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May/June 2011 asiamaritime 1

May/June 2011

Contents

AM FeAtURes

14 BUNKERS Chinalookstolead

16 TankersOwnersstopsplashingthecash

19 JapanShipownerslookbeyondJapan

24 Ship registersMorethanenoughforall

27 Car carriersHopebeyondtheearthquake

30 Malaysia MISCenjoysboxandgasoptions

32 Vietnam Thegoodandthebad

14

24

AM CoveR stoRy10 In2010,containershippinglookedasiftheworsewasover.

Fromrecordlossesin2008,2010wasaboomyear.Butthisyearisturningouttobeapotentialloserforlinerservicesoncemore.Withmegashipsjoiningservicesdailyand18,000teuvesselsintheoffing,companieslikeMaerskanditsrivalsareseekingtodifferentiatethemselvesbylevelsofserviceandcustomer-centricapproachtocontracts.

Industrydata,however,indicatesthatlinercompanieshavetoovercometallhurdlestogetwheretheywanttobe.Notleastoftheirproblemsistheinabilityofshipperstogettheircontractedcargoestoport.Isthedreamofaviation-likeefficiencyanunattainabledream?

2 asiamaritime May/June 2011

May/June 2011

ContentsAM RegulaR ColuMns

4 Comment Bespoke shipbuilding

6 Briefs Yards, ports, lines

8 Commodities Shale oil and gas

13 Launched China King goes to foreign shipmanager

34 Technical Return to onboard training

36 Ship’s store Pitter, patter of tiny carbon footprints

37 Operations Charterers need to know their place

38 Logistics China market awaits

39 IMO Flagging up anti-piracy options

40 Green page Green ideas from DNV

41 Brief encounters Thin end of the social media wedge

42 Diary Merely moving and passing on

44 Maritime’s back pages The NOL story

8

13

40

44


There is noThing quite like a downturn to focus the mind.

Perhaps the 2008/9 debacle is too extreme an example. At the

time those involved in the shipping industry were too busy

working out how to hold on to their shirts, to spare time for cogent

thought about how they might raise their fame.

But if those two too awful years amounted to a storm, what

the maritime industries are confronted with today is a severe de-

pression that looks to settle upon the maritime industry for an ex-

tended period, of which few can yet determine the length. In some

cases this is giving time for serious thought about how to improve.

One happy result is that there are signs that ideas about im-

proving products and services, with a sideways glance to environ-

mental enhancements, have for the first time broken free of the

commercial conference hall.

This has been ,led by the likes of Seaspan Corp’s president and

chief executive Jerry Wang, who conducted a high-profile game of

bluff with shipyards before finally inking a deal worth $700m for

seven 10,000 teu containerships from Jiangsu New Yangzi Shipbuild-

ing in China. With his demand for swift delivery, super-sized and

energy efficient vessels, the ships will be virtually tailor-made; a phe-

nomenon rarely heard of in the boom years of the mid-noughties.

With fuel prices exceeding capital costs many lesser-known

shipowners are following in Mr Wang’s steps. They are either in-

sisting on fuel efficiencies from known yards or being lured away

by others that are prepared to offer the frills rather than face an

empty shipyard come the end of 2013.

The indusTry in The Mirror

In shipping too boxlines such as Maersk, Orient Overseas

Container Line, MSC, CMA CGM and latterly NOL are prepared

to go for the lower costs (hopefully passed on to the customer)

that can be reaped from vast investment in mega-boxships.

And finally, you could not have missed Maersk’s “New Nor-

mal” an act of public self-flagellation wrapped up in a call for

enhanced services in a transparent environment. There is an argu-

ment that much of what Maersk is calling for in the way of punc-

tuality and ease of transaction should have happened a long time

ago. But hey, better late than never, as the shipper never says.

Welcome to the 21st century.]

PUBLISHER DaysOnTheBay Co Ltd

EDITOR

Mike Grinter

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COnTRIBUTORSMichael Grey

Sandra Speares

K K Chadha

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ILLUSTRATIOnSHarry Harrison

ADVERTISInG ACCOUnT MAnAGERTony Stein

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n Lines

Thousands of miles from their headquarters in Asia, the European

workforce of some of the top Asian lines had a rude awakening on

17 April, when EU Competition officials came knocking as the sun

was rising. Those reluctantly answering the door included Hanjin

Shipping, Cosco, OOCL, NYK, Mitsui OSK Lines and Neptune

Orient Lines. Among European lines, Maersk, Hapag-Lloyd, Ham-

burg Sud and CMA CGM, also received the unwelcome wake-up

call. It’s far too early to tell what has sparked the spooks at the EU

Commission. Would the fact that lines such as K Line and Hyundai

Merchant Marine have, thus far, been left alone, suggest pre-raid

knowledge? Or is it simply bafflement of an EU team not known for

its maritime nous trying to work out how liner companies turned

a slump into a windfall from 2009 to 2010? The answer will be a

long time coming. With the threat of fines equivalent to 10% of an-

nual turnover if lines are found guilty of anti-competitive practices,

there will be a lot of twitchy shipping executives for some time to

come.

Mitsui OSK Lines must be feeling punch-drunk.

At around the same time its European officers were

welcoming the EU officials, across the Atlantic the

Federal Maritime Commission in the US was telling

the Japanese line to cough up $1.2m after the FMC

said it had found evidence of misdemeanors over

several years – among them, misdescription of com-

modities; unlawful equipment substitution; providing

transportation services to and entering into service

contracts with unlicensed, untariffed and unbonded

ocean transportation intermediaries; permitting use

of service contracts by persons who were not parties

to those contracts; and providing transportation that

was not in accordance with the rates and charges set

forth in MOL’s published tariffs.

The extraordinary growth of Grand China Logis-

tics over the past few years, and its ambition to come

from nothing to become the world’s third largest bulk carrier by

2015, set off alarm bells in the minds of many. Such alarms rang

louder in May when news emerged that the conglomerate was

defaulting on charter payments. Among owners who must be ruing

the day they banked on the “Grand” vision are Hyundai Merchant

Marine, which is, so far, $7m out of pocket on two bulkers, and

the Greek shipping duo Minerva Marine and the Vafias Group.

Grand China insists that the problem is merely a cash flow blip. Al-

ternative explanations include difficulty in obtaining US dollars at

Chinese banks, but confidence too in the behemoth may soon be

in short supply.

Within a few weeks of OOCL’s announcement it had ordered

10 13,000 teu boxships from Samsung Heavy Industries, news is

out that it has found long-term employment for at least three of the

giants. Japan’s Nippon Yusen Kaishan will charter the trio for three

years when they will be deployed within the Grand Alliance serv-

ice network in 2013. ]

n Ports

The Philippines’ leading port operator International Container

Terminal Services Inc once again demonstrated its nimbleness and

an eye for an opportunity when at the end of May it put in an all-

cash offer for Singapore listed Portek International. Renowned

for its ability to profit from medium-sized terminal operations in

developing countries that top global players cannot reach, ICTSI’s

acquisition of Portek, which has operations in Indonesia, Malta,

Gabon, Rwanda and Algeria, would appear to be a perfect match

especially in pursuit of capitalizing on ever burgeoning growth in

Africa. The news of the acquisition at a cost of $147m came just

MOL has had a rough time with the authorities in Europe and the US over the last few months

ambriefsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

weeks after the terminal operator announced a 25% increase in net

earnings for the first quarter of 2011 at $28.5m.

Russia’s Global Ports Investments, the country’s leading termi-

nal operator, accounting for 30% of total box throughput, is to seek

up to $750m from an initial public offering on the London Stock

Exchange later this year. If successful, the company aims to shore

up its position in Russia with further capital investment on the port

sector. “We hold the number-one position in Russian container

handling and fuel oil exports and have strong capacity to accom-

modate expected market growth as well as the potential to expand

our current terminal facilities,” GPI board chairman Nikita Mishin

revealed in a published statement.


ambriefsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

n Yards

If there is a crisis in shipbuilding, South

Korea’s Samsung Heavy Industries has missed

it. Leading not only its compatriot rivals

Daewoo Shipbuilding and Marine Engineer-

ing and Hyundai Heavy Industries, Samsung

has been the world’s most successful yard thus

far this year. Samsung has picked up orders

worth $10.8bn in the first five months of 2011

($3,2bn in vessel orders and $7.6bn in offshore

contracts). Its order target set at the beginning

of the year is an easily achievable $12bn. Ever

a keen advocate of SHI, shipbuilding analyst

James Yoon of BNP Paribas’ Seoul office says,

“It (Samsung) has essentially already surpassed

the target by 22% if $3.8bn in options on exist-

ing orders for four LNG carriers and five drillships are included.

As a result, the order book has expanded 20% year to date to an

estimated $47.1bn, the highest level since the USD50.1b peak of

2008.”

The acclaim for SHI is not to suggest that its national rivals are

suffering. At the time of going to press rumours abounded that both

DSME and HHI were on the verge of jointly benefitting from the

surge in LNG interest to the tune of $1.5bn, as Greece’s Maran Gas

look set to put in orders for four LNG carriers with options for a

further four. Separately HHI picked up a $1.2bn order for two drill-

ships from drilling contractor Rowan Companies. So far this year

HHI has contracted nine drillship orders worth totally $5bn.

Chances are that the 2010 Hong Kong-listed Chinese ship-

builder China Rongsheng Heavy Industry has been looking at SHI

with a degree of envy. The bulker specialist saw its share price

plummet 7.4% in May after Barclays Capital failed to endorse the

shipyard’s current business model. According to Barclays China

Also listing on the London Stock Exchange was DP

World. The world’s fourth largest port operator debuted

on the exchange on June 1. DP World’s intention is to

attract institutional investors it has been deprived of on

the Dubai Nasdaq due to corporate governance restric-

tions. Some 830m shares were on offer.

The potential for serious disruption at key terminals

run by Australian stevedore Patrick in Sydney, Brisbane

and Fremantle continues to exist despite the decision of

the Maritime Union of Australia to lift work bans on May

26. Following the week-long action that provoked Patrick

to close the terminals, both parties insisted that the dis-

pute over pay has not yet been resolved, opening up the

possibility of further industrial action. ]

Rongheng has an orderbook entirely dominated by bulkers (62%)

and tankers (32%). With both classes of ship almost inevitably see-

ing a decline in orders over the next three to four years future rev-

enues look bleak. Compound this with delayed deliveries of vessels

tied to key contracts such as the 12-ship Vale order for 400,000

dwt bulk carriers, and Barclays’ contention that China Rongsheng

lacks the ability to quickly sidestep into offshore business seems to

spell a slower upward trajectory than punters were expecting when

the yard listed in November 2010.

The beleaguered Japanese shipbuilding sector received a fillip

at the end of May when it was announced the Greek shipowner

Safe Bulkers was to receive loans totaling $122.4m through Japan’s

official export credit system. Banking trio, Japan Bank for Inter-

national Cooperation, the international arm of the Japan Finance

Corporation and Citibank Japan agreed the deal that will go toward

the financing of three new post-panamax bulk carriers thought to

be contracted to Imabari Shipyard. ]

ICTSI’s flagship terminal in Manila. ICTSI has closed a deal for the acquisition of Portek International.

HHI is in line to pick up an LNG quartet from Maran Gas


Jeff Heslewood argues that crude oil prices could be a spur for shale alternatives

SHale oil iS looking pretty

amcommoditiesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

As the world’s oil reserves rapidly deplete, some nations are

looking to alternatives to conventional crude oil extraction. One

such route is oil shale, an organic-rich sedimentary rock that con-

tains significant amounts of kerogen from which hydrocarbons, or

shale oil, can be produced.

The downside used to be the expense of shale oil over conven-

tional crude, but as the price of oil has soared, suddenly shale oil

becomes more attractive. Countries that have significant reserves

of oil shale include China, Brazil, Russia and, of course, the United

States. Of the 48 contiguous states in North America, almost all

have some reserves of oil shale.

Estimates of global reserves range between 2.8 and 3.3trn bar-

rels. The U.S. Energy Information Administration (EIA) estimates

that global shale gas reserves - that is technically recoverable but

not proven reserves – amount to 1400trn cubic feet (tcf) in China,

1150 tcf in the USA, 790 tcf in Argentina, 760 tcf in Mexico and

under 500 tcf in both South Africa and Australia. To put it into per-

spective, 1000 tcf equates to approximately 166bn barrels of oil.

Shale gas is found in shale ‘plays’ which are shale formations

containing significant accumulations of natural gas and which

share similar geologic and geographic properties. A decade of pro-

duction has come from the Barnett Shale play in Texas. Experience

and information gained from developing the Barnett Shale have im-

proved the efficiency of shale gas development around the country.

Another important play is the Marcellus Shale in the eastern

United States. Surveyors and geologists identify suitable well lo-

cations in areas with potential for economical gas production by

using both surface-level observation techniques and computer-

generated maps of the subsurface.

Two major drilling techniques are used to produce shale gas.

Horizontal drilling is used to provide greater access to the gas

trapped deep in the producing formation. First, a vertical well is

drilled to the targeted rock formation. At the desired depth, the drill

bit is turned to bore a well that stretches through the reservoir hori-

zontally, exposing the well to more of the producing shale.

Hydraulic fracturing (commonly called ‘fracking’ or ‘hydrof-

racking’) is a technique in which water, chemicals, and sand are

pumped into the well to unlock the hydrocarbons trapped in shale

formations by opening cracks in the rock and allowing natural gas

to flow from the shale into the well. When used in conjunction

with horizontal drilling, hydraulic fracturing enables gas producers

to extract shale gas at reasonable cost. Without these techniques,

natural gas does not flow to the well and commercial quantities

could not be produced from shale.

KKr investsKohlberg Kravis Roberts & Co. L.P. (together with its affiliates, an-

nounced recently that KKR has entered into a definitive agreement

to acquire certain Barnett Shale properties from Carrizo Oil & Gas,

Inc. for $104m. The transaction, which was expected to close in

mid-May, is being made through KKR Natural Resources. The KKR

partnership with Premier Natural Resources intends to pursue in-

vestments in North American oil and gas properties.

Located in north-central Texas and producing out of the Barnett

Shale formation, the assets contain 122.4 bcfe of total net proved

reserves (based on a third party estimate) and comprise 75 gross

(58.5 net) wells currently producing at a gross rate of 15.7 mmcfe/d

(8.3 mmcfe/d net).

easier to carry than a gallon of petrol

China has spent tens of billions of dollars buying into energy resources from africa to latin america


amcommoditiesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

“With their significant proved developed producing reserve

component in a reservoir we know well through our current op-

erations in the region, the assets are a great fit for our KKR Natural

Resources platform. We are pleased to add these assets to our

oil and gas portfolio and remain excited about the opportunity

to grow the KNR platform through the acquisition of additional

oil and gas properties in North America,” said Jonathan Smidt, a

member at KKR and a senior member of KKR’s energy and infra-

structure business.

The EnvironmentNatural gas is cleaner burning than coal or oil. The combustion

of natural gas emits significantly lower levels of carbon dioxide

(CO2), nitrogen oxides, and sulphur dioxide than does the com-

bustion of coal or oil. When used in efficient combined-cycle

power plants, natural gas combustion can emit less than half as

much CO2 as coal combustion, per unit of electricity output.

However, there are some potential environmental concerns

that are also associated with the production of shale gas. The frac-

turing of wells requires large amounts of water. In some areas of

the country, significant use of water for shale gas production may

affect the availability of water for other uses, and can affect aquatic

habitats.

China – biggest producerChina has spent tens of billions of dollars buying into energy re-

sources from Africa to Latin America to slake the thirst for fuel from

its growing industry and burgeoning cities. But China may have

more energy reources under its own soil than policy makers in the

world’s second-largest economy ever dared imagine.

