Concept study for large LNG containership

Source Company of Master Mariners of Australia vom 18.12.2011

CLASSIFICATION society Germanischer Lloyd (GL) and Japanese shipbuilder IHI Marine United Inc (IHIMU) have signed an agreement to investigate and develop solutions for large LNG-fuelled containerships. GL and IHIMU will work together on a concept study for a 13,000-TEU ship fuelled by LNG. "IHIMU shares GL's assumption that LNG will be a key technology for addressing the challenges the maritime industry faces in terms of reducing emission to the air and reducing its contribution to global climate change," said Pierre Sames, GL senior vice president and head of strategic research and development in a statement from LNG Solutions. The study will focus on the eFuture 13000C, a LNG-fuelled 13,000-TEU ship concept design first launched by IHIMU in 2010. IHIMU claims the eFuture 13000C design boasts a 30 per cent reduction in environmental impact and fuel consumption compared with conventional ships and features a twin-skeg (two-keel) hull and high-capacity batteries to store energy generated by solar panels. The new joint development project will focus on the LNG fuelling system, consisting of the bunker station, tanks, gas preparation and gas lines. IHIMU will design the key structures of the system with GL providing design review, hazard identification and upon the successful completion of the project, approval in principle of the design. Assessment of the safety performance of the gas supply system will be the key aspect of GL's contribution to the project.

First commercial scrubber delivered

Source motorship.com vom 15.12.2011

Hamworthy Krystallon says that the first of four vessels on which its seawater scrubbers are being installed, a ro-ro newbuilding for Italian ship owner Ignazio Messina, is now on line. The company claims that this is the first ever vessel to operate commercially with a scrubber system, enabling Linea Messina to meet 0.1% sulphur emissions regulations in EU ports, as well as ‘future-proofing’ the vessel for the impending 0.1% ECA sulphur limit that will be imposed in 2015. “This is a landmark moment, not just for Hamworthy Krystallon, but the entire shipping industry,” said Sigurd Jenssen, managing director, Hamworthy Krystallon. “Bringing Linea Messina on line highlights the validity of scrubbing technology as a viable and cost-effective solution to meet the stringent sulphur emissions regulations, that are serving to transform the shipping industry. By 2015, ship owners and operators operating in ECAs will have a simple choice - either pay the $300 to $400 price differential for costly distillate fuel or install a scrubber, which typically has a payback of less than twoyears. Messina has shown what the smart choice is.” continued Jenssen. Ignazio Messina placed the first commercial order for seawater scrubbers in 2010, to be installed on four new 45,000dwt ro-ro vessels. Each ship features five scrubbers, consisting of four units for the auxiliary engines (each 2MW) and one unit for the auxiliary boiler (2.5 tons steam per hour). All the scrubbers will be housed within the ship funnel casings. Equipment will include a control system, combined wash-water treatment plant and a new range of super duplex stainless steel pumps supplied by Hamworthy’s Singapore plant. All emissions will be continuously monitored. The delivery of the equipment for Linea Messina took place in January 2011, followed by installation throughout the summer. DNV approved the installation during testing in October 2011, and it has also achieved RINA classification; all vessels being the first of their type to gain RINA’s Green Plus notation. Additionally the system is MED certified. Linea Messina will operate along the African coast as well as in Italian waters. Enrico Allieri, Ignazio Messina's new buildings programme technical director, commented: “Installing Hamworthy Krystallon’s scrubber system was the right commercial and environmental decision. The shipping industry is changing dramatically and it will continue to do so, particularly in relation to the environment, and we wanted to be ready for these new challenges.” “We can now comply with the 0.1% sulphur regulation in EU ports, while burning residual fuel oil and we are now prepared for the 2015 regulation, which will have a significant impact on the industry. What has been clear is that preparation is key as the solutions take time to install and test. But we are now ready and have a competitive advantage in looking to seize the opportunities that change will inevitably bring. The first vessel Jolly Diamante was delivered on 9 December and is now on its maiden voyage to Mediterranean Sea. We will continue to participate in Hamworthy Krystallon’s R&D program which will closely monitor the scrubbers during operations, as a means of continuously improving the characteristics of the scrubbing systems,” concluded Allieri.”

