Maritime industry confronts boatload of environmental challenges
Keeping up in a world hurtling toward the dawn of the IMO 2020 mandate is the biggest challenge facing the maritime industry, according to Kathy Metcalf, president and CEO of the Chamber of Shipping of America.
In a discussion at the Women’s International Shipping & Trade Association (WISTA) International Annual General Meeting & Conference, Metcalf and other panelists addressed the many environmental challenges facing women — and men — in the maritime industry.Front of mind for many attendees at the Nov. 1 event in the Cayman Islands was the International Maritime Organization (IMO) mandate that beginning Jan. 1, all vessels not equipped with exhaust-gas scrubbers must burn more expensive fuel with a sulfur content of 0.5percent or less.
Kathi Stanzel, managing director of INTERTANKO, said while hydrogen is a great alternative to high-sulfur fuel, “we currently have no legislation and no regulation that regulates hydrogen as either a fuel or as a cargo.”
‘It’s a mess’ Stanzel, a marine biologist by training, has led INTERTANKO — the International Association of Independent Tanker Owners — since 2012. Focusing on marine pollution from ships, she spent 10 years as the technical adviser to the International Tanker Owners Pollution Federation before joining the IOPC Funds, a United Nations body tasked with administering compensation conventions for oil pollution from tankers.
Stanzel called the fueling of ships with hydrogen “a different ballgame,” particularly because of how much colder it is than liquefied natural gas (LNG), the special handling it requires and the safety risks involved.
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Freight markets’ lacklustre performance hurting ships’ sales
The less than optimum freight market conditions have started to hurt sentiment in the S&P market, not to mention the newbuilding market. In its latest weekly report, shipbroker Allied Shipbroking said that “the subdued activity resumed in the dry bulk market for another week, reflecting the increasing concerns regarding the recent freight market correction and the overall volatility being seen in the year so far. This past week we witnessed a limited number of second-hand units changing hands, with potential buyers taking a step back, awaiting to see if any clear bullish direction can take shape at this point. However, even if earnings start to rebound, it is unlikely that interest will resume in a snap fashion. In contrast, we continue to see a considerable number of transactions taking place in the tanker market, with a dozen units reported as “sold” this past week. Once again focus was given to the products segment, with the positive outlook and the much-improved freight rates being the leading factors here. In the case that the freight market continues to improve, we expect to see a further escalation of deals to take shape over the following weeks”.
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Slowing ships may have little co2 reduction benefit
An International Maritime Organization (IMO) member country delegate said a study presented this week revealed engine power limitation (EPL) of 10percent to 30percent would result in zero or negligible CO2 reduction.
The IMO met Nov. 11-15 at its headquarters in London, discussed carbon-reduction strategies and ultimately resolved to allow member countries to choose their own strategies to reduce carbon emissions by 2023.
According to the IMO, the maritime industry accounts for about 2.5percent of global carbon dioxide emissions. Shipping also produces other harmful emissions such as black carbon, sulfur oxides, nitrogen oxides and nitrous oxides.
Carbon mitigation is a huge hurdle for the maritime industry. Each year, global climate talks take place to discuss ways to reduce emissions, specifically carbon emissions. The Paris Agreement did not account for the shipping industry in emissions targets and left it to make its own commitments.
The IMO released a brief statement saying that there were “proposals to limit ship speed” discussed at this week’s meeting. The member country delegate said the study presented at the meeting also showed power limitations up to 60percent would cut CO2 by 6percent to 17percent. This could place a ship’s engine power below minimum safe propulsion power requirements according to ISWG-GHG 6/2/5.
“Power limitation as a concept has been holed below the waterline. Yesterday’s analysis showed it simply doesn’t work very well at cutting CO2. Mandatory operational standards are the only way forward now, on either real-world efficiency or real-world speed, take your pick,” the anonymous country delegate said.
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Seas At Risk cites a study done earlier this year by the Clean Shipping Coalition about reductions in greenhouse gases, specifically carbon emissions. It suggests that there would be significant reductions in emissions, but missed the point that there would have to be significant growth in ship fleets to achieve the emissions reductions that the Clean Shipping Coalition found. Seas at Risk also discusses a 66percent reduction in noise pollution and a 78percent reduction in the probability that a ship will collide with a whale.