Just over a year ago, Beijing awakened to a technology revolu-

tion that has unlocked massive reserves of gas trapped within shale

rock formations in the United States.

Once deemed too costly to extract, shale gas has turned

around US dependence on foreign gas imports. Just a few years

ago, the United States was building scores of expensive facilities to

import LNG, looking at long-term demand forecasts and wonder-

ing which countries would supply the huge volume of imports it

needed. Instead, the United States is turning import facilities into

export terminals, because its shale gas reserves are estimated to

be big enough to meet domestic demand for 30 years. This is an

American dream that China wants to emulate.

“America’s shale gas production alone has exceeded that of

total Chinese gas output. That gives us a lot of confidence,” said

Zhang Dawei, deputy director of the Strategic Research Center for

Oil and Gas in the Ministry of Land and Resources.

China’s confidence has been bolstered by a new report of its

estimated reserves of shale gas, which shows them to be, by far, the

largest in the world.

China’s imminent shale rush comes at a critical point. It will

soon overtake the United States as the world’s top energy user

and is already the world’s biggest coal burner. China also pumps

more carbon dioxide into the atmosphere than any other coun-

try. Beijing’s bureaucrats thus face a daunting challenge: how to

clean up its skies while meeting the world’s fastest growing en-

ergy demand.

Natural gas burns more cleanly than other fossil fuels and

installing gas-fired power generation is cheaper and easier than

building nuclear plants. The problem is China cannot meet its ris-

ing demand for gas with its limited reserves of conventional gas.

It faces the prospect of becoming as dependent on international

markets for gas as it is for oil, where China is the world’s second-

largest importer. Shale gas may not be as clean as advertised, ac-

cording to a study released recently by Cornell University in New

York. This study argues that significant amounts of methane escape

into the atmosphere during production in wells and distribution in

pipelines.

PetroChinaPetroChina, the world’s second-most valuable energy company,

announced in February it would buy a $5.4bn stake in Calgary-

based Encana Corp’s shale gas assets. Analysts say PetroChina paid

a large premium for that deal. But a CNPC executive said it was all

about gaining expertise for shale.

“We don’t care much about whether the market believes it’s a

good or bad price. The top priority is gaining access to a resource

and mature technology,” he said. “Price is only a secondary con-

sideration.” ]

Is this going to save the environment?

China’s imminent shale rush comes at a critical point. It will soon overtake the United States as the world’s top energy user and is already the world’s biggest coal burner

amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Maersk’s declaration that it’s out to change container shipping for the better has met with mixed responses

The Maersk Challenge

In case you missed it the Steve Jobs-like appearance of Maersk

Line chief executive Elvind Kolding at the TOC Europe conference

in June had all the razzamatazz we have come to expect from Ap-

ple, including the drip-drip effect of the pre-publicity. Full marks to

Maersk for taking a leaf out of Apple’s marketing handbook.

But did Maersk match up to Apple’s ability to innovate? Mr

Kolding’s chief propositions for the “New Normal’ can be summed

up as:

1, Improve punctuality

2, Simplify the shipping process and make more transparent

(“Booking cargo should be as easy as buying an airline ticket

online”)

3, Shift from price to customer service

4, collaborate with customers

5, Lower more transparent carbon footprint

Get me to the port on timeOn the matter of punctuality Maersk claims to deliver around 80%

of its cargoes on time. On this point the findings of Drewry Ship-

ping Consultants begs to differ, stating that during the first quarter

of 2011, the world’s leading shipping line actually called on sched-

ule just 66.4% of the time.

By contrast rival liner operator Mitsui OSK Line claimed to have

achieved 90% reliability on its Asia – US West Coast service in

the same quarter and a 69% on-time service on the Asia – US East

Coast route, based on an arrival time within 24 hours of the original

schedule. But it’s a sure bet that Drewry is applying a more stringent

measure to on-time arrivals as its recent research awarded CSAV the

crown of most reliable deep-sea containers carrier after the shipping

line managed punctual delivery levels of 69.1%.

According to Drewry the number of vessels across the top 20

largest carriers arriving at port on time was a mere 51% from Janu-

ary to end-March 2011. On this basis the industry has a huge hill to

climb to reach target number one.

Clearly, all participants are using different methods to calculate

punctuality. Singapore’s APL claims that on its transpacific services

95% of its vessels arrived on time in 2010, within four hours of their

scheduled arrival. The editor of the Drewry report Simon Heaney

points out that his analysis focuses on services across multi-trades

rather than picking on specific routes. But such large disparities be-

tween calculations leave some space for error.

And frankly, shippers are skeptical. In a response published by

Shippers’ Voice, the website of the Global Shippers’ Forum, entitled

“Shippers’ Voice applauds Maersk-inspired revolution,” the subse-

quent article did nothing of the sort.

Source: Drewry Maritime Research

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

2Q071Q07 3Q07 4Q07

2Q081Q08 3Q08 4Q08 2Q091Q09 3Q09 4Q09 2Q101Q10 1Q1140%

45%

50%

55%

60%

65%

70%

75%

3Q10 4Q10

Note: Freight rates are US$ per 40ft container, which are updated bi-monthly and have then been averaged for each quarter.

Drewry global container freight rate indexOn-time % (right axis)

container service reliability and freight rate


amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Same old storyYes, the writer liked that the fact that Mr Kolding and his company

were prepared to stick their collective heads over the parapet and

own up to shortcomings. But in the words of Shippers’ Voice: “What

Maersk said was nothing new: shippers and their representatives

have been saying such things for many years.” The article went

on to conclude that unless Maersk and other liner companies are

prepared to follow through on the promise they can expect harsh

criticism.

According to the Hong Kong Shippers’ Council, lines such as

Maersk are going to have a hard time if they are to achieve punctu-

ality without compromising on environmental promises. Executive

director Sunny Ho says: “Slow steaming has led to stretched deliv-

ery schedules and a decline in service. Shipowners are not prepared

to guarantee the reliability of their schedules.”

Mr Ho says the lack of reliability has become particularly criti-

cal as shippers’ desire to reduce inventory levels due to uncertain

market conditions means the need for reliable delivery schedules

is higher than ever. “Shippers need to respond to the market much

faster,” he says. “This has resulted in some cargoes being transferred

to air services.”

It is Mr Ho’s reference to an uncertain market that implicitly ac-

knowledges one of the most serious problems faced by liner com-

panies in delivering on time, i.e. non-arrival of contracted cargo.

According to Mr Kolding this can account for as much as 30% of

contracted volumes. Mr Ho was not prepared to accept such a high

level of non-arrivals but did concede that under current market

conditions shortage of cargo could be a factor. “The market is very

fragile and there are a lot of factors affecting cargo flow to the ex-

tent that some shippers may delay cargoes or even cancel.”

In order to attract cargo that is available reliability is the key

even in the face of higher prices. One Asian liner company said

in confidence that it was able to command a premium for on-time

predictability. A typical scenario appears to be that a shipper will

use air services for a small proportion of its shipment, a much larger

proportion will be assigned to a reliable liner company and the rest

would be handed over to the spot market, thus the shipper is com-

manding a three-tier, three price marine component within its over-

all supply chain.

Ultimately, it isn’t easy to see where container shipping can up

the ante. Information technology has been put forward as a pana-

cea by Maersk and others but Drewry’s Mr Heaney thinks that offers

such as IT-delivered track and trace loading and delivery notifica-

tion should be a given rather than a lure for more business.

Instead he suggests that Maersk has got it right to the extent that

through the use of its own terminal network it can gain through

priority booking. Finally he cites schedules as an area where some

reality could be injected. “It would appear that some published

schedules are over-optimistic,” he concludes.

The small shipper’s sTory of ConfusionCoinCidentally or not, in the aftermath of Maersk’s

launching of its “New Normal” the maritime consultancy firm

SeaIntel Maritime Analysis set out to investigate how a small

customer would get on when trying to get a quote from the

big carriers and NVOCCs. It turned out to be a demoralising

experience.

Under the guise of a new cargo owner (a small trading

company) trying to ship two standard feu from Hong Kong to

Los Angeles and from Hong Kong to Rotterdam, the analyst

sought quotes from 33 carriers and NVOCCs on the Pacific

and 27 carriers and NVOCCs on Asia-Europe. Out of 60 re-

quests, 40 recipients did not provide a quote.

In the battle to get its boxes abroad the invented trader

encountered the following:

• When a carrier or NVOCC provides a quote for the same

product, but from two different offices, the quotes are not

identical;

• Requesting a quote through online web forms often re-

sults in no feedback at all;

• Using rate lookup on websites was either not possible or

provided rates far in excess of the quotes received through

email;

• The quote request was for 2 x 40’ dry containers. No price

negotiations were entered into. Yet the sharpest rates were

significantly below the SCFI average spot rates;

Where quotes were eventually received SeaIntel’s imaginary

new customer was confronted with a baffling array of rarely

explained acronyms, the worse example being the following:

“Collect only, CY/CY incl BAF/CAF/CP plus ISPS/THC/DF/

ENS/CK/HQ SE USD 100/SZ/AGS/OWS/WS (RULED) /Others

if any collect only, From BDCGX CFS/CY incl BAF/CAF/POL

THC/HQ SE/ENS plus ISPS/POD THC/DF/CK/SZ/AGS/OWS/

WS(RULED)/CG(RULED)others if any.”

Would this go some way to explaining those missing car-

goes? For more details contact Lars Jensen at seaintel.com.

may/June 2011 asiamaritime 11

amnews lineamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam


Slow Steaming waS supposed to create a warm, fuzzy feel-

ing among the liner shipping industry by cutting both emissions of

carbon dioxide and other marine pollutants and the liners rapidly

escalating fuel bills.

But transpacific shippers have been left feeling anything but

warm and fuzzy claiming that the box lines have been keeping the

cost savings to themselves while shippers face higher inventory

costs and possible equipment shortages.

The divergent views on slow steaming emerged following an

assessment by the United States Federal Maritime Commission on

the issue and whether cost and other benefits had been passed on

to shippers.

The FMC is still carrying out an assessment of the 36 responses

to its inquiry following the April 5 deadline submission, but it is

clear the liner companies and shippers have differing views about

the issue. Among the comments, seven came from exporters and

shipper bodies, while 22 were from container lines and carrier

groups.

While shipping lines reiterated the benefits of slow steaming

and its impact on their bottom line and the environment, they were

more circumspect about making public the details. So while the

information was given to the commission, lines insisted that when

documents were made public, details such as how many sail-

ings involved slow steaming or how much money was saved was

blacked out or deleted.

There was no such reluctance on the part of shippers, who

while lauding the environmental benefits of slow steaming, were

also critical of the way shipping lines introduced the measure with-

out prior warning. Exporters and importers pointed out they were

still largely unaware of services or loops that use slow steaming

and those that operate at regular service speeds.

The response by Jonathan Gold, a vice-president of supply

chain and customs policy at the National Retail Federation was

typical of most of the responses by shippers.

He pointed out that NRF members supported the environmen-

tal benefits from slow steaming, but added: “Members have not

realised any benefits from slow steaming. Major benefits are only

realised by the ocean carrier.”

Echoing the views of several shippers and other trade repre-

sentatives, Mr Gold added: “As a result of the practice, we have

seen supply chains extended by several days, which adds costs

back into the system for the retailer. The practice results in higher

Shippers are up in arms about the veil liner companies have thrown over their slow steaming savings

Slow SteaMing SMokeScreen

inventory carrying costs for retailers and a decrease in the speed to

market, which is critical for a retailer’s success.”

Shipping lines operated services both at reduced and normal

speeds, but there was “no difference in rates offered by carriers for

slow steaming versus regular steaming,” he said.

Becton, Dickinson and Co, a medical supplies firm, said slow

steaming added an extra two to five days in sailing time between

ports. But it had been offered no choice, either by shipping lines or

by freight forwarders, on whether cargo was moved on ships oper-

ating at normal speed or on vessels slow steaming.

Some carriers alluded to the hoary issue that if carriers did

not invest in ships then shippers would not be able to move their

goods. A variation on this theme was offered by Maersk Line,

whose representatives said fuel cost savings by sailing at a slower

speed had been eroded by higher charter rates, which had risen

from $8,000 to $28,000 per day.

“Any cost savings accrued by reduced fuel consumption has

enabled Maersk Line to sustain its service levels in many US trades.

Without such savings, Maersk Line would not be able to obtain a

sustainable return on investment,” the Danish shipping giant said.

But one official rejected such thinking, pointing out that if slow

steaming resulted in a 20% fuel saving on a particular loop, “the

shipper is correct to point out that the pre-slow-steaming bunker

formula has now been transformed into a healthy profit centre for

the carrier”.

It will be a few months before the FMC decides to take any fol-

low up action, although it is it clear there are battle lines between

carriers and shippers over slow steaming. ]

Shippers are getting steamed up about slow steaming


Supramax bulker, e r bern, is on its maiden

commercial voyage in China after being delivered to

E R Schiffahrt by Vietnam’s Hyundai Vinashin Shipyard

at the end of May.

The 56,000 dwt vessel is the eighth in the series of

11 ships ordered by the German shipowner. The ship

is also the fourth newbuilding to be delivered by Hy-

undai Vinaship Shipyard this year.

The shipyard aims to deliver 11 ships this year and

a further 16 in 2012. The Liberian flagged ship was

named by Mrs. Ngo Thi Thanh Canh, wife of Le Thanh

Quang, who is secretary of the Khanh Hoa Commu-

nist Party.

In June Hyundai Vinashin also laid the keel of the

first of two 56,000 dwt Ice Class Bulk carriers for ESL

Shipping of Finland.

Party for the Party at shiP launch

Shanghai-baSed Zhong An Shipping

has taken delivery of the Hong Kong-flagged

79,600 dwt panamax bulker King Peace from

China’s Wu Jia Zui Shipyard. But while the

ship is Chinese built, owned and crewed,

management is being undertaken by Britain’s

Graig Ship Management.

Ian Morgan, chief executive of Graig Ship

Management, says: “This is an important new

contract, because it is the first opportunity

for us as a UK ship manager to manage a

Chinese-owned, Chinese-built and Chinese-

crewed vessel.

“It makes a lot of sense, we know the ship

inside out because we helped build it, we

know bulk carriers and we know China.”

The firm said 22 of its current newbuild-

ing supervision contracts are for Chinese owners. They com-

prise 18 76,000 dwt bulkers being built at Jiangsu Rongsheng

for Minsheng Financial Leasing and four 45,000 dwt bulkers for

Shanghai Xiang An Electric Power Shipping that have been or-

dered from Chengxi Shipyard. And in a warning to established

amlaunchedamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Asian and Hong Kong-based shipmanagers, Mr Morgan said of

Graig’s management of King Peace, “We see this as a first step

to a growing business becoming a local ship manager for Chi-

nese owners.”

King in safe hands


The decision by the ICS to back an international bunkers levy system has provoked widespread opposition

To levy or noT To levy

ambunkersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

When the InternatIonal Chamber of Shipping concluded

its meeting on 20 May, announcing it would back a bunker levy/

compensation fund-based mechanism as its preferred market-

based measure to reduce CO2 emissions, it’s a fair bet it wasn’t

expecting such an overwhelming backlash from so many other

industry players.

In support of the ICS decision that a levy-based system is “the

one that most shipping companies can live with in order to ensure

a level playing field and the avoidance of serious market distor-

tion”, chairman Spyros Polemis said: “The shipping industry has an

instinctive dislike of unnecessary com-

plication which will be the result of a

system based on emissions trading.

“Governments are looking for leader-

ship from the shipping industry about the

market based measures we prefer to help

reduce CO2, and to raise money for any

environmental compensation fund that

might be developed by governments.

