Drewry: Thriving Products Market Attracts Chemical Tanker Swingers

Chemical shipping faces another tough year, but prospects are improving thanks to the strength of the product tanker market which is attracting a growing number of swing ships out of chemicals into products, according to the latest edition of the Chemical Forecaster, published by global shipping consultancy Drewry.

Drewry estimates that seaborne trade in chemicals (including vegetable oils and fats) was stagnant in 2014 and is forecast to grow at less than 2.5% pa over the next few years. However, this year the fleet is expected to grow by as much as 9% to reach 101 million dwt by the end of 2015, placing at risk operator’s vessel utilisation and earnings. But the relative strength of the product tanker sector is likely to attract more swing ships out of chemicals shipping, so checking effective fleet growth.

”Given the strength of the product sector, we expect more ships to enter this segment than chemicals,” said Drewry’s Lead Analyst for Chemical Shipping Hu Qing.

”So the growth in the fleet actually trading in chemicals and related products is expected to be lower at just under 7% this year. This is below our earlier estimates and hence we are more optimistic about the short-term market prospects.”

Drewry estimates that less than 40% of the total chemical capable shipping fleet is presently trading in chemicals and related products. And the proportion is expected to remain below this threshold over the next few years. Only three years ago over 46% of the fleet was trading in chemicals, representing a notable decline.

”The gap between tonnage carrying chemicals and tonnage carrying petroleum products is widening because of the number of larger ships entering the trades. The trend will continue over the next few years,” said Qing.

In some cases, the decision to move out of chemicals is an enforced one, as comparatively large numbers of ships continue to lose IMO Certificates of Fitness to carry chemicals and related products. In the first four months of 2015 alone, Drewry recorded 60 tankers either losing or not renewing IMO Certificates of Fitness, compared to just 11 vessels that have been moved from the feet through demolition, conversion and total loss.

Looking further ahead, other factors have the potential to curtail vessel supply growth, including shipyards failing to meet scheduled delivery dates and one particular case of bankruptcy.

”As such, slippage and outright cancellations through bankruptcy point to lower fleet growth than the headline numbers suggest,” said Qing.

”As a result, fleet growth is expected moderate over the medium term which bodes well for chemical shipping operators.”

Chinese Boxship Sinks, Eight Crew Rescued

A Chinese-flagged container ship sank early this morning while underway off Guangzhou port taking all of its eight crew members with it.

Fortunately, the crew was plucked out of the water in time by patrol boats, dispatched by Guangzhou Maritime Safety Administration to the scene, Xinhua news agency reports.

The ship, identified as Xin Hong 328, was underway toward Nansha port’s Dongfa pier from Hong Kong when it started to sink. It was loaded with 72 containers, Xinhua said.

According to the Maritime Safety Administration, salvage operation of the containers that fell into the water is underway.

A traffic control has been imposed in the area as the containers pose navigational hazard.

The cause of the sinking has not been disclosed.

World Maritime News Staff

MSC Plans Asia-Europe Services Revamp to Improve Reliability

Mediterranean Shipping Company (MSC), world’s second largest container line and Maersk Line’s partner in the 2M vessel sharing alliance, plans to optimise all of its Asia-Europe services in an effort to improve its schedule reliability.

Over the next several months the Swiss carrier plans to progressively implement changes to port combinations, vessel rotations and capacity deployment within its Asia-Europe services.

MSC launched the new Asia-Europe network in January 2015. According to data gathered by MSC, the Asia – North Europe trade was reported to be performing at 92.1% reliability as of May 2015. The optimisation is expected to sustain and improve on this figure.

The company also plans to reduce the average vessel size on the Condor service, which operates on the Asia – Europe trade, from 9,500 TEUs to 6,500 TEUs.

The network changes apply equally to MSC’s 2M partners, and the changes are expected to be fully effective by the middle of August.

Revised rotations and full service details, which are subject to regulatory requirements, are currently being finalised.

Svitzer Taking Contaminated Tugs to Singapore

Towage company Svitzer is preparing to ship out two of its tug boats contaminated with potentially deadly asbestos from Newcastle this week.

The two tugs were removed from service in February after one of the Chinese-built vessels was found to contain asbestos.

The Australian crews of The Warrego and The Warrunda first raised the alarm several months ago when they found suspicious white dust on board the Chinese made vessels.

Independent testing detected more than 90 areas of asbestos borne dust on the tugs. Both tugs were given Asbestos Free Certificates in Singapore before entering Australian waters.

The Maritime Union of Australia is calling for federal authorities to stop the two tugs from leaving Newcastle.

MUA Assistant National Secretary Ian Bray said foreign workers should not be exposed to a known killer.

“Given it is illegal to import asbestos into Australia, you really have to question why anyone is allowed to export it,” Mr Bray said.

“The MUA does not think these tugs should be sent anywhere without a guarantee that they will not be worked by any crew until the asbestos has been removed.”

“The tugs are going overseas, we think to be repaired by the same people that wrongfully gave the Asbestos Free Certificates,” MUA Deputy Newcastle Branch Secretary Dennis Outram said.

