WORLDWIDE SHIPPING INDUSTRY
Global shipping outlook stable, says Moody’s
The outlook for the global shipping sector into 2020 will remain stable, as higher expected earnings are counterbalanced by the US-China trade tensions and worldwide regulatory risks, says Moody’s Investors Service in a sector report.
It said the key drivers of the stable outlook were a combination of anticipated earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 16percent to 18percent into 2020, (although from a relatively low base in 2018) and largely balanced demand and supply growth. These positives were offset by downside risks from protectionist trade policies and increasing regulation, it said.
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Additional war risk premium pushes up freight rates for oil refiners
India’s oil refiners sourcing crude from conflict-prone West Asia, are facing freight increases of as much as $300,000 per day, after global marine insurers imposed an additional war risk premium of 0.35 per cent to 0.40 per cent of the value of the ship, for every transit through the Strait of Hormuz – the world’s busiest oil shipping lane – in the wake of recent attacks on oil tankers. The freight rates for an Arabian Gulf to India run for a modern Suezmaz tanker or a very large gas carrier (VLGC) have gone up by $150,000 to $300,000 per day because of the additional war risk premium on the ship’s hull and machinery levied by underwriters, an executive with an Indian shipping company said.
The extra war risk premium for a modern very large crude carrier or VLCC will be much more and the freight rates will be higher to that extent, he said. The additional war risk premium is levied on ships by insurers for every transit through the Strait of Hormuz – the only channel for ships to enter and exit the Persian Gulf – carrying crude oil for global refiners. India imported 84 percent of its crude requirement in FY19 and two of every three barrels were sourced from suppliers in West Asia, according to government data.
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Korean shipbuilders gearing up for massive LNG carrier orders in H2
South Korea’s major shipbuilders are pinning high hopes on massive liquefied natural gas (LNG) carrier orders to be placed in the second half of this year, industry insiders said Tuesday, as they aim to sweep global orders to cement their status in the sector.
As of last week, South Korean shipbuilders had secured 21 of 24 LNG carrier orders worldwide this year. With orders for more than 60 LNG carriers expected to be placed this year, industry insiders said South Korean shipbuilders will try to keep up the pace against their Asian rivals. Samsung Heavy Industries Co. is likely to be the first of the local shipyards to bag a new order in the second half as the company was reportedly named a partner for the Arctic LNG-2 project led by Russia’s top independent gas producer, Novatek, according to industry sources.
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Japan says safety of ships in hormuz is a matter of ‘life and death’
Japan sees ensuring the safety of shipping in the Strait of Hormuz as a matter of life and death in terms of its energy security, Chief Cabinet Secretary Yoshihide Suga said. Suga was responding Tuesday to a question about President Donald Trump’s tweet that said nations heavily dependent on fuel exports from the Middle East — including China and Japan — should defend their own ships rather than relying on the US.
The Trump administration has blamed Iran for recent attacks on oil tankers near the Persian Gulf, though Iran denies it. In a call with reporters Monday, US Secretary of State Michael Pompeo’s envoy for Iran, Brian Hook, said more than 60percent of the oil that passes through the strait goes to Asian countries. Hemmed in by its pacifist constitution, Japan relies on the U.S. for security. It has gradually expanded efforts to support US military actions, including sending peacekeeping troops to Iraq about 15 years ago. Under Prime Minister Shinzo Abe, the decades-old US-drafted constitution was reinterpreted in 2014 to allow Japan to defend allies in cases where it faces an existential threat.
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China’s weekly export container shipping index edges up
China’s container transport for export purposes increased for the week ending Friday, according to the Shanghai Shipping Exchange. The average China Containerized Freight Index (CCFI) stood at 818.83, up 0.9 percent from a week earlier, the exchange said.
The sub-index for South Africa service rallied by 3.7 percent to 593.23 week on week, while that for west and east Africa service declined 2.4 percent to 752.51. Persian Gulf/Red Sea service surged by 7.3 percent to 938.75 week on week. The CCFI tracks spot and contractual freight rates from Chinese container ports for 12 shipping routes across the globe, based on data from 20 international carriers. The index was set at 1,000 on Jan. 1, 1998.
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Sniffer drones to patrol world’s busiest ports
Teams of drones are about to start policing the skies of some of the world’s busiest shipping ports. Their target? Environmental rule-breakers. It might sound — and look — like something out of a Marvel Avengers movie, but for many ports around the world, these so-called sniffer drones are the best way to enforce new regulations aimed at cutting the air pollution caused by ships.
Regulators are bracing for rules that are meant to lower shipping’s emissions of sulfur oxides, pollutants blamed for acid rain. Because the regulations, which start January 1, will require most of the world’s ships to burn more expensive fuels, there’s been speculation some owners may try to cheat to drive down what is their single biggest cost. And that’s where the drones come in. In the Netherlands, home to Europe’s largest port, preparations are underway to use a large, unmanned flying vehicle capable of travelling well over 10 miles from the shore to detect emissions from ships. The local enforcement authority calls it a super drone.