The meeting of our member national

associations agreed on an MBM that is

levy-based. Such a system should be de-

veloped by IMO,” he added.

After years of procrastination the ICS

now finds itself fast steaming in a race

against time to establish an international

agreement on climate change within

the International Maritime Organization

before the European Union takes steps

to establish its own carbon trading emis-

sions regime. But, as if attacks from the

EU were not enough, other organizations

have also opposed the ICS initiative. No-

tably BIMCO.

While BIMCO did not reject the ICS proposal outright, at its

general meeting in Vancouver in June, members expressed fears

that taking up any market-based measures could damage the cam-

paign for the adoption of the Energy efficiency Design Index at the

IMO’s Marine Environment Protection Committee Meeting in July.

Less surprisingly, the Global Shippers’ Forum has come out

against the ICS move on grounds it would be the shippers that ulti-

mately pay for the scheme. Lloyd’s List quoted GSF secretary gen-

eral Chris Welsh who said that passing on shipping carbon costs

to their customers via a bunker levy not only removes shipowner

accountability, but also fails to reduce carbon emissions.

Mr Welsh told the newspaper the GSF would welcome and

support a voluntary shipping industry initiative to reduce the car-

bon emissions through the IMO.

“Shipowners need to introduce a rigorous scheme targeting

operational efficiencies and other measures to reduce shipping car-

bon emissions,” he added.

Meanwhile representatives of the fuels that sit at the heart of

the conflict, namely bunkers, are sitting on the fence waiting to see

which way the wind blows. The chief executive of the International

Bunker Industry Association Ian Adams

told Asia Maritime “ The IBIA decided

at its Annual Convention in Stamford,

Connecticut in September 2010, not to

take a position on the issue of climate

change and in particular, the issue of

Market Based Measures,” he said.

“Our members being drawn from

all aspects of the Bunker Industry

(Buyer, Supplier and Service) felt it was

too early for the Association to decide

either way as there is still no definitive

proposal from IMO. The Bunker Supply

industry will adapt to the conditions of

the market,” he concluded.

But if the ICS is to be believed, it

too is looking ultimately to EEDI as the

way forward. In its concluding remarks

following the May meeting the organi-

zation said: “The immediate priority

for ICS however, is to ensure that a

package of technical and operational

measures to reduce CO2 emissions,

which has been developed by the International Maritime Organi-

zation, will be adopted by the crucial meeting of the IMO Marine

Environment Protection Committee in July, as amendments to

MARPOL Annex VI.

“Most importantly this includes the Energy Efficiency Design

Index. Agreement at IMO will be vital to maintain the principle of

global rules for a global industry, which cannot be guaranteed if de-

tailed emission reduction measures are left to the high-level climate

change talks at UNFCCC, or the European Commission, which will

be the likely result if agreement is not reached by governments at

IMO this July.” ]

no smoke with-out disputes


Only price stands between China and its bid to become the world’s largest bunker centre

China bids fOr singapOre’s bunker CrOwn

ambunkersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Over the last few years China has repeatedly surpassed other

nations, particularly in terms of consumption or production be it

shipbuilding, manufacturing or the overall size of the economy.

According to many, bunkers supplies are the next frontier.

Given the huge amount of traffic going in and out of China,

it would not be surprising to see the country near the top of the

heap when it comes to bunkering. What supplied the drag up till

recently was a remnant of the command economy – a monopoly

controlled by China Marine Bunker – known as Chimbusco which

wasn’t broken until 2006.

Commenting on the evolving Chinese market for bunkers, Ian

Adams the secretary general of the International Bunker Industry

Association says, “The monopoly has been broken to a certain

extent but the licenses have been restricted to Chinese companies.

This is having a positive effect with regard to competition and

therefore, prices. As far as opportunities for “International Players”

is concerned this is currently limited to larger trading houses that

are providing a service to the ship-owners.”

Mr Adams adds, “China still needs to invest in its infrastructure

such as storage, blending facilities etc but we fully anticipate that

they will.”

As Mr Adams says, there are far fewer players than in Singa-

pore. They are made up primarily of Sinopec subsidiaries namely,

China Shipping & Sinopec Supplies, China Changjian Bunker,

Sinopec Zhejian Zhoushan. The fifth player, Hong Kong-listed

Brightoil stands out from the group because all of its customers are

international liners. It established a presence in Shenzhen in 2006.

From 2009 it expanded into Shanghai, Ningbo and Zhoushan with

plans to move into Dalian, Tianjin, Qingdao and Rizhao in the

near future.

Brightoil’s Investor Relations manager Rachel So acknowledges

that some demand is moving from Singapore to China but says that

as an important gateway and bunker procurement centre Singapore

will continue to have an important role to play. Brightoil sources

most of its bunker fuel from Venezuela, the Middle East Gulf and

Europe but because much of this fuel reaches China via Singapore,

where Brightoil conducts a lot of its international supply and bun-

kering business, the Lion state is still able to offer better prices than

its Chinese counterparts. Shanghai is currently around $20 per

tonne more expensive.

But Singapore is not sanguine about what it considers a real

threat to its current supremacy. In a recent interview with Bunker-

IBIa secretary General Ian adams

“given that scenario, shipowners would skip stopovers in singapore, which will allow them to save up to one day’s worth of steaming.”

world the chairman of the Singapore branch of IBIA and regional

manager for Asia at Integra Fuels Asia Pte, Mr Simon Neo said that

China posed the biggest threat to Asia as the price gap closes. In

just a year from March 2010 to March this year the price differen-

tial for 380 centistokes grade bunker fuel has narrowed from $39

per tonne to $22.50.

According to industry estimates around 60% of vessels navigat-

ing around Asia pick up bunkers from Singapore. But it’s a fair bet

that a large percentage of those ships are also calling at Chinese

ports.

Mr Neo envisages that in three to five years the price gap be-

tween China and Singapore would have eventually disappeared.

“When the price narrows down to marginal why should shipown-

ers take bunkers in Singapore?” he asked.

Neo told Bunkerworld, “Given that scenario, shipowners

would skip stopovers in Singapore, which will allow them to save

up to one day’s worth of steaming.

“If Shanghai or Shenzhen, for example, together takes 10m

tonnes of bunkers a year, the volumes will definitely need to be

taken from somewhere and it’s likely to be from Singapore,” he

added. ]


Hong Kong based Wah Kwong Shipping acknowledges the quality of its counterparts in a battle against a poor market

WitH a little Help froM our friendS

amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Wah KWong Shipping, a leading Hong Kong-based tanker and

dry bulk owner famously changed its mind about listing in 2008

for what appeared to be solid reasons at the time. But as the market

has softened some listed tanker operators have been able to revert

to the market to help fund their operations during the lean times

that will continue to face the industry over the next few years.

However, Wah Kwong’s chief executive Tim Huxley stands by his

company’s decision.

“It was the right thing to postpone our IPO and we did not

need to do it to fund our expansion - that went ahead in any case,”

he says.

“There are certainly benefits to being a listed company, but

also some disadvantages. Some listed companies have indeed

raised money in what would otherwise have been difficult times to

help them through the downturn and others used the availability

of finance to secure a war chest, which will be quite useful as op-

portunities arise. Our business model, and our conservative nature,

means that we are probably better suited to being private right

now,” he adds.

The Wah Kwong business model has so far managed to eschew

the fickle and frequently ill-informed market investor by virtue of

its ability to tap into important players in the world’s largest market

for raw materials – China. It is not simply a matter of proximity.

Rather, it is the end product of backing the right horse nearly a life-

time ago and nurturing it ever since.

Mr Huxley says, “Wah Kwong has extremely strong Chinese

roots - we are in many respects a Chinese company. Relation-

ships are built over years and have to be mutually benefi-

cial. Yes, we do have an enviable position in this respect

and it certainly did not happen overnight. The com-

pany’s chairman George Chao has been very loyal to

China in many areas and has worked hard to establish

the company there. Wah Kwong is in China for the

long haul and not just because it is the current fla-

vour of the month.”

Until recently, such strong ties did not

stretch to China’s shipbuilders. Previously Ja-

pan’s shipyards benefited because of a merited

reputation for excellence and Wah Kwong’s

good relations with the nation arising out of the

company’s dependence upon Japanese charter-

ers when it was established in 1952. But costs

and a rise in the ability of Chinese shipbuilders

have prompted a rethink in the last few years.

“We now have three VLCCs being built there,” says Mr Huxley.

“Chinese expertise in tankers has come on in leaps and bounds

in recent years and with Korea moving to high end products like

offshore, LNG and the new generation of container ships, it’s no

surprise that people are turning to China for conventional tankers,

which means the products are getting more widely accepted.

“In 2003, when we contracted our current pair of VLCCs, China

was not such a prominent VLCC builder and Korea was very com-

petitive. Things have moved on and major owners don’t have reser-

vations about building tankers in China and major charterers have

come to accept them,” he adds.

As Wah Kwong has stuck by its friends over the years so it has

abided by a business strategy that goes back to its origins – witness

its declaration on the homepage of its website – “Our fleet grew to

meet the growing post war industrial growth in Japan. In those days

our ships were pre-fixed on long term time charters primarily to

Japanese charterers with financing secured on the back of the time

charters. The use of time charters reduced the exposure to market

volatility, and is a chartering methodology that the Group maintains

to this day.”

As recently as 2010, Mr Huxley was espousing the same mes-

sage on news channel CNN and illustrates how the approach still

works now: “In the first five years, you would hope to break the

back of depreciation and generate some decent returns,” he says.

“It is always one of the great lotteries of shipping as to what the

market is going to be like when you come off a long charter and

the market is the market. We recently had a VLCC come free after

a lengthy charter and we re-fixed her for a shorter period at

what is still a profitable level. The real problem comes if

you buy a ship at a sky-high price against a charter at a

very high rate and then the charterer defaults. That’s why

the quality of your counter-party is so crucial.”

Even in the worst of times, Wah Kwong has found that

“reliable counterparties” have seen it through.

“Tankers have not been subjected to the same level of

default as the dry cargo market and no, we haven’t had

any issues on that front,” he says.

“It certainly becomes tougher when you are in

a bad market and your charterer is losing money

- you have to work even harder to ensure there

Wah Kwon Shipping chief executive Tim huxley.


amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

are absolutely no excuses for you to be put off-hire. Fortunately,

our charterers are all with long term partners and we have ridden

the highs and lows together.”

It is perhaps those deep ties with Chinese mainland charters

that keeps Wah Kwong firmly on Hong Kong soil as its European

peers have been increasingly lured to Singapore.

“Singapore has the refineries and a lot of oil companies have

long had their regional base there. Also, Singapore has been a ma-

jor ship repair centre and tankers do actually go past the port, so

there are plenty of logistical reasons to run a tanker operation from

there.

“However, Hong Kong is better located geographically for

China and North Asia and that is one of the reasons we have a

large number of Chinese shipping companies moving here, com-

bined with the fact that we are still the leaders in shipping finance

and have a recognised legal framework. For Wah Kwong, tankers

are just part of our business and none of our customers are in Sin-

gapore. Hong Kong is our home and it is inconceivable that we

would consider moving,” pronounces Mr Huxley.

Perhaps the only area in which Mr Huxley has moderated his

Tanker shipping is in a spin

stance in the face of an increasingly difficult market is that of mar-

ket consolidation, which he dismissed in 2010.

“I think there will be some consolidation in the tanker sec-

tor,” he concedes. “And the latest takeover of Saga by Double

Hull Tankers proves it is alive and well. I can’t see a prolonged

shipping downturn happening without John Fredriksen picking

up a few choice companies as they come available either. Cash

rich companies will always be there for good deals- whether it is

taking over a company or buying a block of ships as in the case

of the sale of the Cido tankers. It all depends on what is the best

value,” he says.

Tanker operators generally might be having a bad time of it

but a passing mention of business at Wah Kwong at the time of

this interview might seem to belie that fact.

“We had a VLCC come free last month and we fixed her for

eighteen months at a profitable rate. We have another VLCC com-

ing free at the end of 2012, so it’s too early to start thinking about

her, but she was acquired at a low price and has been gainfully

employed all her life, so there is a fair bit of cash in the ship,”

Concludes Mr Huxley. ]


amtankersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

With attention focused on other ship classes tankers may avoid a debacle in the medium term

RestRaint key to eventual RecoveRy

As with All other ship types tankers have not had an easy ride

of it since the heady days of 2008. But it is something of a myth

that 2010 was a disaster for the sector. Sure, the dying months

of that year saw rates freight rates at dangerously low levels. But

taking the year as a whole, where average time charter equivalent

very large crude carrier earnings were around $38,000 per day,

this was not only sustainable, but also higher than 2009 levels.

In the medium term the outlook for tankers might not be

described as rosy but it’s not blue either. The related reason

for optimism is that after an orgy of ordering newbuildings in

earlier years it is apparent that some self- restraint has entered the

market.

Clarksons data shows that 425 tankers were ordered in 2008,

131 further contracts were signed in 2009, and a further 233 were

inked in 2010. So, with just 28 oil tankers ordered so far this year

it is clear owners are finally holding back. Of course, a further

reason is that with the upswing in orders for containerships and

liquefied natural gas tankers, not to mention the increasing reli-

ance among the top three Korean shipbuilders on offshore plant,

there are few yards gagging for tanker orders.

All this will be of little comfort to owners for the rest of this

year, as slippage will ensure that ships ordered in 2008 and

2009 will continue to enter the market in ever greater numbers.

The demand side of the equation is relatively perky as the pro-

jection for crude tanker deadweight demand growth in full year

2011 rose to 3.2% in May. This is largely as a result of increased

demand from emerging economies and a real hope that Japan’s

demand for crude will increase at least 1% over the year to touch

4.5m bpd.

It is also forecast that the beleaguered nation will up its de-

mand for gasoil and residual fuel oil as the reconstruction of the

northeast of the country gains pace. This might not appear to add

up to a major fillip but it should not be forgotten that predictions

for Japan’s crude oil demand prior to the tragic earthquake was for

a 3% fall.

Unfortunately, the increase in demand for crude and product

cargoes from the emerging economies will not be strong enough

this year to counter the new tonnage hitting the water for the first

time.

According to Clarksons the sector is in for a deluge. In its mar-

ket outlook in May the broker said: “…higher import levels will

almost certainly be outstripped by the strongest annual growth

in the overall tanker fleet since the mid-1970s. The total active

crude fleet is projected to increase by 7.4% (22.6m dwt) with the

products fleet on track to grow at an even more rapid rate of 7.7%

(8.2m dwt).

“The overall projected growth rate has risen since last month

[April]: with higher than expected deliveries of crude tankers in

the year to date, the overall tanker fleet is set to increase by 7.5%

year-on-year,” Clarksons said.

Despite the bleak picture, practitioners as opposed to ana-

lysts see some reprieve by 2012. In June, as part of a Capital Link

Shipping tanker webinar, Tsakos Energy Navigation chief execu-

tive George Saraglou maintained that the plunge in orders so far

this year would lead to an improvement in the market as early as

2012.

Teekay Tankers chief executive Bruce Chan agreed that the

supply side was going to be better in 2012 onward and conclud-

ed that it was a just a matter of surviving the onslaught this year.

With few options for improving income the emphasis will

have to be on saving for the rest of the year. Slow steaming has

become as important for tankers as boxships, despite suffering

more resistance from charterers. Even so it is likely there will be

an increasing amount of slow boats to China and elsewhere for

the foreseeable future. ]

slow boat to China


All JApAn’s top shipping operators finished fiscal 2010 on

March 31, with positive financial results but with a sting in the

tail of the final quarter, and that was without taking on the effect

of the earthquake that hit the country just 20 days earlier.

