTS

PORT COMMUNITY SYSTEM BRINGING MARITIME AND LOGISTICS STAKEHOLDERS TOGETHER OPEN PLATFORM POWERED BY GeTS GENERATING SMARTER, SAFER AND SMOOTHER GLOBAL TRADE

SMOOTH CUSTOMS CLEARANCE ACROSS BORDERS

WWW.GLOBALPSA.COM

HTTPS://GLOBALETRADE.SERVICES/

MARKETS CONTAINERS

What to do with the money?

Lars Jensen from Vespucci Maritime ponders how carriers might spend their billions earned this year

T

he new data from Container Trade Statistics covering August 2021 still shows basically normal global demand growth.

When compared to the pre-pandemic period in 2019 the global demand growth year-to-date in 2021 is up an average 2.7% per year since 2019. For August specifically it is 2.1%.

This number, of course, conceals a large underlying skewness in the market. Very basically put there has been a strong demand boom for North American imports for a year now whereas all other markets are either growing extremely slowly or are in a slight decline. The fact that North American import growth yearon-year suddenly dropped to slightly below 1% in August does not mean the boom has ended. It simply means that the boom, which has gained full traction in August 2020, continues at the same high level.

But try to place this into the context of the new projections for carrier profitability. The latest assessment from Drewry points to a profit for the carriers of $150bn in 2021 alone with

ISSUE THREE 2021

the UK consultants projecting an even higher figure for next year.

Think about it this way: You can buy a 20,000 teu vessel at a cost of $150m in very round numbers. Hence $150bn will buy you a thousand of such vessels for a combined volume almost matching the entire existing container fleet.

Of course this is not going to happen – not just because it would be sheer folly but also because in physical terms there would not be the capacity do such a thing.

But this brings us to the main point of this line of thought: If there is only slow normal demand growth and the carriers are flush with more cash than ever before, what should they spend the money on?

In the ‘old days’ demand tended to grow on average 8% to 9% per year and hence plowing all available financing into more vessels was the right thing to do to stay abreast of the market developments. Not so anymore at 2% to 3% growth and $150bn to boot.

The carriers are unlikely to

“

The one major avenue open for investment is logistics

”

not do anything with the money, and there is only so much cash you can use to drive the digital transformation. Funding the green transition will of course go faster than expected, but this is still to some degree in an experimental phase and the technology is not at maturity level yet where you can commit such sums into making the transition as yet.

This leaves one major avenue open for investment: Logistics. Either through acquiring assets or through acquiring existing companies. This means the pressure is going to intensify in terms of competition in the logistics sector, likely bringing the largest pressure on the small and mid-sized players.

Naturally Maersk and CMA CGM have already been pursuing this avenue for a while but it is increasingly likely to see other carriers follow suit on this path. ●

19

Danica

Hands-on Crew Management Solutions Danica delivers personalized crew management services. We call it Danica Hands On. Our crew management solutions are individually designed to fit your specific needs.

You can choose a full service package or cherry pick from our individual services, like crew logistics, payroll or competence management or make use of training services.

Danica Maritime Services GmbH Lilienhof | Lilienstrasse 11 | 20095 Hamburg www.danica-maritime.com

Ask us for a competitive quote for the manning of your vessels and you will see that Danica’s quality crew management is also cost efficient.

MARKETS FINANCE

Demise of LIBOR creates uncertainty It will become very difficult to plan your next interest payment

W

hat an amazing year 2021 is turning out for most in shipping (with apologies to tanker owners, still crying into their flat beer). No two shipping cycles are alike, something to bear in mind with today’s generally buoyant, yet still noticeably cautious, markets.

I well recall how in 2003 the bank I was working for predicted the biggest shipping upswing ever, and so it proved with China changing the world. Today’s markets though are so different with so many different strands at play, in a way I feel shipping has never appeared more messed up.

Still, this is meant to be a finance-focused column, so let’s look at the banks. The banking sector has largely sorted itself finally. It is very interesting to note however the massive range in interest charged by lenders at the moment. Several deals done by international banks for stock-listed companies come with margins from 2.5% to 2.7% above

ISSUE THREE 2021

LIBOR, an incredibly low figure for this type of risk. A separate segment are Greek banks lending to local clientele at rates of between 2.7% to 4%.

Then for just about all other banks the figure is between 4% to 6.5%.

Then there’s private equity where decent financing is on offer for 6.5% to 10%, hugely down from the 17% or 18% margins charged eight or nine years ago. Private equity has finally worked out what to do via back levering deals.

Since we’re talking above LIBOR here it would be remiss of me if I didn’t touch upon this tricky subject - it is important, and few people are discussing it properly. After big scandals, where many banks were cheating, the authorities in the UK have decided to ditch the system. It’ll probably take a couple of years for it to be consigned to history. $370trn is quoted today based on LIBOR, it is simply massive. What to do in its place? The Alternative Reference Rates Committee has come up with a secured overnight financing rate (SOFR), which is essentially what banks can borrow from the Fed against treasury bonds.

It is good that it is just overnight but SOFR has a lot of negatives such as no forward curve whereas LIBOR has seven of them.

If a bank goes LIBOR from SOFR it will lose 30 basis points because LIBOR took into account also the risk on the banks. What will people do and how to deal with it in practice? In my mind, it will become very difficult

to plan your next interest payment, it creates uncertainty for sure.

Enough LIBOR conjecture, back to the bigger picture of ship finance.

Overall the banking market for ship finance is still contracting. And yet we are still seeing new lenders come in and others raise their game as shipping is suddenly sexy once again.

Berenberg Bank, for instance, has been making big strides, working with German institutional investors where the bank comes in together for 10% to 20% on individual deals.

It is great to see investors have an interest in shipping again after so many years out in the cold. You can see it everywhere whether it be in the Norwegian bond market, the recent sale of Teekay LNG, or Michael Burry, the guy behind the Big Short, buying a big stake in Golden Ocean. And for my depressed tanker friends, the fact that John ‘Big Wolf’ Fredriksen has just piled into Euronav, well that ought to be a sign of hopeful times ahead. ●

21

EXECUTIVE IN PROFILE DEBATE

Deep seabed mining risks Marta Montojo and Ian Urbina from the non-profit Outlaw Ocean Project on the risks of dredging minerals from the ocean floor

F

ew people have ever heard of the tiny country of Nauru.

Even fewer ever think about what happens at the bottom of the world’s oceans. But that may soon change. The seafloor is thought to hold trillions of dollar’s worth of metals and this Pacific-island nation is making bold moves to get a jump on the global competition to plumb these depths.

The targets of these companies are potato-sized rocks that scientists call polymetallic nodules. Sitting on the ocean floor, these prized clusters can take more than three million years to form. They are valuable because they are rich in manganese, copper, nickel, cobalt that are claimed to be essential for electrifying transport and decarbonizing the economy amid the green technological revolution that has emerged to counter the climate crisis.

To vacuum up these treasured chunks requires industrial extraction by massive excavators. Typically 30 times the weight of regular bulldozers, these machines are lifted by cranes over the sides of ships, then dropped miles underwater where they drive along the seafloor, suctioning up the rocks, crushing them and sending a slurry of crushed nodules and seabed sediments from 4,0006,000 meters depth through a series of pipes to the vessel above. After separating out the minerals, the processed waters, sediment and mining ‘fines’ (small particles of the ground up nodule ore) are piped overboard, to depths as yet unclear.

But a growing number of marine biologists, ocean conservationists, government regulators and environmentally-conscious companies are sounding the alarm about a variety of environmental, food security, financial, and biodiversity concerns

22

associated with seabed mining.

These critics worry whether the ships doing this mining will dump back into the sea the huge amounts of toxic-waste and sediments produced by grinding up and pumping the rocks to the surface, impacting larger fish further up the food chain such as tunas and contaminating the global seafood supply chain.

