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WINTER 2016 - VOLUME 1 NUMBER 3
RETURN OF INVESTMENTGUARANTEED
HPS will deliver a 13.5% improvement in hydrodynamic efficiency as compared to market average.
We either deliver guaranteed high performance or we pay back the additional investment.
jotun.com/hps
56933 HANSA A4 FP HPS Adv.indd 1 10/02/2017 10:51
CONTENTS
tkis-ad-Dry_Bulk_A4_RZ.indd 1 09.01.17 14:44
WIN
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WINTER 2016 - VOLUME 1 NUMBER 3
OFC_DB_Winter2016.indd 1 14/02/2017 14:21
Dry Bulk is a fully-audited member of the Audit Bureau of Circulations (ABC).An audit certificate is available from our sales department on request.
Copyright © Palladian Publications Ltd 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission
of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither does the publisher endorse any of the claims made in the advertisements. Printed in the UK.
Uncaptioned images courtesy of www.shutterstock.com
ON THE COVER
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Bulker Construction & Maintenance27 Easy Choices For Difficult Markets
In a segment defined by chronic oversupply, owners need to display competitive advantages to nose ahead of the crowd. Adam Stuchlik, Jotun, Norway, argues that premium coatings are low hanging fruit everyone can harvest.
31 Keeping Clean Stefan Olsen, Hempel A/S, Norway, explains how coatings technology can achieve efficiencies for dry bulk carriers.
Stockyards, Stackers & Reclaimers33 Stockpiles: The Gravity Of The Situation
Francisco J. Cabrejos, Jenike & Johanson, Chile, illustrates the importance of a functional design, based on the flow properties of handled material, for gravity reclaim stockpiles.
39 Automated Stockpile Monitoring Jatin Kot and Brett Owens, Neptec, Canada, provide an overview of industrial LiDAR scanners for real-time automated stockpile monitoring.
Shiploading, Cranes & Grabs42 For Good Measure
Andreas Heckel, SMB International, Germany, talks to Dry Bulk about customised shiploading systems with in-house manufacturing that offers flexibility in construction.
Inspection, Sampling & Analysis49 Calculating The Risk
Aldwin Vogel, Bureau Veritas, Global Commodities Division, details the transportable moisture limit for dry bulk cargo and how it can be applied for shipping vessels to avoid safety risks.
With more than 100 years of experience, thyssenkrupp Industrial Solutions AG’s customers benefit from a unique know-how in
the field of bulk materials handling. The company supply complete solutions for transporting and handling raw materials in
stockyards and port terminals, from individual machines to turnkey plants.
Its continuous ship unloaders unload ocean-going vessels and river barges in a very environmentally-friendly manner, thanks to
an enclosed conveying route from the ship hatch up to the pier conveyor.
For more information: www.thyssenkrupp-industrial-solutions.com
03 Comment
05 World News
10 Industry View: Shipping’s New Year Security Challenge Gerry Northwood OBE, MAST.
52 Suppliers Round-Up
Regional Report: Latin America12 What’s On The Horizon For South America?
Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy, USA, highlights the importance of South American dry bulk exports.
Regional Report: Europe15 Navigating The European Short-Sea Market
The Editors of BMTI Technik & Informations GmbH, Germany, analyse the European short-sea dry bulk market and how it has developed in the recent past, today and potentially into the future, with a focus on coal’s recent uptick.
Commodity Review: Global Grain Trades18 Black Sea Wheat: Testing The Waters
Andrei Agapi and Jonathan Fox, Platts, UK, detail the fight for new markets for Black Sea wheat exports in 2017, as production hits a new record.
Belt Conveyors & Components22 On Track
Kevin Fales, Flexco, USA, illustrates how to find a cause and solution for mistracking belts.
HIGH QUALITYEQUIPMENT FOR DRY BULKCONVEYING
CIMBRIACONVEYING EQUIPMENT
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variety of bulk materials, ranging
from agricultural products to
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CONVEYING | DRYING | SEED PROCESSING | ELECTRONIC SORTING | STORAGE | TURNKEY | SERVICE
CIMBRIA UNIGRAIN A/SPraestejorden 6 | DK-7700 Thisted | Phone: +45 96 17 90 00 | E-mail: [email protected]
Corporate_210x297_Conveying.indd 1 19-09-2016 15:20:54
COMMENTHARLEIGH HOBBS ASSISTANT EDITOR
MANAGING EDITORJames [email protected]
EDITORIAL ASSISTANTLouise [email protected]
ADVERTISEMENT DIRECTORRod [email protected]
ADVERTISEMENT MANAGERRyan [email protected]
PRODUCTIONBen [email protected]
SUBSCRIPTIONSLaura [email protected]
ADMINISTRATIONNicola [email protected]
WEBSITE MANAGERTom [email protected]
DIGITAL EDITORIAL ASSISTANTAngharad [email protected]
Palladian Publications Ltd, 15 South Street, Farnham, Surrey, GU9 7QU, UK // t: +44 (0)1252 718999 // f: +44 (0)1252 718992 // w: www.drybulkmagazine.com
DRY BULK (ISSN No: 2059-9579, USPS Pending Periodical No: 544) is published quarterly by Palladian Publications Ltd.