“It’s negligent to allow these tugs to go back to Singapore where a worker there could contract a killer asbestos-related disease,” he added.

Image: MUA

Safe Bulkers Slides to Red

NYSE-listed dry bulk shipping company Safe Bulkers recorded USD 6 million net loss for the first quarter of 2015, compared to net income of USD 11.2 million during the same period in 2014.

The company’s net revenue for the first quarter of 2015 decreased by 22% to USD 32.1 million, from USD 41.3 million during the same period in 2014.

Safe Bulkers currently has 10 newbuildings on order, with two to be delivered in 2015, four to be delivered in 2016, three to be delivered in 2017 and one to be delivered in 2018.

The remaining capital expenditure requirements to shipyards or sellers for the delivery of these 10 newbuilds, before minor adjustments for shipyards’ costs related to such delayed deliveries, amounted to USD 259.5 million as of March 31, of which USD 77.6 million was scheduled to be paid in 2015, USD 91.7 million in 2016, USD 69.9 million in 2017 and USD 20.3 million in 2018.

As of March 31, 2015, Safe Bulkers had liquidity of USD 430.7 million consisting of USD 90.9 million in cash, USD 40.7 million in restricted cash, USD 95.1 million available under existing revolving credit facilities, USD 16.0 million available under a committed loan facility for one delivered vessel and USD 188.0 million under committed loan facilities for 10 newbuild vessels.

The Board of Directors of the company also declared a quarterly dividend of USD 0.01 per share of the common stock for the first quarter of 2015.

“We have reduced our quarterly dividend to USD 0.01 per common share in line with the present weak charter market conditions, which have now lasted for more than one year. We have a strong balance sheet and lean operations targeting to preserve our liquidity throughout the adverse part of the shipping cycle,” Dr. Loukas Barmparis, President of Safe Bulkers, said.

Baltic Exchange Drops 172,000 DWT Rates Reports

Changes in the capesize fleet profile have led the Baltic Exchange to announce that it will cease panel based reporting of its 172,000 dwt 4 Timecharter Average (172 4TC) data from 31 July, 2015, and instead provide data derived from its assessments of the more commonly traded 180,000 dwt vessels.

The move follows a decline in the number of 172,000 dwt vessels trading and a growing difficulty for the Exchange’s panel of shipbrokers to provide accurate assessments for this vessel type.

Under the new arrangements the 172 4TC rates will initially be derived from a new calculation of a 180 4TC rate at a constant dollar differential.

The differential will be established and published on 31 July 2015 by reference to the average difference between the panellist reported 172 4TC and the 180 5TC for the preceding 12 months.

”The Baltic Exchange has been providing dual assessments based on 180,000 dwt and 172,000 dwt vessels since February 2014 and we have observed a correlation of over 99% between the two contracts,” Baltic Exchange Chief Executive Jeremy Penn said.

”Faster than anticipated scrapping levels of the older 172,000 dwt vessels will soon mean that our shipbroker panellists will be unable to provide robust assessments for this specific vessel size. The Baltic Exchange cannot make panel based assessments on an increasingly rarely traded vessel type, but publishing a derived rate provides the FFA market with a workable solution and robust settlement data.”

According to analysis by SSY Consultancy and Research there are currently 191 vessels (total 32.87m dwt) of between 170,000-174,999 dwt versus 317 vessels (total 57.34m dwt) of between 180,000-185,000 dwt.

No vessel in the 170,000-174,999 dwt range has been built since 2012 whilst 68 vessels in the 180,000 –185,000 dwt range have been built since 2013. A further 113 180,000–185,000 dwt vessels are scheduled to enter the fleet by the end of 2017.

China Comes to Grips with Emissions from Ships

China has launched a public consultation process regarding legislation on pollution from the shipping sector as it faces growing pressure to resolve this burning issue.

China’s Ministry of Environment Protection issued a call for public feedback on Monday for what is yet to become the country’s first regulation specifically targeting emissions from the shipping sector, Xinhua reports.

According to the ministry, the shipping sector accounted for 8.4% of China’s SOx and 11.3% of NOx emissions in 2013.

Xiong Yuehui, an official with the ministry, said the regulation would be in line with the international standards and cover marine fuel oil quality and its usage.

China is the home of seven out of ten of the world’s busiest ports and does not require that container ships to meet the same air quality standards administered by many other ports around the world. Consequently, one container ship operating along the coast of China emits as much diesel pollution as 500,000 new Chinese trucks in a single day, the US Natural Resources Defense Council (NRDC) saidin a report in October last year.

Since Chinese port cities are some of the most densely populated in the world and about 30 percent of the world’s containers pass through these ports, air pollution from ships and port activities likely contributes to much higher public health risks in China than in other port regions, NRDC said.

Hong Kong is the first to strictly enforce the use of low sulfur fuel by local vessels and plans to be the first in China to mandate ocean-going vessels to use low sulfur marine diesel.

Shenzhen has followed Hong Kong’s lead, by announcing a comprehensive list of ships and ports cleanup initiatives.

World Maritime News Staff