They also worry that the mining may be counterproductive in relation to climate change because it may in fact diminish the ocean floor’s distinct carbon sequestration capacity.

Their concern is that in stirring up the ocean floor, the mining companies will release carbon into the environment undercutting some of the very benefits intended by switching to electric cars, wind turbines and long-life batteries.

Douglas McCauley, who is also the director of the Benioff Ocean Institute at the University of California Santa Barbara, warned against trying to counter the climate crisis with solutions that rely on a “paradigm of just ripping up a new part of the planet.” If the goal is to slow climate change, he said, it makes little sense to obliterate the deep-sea ecosystems and marine life that presently play a role in capturing and storing more carbon than all the world’s forests.

If the high seas represent the last frontier on earth, then the deep seabed outside of national waters is a frontier beyond that, a realm subject to a unique regime under international law, deeming the international seabed area and its resources to be managed by an international organization called the International Seabed Authority (ISA) on behalf of humankind as whole. “But who benefits and how from this new rush to seabed mining remains unclear,”

said Kristina Gjerde, high seas policy advisor for the IUCN Global Marine Program. “And what constitutes benefits to humankind is also unclear as the deep seafloor is filled with untold biodiversity, much of it vitally important to the survival of our planet.”

Still, Nauru hopes to forge ahead with seabed mining. Located in Micronesia, northeast of Australia, the tiny island is among the smallest countries on the planet, with a landmass of 8 square miles and a population of around 12 thousand.

By moving faster than its competition, this cash-strapped developing nation hopes to get an early edge on a potentially multi-billion dollar market even though Nauru itself is only likely to receive a small fraction of the financial benefits of seabed mining from the Canadian company it is sponsoring.

In June, Nauru took the first step in launching the industry. It announced plans to submit an application for commercial extraction on behalf of its sponsored entity “NORI” as early as 2023 to the International Seabed Authority. Such an application will be judged against whatever the deep sea mining rules are at that time — finalized or otherwise.

Over a dozen other countries, including Russia, the UK, India and China, have 15-year exploration contracts. The government of India has recently set aside $544 million to stoke private sector investments and technological research in this industry. But Nauru is taking the lead partially because its sponsored company NORI is a wholly owned subsidiary of a Canadian company that thinks it may benefit from being the first, based on its arguments that the minerals are necessary to enable the transition to a new green economy. maritime ceo

EXECUTIVE IN PROFILE DEBATE

International interest in seabed mining has been stoked partly by new advances in robotics, computer mapping and underwater drilling -- combined with historically high but fluctuating commodities prices.

Mining companies globally are said to be scouring for fresh reserves, having depleted much of the world’s easy-to-access veins. The metals they seek are used in magnets, batteries, and electronic components for smartphones, wind turbines, fuel cells, hybrid cars, catalytic converters and other high-tech gadgetry.

These metals are commonly found on land but some raise concerns that these may not be enough.

“With dwindling resources on land, with exponential growth of demand, and a shortage in circulation (recycling), there is a need to find alternative sources of critical metals needed to allow the energy transition to zero-net carbon economies,” said Bramley Murton, a marine researcher at the UK’s National Oceanography Centre. It has been estimated that, collectively, the nodules on the bottom of the ocean contain six times as much cobalt, three times as much nickel, and four times as much of the rareearth metal yttrium as there is on land.

Mining companies and states have set their eyes on a specific part of the sea, an area bigger than the size of continental United States that stretches from Hawaii to Mexico, neighboring Nauru’s exclusive economic zone. The ocean floor under that area, known as the ClarionClipperton Zone, is estimated to contain metals valued at between $8 trillion and $16 trillion.

Nauru has teamed up with NORI, which is owned by a Canadabased firm called The Metals Company to explore this area. “We are proud that Pacific nations have been leaders in the deep-sea minerals industry,” a statement co-authored

by Nauru’s representative to the International Seabed Authority recently declared.

Scientists have conservatively estimated that each mining license

ISSUE THREE 2021

will permit direct strip mining of some 8,000 square kilometers of seabed over the course of a 20 year mining license from the ISA and ‘easily’ impact a further 8,000-24,000 square kilometers of surrounding seabed life by sediment plumes generated by the mining the ocean floor. They estimate that the ‘nodule obligate species’ – the animals living on the nodules or, like deep-sea octopuses, that otherwise need the nodules to survive - will take millions of years to recover and even the animals living in the surrounding sediment may take hundreds to thousands of years to recover from the impact of mining.

Some corporate stakeholders are voicing skepticism. In March, BMW and Volvo Group, along with Samsung and Google, pledged to abstain from sourcing deep sea minerals. In its most recent global report, the International Energy Agency, a global body that advises countries on policy, concluded that seabed mining machines, “...often cause seafloor disturbance, which could alter deep sea habitats and release pollutants... stirring up fine sediments, could also affect ecosystems, which take a long time to recover.” In June, the European Parliament also asked the executive branch of the European Union to stop financing deepsea mining technology and called for a delay in more exploration operations.

UK House of Commons Environment Audit Committee in 2019 concluded that deep-sea mining would have “catastrophic impacts on the seafloor”, the International Seabed Authority benefiting from revenues from issuing mining licenses is “a clear conflict of interest” and that “the case for deep sea mining has not yet been made” One worry among seabed mining critics is that the industry’s giant suction, grinding and harvesting machines will kick up huge and suffocating clouds of sediment both along the seabed and high in the water column that block light, crowd out oxygen, produce harmful amounts of noise pollution and disperse toxins which decimate life and contaminate

seafood. Such contamination could also pose a threat to the food security for developing and coastal nations whose fishing stocks and other seafloor marine life would be decimated.

“We need much more time for research to be carried out, not by mining companies, but by independent seabed ecologists,” said Kelvin Passfield, who runs the Te Ipukarea Society in the Cook Islands and is part of a group of non-profit organizations in Fiji, Vanuatu and elsewhere in the Pacific islands that are concerned about the impacts of such plumes on local fishermen and food security.

Other critics see the mining as a ponzi scheme of sorts that is meant to draw venture capital investment but in fact has little real chance to make money in the long term.

Matthew Gianni, co-founder of the Deep Sea Conservation Coalition, said that seabed mining companies are trying to peddle a false choice between having to mine cobalt and nickel on land or in the deep sea when they claim we need 100s of million of tons of these metals to build batteries for electric vehicles and other renewable energy storage technologies. “We don’t need to build batteries with either nickel or cobalt. Tesla and BYD, the world’s second largest EV manufacturer, are making cars with Lithium Iron Phosphate (LFP) batteries, with little to no nickel or cobalt, which are selling unexpectedly well,” he said. “There is massive investment now being put into developing batteries that don’t use these metals at all.”

Better product design, recycling and reuse of metals already in circulation, urban mining, and other ‘circular’ economy initiatives can vastly reduce the need for new sources of metals, he said.

Once thought to be relatively lifeless, the deep sea is now seen by most scientists as a species-rich environment populated by creatures that thrive under conditions that seem impossibly extreme. And yet, much of its biodiversity on the seafloor is distinctly vulnerable to change because their habitat is so far removed and thus rarely disturbed. ●

23

IN PROFILE

Rolf Habben Jansen p.29

John Denholm p.31

Rome Ed Buttery p.00 p.35

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

24

maritime ceo

IN PROFILE

Steffen Bauer p.41

Nikolas Tsakos p.39

Polys Hajioannou p26

Modi Mano p37

Rajalingam Subramaniam p.33

ISSUE THREE 2021

25

IN PROFILE

One step ahead of the pack Polys Hajioannou and Safe Bulkers have been prepping their fleet to keep regulators at bay

O

n the occasions where Maritime CEO has had the chance to interview Polys Hajioannou, this issue’s cover star, it’s been clear from the get-go that we’ve been sitting down opposite a visionary within the shipping industry.