Annual subscription (monthly) £50 UK including postage, £60 overseas (airmail). Claims for non-receipt must be made within four monhts of publication of the issue or they will not honoured without charge.
The Winter 2016 issue of Dry Bulk ends a year of surprises, upsets and achievements, and
brings in a new year of possibilities. From political controversy to Olympic Games scandals, the year will certainly be an interesting topic in a history class in 30 years time.
It’s difficult to know what the year will be remembered for: a controversial US Presidential election, Brexit, Colombia’s Peace Deal, a substantial amount of celebrity losses, or even DiCaprio’s first Oscar?
Much like 2016, the dry bulk market has had its fair share of ups and downs over the past 12 months. Initially, it was not a great start. The Baltic Dry Index (BDI) hit a record low of 290 points back in February – largely due to weak demand for commodities. While freight rates gradually improved over the year, the BDI was still below last year’s levels.
However, the industry did pick itself up with freight rates improving, giving us a glimpse of light and recovery. Shipping analyst BIMCO reported, as it expected, 4Q16 delivered high demand for dry bulk ships. The handymax sector grew the most in 2016 – by 5% – and capesize and panamax sectors had more moderate growth, 1.9% and 0.6% respectively.
One of the three major dry bulks, coal, caught many off guard and performed better than expected in 2016. After years of price slumps and declining demand, there was a surge in both metallurgical and thermal coal prices in 2016, as China reduced its coal production (a result of a new government policy reducing miners’ working days), which led to prices increasing and the country relying more on imports.
Iron ore also shone in 2016 (although performing moderately in comparison to coal). China was again to thank here. Increased
Chinese steelmaking, as well as higher demand for iron ore from the country, helped keep its prices strong in 2016.
Now the industry needs to prepare for what could be in store in 2017 – the year of the rebound? While the positive performances may be good signs for the year ahead, cautious optimism seems to be the running theme in outlooks.
Both BIMCO and Maritime Strategies International (MSI) have indicated that the industry’s solid finish in 2016 is welcomed and there is potential for 2017 to keep heading towards recovery, but it will not be easy. A slow and difficult road lies ahead and we should not get ahead of ourselves. Growing economies, expanding infrastructure and increases in steel production are projected to lead to moderate growth for the dry bulk market in 2017.
Freight rates are largely expected to remain low as the supply-demand balance evens out. BIMCO expects supply to exceed demand, resulting in a level of loss-making freight rates. MSI’s Senior Analyst Will Fray indicated that there may be potential for brief rises in the short term but nothing to make any substantial long-term rate increase. But Rome wasn’t built in a day, right?
China seems to (unsurprisingly) be the root of optimism (or caution) for the next year. BIMCO believes the country’s five-year plan for improving transport connectivity will have a positive effect on dry bulk imports and be beneficial to the dry bulk shipping sector. But the slowing economic growth of the country could be a major limitation to the industry’s growth.
One thing’s for sure, it will not be plain sailing. There are many factors that will shape the next year and, maybe longer term, we will begin to see that light at the end of the tunnel.
VIGAN Engineering s.a. Rue de l’Industrie, 16 - 1400 Nivelles - BelgiumTél.: +32 67 89 50 41 • Fax : +32 67 89 50 60 • www.vigan.com • [email protected]
A win-win solution between customer expertise and VigAn know-how
Pneumatic or MechanicalShip Loaders & Unloaders
Port Equipment - Turnkey Projects
PNEUMATIC UNLOADING (NIV) :Up to 800 tons/hourAll sizes of vessels
Average efficiency 75%-80%
PortAble grAin PumPs up to 270 t/h
PneumAtic unloAder up to 600 t/h
loAder up to 2000 t/h
simPorter up to 1500 t/h
ALL TyPEs Of GrAIN
Pub vigan 1215.indd 1 20/01/16 10:35
WINTER 2016 . DRY BULK . 5
WORLD NEWSINTERNATIONAL Enhancing bulk carrier operations in shallow waters
A leading partner for the engineering, construction and
service of industrial plants and systems, thyssenkrupp Industrial Solutions, has entered into a partnership with National Ports, an Australia-based developer and operator of large-scale floating port solutions, to make the operation of bulk carriers and materials handling equipment more efficient and environmentally friendly in shallow water ports around the world.
The cooperation is aimed at further developing and rolling out a new technology: the super-shallow draft bulk carrier.
Marco Lucido, Managing Director at National Ports, said: “Our new solution will open up access to shallow loading and destination ports worldwide, including those affected by large tides. The system will not only be able to significantly increase cargo throughput for existing mining companies with limited draft, it can also help to make new mining companies economically viable.”