Mitsui OSK Lines recorded a $700m profit, a quadrupled

increase on its dire results in fiscal 2009, but the fourth quarter

indicated turbulent waters, falling by Y2.2bn ($27.4m), or 78%

compared to the previous quarter. Looking to the rest of the year

MOL accurately predicted a slump in the car carrier trade due to

post-earthquake trauma at the automakers’ sites.

The company was perhaps less on the ball when it suggested

only fuel prices would provide a drag on container fortunes for

the rest of the year as freight rates continue to slide on the two

main trade lanes.

With dry bulk business still in the doldrums, MOL expects

company-wide net income to drop 48.5% to Y30bn by the end of

this fiscal year.

Kawasaki Kishen Kaisha also managed a respectable $368m

net profit for fiscal 2010. But K Line expects that figure to be

slashed to $25m by the end of fiscal 2011, citing high fuel prices

and oversupply in the bulk carrier sector.

Finally, Nippon Yusen Kaisha, the largest of Japan’s operators,

recorded net income of Y78.5bn compared with a Y17.4bn loss in

fiscal 2009. In the light of the impact of the natural disaster and a

downturn in market conditions NYK is predicting net income of

just Y34bn by end of March 2012.

Conservative goodNone of the lines can be said to be in a comfortable position but

they have born up better than many other international operators

so far. Analyst Moody’s stated in June that Japan’s elite trio had

been affected less than other shipping companies because of their

strong relationships with customers, their diverse fleets and a pre-

ponderance of long-term contracts.

It has always been the way. And despite the braying of inter-

national shipowners and speculators when shipping cycles are at

their peak, Japanese shipping operators have been happy to turn

a more modest profit more consistently based on the attributes

cited above.

Conservative badHowever, such conservatism has not worked for the lower profile

Sticking to tried and trusted operational strategies, Japan’s top three operators will weather the storm but can the same be said for the country’s shipowners?

ConServative approaCh workS for SoMe

Japanese shipowners in recent years, which have typically placed

heavy reliance on long-term charters with the much larger opera-

tors. For some years now the shipowners have found themselves

penalised by yen-denominated loans for newbuildings against

earnings from charterers in US dollars that are worth less and less

on an almost daily basis. All this is compounded by a 35% cor-

porate tax rate.

In the good times strong relationships between the shipown-

ers and the charters and the local banks worked to everybody’s

benefit. Now the shipowners can no longer avail themselves of

cheap 100% loans and the charterers are driving harder bargains.

After years of having their backs to the wall, Japanese ship-

owners are showing signs of looking beyond the Japan Sea to re-

cover their fortunes. A recent report in Lloyd’s List described ship-

owners around Shikuko Island as reaching a tipping point where

many owners are considering setting up overseas in tax-friendly

environments such as Singapore or Hong Kong.

But this Asia Maritime writer exposed the Japanese ship-

owner’s dilemma more than three years ago when the finance

conference organizer Marine Money made its first call at Imabari

in 2008. At the time shipowners were bewailing the same adverse

circumstances and low charter rates verses high operation costs.

There are indications that Japanese shipowners are looking

cautiously at foreign shipmanagers. Others are actively exploring

moves to Singapore. But the majority are prepared to stick it out

in the hope for better times. ]

amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam


amjapanamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamammamamamamamamamamamamamamamam

As is well known, CO2 emissions from international

shipping have been rapidly increasing along with the

growth of global seaborne trade. It reached around

870m tonnes of CO2 in 2007. According to the latest

estimation by the IMO, CO2 emissions from inter-

national shipping would increase, without effective

measures, three times the current level by 2050. Ur-

gent action in the maritime field is needed to improve

energy efficiency of ships and consequently to reduce

their CO2 emissions.

Marine Environment Protection Committee (MEPC)

of the IMO has been discussing the measures for CO2

emissions reduction from international shipping, and

developed the draft amendments to MARPOL Annex

VI. The draft amendments to MARPOL Annex VI cover

mandatory application of the Energy Efficiency Design

Index (EEDI) for new ships and providing the SEEMP

for both new and existing ships.

The amendments to MARPOL Annex VI would re-

quire ships of 400 gt and above to calculate the EEDI

values (attained EEDI) and require ships of certain size

Notes oN possible adoptioN of aM eNdMeNts to MaRpol aNNex Vi at MepC 62shinichiro otsubo, director for international regulations at the safety standards division of the maritime bureau at Japan’s Ministry of land, infrastructure, transport and tourism, is a leading advocate of eedi. in an exclusive article for asia Maritime, he dismisses the arguments of the naysayers

Table1 Reduction factors (in percentage) for the eeDi relative to the eeDi Reference line

* Reduction factor to be linearly interpolated between the two values dependent upon vessel size. The lower value of the reduction factor is to be applied to the smaller ship size.

ship Type size

Phase 0

[1 Jan 2013

–

31 Dec 2014]

Phase 1

[1 Jan 2015

–

31 Dec 2019]

Phase 2

[1 Jan 2020

–

31 Dec 2024]

Phase 3

[1 Jan 2025

and

onwards]

Bulk Carrier

20,000 DWT

and above0 10 20 30

10,000 –

20,000 DWTn/a 0-10* 0-20* 0-30*

Tanker

20,000 DWT

and above0 10 20 30

4,000 –

20,000 DWTn/a 0-10* 0-20* 0-30*

Figure 1 Concept of the EEDI requirement

Figure 1 Concept of the eeDi requirement



Notes oN possible adoptioN of aM eNdMeNts to MaRpol aNNex Vi at MepC 62

and above to satisfy the required EEDI which is determined by mul-

tiplying the reference line value (an average EEDI value of existing

ships according on the size and ship type) by the reduction factor.

The reduction factors are to become more stringent step by step.

Table 1 shows the reduction factors of bulk carriers and tankers,

which depend on the size of ship and the time of building contract,

and Figure 1 shows the concept of the EEDI requirement.

The EEDI can be categorized as one type of technical perform-

ance standards for new ships, and this type of regulation (technical

performance standards for new ships) has been widely used in the

field of safety and environment protection by IMO. Mandatory

technical performance standards for ships means setting certain

performance criteria in the form of regulations that ships shall

comply with. The mandatory EEDI requirement is no different

from other regulations developed by IMO, in the sense that certain

performance standards are set and that ships shall “do something

technically” in order to satisfy such standards.　There are many

options to satisfy the required EEDI, and shipping companies and

shipbuilders can decide their own optimum technical solution for

their newbuilds.　Simply put, a “low-tech solution (design speed

reduction)” and “application of new technologies” are available to

improve the EEDI.

The first type of solution (design speed reduction) is effective

because the EEDI value is largely influenced by the ship speed,

which appears in the denominator of EEDI formula, and the neces-

sary power to enable such speed, which appears in the numerator

of EEDI formula. The value of EEDI can be improved considerably

by the reduction of design speed, since the necessary power is re-

duced by the cubic ratio of speed reduction.

As regards the second type of solution (application of new

technologies), there are numerous combinations of available and

effective technologies. Normally, shipping companies and ship-

builders would discuss, during the early design and newbuilding

negotiation stage, the selection of the technologies that would be

applied in their new ships. The initial cost increase and the cost

saving through the reduced fuel consumption would be the prima-

ry focus in the design stage; a possible investment criteria would

be that the initial costs for newly applied technologies would not

exceed the benefits of fuel saving (e.g., present value of saved fuel

costs for several years). Table 2 shows the example of estimation

for EEDI improvement potential. In fact, ships can satisfy the re-

quirement of EEDI in cost-effective manner, without counting on

the first option, i.e., the reduction in the ship speed and installed

engine power.

Optimum solutions, which may be the combination of the first

and the second solution, varies according to each ship. Shipowner,

operator and shipbuilder would discuss together and determine the

optimum solution to satisfy the EEDI requirement. Such discussion

would not prefix the speed reduction option as the sole solution;

if the speed reduction causes longer lead-time, and if the ship is to

carry time-sensitive cargoes, both shipowner and operator would

hesitate to choose this option. However, if the lead time can be

maintained because longer ocean voyage time is compensated by

more efficient port services by the use of, e.g., the port entry reser-

vation system which would reduce the offshore waiting time for in-

coming ships. In such a case, the speed reduction would not affect

the quality of shipping service, and the stakeholders may choose

such option.

The draft amendments to MARPOL Annex VI do not prejudge

specific measures to satisfy the EEDI requirement. However, there

are a few critics who highlight that the mandatory EEDI require-

ment will result in a drastic reduction in installed power, in order

to comply with the required EEDI.

As mentioned above, speed reduction is one of effective meas-

ures. However, optimum speed for newly built ships would be de-

cided by consultation among shipowner, operator and shipbuilder

at design stage, taking into account the envisioned operational

pattern and business model of each particular ship. Shipowner,

operator and shipbuilder are not so stupid that they plan to build

a ship whose speed cannot maintain the quality of service and put

the ship at risk of safety.

In addition, as a safeguard for potential risk that the ship

with excessively low speed is designed and constructed, the draft

amendments to MARPOL Annex VI includes a regulation: “For

each ship to which this regulation applies, the installed propulsion

power shall not be less than the propulsion power needed to main-

tain the manoeuvrability of the ship under adverse conditions, as

defined in the guidelines to be developed by the IMO.” The draft

guidelines will be considered at MEPC 62 and these guidelines will

be further developed through input from all concerned parties.

It is a primitive mathematics that the value of EEDI is improved

by speed reduction. All qualified naval architects know it. How-

ever, whether they would use the speed reduction as the option in

their newbuilds is a different matter. There is nothing wrong, as far

as the global environment is concerned, in that the ship would run

with slower speed with smaller power, as such ship, not only being

certified as having lower EEDI value, would burn less fuel and emit

less CO2. However, any naval architects know that simply slower

ships would not be well received by ship owners/operators. That

is why ship designers and naval architects all over the world, while

being aware of the existence of the easy-way-out (speed reduction),

have been seeking the optimal design using various technologies,

without lowering the service quality and profit potential of ships,

which would have a lower value of EEDI and at the same time re-

duce the fuel consumption in operation.

Maritime industries have been using the EEDI in trials and on


Component of resis-

tance and propulsion New technologies

Improvement effect

of each

technology(%)

Expected year

the improvement

reaches the

maximum

2013-2017 2018-2022 2023-2027

Reduction of air and

wind resistance

Optimization of

superstructure 30 2019 　　 O

Reduction of friction

resistance

Low friction coating 5 2012 O 　　

Air lubrication method 10 2020 　 O O

Stern duct 2 2013 　 O O

Improvement of

propeller efficiency

CRP 8 2013 O O O

Sprit stern 4 2024 O

Improvement of

propulsion efficiency

by shape of stern

Stern duct 4 2013 O O O

Sprit stern - - O

Post-swirl system 4 2013 O 　

Waste heat recovery 　 O O O

　 Present 2013-2017 2018-2022 2023-2027

Improvement rate of FOCME (%) - 14.5% 25.5% 36.4%

FOCME(t) for 8 years 95,127 81,315 70,853 60,521

Present Value of fuel cost reduction for 8 years 　M$　 - 5.05 8.87 12.65


Table 2 Estimation for EEDI improvement potential by the application of the energy-saving technologies(Dry cargo carrier (77000DWT))

a voluntary basis for several years. Some shipping companies have

already published a concept of low-EEDI ships whose energy ef-

ficiency is considerably improved. Some shipbuilders also have

completed the conceptual design of ships that will contribute to

the economies of shipowner and operator. Furthermore, some

classification societies, including class NK, DNV and GL have

started issuing the EEDI certifications for trial.

The EEDI concept was developed four years ago, and since

then has been fine-tuned and tested by various stakeholders includ-

ing the industries and the maritime administrations. As a cumula-

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tive result of the international efforts of more than four years, the

amendments to MARPOL Annex VI will be discussed for adoption

at MEPC 62 held from 11 to 15 July 2011 at IMO headquarter.

The draft amendments to MARPOL Annex VI have been care-

fully developed to improve the energy efficiency of ships without

imposing an excessive burden on the maritime industry. Japan

believes that adoption of the draft amendments to MARPOL Annex

VI will contribute to the economy of shipowners and operators and

enable the international shipping sector to achieve CO2 emissions

reduction in an effective manner. ]



Table 2 Estimation for EEDI improvement potential by the application of the energy-saving technologies(Dry cargo carrier (77000DWT))

ThE marITImE InDusTry is constantly changing, and class soci-

eties are being called upon to play an ever-greater role in areas that

extend beyond the realm of traditional ship classification. With the

change in ClassNK’s organizational status to a generally incorpo-

rated foundation, it has gained a far greater range of freedoms with

regards to its future development, and can establish new subsidiary

companies. It will now be easier for the organization to develop

new services to address the changing needs of the maritime indus-

try, while also maintaining its status as an independent and non-

profit organization.

ClassNK chairman and president Noboru Ueda explains, “For

example, there is great demand for consulting services related to

new conventions such as the Maritime Labour Convention or the

ship recycling convention, and given our vast range of experience

in these areas classification societies are often the organizations

that are most capable of providing such services.

“Nevertheless, serving as both a consultant and certification

body has always been something of a grey area. Thanks to the

change in status, we can now establish separate entities to provide

these kinds of services, thus directly addressing the growing needs

of industry, while also creating greater transparency,” he says.

Under the new structure, subsidiaries can make a profit. But in

order to optimise ClassNK operations, any excess funds generated

will be returned from subsidiaries to the core foundation.

“However, our goal is to maximize safety and not profits, and

as an independent, non-profit organization, such funds would be

used to further our goals of ensuring the safety of life and property

at sea, and protecting the marine environment,” says Mr Ueda.

President Ueda quickly dismisses any suggestion within the in-

dustry that with subsidiary profits coming in, independence would

go out: “As a third-party verification organization, independence,

transparency, and competence are absolutely essential to our op-

erations. It is for that reason that, even with the changes in domes-

tic law and our change in legal status, we have chosen to remain a

wholly independent, non-profit organization,” he says.

Mr Ueda is equally keen to assure its shipowner clients that

there will be no let up on the core marine business as a result of

the shake up: “While there has been a trend for classification soci-

eties to expand their activities away from the maritime industry and

into the onshore industrial sector, among other fields, at ClassNK

we have no such intentions. We are and will remain dedicated to

serving the maritime industry. As a result of the transition in April,

On April 1, ClassNK became a generally incorporated foundation, thus freeing the organization to set up strategic subsidiaries

we will be expanding the range of our activities, this is aimed at

providing better service and meeting the growing needs of the glo-

bal maritime industry.”

Another reason for the need to breakdown the service offerings

that ClassNK have is the increasing willingness of Japanese Mari-

time industries to seek out new technologies.

“The Japanese maritime cluster, and Japanese shipyards in par-

ticular, have the greatest potential to contribute to wider industry

efforts to reduce greenhouse gas emissions, says Mr Ueda.

“The 22 different projects already being carried out by the

Japanese maritime industry as part of a national project to reduce

maritime GHG emissions are a perfect example of the way that the

Japanese industry is taking a leading role in these efforts. While

addressing the challenges of reducing maritime GHG emissions

will require a global effort, and I applaud all such efforts being un-

dertaken around the world, I know of no other such programme on

the planet that compares in terms of size, scope or practicality to

the efforts being undertaken by the Japanese maritime industry,” he

concludes.

With cutting edge technologies like air lubrication and hybrid

power systems already being outfitted on actual vessels, Japanese

yards look set to lead the way with regards to emission reduction

in the short term, and ClassNK is proud to be part of it. ]

ClAssNK freed tO Offer New serviCes

ClassnK chairman and president noboru ueda


The Cyprus flag has had been in a flap in the previous

decade, hitting a peak of about 29 million gross tonnes in

2000 before falling back to around 20 million gt seven years

later.