Days after our most recent encounter where Hajioannou had explained why he felt this particular dry bulk run had legs, backing up this prediction, the Cypriot announced a fixture of a Safe Bulkers capesize for up to four years, expecting to earn a minimum $26.7m, as the Baltic Capesize Index hits highs not seen for 13 years.

“Demand is on the rise whereas supply is unable to follow, thus the charter rates are continuously moving upwards. Strong fundamentals support further upside in dry bulk,” a bullish Hajioannou tells Maritime CEO. Other ship types have jumped the queue at Asian shipyards providing dry bulk with a long runway supply/demand-wise, Hajioannou says, pointing to the massive, record ordering of containerships over the past year, which have made dry bulk slots at yards “very tight”, he says, with anyone ordering now likely having to wait until 2024 for ships to deliver.

The dry orderbook as a percentage of the dry bulk fleet stands at 6%, the lowest in the last 20 years, Hajioannou points out. This slowpaced fleet expansion will be a key factor for the long-term health of the dry market, he insists.

26

A further reason that Hajioannou believes in his firm’s favour is the fact that stringent environmental regulations and climate pledges to cut carbon emissions in order to reach a CO2 emissions peak by 2030 will favour companies with modern fuel-efficient fleets. Older fuel vessels are likely to become less competitive, he suggests, taking also into account that a significant portion of the global dry bulk fleet will be turning 15 years old over the next few years, thus facing increased environmental scrutiny.

In addition, uncertainties regarding emissions regulations and propulsion technologies will probably limit the ordering activity; Another point in favour of a protracted dry bulk run, according to this seasoned shipowner, is that demand as expressed in seaborne trade volumes is expected to be strong at least for the next 12 months with the global commodities demand catching up to pre-Covid levels further supported by green infrastructure and renewables projects taking up a big component of the fiscal stimulus both of the US and China, which ultimately will have a direct impact on long-term productivity and the global GDP. Hajioannou describes the dry bulk market of last year as a rollercoaster, recalling: “The global output declined about three times as much as during the global financial crisis in half the time as a result of the Covid19 pandemic, which led to a severe global recession unique in its depth and severity. The combination of

“

Safe Bulkers has been relentlessly, albeit silently preparing for the next decade

”

Covid-19, which led to the collapse of freight rates and to liquidity crunch, the introduction of ever-changing environmental regulations, green shipping, decarbonisation, geopolitics, capital allocation strategies and alternative finance, were among the most significant challenges we had to address along with the inability to make crew changes. Despite the uncertainties we have managed to break even as early as the third quarter of 2020 and returned in black during the fourth quarter of the year.”

Listed Safe Bulkers tends to go about its business in a diligent, yet rather quiet manner. It is not a company that likes to make big, flashy announcements, preferring to just get on with its own agenda.

“Safe Bulkers has been relentlessly, albeit silently preparing for the next decade,” Hajioannou says. “We acknowledged early on, that environmental conservation is crucial for our survival not only as a shipping company but also as individuals.”

The company was an early adopter of scrubbers and ballast water treatment systems and has latterly initiated a significant fleet renewal programme.

This year has seen Safe Bulkrs sell seven older, less efficient or Chinese-built vessels, while acquiring maritime ceo

COVER STORY

four Japanse secondhand ships and placing orders for eight Japanese newbuilds, which meet EEDI Phase3 requirements as well as complying with the International Maritime Organization’s (IMO) NOx Tier III regulations.

Further fleet renewal and ship upgrades are on the cards, Hajioannou reveals so that Safe Bulkers can stay ahead of the tsunami of environmental regulation changes heading shipping’s way.

“Safe Bulkers intends to become the environmentally conscious industry leader. Taking risks and bearing investment cost comes in tandem,” Hajioannou says, adding: “We have taken action ahead of the competition, by placing ESG at the very heart of our business strategy.

We remain committed to continuing our environmental investments, further reducing our environmental impact by improving the quality of

ISSUE THREE 2021

fuel emissions of our fleet and continuously improving our environmental performance, in our goal to distinguish ourselves among our peers as an environmental conscious leader in the dry bulk shipping industry. We look ahead, playing the asset game proactively.”

Hajioannou is well aware that the industry’s regulatory environment is becoming more complex and includes US, EU oversight as well as the IMO’s GHG regulations.

“In the foreseeable future we expect the trend of increasing regulatory compliance complexity to continue,” Hajioannou says.

In his capacity as vice president of the Cyprus Union of Shipowners

“

We look ahead, playing the asset game proactively

”

and, with Safe Bulkers having a strong physical presence in Cyprus, Hajioannou has watched and applauded as the island has really focused developing into an international maritime hub over recent years. Safe Bulkers is the largest shipowner under the Cyprus registry and Hajioannou’s views are taken seriously by the top echelons of the government.

“The responsiveness of the Cyprus Shipping Ministry to a fast-changing competitive environment, by securing a favourable tax regime for the next 10 years will further enhance Cyprus as an international shipping business destination,” Hajioannou reckons, going on to praise authorities during the pandemic for their decision to introduce a safe corridor for crew changes. For now, Hajioannou seems to content to ride the dry bulk wave from his base in the eastern Med. ●

27

TURN UNCERTAINTY

INTO CONFIDENCE Chart a practical path to decarbonization The goal is clear – but the path is uncertain. DNV’s Maritime Forecast to 2050 uses a new carbon risk framework for a detailed assessment of fuel ready and fuel flexible solutions. Empowering you to make sound decisions and keep your vessels under the tightening carbon trajectories.

Download the Maritime Forecast to 2050: dnv.com/maritime-forecast

IN PROFILE

The coming months for liner shipping An interview with Rolf Habben Jansen, the CEO of Hapag-Lloyd

T

he container sector is the star of the show in terms of earnings right now, and demand is expected to remain at a high level.

Nevertheless, Rolf Habben Jansen, the CEO of Hapag-Lloyd, Germany’s largest liner, remains careful in his predictions about what’s next.

Habben Jansen believes that despite the unexpected boom in demand since the second half of last year, looking far ahead into 2022 is very difficult, especially with volatile market conditions and current infrastructure challenges. Further complicating matters, the pandemic’s development remains uncertain.

“However, we remain cautiously optimistic,” says Habben Jansen.

As analysts expect the extraordinary current rates to pass as well as the current squeeze on ship capacity, the Dutchman, who’s been at Hapag-Lloyd‘s helm since 2014, notes it is important to consider that the current rate discussion is only about spot rates.

“As of today, we are still loading containers at 2020 rate levels, which means that customers with medium and long-term contracts are not affected by the current rate development,” he argues.

On average, container rates were at Hapag-Lloyd about $400 more per teu in the first quarter of 2021 compared to the same period last year. For its interims, HapagLloyd revealed it earned more in six months than in previous 10 years.

In terms of ordering new capacity, Habben Jansen reckons the liner

ISSUE THREE 2021

“

The drive to reduce emissions will most likely accelerate the need for a renewed global fleet

”

sector is still not close to the order boom seen in 2008 and 2009, and he doesn’t see that much of a risk that the book will grow again to such a size.

“Last year we already said that the orderbook was a bit too small, as too many shipping companies were reluctant to invest after 10 years of losses. We expect a slight increase in demand and an increase in scrapping of vessels, and in addition, stricter environmental regulations and the drive to reduce emissions will most likely accelerate the need for a renewed global fleet,” he tells Maritime CEO.

The Hamburg-based company made headlines recently with six megamax orders and the addition of ten 13,000 teu neo-panamax containerships. Larger ships are justified by economies of scale – the larger, the more cost-efficient. However, Habben Jansen also notes that as ships get bigger and bigger, the additional cost savings become smaller and smaller.