The majority of global import and export ports for bulk material are geographically remote and not sufficiently dredged to handle modern bulk carriers. Such bulk carriers with a capacity of 180 000 DWT usually require a draft of around 19 m, including clearance under the keel. With up to 185 000 DWT on a 14 m draft, the new system will be able to transit ports with limited water depth. It will be capable of self-unloading its cargo at a rate of up to 10 000 tph into bulk carriers of any size (including the valemax with a
400 000 DWT capacity) or directly at the destination port in a safe and environmentally-friendly manner. The new bulk carrier can be loaded from any ocean-going vessel or directly from the land side via shore conveyors, thus limiting capital expenditure for new port infrastructure.
Konecranes acquires Terex MHPSKonecranes Plc has completed the acquisition of Terex Corp.’s Material Handling & Port Solutions business (MHPS business) for US$595 million and €200 million in cash and 19.6 million newly issued class B shares representing a 25% interest in Konecranes.
The acquisition of MHPS is expected to improve Konecranes’ position as a focused global leader in the industrial lifting and port solutions market.
Panu Routila, President and CEO of Konecranes, said: “We are extremely proud to combine forces with MHPS. We want to provide a home for Demag and Port Solutions, from which these businesses can grow and become stronger as part of our joint organisation. The MHPS acquisition makes it possible for us to realise a long list of synergies. We will be one technology company, ready to create the next generation of lifting.”
“We believe that the Konecranes-MHPS combination represents compelling industrial logic that will deliver significant value to Konecranes customers, team members and shareholders, including Terex,” commented John L. Garrison, Terex President and CEO.
Merger to create bauxite powerhouseMHM Metals has entered into a merger term sheet with Alliance Mining Commodities (AMC), the owner of a 90% interest in the Koumbia bauxite project in Guinea (the government of Guinea holds the remaining 10%).
The Koumbia project is located in the Boke bauxite belt in Guinea, a significant region for premium-quality direct shipping bauxite.
According to MHM, the merger provides a “unique opportunity to leverage a world class project off MHM existing management’s significant experience in the development of bulk commodity and infrastructure projects to create a substantial new ASX-listed direct shipping bauxite producing company in the short to medium term.”
AMC has spent over US$40 million to date on exploration and resource delineation, a definitive feasibility study for a 10 million tpy operations, and environmental and social impact studies.
It has been granted a mining concession from the Guinean government and has an agreed mining convention for the development and operation of the mine.
The proposed merger remains subject to a number of conditions, including the completion of due diligence. Assuming satisfactory completion of due diligence, the companies were expected to execute a binding merger agreement by the end of 2016 followed by a meeting of MHM shareholders to approve the deal in February 2017.
6 . DRY BULK . WINTER 2016
Connecting South Dakota agriculture producers to key marketsUS South Dakota farmers transporting inbound fertilizer and outbound crops gained a faster, more direct rail connection to key markets aboard Union Pacific’s GroTrain service, which started in January.
“Moving products to market quickly is critical to fertilizer and crop producers,” said Kari Kirchhoefer, Union Pacific Vice President – Chemicals. “GroTrain is a cost-effective solution that streamlines rail services, expedites transit times and provides increased efficiencies they need.”
Rapid City, Pierre & Eastern Railroad (RCPE) delivers directly to farm producers in the Mount Rushmore State. Instead of transferring shipments to a third railroad, RCPE now interchanges trains directly with Union Pacific at its Mankato, Minnesota, rail yard – saving time and extra coordination.
“We are committed to working with our Class I railroad partners to provide competitive transportation solutions,” said Brad Ovitt, RCPE President. “The interchange at Mankato provides another effective gateway for South Dakota shippers to take advantage of business opportunities across Union Pacific’s network.”
Siwetell supporting Chinese power plant expansionSiwertell, part of Cargotec, has secured an order from Beijing-based Shenhua Logistics Group Corp. Ltd for two rail-mounted ST 790-D screw-type unloaders. The unloaders are destined
for use by Suizhong Power Generation Co. Ltd and will support the company’s power plant expansion plans in Qiansuo, Suizhong County, China. The order is scheduled for delivery in March 2018.
“The customer chose Siwertell’s totally-enclosed screw-type technology because it needed to provide a clean, efficient operation with minimal environmental impact,” said Ola Jeppsson, Siwertell Sales Manager. “The Suizhong power plant currently receives most of its coal by rail, sourced from Shenhua’s own coal mines. The expansion plans include building a new jetty to increase coal deliveries arriving by sea. The unloaders will discharge coal from vessels of up to 50 000 DWT at a rated capacity of 1500 tph for each unloader.”
The unloaders will be fully assembled at Siwertell’s sub-contractor ’s premises in Nantong, China. The units will then be shipped by specialist vessel to the Suizhong power plant, where they will be unloaded onto rail tracks installed on the new jetty, and then handed over following performance tests and final commissioning.