In the past four years though, tonnage volumes have

steadily climbed again to reach the current position of about

22m gt. With around 1,650 ships flying the Cypriot flag,

the land of Aphrodite, who was born in the sea foam near

Paphos following the union of Zeus and the Titan goddess

Dione, has the world’s 10th largest merchant fleet.

People involved in the country’s maritime sector are

hoping the gods are again looking benignly on both the

Cypriot flag and the country’s shipping sector in general.

Pointing to the reasons for such benevolence, George

Pamboridis, chairman of corporate services company Pru-

dens, cites three main reasons why the Cypriot flag is more

attractive to foreign owners.

Possibly the key one is the European Commission’s ap-

proval in March last year of a revised tonnage tax regime in Cyprus.

Not only does this mean there are no taxes on the profits earned

or the dividends paid by a Cyprus shipping company with Cypriot

flagged ships operating in international waters, but the salaries of

officers and crew are tax-free.

Mr Pamboridis says the new taxation agreement “goes far be-

yond any other tonnage tax regime in the European Union”. He

added: “This competitive advantage is expected to improve Cyprus’

prospects in the shipping world.”

He points out the tonnage tax concession is “available to any

owner, charterer or ship manager”. Mr Pamboridis added that ship-

ping companies have the choice of either opting into the tonnage

tax scheme or paying a 10% corporate tax rate, which is the lowest

corporate rate in the European Union. But those choosing to join

the tonnage tax must remain in the scheme for 10 years, although

firms can withdraw if ships are sold or the relevant charter ends.

In an effort to deter substandard ships, vessels on the Paris or

Tokyo grey or black lists have to pay either 30% or 60% more in

tonnage tax fees.

Explaining the other reasons for growing interest in the ship-

ping register, Mr Pamboridis says the Cyprus flag is no longer on the

United States Coast Guard’s target list. The flag is also on the Paris

and Tokyo MOU’s white lists.

He says there were also bilateral co-operative agreements

covering merchant shipping with 32 countries including mainland

China.

In the favour of the gods

amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

amamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Cyprus’ favourable tax regime is proving a lure for shipowners in europe and asia

This means “there is increasing interest in the Cyprus flag by

Asian owners,” Mr Pamboridis says.

Cyprus has already started to call itself the “Shipping Metropolis

of Europe”. While this might provoke cries of ‘foul’ by its Greek

neighbours, government figures show there are around 130 Cyprus-

based shipping, ship management and shipping related companies

who employ 60,000 seafarers and 4,000 shore-based personnel.

Currently, about 4% of the global merchant fleet is managed from

Cyprus, while the industry contributed about 5% of GDP last year.

This comes at a time when energy companies are looking with

mounting excitement at what are considered to be vast natural gas

reserves in the eastern Mediterranean. Estimates suggest that the

Leviathan gas field, which lies south-east of Cyprus, has around

2trn cu m of gas, making it the biggest find by US-based gas and

oil company Noble Energy. The firm is expected to start exploratory

drilling of this and neighbouring offshore blocks either by the end

of this year or early 2012.

Mr Pamboridis says if early estimates are correct Cyprus would

only use one tenth of the reserves in the next 50 years.

He adds that while there was no legal requirement to use Cy-

prus flagged vessels, such as offshore supply ships, the exploration

and development of these offshore fields would spur the country’s

maritime sector.

The only issue that could spoil the ongoing renaissance in the

Cyprus flag is the continuing ban on Cyprus flagged vessels calling

at Turkish ports. Mr Pamboridis says a lifting of the ban would be

conditional on Turkey joining the European Union.]


amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

amamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

The Liberian regisTry currently comprises

3,570 ships totalling 115 m gt., the highest in its

entire history. Since LISCR took over the manage-

ment of the registry in 2000, the fleet size has

more than doubled. The Liberian Registry is the

second largest in the world and with size comes

influence.

The IMO’s Maritime Safety Committee ap-

proved interim guidance on the employment of

privately contracted armed security personnel on-

board ships transiting the high-risk piracy area off

the coast of Somalia and in the Gulf of Aden and

the wider Indian Ocean at its 89th session in May

2011.

“This guidance is largely based on that

which the Liberian Registry has been provid-

ing to its shipowners, ship operators, and

ship masters, since 2010,” says Scott Bergeron, chief operat-

ing officer of the Liberian International Ship & Corporate

Registry, the US-based managers of the Liberian Registry.

Given the recent interest by governments and shipping indus-

try associations in the use of armed security personnel on ships,

the Liberian Registry proposed that IMO undertake this work,

as the competent UN agency for such matters, and provided its

guidance to IMO for consideration by the MSC Working Group

on Maritime Security and Piracy.

The guidance includes sections on risk assessment, selection

criteria, liability, command and control, management and use of

weapons and ammunition at all times when on board and rules

for the use of force as agreed between the shipowner, the private

maritime security company and the master.

To expedite finalisation and promulgation of the guidelines, an

inter-sessional meeting of the MSC Working Group on Maritime

Security and Piracy is proposed for September 2011 to review the

guidelines for any amendments. Representatives of the Registry will

participate.

“The Liberian Registry is working with the naval forces in pira-

cy-affected areas to improve compliance of its registered fleet. It

strongly urges shipowners and their masters to follow Best Manage-

ment Practice,” says Mr Bergeron.

Meanwhile, the Liberian Registry is keen to get the message out

to new clients and new ships as well as offer a wide range of serv-

ices that can be found with one of the largest registers.

“Greece and Germany have traditionally been strong supporters

of the Liberian flag, and continue to be so, says Mr Bergeron.

Flagging up the Fight on piracythe liberian registry has been at the forefront of the war on pirates

“But Asia is a vital market for the registry, and

one where we are growing in strength on a daily

basis, both in terms of existing tonnage and new-

buildings. Japanese vessels, for example, have

been registering with Liberia for over forty years,

and executives from leading Japanese shipping

companies have confirmed that they expect to

see a further increase in Japanese ship registra-

tions with Liberia. LISCR has a dedicated office

in Tokyo and, fittingly, last year it was a Japanese

vessel which took the registry over the historic

100m gt mark.

“Liberia is expanding its business throughout

the Far East and is continuing to attract new busi-

ness there because of its outstanding record for

safety and service, and the proactive support it

offers to owners in the region,” he concludes. ]

scott bergeron chief operating officer of the Liberian

international ship & Corporate registry


Marshalling the forces of asia

amship registersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

asia is proving to be a rich hunting ground for the Marshall islands register

ioM eyes asiaThe Isle of Man Ship Registry continues to make inroads

into the Asia Pacific markets with more owners from the re-

gion selecting the flag as their registry of choice.

And now that focus is starting to pay off with several

major owners from the region taking the decision to put

some tonnage with the Isle of Man.

Registry director Dick Welsh believes the flag’s high in-

ternational standards, growing regional reach and highly cost

effective fee structure mean the flag is naturally attractive to

a wide range of owners.

He believes the low cost structure and the fact that the

IoM flag meets all the international benchmarking criteria

makes it a strong alternative.

The registry is making efforts to engage with owners and

operators across Asia and has homed in on Singapore as one

of Asia’s most dynamic international shipping centres.

The flag has recently appointed Geoff Hutcheon as a

surveyor in the Lion City and Dick Welsh and his colleague

Anne Blyth, the flag’s senior registrar, makes regular visits to

the region. ]

The conTInuIng rIse in the strength of the Marshall Islands

Registry both in terms of tonnage growth and, more importantly, the

quality of that tonnage has been extraordinary.

As of June 2011, the MIR is the third largest and fastest growing

registry in the world with 71.5m gt and more than 2,400 vessels.

Also in June, the MIR qualified to be listed under the United

States Coast Guard’s Qualship 21 program for the seventh year

running.

With this designation ship owners and operators of Marshall

Island flagged vessels are able to apply to the USCG for a Qualship

21 certificate and the rewards that registration entails - a two-year

limited port State control (PSC) oversight for freight ships to a possi-

ble reduction of scope for annual/“mid-period” exams for tank ships

that have applied for and received Qualship 21 certification.

According to the president of International Registries Inc that

manages the MIR through its affiliates, Bill Gallagher nearly 18%

of the vessels on the USCG Qualship 21 vessels list are Marshall

Islands flagged ships.

Further testimony to the quality of the MIR fleet has been its

ability to maintain its white list status with both the Paris and Tokyo

MoUs and has met the LRS criteria of the Paris MoU.

Annie ng managing director of International registries (far east)

We welcome any competition

Asia is playing an increasingly dominant role in the growth of

MIR, headed by the dynamic managing director of IIR for the Far

East, Annie Ng. In just the last year or so Annie has been at the fore-

front of the establishment of new offices in Taipei, Imabari in Japan

and is now on the hunt for the right personnel to open premises in

Fuzhou, China.

Ms Ng’s office had been marketing in Taiwan for some years

before setting up a service office. “Pure marketing may be helpful to

get shipowners our attention but to offer a true service to our clients

a full service office with technical knowhow on hand is imperative

in providing what the client wants and needs,” she says.

Pointing to the fact that other open registries are also experienc-

ing good growth due the extraordinary number of vessels being de-

livered, Ms Ng says, “We welcome any competition, there is always

enough business for everybody.” But she insists that those flags sim-

ply content with a marketing presence in the region will eventually

lose out. ]


In the drIve to cut fuel costs and reduce shipping’s carbon foot-

print many substitute forms of propulsion such as liquefied natural

gas, electricity, hybrids, or even nuclear fuel have been put forward

as possible alternatives.

What makes Nippon Yusen Kaisha’s car carrier Auriga Leader

truly innovative is the sheer range of alternatives there is packed

into the hull and deck of one vessel.

With the participation of Kawasaki Heavy Industries, ClassNK,

and the Monohakobi Technology Institute, NYK now owns and will

shortly operate the world’s first solar-power-assisted vessel that is fit-

ted with a hybrid power supply system, ballast water management

system and is also adapted to use low sulphur fuel.

Originally built at the Kobe shipyard of Mistsubishi Heavy

Industries, the Auriga Leader has a length overall of 199,99m, a

breadth of 32.26m, depth of 34.52m and is capable of carrying

6,200 cars.

The parties involved in the project, one of a number of such

subsidised by the Ministry of Land, Infrastructure, Transport and

Tourism, began shipboard tests in June. These tests will verify the

effects of a jointly developed hybrid power supply system for vessels

that will be installed on NYK Line’s solar-power-assisted car carrier

the 60,213 gt Auriga Leader. The vessel is also being fitted with a

ballast-water management system and adapted to use low-sulphur

fuel to further strengthen environmental measures.

Photovoltaic problemsThe power generation and endurance of the photovoltaic panels on

Auriga Leader have been undergoing shipboard tests since the com-

pletion of the vessel on December 19, 2008. The tests have shown

that providing a stable power supply from the photovoltaic panels

can be difficult because even a slight change in the weather may

have a significant effect on the amount of power generated. It was

also found that attempting to make the solar power system bigger

to gain more output and to increase its dependency could result in

problems with regard to stable operations due to fluctuations in the

power supply.

each company contributed to the overall designThe hybrid power supply system has been studied since fiscal 2009.

NYK Line and MTI, setting out with the aim of curtailing CO2

emissions, have pursued a stable onboard power supply in case

an unstable renewable energy source such as solar power was to

Sun ShineS on the environMentally friendly

amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

nyK line and Mti will aim to develop an even larger solar power generation system for vessels, while Khi will seek to commercialize the hybrid power supply system for vessels.

nyK’s revolutionary new car carrier draws on a range of green sources for its power including the sun

be adopted. At the same time KHI has been working to develop a

hybrid power supply system for vessels through the use of its self-

developed large nickel hydrogen batteries known as Gigacell®; and

ClassNK is supporting all these projects as part of assistance pro-

vided through a joint research scheme based on industry demands.

Charging and discharging a fluctuating amount of solar power

generated by this hybrid power supply system will stabilise the sup-

ply to the vessel’s electrical power system. This will also minimise

output fluctuations from the diesel power generator and secure a

stable power supply.

Shipboard tests on Auriga Leader will continue in the weeks to

come with the aim of achieving a stable power supply under harsh

marine conditions through the combination of solar power genera-

tion and the hybrid power supply system, and the effects will be

verified. Based on the experiment results, NYK Line and MTI will

aim to develop an even larger solar power generation system for

vessels, while KHI will seek to commercialize the hybrid power

supply system for other ships.]

even if it rains the Auriga Leader will power on


According to the latest figures available vehicle and auto parts

exported from Japan in April were all but wiped out by the continu-

ing fall out from the devastating earthquake and consequent tsu-

nami of March 11.

Just 126,061 units left Japan in April, a fall of 67.8% compared

to the same month in 2010. Buses were the most seriously affected

vehicles, witnessing an 83.2% fall off from the year before. But the

signs are that Japan’s auto industry may now be over the worse.

On June 13, president of Toyota Motor Corporation Akio Toyoda

declared on the company website: “Production in Japan is expected

to return to 90% of normal levels in June. From July and after, the

degree of production recovery will depend on the model, but pro-

duction volume is expected to have recovered to almost normal lev-

els. And, it is hoped to be able to make up for lost production from

around October.” However, Toyota appears to have been the least

affected having lost only 20% of production in April. But Mitsubi-

shi, which was hit by a 70% drop in production, shares Toyota’s op-

timism that production will be close to normal by the fourth quarter.

Further evidence that in the short-term cargo flows are acceler-

ating comes with K Line’s u-turn on its earlier decision to lay up two

vessels in May and MOL reconsidering a similar move. Neverthe-

less the impact on the trade is bound to lead to a drag on full fiscal

year figures come next spring.

NYK, the largest of the Japanese car carrying firms in terms

of capacity, downgraded its volume forecasts in May by 26% for

the period until October and 11% or 2.8m units for the full cal-

endar year.

Mixed picture for car carriers

amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

the earthquake and tsunami in Japan has wreaked havoc in the car carrying business but emerging markets indicate a bright future

MOL said it could be carrying up to 30% less vehicles over the

same period. And does not seem to anticipate much growth beyond

this year. The company currently operates 114 PCTCs but despite a

slew of new vessels joining the fleet this year and next, it only ex-

pects to be operating 110 ships by the end of 2012.

new cars new roadsIt is good to know then, that while Japan may still be the most im-

portant export market for autos and parts, it is no longer the only

game in town, as the head of China for Wallenius Wilhelmsen Lo-

gistics, Leroi Xavier can attest.

Imports of cars into China were around 810,000 units in 2010.

In the first four months of 2011, year-on-year the figures were 30%

up on 2010. Exports from the country are faring almost as well. Af-

ter 510,000 units were exported in 2010, exports grew year-on-year

by 50% for the first four months of 2011.

In order to cash in on the growth of the international trade in

vehicles based in China WWL has invested in two strategic joint

ventures, Tianjin RoRo Terminals with the Tianjin Port Group and

the Shanghai Haitong International Terminal, together with the

Singapore International Port Group, Anji Automotive Logistics and

NYK.

Mr Xavier says that the impact of the earthquake on Chinese

business has been generally limited to a shortage of parts for the

Japanese clusters in Tianjin, Beijing and Guangdong provinces. “Im-

ports from Japan have slowed by 10%,” he says.

china is providing more and more business for car carriers


amcar carriersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Intra-Asia welcomes careful driversLike NYK, MOL and K Line, WWL has been developing intra-Asia

services covering Southeast Asian destinations and reaching out to

India. “We are also reinforcing our China/Japan loop services. And

from a deep-sea export perspective we have an ASOC trade cover-

ing pacific islands besides New Zealand and Australia. Also a few

projects for new trades are being assessed,” he adds.