When it comes to port congestion issues, he believes it will continue in the months to come – mostly due to continuous high demand, full ships, and Covid-19related restrictions.

Today, the sector looks pretty much consolidated. But to entertain the idea of creating maybe three or four top carriers for Habben Jansen is something he deems highly unlikely.

“We don’t believe that we are going to see mergers among the top players in container shipping within the next few years. Our industry has seen lots of consolidation in recent years. Synergies from larger combinations will be limited, valuations are high right now and competition authorities will have a very close look and might impose harsh restrictions on any major merger that could come up,” Habben Jansen reckons.

Whether we are looking at a fundamental shift in the market, Habben Jansen says that is currently very difficult to assess. “We expect to see a strong market in the next quarters – visibility beyond that is limited,” he concludes. ●

29

BETTER MANAGED VESSELS FOR LESS COST!

CALL US NOW!....

WE CAN REALLY HELP!

ANDREW J. AIREY - MANAGING DIRECTOR TEL: +66-81-845-6269 E-MAIL: ANDREW@HIGHLAND-MARITIME.COM

INTERNATIONAL THAI SHIPMANAGEMENT Est.2009

MARITIME EXPERTISE BULK

CERTIFIED

LLOYD’S REGISTER

RORO

OFFSHORE

CONTAINER

DOC, MLC, ISO

WEBSITE: WWW.HIGHLAND-MARITIME.COM

FACEBOOK: HIGHLAND MARITIME - ALL SEASON

We Manage… You Smile…!

IN PROFILE

Climate champion John Denholm spearheads UK call for shipping to be net zero by 2050

A

s president of the UK Chamber of Shipping and fifth-generation head of illustrious family shipping business J. & J. Denholm that stretches back over 150 years, John Denholm doesn’t mince his words.

“The whole decarbonisation process is the biggest challenge that humanity has ever faced,” he says. “We’ve spent the last 2,000 years squabbling with each other for economic advantage. Now we’ve got to work together, probably to our economic disadvantage, to save the planet.”

The UK government has been at pain to stress its green credentials ahead of the COP26 climate change talks due to take place in Glasgow beginning November 1, and the domestic shipping industry is following suit. In mid-September, on the eve of London International Shipping Week, the UK Chamber issued a call for the IMO to double its decarbonisation goals and aim for net-zero emissions by 2050.

“The world needs to know the shipping sector takes its responsibilities seriously and by setting the goal of net-zero carbon emissions by 2050, people would be in no doubt,” Denholm said at the time.

Down the years the Denholm Group has been no stranger to change. It moved from sail to steam before embracing diesel engines; had to rebuild its fleet after two world wars; and after a brief foray into tankers and ore carriers retrenched, into dry bulk carriers. Today it still owns three handysize bulkers,

ISSUE THREE 2021

all Japanese-built and averaging just over five years in age, handled commercially by broking subsidiary Denholm Coates in London.

Meanwhile, the group also diversified, first into shipmanagement where it arguably founded today’s modern third party business by taking over vessels belonging to Norwegian shipowner Erling Naess.

Denholm Ship Management was later sold to Anglo-Eastern, in return for what is today a shareholding stake of some 26%. It then took a strategic decision to move sideways into other maritime-related business where it could own a controlling stake - namely logistics, seafoods and industrial services.

Certain family values have remained constant throughout, however, namely the Denholm Standard which all 1,000+ of the group’s staff in 50 offices worldwide are obliged to sign up to. These values are integrity, fairness, upholding the law and respect – for fellow workers, communities and the environment.

Which brings us back to current chairman John Denholm and his lobbying effort ahead of COP26 being hosted in his home city of Glasgow.

“We’re doing terrible things to our planet and we’ve got to stop that,” he says, adding: “We need to get to net zero by 2050 at least.” That means starting work on zero carbon ships now, he emphasises, since today’s designs will be built in 2030 and will still be in the water in 2050.

Developing viable non-fossil fuels will be the crux of the matter, he accepts, but he’s confident that

“

We’ve got to work together, probably to our economic disadvantage, to save the planet

”

the shipping industry possesses the right mindset to rise to the challenge. When he was president of BIMCO back in 2015 a number of shipping nations weren’t convinced of the need to do something, he recalls, but now the belief in the need for action is “almost universal”, he says, which is “a huge change”.

Denholm’s own pick as a future fuel? “I’m a deepsea shipping man and I focus on ammonia as the way forward,” he replies, while acknowledging that the necessary technology and supply infrastructure simply isn’t yet available. ●

31

Global network, local connections, complete control.

Experience a complete range of port agency services you can trust with our unique global network and selected partners.

Connect to a smoother, smarter ocean at: iss-shipping.com

IN PROFILE

Not sitting on the sidelines Captain Raja is determined to lead from the front as shipping grapples with its future

E

nergy transition plays, decarbonisation of shipping, industry collaboration, a stronger focus on smart shipping and the ability to attract and retain talent have been identified as key to AET Tankers’ future strategy.

Captain Rajalingam Subramaniam is president and CEO of the Singapore-headquartered wholly owned petroleum shipping subsidiary of Malaysian energy logistics group, MISC and is driving the asset renewal and sustainability focus.

Known in the industry as Captain Raja, he trusts that all participants must partner and work together towards a common goal - creating a truly sustainable and decarbonised global trade network in an appropriate timeframe.

“Technology and data must be shared for the good of everyone, and true partnerships must be developed to ensure the benefits and synergies of decarbonisation and sustainability are realised across the global logistics network. We all need to play our part now and not wait until the last possible moment,” Capt Raja says.

He began his career at sea, came ashore in 1996, and has since held various positions in the MISC group.

Speaking to Maritime CEO, Capt Raja sees some positive signals in the tanker sector in H2 2021 and into 2022, coming from a reduction in overall tonnage, an improving demand profile, a gradual increase in production and enhanced refinery utilisation.

Ever since he took over AET in 2016, he has led the acceleration of the company’s energy transition scheme and the adaptation of dual-fuel for many of its newbuilds.

ISSUE THREE 2021

Partnering with energy majors who share a common decarbonisation vision, shipyards, equipment manufacturers, financial institutions, class societies, and other maritime stakeholders have also contributed significantly to this journey.

“We do not believe in sitting on the sidelines but acting now and not later to contribute to a resilient maritime industry with a holistic and purposeful adoption of our sustainability agenda across all ESG components, including financial sustainability.” Capt Raja remarks.

AET is an early adopter of dualfuel solutions and has seen deliveries in 2020 and early 2021 of seven eco-efficient DPSTs. The company currently owns and operates more than 60 tankers and has an orderbook of 11 vessels with deliveries stretching between 2022 and 2023, all fixed on long-term contracts.

“With our newbuild programme, we will further modernise our fleet with cleaner and greener solutions and strengthen our financial sustainability pillar.”

For Capt Raja, looking farther ahead, a longer-term solution for decarbonisation sees multiple pathways and AET will select the most effective long-term solution for zero carbon vessels. “Being an early adopter comes with risks, but we were early adopters of dual-fuel technology and we have built the experience to manage those risks.”

Capt Raja tells Maritime CEO he supports a carbon tax centrally coordinated and equitably proportioned to users of the products and services, and believes that revenues raised from the carbon tax must be reinvested into further maritime research and development to

advance low-carbon.

He also believes that additional collaboration is needed with the wider stakeholder grouping of financiers to see more support with better differentiators and incentives for owners to adopt solutions that are more ESG orientated. “I would like to see more support for truly cleaner and greener maritime solutions in all asset classes and the financing margins should be sustainability linked to pivoting the behaviour of our industry colleagues in the right direction.” Capt Raja says.

Underpinning the entire logistics network will be the recruitment, retention, and diversity of great talent. “We need to attract and retain a workforce for tomorrow’s needs that is increasingly driven by purpose and ESG goals. Our people must be encouraged to invest in our future and recognise that they too are vital stakeholders and partners.”