AUMUND increasing in Turkish cement marketAUMUND Fördertechnik has increased its share in the Turkish market with over 100 machine orders from Çimsa Cimento and Baticim.
Çimsa Cimento has now ordered about 60 AUMUND machines for plants in Eskisehir and Nigde. Baticim ordered 41 machines for a plant in Söke. With
the arrival of these two large orders, AUMUND has now sold more than 150 machines to the Turkish cement industry within one year.
By the end of 2016, AUMUND anticipated to supply Çimsa Cimento’s Eskisehir plant with six central chain bucket elevators, with centre distances between 25 – 68 m and capacities from 40 – 400 tph. The package also comprises 10 belt bucket elevators with centre distances between 17 – 95 m and capacities from 200 – 350 tph. Additionally, six AUMUND 800 mm pan conveyors with centre distances between 15 – 47 m and capacities from 150 – 250 tph were ordered. The order for Eskisehir is completed by three trough chain conveyors.
For the Nigde plant, AUMUND will supply three central chain bucket elevators, with centre distances between 25 – 37.5 m and capacities from 50 – 400 tph. The order also comprises six belt bucket elevators with centre distances between 3 – 91 m and capacities from 250 – 350 tph. To convey clinker, a bucket apron conveyor with a centre distance of 40 m and a capacity of 250 tph will be used.
Batisöke Söke Cimento will take delivery in mid-2017 of 14 central chain bucket elevators, with centre distances between 22 – 43 m and capacities from 130 – 600 tph. The order also comprises five belt bucket elevators with centre distances between 60 – 125 m and capacities from 300 – 650 tph, and 15 AUMUND pan conveyors with widths ranging from 800 – 1400 mm, centre distances
WORLD NEWS
FEBRUARY25-28
GEAPS Exchange 2017 | Feb. 25-28 | Kansas City Convention Center | Kansas City, Missouri
For more information and to register for Exchange 2017, visit www.geaps.com/Exchange.
MORE THAN 400 Exhibitors IN 270,000 SQUARE FEET No matter what operations problems your facility faces, you will � nd the products and solutions you need at GEAPS Exchange 2017.
Browse the latest products and technologies in the Expo, and meet a wide variety of suppliers.
FEBRUARY25-28
GEAPS Exchange 2017 | Feb. 25-28 | Kansas City Convention Center | Kansas City, Missouri
For more information and to register for Exchange 2017, visit www.geaps.com/Exchange.
MORE THAN 400 Exhibitors IN 270,000 SQUARE FEET No matter what operations problems your facility faces, you will � nd the products and solutions you need at GEAPS Exchange 2017.
Browse the latest products and technologies in the Expo, and meet a wide variety of suppliers.
8 . DRY BULK . WINTER 2016
WORLD NEWSDIARY DATES
16th Coaltrans India 21 – 22 February 2017
New Delhi, Indiawww.coaltrans.com/india
GEAPS Exchange 201725 – 28 February 2017
Kansas City, US www.geaps.com/exchange
Black Sea Grain 2017 5 – 6 April 2017
Kiev, Ukrainewww.ukragroconsult.com/ bsg/2017/en/conference
Inland Rivers, Ports & Terminals Annual Conference 2017
25 – 27 April 2017 Kansas City, US
www.irpt.net
Schüttgut 10 – 11 May 2017 Dortmund, Germany
www.easyfairs.com/events_216/schuettgut‑recycling‑technik‑2017_
82627/schuettgut‑2017_82628
23rd Coaltrans Asia 14 – 16 May 2017
Nusa Dua, Indonesiawww.coaltrans.com/asia/details.html
Dry Cargo Conference & Exhibition 1 – 2 June 2017
Amsterdam, Netherlandswww.easyfairs.com/?id=99416
TOC Europe27 – 29 June 2017
Amsterdam, Netherlandswww.tocevents‑europe.com
between 49 – 146 m and capacities from 300 – 600 tph. Six sets of truck loading equipment will also be supplied.
Successful delivery of CSU at Port of PecemTenova TAKRAF recently completed the delivery of a continuous ship unloader (CSU) to handle iron ore at the Port of Pecem, Brazil. The major turnkey contract was awarded by Secretaria Da Infraestrutura (SEINFRA) – Governo Do Estado Do Ceara in March 2014.
Design and construction of the CSU was carried out in Italy. TAKRAF’s China office oversaw all matters related to machine manufacturing and assembly, while the company’s Brazil office was responsible for all local project activities up to commissioning.
The CSU has a nominal capacity of 2400 tph and is able to unload vessels up to 125 000 DWT. It is equipped with a bucket-chain elevator approximately 35 m high and with a slewing/lifting boom, which includes the transfer conveyor, for a total length of 42 m. The discharge on the conveyor jetty is via a vibrating feeder, which is more compact and therefore reduces the height of the machine.