Key to servicing Southeast Asia and beyond is the use of Sin-

gapore as a hub. “We have lately developed a High and Heavy

preparation center for one of our major customers and certainly

use Singapore as a hub both on the ocean and inland sides as

part of our Supply Chain management solutions,” says Mr Xavier.

Through one of its parent companies WWL already operates

Tonsberg the world’s largest car carrier and Mr Xavier sees this as

part of a growing trend with the arrival of the first of four mark V

carriers from Japan’s Mitsubishi Heavy Industries expected this year.

“Making larger vessels allows us to carry more cars in both a

more economical way and a more environmentally friendly fash-

ion,” he says.

“There is no doubt that China will export to volume markets

such as North America and Western Europe in the next three

years. When this happens, exporters will need reliable liner serv-

ices and will have to focus more on the quality of their logistics.

This means that RORO carriers will have to dedicate a service for

Chinese exports and this also means that the freight rates will be

higher,” he adds.

Out of the water WWL is growing a strong distribution network

within China, offering an inland network through a joint venture

with Citic. “We operate three technical services centres in Shanghai

and Tianjin and will continue this development in other major ports

in China,” he says.

“Our customers are based on the four major automotive

clusters Guangzhou, Shanghai, Tianjin and Dalian. All logistics

modes are utilised in China. Waterways are very well utilised on

the Yangtze River, and trains are quite well utilised in northern

China.”

So prospects are good but the car carrying business is yet to get

back to the glory days of 2008. When might that be? “I am not sure

whether volumes can reach 2008 levels before China automakers

penetrate European and American markets and start mass exporta-

tions. 2013 could be optimistic but 2015 might be a more realistic

date, Mr Xavier concludes. ]

SERVICE & QUALITYARE WITHIN YOUR REACH

For a full list of offices, please visit: WWW.REGISTER-IRI.COM

INTERNATIONAL REGISTRIES (FAR EAST) LIMITEDThe Marshall Islands Maritime and Corporate Administrators

TEL: +852 2526 6641 [email protected]


Being in possession of the largest liquefied natural gas carrier

fleet in the world, MISC is in as good position as any to capitalise

on the recent surge in enthusiasm for the gas. But is the company

convinced that the party won’t be spoiled by too many guests

coming to the table?

“Although growth rates from 2011 onwards are lower than

the 2006-2010 period, LNG import growth translating to shipping

demand is fairly balanced against growth in supply but with a

period of demand outpacing supply between 2011 to 2015,” the

company says.

“Hence, during the next four years, the LNG shipping busi-

ness is expected to be buoyant with a more balanced picture

beyond 2015,” MISC adds.

The contractual nature of LNG

bus iness compared wi th some

tanker and dry bulk shipping can

provide a buffer against catastrophic

losses. MISC observes that generally,

the nature of LNG business (70-

80%) is based on long term charters

and thus, it may not face the same

risk of overcapacity as with other

classes of vessels. Furthermore, a

more recent innovation in how the

fuel is stored and distributed means

industry players can earmark their

aged vessels for LNG offshore tech-

nology solutions.

on the brink of a golden age?On an even more positive note, the International Energy Agency

released a special report in June 2011 exploring the potential for a

“golden age” of gas in which global use of gas is expected to rise

by more than 50% from 2010 levels and will account for more

than a quarter of global energy demand by 2035.

“But as far as MISC is concerned,” the company says, “our

LNG shipping operation has remained stable and is shielded from

spot rate volatility due to our committed long-term contracts. We

have always maintained a prudent stance and only contract new-

buildings on secured contracts.”

Of course, at the top of the list of spurs to growth in LNG ex-

ports was the disastrous earthquake and consequent tsunami.

MISC estimates that Japan has an additional LNG requirement

of 8-12m tonnes due not only to the Fukushima shutdown but

Liquefied natural gas is set for a positive cycle according to MISC, its largest carrier

DeLIverIng on the proMISe

also the damage to other nuclear plants.

“Furthermore, the long-term impact of the Fukushima shut-

down and the resulting slowing of growth of nuclear power will

also increase global LNG demand by 25m mtpa (equivalent to

3.2 Bcf/d of gas) to 401m mtpa by 2020, up from previous esti-

mates of 378m mtpa,” the company predicts.

The immediate effect of the Japanese disaster has been a

marked increase in short and medium term charters. After the

incident, the number of LNGC sailing to Japan surged 29% since

April and brokers also reported ship unavailability as most ships

were locked for short and project term charter.

Given the size of Japan’s LNG receiving facilities and those

of China and the emerging na-

tions in Asia, there has been a

spike in orders for LNG carriers

in the 145,000 cbm to 160,000

cbm range, with the prospect that

Nakilats’ fleet of 220,000 cbm to

260,000 cbm vessels will continue

to struggle for employment.

On prospects of MISC joining

the market for new vessels the com-

pany says, “As mentioned earlier,

MISC takes a prudent stance in

the building of our LNG fleet and

thus, the expansion depends on the

project requirements.

“In any event, MISC reviews its fleet deployment plan from

time to time, and may embark on a LNG fleet expansion if it is

supported by firm demand of new shipping requirements or LNG

offshore technology solutions such as floating, storage and regasi-

fication units and other floating LNG projects.”

From gas to boxesWhilst the operation of LNG vessels may be considered to be part

of the elite top end of the shipping market, MISC is not afraid to

be deeply involved in the more crowded market of intra-Asia box

carriage.

To cater for the growing regional demand, currently MISC

owns and operates 22 containerships with capacities ranging

from 700 to 4,900 teu on intra-Asia routes. MISC views the intra-

Asia liner business as regional trades covering east of the Suez

Canal, bordering the Pacific Rim, including Oceania and South

Africa.

ammalaysiaamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama

MisC is watching the Lng market closely before making a move


IEA predicts golden age for gas by 2035

ammalaysiaamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama

There appear to be some complex issues involved in intra-

Asia trade today. On the positive side there continue to be an in-

creasing number of free trade agreements being signed between

China and its partners in Asia.

Less positive perhaps, is the charge to intra-Asia trade by

players better known for Asia-Europe and Asia-US trades. There

also seems to be a slim threat to the business from China’s move

to build expressways from home to Indochina. But MISC is confi-

dent that its fleet of boxships is pitch perfect for the conditions.

“From our perspective, driven by the region’s fast develop-

ing emerging markets and economies, and coupled with China’s

strong presence in Asia’s economic growth moving forward, the

intra-Asia trade-lane will continue to be a beacon among other

trade-lanes in the years to come,” the company says.

“No doubt, the cascading of excess and larger tonnages for

Asia-Europe and Asia-US trades will have an impact on intra-Asia

trades. However, these larger vessels will be limited in their cov-

erage as many port facilities and infrastructure in the intra-Asia

region are still limited to handling nothing bigger than panamax

size vessels.

“Furthermore, although the current overland development be-

tween areas in southern China and neighbouring countries within

Asean have begun in earnest; cross-border volume and road / rail

haulage of containerised cargo is still insignificant as they are

compounded by various customs, border and infrastructure re-

strictions. Comparatively, it is still more cost effective to ship car-

goes directly to the ports, which are closer to consumer markets,”

MISC concludes. ]


NippoN YuseN Kaisha first began shipping services to Vietnam

in 1956, at a time when the Cold War era military conflict was set

to flare up and consume the country for the next 20 years. In fact

NYK’s service was not suspended until 1975, when the commu-

nists claimed victory and closed the doors to external trade.

NYK was unable to ship goods to and from the country again

until 1990. The company resumed a representative office in 1992

through its logistics arm Yusen Air & Sea Services. In 1996, NYK’s

logistics arm at the time, Yusen Air & Sea Services, opened an of-

fice in 1996.

Now, under the new registered name Yusen Logistics, the com-

pany provides a nationwide network of trucking and 7,636 m2 of

warehousing.

Much has been made

in the press of the exodus

of manufacturing from

China’s Pearl River delta –

by some estimates as much

as 25% of production

has fled to countries like

Vietnam and Bangladesh.

But a swathe of Japanese

manufacturers moved into

the country some years be-

fore. It is, for the most part,

these early arrivals that

Yusen Logistics has come

to serve.

A Yu sen Log i s t i c s

spokesperson says that

70% of its customer base

in Vietnam is made up of Japanese manufacturers and traders.

Although Yusen Logistics says it has expansion plans to meet

the needs of the rapidly expanding manufacturing and trading

base, it will have to act fast to catch up with international liner

companies and their related logistics arms that have been investing

large amounts in new ports and terminals.

NYK’ s chief national rival Mitsui OSK Lines, as part of a joint

venture including Hanjin Shipping, Saigon New Port and Wan Hai

Lines officially opened the Tan Cang Cai Mep International Termi-

nal in March this year.

Just a stone’s throw from Vietnam’s commercial capital Ho

Chi Minh City, the new terminal has a megaship capability draft

of 15.8m and a capacity of 1.1m teu. Both Hanjin and MOL have

NYK has a long history of providing logistics support to the Southeast Asian nation

NYK’S loNg roAd iN VietNAMamvietnamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamama

hanjin shipping is a stakeholder in Vietnam’s Tan Cang Chai Mep Terminal

been making direct calls to the new terminal on their way to Eu-

rope since January this year.

But Tan Cang Cai Mep is just the latest in a slew of terminals

that have opened in the south of the country under the umbrella of

the government nominated Cai Mep-Thi Vai Deep Sea Port Devel-

opment Project.

An A to Z of leading global port operators has jointly financed

other projects. Hutchison Port Holdings joined up with Saigon

Investment Construction and Commerce in the establishment

of Saigon International Terminals. And HPH’s rival and minority

shareholder PSA sits close by at the SP-PSA terminal, courtesy of a

joint venture with Saigon Port and local shipping line Vinalines.

The list goes on: DP World has its stake in Saigon Premier

Container Terminal with

an estimated eventual

capacity of 1.5m teu.

APM Terminals has

recently completed its

Cai Mep International

Terminal and begun op-

erations at the 1.1m teu

facility.

Although, thus far

NYK has been left out in

the cold as far as prior-

ity bookings at southern

ports is concerned it is

eagerly eying logistics

opportunities in neigh-

bouring Cambodia.

“The market in Cam-

bodia is set to expand in the next two-three years by Japanese and

Korean companies,” the spokesperson says.

“Yusen Logistics has opened a representative office in Phnon

Penh and is reinforcing its intelligence gathering.

Since the capacity of Cambodia’s port and aiport network is

small, Yusen Logistics would employ ocean barge and truck trans-

portation through Ho Chi Minh.

Unconfirmed reports however suggest that NYK will eventu-

ally make the plunge in terminal investments in the near future. An

MOL official told Asia Maritime that a 2010 report linking it with

NYK, Japanese trading house Itochu and local state-owned ship-

owner Vietnam Shipping Lines for a terminal joint venture in the

north of the country is still under consideration. ]

In the coming issues of Asia Maritime you’ll find in-depth features on Asia’s most important maritime nations – and those emerging. You will also gain important insights into industry sectors and the region’s most important figures.

For our regular columns we shall be trawling industry sectors deep and wide. As a result, you’ll find stories on the environment, logistics, industry and personal profiles, innovations, an in-depth investigation into a high-profile industry concern…And a great deal more, all written in a direct and entertaining way so that you will find that Asia Maritime is not just a must-read but a want-to-read publication!

Coming in Asia Maritime in July/August 2011

Russia/Australia/Marine Law/Shipmanagement

Middle East/Special Innovations pull-out


amtechnicalamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

IA rAft of major revisions to the International Convention on

Standards of Training, Certification and Watchkeeping for Seafarers

(STCW Convention), 1978, and the STCW Code were adopted by

the IMO in June, 2010, at a special Diplomatic Conference in Ma-

nila, the Philippines. Known commonly as the Manila amendments,

these changes are set to enter into force on January 1, 2012 and col-

lectively represent an important milestone in the ongoing efforts of

the shipping industry to enhance safety at sea.

The scope of the amendments is wide-ranging and their im-

plementation will have a significant impact on many areas of ship

operation, including training. Indeed the Manila amendments repre-

sent a vital first step in recognising the role of new technology, and

distance learning methods, in the training of modern day seafarers.

Many believe the amendments will act as a catalyst to accelerate the

more widespread adoption of onboard training, including computer-

based training (CBT) systems, to the mutual benefit of shipowners,

ship managers and seafarers.

Among the amendments adopted in Manila are new require-

ments relating to training in modern technology, such as electronic

charts and information systems (ECDIS), and the introduction of

modern training methodology, including distance and web-based

learning, for the first time. There is also a focus on ‘new’ training

methods such as simulator-based training and eLearning. Demon-

strating competence by approved simulator training is now included

in more of the competence areas and there are 84 specific refer-

ences to this in the document.

Speaking at the Tanker Safety Conference in London last Octo-

ber, Captain Ashok Mahapatra, head of marine training and human

element section at IMO, highlighted a number of other key changes

that will have an impact on training regimes. He pointed out, for in-

stance, that companies will be responsible for refresher training on-

board ships, with the Manila amendments setting out requirements

for the demonstration of continued competence in areas of basic

safety training.

The revised STCW requires continued proof of BST competence

every five years, making an allowance for the assessment of compe-

tence ashore for those areas that cannot be assessed onboard. There

are also provisions for environmental pollution awareness training,

security training and training based on general anti-piracy related

information.

The Manila amendments further reorganise and update the

competence tables for engineers to meet emerging and contem-

The new amendments to STCW brings training full circle but with added technology

STCW aMendMenTS SeT To give onboard Training a booST

porary technologies and to set specific competence requirements

for personnel serving onboard different types of tankers, including

guidance relating to CBT. Captain Mahapatra listed the key benefits

of the STCW amendments including the introduction of training in

modern technologies and the acceptance of modern training meth-

ods. However the IMO is reserving judgment as to what the future

holds. According to the spokesman, “The actual impact of specific

amendments on training, and training providers, will be something

that will only be seen once the amendments take effect.”

Shipowner groups have responded positively to the amendments

and to the impact they will have on seafarer training regimes, which

could represent the beginning of a period of significant change.

James Langley, senior advisor for the International Shipping Federa-

tion (ISF) and the International Chamber of Shipping (ICS), says, “The

industry has perhaps not embraced CBT as much as many people

expected, but the STCW amendments might mark the start of some-

thing different.”

Mr Langley highlights the requirement for refresher training,

which has not been included in STCW before. He says, “CBT could

well come into this. For example, it might be possible for an online

assessment to see if a particular crew member needs to demonstrate

further competency and undertake refresher training.”

There are other elements of the amendments that could also give

impetus to CBT adoption. Mr Langley says, “Certainly, CBT would

become increasingly popular and, for areas like ECDIS which be-

Charts are becoming increasingly electronic


amtechnicalamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

As a result of the STCW amendments onboard training will regain its importance

come mandatory for many vessels in 2012, much

of the training could be done onboard with CBT

technology.”

He continues, “Onboard training makes sense

for shipowners and seafarers as it is less costly and

less disruptive. It is one way of ensuring a happier

crew, as seafarers appreciate the ability to have

training onboard rather than ashore and it might

provide a simpler way of getting additional train-

ing, aiding continuous professional progression.”

The ICS/ISF and their members are now dis-

cussing the implications of the Manila amend-

ments with administrations, with a view towards

ensuring a unified, common interpretation. Mr

Langley says, “The industry has to work together

and administrations have a key role to play. Once

administrations have set out their position on vari-

ous issues, then shipowners will be better able to

develop onboard training strategies around the

revised STCW requirements.”

Overall though, Mr Langley cautions against

thinking that the implementation of the revised STCW next year

will have an instant impact on current training practices. ”This is a

stepping stone, not a major step forward, certainly as far as onboard

training using CBT is concerned,” he suggests.