Going forward Capt Raja plans to focus on growing AET’s asset portfolio in a balanced manner, so AET continues to support the needs of the energy market and capitalise on energy transition opportunities.●

33

DECARBONISING MARITIME WILL TAKE

MORE THAN TECHNOLOGY

Read more at www.wartsila.com/decarbonisation

IN PROFILE

London leader Ed Buttery on the road to an IPO and future plans

I

t has been a sensational year for Ed Buttery, leading his sevenyear-old firm onto the London Stock Exchange (LSE), continuing to grow his handy bulker fleet while enjoying the best rates in more than a decade.

Taylor Maritime Investments’ listing in London was a brave move, there had been no shipping IPOs in the UK capital for many years, yet Buttery rolled his sleeves up and hit the virtual roadshow hard, drumming up support for the launch with snappy, beguiling pitches on prospects for the dry bulk sector - much of which has borne out in the weeks since the bell tolled on his big day at the LSE. The cash accrued has gone on bulking up the fleet, yet Buttery, now a CEO with shareholders to appease, says the aim for the company is not to expand willy-nilly.

“The ultimate goal is not a certain number of ships but to maximise long term shareholder value, protect dividends and to grow them,” Buttery says, adding: “We will look for new exciting investment opportunities but if we don’t find them we will be happy to return capital and profits to shareholders.”

Nevertheless, Buttery is adamant that the handysize segment has had and continues to have extremely compelling fundamentals. Moreover, with a nod to his father, Chris, the co-founder of Pacific Basin, Buttery points out his company has access to private deals owing to the family’s longstanding relationships.

To date, Taylor Maritime has eschewed newbuilds, content to

ISSUE THREE 2021

“

We see relative better value in the secondhand market

”

scour the secondhand markets for prime Japanese tonnage. This strategy is unlikely to change anytime soon.

“We would never rule it out but at the moment we see relative better value in the secondhand market and there are obvious challenges around newbuildings which relate to future technology changes as our industry charts its course towards zero carbon over the medium to long term,” Buttery says.

It is, of course, the single issue that dominates shipping boardrooms more than most these days - hope to navigate shipping’s path

to decarbonisation, and is a topic Buttery has strong opinions about.

“We believe the industry in general needs to be more ambitious with its long term targets and should be aiming for zero carbon by 2050,” Buttery says, telling Maritime CEO that his company is deploying several strategies towards this objective. One aspect is looking at innovations in zero emission ship design/technologies and fuels, and evaluating projects that the company can participate in which test these in practice. In the meantime, the company is continuing and expanding its programme of retrofitting its ships with energy efficiency measures .

At the last count, the Taylor Maritime fleet was hovering around the mid-30s in terms of numbers with an average age of under 10 years. ●

35

A smarter perspective on a low carbon future Let’s talk.

With future-fuel flexibility

Meet us at Marintec at stand N2E3D

wingd.com

IN PROFILE

Methanol future Modi Mano on the decision to buy Marinvest

I

t’s been a couple of years since Maritime CEO ran into Modi Mano, the CEO and founder of MSEA Group. The last time was on stage at the Monaco Yacht Club, talking tankers with among others, Scorpio’s Emanuele Lauro at a high profile Maritime CEO Forum (pictured). In the intervening period, Mano has had much time to ponder shipping’s topic du jour - the future fuel conundrum - and this October he made his intentions clear ...

MSEA Group, Arkview Capital and Scorpio Tankers announced earlier this month the creation of a joint venture company called Clean Sea Transport to acquire Marinvest and its fleet of five dual-fuel methanol carriers and four LR1 product tankers.

The Marinvest methanol fleet comes attached with long-term charters to its partner Waterfront Shipping, a subsidiary of methanol producer Methanex Corporation.

Marinvest is the world’s pioneer in building and operating methanol-fuelled vessels. Based in Sweden, Marinvest was founded in 1988 by Lars Mossberg, who developed and managed one of the world’s first methanol-powered commercial vessels.

The new Clean Sea Transport platform aims to offer charterers and customers access to future-proof tonnage in the tanker, container, and dry bulk segments.

Mano says the inclusion of four LR1 product tankers in the deal underpins his counter cyclical tanker investment strategy.

Speaking with Maritime CEO, Mano says the plan is to develop the fleet further, but to also bring the methanol technology to other

ISSUE THREE 2021

“

Methanol is a viable and cost effective long term solution not only for tankers but also for other segments such as containers and dry bulk shipping segments.

“We very much believe this is a viable and cost effective long term solution not only for tankers but also for other segments such as containers and dry bulk. We have the capacity, know how and now the track record to to grow the business and bring real value to our environmentally minded industry counterparts,” Mano says.

Mano’s career saw him co-found mighty Navig8 Group in 2007, having previously worked for DVB Bank. He founded MSEA in 2012 in Cyprus. The company now operates a fleet of 24 vessels consisting of medium-range and conventional chemical and product tankers, iceclass 1A tankers, long-range product tankers and aframax tankers. ●

”

37

IN PROFILE

A life in shipping Nikolas Tsakos recorded his first ever podcast with Capital Link in October. Maritime CEO tuned in

A

s far as this year goes, the tanker sector will definitely be one to forget.

Nevertheless, Dr Nikolas Tsakos, founder, CEO and president of Tsakos Energy Navigation (TEN), is certain of its comeback and hopes it will mimic what other shipping sectors are experiencing.

Tsakos comes from a long line of shipowners. The Tsakos family traces its shipping roots back to 1854, when his ancestors sailed to the Black Sea to trade citrus fruits from the island of Chios, bringing back grain from Romania. The initial seed for the Tsakos Group was founded in the late 1960s by Captain Panagiotis Tsakos, father of TEN’s boss who also made his first fortune in oil trading.

Tsakos started visiting ships at a very young age, following in his father’s footsteps, who had a very good way of introducing him into the shipping business, without ever forcing him into it. His mother was also a successful doctor.

After serving in the Greek Navy and then heading to college, he came up with an idea to combine his academic knowledge and his passion for shipping.

“If you are not the captain or an engineer or a seafarer, you are considered a failure in life,” Tsakos said in conversation with Capital Link.

He was educated in the US and, looking back, he said, smiling, that had he gone to the west coast, he’d be a high-tech trillionaire by now rather than a hard-working seafarer.

“I still believe I should have moved to the west coast,” he mentioned a few times.

The foundation of TEN was inspired in New York in the mid-‘80s

ISSUE THREE 2021

when a fashionable model for real estate was limited partnerships.

“Since we’re always looking at shipping as floating real estate, I felt that could be a model that could work for our industry,” Tsakos relayed.

He was 24 when he listed his company on the New York Stock Exchange. His father was not enthusiastically supportive but said “if this can be done and you think you can do it - go ahead and do it.”

He referred to his father as a genius in psychology, actually guiding him towards something he’d like him to do without ever feeling he had to do it. “I don’t care what you do, but be the best or one of the best,” Panagiotis Tsakos used to say to his son.

As a former chairman of the International Association of Independent Tanker Owners (INTERTANKO), Tsakos sees the tanker industry as very fragmented and is a big supporter of owners communicating. “We are looking at so many pressing issues for shipowners, such as decarbonisation, new technologies and we have to at least be able to exchange ideas.”

He is also a big supporter of pools, which accordingly exclude the need

to merge or carry the baggage or skeletons in the closet of another public company.

TEN is doing its part to reach the 2030 and 2050 targets set out by the International Maritime Organization with dual-fuelled newbuilds and the company making the decision not to order any more conventional ships. For Tsakos, LNG is a very good step forward, despite the current technology limitations. He believes the infrastructure for existing fuels can be improved to slash carbon emissions with a fraction of the disruption and the investment of those of potential future fuels such as hydrogen, nuclear energy, or something else.

