9 minute read
Shipyards
The way ahead
What Keppel’s marriage to Sembcorp Marine means for the future health of shipyards in the Lion Republic
After almost one year of negotiations and more than a decade of speculation, Keppel Corporation and Sembcorp Marine reached an agreement in April for the S$8.7bn ($6.29bn) combination of Keppel Offshore & Marine and Sembcorp Marine creating a mega yard entity in Singapore.
The two parties have been in negotiations since June last year, when a memorandum of understanding was signed to enter into exclusive negotiations to combine. The combination is based on a 50:50 enterprise value ratio between Keppel O&M and Sembcorp Marine, and after taking into account the respective capital structures of the two companies and other factors, the agreed equity value exchange ratio will result in Keppel shareholders owning 56% of the combined entity and Sembcorp Marine shareholders owning 44%.
Singapore’s state-owned fund Temasek will hold 33.5% and be the largest shareholder of the new enlarged entity.
Keppel O&M’s legacy rigs and associated receivables will not be part of the combination.
Loh Chin Hua, CEO of Keppel and chairman of Keppel O&M, said, “The signing of a win-win agreement on the proposed combination of Keppel O&M and Sembcorp Marine marks a strategic milestone for the offshore & marine
sector. It brings together two leading O&M companies in Singapore to create a stronger player that can realise synergies and compete more effectively amidst the energy transition. Together with the resolution of Keppel O&M’s legacy rigs, this is a major step forward in Keppel’s
Strategic Marine moves into larger premises
THIS FEBRUARY STRATEGIC Marine completed the acquisition of a significantly larger shipbuilding facility in Singapore in a move that is expected to boost its shipbuilding capacity and product range. The Singapore-based shipbuilder has acquired the fixed infrastructure as well as the lease of the shipyard at 5 Benoi Road and has completed the lease transfer from JTC Corporation, the lessor of the shipyard. The facility that features a 5,000 dwt dry dock and a 6,000 dwt slipway, will see Strategic Marine scale up shipbuilding capabilities and expand to deliver larger vessels and execute vessel repair and maintenance services. The shipyard added the capacity will also be greatly increased with a 105m long dry dock facility and a slipway.
“This new development immediately increases our operational footprint,” said Chan Eng Yew, CEO of Strategic Marine, adding that the shipyard is already in discussions with existing and new clients on several projects and that is looking to convert these discussions into contracts in the next few months.
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Using SMARTShip’s Voyage Fuel Optimisation module, a gas carrier recorded 357.5 MT in fuel savings over 12 voyages. That’s ~9.1% reduced fuel consumption, $178,000 cost savings, and a significant ~1,113 MT reduction in CO₂ emissions.
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Vision 2030 journey, as we simplify our business and sharpen our focus on providing solutions for sustainable urbanisation.”
Tan Sri Mohd Hassan Marican, chairman of Sembcorp Marine, said, “The proposed combination marks a major milestone in Sembcorp Marine’s strategic business transformation journey since 2015 to stay resilient amid dramatic changes in our industry. Sembcorp Marine and Keppel O&M are Singapore’s homegrown marine icons. I am confident the combined entity, with its larger operational scale, broader geographical footprint and enhanced capabilities, will create a leading Singapore player to capitalise on the opportunities in the offshore and marine, as well as the renewable and clean energy sectors.”
The deal is subject to regulatory approvals, while shareholder approvals will be sought in the fourth quarter of 2022.
Nagi Hamiyeh, head, portfolio development group, Temasek, commented: “We expect the combined entity to be well-positioned to achieve the necessary scale and synergies to become more competitive and to build a sustainable orderbook amid the changing global energy environment. This is also well aligned with our objective to catalyse the transition of our portfolio companies towards a net zero world.”
David Borcoski, CEO of ASP Ships Group, argues Singapore should focus on the higher end, technologically complex shipbuilding and repair business. The maritime sector can also support smaller ship repair and building business in Batam and other nearby yards with services, equipment and expertise, he suggests.
Rajesh Unni, who heads up Synergy Marine Group, agrees with his shipmanagement counterpart at ASP on the need for Singapore to concentrate on high value-added niche projects.
“Don’t compete for run of the mill type newbuild or conversion projects more easily and cost-effectively completed elsewhere where labour costs are lower,” Unni advises, adding that blocks or modules could be fabricated in yards in neighbouring countries such as Indonesia and Malaysia and then barge them to Singapore for assembly and commissioning.
A report published by local bank UOB Kay Hian at the end of August was bullish on prospects for the nation’s top two yards.
The rig market, particularly the semisubmersibles segment, has continued to gain strength this year with higher utilisation and day rates, the report pointed out.
PaxOcean works on carbon capture tech
SINGAPORE’S KUOK GROUP is participating in a new project to develop shipboard post-combustion carbon capture technologies.
PaxOcean, one of Kuok Singapore Limited’s maritime group businesses, will be working with Nanyang Technological University Singapore (NTU) on a 30-month project led by Professor Wang Xin, chair of the School of Chemical and Biomedical Engineering at NTU.