Nonetheless, leading maritime training providers are confident

that the new regulations will give impetus to more modern, cost

effective and crew-friendly methods of training. Roger Ringstad,

managing director of Seagull AS of Norway, says, “We think this is

a significant piece of regulation. While it is an evolution from past

STCW versions, there are areas where it will have a particularly

high profile impact, for example ECDIS training. The revised STCW

is much clearer on this, setting out new requirements relating to

training in modern technology such as Electronic Chart Display and

Information Systems, which will become mandatory on new tankers

from 2012.”

Seagull also notes that there will be new certification require-

ments for able seafarers. Up to now onboard competence verifica-

tion has largely been restricted to officer level. “However our read-

ing of the amendments is that there will be an extension to include

able seafarers as well,” says Mr Ringstad. He continues, “Certainly

we expect this regulatory initiative will open up a greater require-

ment not just for training, but for re-training as well. It is perhaps

not a revolution, but in some areas we will see a greater focus on

onboard CBT and distance-based learning as a result of the changes

made through the amendments.”

Seagull is now preparing to meet the changing requirements of

shipowners and operators in the wake of these latest STCW revi-

sions. Mr Ringstad notes. “We started last year a systematic review of

all our training modules to see where revisions might be necessary.

As a result we can see that we will need to look deeper into certain

areas and we have begun that process.”

Updating the company’s existing range of CBT modules to take

advantage of the opportunities that are likely to open up for training

providers will be a gradual process. As Mr Ringstad points out, the

revised STCW has a fairly wide implementation window stretching

from 2012 to 2017.

One area of concern that is highlighted by Seagull is the need

for flag states to harmonise their approach to the revised STCW. “Flag

states are not always in complete agreement with one another as to

how regulations should be implemented and this is a headache for

ship owners and operators, as well as for training providers such as

ourselves. In the past we have seen regulations implemented differ-

ently from one flag state to another, and we hope this will not hap-

pen in this case.”

While regulations are an important driver behind the greater

adoption of onboard CBT and distance learning, there are other fac-

tors that are also likely to encourage more shipowners and operators

to embrace this approach. “If you do training onboard you can use

the actual equipment concerned, so it is widely agreed that this is

the best way to go about training and companies like Seagull can

provide the necessary structure,” says Mr Ringstad. “It is also more

cost effective and surveys from the Nautical Institute have shown

that seafarers are keen on onboard training as otherwise training can

eat into their valuable leave time.” With the recruitment of seafarers

in some sectors of the shipping industry still proving problematic,

ensuring they can spend more quality time with their families could

become an ever more important consideration for owners and

operators. ]


MTM geTs The nod froM dnVMTM MeTalizing, a player in the thermal spray coating

industry has won the DNV approval certificate for its thermal

sprayed zinc coating procedure.

DNV has approved MTM Metalizing’s thermal sprayed zinc

coating technology for use in ballast tanks, double-skin spaces,

cofferdams and other enclosed spaces, under the International

Marine Organization Performance Standard for Protective Coat-

ing requirements.

Mr Bill Jordan, General Manager of MTM Metalizing noted

that zinc has extensive anti-corrosion qualities. “Zinc provides

greater galvanic protection than other metals such as alumini-

um. It is the easier of the two metals to apply by either flame or

arc spray. It can be deposited onto steel via spraying which is

what MTM Metalizing specialises in,” explains Jordan.

MTM Metalizing is the first metalizing company in the

world to obtain a DNV Certification of Approval for its thermal

sprayed zinc coating technology. The certification is valid until

31st December 2013.

MTM Metalizing gained the certification after extensive

testing including accelerated corrosion tests. This is believed

to be the first “Alternative Coating” approval issued under the

IMO guidelines. The application speed that the IMC-patented

equipment produces allows the use of metalizing as a realistic

alternative for ballast tank coating. ]

eVac inTroduces orca iii’s Tiny fooTprinT evac, a supplier of wastewater collection and treatment solu-

tions has introduced the ORCA III small footprint physicochemical

advanced wastewater treatment unit.

The ORCA III comes in six different sizes, with a hydraulic load-

ing capacity ranging from 20cu.m./day down to 1.5cu.m./day. It is

ideally suited for efficient wastewater treatment for vessels that stay

idle part of the time, thanks to its physicochemical treatment tech-

nology. The system meets the requirements of MEPC 159(55) of the

International Maritime Organization.

“With the ORCA III in production, Evac offers the whole range

of advanced wastewater treatment systems for the marine industry,”

says Mika Karjalainen, General Manager of Evac Oy. “Its predeces-

sor, the ORCA II unit, has been installed on several hundred vessels,

and it complements our MBR biological membrane wastewater

treatment units.

In the ORCA III wastewater treatment system the sewage from

the holding tank for black and grey water is transferred, using a

macerator pump, to a sedimentation tank through a static mixer and

flocculation dosing. In a separate second tank section the clarified

liquid is re-circulated through a disc filter and the organic matter

is oxidised with Hypochlorite, after which the clean wastewater is

discharged overboard. ]

lloyd’s regisTer’s Knowledge Based Management team (KBM)

has successfully created a pilot risk-based inspection and maintenance

programme for Modern Terminals Limited’s (MTL) quay side and rubber-

tyred tire gantry cranes in Hong Kong.

MTL operates four Container Terminals 1, 2, 5 & 9(S) in Hong Kong.

At all these facilities, the management of equipment inspection and

maintenance programmes is critical to continued effective operation.

After MTL commissioned Lloyd’s Register to develop a risk model for

the equipment, the KBM team saw that their Arivu™ risk-based solution

was well suited to the client’s needs. The Arivu product is a software-

based system that generates maintenance and inspection plans and

maps them directly onto an organisation’s risk tolerance and financial

objective framework.

Initially, the KBM team worked to understand MTL’s objectives

and then used the Arivu™ software to create port crane models. These

models delivered a tailored task plan for each crane that factored in

the crane’s design, usage, age and condition. The models were suc-

cessfully piloted and, by using KBM’s risk-based maintenance strategy,

the client’s maintenance costs were reduced and operational reliability

strengthened.

Kenny Lam, Engineering and Planning Manager for MTL, said the

company was pleased with the result of the pilot project. “In this pilot

project, the KBM project team worked closely with us to develop the

risk models for our port equipment,” Said Mr. Lam. “The KBM team

gave us excellent support during the entire project and also devoted ad-

equate resources to achieve each project milestone.” ]

reducing crane operaTion risk

amship's storeamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam


amoperationsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

“Why do you hate charterers so much?” – a correspondent

writes after a recent outburst which suggested that people who hire

ships for a quick voyage have got no right to tell the shipowner how

to run his ship. But it is not a matter of likes

or dislikes – I was complaining on behalf of

ship operators who have seen a disturbing

lack of balance in the contractual relation-

ship between both sides in a charter party.

You could argue that shipowners have

themselves to blame. If they hadn’t been so

full of boundless optimism, they would not

have built so many ships that they had to

spend their days on their knees, grovelling in

front of potential charterers who might deign

to use them. It is astonishing that so few of

the lessons of recent history; of the great

overtonnage of the 1970s, which lasted into

the 90s, seem to have registered with today’s

big spenders.

But increasingly, voyage charterers seem

to be pushing their luck in dictating to own-

ers and managers how these ships are to be

operated. Once it was enough that the cus-

tomer agreed the basic terms for the voyage,

which spelt out the origin and destination, the dates of commence-

ment and completion, and a few other factors. A few years ago,

aided by the new facility of weather routeing and its sinister auxil-

iary of “hindcasting”, charterers started to actually specify the route

the vessel must take on her voyage, effectively challenging the role

of the master and his traditional judgement. The courts seemed to

think that this was unexceptional, and backed the charterers on

numerous occasions, which disappointed the professionals no end.

Charterers were increasingly throwing their weight around on

the loading and discharging berth, ignoring the cargo plan of the

master, doing whatever suited them best, and if the master objected

on the grounds that he did not want his ship damaged, threaten-

ing the owner that his ship would be “blacked”, or demanding the

master be replaced. Somewhere along the line, the “give and take”

that characterised the relationship between charterers and ship-

owners became “you give and I take!”

Today the charterers are determined to exercise a managerial

control of the chartered vessel, even demanding the right to ap-

prove the appointment of the master and officers, with a lot of rules

Michael Grey maintains many charterers are getting too big for their boats

The cusToMer is noT always riGhT

specifying the experience they must have in rank. They argue that

there is a dearth of experience around, with so many senior offic-

ers retiring (it is worth asking them why this is the case!) and they

cannot take the risk of their cargo ending

up on the beach as a result of somebody’s

inexperience.

It might appear a compelling argu-

ment, except that once again it treads on

the owner’s clear responsibilities to man

his ship with the people he thinks are

competent and capable, and not those

that might happen to suit the organisation

which might charter his ship.

Somebody has to employ a “first trip”

mate or second engineer, master or cargo

officer, and it is an outrageous liberty for

a voyage charterer to start intruding into

the specific manning of somebody else’s

ship. It is also making it nearly impossible

to properly man ships, to determine a fair

and responsible promotions policy, which

will encourage the retention of good and

ambitious officers. How does the em-

ployer reward talent and encourage good

officers, if some charterer is allowed to influence the appointment

of officers, rejecting those it deems are insufficiently experienced

in their respective ranks? It is an unjustified infringement into the

operation of another business that is not one’s own and deserves

to be robustly resisted by any shipowner with character. Is not this

“market dominance” legally questionable?

Now we have charterers telling owners not to employ armed

guards aboard ships carrying their cargoes through pirate-infested

waters, thus preventing the owners from exercising their duty of

care for their employees, as they see fit. Will the charterers take re-

sponsibility for any consequences from their prohibition, if the ship

is captured and harm comes to the seafarers?

People who hire ships have no lack of contractual rights – but

the unbalanced market is enabling these customers to hugely in-

crease their powers. Owners should tell charterers’ brokers to get

lost when they submit unjustifiable demands. Maybe it won’t always

be the case that the charterer will always have the whip hand – the

cycles do come around – and when this happens the ill-will that this

sort of bullying control has generated will be remembered. ]


For years Li & Fung has been sourcing 50% of its products,

chiefly apparel, footwear and other fast moving consumer goods,

from China for export to the lucrative western markets of the US

and Europe. But the tide that was turning in terms of new world

trade patterns prior to the global financial crisis has now become a

positive swell. Vice president of the logistics arm of Li & Fung, LF

Logistics’ Tommy Lui explains what this means for the company:

“Our business in goods from China to the US going forward can

only be described as steady. Europe has already surpassed the US

as the largest export market but the continent has some issues these

days.”

Japan, has traditionally been Li & Fung’s third largest market,

“but it has huge problems. Trade volumes will take a hit especially

in the high value products sector,” says Mr Lui.

But the huge compensation factor is that a huge market is open-

ing up on the company’s doorstep in China. The rapid rise in costs

of production in China may serve to slow volumes to Li & Fung’s

traditional markets but the increased affluence at home means Li &

Fung will have to move fast to catch up with developments.

“The majority of our goods are still for export. Our domestic

business is still in its infancy,” says Mr Lui.

Asia’s leading sourcing, distribution and retail group has its eye on China’s growing domestic market and the rise of Asean as consumer

The new fronTier

“Li & Fung has 3,000 trucks and 20 warehouses, some of

which are the most advanced in China. “We have set up a national

distribution network for fast moving consumer goods that can be

distributed to around 880 cities across China on a daily basis. But

we have barely scratched the surface,” he concludes.

Many companies might be content to find and exploit a niche

catchment area such as Guangdong. The southern province has

a population of around 96m and commands 7% of the national

economy, sufficient to make any savvy retailer rich. But Li & Fung

has grander plans that may eventually centre on Shanghai.

Mr Lui says the Chinese market consists of three-tiers and in-

creasingly, four distinct geographical markets. “As a retailer you

have to have a presence in Shanghai, Beijing and Shenzhen. It’s

unlikely that you will make money in these cities – they are satu-

rated. But they are where customers seek out new products.”

By being situated slightly west of Shanghai products can be

fed easily to the north to second-tier cities such as Tianjin and

Qingdao, and to the southern counterparts such as Dongguan and

Guiyang. But equally important are the western cities of Chengdu

and Chongqing in Sichuan province. Both with urban popula-

tions of 10m they are important industrial centres that until now

have been isolated from the rest of the country and only exposed

to western brands in the last five years. Consumerism is high and

customers are literally queuing out the door of western branded

outlets.

Through a series of free-trade agreements with Asean, China is

rapidly becoming more than a sum of its parts. “Inter-Asia is hap-

pening big time,” Mr Lui declares.

Extraordinarily ambitious government sponsored trans-Asian

roads and railways will revolutionise business between China and

its trading partners.

“We are most impressed by the expressways being constructed

between China and Southeast Asia because the highway that con-

nects Guangxi to Vietnam goes all the way up to Ho Chi Minh City

and on to Laos and Cambodia. From there you will be able to cut

across to Thailand and down to Malaysia and Singapore,” he says.

“When that is built in three to four years there will be an im-

mense amount of trade between China and Southeast Asia. Small-

scale production will eventually migrate from China to Southeast

Asia. China will concentrate on large-scale mass production and

customisation. Each market will start to differentiate while working

as a tightly integrated manufacturing network,” he concludes. ]

amlogisticsamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

senior vice president of LF Logistics

Tommy Lui.


Flag states’ role in the Fight against skull and crossbones

Piracy was inevitably back on the agenda at the IMO’s Mari-

time Safety Committee during the committee’s deliberations be-

tween May 11-20, although the precise role to be played by flag

states over the question of armed guards and privately contracted

naval support, remains unclear.

At the meetings at MSC last month, interim guidance on the

use of privately contracted armed security personnel on ships tran-

siting the danger zone - which now extends not only to the Somali

coast but the Gulf of Aden and the Indian Ocean - was agreed.

Interim recommendations for flag states include the use of

privately contracted armed security personnel on board ships in

high risk areas and guidance to shipowners and operators as well

as masters if they decide to use privately contracted armed security

were approved to try to clarify the position of those deciding to

provide armed guards for their vessels to counteract piracy threats.

According to the IMO, “The guidance to shipowners notes that

flag state jurisdiction and any laws and regulations imposed by the

flag state concerning the use of private security companies apply to

their vessels. Port and coastal states’ laws may also apply to such

vessels.”

The IMO has stressed that the use of private security person-

nel should not be considered as an alternative to the use of best

management practices to deter piracy, as well as the use of protec-

tive measures. One continuing area of concern for the industry is

the fact that many companies are not abiding by best management

practices or reporting their presence to military authorities before

transit across the target zone for attacks - which has become ever

larger with the use of motherships.

The IMO says, “placing armed guards on board as a means

to secure and protect the vessel and its crew should only be con-

sidered after a risk assessment has been carried out. It is also im-

portant to involve the master in the decision making process. The

guidance includes sections on risk assessment, selection criteria,

insurance cover, command and control, management and use of

weapons and ammunition at all times when on board and rules for

the use of force as agreed between the shipowner, the private mari-

time security company and the master.”

The IMO says that interim recommendations for flag states

recommend that they have a policy on whether or not the use of

private armed guards will be authorised.

The flag state position is one that has raised a number of ques-

tion marks. Clay Maitland, senior partner of IRI which runs the

Marshall Islands register said recently that the register was not pre-

pared to sign any document endorsing the use of armed guards on

vessels or indeed prohibiting their use. At the same time, he said

such measures were now necessary in what was in all likelihood to

become a “shooting war” in the near future. However, as Mr Mait-

land pointed out, “once an escalated shooting war begins, seafar-

ers are going to be exposed to friendly as well as hostile fire. One

wonders how industry spokespersons will react when the casualty

list begins to rise.”