Shipping confidence picks up despite Eurozone fears

Source Moore Stephen vom 13.12.2011

Overall confidence levels and the likelihood of major new investments in the shipping industry in the next twelve months picked up in the three months ended November 2011, according to the latest shipping confidence survey by leading accountant and shipping adviser Moore Stephens. This was tempered by an expectation of a rise in finance costs. Respondents also continued to exhibit a high level of concern about the negative impact of overtonnaging on the market amid continuing fears about the global economic climate, and the eurozone crisis in particular. In November 2011, the average confidence level expressed by respondents in the markets in which they operate was 5.4 on a scale of 1 (low) to 10 (high). This is up on the figure of 5.3 recorded in our August 2011 survey. Confidence was highest among managers, unchanged at 5.6. Europe at 5.1 was the least confident of all geographic regions covered by the survey. In May 2008, confidence in Europe was at a high of 6.6, and as recently as August 2010 was running at 6.1. Respondents were more optimistic of making a major investment or significant development over the next twelve months, with the likelihood rising to 5.2 from 5.1 in the last survey. Owners (up from 5.3 to 5.5), managers (5.2 to 5.4) and charterers (5.7 to 5.8) were all more confident. Expectations were unchanged in Asia at 5.2, but were up in Europe, from 5.0 to 5.1. 24% of respondents (up from 22%) cited demand trends as the most significant factor affecting business performance in the next twelve months, with 17% opting for competition (unchanged from last time) and finance costs (up from 16% last time). Fuel costs were down from 12% to 9%, while tonnage supply increased by one percentage point to 13%. There was a five percentage point increase this time (from 52% to 57%) in expectations of an increase in finance costs. Owners (up from 53% to 57%) and managers (up four percentage points to 56%) joined in believing that finance costs would rise. There was an increase in the numbers of respondents in both Asia and Europe who thought finance costs would rise (up from 50% to 54%, and from 53% to 61%, respectively). In the tanker sector, the number of respondents expecting rates to increase over the coming year fell from 34% to 30%. But, there was a 19 percentage point increase (from 21% to 40%) in the number of charterers who thought rates would go up. There was also a corresponding 19 percentage point fall (from 26% to 7%) in the number of charterers expecting tanker rates to fall. Not for the first time, the chartering sector seems to know something that other parts of the market do not. For the first time in three years, those predicting a decline in rates in the dry bulk sector exceeded the total of those who thought they would increase. The percentage expecting an increase fell from 27% to 23%, a new all-time low in the life of the survey. Meanwhile, 31% thought that rates would go down; the highest level since the 43% recorded in October 2008. In the container ship market, the number of respondents overall expecting a decline in rates was higher than the number anticipating rate increases. Overall, just 23% of respondents (compared to 28% last time) expected rates to go up, the second-lowest figure since the survey began, behind only the 20% recorded in October 2008. Meanwhile, 31% thought that rates would go down, the highest figure since the 36% recorded in February 2009. Moore Stephens shipping partner, Richard Greiner, says, “It says a great deal for the resilience of the shipping industry that, despite the problems facing the sector, and notwithstanding the acute difficulties bedevilling the world economy, our survey showed a small increase in confidence. Like a boxer who refuses to lie down, shipping is fighting to ride the punches and to bounce back off the ropes. There was even an increased expectation that respondents would be making a major investment over the coming twelve months. This is encouraging, and supports the belief that now is a good time to buy for those who have access to funding. “Nevertheless, it is undeniable that shipping is struggling on a number of fronts. Seldom, if ever, can classic problems within the industry have coincided with such a severe economic downturn and acute debt crisis. Overtonnaging is the issue dominating responses to our survey and, even when other concerns are raised, overtonnaging is still the elephant in the room. It will doubtless remain so for some time, but the situation could be eased in the shorter-term by sensible renegotiation and resourceful financing. “Meanwhile, operating costs are set to rise, with a recent Moore Stephens survey predicting a 3.7% increase in 2012. Shipping is an expensive business in which to operate, and the returns currently available through the freight markets are generally not sufficient to offset operating costs and leave any prospect of a return on investment. “These are challenging times. The shipping industry which emerges intact from the current downturn will be stronger than the one which entered it. The loss of some good, well-run companies is the sad but inevitable result of the singular economic conditions currently prevailing throughout the world. But the loss of short-termist, inadequately funded companies will leave the industry in much better shape than it was before the indicators started to point in the wrong direction.”

SOx emission rules being avoided

Source Lloyd’s List vom 19.12.2011

A significant minority of about a fifth of ships are not complying with European requirements on sulphur emissions, according to research by the Seafarers' International Research Centre at Cardiff University, which has called for more effective enforcement of sulphur regulations. This is among the findings of an interim report on the effectiveness of international regulation of pollution controls: the case of the governance of ship emissions funded by the UK Economic & Social Research Council and supported by the UK Maritime & Coastguard Agency. The research is based on ships calling at ports in the UK and Sweden. The research project continues through to the end of 2012. The report says that, based on its evidence, it is clear that a minority of berthing ships in the UK and Sweden are continuing to burn non-compliant fuel. Its estimate of 18% non-compliance for western Europe and the Baltic is mostly due to the supply of off-spec fuel, rather than conscious regulatory avoidance, but there is evidence of some deliberate avoidance. It notes ships deliberately avoiding compliance are unlikely to send samples for testing. There could be some additional inadvertent non-compliance of vessels with single service tanks operating an inadequate changeover procedure. It suggests the proportion of non-compliant ships varies considerably and for ships transiting UK and Swedish waters, but not calling there, the figure could be higher. In fact, fuel testing by Swedish authorities in Swedish ports revealed non-compliance of just 4%. This low figure could be due to longstanding financial incentives there to burn low-sulphur fuel, with an established fuel-sampling programme, for the high proportion of ships calling in Swedish ports that operate continuously in the Baltic and North Sea emissions control areas. It warns of the danger the shipping industry's culture of compliance could break down in this regulatory area, due to the substantial cost savings from running on non-compliant fuel. This supports the need for effective enforcement measures. “A reliance solely on visual checking of documents does not seem appropriate to this need for particularly effective enforcement," the report says. "If the EU 0.1% sulphur pot fuel regulations are not to appear toothless, non-compliant vessels need to be named and shamed on the Equasis website." Among its recommendations are that the MCA pilots the use of fuel sampling and testing kits, similar to those already in use in Sweden, German and the Netherlands, in conjunction with laboratory testing. All EU countries should inform the European Commission of vessels found to be non-compliant. Agreement should be sought at the International Maritime Organization for a new format of bunker fuel delivery note in English that should state the sulphur content and the deliverer of the fuel.