Once the manufacturing and assembly process was concluded, the CSU (machine body and elevator) was moved inside the harbour at Tianjin, China, from a private to a public quay, through a special barge and crane vessel, in
order to allow for the mooring of a specialised transport vessel.
The operation was successfully concluded within the expected transit time of 35 days and the Provisional Acceptance Certificate was released in November 2016.
£2.8 million crane refurbishment project at ABP South WalesAssociated British Ports (ABP) South Wales has invested over £2.8 million into the refurbishment of five cranes across its Newport and Swansea ports to improve operational efficiency and extend the lifespan of the cranes.
The quayside cranes are able to handle a range of cargo, such as coal, aggregates, forest products and steel. The refurbishment is expected to enable increased handling efficiency at the ports when loading and discharging vessels.
The refurbishment work encompassed an extensive upgrade of major mechanical components, such as slew and hoist equipment, motor drives, control panels, and the installation of energy efficient LED lighting. The cranes were also completely descaled and both external and internal surfaces were then repainted.
Three of the upgraded cranes are located at Newport and two at Swansea. The five cranes were nearing the end of their operational life but this renovation has extended their lifespan by ten years.
You can’t seize the right opportunities without the right informationPlatts Dry Freight Wire is unique in providing a truly independent and holistic assessment of the dry freight market which integrates the views of brokers, ship owners and charterers alike.
Our robust price assessments and market commentary, timely news, unique cargo information and verified fixtures are here to help you effectively manage your risk exposure and make confident decisions in the dry freight market.
Platts Dry Freight Wire covers:• Over 110 global freight routes from Atlantic
to Asia-Pacific
• Capesize, Panamax, Supramax, Handymax and Handysize prices
• All major commodities – iron ore, coking and thermal coal, alumina, sugar, grains and polymers
For more information and a free trial contact [email protected] or visit the website www.platts.com/products/dry-freight-wire
Market coMMentary
capesize
Sentiment in the Capesize market in both the Asia Pacific and Atlantic basins firmed Wednesday. In the Asia Pacific a flurry of fixtures continued to be seen for the Western Australia to Qingdao iron ore route. Sources attributed the firm sentiment to a combination of strong tonnage demand in the basin and rise in derivatives. Market participants said at least 20 vessels were fixed over the past two days, so the tonnage list had shortened. A ship owner source expected the uptrend to continue as demand from China was seen to remain strong. Over in the Atlantic, the tight tonnage list continued to support higher freight levels, ship broker sources said. On the Western Australia-Qingdao iron ore route, miners FMG, Rio Tinto and BHP Billiton remained active Wednesday. FMG was heard to have fixed at least two Capesize vessels from Hedland to Qingdao for November loading dates. One was heard fixed at $6.30/wmt and another was heard linked to the MV Golden Beijing at $6.45-$6.50/
today in dry Freight Wire
Capesize 2
Panamax: Asia-Pacific 2
Panamax: Atlantic 3
Supramax 4
Handymax 5
Handysize 5
Containers 6
Freight heards 6
Latest market fixtures 7
Markets News 9
key routes, noveMber 16 ($/mt)route* Load port discharge port cargo size (kt) Platts symbol close change
capesize
Iron OrePC5 Port Hedland, Northwest Australia Qingdao, North China 170 IOFAC00 6.55 +0.55PC8 Saldanha Bay, South Africa Qingdao, North China 170 IOFSA00 10.20 -0.20PC3 Tubarao, South Brazil Qingdao, North China 170 IOFBC00 13.35 -0.40
CoalPC1 Hay Point, Northeast Australia Qingdao, North China 160 CDANC00 7.35 +0.55PC7 Puerto Bolivar, Colombia Rotterdam, Netherlands 150 CIBCR00 9.85 +0.55PC2 Tubarao, South Brazil Rotterdam, Netherlands 170 IOTBE00 8.80 +0.30
Panamax
CoalPP6 South Kalimantan, Indonesia Krishnapatnam, East coast India 75 CIIEI00 7.35 +0.65PP8 Hay Point, Northeast Australia Paradip, East coast India 75 CDBFAI0 11.00 +0.20PP7 Hay Point, Northeast Australia Qingdao, North China 75 CDBFA00 8.85 +0.15PP2 Richards Bay, South Africa Mundra, West coast India 75 CSAKL00 9.20 +0.20
AluminaPP22 Bunbury/Kwinana, Southwest Australia Jebel Ali, UAE 60 MMABJ00 11.70 0.00
supramax
ScrapPS15 New Jersey, US East Coast Aliaga, Turkey 45 MSJAT00 18.75 +0.25
handysize
AluminaPH6 Bunbury/Kwinana, Southwest Australia Lianyungang, North China 30 MMACH00 13.55 +0.10
ScrapPH20 Rotterdam, Netherlands Aliaga, Turkey 25 MSRAT00 16.00 0.00
*PC=Platts Capesize PP=Platts Panamax PS=Platts Supramax PH=Platts Handysize
PC3: Tubarao-Qingdao iron ore ($/mt)
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16-Nov02-Nov19-Oct05-Oct21-Sep06-Sep23-Aug