The project, called “Application of Carbon Capture Technology for the Reduction of GHG Emission from Ships”, has been awarded by the Singapore Maritime Institute (SMI), backed by funding from the National Research Foundation Singapore (NRF), under the Maritime Transformation Programme.
Cheng Peng Tan, executive director of SMI, said that the project could potentially be the first of its kind in the world, if successful. Kuok is onboard as an industry partner and will collaborate with NTU in providing both cash and in-kind contributions for the project.
“Carbon capture and storage (CCS) has been identified as a potential abatement technology to reduce GHG emissions in the transitional period to a low-carbon economy. Such collaboration with key industry players like Kuok is highly valuable, as we jointly develop a meaningful and innovative solution,” noted Professor Dr Jasmine Lam, centre director of the Maritime Energy & Sustainable Development Centre of Excellence at NTU.
ADVERTORIAL THE RISKS OF FALSE PROMISES IN THE DIGITAL WORLD Surely, you’ve heard this story before, or if unfortunate, you’ve experienced it firsthand. Browsing the Web, you find a product that is marketed as better and cheaper than other similar ones. It’s all catchy, looks great and you go for it. The item eventually arrives, you’re excited, open the box, and find… a low quality and non-robust product which doesn’t match the attractiveness that triggered your purchasing decision.
What does this have to do with shipping?
Selecting the right shipping software shares some characteristics with online shopping – you filter through competing products, check out prices, analyze reviews, you take the merchant’s words for what they’re trying to sell you, and you reach a rational decision where to best spend your money. However, it’s usually easy to identify you’ve been scammed online. Reaching the same quality assessment about shipping software requires to spend way more of your time, a non-refundable commodity. Moreover, making the wrong choice can expose your company to stormy waters.
Who determines what a false promise is?
Ultimately, only you can appreciate the value received for what you’ve paid. If you don’t want to be left having wasted your time and financial resources on a dud or a dead-end, you can always rely on people with the know how-to deliver according to expectations. AXSMarine has pioneered digitalization in shipping and has experienced the early 2000’s Dotcom Boom, seeing companies promising the unachievable, burning investors’ cash and eventually being washed away by reality.
Capitalizing on its 22 years of experience and selfpowered business model, AXSMarine has created a very comprehensive and widely used set of tools and data for demanding shipbrokers, charterers, shipowners, analysts and many other industry participants.
STARTUP FAILURE RATES
Startup failure rates*
First year First two years Within five years Within ten years Within 15 years
0% 25% 50% 75%
PERCENTAGE OF STARTUPS I saw a graph that seemed accurate…
*Source: explodingtopics.com/blog/startup-failure-stats
The latest smoke and mirrors
Recent software providers are making bold claims about what their products are supposed to deliver. Unfortunately, these are often unattainable due to tech-stack limitations and/or because the data lacks accuracy and depth to support the promises. Any email content extraction automated tool, promoted as an alternative to AXSReader and Market Monitoring tool, you’re being taken for a ride. Email parsing software, as its name suggests, automates the process of translating raw text into actionable vessel supply/ demand data. It’s no new concept, rather a service provided by AXSMarine for the past 12 years, used by 100’s of companies saving them an average of 60 mins person/day, processing 300 million emails per year and guaranteeing privacy of customers’ data. Yet, this remains very far from providing the transparency required to build yourself a competitive edge.
A true Market Monitoring solution like AXSMarine Trade Flows delivers in addition much more than an email parsing service. The depth of data comprises years of actual ship and commodity movement history including predictions of ship and cargo destinations. This is going way beyond just looking at a fraction of market emails to drive surface conclusions. Any snorkeling or scuba diving experience tells you how different reality is compared to the blurry view from the surface. And as you may have noticed, the more adverse the winds, the blurrier the surface.
AXSMarine Trade Flows demonstrates for example that shipments of Urea, Sulphur, Petcoke, Potash and Cement all together account for 3.73% of the Drybulk commodities shipped by sea worldwide in 2021. It provides very granular data supporting this reality. The corresponding number of voyages for these commodities represented only 8.17% of all laden legs. Are these good enough and reliable drivers and your best choice for a proper reading of the market?
Iron ore represents the lion’s share of Dry Bulk cargo carried by sea, accounting for 26.7% of all Dry Bulk commodities transported in 2021. Attempts to use the outcome of an automated reading tool to monitor the market can probably give you a 6% market coverage of the Dry Bulk commodities shipped by sea. Big players like Vale, FMG, BHP, Rio Tinto and other miners rarely blast their private cargoes via email circulars. According to several renowned and experienced Capesize shipbroking companies, Cape cargoes quoted via email only represent about 15% of what is actually moving.
Be careful as you might have been taken for another ride, hooked on limited data displayed on a Base 100, a trick used to hide a lack of quality data coverage. A typical graphical display showing variation percentage that can be very misleading.
Whether you are a direct shipping player, a commodity trader, an analyst, a quantitative or hedge fund, you care about best possible signals and must act with caution to make the bestinformed decisions.