Study shows significant reductions in CO2 emissions from ships from IMO measures

Source IMO vom 14.11.2011

An IMO-commissioned study into the impact of mandatory energy efficiency measures for international shipping shows that implementation of the measures will lead to significant reductions of greenhouse gas (GHG) emissions from ships, specifically reductions of carbon dioxide (CO2), resulting from enhanced fuel efficiency. The study found that, by 2020, an average of 151.5 million tonnes of annual CO2 reductions are estimated from the introduction of the measures, a figure that by 2030, will increase to an average of 330 million tonnes annually. CO2 reduction measures will result in a significant reduction in fuel consumption, leading to a significant saving in fuel costs to the shipping industry. The study was launched on Monday (14 November) ahead of the forthcoming United Nations Climate Change Conference, to be held in Durban, South Africa, from 28 November to 9 December, 2011. IMO will report to that Conference on the breakthrough adoption, in July. 2011 at IMO's Marine Environment Protection Committee (MEPC), of mandatory technical and operational measures to reduce GHG emissions from international shipping. Amendments to the International Convention on the Prevention of Pollution from Ships (MARPOL), Annex VI Regulations for the prevention of air pollution from ships, add a new chapter on Regulations on energy efficiency for ships. The regulations will apply to all ships of 400 gross tonnage and above and are expected to enter into force on 1 January 2013. This new chapter makes mandatory the Energy Efficiency Design Index (EEDI), for new ships, which, in essence, requires new ships to be designed to be more energy efficient (and thereby release less greenhouse gases). The regulations are non-prescriptive: as long as the required energy-efficiency level is attained, ship designers and builders are free to use the most cost-efficient solution or solutions for each particular ship. The new regulations also make mandatory a Ship Energy Efficiency Management Plan (SEEMP) for all ships. This is a plan which sets out, for an individual ship, how energy savings can be made. There are a variety of options to improve efficiency - speed optimization, weather routeing and hull maintenance, for example - and the best package of measures for a ship to improve efficiency differs to a great extent depending upon ship type, cargo, route and other factors. The new regulations make such a ship-specific plan mandatory thereby encouraging the shipping industry to review its practices in a systematic way to find the best balance. Amongst the key findings, the report  found that:

- By 2020, an average of 151.5 million tonnes of annual CO2 reductions are estimated from the introduction of the EEDI for new ships and the SEEMP for all ships in operation, a figure that by 2030, will increase to an average of 330 million tonnes annually.

- Compared with Business as Usual (BAU), the average annual reductions in CO2 emissions and fuel consumed are estimated between 13% and 23% by 2020 and 2030 respectively.

 - CO2 reduction measures will result in a significant reduction in fuel consumption, leading to a significant saving in fuel costs to the shipping industry, although these savings require deeper investments in more efficient ships and more sophisticated technologies, as well as new practices.

- Significant reduction of CO2 emissions from ships due to EEDI and SEEMP regulations is foreseen to 2050 with emission reduction due to SEEMP likely to be realised more rapidly than that for EEDI, as the effect of EEDI will occur only as and when older, less efficient, tonnage is replaced by new, more efficient tonnage.

 - The estimated reductions in CO2 emissions, for combined EEDI and SEEMP, from the world fleet translate into a significant annual fuel cost saving of about US$50 billion in 2020 and about US$200 billion by 2030; using fuel price increase scenarios that take into account the switch to low-sulphur fuel in 2020.

- Mandatory application of EEDI will drive more energy-efficient ship design and realise the CO2 emission reduction potential associated with technical innovation and the use of lower or no carbon fuels.

 - The mandatory use of SEEMP based on current IMO regulations will provide a procedural framework for shipping companies to recognise the importance of the operational energy- saving activities. It will significantly boost the level of awareness and, if implemented properly, will lead to a positive cultural change.

- Investigations show that ship hydrodynamic and main engine optimisation will bring about energy-saving opportunities of up to around 10% with no significant additional cost of shipbuilding.

- The IMO regulations represent the first-ever mandatory energy efficiency measures for an international transport sector and their adoption followed several years of work on the matter. Work is now progressing on market-based measures, with intensive work to review a number of different proposals, submitted by Governments and observer organizations.

Further work will be carried out on market-based measures in 2012. Such measures would place a price on greenhouse gas emissions, thereby providing both an economic incentive for the maritime industry to invest in more fuel-efficient ships and technologies and to operate ships in a more energy-efficient manner and a mechanism to offset growing ship emissions in other sectors. In addition, these measures can generate funds that could be used, for example, for projects to mitigate climate change in developing countries.