subscriber notePlatts proposes launching dry bulk tce assessments Platts proposes to launch daily Time-Charter Equivalent, or TCE, assessments for dry bulk vessels to reflect the market’s growing interest in these prices, effective January 3, 2017. Each TCE assessment for Supramax, Panamax and Capesize vessels will reflect the $/day pricing derived from the respective voyage rates published on a $/mt basis in the Dry Freight Wire. The TCE would be calculated using bunker prices published by Platts. The port charges, vessel speed and consumption used in the TCE calculation are arrived at by extensive market survey and will reflect market practice. All assessments will be basis loading and
volume 3 / issue 221 / november 16, 2016
dry Freight Wire
www.platts.com shiPPingwww.twitter.com/Plattsshipping
(continued on page 8)
10 . DRY BULK . WINTER 2016
INDUSTRY VIEWThe growing security threat to the
global shipping industry is an issue that will once again take centre-stage as we look ahead to 2017. A two-pronged threat of piracy and terrorism has emerged in one of the world’s most important shipping lanes. These recent attacks on vessels passing through the Indian Ocean and the Red Sea have presented the shipping community with what the government intelligence agencies call an “indication and warning” of criminal and terrorist intent. Something that would be dangerous to ignore. The clear lesson of recent events is that governments, ship owners and crews must be ready and willing to raise their guard or risk becoming victim to a pirate hijacking of their vessel, or worse, a terrorist atrocity.
Sadly, where there is political and economic strife in coastal communities, maritime criminality follows. Yemen is such a place and the ongoing civil war has resulted in an alarming spate of incidents, with both military and merchant vessels being targeted as they transit the Bab-el-Mandeb Strait and, earlier in the year, off Al Mukallah. The recent bomb attack on an LNG tanker, and the missile attacks on a UAE supply vessel and US Navy warships, is a consequence of the conflict in the Yemen spilling over into the maritime environment.
Beyond Yemen, the international community is struggling with Somalia, where political and economic progress has stagnated. A recent attack on the CPO Korea on 22 October was the first confirmed pirate attack on a merchant vessel this year. The same Pirate Action Group (PAG) that attacked the CPO Korea is
believed to have gone on to attack Iranian fishermen in the area. It is clear that the threat of piracy in the Somali Basin remains a persistent and ongoing problem. The shipping community will do well to heed the repeated warnings of western naval forces that parts of the eastern seaboard of Somalia remain permissive to pirate activity.
Yet despite these warnings, NATO announced last month that it is ending its long and highly successful Indian Ocean counter-piracy mission so that it can focus its efforts on the Mediterranean and Black Sea. This leaves the task to EUNAVFOR, which has just announced its mandate has been extended to 2018, and the US-led coalition. Thus in terms of the western military effort focused on counter-piracy operations in the Indian Ocean, there is both good and bad news. Admittedly the NATO withdrawal has been a long time coming: they largely fish from the same pool of navies as EUNAVFOR, and force flow (warship availability) has been placed under increasing pressure as operations in the Baltic and Mediterranean have had a higher priority for European navies. No matter the reasons, the critical issue is that NATO withdrawal sends the wrong message to those who mean seafarers harm in the Indian Ocean region.
This all comes a year after the reduction in the size of the Indian Ocean high-risk area. As was the case with the NATO withdrawal, the reduction in the size of the HRA was made for some very sound reasons. However, despite shipping industry bodies being emphatic in their advice that the shipping industry should not relax its guard, the reduction in the size of the HRA was seen by some members of the industry as a green light to dismantle their Best
Management Practice (BMP) 4 and armed security measures. In this highly inter-connected world in which we live, it is hardly a wild assumption that the Somali pirate kingpins will be watching and noting these developments. To this end, it is very likely that the attack on the CPO Korea came about because pirate investors were prepared to finance a PAG to test whether the risk-reward ratio might be tilting back in their favour.
While states and security organisations clearly have a major role to play in protecting maritime trade, commercial vessels must maintain vigilance. In a cash-strapped industry, it is often the case that physical security measures are viewed as unaffordable. However, basic security measures are not expensive. These include maintaining a good lookout and being well versed in the guidelines set out by BMP 4. Primary amongst this is being able to take shelter quickly and efficiently in a well-protected and resourced Citadel. However, in the southern Red Sea, Gulf of Aden, and distant waters of the wider Indian Ocean, armed security has so far been the only solution that guarantees safety. Ask the Master and crew of the CPO Korea.