“I think that one of the things which is missing, and I don’t know if we’re going to talk about it in Scotland, is the actual damage to our planet to achieve the new infrastructure that will move what would be supposedly much greener energy,” he said, discussing COP26, an upcoming major climate summit. He believes that if we want to mimic the current energy infrastructure, the environmental impact would be huge. “No one is looking at how electricity is produced,” he pointed out. ●

39

Jotun developed the HullSkater - a hull cleaning robot for vessels.

But they’re…

Your Arena for Ocean Solutions

It’s hard to find the next sustainable solution, when there’s an ocean between us.

Nor-Shipping brings the industry together. Learn more about new ocean solutions, and meet the companies that are taking positive #ACTION, from 10-13 January 2022 in Oslo. Learn more at nor-shipping.com

… 11240 nautical miles away from Hyundai Heavy Industries Group who constructed the world’s first 14,800 TEULNG dual-fuel VLCS

IN PROFILE

Low water? No problem Germany’s HGK Shipping has developed ships that can deliver cargoes along rivers with depths of just 30 cm

T

he end of September saw the launch of the Gas 94, an innovative, low-water gas tanker operated by HGK Shipping, the largest inland waterway shipping company in Europe. The ship was specially designed and constructed on behalf of BASF. It will help ensure that supplies of raw materials reliably reach the BASF business site in Ludwigshafen, even if the water levels in the river Rhine are critical.

The diesel-electric drive system onboard the vessel will help the two long-standing partners to achieve their sustainability goals.

The river Rhine and inland waterway shipping are crucially important for supplying the BASF Group’s site at Ludwigshafen. Most of the inland waterway shipments have to make their way through the critical water levels at Kaub in the central Rhine valley. The Gas 94 has been designed in such a way that it can still transport 200 tonnes of liquefied gases, even if the water level at Kaub is just 30 cm. This is possible because of the optimised uplift properties on the vessel’s hull, which has been achieved using a complex arrangement of components such as cargo containers and the drive system technology. The gas tanker is 110 m long and, with a width of 12.5 metres, broader than the other vessels in the HGK Shipping fleet.

The Gas 94 is characterised by its unusual aft and foreship designs and the low-water properties that they achieve. While the foreship has been designed as a very large unit and therefore ensures increased uplift, the stern part of the vessel is rather like a diffusor.

The concept, the basic idea

ISSUE THREE 2021

and the engineering for this forward-looking design was developed by the team at HGK Shipping’s design center in close cooperation with the transport management experts at HGK Gas Shipping in Hamburg.

The search for new solutions was caused by the effects of the ongoing low water levels on BASF’s logistical processes in 2018 as well as recurring low water levels on the river Rhine. N The new gas tanker represents a further milestone in optimising the design of vessels and the drive concept for HGK Shipping.

“The combination of an innovative drive system with a ship design, which is optimised for extremely low water levels, provides an impression of how we think that inland waterway shipping will develop in the future,” says Steffen Bauer, CEO of HGK Shipping.

Bauer has been at the helm of HGK Shipping since August 2020, having previously worked as head of the Imperial Shipping Group for several years before it was taken over

by HGK last year.

Earlier this year, Bauer oversaw the acquisition of river dry

bulk operator Niedersächsische Verfrachtungsgesellschaft (NVG).

It’s HGK’s goal to put into service six more modern low-water vessels with optimised drive systems during the next few years and therefore construct the Gas 100 by 2026.”

Häfen und Güterverkehr Köln (HGK) is the logistics company in the Stadtwerke Köln Konzern (City of Cologne Public Utilities Group). Formerly a port operator, HGK has developed into a European-wide group for integrated transport and logistics services.

Divided into the five business areas, Logistics & Intermodal, Shipping, Rail Operations, Infrastructure & Maintenance and Real Estate, the HGK Group operates the largest inland port network in Germany, one of the largest private freight railways, specialist logistics companies and terminals as well as its own rail network and workshops for freight transport operations through its subsidiaries and associated companies.

HGK Shipping operates around 300 ships. The spectrum of goods transported ranges from liquid chemical products and liquefied gases to dry goods and breakbulk cargo. ●

41

REGULAR BOOKS WINE

Beyond ice wine Canada’s wine industry is growing fast with a surprising range of grape varieties available

C

anada’s drinks résumé has a few notable beverages on it. Whether it’s the Bloody Caesar, Newfoundland Screech, or good ol’ Molson Canadian, Canuck libations seem to stand out against international counterparts. The Canadian wine industry may still be in its infancy compared to Old World wine-producing regions, but it’s now worth more than $1bn annually with more than 600 wineries..

Of Canada’s 10 provinces, four

have winegrowing regions. A common misconception is that Canada specialises in ice wine and only ice wine. Most Canadian ice wine is made from the winter-hardy Vidal grape or the cool-climate-loving Riesling grape. But those two varieties represent a very small portion of grape varieties planted across the county. Outside Canada’s small but renowned ice wine production is a plethora of options — from light and aromatic, to fruity and full-bodied.

Two (more) to try CHECKMATE 2017 QUEEN’S Advantage Chardonnay. This artisanal winery only grows two grapes — Chardonnay and Merlot — but produces them in a plethora of expressions. Vines for the Queen’s Advantage Chardonnay are nearly 50 years old and grown on the Golden Mile Bench in the south Okanagan Valley. This wine explodes with ripe stone fruit flavours alongside layers of buttery barrel spice and a silky finish.

42

Four-time recipient of WineAlign’s Canadian Winery of the Year award, Tawse is one of the largest producers of organic wine in Ontario. The Cabernet Franc Grower’s Blend exudes both jammy and dried dark fruits, with an exceptional mingling of floral and soft spices. ●

“

There’s now more than 600 vineyards coast to coast

”

Given Canada’s cooler temperatures, which help boost acidity levels in grapes, sparkling wine is making waves as well.

In British Columbia, nine winegrowing regions focus on Merlot, Pinot Noir, Pinot Gris, and Chardonnay. The Okanagan Valley is the province’s most notable inland region, with summertime highs over 100 degrees Fahrenheit.

Further east, in Ontario, are three continental-climate regions that are the most southerly in the country: Niagara Peninsula, Prince Edward County, and Lake Erie North Shore. These regions sit along the same latitude as Oregon and Tuscany and are moderated by three of the Great Lakes — Ontario, Erie, and Huron — which play an important role in cooling the vineyards during Ontario’s hot summers.

Continuing east, both Quebec and Nova Scotia also are up and coming wine destinations. ● maritime ceo

GADGETS

Mini perfect

T

he iPad mini is usually updated every couple of years, but this latest iteration is the first major redesign of the mini since 2014: it sports the shiny new A15 SoC, 64 or 256GB of storage, an upgraded 12MP camera, a larger display, WiFi6 and 5G and GPS for the cellular version. It’s touted to have a battery life of 10 hours with WiFi or 9 on cellular. We were huge fans of the first generation iPad mini, it’s size and heft were very ergonomic — perfect as an ebook reader and tablet that you could actually hold without developing wrist strain. The latest version is extremely tempting. iPad mini 6th Generation Apple.com $500-$800

Shock proof

I

f you’ve bought a new Apple device, a case is a must to safeguard your new precious tech. Look no further than the lunatics at Mous, who seem to spend most of their time trying to break phones in their cases by dropping them from all sorts of foolish heights. They also do Samsung Galaxy and Google Pixel as well as MacBook sleeves. The cases are lined with the company’s proprietary AiroShock impact absorbing technology, and the backs are tough as tough can be, and the new Limitless 4.0 range is Apple MagSafe Compatible.