Ocean Tankers sees another ship forced to go under the hammer

Source Lloyd’s List vom 14.12.2011

Another tanker belonging to troubled Cyprus-based shipowner Ocean Tankers is being sold at auction, having been arrested — adding to the growing list of Ocean Tankers’ ships being forcefully sold as the company struggles for survival. The sale at auction in Cape Town, South Africa, of the 2008-built, 12,923 dwt combined chemical and oil tanker Vasi is the latest in a line of Ocean Tankers’ vessels being sold off by the Royal Bank of Scotland due to a lack of mortgage repayments. RBS has forced the sale this year of a handful of other vessels operated by Ocean Tankers after the company defaulted on a $284m mortgage facility. Sales reportedly include that of tanker Marim, Prodromi, Anefani , Lisa, Berengaria and Frachtis. Ocean Tankers has hit out at the bank, claiming RBS “tricked the company” after it ended support and started confiscating vessels. Ocean Tankers said the bank’s actions were “possibly due to their inability to reach an agreement as a result of the problems that the banking system faces”. The company blamed its financial problems on low spot rates and lower-than-expected proceeds received from a legal ruling, among other factors. According to Admiralty Shipsales in South Africa, the auction sale of Vasi is scheduled for January 12 next year. Roy Martin from Admiralty Shipsales told Lloyd’s List on Wednesday Vasi was arrested in Cape Town on around November 15. RBS “pulled the plug”, said Capt Martin. “They decided enough is enough.” Contrary to expectations amid this year’s harsh economic circumstances, he said he has not seen a noticeable rise in arrested vessels and auction sales this year. This could change, however. Analysts say if low freight rates persist for tankers next year, arrests and forced sales could creep up. The potential development next year will not please Ocean Tankers, which takes a firm, even vitriolic, stance against the forced sales of its ships. “We believe that the confiscations of ships and their sale [at] humiliating prices is wrong,” the company said. It added: “It is neither rational nor acceptable for the banks to sell the ships in auctions, losing $240m instead of helping and supporting the company with $10m for the safe operation of the fleet, until the crisis ends.”

One-third of shipping accounts kept secret, says KPMG

Source Lloyd’s List vom 12.12.2011

Around one-third of shipping companies still keep their financial information under wraps - although, on the whole, transparency has improved over the past three years, according to a new survey from KPMG. The research, which updates an earlier version undertaken by the professional services firm in 2008, examines specific areas such as accounting standards and impairment, risk disclosure, key performance indicators and sustainability reporting. “Of greatest concern is that for many in the sector there is no information at all,” KPMG said. “We continue to find it difficult to locate publicly-available information.” Annual reports or equivalents were unobtainable in 33% of cases, down from 44% in 2008. The improvement is hailed as encouraging and perhaps a reflection of growing demand for transparency from shipping’s supply chain and financiers. Shipping annual reports were on average 130 pages long, compared with 175 pages on average for FTSE 100 companies. Based on that finding, KPMG concluded that even such information as is available is in less depth than that for other business areas.

Shipping: that sinking feeling

Source FT.com vom 14.12.2011

Last into the downturn, last out. That could be the fate of the world’s shipping industry. In 2008, when the global financial system was sinking, tanker operators were merrily ordering new ships. These are still being delivered, creating a glut of container ships, tankers and bulk carriers, swamping many operators. Like the biggest ships, this market can take a long time to turn around. The result is a financial squeeze. Shipping rates have plunged; large operators are collapsing. US-listed General Maritime sought Chapter 11 protection in November. Very large crude carriers cost roughly $20,000 a day to operate. Yet Frontline, one of the biggest operators, was forced to slash its charter rates to less than $13,000 a day in the third quarter. No public company can burn through cash at this rate for long. The company has since been rescued by its founder, John Fredriksen, while Denmark’s Torm, an oil products tanker operator, has negotiated a debt standstill. The looming year-end provides a deadline for auditors and shipowners to decide on companies’ viability; the chances are many will sink. Their plight is worsened by the tightening of bank credit. Bank unwillingness to finance ship purchases is creating a downward spiral as prices fall on the lack of buyers. Prices of five-year-old very large crude carriers have fallen by a third since January to $58m, according to Vesselsvalue.com. Meanwhile, creditors, including banks, are fretting about their shrinking collateral, and are demanding that operators put up more cash or sell ships. The share prices of Frontline and Torm have fallen by about 90 per cent this year. That makes Torm’s planned rights issue a tough sell; it is hard to argue that the market has reached its bottom. Fears that China will boost ship production to protect jobs, adding to the glut, are among the other factors keeping the market depressed. There is a silver lining: demand for steel in China is keeping scrap prices buoyant. The breaker’s yard beckons for a swath of global shipping.