The Clean Shipping Coalition’s study suggests that a 10percent reduction in speeds would require a 10percent growth in the number of ships to achieve 13percent CO2 emissions reductions between 2018 and 2030. In fact, the study finds that a 10percent reduction in speed, while everything else remains the same, would result in an increase of emissions. Additionally, a 20percent reduction in speed would need a 22percent increase in the number of ships to obtain a 24percent reduction in CO2 emissions; likewise, to obtain 33percent reduction in emissions with a 30percent reduction in speeds, the number of ships must increase by 37percent.
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Chinese seaborne thermal coal deals being canceled
Chinese buyers of seaborne thermal coal have been cancelling deals or trying to defer delivery cargoes to the end of December amid ongoing curbs on imported material, market sources said Monday.
An international trader said a Chinese buyer walked away from a deal when the cargo was loading last week. As such, the trader had to resell the cargo, incurring a loss of about $1.75-$2.00/mt.
Chinese buyers do not want to restart discussions until the middle of next month when they will negotiate January cargoes, he said, as they expected restrictions on imports to be eased in the new year.
Given the expectations of a huge vessel queue in January ahead of Lunar New Year holidays, the first quarter of next year would be “depressing”, the trader, adding that it was a good time for Indian buyers.
A trade for Newcastle 5,500 kcal/kg NAR coal was reported Monday at $63-$64/mt CFR India, translating to about $49.50-$51.50/mt FOB, for a Panamax shipment, according to a Singapore-based trader.
Some Australian coal suppliers were offering Newcastle 5,500 kcal/kg NAR privately at $49/mt FOB but Indian buyers wanted to push the price down further, the international trader said.
The Singapore-based trader said miners and sellers without the flexibility to postpone laycans for high-ash Australian coal may need to dispose of their cargoes at lower prices.
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Managing alien stowaways
Ballast water is of crucial importance to the safe operation of ships by reducing hull stress, maintaining stability and improving propulsion and maneuvrability. However, ships’ ballast water may also contain alien marine organisms which establish themselves in the host environment, threatening the survival of many native species and creating a public health hazard in surrounding communities. According to the International Maritime Organization (IMO), “the spread of invasive species is now recognized as one of the greatest threats to the ecological and the economic well-being of the planet”.
Global recognition of the problem was slow to develop, but eventually led to the 2004 Ballast Water Management Convention (BWMC), which entered into force in 2017. Currently there are 81 BWMC signatory countries comprising over 80percent of the world’s tonnage. The United States is not a party to the Convention, but rather – as is often the case – developed and implemented its own legislation to control the introduction and spread of invasive species in US waters. The two regulatory schemes are not uniform; the current US regime is generally considered to be more stringent and prescriptive than its IMO counterpart. A detailed comparison of the two regimes is beyond the scope of this article, but major differences include testing and verification protocols to prove ballast water management system efficiency, the methodology for evaluating the effectiveness of the systems, and the schedule for compliance.
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S Korean shipyards dominating orders attracting $14bn of invested capital
South Korean shipyards remain the preferred option among Greek ship owners, especially when it comes to ordering their latest high-tech and niche-busting LNG carriers. According to data compiled by VesselsValue, exclusively for Hellenic Shipping News Worldwide (www.hellenicshippingnews.com), the current orderbook by Greek owners in South Korean yards stands at 60percent of their total, with 118 ships, worth just over $14 billion USD. Out of this amount, $10.3 billion is invested towards building 55 LNG newbuildings, while an additional $3.4 billion has been contracted in South Korean yards for 58 tankers of all shapes and sizes, with a total capacity of 7.86 million tons dwt. It seems that Greek owners are valuing the technological edge and expertise among South Korean yards, when compared to other countries.
For instance, in China, Greek shipping interests are currently building 56 ships, worth $2.3 billion, which equates to a market share of 29percent (among the Greek clientelle that is). According to VesselsValue, ship owners from Greece have placed orders for 33 dry bulk carriers, worth just over 1 billion USD. These ships will add 3,283,700 tons of carrying capacity to the Greek-owned dry bulk fleet, when they are delivered over the next few years. An additional 13 container ships are being built in China, worth over $710 million, together with 10 tankers, worth over $535 million. By contrast, Japanese yards, once-dominant in terms of market share among Greek owners, are now building just 21 ships, of about 1 billion USD in value, i.e. approximately 11percent of the total Greek orderbook.