NoteMAST is a leading global security provider with the expertise and capability to provide comprehensive security advice. MAST’s Chief Operating Officer, Gerry Northwood, is an acknowledged expert in counter piracy. He commanded Royal Navy operations against Somali pirates in the Indian Ocean and narcotics smugglers in the Caribbean. He also played a key role in the creation of EUNAVFOR and MSCHOA, for which he was awarded an OBE. This strong background in maritime security operations allowed him to help shape the nature of military counter-piracy operations in the Indian Ocean, and the increasingly successful relationship between the military and commercial sectors.
SHIPPING’S NEW YEAR SECURITY CHALLENGE Gerry Northwood OBE, MAST
Experience the progress.
[email protected]/LiebherrMaritimewww.liebherr.com
Liebherr Ship CranesDue to the restricted space in harbour areas, operations are more frequently being moved to the open sea especially for dry bulk handling. Floating cranes from Liebherr comprise a range of powerful equipment for dry bulk handling on the open sea for vessels up to Capesize. Even cranes for ocean-going barges and pontoons are included in the comprehensive product portfolio for operation on the open sea.
12 . DRY BULK . WINTER 2016
WHAT’S ON THE HORIZON FOR
SOUTH AMERICA?SOUTH AMERICA?
WINTER 2016 . DRY BULK . 13
Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy, USA,
highlights the importance of South American dry bulk exports.
S outh America is in many ways the backbone of the dry bulk shipping market. While China of course drives dry bulk commodity demand, it is from South America that a
particularly large amount of commodity supply comes. South America is blessed with an abundance of iron ore, coal and grain – and also minor bulk cargoes, including sugar. All of these cargoes are shipped to buyers around the world on a daily basis. Also incredibly important for the dry bulk shipping market is that the vast majority of these cargoes are exported from the Atlantic Basin. This is significant as it is here where spot vessel supply most often becomes tight (as dry bulk vessels are most often delivering their cargoes to buyers in Asia, where they then become available in the spot chartering market for another voyage).
The long-haul nature of many South American commodity exports, combined with the wide variety of dry bulk commodities produced there, makes South America a crucial region for the dry bulk shipping market. All of the dry bulk vessel classes are affected by production of South American commodities, along with any supply disruptions and logistics problems that, from time-to-time, arise in South America. South America’s primary dry bulk exporting nations, Brazil, Colombia and Argentina, are still developing countries and are prone to more disruptions than seen with major developed exporters, such as Australia. Indigenous tribes in recent years have gone as far as blocking major Brazilian iron ore railroads, which in turn has led to vessel congestion surges at major Brazilian iron ore ports. South American truckers and other workers are also well known for their strikes, while sudden increases in South American grain port congestion has become fairly common. Vessels grounding on the Parana River, where grain vessels traverse en masse, is another logistical problem often seen in South America.
Iron oreIron ore exports are a major component in the capesize market and Brazilian iron ore shipments are perhaps the most significant cargo capable of leading to sharp changes in capesize shipping rates. While Australia is the world’s largest exporter of iron ore cargoes, Brazil is the world’s second largest iron ore exporter. However, Brazil’s iron ore exports are shipped out of the Atlantic Basin, meaning that, in times of tight spot vessel supply, surges in Brazilian iron ore shipment activity traditionally leads to strength in capesize rates (the vast majority of Brazil’s iron ore is shipped in capesize vessels). Overall, Brazilian iron ore shipments
are a major driver of the great volatility that is historically seen in the capesize market.
Last year, Brazilian iron ore exports (which are shipped primarily to buyers in Asia) climbed to a record of 366 million t. This large increase primarily came as a result of Vale and Anglo American ramping up production. Last year’s record Brazilian iron ore production marked a year-on-year increase of 21 million t (6%); this year another record is likely to be set. At the time of writing, 2016 Brazilian iron ore exports are on pace to climb to approximately 384 million t. This would mark a year-on-year increase of 18 million t (5%). Steady growth in Brazilian iron ore production and exports are expected during the upcoming years, primarily due to Vale’s plans to roll out additional iron ore production from its long-waited S11D mine.
Overall, demand for Brazilian iron ore (and all iron ore) has remained strong, even during times when Chinese steel production has fallen. Demand has also remained strong even at times when China’s iron ore port stockpiles have been at very high levels. A key Commodore Research view has been that Chinese iron ore imports (including demand for Brazilian iron ore) has been set to remain strong, and China has continued to show the world that it has remained happy to purchase as much iron ore as global miners want to sell. So far, there has been absolutely no decline in Chinese iron ore import demand, and the outlook for both Brazilian iron ore exports and overall iron ore demand remains promising.
Looking longer-term, one of the most significant possible headwinds on the horizon for the dry bulk market regarding Brazilian iron ore exports is the possibility of Vale (and others) potentially ordering new valemaxes. In addition, there still remains talk that China and Brazil want to jointly construct a trans-Amazonian railroad in Brazil. The proposed new railroad would be used to rail iron ore mined in Brazil to the western part of the country, and then iron ore would be shipped out of the Pacific Basin. This would cut down the distance that vessels carrying Brazilian iron ore would have to travel when exporting iron ore to China and other buyers in Asia. In addition, Brazilian iron ore shipments would no longer be an Atlantic Basin cargo. Such a change in the nature of Brazilian iron ore exports would be damaging to the capesize market, but there has been no progress made regarding building this potential new railroad. In addition, it would take many years for construction to be completed, and the overall outlook for the proposed trans-Amazonian railroad remains unlikely.