Mous Limitless Row.mous.co $50-$100

Browsing crescendo

T

his final gadget is a new browser. Sounds underwhelming, but Opera GX is a new release from Opera that is specifically aimed at gamers — and it has some pretty nifty features. It has Messenger, Twitch, Telegram, Twitter, Instagram, VK, Discord and WhatsApp all built in, to keep most of your social media in one spot. It also has tunes: Apple Music, Deezer, Soundcloud, Spotify, Tidal and YouTube Music.

More importantly, you can limit the amount of RAM and bandwidth it uses, as well as keep tabs on which tabs are using a lot of CPU time. It will import all your information and passwords from most other browsers and you can use an extension to enable Chrome extensions in the browser. All in all it’s just very well put together. Available for Mac OS, Windows, iOS and Android.

Opera GX www.opera.com/gx $0

ISSUE THREE 2021

43

REGULAR BOOKS

China’s focus on Latin America The People’s Republic is investing heavily in South America. The US is belatedly responding

T

oday, China is Latin America’s top trading partner. Of course, China had always traded with the region but in recent years things have become more focused. In 2019, Chinese companies invested $12.8bn in Latin America, up 16.5% from 2018, concentrating on regional infrastructure such as ports, roads, dams and railways.

Chinese purchases of minerals and agricultural commodities helped South America stave off the worst privations of the 2008 financial crisis. And Covid19 has only accentuated the relationship with China as a key customer and investor helping to keep embattled countries afloat. So, understanding the Latin America- China trade relationship is important. A few titles that may help are below.

Maybe a good place to start is a general book on the region and Fernando Calderon and Manuel Castells’ The New Latin America is a very useful guide.

Moving from country to country the book examines the twin forces of widespread inequality and poverty, which have triggered social explosions as opposed to technological modernisation and the emergence of new middle

44

class consumer groups. Where Chinese investment, trade and influence fits within these new societies morphing between old identities and new is a particular strength of the book. After reading The New Latin America and gaining some familiarity with the region it’s time to dive a little deeper.

China-Latin America and the Caribbean: Assessment and Outlook

by European editors Thierry Kellner and Sophie Wintgens is perhaps a little academic but useful for those deep-diving the Latin America/China relationship. Much more has been written on the China-Africa relationship and in many key respects the Latin AmericaChina relationship is the same, but different. The emergence of new forms of dependence based to a degree on the deindustrialisation phenomenon throughout Latin America that allows space for Chinese investment. Similarly it considers Latin America as a zone where China and the United States are engaged in a highly competitive game for influence in the region.

Looking particularly at Chinese finance and investment in the region is Stephen B Kaplan’s Globalizing

Patient Capital: The Political Economy of Chinese Finance in the Americas.

Kaplan argues that China’s “patient capital” (another way of saying long term investing) endows national governments with more room to manoeuvre in formulating domestic policies.

Though the author also notes that Chinese lenders may not react well to developing Latin American nations’ ongoing struggles with debt and dependency. Kaplan believes that by looking at how China is investing in the region we can see a new form of globalisation showing the costs and benefits of state versus market approaches to development.

And finally, China’s investments in Latin America have spawned some push back from the US. To understand why Washington is wary of Beijing, what it might do to counter growing Chinese influence and how Beijing may, in turn, respond to that the multi-authored Countering China in Latin America and Africa on Trade: A United States Foreign Policy Perspective is a useful collection of essays to mull over when considering the bigger question of the region’s trade relationships. ●

maritime ceo

REGULAR TRAVEL

Glam Glasgow Home to COP 26 and a big shipping gathering shortly, Scotland’s largest city has reinvented itself in recent years

W

here famous neighbour Edinburgh is tourist central, Scotland’s second city Glasgow has a grittier, more creative edge. This former industrial powerhouse has transformed itself into a city of culture. Glasgow mixes historic sandstone buildings and modern architecture, award-winning museums and live music venues, quirky shops and innovative restaurants.

Check in to the Grasshopper Hotel in the centre of the city. It’s extra convenient if you’re travelling by train as it’s on the top floor of a building next to Glasgow Central Station.

Have a walk in the park to the grand red sandstone building housing Kelvingrove Art Gallery and Museum.

Part art gallery, part history museum, there are 33 different galleries and an eclectic mix of collections with a giant elephant next to a World War II Spitfire as well as dinosaur eggs, Egyptian artifacts and a Salvador Dali painting.

ISSUE THREE 2021

“

Glasgow mixes historic sandstone buildings, eclectic culture and modern architecture Carry on past the university, which has more than an element of Harry Potter about it, to Byres Road, the heart of Glasgow’s West End and home to some great boutique and vintage shops.

Stop for lunch at the Ubiquitous Chip, where they put a modern twist on traditional Scottish dishes, served in a lovely flower-filled courtyard.

Near the train station is the Lighthouse. This building was one of Art Nouveau designer Charles Rennie Mackintosh’s first commissions and was originally the Glasgow Herald newspaper offices. Now it’s a centre for design and architecture, with a free exhibition on Mackintosh’s work. Don’t forget to head up the spiral stairs of the old water tower for a great view across Glasgow city centre.

”

Head down to the river to the striking, Zaha Hadid-designed Riverside Museum. Opened in 2011, the ‘Glasgow Guggenheim’ has 3,000 transport and travel related exhibits, from steam trains to skateboards.

Just outside the museum you can take a tour of the Glenlee, a restored tall ship that’s one of only five sailing ships built on the Clyde still afloat.

For a spot of refreshment head over the Willow Tea Rooms on Sauchiehall Street, which has been restored to its original Art Nouveau glory. Choose from afternoon tea with sandwiches and scones, or something a bit more Scottish like Cullen Skink (smoked haddock and potato soup) or Scottish Rarebit. Not a deep-fried Mars bars in sight! ●

45

REGULAR OPINION

Stopford on Maersk and methanol The world’s most famous shipping economist, Dr Martin Stopford, the non-executive president of Clarkson Research Services, reacts to Maersk’s $1.4bn bet on methanol powered boxships

I

t is 15 years since the Emma Maersk was launched. With her 109,000 hp engine and 25.5 knot design speed, she was the beginning of the big gas guzzler generation. So it’s great that Maersk is now taking this initiative to build methanol powered ships, but how green are they?

And is it really a revolution?

Let’s start with the green issue. How green is methanol? It’s a hydrocarbon fuel and when burnt in a marine diesel engine it produces almost as much CO2 as heavy fuel oil (VLSFO). LNG and LPG both perform better. What makes methanol different is that it is not extracted from the earth, it is manufactured.

If the manufacturing process uses green energy such as biomass, wind or solar, the methanol produced is green. Otherwise, it is just another hydrocarbon producing big CO2 emissions.

By placing contracts for green methanol, Maersk is helping to stimulate production, which is great for the environment. But it is not straightforward. There is serious competition for the limited supply of green energy needed to make green methanol and the conversion process is inefficient (40-70% of the energy is lost). So making methanol for ships may not be the best way to use this scarce resource.

Green methanol is also expensive. Maersk says it could cost $1,000 a tonne, and it takes two tonnes of methanol to do the work of one tonne

46

of HFO (19.7 MJ/kilogram compared with 41.8 MJ /kilogram for HFO) which pushes the ‘real’ price up to $2,000 a tonne, so shippers must expect to pay a lot more for ‘green transport’.

From a risk perspective, Maersk gets a lot of bang for their buck.

Methanol burns easily in internal combustion engines and the new ships can switch between VLSFO and methanol. This is mature technology (I used to make model aircraft with tiny engines burning methanol).

So, if the methanol doesn’t work out price-wise, the ships can switch to VLSFO and have not lost much.

Overall, Maersk should be congratulated for showing the world that shipping is serious about the environment, at a time when there’s not much green maritime technology on offer. But although it

sounds revolutionary, it is just using established technology and a scarce supply of green energy to manufacture a hydrocarbon fuel that can be burnt in a ship. There are already about 20 ships in service or on the orderbook. And there are many small plants in operation or under development worldwide, producing green methanol.