Newbuilding ordering activity tumbling, despite deals being concluded

Source Hellenic Shipping News vom 14.12.2011

Hellenic ship owners were the main contributors to this week's newbuilding ordering activity, as things appear to be cooling down more than ever in the market, as we head towards the end of the year.According to the latest weekly report from Clarkson Hellas, "as we move further into December and the festive period, activity in the Newbuilding market continues to gradually wind down, as evidenced by the lower levels of new enquiry now being witnessed. The week has however seen some new business being concluded, as certain buyers have looked to tie up their various negotiations before the end of the year. Whilst the second half of the year has certainly seen a slight decline in the number of orders being placed at the Korean yards, it can in no way detract from what has for the most been a very successful 2011 for the major yards in Korea. The "Big Three" yards in particular have led this ordering drive throughout the year, winning orders across the Container, Offshore and LNG sectors. A continued demand across these sectors would no doubt be well received by the yards in 2012 however with the turmoil within the European financial markets continuing to look like it will restrict owners access to financing, it will likely be some time before the forward picture for 2012 can be established. It is well known that the yards in China have faced a far more challenging year, with the beginning of the year in particular being especially quiet. Fortunately for the yards, activity has picked up a little during the second half of the year, at least amongst the major State and Private yards, with some ordering again beginning to take place in the Dry Bulk sector. This being said however, there still remains a large amount of 2013 capacity available amongst the majority of the yards and how they attempt to fill this will remain an interesting story going forward into 2012, especially given the challenges that potential owners will have face, as alluded to above" said Clarkson Hellas. In a separate report, Piraeus-based shipbroker Golden Destiny, said that November showed a silent ordering momentum with the offshore business booming, while the year seems to end with weaker levels of contracting activity in the bulk carrier and tanker segment from 2010 and a renewed ordering interest in the LNG, container and offshore vessels. "However, the second week of December closed with very firm newbuilding appetite for bulk carriers and tankers and a record newbuilding activity not seen since the beginning of November, showing a 288% remarkable weekly increase for 66 fresh orders reported worldwide at a total deadweight of 3,910,000 tons.The total invested capital is estimated to be in excess of $2,1 billion with 53% of the total number of reported at an undisclosed contract price. Bulk carriers are in the first rankings by holding 29% of the total contracting activity. Offshore vessels are again on the spotlight and tankers to follow by grasping 35% and 23% respectively of the total number of units ordered. At similar week in 2010, the ordering momentum was 120% higher with 99 total bulk carriers' contracts being recorded and only 4 offshore vessels" said Golden Destiny. Detailing the market activity, the shipbroker said that "in the bulk carrier segment, notable order of the week has been the placement of a capesize order by Greek player, Polembros Shipping, for two 206,000 units at Shanghai Waigaoqiao for $53 mil each with delivery in 2013. Polembros signed an original two 206,000dwt vessels order at SWS in August this year. Furthermore, market rumors suggested that Minerva Maritime may have ordered two 176,000 dwt units from the same yard at $43 mil each, but the order has been denied by the owner. An order has also been revealed in the kamsarmax segment by a Chinese player, Qingdao Da Tong International at a domestic yard, Jinling, for three 82,000dwt units at an undisclosed contract price with delivery in 2013. Furthermore, China's Shanghai Waigaoqiao has won its first kamsarmax orders by Singapore based player related to Chinese steel mill Rizhao Steel for two 82,000dwt newbuildings, plus two options, for delivery in 2013. Sources reveal that the owner is paying around $30,5 mil each for the units. In the handysize segment, Arklow Shipping of Ireland, which is specialized in mini bulk carriers, made a step forward by ordering two 35,000dwt units from Daesun with delivery in 2013 at a price of region $25,5 mil each. In addition, Pyrsos Management of Greece has placed an order for six handysize unit of 37,000dwt in Jinling of China for delivery in 2013-2014" said Golden Destiny. It went on to mention that in the tanker segment, "Tomasos Brothers of Greece has placed a order for four product carrier units of 37,000 dwt at Chinese yard, Guangzhou, for $36 mil with delivery in 2013-2014. In the crude tanker segment, South Korean shipbuilder has won a shuttle tanker order from Knutsen NYK Offshore Tankers for a 112,000dwt, DP2-class vessel for delivery in 1h 2014 to service a long term charter with Exxon Mobil. Notable order of the week has been the announcement from China Rongsheng Heavy Industries for receiving a ten plus ten 157,000 dwt suezmax tankers order from Global Union Shipping with delivery the year end of 2013 and 2014 with a total estimated cost around $1,2 billion" said the report. Similarly, "in the gas tanker segment, Maran Gas Maritime, the gas carrier arm of the Greece based Angelicoussis Shipping Group, has exercised its options with Hyundai Heavy Industries for two more LNG units at $200 mil per vessel for delivery in December 2014 and April 2015. Maran had also ordered five similar sized LNG carriers from another South Korean shipyard, Daewoo Shipbuilding. The two South Korean shipyards, DSME and HHI, had signed a letter of intent in June 2011 to build eight gas carriers for Maran Gas, including an option for four more units, at an expected cost of $1,6 billion. Furthermore, rumors have been circulated in the market that Greek owner Dynacom has converted its VLCC newbuildings into LNG carriers, but this movement has not been confirmed by the owners. It has been revealed that the owner is under discussions with Hyundai Heavy Industries to swap one of its VLCCs on order for a LNG unit, but no agreement has been reached yet. In the container segment, China Shipping Container Lines has declared options for four post panamax containerships of 10,000 TEU, from an earlier order placed in October for eight similar units, as an order split equally between two Chinese yards, Dalian Shipbuilding Industry and Hudong Zhonghua. Additionally, Israel based Ofer Brother is behind a large panamax order for two 6,600 TEU ships for delivery starting in 2013 at China's Jiangsu Rongsheng Heavy Industries, the order is said to have been placed some time ago and now came to light" concluded Golden Destiny.