The MSC also agreed guidelines to assist in the investigation of

crimes of piracy and armed robbery against ships that are “intended

to assist an investigator to collect evidence, including forensic

evidence, to support the submission of written reports which may

assist in the identification, arrest and prosecution of the pirates that

held the vessel and crew captive.

International Chamber of Shipping secretary general Peter

Hinchliffe says: “ICS is very pleased to see that the IMO has

endorsed two important sets of guidelines on the use of armed

guards, one for companies and one for flag states although both

need further development this year. It is pleasing that the legal

pitfalls in the employment of private armed guards have also been

recognised and that further work will be done on this.

“ICS believes that a robust international signal is required to

demonstrate that further acts of piracy and the use of violence are

not acceptable. In particular States are urged to take action to pre-

vent further mother ship activity and to seek UN Security Council

action to create a ‘blue beret’ force of armed guards to be deployed

to vulnerable ships.” ]

amimoamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

sandra speares reports from the iMo on the latest developments in the fight against piracy

Flag states are carving out a role in the fight against piracy


amgreen pageamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Det Norske Veritas, the Norwegian classification

society is unveiling a series of green ship designs.

The first in the series was the Triality very large

crude carrier that was publically launched at the end

of last year although work on the project, by more

than 35 DNV staff had been ongoing for some time.

Kaveh Mansoorian, DNV senior customer rela-

tions manager in Hong Kong said some of the con-

cept work was done by the firm’s offices in Asia, al-

though there were no regional shipping companies

involved.

Commenting on the project, Jan Koren, DNV

segment director for tankers, said the challenge

“was to develop a new concept VLCC with the same

cargo carrying capacity and operational range as

today’s ordinary VLCC”.

He adds: “The new concept was to be charac-

terised by the following main features: LNG fuelled,

ballast-free and capable of effectively recovering

volatile organic compounds - significant volumes of cargo vapours

which would otherwise be lost to the atmosphere.”

Mr Koren says: “The Triality VLCC will not be contracted in the

very near future, but the project points in specific directions for the

development of future designs. It is worth noting that features incor-

porated in the Triality concept may well be applied to smaller tank-

ers too.”

Five months on, DNV unveiled its Ecore design for a very large

ore carrier which was produced as part of a joint maritime indus-

try project. This has involved engine maker, MAN Diesel & Turbo,

cargo equipment specialist Cargotec and other partners, FKAB and

TGE Marine.

DNV project manager Pål Wold says the aim was to develop a

large ore carrier design that lowered fuel costs and improved load-

ing efficiency.

The curvaceous design – one hesitates to call it sexy, although

it does have a certain allure - features a more ballast friendly hull

shape and a large centre cargo hold layout. There are also two-

stroke dual fuel ME-GI engines using liquefied natural gas and a

highly efficient self-loading system.

The vessel has two receiving hoppers, one on each side, and

bulk material is loaded into one of these at up to 16,000 tonnes per

hour by the shore-based loader. From the hopper, cargo is fed to

the loading conveyor, which travels on rails in the upper part of the

cargo hold and ensures continuous loading throughout the length of

the hold. The conveyor is reversible so that it can distribute material

to both ends.

DNV unveils ore and crude carriers that leave a lighter footprint

DesigN for chaNge

Cargotec sales director Johan Ericson says: “The MacGregor

material handling system is designed to overcome the problems that

can be caused at bulk cargo loading terminals by the length and

width of a vessel. It makes it possible for the shore-based loader

to operate at a single point along the vessel, removing the need to

move the loader, or the ship, or even both, during the loading proc-

ess.”

Mr Wold says: “Our goal was to combine proven systems and

design concepts to demonstrate how fuel costs can be reduced and

loading efficiency improved.”

The designers canvassed opinion from shipowners, cargo own-

ers and brokers to ensure the project was consistent with market

demand, while designing the vessel for a recognised iron ore trade

- from Australia to China. “Ecore is grounded in market reality and

applies existing technology to real-world issues,” Mr Wold adds.

The concept specifications feature a 250,000 dwt vessel with a

length of 330 m and a loaded draught of 18 m operating at a loaded

service speed of 14.9 knots. The vessel features a ship-to-ship LNG

and fuel oil bunkering system for locations off Shanghai or Western

Australia. DNV estimates it would take nine to 15 hours to bunker

the vessel with around 4,000 cu m of LNG.

Mr Wold says that with a single cargo hold, the cargo centre-

hold layout and midship-form was developed to minimise the need

for ballast, and enable more efficient cargo handling and allow

space for LNG tanks to be stored below the main deck. ]

Conveyance made easy


ambrief encountersamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

There are many mansions in the house

of Bernie B, the great operator in the public

relations game. One is the home of the risk-

taker, for Bernie likes a bet or two and it was

somehow typical we met on the fast catama-

ran to Macau, me en route to a cheap flight,

him to splash the cash on the tables.

A very hard man to categorise. Very af-

fable face to face, fond of a drink or three but

with the best distribution in the business.

Bernie B has every little port paper in the

world on his distribution. If you need a crane

driver and you are the worst paying port

operator in South Asia, Bernie can find you

one (for a very reasonable fee). If you need

to produce the glossy but stodgy sandwich of

documents necessary for an IPO on one of

the world’s stock exchanges, Bernie’s stable of

designers, wordsmiths and lawyers will do the

needful. But the killer ap for Bernie B is how

prepared he is for when the sticky stuff hits

the fan.

Hours it seems after some bulker spills

its guts on some picturesque coast, days

before the dozy Clubs and insurers get their

acts together, a grave faced” company rep-

resentative” appears on the screens and in

the breakfast newspapers, to the naked eye

a company spokesman, to we few, one of the small team of actors

employed by Bernie to help him manage the periodic crises arising

in the industry. Like the villains in many Hollywood films, these

character actors tend to be British, middle aged, weary looking and

many times married.

How Did Bernie B get to where he is today? Like many he be-

gan his rise in the field of PR as a journalist for a trade paper, Pow-

ered Ships, back in the early 1970s. Didactic, scary sub-editors

hammered his command of good clean prose into him.

Busy as he is, Bernie B can still knock out 400 words of crystal

clear prose on any subject of the hour. Dozens of people in the in-

dustry first learned to endure the blue pencil wielded by Bernie B.

Yet it is not entirely clear where he comes from. There is a touch

of the middle European about him, but he swears he is part Bel-

gian. He speaks English like a native, but can converse and swear

in Cantonese to a standard that has made him famous in South

China. Certainly he can work in German French or Russian when

he needs to.

CC Kai meets Bernie B, dean of the PR men

On the OtheR side Of the Pen

He is very able at merging and demerging with much bigger

companies. He has sold and resold companies like B Associates

or B PR or some variation on that theme many times. He seems to

profit from the knowledge that the big battalions never quite “get”

shipping and transport, nor do they manage to proceed beyond

the “oily rag “ image that more or less prevails in the world for the

industry.

For Bernie B’s success rests on something like an innate abil-

ity to turn a profit married to the wonder and enthusiasm of an

industry nerd. He is still something of a ship-spotter. He can still

be found at the end of a quay scrutinising a ship. His address book

of people who really know ship construction is a legend. He is

rumoured to be in negotiation with a large PR conglomerate that

is anxious to get into shipping. Will it be a deal too far? Will the

man with the goatee prevail? How much longer can his liver en-

dure the abuse? When will the Tai Tai get her way and force him to

retire? All very hard to say—such is the highwire act of Bernie B,

dean of the PROs.]


At lAst the spotlight moved to Hong Kong and away from its

closest rival as the Seatrade Asia Awards event was shipped in to

the Grand Hyatt on June 17.

Award winners, Harry Banga of Noble Group (Seatrade Life-

time Achievement Award), Wah Kwong’s vice chairman Sabrina

Chao (Seatrade Young Person of the Year), and president of China

Rongsheng Heavy Industries Group, Chen Qiang (Seatrade Personal-

ity of the Year), mingled amidst a gathering of more than 450 guests.

Hong Kong plays Host to sHipping’s finest

Other notable winners included Pacific Basin (Bulk Operator

Award), Thome Ship Management (Ship Manager Award), HSBC

(Ship Finance Award), while China Rongsheng picked up its

second award of the night in the Shipbuilding category.

In a time of general gloom for the industry, a night of

communal back-slapping is always a welcome event. ]

Winners stand on ceremony at the seatrade Asia Awards in hong Kong

the impending exit of NOL chief executive Ron Wid-

dows, announced at the end of April looks, as each day

passes, like a tip of the iceberg moment. During his three-

year reign at the helm of NOL and a number of years previ-

ously with subsidiary APL, Mr Widdows has been a high-

profile figure in a high-profile sector of the shipping industry.

Apart from his full-time jobs he formerly led the Transpacific

Stabilization Agreement and is current president of the

World Shipping Council.

And yet there is a sense

that the magic was leaving

this ultimate professional. Mr

Widdows could be accused

of holding out against the

inevitable by refusing to join

the megaship rush. His an-

nouncement that NOL was

finally ordering 10 14,000 teu

CHanging of tHe guard at nol

amdiaryamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Apl president eng Aik meng joins the exodus from Apl


At lAst the spotlight moved to Hong Kong and away from its

closest rival as the Seatrade Asia Awards event was shipped in to

the Grand Hyatt on June 17.

Award winners, Harry Banga of Noble Group (Seatrade Life-

time Achievement Award), Wah Kwong’s vice chairman Sabrina

Chao (Seatrade Young Person of the Year), and president of China

Rongsheng Heavy Industries Group, Chen Qiang (Seatrade Personal-

ity of the Year), mingled amidst a gathering of more than 450 guests.

Hong Kong plays Host to sHipping’s finest

Other notable winners included Pacific Basin (Bulk Operator

Award), Thome Ship Management (Ship Manager Award), HSBC

(Ship Finance Award), while China Rongsheng picked up its

second award of the night in the Shipbuilding category.

In a time of general gloom for the industry, a night of

communal back-slapping is always a welcome event. ]

Winners stand on ceremony at the seatrade Asia Awards in hong Kong

the impending exit of NOL chief executive Ron Wid-

dows, announced at the end of April looks, as each day

passes, like a tip of the iceberg moment. During his three-

year reign at the helm of NOL and a number of years previ-

ously with subsidiary APL, Mr Widdows has been a high-

profile figure in a high-profile sector of the shipping industry.

Apart from his full-time jobs he formerly led the Transpacific

Stabilization Agreement and is current president of the

World Shipping Council.

And yet there is a sense

that the magic was leaving

this ultimate professional. Mr

Widdows could be accused

of holding out against the

inevitable by refusing to join

the megaship rush. His an-

nouncement that NOL was

finally ordering 10 14,000 teu

CHanging of tHe guard at nol

amdiaryamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

Apl president eng Aik meng joins the exodus from Apl


ammaritime’s back pagesamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamamam

All ChnAge At nOl

Singapore container Shipping giant Neptune Orient

Lines has been in the news following the announcement that

Ron Widdows would retire as group president and chief ex-

ecutive officer at the end of this year.

Mr Widdows, 57, has been with NOL for 30 years and

will remain as a senior adviser when he is replaced by Mr

Ng Yat Chung, a senior executive of Singapore Government-

owned investment company Temasek Holdings.

Mr Ng, 49, spent 28 years in key leadership roles in the

Singapore Armed Forces, including a stint as chief of Defence

Force, before joining Temasek in 2007 as portfolio manage-

ment managing director. Temasek Holdings owns about 68%

of NOL.

NOL says that Ng’s appointment stems from the company’s on-

going succession planning and leadership renewal process.

Mr Widdows became NOL’s CEO in 2008 after heading its con-

tainer shipping business APL from 2003. NOL acquired APL (Ameri-

can President Lines) in 1997.

out of the boxAPL was one of the first shipping lines in the world to sense the

customer benefits of containerisation.

In 1958 APL’s CEO Ralph Davies, an oil man, sent a fact-finding

mission to 26 major ports to assess the readiness for containers

around the world.

Despite a skeptical industry, around 25% of all APL cargoes in

the Pacific were containerised a decade later, with the figure leap-

ing to nearly 60% by 1973.

Birth of noLNOL began life in December 1968 as Singapore’s national ship-

ping line, wholly-owned by the government just as it was becoming

clear that containerisation was the way of the future.

Today, NOL group has grown to be a major force in global

container transportation and logistics through its industry-leading

container transport brand APL and its supply-chain management

arm APL Logistics. The group now transports more than 2m feu

annually.

The company’s initial fleet of five vessels faced tough competi-

tion from well-established players during those early days including

large British and European consortia, which had dominated the ma-

jor trade routes since the 1820s.

Against tremendous odds, NOL charted a path of growth - ex-

panding into new trades with new services. By 1973 the company’s

K K Chadha looks back to the origins of Singapore’s most successful shipping venture

fleet was 20-strong and by the mid-1970s NOL had turned its first

profit under the leadership of managing director Goh Chok Tong,

who went on to become Singapore’s second Prime Minister.

The 1970s marked the true era of containerisation - an opportu-

nity that NOL seized with investments in new purpose-built vessels.

NOL entered the Asia-Europe trade as part of the ACE consortium

with partners OOCL and K Line, while the company’s foray into the

key Trans-Pacific trade began with a standalone service.

NOL’s successful Initial Public Offering (IPO) in 1981 reflected

its “coming of age”, raising S$155m (US$126m) to fuel further

growth, expand the company and diversify ownership beyond the

government.

The maturing NOL group continued to grow landside capabili-

ties to augment its liner business, and by the early 1990s had diver-

sified into the lightering business with oil and petroleum product

tankers - under the brands AET (American Eagle Tankers) and NAS

(Neptune Associated Shipping).

The NOL group’s brands, APL and APL Logistics, are leaders in

the global container transportation industry with more than 11,000

employees providing

services in over 140 countries, helping to make NOL the largest

shipping and transportation company listed on the Singapore Stock

Exchange.

As of today NOL is active in tackling a range of key issues in the

global supply chain on behalf of its customers, from changing secu-

rity requirements to the increasing importance of China and India,

the challenges facing the Panama Canal and infrastructure-related

congestion in North America. ]

the neptune coral, one of the first cellular container vessels in the noL fleet, introduced in 1977

Greg MarchAsia DirectorThe Journal of CommerceHong KongTel: +852 2585 [email protected]

Sponsorship opportunities are also available!

For more details, contact:For general or registration inquiries, please email us at [email protected].

Specific topics for discussion include:Beyond the coast: big labor cost increases in traditional manufacturing regions in China are forcing the relocation of manufacturing and assembly deep into the hinterlands, creating urgency around inland transport connections including container on rail. To what degree should shippers seek to manage this?

How are labor shortages impacting origin consolidation and other logistics activities? Capacity, supply and demand and rate outlook on the East-West trades.

Global economic overview: Trade, consumer spending, global imbalances and performance of individual national economies all impact on container shipping volumes.

South China economic development post-recession

Hosted by Silver Sponsor Organized byLanyard & Badge SponsorPlatinum Sponsors

Intercontinental Shenzhen, China

October 11-12, 20115th Annual TPM Asia Conference

ASIA

TPM Asia presents a series of in-depth sessions with top-level speakers focusing on container trade and

logistics in the Europe-Asia, Trans-Pacific, and Intra-Asia markets, from an Asian perspective. This confer-

ence will address these issues head-on, with keynote speakers, roundtable discussions and formal

presentations. The objective is to give shippers, carriers, 3PLs, terminals and other industry professionals

a detailed briefing on a range of urgent issues affecting container shipping and logistics in Asia.

Documents

Hong Kong Port