Copacabana beach, Rio de Janeiro, Brazil.
CoalRegarding the coal market, Colombia is the world’s third largest exporter of thermal coal. The majority of Colombia’s thermal coal exports are shipped from the Atlantic Basin, but a small amount is also exported from the Pacific Basin, as Colombia straddles both the Atlantic Ocean and Pacific Ocean. The vast majority of Colombia’s thermal coal exports are shipped in capesize vessels, and most cargoes are exported to buyers in Europe. Last year, Colombian thermal coal exports increased to a record of 81 million t. In 2016, exports are expected to total approximately 88 million t. This would mark a year-on-year increase of 7 million t (9%) and would set another record. Colombia has often had environmental and railway problems, however, and logistical concerns remain an issue that is limiting stronger growth in Colombian exports. The Colombian government has remained keen on further increasing the country’s thermal coal production and exports; growth is expected to continue during the upcoming years.
GrainSouth America is also home to a very large amount of grain production. In particular, a significant amount of the world’s soybeans and coarse grain (which includes corn) is harvested in South America, and the grain cargoes are then shipped to various buyers around the world. Overall, the vast majority of South America’s grain shipments are exported from Brazil and Argentina, and these are Atlantic Basin exports. Brazil is the world’s largest soybean exporter; Argentina is the third largest. In addition, Argentina is the world’s second-largest exporter of coarse grain and Brazil is the third largest. In total, Brazil and Argentina export about 56% of the world’s soybean exports and also about 26% of the world’s coarse grain exports. The vast majority of South American soybean and coarse grain exports are shipped in panamax and handymax vessels (including supramax and ultramax vessels).
Brazil is expected to produce about 101 million t of soybeans during the current 2016/2017 grain trade marketing year. This would mark a year-on-year increase of 4.5 million t (5%) from the 96.5 million t of soybeans that Brazil produced in 2015/2016. In addition, Brazilian soybean exports in 2016/2017 are expected to total approximately
58.5 million t. This would mark a year-on-year increase of 3 million t (5%) from the 55.5 million t exported in 2015/2016. Argentina is expected to produce approximately 57 million t of soybeans during the current 2016/2017 grain trade marketing year. This is roughly the amount that Argentina produced in 2015/2016. In addition, Argentinean soybean exports in 2016/2017 are expected to total approximately 11 million t. This would mark a year-on-year increase of 1 million t (10%) from the 10 million t that Argentina exported in 2015/2016. China remains the world’s largest importer of soybeans and the vast majority of Brazilian and Argentinean soybean exports are sent to Chinese buyers.
Regarding the coarse grain market, Argentina is expected to produce approximately 44 million t of coarse grain during the current 2016/2017 grain trade marketing year. This would mark a year-on-year increase of 7 million t (19%) from the 37 million t of coarse grain that Argentina produced in 2015/2016. In addition, Argentinean coarse grain exports in 2016/2017 are expected to total approximately 27 million t. This would mark a year-on-year increase of 4 million t (17%) from the 23 million t that were exported in 2015/2016. Brazil is expected to produce approximately 85.5 million t of coarse grain during the current 2016/2017 grain trade marketing year. This is 16.5 million t (24%) more than Brazil produced in 2015/2016. In addition, Brazilian coarse grain exports in 2016/2017 are expected to total approximately 24.5 million t. This would mark a year-on-year increase of 8.5 million t (53%) from the 16 million t that was exported by Brazil in 2015/2016. Northern Africa and the Middle East combined make up the largest buyer of coarse grain imports. A large amount of South American coarse grain exports are shipped to this region, along with various other importers around the world.
OutlookOverall, South America is a major player in the iron ore, coal and grain markets – with Brazil, Colombia and Argentina the most significant dry bulk exporting nations. Changes in South American commodity production, logistics and government policy, etc. will all continue to have a very significant impact on the dry bulk shipping market in years to come. As it currently stands, production
of all major South American dry bulk commodities is likely to continue to increase in upcoming years, with the largest growth expected to be seen in Brazilian iron ore production. South America is set to remain a resource-rich continent filled with nations that are still very much developing. Dry bulk commodity production and exports are a major source of income, jobs, and tax revenue for Brazil, Colombia and Argentina. Further boosting dry bulk commodity production remains a key focus in all of these nations. Prospects for long-term growth in South American dry bulk commodity exports are very promising, and South America is set to remain the backbone of the dry bulk shipping market. Brazilian iron ore exports (2012 – 2016 annualised).
14 . DRY BULK . WINTER 2016
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