Green retrofits held back by financing

Source Lloyd’s List vom 31.10.2011

With various new forms of green money-saving technology hitting the market, retrofitting can be an attractive option. However, many shipowners are finding financing modifications to a ship can be difficult. In response, new initiatives are springing up where third parties front the cash. Exhaust cleaning technology is the most common example of the financing problem at the moment. Many in the maritime industry see the large-scale retrofitting of scrubbers as inevitable as regulators become increasingly stringent about ships’ emissions. However, owners report that financing can be a hurdle to overcome before new scrubbers are installed on an old ship. According to Don Gregory, chairman of the Exhaust Gas Cleaning Association, some owners are holding off on investing in a scrubber altogether for want of funding. “There is definitely a group out there that would have it installed today if they could pay for it later,” Mr Gregory says. His comments were echoed by a spokesperson for the German Shipowners’ Association, speaking at a recent trade conference in London. “Members have told us this kept them from making the investment,” he said. Mr Gregory argues the business case for retrofitting scrubbers is clear-cut: a one-time investment pays itself back over time because the technology allows a shipowner to go on burning high-sulphur fuel, even in emissions control areas. According to Mr Gregory, even with the spread between high and low-sulphur fuel relatively low at the moment, scrubbers can pay for themselves this way in a matter of years. However, banks are often unwilling to accept a scrubber, or other retrofit technology, as collateral for a project-finance loan because the kit can be difficult to remove from the ship and has an unclear resale value. The problem is exacerbated by the fall that vessel values have taken in recent years. A shipowner who took out a mortgage on a newbuilding in 2008 could find himself owing more to the bank than his vessel is worth today, leaving him with no collateral left. Though scrubbers offer a case in point, the same obstacles need to be overcome when installing other retrofits with long-term  economic benefits, such as a dual-fuel engine or wind-assisted propulsion. However, bankers say that shipowners’ complaints about their reluctance to finance scrubbers — or other green technology — are exaggerated. “We have never denied a request to finance scrubbers,” says Gust Biesbroeck, head of transport at ABN Amro, although Mr Biesbroeck did make it clear that his bank had received very few request for scrubber financing so far. According to Mr Biesbroeck the shipping industry should look to itself when trying to explain lacklustre demand for scrubber technology. “We are very explicit about our desire to finance technical innovation in the sustainability department. That is not happening so far, mostly for lack of investment.” Mr Biesbroeck does admit a shipowner would have to bring some additional form of security to the table to receive a scrubber project loan, or financing for any other form of relatively unproven technology. “Uncertainty concerning value does make financing a product difficult. A lot of players find that hard to stomach,” Mr Biesbroeck says. He suggested shipowners look to their mortgage providers for additional financing. “We are willing to grant the benefit of a doubt regarding the economic value of a scrubber,” he says. “However, if the value of your fleet is less than your outstanding mortgage, off course we can’t help.” Because many underfunded owners could soon find themselves forced into the scrubber market, some are seeing business opportunities. Robin Meech, managing director of Marine and Energy Consulting, has launched a business initiative dubbed Abatement Technology and Finance, which arranges scrubber financing for shipowners. Mr Meech is currently working with banks to cut favourable deals, but his newest approach is a financial model in which bunker providers put up the cash for a scrubber, and in return get an exclusive bunkering contract with the buyers. Mr Meech is not the first to suggest alternative third-party financing. MAN Diesel Primeserv has been running a retrofit financing programme for products for two years, of which some 20 customers have taken advantage so far. Primeserv vice-president Per Ruud saysthe majority of the deals the company has signed had been for turbocharger cutouts, or other upgrades associated with slow steaming. Mr Ruud says the Danish engineering company is set to expand the range of products and services that its Trident financing solution will be able to cover, but admitted it will always depend on shipowner demand, which he believes is currently there. Some players have suggested other unconventional ways of financing scrubbers. Mr Gregory of EGCSA says a small-scale high-risk bond issue could also fund a scrubber retrofit for a group of companies in, say, a tanker pool. “The returns would definitely be better than those on, say, London real estate,” Mr Gregory says. However, according to Mr Gregory most investors tend to prefer the devil they know. “These are schemes that have a lot of legs,” Mr Gregory says. “But getting investors to spend time to evaluate them can be exceedingly difficult.”

Shipyards BLRT Grupp and Wärtsilä co-operate to install scrubbers

Source Hellenic Shipping News vom 22.11.2011

Ship-repair yards of BLRT Grupp and the marine industry's solutions provider Wärtsilä has signed a Co-operation Agreement aimed at promoting the exhaust gas purification systems (scrubbers). All ship-repair yards of BLRT Grupp will cooperate - Tallinn Shipyard in Tallinn, Western Shiprepair in Klaipeda and Turku Repair Yard in Turku. This agreement is the new phase of cooperation between our concerns that will allow not only to conduct general repairs in our yards but also to modernize ships in accordance with the new requirements of international conventions, explained Marketing Director of Tallinn Shipyard Gabriel Avanesov. Combination of new technology developed at Wärtsilä and services provided by our specialists will allow us to offer our clients new product at reasonable prices which is especially important now when shipping companies have problems because of low freight rates, he added. The success of this cooperation was confirmed by the pilot project which was carried out by our specialists at Turku Repair Yard in anticipation of a formal agreement, said Managing Director of Turku Repair Yard Hans Sundqvist. According to him, the specialists of BLRT Grupp have everything that is required to carry out modernization works and to develop relevant projects and draw up the documentation. The agreement was concluded for a period of three years and it involves installation of scrubbers on the ships that regularly operate in SECA zones. According to the analytics, scrubber market capacity may increase up to 70 billion dollars by the year 2025. The international convention MARPOL (International Convention for the Prevention of Pollution from Ships), namely its Annex VI Prevention of Air Pollution from Ships, sets limits on sulphur content in the fuel that is used in ship propulsion systems. By 2015, the limit for sulphur content in the fuel for SECA zones (Sox Emission Control Areas: the Baltic Sea and the North Sea, La Manche) shall be 0,1 percent. The most costeffective and efficient way to achieve these goals is to purify exhaust gases. The equipment provided by Wärtsilä and installed by BLRT Grupp's yards reduces sulphur oxides by 99 percent. The holding BLRT Grupp consists of 66 subsidiaries and 13 joint ventures that provide employment for 4000 specialists in Estonia, Latvia, Lithuania, Finland, Norway, Russia, Poland and Ukraine. In addition to ship repair and modernization services, the holding provides high-quality services of ship design, building and utilization. The holding has also reached considerable results in high-technology metal structures production, machine building, metal processing, stevedore and port services and metal and industrial gases trading.