The real revolution is not the fuel – there is still a long way to go on that front. It is their aim to negotiate a zero carbon freight premium which shares the cost of the $2,000 a tonne green fuel with shippers. The liner companies need the shippers as financial partners on the voyage to zero carbon in 2050 and this would get the show started.

As Rod Stewart put it “The first cut is the deepest” and who better to make it than Maersk? ● maritime ceo

REGULAR OPINION

Sailing on an ocean of greenwash Andrew Craig-Bennett has some queries for wind propulsion proponents

I

n 1979 there was an oil crisis brought on by the revolution in Iran. Crude oil doubled in price to $39.50 per barrel. The supply of oil dropped by around 6%, but that was enough to get people excited. So far as shipping was concerned, there was a wave of orders for bulk carriers to carry all the coal that the world was about to start using (see “bulk carrier crash, 1983-7”), the big tankers that had poked their noses out of lay up went back into lay up (see “tanker crisis”), the flood of product tankers ordered on the back of a famous Drewry report found their market had vanished like the morning dew, and a handful of people thought that there might be an opening for a sailing cargo carrier.

I remember the design that they came up with. It was a completely orthodox square rigger, picking up roughly where the Flying P Line of F. Laeitz GmbH had left off in 1914, but larger, 14,000 tons deadweight rather than 8,000, because the proposers, some of whom had experience in the last real sailing ships, thought their ship might substitute directly for an SD14 ‘tweendeck tramp. The ship was never built, but it did attract some comment in the shipping press. There was little doubt that this ship, had she been built, would have performed as intended, using technology, such as the Jarvis brace winch, which had been developed in the last real sailing ships, with internal combustion substituted for muscle power.

Financially, this ship might not have done so well; there were already capesize bulk carriers, and the proposed ship’s hatches were

ISSUE THREE 2021

small by 1970s standards, whilst the tracery of standing and running rigging would have to be moved clear for a shore crane to work, so she could not work many hatches at a time, making her slow to stow and slow to discharge, but the ship would certainly have got from A to B with a cargo, without using an engine. I regret to say that I cannot remember the names either of the proposal or of the people behind it, but it was an honest outline design, not that insult to everyone’s intelligence, an ‘artist’s impression’, whilst CGI didn’t exist in 1979.

“

By 2030, we are meant to have 5% of the world fleet of some 60,000 ships using no fossil fuels at all

”

We are now seeing new proposals for sailing merchant ships. Those that I have seen are ‘artist’s impressions’ or ‘CGI’ and they do not look like any sailing ship that has been seen before. Two well-known proposals get round the hatch size problem by being envisaged as roll-on, roll-off ships. One is a car carrier, and the other is a cargo roro.

Both have dates of 2024 or 2025 attached to them, at present they only exist electronically, and both are aimed at the North Atlantic, which is quite well suited to sailing ships, as it is windy for most of the time, unlike, say, Shanghai to Rotterdam.

I would like to take these ideas seriously, but they do not look as if they are really intended to sail; that

is, to operate as a cargo carrier under wind power alone, because the sail area in the CGI pictures looks too small in relation to the size of the hull, and they have novelty rigs, yet to be tried and proven. The power to weight and sail area to windage ratios seem low, assuming the rig works reliably, so I suppose that they are going to start the engine to get anywhere in all except ideal conditions. The North Atlantic is not famous for its ideal conditions.

Are these sailing ships real, or are they exercises in kite flying, like the ‘proposals’ for odd looking superyachts that are touted around to catch the attention of billionaires seeking to impress their neighbours at Cannes? Meanwhile, the ordinary everyday shipping companies, including one that is behind one of these proposals, get on with ordering ordinary motor ships, made from ordinary steel, to be fuelled with ordinary methane, or even ordinary heavy oil, or that fashionable thing, a combination of both.

By 2030, we are meant to have 5% of the world fleet of some 60,000 ships using no fossil fuels at all. Do you suppose, gentle reader, that we are going to see 3,000 wind-powered ships in nine years’ time?. ●

47

SPLASHBACK REGULAR

Your thoughts You lot certainly have plenty of views on all things shipping. Below are some of the best recent reader comments to Splash articles Andrew Craig-Bennett ponders what good will come from Walmart, Ikea et al going down the shipping route: “I fail to understand how chartering ships and buying containers eases port congestion.Am I missing something?”

Thomas Timlen on how the IMO actually functions: “Many observers do not appreciate the fact that the IMO has no enforcement role, only the member states have the authority to enforce the instruments agreed at the IMO, and that enforcement cannot happen until the respective member states themselves enact and apply related national laws.”

Frank Coles on event organisers coming out of Covid hibernation: “The eagerness to go back and repeat the conference circuit and no doubt the awards circus means we have not strayed far from the insanity. Repeat, repeat and repeat… oh look nothing has changed. The awards are all useless because we all know the rules are slanted to who pays and who buys awards. I know, having received awards and had companies receive awards on this basis.”

48

A Global Christmas Carol by the All Clear 2021 Hey, hey, hey children!

Come sit by me.

I’ll tell a story ’bout your bare Christmas tree.

You can thank Walmart for your misery.

Cuz Santa’s sleigh is stuck in LA now!

You can bet that they’re gonna spin ya some reasons quite untrue.

That it’s your fault your Christmas presents Never made it to you.

That you wanted Christmas cheaper than all those toys made in Japan So you took your best, and headed west to hungry China-l-a-a-a-a-nd ! Now, tell me children. What we gonna do?

The factories’ there, our cupboards’ bare, and we are through.

They own the shipping. They provide the crew.

They make you everything, even your shoes.

We ship them cardboard, and our dollars too.

Just so Walmart and Lowes can sell us new.

You’re feeling empty, tired and blue.

Now, tell me children. What we gonna do?

Hey, hey, hey children!

Come sit by me.

I’ll tell a story ’bout your bare Christmas tree.

You can thank Walmart for your misery.

Cuz Santa’s sleigh is stuck in LA now! © Brian Watt

On green finance Andy Longhurst had this to say: “All you need to do is slow down, paint your hull, and/ or take credit for somebody else planting a tree, and all of a sudden you can issue green bonds, get green loans, and pay lower margins. Has this generation never heard of the Emperor’s New Clothes? This is a con job. Wake up people.”

Peter Lahay was none too complimentary on the Day of the Seafarer: “Frankly the Day of the Seafarer is an insult to seafarers. We will ask them to sound their horns once again. All this does is wake up the poor bastards trying to get some rest. We all know seafarers work 10 hours and more every day of the week then are required to sign fake documents to show to PSC authorities who turn a blind eye to breaches of international standards and abrogation of human rights. Go ahead and toot your horn and show us your fake tears on the Day of the Seafarer while so many still hold a knife to the seafarers throats in broad daylight. The industry skids are greased by exploitation and seafarers fear of blacklisting. This industry remains a human rights disgrace.” maritime ceo

Singapore / September

Monaco / October For further information contact grant@asiashippingmedia.com or visit www.splash247.com.

Splash - for incisive, exclusive maritime news and views 24/7.

www.splash247.com

NAME

Holger Börchers

“

POSITION

IT Manager

COMPANY

Briese Schiffahrt Leer, Germany

SCOPE

Dualog® Business Mail implemented on 130 ships

My life has become easier – We had to replace numerous outdated systems with one reliable and future proof solution across the entire fleet. I needed one unified strategy to deal with data management and cybersecurity. I found that Dualog had a unique offering, and I can now focus on business improvements instead of problems.

Photo: Lars-Josef Klemmer

#DUALOG CUSTOMER STORIES

Email | Smart Internet | Cybersecurity | Data Transfer

dualog.com

We bring ship and shore closer