Wave of insolvencies looms for shipping industry

Source FT.com vom 11.12.2011

Fears are mounting that the eurozone financial crisis could spark a fresh wave of shipping insolvencies, after funding problems at many leading European banks accelerated falls in vessel values, triggered by the worst conditions in some shipping markets in 25 years. Several of the world’s most important shipping financiers have told the Financial Times that liquidity problems are putting banks off financing potential purchases of ships that come up for sale, pushing down the values they achieve. That is prompting banks to worry about the value of similar ships pledged as collateral on their loans. A downward spiral in values is developing as falling values prompt banks to pressurise owners to sell off further ships. The warnings come at the end of a year so grim for some of the most important shipping segments that many involved are already comparing conditions to the prolonged slump in the mid-1980s. One of the world’s leading shipping conglomerates – Korea Lines – and one of the best-known tanker operators – General Maritime – have already collapsed into bankruptcy protection as a ship glut has depressed earnings. One of the most outspoken financiers, Dagfinn Lunde, head of shipping at Germany’s DVB Bank, confirmed that the credit squeeze was restricting finance for second-hand ship purchases. As a result, Mr Lunde said, prices realised by vessels were falling fast, prompting more banks to push shipowners into selling ships. “I don’t think we will for many years have a normally functioning market,” Mr Lunde said. “In some markets, we will never have the equity returns we were used to.” Harald Serck-Hanssen, head of shipping for Norway’s DNB, one of the world’s largest shipping lenders, echoed Mr Lunde’s concerns. Financing problems were limiting demand for ships that came on to the market and pushing down prices, he said. “There may be a downward spiral forced by the banks,” he said. Like many senior shipping financiers, Mr Serck-Hanssen expected more companies to follow those that have collapsed this year into insolvency. “There will absolutely be more bankruptcies,” he said. “That’s clear.” According to VesselsValue.com, an arm of London’s Seasure Shipbrokers, a typical fiveyear-old very large crude carrier has fallen 30 per cent in value since August to only $58m. The value of a Panamax container ship – the largest that is able to be used the Panama Canal – of similar age has fallen 32 per cent since May to $39.3m. Even in dry bulk shipping, where earnings have recovered after falling earlier in the year, a fiveyear-old Capesize – the largest class – has fallen 28 per cent from a year ago, to $39.4m.

Rising bunker price heaps pressure on VLCC owners

Source Lloyd's List vom 08.12.2011

High oil price pushes up costs, eroding earnings in the overtonnaged VLCC market IN another blow to struggling tanker owners, bunker fuel costs are creeping up towards $700 per tonne, stifling daily returns for very large crude carriers deployed on the key Middle East to Asia oil trade. Prices for 380 cSt bunker fuel from Fujairah in the Middle East are $691.50 per tonne, Athens-headquartered broker Optima reported on Wednesday. A week ago the bunker price was $682.50, up from $664 the week before, the broker reported. High oil prices of around $110 a barrel for Brent crude, the international benchmark, are driving up bunker prices. Oil prices increased at the start of this year during the instability of the Arab Spring and have remained above $100 for much of 2011. European Union sanctions against import and transport of Syrian oil have helped to keep prices high, amid concerns in the market of oil supply constraints. Extended trade sanctions against oil giant Iran, which produces 2.3m barrels per day, has fed those supply fears, keeping oil prices high as 2011 draws to a close. BP's chief executive Bob Dudley warned this week that high oil prices threaten global economic growth. Growth in tanker owners' balance sheets is certainly threatened, and by more than the high cost of bunker fuel. Too many VLCCs are competing for cargoes, forcing owners to accept low or stagnant charter rates. On Wednesday, freight derivatives broker Marex Spectron highlighted oversupply in the Middle East Gulf, the main region where VLCCs load cargoes. The broker reported 43 available for employment in the region over the next three weeks, with just 23 cargoes expected to come onto the market. As vessel oversupply and high bunker costs conspired to pile pressure on owners in the last week, the Baltic Exchange's data showed stagnant rates and earnings on the Middle East-Asia voyage. Singapore's Phoenix Tankers was one owner willing to accept the week's flat rate. It chartered out its 2009-built, 309,887 dwt Phoenix Vigor at W59 for the trip. The Baltic Exchange shows that W58-59 has been the rate all week. The Baltic Exchange puts the rate of W59 at $13,000 per day, higher than the daily cost of roughly $10,000 per day to run a modern VLCC. Earnings might not be spectacular, but at least owners are covering operating costs: a month ago, earnings were a paltry $500 per day. "Steady" is the word brokers are using to describe the present market. It is a word that owners will be happy to hear in the run-up to Christmas, given the potential for more of the unsettling volatility seen throughout much of this year.

Speed obsession is out of fashion

Source Tradewinds vom 09.12.2011

Tomorrow's ships will likely not be able to sail as fast but they are certain to be much more fuel-efficient than those being delivered today. New technology, the market recession and soaring fuel prices have led to a fundamental shift in the way ships are designed, according to one leading classification society. The new generation of vessels coming off the designer's drawing board will allow future owners to adapt their operating speeds to the ups and downs of the market more easily. German class society Germanischer Lloyd (GL) has identified a change in thinking where the traditional obsession with designing ships around a maximum speed, particularly in the containership sector, is waning. Instead, designers are looking to design around an optimum speed, somewhat lower than the maximum, where the vessel operates in the most fuel-efficient way within the current trading pattern. "Nowadays ship designs are directed not so much toward the maximum speed that can be achieved but an optimal speed that is the most fuel-efficient for the vessels operating conditions," said Albrecht Grell, executive vice-president of GL's Maritime Solutions. "Design technology has certainly helped speed up that process because we can now test thousands of different operating simulations," he explained. Grell gives the example of containership operators that are seeking to design ships within a profile of operating at 16 knots 30% of the time and a maximum speed of between 21 and 22 knots between 20% and 30% of the time, with the rest of the operation made up of scatter points around those two regions. The trend is also catching on in the dry and tanker markets and even in those with highly varied operating patterns, such as multi-purpose vessels (MPPs). The new initiative among designers also seems to reflect long-term concerns over rising fuel costs and the market downturn, which has made slow steaming preferable to operating ships flatout. The latest generation of vessels should have more flexibility to adapt speed more easily to market conditions. Grell says there is a noticeable trend toward maximum speeds being reduced in new ship designs, in part as a reaction to higher fuel costs. AP Moller-Maersk recently reduced the maximum speed of its 18,000-teu containerships ordered at Daewoo Shipbuilding & Marine Engineering compared with its previous series of 13,000-teu vessels. Grell believes that the introduction of minimum efficiency standards for ships under the Energy Efficiency Design Index (EEDI) will also encourage lower maximum speeds. An International Maritime Organisation (IMO) regulation requires new ships to reach a 10% improvement in efficiency by 2015, then a further 20% by 2020 and another 30% by 2025. Reducing speed is the easiest and most effective way for new vessels to improve their efficiency rating under the EEDI. However, the EEDI calculation focuses mainly on installed power and therefore maximum speed. The efficiency rating of the vessel will not improve much even if it is meant to operate at a lower and more efficient optimum speed. This is likely to encourage owners to focus on reducing maximum speed further. "In the first phase [of EEDI] I don't expect there to be much change but in the second and third phases maximum speed will have to be reduced to meet the regulation," Grell said. This will create a scenario where ships being delivered today will be competing with the new generation of fuel-efficient but less powerful ships. Grell believes that, with the expected increase in fuel prices and possible carbon tax, it will be the newer ships that will have a distinct advantage and they could eventually force older tonnage out of the market.

UN's Maritime Agency to Weigh Setting Price on Ship Emissions

Source Hellenic Shipping News vom 12.12.2011

The International Maritime Organization, the United Nations' shipping agency, will next year consider how to set a price on greenhouse-gas emissions from ships that contribute to climate change. The London-based IMO's environmental panel will give "priority consideration" on whether to set a global levy or establish an emissions-trading program, IMO Secretary-General Efthimios Mitropoulos said today in an interview in Durban, South Africa. The UN agency has been unable to agree on measures to curb emissions from ships for more than a decade. The European Union, which runs the world's biggest carbon trading system, has said it may present its own proposal next year to limit the industry's pollution if IMO doesn't find a solution. Global maritime transport accounts for almost 3 percent of carbon-dioxide discharges, and emissions from ships are expected to increase from 150 percent to 250 percent by 2050, according a report by WWF and Oxfam published in September. Mitropoulos declined to comment on when a decision may be made or how much revenue may be raised from a tax or trading program. He stressed that any new rules for shipping emissions must apply to all vessels regardless of country. "For this system to succeed, ships should comply with the same global standards all over the world," he said. "Were we to move to different standards for different ships you would have a major problem." A proposal at the Durban summit calls for using charges on shipping fuels as a way to channel money into a UN climate aid fund. The plan is part of discussions on how to establish a new Green Climate Fund and raise $100 billion a year by 2020 to help vulnerable nations deal with global warming. Carbon Price The proposal is significant because it identifies the first potential private source of income for the fund. The draft UN document proposes that "financial resources" raised by unspecified actions to be taken by the IMO to cut bunker fuel emissions be channelled into both the UN's mooted Green Climate Fund and into providing compensation to developing nations whose companies are affected by the extra shipping costs. Setting a $25 per metric ton carbon price on shipping fuel could generate $25 billion a year by 2020 and help reduce emissions, according to environment group WWF and charity Oxfam. About $10 billion of that could be channelled to the Green Climate Fund, they said. Mitropoulos declined to comment on proposals being discussed at the Durban talks.

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Around 90% of world trade is carried by the international shipping industry. There are over 50,000 merchant ships trading internationally, transporting every kind of cargo. Without shipping the import and export of goods on the scale necessary for the modern world would not be possible.